USHA GARMENTS MANUFACTURING CO P. LTD, MUMBAI V. DCIT 8(3), MUMBAI

ITA 4213/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3618 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKUNDRAJ M CHATE
• Assessee Lawyers: KEYURI DESAI
• Keywords: Depreciation; Earning of tax free income
• Section: 14A; 32

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, F MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.4213/MUM/2014 ASSESSMENT YEAR: 2010-11 USHA GARMENTS MFG. COMPANY P. LTD. PLOT .13, WICEL, MIDC, ANDHERI (EAST), MUMBAI-400093 / VS. DCIT, WARD-8(3), AAYAKAR BHAVAN, MUMBAI-400020 ( #$% & /ASSESSEE) ( ' / REVENUE) PAN. NO. AAACU1397H ( ') * & + / DATE OF HEARING : 08/03/2016 * & + / DATE OF ORDER: 11/03/2016 #$% & ! / ASSESSEE BY SHRI PANKAJ R. TOPRANI & MS. KEYURI DESAI ' ! / REVENUE BY SHRI MUKUNDRAJ M. CHATE ITA NO.4213/MUM/2014 USHA GARMENTS MFG. COMPANY PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THIS ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 30/04/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE FIRST GROUND RAISED BY THE ASSESSEE PERTAINS TO UPH OLDING THE DISALLOWANCE OF ENTIRE DEPRECIATION OF RS.23,11,087 /-, CLAIMED ON FACTORY BUILDING AND RENTED PREMISES U/S. 32 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING THE CRUX OF ARGUMENT ADVANCED BY SHRI PANKAJ R. TOPRANI ALONGWITH MS. KEYURI DESAI WAS TH AT DETAILS OF PROPERTY AND PROPERTY-WISE DEPRECIATION WAS DULY FILED BEFORE THE ASSESSING OFFICER AND THE ASSESSEE IS MANUFACTURING GARMENTS. THE OBSERVATION MADE IN TH E ASSESSMENT ORDER THAT NO DETAILS WERE FURNISHED IS IN FACT WRONG FOR WHICH OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 31. ON THE OTHER HAND, THE LD. AR, SHRI MUKUNDRAJ M. CHATE DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRI EF ARE THAT THE ASSESSEE, A PRIVATE LIMITED COMPANY, AT THE RELEVAN T TIME WAS ENGAGED IN MANUFACTURING AND EXPORT OF READYMADE GA RMENTS, DECLARED INCOME OF RS.2,46,42,031/- ON 6.10.2010 IN THE RETURN. THE ASSESSEE RENTED OUT THE PREMISES AND A LSO PAID MUNICIPAL TAXES. THE ASSESSEE CLAIMED DEPRECIATION U/S 32 OF THE ACT ON FACTORY BUILDING AND ALSO THE RENTED PRE MISES WHICH ITA NO.4213/MUM/2014 USHA GARMENTS MFG. COMPANY PVT. LTD. 3 WAS DISALLOWED. ON APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AFFIRMED THE STAND OF THE ASSESSING O FFICER. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. IT IS NOTED THAT WHILE ADJUDICATING THE APPEAL, THE LD. COMMISS IONER OF INCOME TAX (APPEALS) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND ALSO SOUGHT REMAND REPORT FROM THE ASS ESSING OFFICER. HOWEVER, THE CLAIM OF DEPRECIATION WAS DI SALLOWED. IT WAS PURELY ON THE PLEA THAT PROPERTY-WISE DETAILS O F DEPRECIATION WERE NOT FILED BY THE ASSESSEE. HOWEV ER, FROM THE PAPER BOOK, FILED BEFORE THIS TRIBUNAL, IT IS NOTIC ED THAT THE DETAILS WERE DULY FURNISHED BEFORE THE ASSESSING OF FICER AND THE PROPERTY-WISE DEPRECIATION CHART WAS DULY FILED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). WITHOUT GOING INTO MUCH DELIBERATION, WE ARE OF THE VIEW THAT THE CLAI M OF THE ASSESSEE CANNOT BE SUMMARILY REJECTED, THEREFORE, T HIS ISSUE IS REMANDED BACK TO THE FILE OF THE LD. ASSESSING OFFI CER TO EXAMINE THE CLAIM OF THE ASSESSEE AND DECIDE IN ACC ORDANCE WITH LAW. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEI NG HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, I N SUPPORT OF ITS CLAIM. THIS GROUND IS ALLOWED FOR STATISTICAL PURP OSE ONLY. 3. THE NEXT GROUND PERTAINS TO UPHOLDING THE DISALL OWANCE OF RS.5,42,580/- MADE U/S. 14A OF THE ACT. THE CRU X OF ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE EARNED CERTAIN EXEMPT INCOME AND THE LD. A SSESSING OFFICER WRONGLY APPLIED RULE 8D. IT WAS CONTENDED THAT NO BORROWED FUNDS WERE UTILIZED BY THE ASSESSEE FOR MA KING THE INVESTMENT FOR WHICH OUR ATTENTION WAS INVITED TO P AGE 8 OF THE ITA NO.4213/MUM/2014 USHA GARMENTS MFG. COMPANY PVT. LTD. 4 PAPER BOOK. RELIANCE WAS PLACED UPON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN CIT V. ABHISHEK INDU STRIES LTD. [2016] 380 ITR 652. PLEA WAS ALSO RAISED THAT THE LD. ASSESSING OFFICER HAS NOT RECORDED SATISFACTION WHI LE MAKING THE DISALLOWANCE. ON THE OTHER HAND, THE LD. DR DE FENDED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONF IRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 3.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OBSERVATI ON MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO T HE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MAT ERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RES PECTIVE COUNSELS, IF KEPT IN JUXTAPOSITION AND ANALYZED, IT IS NOTICED THAT EVEN THE ASSESSEE HAS ACCEPTED THAT HIS CLAIM IS WRONG, HOWEVER, IT IS NOTICED THAT THE ASSESSEE MADE INVES TMENT OF RS.3,06,87,774/- AND RS.3,06,43,545/- AS ON 31.3.20 09 AND 31.3.2010 RESPECTIVELY. THE ASSESSEE RECEIVED DIVI DEND OF RS.2,32,581/- WHICH WAS CLAIMED EXEMPT U/S. 10(34) OF THE ACT. THE ASSESSEE HAS NOT ATTRIBUTED ANY EXPENSES WHICH WERE CARRIED OUT FOR THE ACTIVITY OF INVESTMENT FOR EARNING EXEMPT INCOME. NO DOUBT THE LD. ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE AND EVEN THE ASSESSEE ITSELF MADE DISALLOWANCE OF RS.1,53,328/- BEING 0.5% OF THE AVE RAGE INVESTMENT. CONSIDERING THE TOTALITY OF FACTS, THE DISALLOWANCE UPTO RS.1,53,328/- IS CONFIRMED. SO FAR AS NON-REC ORDING OF SATISFACTION IS CONCERNED, WE FIND THAT SATISFACTIO N HAS BEEN DULY RECORDED FOR WHICH A PARTICULAR FORMAT HAS NOT BEEN ITA NO.4213/MUM/2014 USHA GARMENTS MFG. COMPANY PVT. LTD. 5 PRESCRIBED. THE LD. ASSESSING OFFICER WAS NOT SATIS FIED WITH THE CLAIM OF THE ASSESSEE THEREBY HE ISSUED A SHOW CAUS E NOTICE. HOWEVER, SO FAR AS THE REMAINING CLAIM IS CONCERNED , THE LD. ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE AND DECIDE IN ACCORDANCE WITH LAW. THE AS SESSEE BE GIVEN OPPORTUNITY TO SUBSTANTIATE ITS CLAIM. THUS, THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 4. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY AL LOWED FOR STATISTICAL PURPOSE. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 08/03/2016. SD/- SD/- ( JASON P. BOAZ ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER ( ) MUMBAI; , DATED : 11/03/2016 SSL /. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./ / THE APPELLANT (RESPECTIVE ASSESSEE) 2. 01./ / THE RESPONDENT. 3. 2 2 ( 3& ( - ) / THE CIT, MUMBAI. 4. 2 2 ( 3& / CIT(A)- , MUMBAI, 5. 5'6 0&# , 2 -+ -# 7 , ( ) / DR, ITAT, MUMBAI 6. 8$ ) / GUARD FILE. ! / BY ORDER, 15& 0& //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , ( ) / ITAT, MUMBAI