ACIT, UDAIPUR V. M/s. Shree Rajasthan Syntex Ltd., UDAIPUR

ITA 476/JODH/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4808 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 18-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K DAS
• Assessee Lawyers: MAHESH GAHLOT
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3); 115JB; 37(1); 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, JODHPUR BEFORE SHRI B.P JAIN ACCOUNTANT MEMBER AND SHRI PARTHA SAR A THI CHAUDHURY JUDICIAL MEMBER ITA NO.476/JODH/2014 ASSESSMENT YEAR:2010 - 11 THE ACIT VS. M/S. SHREE RAJASTHAN SYTEX LTD. CIRCLE - 2 PULLA, BHUWANA ROAD, N.H - 8 UDAIPUR UDAIPUR PAN NO. AACCS8784L (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. MAHESH GAHLOT DEPARTMENT BY : SH. A.K. DAS DATE OF HEARING : 30/11/2016 DATE OF PRONOUNCEMENT : 30/11/2016 ORDER PER PARTHA SARATHI CHAUDHURY , JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) DT. 10/07/2014, ON THE FOLLOWING GROUNDS OF APPEAL : 1. DELETING THE DISALLOWANCES OF CLAIM OF REVENUE EXPENDITURE AMOUNTING TO RS. 1,55,74,3 13/ - MADE UNDER SECTION 37(1) OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT RING FRAME MACHINE, SPEED FRAME MACHINE ETC PURCHASED UNDER TUF SCHEME WERE MEANT FOR EXPANSION OR UPGRADATION OF THE PLANT BY PURCHASE OF NEW MACHINERY AND NOT AT ALL MEANT F OR REPAIR AND MAINTENANCE OF THE MACHINERY AND DESPITE THE FACTS THAT SAME WAS RIGHTLY TREATED AS CAPITAL ASSET BY THE ASSESSEE COMPANY ITSELF IN ITS AUDITED BOOKS OF ACCOUNTS. 2 2. DELETING THE DISALLOWANCES OF RS. 53,17,548/ - MADE UNDER SECTION 40(A)(IA) OF THE I.T. ACT IGNORING THE FACT THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX ON THE PAYMENTS MADE TO CLEARING AND FORWARDING AGENTS AS PER PROVISIONS OF SECTION 194C OF THE I.T. ACT, READ WITH BOARDS CIRCULAR NO. 715 DATED 08/08/1995 AND MOREOVER THE C&F AGENT IS NEITHER NON - RESIDENT OWNER NOR AN AGENT ACTING ON BEHALF OF A NON RESIDENT SHIP OWNER AND THEREBY CIRCULAR NO. 723 IS NOT AT ALL APPLICABLE. 3. DIRECTING THE AO TO ALLOW DEDUCTION UNDER SECTION 80IA/80IB OF THE I.T ACT ON POWER PLANT AND UNIT NO. 2 OF POLYPROPYLENE MULTI FILAMENT YARN AND UNIT NO. 3 OF SPUN YARN DESPITE THE FACT THAT NO SEPARATE UNIT WISE AUDIT REPORT WERE FILED BEFORE THE AO FOR CLAIMING SUCH DEDUCTION. 2. THE BRIEF FACTS APPEARING IN THIS CASE ARE THAT THE ASSESSEE COMPANY IS A MANUFACTURING UNIT OF SPUN YARN AND FILAMENT YARN IN THE RELEVANT A.Y., RETURN OF INCOME FILED BY THE ASSESSEE ON 27/09/2010 DECLARING TOTAL INCOME AT RS. ( - ) 71,19,289/ - . THE CASE WAS SELECTED FOR SCRUTINY WHEREBY NOTICE UNDER SECTION 143(2) OF THE A CT WAS ISSUED ON 29/08/2011, SERVED ON THE ASSESSEE FIXING FOR HEARING ON 13/09/2011. DURING THE ASSESSMENT PROCEEDING THE LD. AR OF THE ASSESSEE FURNISHED BOOKS OF ACCOUNT AND VARIOUS DETAILS AS AND WHEN CALLED FOR ALONGWITH WRITTEN SUBMISSION AND DETAI LS / CLARIFICATIONS WHICH WERE EXAMINED ON TEST CHECKED BASIS. THE ASSESSEE HAS DECLARED GROSS TOTAL INCOME OF RS. ( - ) 71,19,289/ - BEFORE SET OFF OF BROUGHT FORWARD LOSSES. THE ASSESSEE ALSO CLAIMED RS. 46,30,58,410/ - BROUGHT FORWARD LOSSES CARRIED FORWARD TO NEXT YEAR AND ALSO CLAIMED RS. 1,66,34,016/ - LONG TERM CAPITAL LOSS TO BE CARRIED FORWARD (A.Y. 2006 - 07). THE ASSESSEE HAS DECLARED BOOK PROFITS UNDER SECTION 115JB AT RS. 9,87,129/ - AND OFFERING RS. 1,52,511/ - AS MAT TAX UNDER SECTION 115JB. 3 3. THE L D. AO ASSESSED THE CASE AND PASSED AN ORDER UNDER SECTION 143(3) OF THE ACT ON 29/08/2011 AT TOTAL INCOME OF RS. NIL. 4. THAT, WITH REGARD TO FIRST GROUND OF APPEAL WHICH RELATES TO THE DELETION OF DISALLOWANCE OF CLAIM OF REVENUE EXPENDITURE AMOUNTING TO RS. 1,55,74,313/ - UNDER SECTION 37(1) BEING THE REPLACEMENT OF MACHINERY AS SHOWN IN ANNEXURE - IV OF THE TAX AUDIT REPORT RELATED TO COMPUTATION OF DEPRECIATION. 5. THE LD. AO ASKED THE ASSESSEE TO JUSTIFY THE ALLOWABILITY OF THESE EXPENSES. THE AO IN HIS ORDER WHILE CONSIDERING THE WRITTEN REPLY OF THE ASSESSEE DID NOT ALLOW THE AMOUNT OF RS. 1,32,38,166/ - CLAIMED AS REVENUE EXPENDITURE FOR REPLACEMENT OF ASSETS, HOWEVER TREATING THE SAME AS CAPITAL EXPENDITURE THE DEPRECIATION @ 15% AMOUNTING TO RS. 23,3 6,147/ - WAS ALLOWED AND RS. 1,32,38,166/ - WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE LD.CIT (A) IN HIS ORDER HELD THAT THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE IN RESPECT OF THESE GROUNDS ARE SAME AND IDENTICAL TO THE EARLIER ASSESSMENT YEARS AND THE MATTER IS COVERED IN THE ASSESSEES OWN CASE I.E; THE EXPENSES WERE ALLOWED AN D HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE FOR THE EARLIER ASSESSMENT YEARS I.E; 2004 - 05, 2005 - 06, 2007 - 08 AND 2008 - 09 BY THE LD. CIT(A) UDAIPUR VIDE HIS ORDER DT. 23/03/2007 IN APPEAL NO. 343/IT/UDR/2006 - 07 DT. 31/03/2008 IN APPEAL NO. 360/IT/UDR/2007 - 0 8 AND DATED 31/03/2010 IN APPEAL NO. 119/IT/UDR/2009 - 10 RESPECTIVELY. FURTHER THE ISSUE HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY HONBLE ITAT JODHPUR BENCH IN ITA NOS. 407 & 4 540/JU/2007 (A.Y. 2004 - 05), ITA NO. 36/JU/2008 (A.Y. 2005 - 06), DECIDED THIS GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE VIDE THEIR ORDER DT. 09/10/2013. 7. THAT ON THESE GROUNDS AND DISCUSSIONS THE LD. CIT(A) HELD THAT THERE IS NO DEVIATION FROM THE ABOVE DECISION AND ACCORDINGLY THE ADDITION OF RS. 1,32,38,166/ - WAS DELETED. 8. WE HAVE PERUSED THE RECORDS OF THE CASE, FACTS AND CIRCUMSTANCES AND THE RIVAL CONTENTION AND WE FIND IN THE PAPER BOOK FILED BEFORE US THAT IT IS A COVERED MATTER, THE ISSUE BEING COVERED IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS I.E; 20 04 - 05, 2005 - 06,2007 - 08 AND 2008 - 09. IN THE VARIOUS APPEALS ORDERS AS MENTIONED IN THE ORDER OF THE LD. CIT(A) WHICH IS ON RECORD. 9. THAT IN THE PAPER BOOK WE ALSO FOUND THE COORDINATE BENCH OF ITAT DECISION IN ITAT NO. 407 & 540/JU/2007 FOR A.Y. 2004 - 05, ITA NO. 36/JU/2008 FOR A.Y. 2005 - 06 THIS ISSUE BEING DECIDED IN FAVOUR OF THE ASSESSEE AND THIS FACT IS ALSO ON RECORD. THEREFORE WE ARRIVE AT OUR CONSIDERED VIEW THAT THERE IS NO INFIRMITY IN THE EARLIER DECISION AND ACCORDINGLY WE SUSTAIN THIS DELETION AND UPHELD THE ORDER OF THE LD. CIT(A). 10. THIS GROUND OF APPEAL OF THE REVENUE IS THEREFORE DISMISSED. 11. THE NEXT GROUND OF APPEAL RELATES TO DELETION OF DISALLOWANCE OF RS. 53,17,548/ - MADE UNDER SECTION 40(A)(IA) OF THE ACT. THE LD. AO HAS MADE ADDI TION UNDER SECTION 40(A)(IA) OF THE ACT OF RS. 53,17,548/ - AS THE ASSESSEE HAS FAILED TO DEDUCT TDS ON PAYMENT MADE TO CLEARING AND FORWARDING AGENTS. 5 12. THE LD. CIT(A) IN HIS ORDER HELD WHILE CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE DECISION OF DIFFERENT HIGHER APPELLATE AUTHORITIES COURTS AND THE FINDINGS OF THE LD. AO THAT IN FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE ARE SAME AND IDENTICAL TO THE EARLIER ASSESSMENT YEARS AND THIS MATTER IS COVERED IN THE ASSESSEES OWN CASE AND HAS BE EN DECI DED IN FAVOUR OF THE ASSESSEE FOR ASSESSMENT YEARS 2005 - 06, 2006 - 07 AND 2007 - 08 VIDE ORDER NO. 360/IT/UDR/2007 - 08 DT. 31/03/2008 AND IN APPEAL NO. 119/IT/UDR/2009 - 10 RESPECTIVELY. THIS GROUND OF APPEAL WAS EVEN ALLOWED IN ORDER OF ITAT IN APPEAL NO. 309/IT /UDR/2011 - 12 DT. 12/09/2013 FOR A.Y. 2009 - 10. THAT FURTHER THE HONBLE JURISDICTIONAL ITAT JODHPUR IN ITA NOS. 407 & 540/JU/2007( A.Y. 2004 - 05), ITA NO. 36/JU/2008(A.Y. 2005 - 06), HAS DECIDED THIS GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE VIDE THEIR ORDER DT. 09/10/2013 AND THE LD. CIT(A) THEREBY OPINED THAT THERE IS NO REASON TO DEVIATE FROM THE AFORESAID DECISION AND ACCORDINGLY THE ADDITION OF RS. 53,17,548/ - WAS DELETED. 13. WE HAVE PERUSED THE CASE RECORDS, FACTS AND CIRCUMSTANCES OF THE CASE AND WE F IND IN THE PAPER BOOK AT THE TIME OF THE HEARING THAT NOT ONLY IN THE EARLIER ASSESSMENT YEARS THIS ISSUE WAS DECIDED IN VARIOUS APPEALS IN FAVOUR OF THE ASSESSEE BUT EVEN THE COORDINATE BENCH OF ITAT JODHPUR IN ITA NOS. 407 & 540/JU/2007 FOR A.Y. 2004 - 05 AND IN ITA NO. 36/JU/2008 FOR A.Y. 2005 - 06 HAS DECIDED THIS GROUND IN FAVOUR OF THE ASSESSEE VIDE THEIR ORDER DT. 09/10/2013. WE FIND NO INFIRMITY ON THE DECISION OF THE LD. CIT(A) AND WE FOLLOW THE DECISION OF THE COORDINATE BENCH OF ITAT, JODHPUR IN ASSE SSEES OWN CASE AS HAS BEEN 6 DECIDED EARLIER AND HENCE THE AMOUNT OF RS. 53,17,548 - HAS DELETED BY THE LD. CIT(A) IS SUSTAINED. THE APPEAL OF THE REVENUE ON THIS GROUND IS THEREFORE DISMISSED. 14. THE THIRD GROUND OF APPEAL DOES NOT HOLD GOOD ANY MORE HEREIN SINCE WE HAVE ALREADY DECIDED THE FIRST TWO GROUND IN FAVOUR OF THE ASSESSEE AS HAS BEEN DECIDED BY THE COORDINATE BENCH OF ITAT JODHOPUR. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/ - SD/ - (B.P. JAIN) ( PARTHA SARATHI CHAUDHURY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30/11/2016 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR