ACIT RG 12(1), MUMBAI V. MUMBAI PORT TRUST, MUMBAI

ITA 4806/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62250 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 15-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Assessee Lawyers: H K
• Keywords: Depreciation; Opportunity of being heard
• Section: 143(3); 12AA; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI RAJENDRA SINGH (A.M.) ITA NO. 4806/MUM /2011 ASSESSMENT YEAR : 2004-05 ITA NO. 4807/MUM /2011 ASSESSMENT YEAR : 2005-06 ITA NO. 4808/MUM /2011 ASSESSMENT YEAR : 2007-08 ADIT (E) - I (1), ROOM NO. 504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI 12. VS. MUMBAI PORT TRUST, PORT BHAVAN, SHOORJI VALLABHDAS MARG, BALLARD PIER, MUMBAI 400 001. PAN : AAATM5001D (APPELLANT) (RESPONDENT) REVENUE BY : SHRI PRAVIN VARMA ASSESSEE BY : SHRI H.K. PANDA DATE OF HEARING 24.4.2012 DATE OF PRONOUNCEMENT 27.4.2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THESE THREE APPEALS PREFERRED BY THE REVENUE ARE DI RECTED AGAINST THE SEPARATE ORDERS DATED 14-2-2011 FOR ASSESSMENT YEARS 2004-05 AND 2005-06 AND DTD. 7-2-2011 FOR A.Y. 2007-08 PASSED B Y THE LD. CIT(A). SINCE FACTS ARE IDENTICAL AND ISSUE INVOLVED IS COM MON, ALL THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE. ITA NO. 4806 TO 4808/MUM/2011 MUMBAI PORT TRUST. 2 2. BRIEFLY STATED FACTS OF THE CASE EXTRACTED FROM ITA NO. 4806/MUM/2011 FOR A.Y. 2004-05 ARE THAT THE ASSESSE E FILED RETURN OF INCOME DECLARING A LOSS OF RS. 86,21,24,565/-. THE ASSESSMENT U/S 143(3) INCOME TAX ACT, 1961 (THE ACT) WAS COMPLETED ON 21-12-2006 ASSESSING LOSS AT RS. 32,05,83,570/-. THEREAFTER, ORDER U/S 154 OF THE ACT HAS BEEN PASSED ON 27-08-2008 REVISING THE LOSS TO RS. 30,97,91,020/-. SUBSEQUENTLY, THE A.O. FROM THE DE PRECIATION CHART OBSERVED THAT THE DEPRECIATION IN RESPECT OF RAILWA YS PERMANENT WAY WAS CLAIMED AT 25% BY INCLUDING THE SAME IN THE BLO CK OF PLANT AND MACHINERY. HOWEVER, THE SAME WAS NOT FOUND JUSTIFI ABLE BY THE A.O. BY APPLYING THE ANALOGY OF ROADS FOR VEHICLES. ACCORD ING TO THE A.O., THE RAILWAYS ESTABLISHMENT FALLS UNDER THE HEAD BUILDI NG AS AGAINST PLANT AND MACHINERY CLAIMED BY THE ASSESSEE. ACCORDINGL Y, THE A.O. ISSUED NOTICE U/S 154 OF THE ACT DTD. 17-12-2008 PROPOSING TO DISALLOW THE EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE ON RAIL WAYS PERMANENT WAY. IN COMPLIANCE, THE ASSESSEE FILED WRITTEN SUBM ISSION WHICH IS REPRODUCED UNDER:- PERMANENT WAYS OF MBPT RAILWAYS ARE CONSIDERED AS P&M, SINCE THEY ARE EQUIPMENTS LAID OVER THE LAND FACILITATE RAILWA Y MOVEMENT. THE PERMANENT WAY IS DISTINCT FROM THE LAND WAY, AND EV EN IF NOT PAVED CAN FACILITATE MOVEMENT OF GOODS. WHEREAS, THE EQUIPME NT SUCH AS RAILS HAS TO BE MOUNTED ON THE FLOOR TO TAKE THE LOAD OF THE TRAIN AND THEY WEAR OUT FASTER, HENCE, TREATMENT IS IN ORDER. ITA NO. 4806 TO 4808/MUM/2011 MUMBAI PORT TRUST. 3 HOWEVER, THE A.O. DID NOT ACCEPT THE ASSESSEES EXP LANATION. IN THE OPINION OF THE A.O., THE RAILWAY PERMANENT WAY IS A ROAD OVER WHICH TRAINS RUN, THEREFORE, HE DISALLOWED THE EXCESS CLA IM OF DEPRECIATION AND ALLOWED ONLY 10% DEPRECIATION THEREON. 3. ON APPEAL, THE LD. CIT(A) FOLLOWING THE DECISION IN THE CASE OF KALINGA TUBES LTD. VS. CIT (1973) 96 ITR 20 (ORI) A ND CIT VS. BIRLA JUTE & INDUSTRIES LTD. (2003) 260 ITR 55 (CAL) WHILE OBS ERVING THAT THE APPELLANT HAS RIGHTLY CLASSIFIED THE RAILWAY SIDING UNDER THE HEAD PLANT & MACHINERY, DIRECTED THE A.O. TO ALLOW THE DEPREC IATION TO THE APPELLANT AS PER INCOME TAX RULES AND ALLOWED THE APPEAL OF T HE ASSESSEE. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWING COMMON GROUND S OF APPEAL:- 1. WHETHER ON THE FACTS OF THE CASE, AND IN LAW, THE L D. CIT(A) ERRED IN HOLDING THAT THE RAILWAY SIDING FALLS UNDER THE HEA D PLANT AND MACHINERY AS AGAINST CORRECTLY HOLDING IT AS BUIL DING. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(APPEALS)-I, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 5. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AGR EED THAT THE TRIBUNAL IN THE QUANTUM APPEALS FILED BY THE ASSESS EE FOR THE ABOVE ASSESSMENT YEARS HAS SET ASIDE THE ASSESSMENT TO TH E FILE OF THE A.O. TO EXAMINE THE ASSESSEES CLAIM OF EXEMPTION AS A RESU LT OF REGISTRATION U/S ITA NO. 4806 TO 4808/MUM/2011 MUMBAI PORT TRUST. 4 12AA NOW AVAILABLE TO THE ASSESSEE AFRESH, THEREFOR E, THE ISSUE MAY BE DECIDED ACCORDINGLY. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THERE IS NO DISPUTE THAT THE A.O. FOR THE ASSESSMENT YEARS 2004 -05 & 2005-06 HAS PASSED THE ORDER U/S 154 REDUCING THE DEPRECIATION FROM 25% TO 10% ON RAILWAY PERMANENT WAY. WE FURTHER FIND THAT THE A.O . IN THE ASSESSMENT ORDER FOR THE A.Y. 2007-08 HAS PASSED THE ORDER U/S 143(3) OF THE ACT WHEREIN HE HAS ALLOWED THE DEPRECIATION ON RAILWAY PERMANENT WAY AT 10% AS AGAINST 25% CLAIMED BY THE ASSESSEE. WE FURT HER FIND THAT ON APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASS ED U/S 154, THE LD. CIT(A) BY FOLLOWING THE DECISIONS OF KALINGA TUBES LTD. (SUPRA) AND BIRLA JUTE & INDUSTRIES LTD. (SUPRA) HAS ALLOWED THE DEPR ECIATION AS CLAIMED BY THE ASSESSEE. WE FURTHER FIND THAT THE TRIBUNAL IN THE QUANTUM APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2004-05 AND 2005-06 IN ITA NOS. 6765 & 6791/MUM/2008 ORDER DTD. 27-01-2011 ON THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE THAT THE A.O. ERRED IN NOT ALLOWING EXEMPTION EVEN THOUGH THE APPELLANTS INCOME IS EXE MPT U/S 11 OF THE INCOME TAX ACT AFTER ADMITTING THE SAME WHILE RELYI NG ON THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT IN CIT VS. U. P. FOREST CORPORATION, 230 ITR 945 HAS HELD VIDE PARA 9 OF HI S ORDER DATED 27-1-2011 AS UNDER: ITA NO. 4806 TO 4808/MUM/2011 MUMBAI PORT TRUST. 5 . WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO TH E FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE M ATTER, ON MERITS, FOR ELIGIBILITY TO TAX EXEMPTION AS A RESULT OF THE REG ISTRATION UNDER SECTION 12AA NOW AVAILABLE TO THE ASSESSEE AND IN THE LIGHT OF THE REQUISITE AUDIT REPORT AND OTHER DOCUMENTS NOW FILED BY THE ASSESSE E. WHILE DOING SO, THE ASSESSING OFFICER SHALL DECIDE THE MATTER BY WA Y OF A SPEAKING ORDER, IN ACCORDANCE WITH THE LAW AND AFTER GIVING A FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE. WE FURTHER FIND THAT THE TRIBUNAL IN ASSESSEES APP EAL IN ITA NO. 4430/MUM/2011 FOR A.Y. 2007-08 ORDER DTD. 20-04-201 2 WHILE FOLLOWING THE ORDER FOR ASSESSMENT YEARS 2004-05 AND 2005-06 (SUPRA) HAS SET ASIDE THE ASSESSMENT TO THE FILE OF THE A.O. WITH A DIRECTION TO PASS FRESH ASSESSMENT ORDER AFTER COMPUTING THE INCOME STRICTL Y IN VIEW OF THE PROVISIONS CONTAINED IN SECTIONS 11 TO 13 OF THE AC T AND TO GRANT EXEMPTION AS PER THE SECTION 11 WHILE COMPUTING THE INCOME AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE. 7. THAT BEING SO, WE ARE OF THE VIEW THAT SINCE THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 HAVE BEEN SET ASIDE TO THE FILE OF THE A.O., THEREFORE, THE ORDERS PASSED BY THE A.O. U/S 154 FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 DO NOT SURVIVE AND CONSEQUENTLY THE APPEALS FILED BY THE REVENUE AGAINST THE SAID O RDERS BECOME INFRUCTUOUS. AS REGARDS TO THE APPEAL FOR THE A.Y. 2007-08, SINCE THE TRIBUNAL HAS SET ASIDE THE ASSESSMENT TO THE FILE O F THE A.O., WE RESPECTFULLY FOLLOWING THE SAME, SET ASIDE THE ISSU E TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIREC TION GIVEN BY THE TRIBUNAL (SUPRA) AND ACCORDING TO LAW AFTER PROVIDI NG REASONABLE ITA NO. 4806 TO 4808/MUM/2011 MUMBAI PORT TRUST. 6 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GR OUNDS TAKEN BY THE REVENUE FOR THE A.Y. 2007-08 ARE, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8. IN THE RESULT, APPEALS FOR THE A.Y. 2004-05 AND 2005-06 ARE DISMISSED AND THE APPEAL FOR A.Y. 2007-08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THIS 27 TH DAY OF APRIL, 2012. SD/ - (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/ - (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 27 TH APRIL , 2012. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 1, MUMBAI 4. COMMISSIONER OF INCOME TAX 1, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH B, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI