Sarovar Spintex Pvt.Ltd., Surat V. The ACIT.,Circle-4, Surat

ITA 397/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5567 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 04-02-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Capital asset; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABA D CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL , A.M.) I.T.A. NO. 397/AHD./2008 ASSESSMENT YEAR : 2004-2005 M/S. SAROVAR SPINTEX PVT. LTD., SURAT -VS.- ASSISTANT COMMISSIONER OF INCOME TAX, (PAN : AADCS 3969 G) CIRCLE-4, SURAT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAPNESH SHETH RESPONDENT BY : SMT. JYOTI LAXMI, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 07.12.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I, SURAT CONFIR MING THE ACTION OF ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS.2,23,312/- OUT OF DEPRECI ATION FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED THE FACTS ARE THAT IN THE ASSESSM ENT ORDER, THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAD RECEIVED GOVERNMENT SUBSIDY OF RS. 13,38,868/- BASED ON CAPITAL INVESTMENTS, WHICH WAS SANCTIONED DURING THE YEAR 1997. SIMILARL Y, SUBSIDY OF RS.12,69,850/- WAS SANCTIONED IN MAY, 2001 IN THE ASSESSMENT YEAR 2002-03, THE AS SESSING OFFICER REDUCED THE SUBSIDY SO RECEIVED FROM THE ACTUAL COSTS OF THE CAPITAL ASSET FOR THE PURPOSE OF WORKING OUT CORRECT ALLOWABLE DEPRECIATION, AS PER THE PROVISIONS OF SE CTION 43(1) OF THE ACT AND RE-WORKED OUT THE DEPRECIATION ALLOWABLE FOR THAT YEAR. IN THE ASSESS MENT YEAR 2002-03, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF ASSESSI NG OFFICER AND CONFIRMED THE DISALLOWANCE OF DEPRECIATION MADE BY THE ASSESSING OFFICER. FOR THE SAME REASONS THE ASSESSING OFFICER DISALLOWED AMOUNTING TO RS.2,23,312/- IN THE ASSESS MENT YEAR UNDER APPEAL. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE AS SESSEE CONTENDED THAT AS PER PROVISIONS OF SECTION 43(1), SUBSIDY REQUIRED TO BE REDUCED IN TH E YEAR, IN WHICH IT IS RECEIVED AND NOT SUBSEQUENTLY. THE WRITTEN DOWN VALUE OF OPENING BLO CK OF ASSETS CANNOT BE ADJUSTED BY THE AMOUNT OF SUBSIDY RECEIVED IN THE YEAR 1992-93. IT WAS ALSO STATED THAT SUBSIDY WAS RECEIVED 10 2 ITA NO. 397/AHD/2008 YEARS AGO AND IN THE YEAR 1997 WHEN THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF P.J. CHEMICALS REPORTED IN 210 ITR 830 (SC) WAS APP LICABLE. 3. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTI ON OF ASSESSING OFFICER ON THE GROUND THAT SINCE HIS PREDECESSOR DECIDED THIS ISSUE AGAIN ST THE ASSESSEE, HE HAS NO CHOICE BUT TO RESPECTFULLY FOLLOW THE DECISION OF LEARNED COMMISS IONER OF INCOME TAX(APPEALS) OF THE EARLIER YEAR. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONE R OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE SH RI SAPNESH SHETH, LD. COUNSEL APPEARED AND POINTED OUT THAT THE DISALLOWANCE OF DEPRECIATI ON IN THE EARLIER YEAR IS UPHELD BY THE TRIBUNAL. IN SUPPORT OF THIS ORDER DATED 09.09.2009 IN ITA NO. 1382/AHD/2007 FOR THE ASSESSMENT YEAR 2002-03 IN ASSESSEES OWN CASE WAS PLACED ON RECORD. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE MERE FACT THAT THIS GROUND OF APPEAL WAS NOT PRESSED BY THE LD. COUNSEL OF THE ASSESSEE IN THE LAST YEAR, IS NO GRO UND TO DECIDE THIS ISSUE ON MERIT IN THE ASSESSMENT YEAR UNDER APPEAL. HE FURTHER SUBMITTED THAT EXPLANATION 10 TO SECTION 43(1) WAS INSERTED WITH EFFECT FROM 01.04.1999, THEREFORE, FO R THE PURPOSE OF COMPUTING DEPRECIATION, THE AMOUNT OF SUBSIDY SANCTIONED IN EARLIER YEARS FROM THE GOVERNMENT CANNOT BE REDUCED. HE ACCORDINGLY CONTENDED THAT THE ASSESSING OFFICER BE DIRECTED TO ALLOW THE DEPRECIATION AS CLAIMED WITHOUT DEDUCTING THE AMOUNT OF SUBSIDY REC EIVED FROM THE GOVERNMENT. 5. ON THE OTHER HAND, SMT. JYOTI LAXMI, LD. SR. D.R . APPEARING ON BEHALF OF THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. SHE POINT ED OUT THAT AS PER SCHEME OF ALLOWANCE OF DEPRECIATION UNDER SECTION 32, IT IS ALLOWABLE ON O PENING W.D.V. AND FOR THE PURPOSE OF COMPUTING DEPRECIATION THE SUBSIDY WAS DEDUCTED BY THE ASSESSING OFFICER IN THE EARLIER YEARS. IN THE ASSESSMENT YEAR UNDER APPEAL, THE DEPRECIATI ON IS ALLOWABLE ON OPENING W.D.V. IN THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSING OFFICER HAS ALLOWED THE DEPRECIATION ON OPENING W.D.V. AS PER RECORD OF THE DEPARTMENT, THEREFORE, THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 3 ITA NO. 397/AHD/2008 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE ASSESSME NT YEAR 2002-03, THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION OF RS.3,96,892/- BY RED UCING THE COST OF CAPITAL ASSETS BY THE AMOUNT OF SUBSIDY RECEIVED, WHICH WAS CONFIRMED BY THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS). ON APPEAL IN ITA NO. 1382/AHD/2007, T HE ASSESSEE ACCEPTED THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BY NOT PRESSING THE RELEVANT GROUND TAKEN BEFORE THE TRIBUNAL. BE THAT AS IT MAY, WE FOUND CO NSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE LD. D.R. THE CURRENT YEARS DEPRECIATION IS ALL OWABLE ON OPENING BALANCE OF WRITTEN DOWN VALUE. IN THE ASSESSMENT YEAR UNDER APPEAL, THE ASS ESSING OFFICER MERELY CALCULATED THE DEPRECIATION ON CLOSING WRITTEN DOWN VALUE OF THE A SSESSMENT YEAR 2003-04, WHICH IS THE OPENING WRITTEN DOWN VALUE OF THE ASSESSMENT YEAR UNDER APP EAL. IN THIS VIEW OF THE MATTER, WE INCLINED TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX(APPEALS). 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 23.07.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23/ 07 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD LAHA/SR.P.S.