Income Tax officer -2, Ratlam V. Shri Rahul Chaprod, Prop.M/s Rahul food Industries, Ratlam

ITA 498/Ind/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5141 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-10-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 07-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B J BORICHA
• Assessee Lawyers: S S DESH
• Keywords: Depreciation; Rectification of order
• Section: 143(3); 154

Judgement Text

RAHUL CHAPROD I.T.A.NO.498/IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 498 /IND/2017 ASSESSMENT YEAR 2012-13 REVENUE BY SHRI B.J BORICHA , SR. DR ASSESSEE BY SHRI S.S. DESHPANDE , CA DATE OF HEARING 2 2 . 10 .2018 DATE OF PRONOUNCEMENT 2 4 . 10 .2018 O R D E R PER SHRI MANISH BORAD,AM THIS APPEAL OF REVENUE PERTAINING TO A.Y. 2012-13 I S DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), UJJAIN (IN SHORT CIT(A)), DATED 17.04.2017 WHICH IS ARISING OUT OF THE ORDER U/S 154 OF THE INCOME TAX ACT 1961(HEREIN AFTER CALLED AS THE ACT) FRAMED ON 10.01.2017 BY ITO-2, RATLAM. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APP EAL; INCOME TAX OFFICER - 2, RATLAM VS. SHRI RAHUL CHAPROD, PROP.M/S. RAHUL STEEL FOOD INDUSTRIES, 13, PIPLI BAZAR, JAORA, DIST. RATLAM (M.P) (APPELLANT) (RESPONDENT ) PAN NO. A DNPC0133E RAHUL CHAPROD I.T.A.NO.498/IND/2017 2 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.27,88,184/ - MADE ON ACCOUNT OF INCORRECT DEPRECIATION CLAIMED BY THE ASSESSEE. (NOTE THE CASE IS COVERED UNDER THE EXCEPTIONS ME NTIONED IN PARA 8(C) OF CIRCULAR 21/2015. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE BEING AN INDIVIDUAL CARRIES THE BUSINESS U NDER SOLE PROPRIETORSHIP CONCERN M/S. RAHUL STEEL & FOODS IND USTRIES. THE ORIGINAL RETURN OF INCOME WAS FILED ON 21.09.2012 I N WHICH INCOME OF RS.4,22,050/- WAS DECLARED WHICH WAS SUBSEQUENTL Y REVISED ON 22.09.2012 DECLARING INCOME AT RS.4,90,390/-. CAS E PICKED UP FOR SCRUTINY UNDER CASS AND ASSESSMENT U/S 143(3) OF TH E ACT COMPLETED ON 30.01.2016 ASSESSING INCOME AT RS.6,80 ,390/-. SUBSEQUENTLY THE LD.A.O UNDER THE PROVISIONS OF SEC TION 154 OF THE ACT PASSED AN RECTIFICATION ORDER OBSERVING THAT TH E ASSESSEE HAS WRONGLY CLAIMED DEPRECIATION OF RS.27,88,184/- ON M ACHINERY AND BUILDING REFLECTING IT ONLY IN THE COMPUTATION OF I NCOME BUT IN THE AUDITED BALANCE SHEET NO SUCH CLAIM OF DEPRECIATION HAS BEEN MADE. HE ALSO OBSERVED THAT THIS ACTION OF THE AS SESSEE OF NOT SHOWING THE DEPRECIATION IN THE AUDITED BALANCE SHE ET SHOWS THAT THE ALLEGED FIXED ASSETS HAVE NOT BEEN USED FOR BUS INESS PURPOSES RAHUL CHAPROD I.T.A.NO.498/IND/2017 3 AND ACCORDINGLY DISALLOWED THE CLAIM OF DEPRECIATIO N AT RS.27,88,184/- IN THE ORDER FRAMED U/S 154 OF THE A CT ON 10.01.2017. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD .CIT(A) AND SUCCEEDED AS THE GROUND OF THE ASSESSEE CHANGING TH E ADDITION OF RS.27,88,184/- WAS ALLOWED BY THE LD.CIT(A) OBSERV ING AS FOLLOWS; 4.1 GROUND NO.1 & 2:-THROUGH THESE GROUNDS OF APPE AL THE APPELLANT HAS CHALLENGED THE ADDITION OF RS.27,88,184/- ON AC COUNT OF- DEPRECIATION. THE AO MADE THE ADDITION ON 'THE GROU ND THAT THE APPELLANT HAS NOT DEBITED THE DEPRECIATION IN THE P&L ACCOUNT . THE AO WHILE FRAMING THE ASSESSMENT ORDER U/S 143(3) HAS ALLOWED THE CLAIM OF THE APPELLANT IN RESPECT OF THE DEPRECIATION. THE AO AL LOWED THE CLAIM OF THE DEPRECIATION AFTER DUE APPLICATION OF' THE MIND. TH E AO IS NOT CORRECT IN - WITHDRAWING THE CLAIM OF THE APPELLANT IN RESPECT O F THE DEPRECIATION U/S 154 OF THE LT. ACT. THE APPELLANT IN THE AUDITED BA LANCE SHEET WAS HAVING THE FIXED ASSETS. THE APPELLANT IS ENTITLED FOR THE DEPRECIATION ON FIXED ASSETS. THE APPELLANT OWNS GODOWN AND RENT HAS BEEN RECEIVED FROM MPWCL. THE SAME VIEW HAS ALSO BEEN UPHELD BY HON'BL E ITA T, INDORE IN THE CASE OF SUDHA DEVI OSWAL VS JCIT, RATLAM APPEAL NO.ITA NO. 212/IND/2014 A.Y. 2010-11 ORDER DATED 16-11-2015. T HEREFORE THE ADDITION MADE BY THE AO AMOUNTING TO RS.27,88,184/- IS DELETED. THEREFORE, THE APPEAL ON THESE GROUNDS IS ALLOWED. 5. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL RAISING SOLE GRIEVANCE AGAINST THE ORDER OF LD.CIT(A) DELET ING THE ADDITION OF RAHUL CHAPROD I.T.A.NO.498/IND/2017 4 RS.27,88,184/- ON ACCOUNT OF INCORRECT DEPRECIATION CLAIMED BY THE ASSESSEE. 6. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D SUPPORTING THE ORDER OF LD.A.O. 7. PER CONTRA LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT IT HAS BEEN CONSISTENTLY HELD BY THE HON'BLE COURTS THAT I T IS NOT MANDATORY TO CLAIM DEPRECIATION IN THE BOOKS OF ACC OUNTS AND THE ASSESSEE CAN CLAIM THE SAME WHILE FILING THE INCOM E TAX RETURN SHOWING IT IN THE COMPUTATION OF INCOME. THE IMPUG NED ASSETS I.E. MACHINERY AND FACTORY BUILDING ARE BEING CONSISTENT LY USED FOR BUSINESS PURPOSES. ALL NECESSARY DOCUMENTS IN SUPP ORT THEREOF HAVE BEEN FILED BEFORE THE LOWER AUTHORITIES. NECE SSARY DOCUMENTARY EVIDENCE OF FACTORY BUILDING GIVEN ON R ENT TO MPWCL SINCE JUNE,2011 ARE PLACED ON RECORD. HE THEREFORE PRAYED THAT THE FINDINGS OF LD.CIT(A) MAY PLEASE BE CONFIRMED. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. REVENUES GRIEVANCE IS LIMITED T O THE DELETION OF ADDITION OF RS.27,88,184/- BY LD.CIT(A). FROM PERU SAL OF THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE LD.CIT(A) I T IS REVEALED THAT THE ALLEGED ADDITION OF RS.27,88,184/- INCLUDE S TWO RAHUL CHAPROD I.T.A.NO.498/IND/2017 5 COMPONENTS. FIRSTLY DEPRECIATION OF RS.26,80,229/- AND INTEREST OF RS.1,07,955/-. PERUSAL OF COMPUTATION OF INCOME SH OWS THAT THE ALLEGED INTEREST AMOUNT OF RS.1,07,955/- WAS REDUCE D FROM THE BUSINESS PROFITS BUT HAS BEEN SHOWN AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE NO ADDITION OF THE IMPUGNED INTEREST OF INCOME OF RS.1,07,955/- WAS C ALLED FOR. 9. LD.CIT(A) HAS WRONGLY MENTIONED THE DEPRECIATION AMOUNT AT RS.27,88,184/- BECAUSE THE ACTUAL DEPRECIATION CLAI M MADE BY THE ASSESSEE IN THE COMPUTATION OF INCOME IS RS.26,80,2 29/-. THEREFORE OUR ADJUDICATION NOW IS LIMITED TO THE DE PRECIATION CLAIM OF RS.26,80,229/-. THIS AMOUNT OF DEPRECIATION INCL UDES DEPRECIATION OF RS.20,76,428/- CLAIMED ON THE WRITT EN DOWN VALUE (IN SHORT WDV) OF MACHINERY AND RS.6,03,801/- CL AIMED ON THE WDV ON THE FACTORY BUILDING. 10. AS FAR AS THE CONTENTION OF THE ASSESSEE THAT THE CLAIM OF DEPRECIATION IS ELIGIBLE IN THE INCOME TAX RETURN EVEN IF THE SAME HAS NOT BEEN CLAIMED IN THE BOOKS OF ACCOUNTS CERTA INLY HAS MERITS AS THE ISSUE IS SQUARELY COVERED BY THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF SUDHA DEVI OSWAL VS JCIT RATLA M ITA NO.212/IND/2014 ORDER DATED 16.11.2015 WHEREIN SIMI LAR FACTS RAHUL CHAPROD I.T.A.NO.498/IND/2017 6 WERE THERE BEFORE THE TRIBUNAL WHEREIN DEPRECIATION ON THE BUILDING AND WAREHOUSE WAS NOT CLAIMED IN THE BALANCE SHEET BUT THE CLAIM FOR DEPRECIATION WAS LODGED BY THE ASSESSEE BEFORE THE LD.A.O DURING THE ASSESSMENT PROCEEDINGS. THE TRIBUNAL AF TER EXAMINING THE FACTS CONCLUDED THAT THE WAREHOUSE BUILDING WAS IN EXISTENCE AND WAS ALSO USED FOR BUSINESS ACTIVITIES, THEREFOR E THE ASSESSEE IS ENTITLED TO DEPRECIATION. 11. IN THE INSTANT APPEAL THE FACTS ARE QUITE SIMIL AR AS THE DEPRECIATION ON MACHINERY AND FACTORY BUILDING HAVE NOT BEEN CLAIMED IN THE BALANCE SHEET I.E. NOT DEBITED TO TH E PROFIT & LOSS ACCOUNT BUT WHILE PREPARING THE COMPUTATION OF INCO ME THE DEPRECIATION OF RS.26,82,229/- HAS BEEN CLAIMED. I N THE TAX AUDIT REPORT U/S 44AB OF THE ACT, AT THE RELEVANT COLUMN OF FORM 3CD. AUDITOR HAS GIVEN THE DETAILS OF DEPRECIATION CALCU LATED ON THE WRITTEN DOWN VALUE OF THE MACHINERY AS WELL AS FACT ORY BUILDING. THERE IS NO DISPUTE AT THE END OF REVENUE ABOUT THE WDV OF MACHINERY AND FACTORY BUILDING. WE ARE ALSO SATISF IED THAT THE IMPUGNED ASSETS ARE BEING REGULARLY USED FOR BUSINE SS PURPOSES. WE THEREFORE ARE OF THE CONSIDERED VIEW THAT THE AS SESSEE HAS RAHUL CHAPROD I.T.A.NO.498/IND/2017 7 RIGHTLY CLAIMED THE DEPRECIATION OF RS.26,80,229/- AND LD.CIT(A) MADE NO ERROR IN ALLOWING THE CLAIM OF THE ASSESSEE . 11. IN THE RESULT THE GROUND RAISED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 24.10.2 018. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 24.10.2018 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER ASSTT. REGISTRAR