SHOLAPUR ORGANICS P.LTD, MUMBAI V. ITO 8(3)(1), MUMBAI

ITA 4919/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84030 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-10-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 27-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAV KUMAR
• Assessee Lawyers: ANUJ KISNADWALA
• Keywords: Depreciation; Tax effect; Condonation of delay
• Section: 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI . . , . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI R.C.SHARMA , ACCOUNTANT MEMBER ITA NO.4919/MUM/2013 (A.Y.2010-11) SHOLAPUR ORGANICS PVT. LTD., FP-145, RAM MANDIR, VILE PARLE (E), MUMBAI 400 057 PAN: AAFCS 1311J (APPELLANT ) VS. THE INCOME TAX OFFICER 8(3)(1), AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 (RESPONDENT) APPELLANT BY : SHRI ANUJ KISNADWALA RESPONDENT BY : SHRI LAV KUMAR DATE OF HEARING : 22/10/2014 DATE OF PRONOUNCEMENT : 22 /10/2014 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST ORDER PASSED BY LD. CIT(A)-18 MUMBAI DATED 4/4/2013 FOR ASSESSMENT YEAR 2010- 11. GROUNDS OF APPEAL READ AS UNDER: 1) DISALLOWANCE OF DEPRECIATION IN THE COMPUTATION OF MINIMUM ALTERNATE TAX (MAT) A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 175,882 IN THE CALCULATION OF MAT UNDER SECTION 115JB BEING DEPRECIATION (ON THE ASSE TS READY TO USE) DEBITED TO PROFIT & LOSS A/C. THE DEPRECIATION IS CORRECTLY CL AIMED ON THE ASSETS READY TO USE IN ACCORDANCE WITH THE COMPANIES ACT, 1956 AND THER EFORE, DISALLOWANCE OF RS 175,882 NEEDS TO BE DELETED. B WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A ) ERRED IN IGNORING THE SETTLED LAW THAT THE ASSESSING OFFICER CANNOT OPEN THE ACCO UNTS WHICH HAVE BEEN DRAWN IN ACCORDANCE WITH THE COMPANIES ACT,1956 AND ACCEP TED BY THE REGISTRAR. ACCORDINGLY, DISALLOWANCE OF DEPRECIATION DEBITED T O P&L A/C DRAWN IN ITA NO.4919/MUM/2013 (A.Y.2010-11) 2 ACCORDANCE WITH THE COMPANIES ACT, 1956 IS BAD IN L AW AND NEEDS TO BE DELETED. 2. THE APPEAL IS BELATED BY 20 DAYS. AN APPLICATI ON FOR CONDONATION OF DELAY HAS BEEN FILED ALONGWITH AN AFFIDAVIT STATING THE REASON THAT AFTER THE ORDER PASSED BY LD.CIT(A) RESULTANT TAX EFFECT WAS ONLY A SUM OF RS.26,382/- WHICH WAS NOT CONSIDERED TO BE SIGNIFICANT AND IN ORDER TO SAVE LITIGATION COST AND TO BUY PEACE, IT WAS DECIDED TO PAY TAX LIABILI TY WITHOUT CONSIDERING THE ELEMENT OF PENALTY. LATER ON C.A OF THE ASSESSEE ADVISED THAT APPEAL SHOULD BE FILED AS CONCEALMENT PENALTY MAY BE LEVIED AND ACCORDINGLY APPEAL WAS FILED. IT IS SUBMITTED THAT THE DELAY IS NOT INTEN TIONAL, THEREFORE, SHOULD BE CONDONED. 3. AFTER HEARING BOTH THE PARTIES AND AFTER CONSIDE RING THE REASONS STATED, WE ARE OF THE OPINION THAT DELAY SHOULD BE CONDONED . ACCORDINGLY, DELAY IS CONDONED AND WE PROCEED TO DECIDE THE APPEAL ON MER ITS. 4. WHILE COMPUTING BOOK PROFIT THE AO ADDED A SUM O F RS.1,75,882/- BEING DEPRECIATION ON TRADE MARK AND COPY RIGHTS AS THE S IMILAR AMOUNT WAS ADDED BY THE ASSESSEE WHILE COMPUTING NORMAL INCOME ON AC COUNT OF NON-USER OF THE ASSET. IT IS THE CASE OF THE ASSESSEE THAT THOUGH DISALLOWANCE WAS CALLED FOR UNDER THE NORMAL PROVISIONS BUT ACCORDING TO THE PR OVISIONS REGULATING MAT NO SUCH DISALLOWANCE IS PERMISSIBLE. IT WAS SUBMITTED THAT IF THE ACCOUNTS OF THE ASESSEE ARE AUDITED AS PER PART-II & III OF THE SCH EDULE-VI OF COMPANIES ACT, THEN AO HAS NO POWER TO GO BEYOND THE PERMISSIBLE ADDITIONS AND REDUCTIONS AS DESCRIBED IN EXPLANATION UNDER SECTION 115JB OF THE ACT. IT WAS ALSO SUBMITTED THAT AS PER EXPLANATION TO SECTION 115JB IF ANY AMOUNT OF DEPRECIATION IS ADDED THEN THE SAME IS TO BE REDUCE D TO THE EXTENT THE DEPRECIATION DEBITED TO P&L ACCOUNT AND ONLY EXCEP TION IS THAT DEPRECIATION SHOULD NOT BE ON ACCOUNT OF REVALUATION OF ASSETS. REFERENCE IN THIS REGARD WAS MADE TO CLAUSE(G) OF EXPLANATION -1 AND SUB-CLA USE (IIA) OF EXPLNATION-1 UNDER SECTION 115JB OF THE ACT. IT WAS SUBMITTED T HAT THE SAID DEPRECIATION ITA NO.4919/MUM/2013 (A.Y.2010-11) 3 DEBITED TO P&L ACCOUNT IS NOT ON ACCOUNT OF REVALUA TION OF ASSET, THEREFORE, EVEN IF THE AMOUNT OF DEPRECIATION IS ADDED THEN IT HAS ALSO TO BE REDUCED AS THE SAME HAS BEEN DEBITED TO P&L ACCOUNT WHICH WILL NULLIFY EFFECT OF ADDITION. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. AFTER CAREFUL CONSIDERATION, WE ARE O F THE OPINION THAT THE SAID AMOUNT OF DEPRECIATION BELONGS TO TRADE MARK AND C OPY RIGHTS WHICH WAS DEBITED BY THE ASSESSEE TO THE P&L ACCOUNT AND ADDE D TO THE NORMAL COMPUTATION ON ACCOUNT OF NON-USER OF THE ASSET. T HE SAID AMOUNT WAS TO BE ADDED AS PER CLAUSE(G) OF EXPLANATION-1 TO SECTION 115JB AND AT THE SAME TIME ACCORDING TO SUB-CLAUSE (IIA) THE SAME WAS ALSO REQ UIRED TO BE REDUCED WHILE COMPUTING BOOK PROFIT AS THE SAME WAS DEBITED TO P& L ACCOUNT AND WAS NOT ON ACCOUNT OF REVALUATION OF ASSET. THEREFORE, WE DIRECT THE AO TO REDUCE SIMILAR AMOUNT I.E. A SUM OF RS.1,75,882/- FROM TH E BOOK PROFIT DETERMINED BY THE AO. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 22/10/20 14 !' # $%& 22/10/2014 ! ' SD/- SD/- ( . . /R.C.SHARMA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; $% DATED 22/10/2014 ITA NO.4919/MUM/2013 (A.Y.2010-11) 4 ()* ()* ()* ()* +*') +*') +*') +*') / COPY OF THE ORDER FORWARDED TO : 1. ,- / THE APPELLANT 2. (.,- / THE RESPONDENT. 3. / ( ) / THE CIT(A)- 4. / / CIT 5. *0' ()% , , / DR, ITAT, MUMBAI 6. '1 2 / GUARD FILE. % % % % / BY ORDER, .*) () //TRUE COPY// 3 33 3 / 4 4 4 4 5 5 5 5 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . ./ VM , SR. PS