ACIT, Coimbatore V. M/s. Super Sales India Limited, Coimbatore

ITA 431/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51977 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K RAGHU
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 431/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(1), COIMBATORE. V. M/S. SUPER SALES INDIA LTD., 34A, KAMARAJ ROAD, COIMBATORE-641 018. [PAN : AADCS0650A] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, SR. DR RESPONDENT BY : SHRI K. RAGHU, FCA DATE OF HEARING : 19-10-2011 DATE OF PRONOUNCEMENT : 19-10-2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEAL S)-I, COIMBATORE IN APPEAL NO. 286/09-10 DATED 20-12-2010 FOR THE ASSESSMENT YEAR 2007-08. 2 SHRI SHAJI P. JACOB, LEARNED SR. DR REPRESENTED O N BEHALF OF THE REVENUE AND SHRI K. RAGHU, FCA REPRESENTED ON BEHALF OF THE ASS ESSEE. 3. IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSE SSEE IS A COMPANY WHICH HAD IN THE ASSESSMENT YEAR 2001-02 PURCHASED BY WAY OF SLUMP SALE FROM M/S. TEXTOOL CO. LTD., YARN PROCESSING DIVISION KNOWN AS M/S. JAY TEXTILES, UNIT-III I.T.A. NO.431/MDS/2011 2 SITUATED AT METTUPALAYAM. THE PURCHASE WAS FOR A T OTAL CONSIDERATION OF ` 20 CRORES WHICH INCLUDED THE LAND, BUILDING AND OTHER FIXED ASSETS. IT WAS THE SUBMISSION THAT AS PER THE BALANCE SHEET OF M/S. TE XTOOL CO. LTD., THE WRITTEN DOWN VALUE (W.D.V.) OF THE ASSETS OF M/S. JAY TEXTILES, UNIT-III SITUATED AT METTULAPALAYM WAS AS MENTIONED IN PARE 2 PARA 4 OF THE ASSESSMENT ORDER. IT WAS THE SUBMISSION THAT THE SAME CAME TO ABOUT ` 5.4 CRORES. IT WAS THE SUBMISSION THAT FOR THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAD FILED ITS RETURN OF INCOME WHEREIN THE ASSESSEE HAD CLAIMED DEPRECIATION BY TAKING THE W.D .V. OF M/S. JAY TEXTILES UNIT-III TAKEN OVER AT ` 20 CRORES LESS THE W.D.V. FOR THE RELEVANT ASSESSM ENT YEAR. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD INVOK ED THE PROVISIONS OF EXPLANATION 3 TO SECTION 43 OF THE INCOME TAX ACT, 1961 (THE A CT FOR SHORT) AND HAD ADOPTED THE W.D.V. OF THE ASSETS AS ON 01-04-2000 OF M/S. J AY TEXTILES, UNIT-III WHICH WAS PURCHASED BY THE ASSESSEE AND HAD RE-WORKED THE W.D .V. YEAR AFTER YEAR. IT WAS THE SUBMISSION THAT THUS THE ASSESSING OFFICER HAD REDUCED THE CLAIM OF DEPRECIATION. IT WAS THE SUBMISSION THAT THE ASSES SEE HAD CLAIMED DEPRECIATION BY INVOKING THE W.D.V. FOR THE ASSESSMENT YEAR 2001-02 AT ` 20 CRORES AND THE ASSESSING OFFICER HAD ADOPTED THE W.D.V. BY INVOKIN G THE EXPLANATION 3 TO SECTION 43 OF THE ACT TO ADOPT THE W.D.V. FOR THE ASSESSMEN T YEAR 2001-02 AT THE VALUE AS DISCLOSED IN THE RETURNS OF M/S. TEXTOOL CO. LTD. ON APPEAL, THE LEARNED CIT(A) HAD HELD THAT THE EXPLANATION 3 TO SECTION 43 OF THE ACT COULD NOT BE APPLIED FOR THE ASSESSMENT YEAR 2007-08. CONSEQUENTLY, THE LEARNED CIT(A) HAD DELETED THE I.T.A. NO.431/MDS/2011 3 ADDITION REPRESENTING THE DISALLOWANCE OF THE DEPRE CIATION. IT WAS THE SUBMISSION BY THE LEARNED DR THAT THE ASSESSING OFFICER IN PAG E 3, PARA 4 OF THE ASSESSMENT ORDER HAD CATEGORICALLY MENTIONED THAT REMEDIAL ACT ION FOR THE EARLIER ASSESSMENT YEARS, BEING ASSESSMENT YEARS 2003-04 AND 2004-05 W AS BEING INITIATED SEPARATELY. THE LEARNED DR SUBMITTED THAT THE ORDER OF THE LEAR NED CIT(A) WAS LIABLE TO BE REVERSED AS HE HAD NOT TAKEN INTO CONSIDERATION THE FACT THAT THE ASSESSING OFFICER WAS PROPOSING TO RECTIFY AND TAKE REMEDIAL ACTIONS IN THE EARLIER YEARS. 4. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT EXPLANATION 3 TO SECTION 43 OF THE ACT COULD NOT BE INVOKED FOR T HE ASSESSMENT YEAR 2007-08 BEING THE YEAR IN APPEAL. IT WAS THE SUBMISSION TH AT THE TRANSACTION OF PURCHASE OF THE UNIT TOOK PLACE DURING THE ASSESSMENT YEAR 2001 -02 AND AS NO DISTURBANCE HAS BEEN CAUSED TO THE VALUE TAKEN DURING THE ASSESSMEN T YEAR 2001-02, THE SAME COULD NOT BE DISTURBED IN THE ASSESSMENT FOR THE AS SESSMENT YEAR 2007-08. HE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A ). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET IT IS NOTICED THAT THE ASSESSING OFFICER HAS MENTIONED THAT REMEDIAL A CTION IS BEING CONSIDERED FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05. ADMITTED LY, EXPLANATION 3 TO SECTION 43 OF THE ACT CANNOT BE INVOKED FOR THE SUBSEQUENT YEAR, BEING THE ASSESSMENT YEAR 2007-08, ESPECIALLY WHEN THE TRANSACTION TO PU RCHASE THE UNIT TOOK PLACE DURING THE ASSESSMENT YEAR 2001-02. HOWEVER, AS IT HAS BEEN SPECIFICALLY MENTIONED THAT THE ASSESSING OFFICER IS TAKING REME DIAL ACTION FOR THE EARLIER I.T.A. NO.431/MDS/2011 4 ASSESSMENT YEARS, BEING ASSESSMENT YEARS 2003-04 AN D 2004-05, WE ARE OF THE VIEW THAT THIS ISSUE IN THE APPEAL WOULD HAVE TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION AFTER COMPLET ING THE REMEDIAL ACTION THAT HE PROPOSES TO TAKE IN REGARD TO THIS ISSUE FOR THE EA RLIER ASSESSMENT YEARS AND WE DO SO. IN THE CIRCUMSTANCES, THE ISSUE IN THIS APPEAL IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION AFTER THE ASS ESSING OFFICER HAS DONE THE REMEDIAL ACTION FOR THE ASSESSMENT YEARS 2003-04 AN D 2004-05 OR ANY OF THE OTHER EARLIER ASSESSMENT YEARS AS WOULD BE PERMISSIBLE UN DER LAW. WE MAY SPECIFICALLY ALSO MENTION HERE THAT THE ASSESSING OFFICER SHALL GRANT DEPRECIATION AS PER LAW ON THE W.D.V. ARRIVED AT FOR THE RELEVANT ASSESSMENT Y EAR AS ON 01-04-2006 AND AFTER TAKING INTO CONSIDERATION THE ADDITIONS AND DELETIO NS, IF ANY, TO THE FIXED ASSETS. IN THE CIRCUMSTANCES, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 19/10/2 011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 19 TH OCTOBER, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE