DCIT, New Delhi V. M/s. Avichal Buildcon (P) Ltd., Delhi

ITA 4876/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6186 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 19-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 05-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, G.D. AGRAWAL, G.D. AGRAWAL, G.D. AGRAWAL, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT AND AND AND AND SHRI BHAVNESH SAINI SHRI BHAVNESH SAINI SHRI BHAVNESH SAINI SHRI BHAVNESH SAINI, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA ITAITA ITA NO NONO NO . .. . 4876/DEL/2014 4876/DEL/2014 4876/DEL/2014 4876/DEL/2014 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2011 2011 2011 2011 - -- - 12 1212 12 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -4, 4,4, 4, N NN NEW DELHI. EW DELHI. EW DELHI. EW DELHI. VS. VS. VS. VS. M/S AVICHAL BUILDCON (P) LTD., M/S AVICHAL BUILDCON (P) LTD., M/S AVICHAL BUILDCON (P) LTD., M/S AVICHAL BUILDCON (P) LTD., 1711, S.P. MUKHERJEE MARG, 1711, S.P. MUKHERJEE MARG, 1711, S.P. MUKHERJEE MARG, 1711, S.P. MUKHERJEE MARG, DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. PAN : AAFCA6846A. PAN : AAFCA6846A. PAN : AAFCA6846A. PAN : AAFCA6846A. (APPELLANT) (RESPONDENT) ITA ITA ITA ITA NO NONO NO .824/DEL/2015 .824/DEL/2015 .824/DEL/2015 .824/DEL/2015 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2011 2011 2011 2011 - -- - 12 1212 12 M/S AVICHAL BUILDCON M/S AVICHAL BUILDCON M/S AVICHAL BUILDCON M/S AVICHAL BUILDCON PVT. LTD., PVT. LTD., PVT. LTD., PVT. LTD., 1711, S.P. MUKHERJEE MA 1711, S.P. MUKHERJEE MA 1711, S.P. MUKHERJEE MA 1711, S.P. MUKHERJEE MARG, RG, RG, RG, DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. PAN : AAFCA6846A. PAN : AAFCA6846A. PAN : AAFCA6846A. PAN : AAFCA6846A. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -4, 4,4, 4, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : SMT. SUNITA SINGH, CIT - DR. ASSESSEE BY : SHRI R.S. SINGHVI, CA. DATE OF HEARING : 24.01.2019 24.01.2019 24.01.2019 24.01.2019 DATE OF PRONOUNCEMENT : 28.01.2019 28.01.2019 28.01.2019 28.01.2019 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, PER G.D. AGRAWAL, PER G.D. AGRAWAL, PER G.D. AGRAWAL, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT : :: :- -- - THESE CROSS-APPEALS ARE FILED AGAINST THE ORDER OF LE ARNED CIT(A)- XXXIII, NEW DELHI DATED 25 TH APRIL, 2014. 2. SINCE THE ISSUES IN THESE CROSS-APPEALS ARE INTERRELATE D, WE CONSIDER THEM TOGETHER. ITA-4876/D/2014 & 824/D/2015 2 3. THE FACTS OF THE CASE ARE THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED THE RETURN DECLARING LOSS OF `2,48,48, 142/-. SINCE AS PER THE RETURN OF INCOME THE ASSESSEE HAD DECLARED THE LOSS, NO DEDUCTION U/S 80-IC WAS CLAIMED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSE E COMPANY HAS DEMERGED FROM M/S DHARAMPAL SATYAPAL LTD. WITH EF FECT FROM 01.04.2006 BY THE ORDER OF HON'BLE DELHI HIGH COURT DATED 11 TH SEPTEMBER, 2007. BY SUCH DEMERGER, THE ASSESSEE AS WELL AS ABHISAR BUILDWELL PVT.LTD. CAME INTO EFFECT. THE ASSESSING OFF ICER NOTICED THAT M/S DHARAMPAL SATYAPAL LTD. HAVE PURCHASED THE PLANT AND MACHINERY OUT OF DEFERRED GOVERNMENT GRANTS. COST OF SUCH PLANT AND MACHINERY WAS `55.72 CRORES. THE ASSESSING OFFICER WAS OF THE OPINI ON THAT BY VIRTUE OF EXPLANATION-7 TO SECTION 43(1), THE COST O F ASSET SHOULD BE REDUCED BY THE DEFERRED GOVERNMENT GRANTS. HE FOUND THAT SINCE THE ENTIRE ASSETS WERE PURCHASED OUT OF GOVERNMENT GRANTS, T HE ASSESSEE WAS NOT ENTITLED TO ANY DEPRECIATION. ACCORDINGLY, HE DISALLOWED THE DEPRECIATION CLAIMED BY THE ASSESSEE AT `3,96,19,664/-, WHICH RESULTED IN THE ASSESSMENT OF TOTAL INCOME AT `1,47,71,522/-. O N APPEAL, THE ASSESSEE CHALLENGED THE DISALLOWANCE OF DEPRECIATION. L EARNED CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE A ND THEREFORE, THE ASSESSEE IS IN APPEAL VIDE ITA NO.824/DEL/2015. BEF ORE THE LEARNED CIT(A), THE ASSESSEE CLAIMED DEDUCTION U/S 80IC AND ALSO FILED THE AUDIT REPORT IN FORM 10CCB. LEARNED CIT(A) DIR ECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80IC AS PER LAW. THE REVENUE IS IN APPEAL AGAINST THIS DIRECTION OF THE LEARNED CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PER USED THE MATERIAL PLACED BEFORE US. SO FAR AS THE ASSESSEES APPEA L IS CONCERNED, IT IS STATED BY THE LEARNED COUNSEL THAT TH IS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIO N OF THE ITAT IN THE CASE OF ABHISAR BUILDWELL PVT.LTD. VIDE ITA NO .823/DEL/2015. HE ITA-4876/D/2014 & 824/D/2015 3 STATED THAT ABHISAR BUILDWELL PVT.LTD. WAS ALSO DEMERGE D FROM M/S DHARAMPAL SATYAPAL LTD. BY THE SAME ORDER OF HONBLE HIGH COURT. THE ASSESSING OFFICER HAS DISALLOWED THE DEPRECIATION IN THE CASE OF ABHISAR BUILDWELL PVT.LTD. ALSO WHICH WAS DIRECTED TO BE ALLOWED BY THE ITAT FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. MEGHALAYA STEELS LTD. [2016] 383 ITR 217 (SC). HE , THEREFORE, STATED THAT THE CLAIM OF DEPRECIATION MAY BE ALLOWED. 5. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE ASSESSING OFFICER. SHE FURTHER STATED THAT THE DEMERGER TOOK PLACE IN THE YEAR 2006-07 WHILE THE YEAR UNDER CONSIDERATION IS 2011-12. HOW THE DEPRECIATION CAN BE CLAIMED AND ALLOWED ON ACTU AL COST OF DEMERGED ASSETS. IT SHOULD HAVE BEEN CLAIMED ON WDV. LEARNED COUNSEL WAS NOT READILY ABLE TO STATE WHAT HAPPENED IN THE PRECEDING FOUR YEARS SO FAR AS THE ALLOWABILITY OF DEPRECIATION IS CONCERNED. 6. AFTER CONSIDERING THE FACTS OF THE CASE AND SUBMISSION S OF BOTH THE SIDES, WE DEEM IT APPROPRIATE TO SET ASIDE THE ORDE RS OF THE AUTHORITIES BELOW ON THIS POINT AND RESTORE THE MATTE R TO THE FILE OF THE ASSESSING OFFICER. ADMITTEDLY, DEMERGER TOOK PLACE IN THE YEAR 2006 AND THEREAFTER WHETHER THE DEPRECIATION IS TO BE ALL OWED ON THE ACTUAL COST OF DEMERGED ASSETS OR THE COST IS TO BE REDUCED BY A NY GOVERNMENT GRANT RECEIVED BY THE DEMERGED COMPANY S HOULD HAVE BEEN EXAMINED IN THE ASSESSMENT YEAR 2007-08 AND THEREA FTER, YEAR AFTER YEAR, DEPRECIATION IS TO BE ALLOWED ON WDV. T HESE FACTS ARE NOT AVAILABLE ON RECORD. WE, THEREFORE, DIRECT THE ASSESSI NG OFFICER TO EXAMINE WHAT HAPPENED IN THE PRECEDING YEARS. IF IN THE PRECEDING YEARS THE DEPRECIATION WAS NOT CLAIMED OR THIS ISSUE WAS NOT CONSIDERED AND THE FACTS OF THE CASE WARRANT THE CONSID ERATION OF THIS ISSUE IN THE YEAR UNDER CONSIDERATION, THEN ASSESSING OFFI CER WILL CONSIDER THE SAME IN THE LIGHT OF THE DECISION OF HON BLE APEX COURT IN ITA-4876/D/2014 & 824/D/2015 4 THE CASE OF MEGHALAYA STEELS LTD. (SUPRA) AND ALSO THE DECISION OF ITAT IN THE CASE OF ABHISAR BUILDWELL PVT.LTD. VIDE ITA NO .823/DEL/2015. IF THE CLAIM OF DEPRECIATION OF THE ASSESSEE IS ALLOWED, TH EN THE ASSESSED INCOME WILL TURN INTO NEGATIVE INCOME AND THERE WIL L BE NO QUESTION OF CLAIM U/S 80IC WHICH WILL RENDER THE REVENUES APPEAL ACADEMIC. IF AT ALL THE ASSESSING OFFICER TAKES THE DECISION TO DISALLOW T HE DEPRECIATION, THEN HE WILL CONSIDER THE CLAIM OF DED UCTION U/S 80IC AS PER THE DIRECTION OF THE LEARNED CIT(A) IN PARAGRAP H 5.5 OF HIS ORDER, WHICH READS AS UNDER:- 5.5 CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I ADMIT THE AUDIT REPORT IN FORM 10CCB AS FRESH EVIDENCE AND THE SAME HAS BEEN EXAMINED BY THE ASSESSING OFFICER ON MERITS AS WELL. NO FURTHER OPPORTU NITY IS REQUIRED AS SUCH. I HAVE CONSIDERED THE JUDICIAL PRONOUNCEMENT RELIED BY LD. AR THAT THE AUDIT REPOR T IN FORM 10CCB CAN BE SUBMITTED BEFORE THE FIRST APPELLAN T AUTHORITY SPECIALLY UNDER THE CIRCUMSTANCES WHEN LOSS WAS CLAIMED IN RETURN OF INCOME WHICH WAS CONVERTED INTO POSITIVE INCOME BY MAKING ADDITION BY THE ASSESSING OFFICER. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S 80IC AS PER LAW TREATING THAT THE REQUIREMENT OF FILING AUDIT REPORT IN FORM NO.10CCB IS MET. 7. WE ENTIRELY AGREE WITH THE ABOVE DIRECTION OF LE ARNED CIT(A). THE SAME IS UPHELD. 8. IN THE RESULT, BOTH THE APPEALS ARE DEEMED TO BE A LLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 28.01.2019. SD/- SD/- (BHAVNESH SAINI (BHAVNESH SAINI (BHAVNESH SAINI (BHAVNESH SAINI ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT VK. ITA-4876/D/2014 & 824/D/2015 5 COPY FORWARDED TO: - 1. REVENUE : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -4, NEW DELHI. 4, NEW DELHI. 4, NEW DELHI. 4, NEW DELHI. 2. ASSESSEE : M/S AVICHAL BUILDCON PVT. LTD., M/S AVICHAL BUILDCON PVT. LTD., M/S AVICHAL BUILDCON PVT. LTD., M/S AVICHAL BUILDCON PVT. LTD., 1711, S.P. MUKHERJ 1711, S.P. MUKHERJ 1711, S.P. MUKHERJ 1711, S.P. MUKHERJEE MARG, DELHI EE MARG, DELHI EE MARG, DELHI EE MARG, DELHI 110 006. 110 006. 110 006. 110 006. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR