AMAL LTD, MUMBAI V. DCIT 2(1), MUMBAI

ITA 4465/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5667 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-01-2014
• Assessment Year: 1997-1998
• Appeal Filed On: 03-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: K K VED
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 80HHC; 234B

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI SANJAY GARG, JM ./I.T.A. NO.4465/M/2011 ( / ASSESSMENT YEAR: 1997 - 1998 ) M/S. AMAL LTD., VEER SAVARKAR MARG, NEAR PRABHADEVI TELEPHONE EXCHANGE, DADAR (W), MUMBAI 400 028. / VS. THE DCIT - 2(1), MUMBAI. ./ PAN : AAACA 1041 J ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI K.K. VED / RESPONDENT BY : SHRI SURENDRA KUMAR, DR / DATE OF HEARING : 21.1.2014 / DATE OF PRONOUNCEMENT : 31 .1.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 3.6.2011 IS AGAINST THE ORDER OF THE CIT (A) - 4, MUMBAI DATED 23.3.2011 FOR THE ASSESSMENT YEAR 1997 - 1998. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN DIRECTING THE AO TO CONSIDER THE ALTERNATE CLAIM OF THE APPELLANT TO DISALLOW DEPRECIATION TO THE EXTENT OF RS. 6,97,149/ - IN RESPECT OF ADDITION TO ASSETS MADE IN ASSESSMENT YEAR 1991 - 1992. THE LD CIT (A) OUGHT TO HAVE APPRECIATED THAT THE CLAIM FOR DEPR ECIATION ON ADDITION TO ASSETS MADE IN ASSESSMENT YEAR 1991 - 1992 HAD BEEN ALLOWED IN FULL BY ORDER DATED MARCH 4, 2011 OF THE LD CIT (A). 2. THE LD CIT (A) OUGHT TO HAVE DIRECTED THE AO TO ALLOW ENTIRE DEPRECIATION ON ADDITION TO ASSETS MADE IN ASSESSMENT YEAR 1991 - 1992. 3. THE LD CIT (A) ERRED IN NOT DIRECTING THE AO TO EXCLUDE 90 PER CENT OF NET INTEREST INCOME FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. 4. THE LD CIT (A) ERRED IN NOT DIRECTING THE AO TO ADJUST THE INTEREST UNDE R SECTION 234B AGAINST THE SELF ASSESSMENT TAX PAID BASED ON RETURNED INCOME AS AGAINST BASED ON ASSESSED INCOME. 2 5. THE LD CIT (A) ERRED IN NOT DIRECTING THE AO TO NOT TO CHARGE INTEREST UNDER SECTION 234C IN RESPECT OF FIRST TWO INSTALLMENTS OF ADVANCE T AX. 6. THE LD CIT (A) ERRED IN NOT DECIDING THE FOLLOWING GROUND IN THE APPEAL. 5. THE LD DEPUTY COMMISSIONER ERRED IN NOT SETTING OFF THE INTEREST EXPENDITURE AGAINST THE INTEREST RECEIPT FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER 80HHC OF THE ACT. T HE LD DEPUTY COMMISSIONER OUGHT TO HAVE EXCLUDED ONLY 90 PER CENT OF BALANCE INTEREST RECEIPT I.E., RS. NIL FROM THE PROFITS OF BUSINESS TO COMPUTE THE DEDUCTION UNDER SECTION 80HHC OF THE ACT, AS DIRECTED BY THE CIT (A). 3. AT THE OUTSET, SHRI K.K. VED, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUND NO.1 & 2 AND MENTIONED THAT THE ISSUE RELATES TO GRANTING OF DEPRECIATION ON THE CORRECT WDV TO BE WORKED OUT AFTER CONSIDERING THE PROPER DEPRECIATION FIGURES RELEVANT FOR THE ASSESSMENT YEAR 1991 - 1992 ONWARDS. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO THE DIRECTION GIVEN BY THE CIT (A) IN PARA 7 OF THE IMPUGNED ORDER. FURTHER, LD COUNSEL MENTIONED THAT THE AO HAS NOT GIVEN EFFECT TO THE SAID DIRECTION TILL THE DATE, EVEN AFTER LAPSE OF NEARLY A COUPLE OF YEARS. GOING THROUGH THE FACTS, BOTH THE PARTIES CONCURRED WITH THE PROPOSAL TO REMAND THE MATTER TO THE FILES OF THE AO WITH A DIRECTION TO THE AO TO COMPLETE THE REQUIREMENT OF GIVING EFFECT TO THE SAID DIRECTION I N A TIME BOUND MANNER. AFTER DISCUSSION WITH BOTH THE PARTIES, WE FEEL THAT A COUPLE OF MONTHS SHOULD BE GIVEN TO THE AO FROM THE DATE OF THIS ORDER FOR GIVING EFFECT TO THE SAID DIRECTION OF THE CIT (A) AFTER HEARING THE ASSESSEE IN THIS REGARD. ASSESSE E IS DIRECTED TO SUPPLY THE COPY OF THIS ORDER SOON AFTER HE RECEIVES THE SAME AND BRING IT TO THE NOTICE OF THE CIT (A) WITHOUT WAITING FOR THE NOTICE FROM THE OFFICE OF THE CIT (A). THIS WILL ONLY HELP TO REDUCE THE DELAY, IF ANY. ACCORDINGLY, GROUNDS NO.1 & 2 ARE ALLOWED . 4. GROUNDS NO.3 AND 6 ARE INTER CONNECTED AND THEY RELATE TO GRANTING OF BENEFIT OF NETTING AND THE INTEREST INCOME AGAINST THE EXPENDITURE ETC. IN THIS REGARD, BOTH THE PARTIES STATED THAT THE SAID CLAIM OF THE ASSESSEE NEEDS TO BE CONSIDERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE BINDING JUDGME NT OF THE HONBLE APEX COURT IN THE CASE OF ACG ASSOCIATED CAPSULES P. LTD VS. CIT (343 ITR 89) . ACCORDINGLY, WE DIRECT THE AO TO APPLY THE SAID JUDGMENT ON CONSIDERING THE FACTS OF THE PR ESENT CASE AFTER REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE PRINCIPLES OF THE NATURAL JUSTICE. ACCORDINGLY, IN SUBSTANCE, GROUNDS NO.3 AND 6 ARE ALLOWED . 3 5. IN CONNECTION WITH GROUNDS NO.4 AND 5 , WHICH RELATE TO THE COMPUTATION OF IN TEREST UNDER 234B AND 234C OF THE ACT, THE ASSESSEE IS NOT HAPPY WITH THE KIND OF ADJUDICATION GIVEN BY THE CIT (A) AND FAIRLY MENTIONED THAT THESE ISSUES SHOULD ALSO REVISIT THE AO FOR DECIDING THEM AFRESH IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN T HE CASE OF DEUTSCHE BANK A.G VS. DDIT VIDE ITA NO.1668/M/2010 (AY 2005 - 2006) DATED 10.4.2013, WITH REGARD TO INTEREST U/S 234B, AND ANOTHER DECISION OF THE ITAT, CHANDIGARH BENCH IN THE CASE OF JCIT VS. ARIHANT INDUSTRIES LTD [2005] 96 ITD 464 (CHD.), WHIC H IS RELEVANT FOR THE INTEREST U/S 234C OF THE ACT. IN THIS REGARD, AO IS DIRECTED TO ATTEND TO ALL THE ARGUMENTS TO BE MADE DURING THE SET ASIDE PROCEEDINGS BY THE ASSESSEE BY WAY OF PASSING A SPEAKING ORDER. ACCORDINGLY, GROUNDS NO.4 AND 5 ARE ALLOWED FOR STATISTICAL PURPOSES . 6. CONSIDERING THE GENERAL AND CONSEQUENTIAL NATURE OF THE OTHER GROUNDS RAISED IN THIS APPEAL, THEY ARE DISMISSED AS CONSEQUENTIAL OR GENERAL IN NATURE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONO UNCED IN THE OPEN COURT ON 3 1 S T JANUARY, 2014. S D / - S D / - (SANJAY GARG ) (D. KARUNAKARA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 3 1.1.2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// 4 / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI