The ACIT, Bhopal V. M/s. Himanshu Floor Mills Pvt.Ltd., Bhopal

ITA 507/IND/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2492 (ITAT-INDORE)
• Duration Of Justice: 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 01-12-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 03-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Depreciation; Tax effect
• Section: 260A; 268A

Judgement Text

- 1 - IN THE INCOME TAX APPELATE TRIBUNAL, SMC-I BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 507/IND/09 A.Y. 2004-05 ASSTT. COMMR. OF INCOMETAX 1(1) BHOPAL APPELLANT VS SHRI HIMANSHU FLOOR MILLS PVT. LTD. BHOPAL RESPONDENT PAN AAACH 8402Q APPELLANT BY SMT. APARNA KARAN, SR. DR RESPONDENT BY NONE O R D E R THIS APPEAL IS BY THE REVENUE CHALLENGING THE ORDE R OF THE CIT(A) DATED 26.8.2009. DURING HEARING OF THIS APPEAL, I HAVE HEARD SMT. APARNA KARAN, LEARNED SENIOR DR, AND NO-BODY WAS PR ESENT FOR THE ASSESSEE. REGISTERED NOTICE OF HEARING WAS SENT TO THE ASSESSEE ON 11.11.2009. THE ASSESSEE NEITHER PRESENTED ITSELF NOR MOVED ANY APPLICATION FOR ADJOURNMENT, THEREFORE, I HAVE NO O PTION BUT TO PROCEED EX-PARTE QUA THE ASSESSEE AND DISPOSE OF THIS APPEA L ON THE BASIS OF MATERIAL AVAILABLE IN THE FILE. - 2 - 2. THE FIRST GROUND RAISED IS THAT THE LEARNED FIRS T APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.4,26,936/- MAD E ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON THE FIXED ASSETS. ON QUESTIONING FROM THE BENCH ABOUT THE TAX EFFECT, IT WAS FAIRLY POINT ED OUT THAT THE TAX EFFECT IS BELOW THE PRESCRIBED MONETARY LIMIT. I HAVE CON SIDERED THE SUBMISSIONS PUT-FORTH BY THE LEARNED SENIOR DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED DEPREC IATION OF RS. 8,53,871/- ON THE FIXED ASSETS. THE LEARNED ASSESS ING OFFICER BASED UPON THE COMMENTS OF THE AUDITORS IN THE NOTES TO A CCOUNTS AND THE NATURE OF THE BUSINESS, DISALLOWED 50% OF THE DEPRE CIATION CLAIMED BY THE ASSESSEE WHICH WAS WORKED OUT AT RS.4,26,936/-. BEFORE THE LEARNED FIRST APPELLATE AUTHORITY THE SUBMISSION OF THE ASS ESSEE WAS THAT THE FIXED ASSETS WERE DULY REFLECTED IN THE BALANCE SHEET DUR ING THE RELEVANT PERIOD AND THERE WAS NO NEW ADDITION IN THE ASSETS. THE D EPRECIATION ON ALL THE ASSETS WAS REGULARLY ALLOWED SINCE THE DATE OF INCL USION IN THE BALANCE SHEET. EVEN IN THE IMPUGNED ORDER THERE IS A FACTU AL FINDING THAT THE ASSESSEE FROM THE DATE OF INCLUSION HAS NOT SHOWN I N ADDITION TO THE BLOCK OF ASSETS AS THE WDV AS ON 31.3.2002 WAS TAKE N AS BASIS AFTER REDUCING THE SALE OF SOME ASSETS FOR THE CALCULATIO N OF ALLOWABLE DEPRECIATION FOR THE ASSESSMENT YEAR 2003-04 AND TH E ASSESSEE WAS - 3 - ALLOWED DEPRECIATION FOR THE ASSESSMENT YEAR 2002-0 3. THE REVENUE HAS NOT ADDUCED ANY EVIDENCE CONTROVERTING THE FACTUAL FINDING MENTIONED IN THE IMPUGNED ORDER, THEREFORE, THE DISALLOWANCE IS DESIRABLE IN THE IMPUGNED APPEAL. EVEN OTHERWISE ON THE TAX EFFECT THIS APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED. THIS VIEW FINDS SUPPORT FROM THE DECISION OF THE TRIBUNAL IN THE CASE OF R.K. HOTELS (ITA NO.383/IND/09). THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HER EUNDER :- THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER O F LD. CIT- (A)-II, BHOPAL, DATED 31.3.2009 FOR THE AY 2005-06 ON THE GROUND THAT THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF 6,37,206/- MADE BY THE AO BY APPLYI NG THE PROVISIONS OF SEC. 154(3) ON ACCOUNT OF INCORRECTNE SS AND INCOMPLETENESS OF BOOKS OF ACCOUNT.. 2. DURING HEARING OF THE APPEAL, WE HAVE HEARD SMT. APARNA KARAN, LD. SR. DR AND SHRI H.P. VERMA ALONG WITH SH RI ASHISH GOYAL, LD. COUNSEL FOR ASSESSEE. AT THE OUTSET, IT WAS POINTED OUT THAT THERE IS TYPOGRAPHICAL ERROR IN MENTIONING THE FIGURE OF RS.6,37,206/- IN THE GROUND OF APPEAL AS THE CO RRECT FIGURE IS RS.3,94,732/-. THE ASSERTION OF THE ASSESSEE WAS CONSENTED TO BE CORRECT BY THE LD. SR. DR. FURTHER, IT WAS POINTED OUT THAT THE TAX EFFECT IS ALSO BELOW MONET ARY LIMIT, THEREFORE, THE APPEAL OF THE REVENUE MAY BE DISMISS ED. THE LD. SR. DR FAIRLY AGREED TO THE SUBMISSION OF THE A SSESSEE TO THE EXTENT THAT THE TAX EFFECT IS BELOW PRESCRIBED MONETARY LIMIT FOR FILING THE APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON THE FILE. WE HAVE FOUND THAT WHILE DISPOSING OF GROUND NO.3 (PAGE 2 OF THE IMPUGNED OR DER), THERE IS A MENTION THAT THE ADDITION OF RS.3,94,732 /- WAS MADE BY ESTIMATING THE NET PROFIT @5% OF THE TOTAL TURNOVER OF RS.1,27,44,130/- IN PLACE OF RS.2,42,474/- SHOWE D BY THE ASSESSEE, THEREFORE, WITHOUT GOING INTO THE MERIT O F THE CASE, WE ARE OF THE VIEW THAT SINCE THE TAX EFFECT IS BEL OW PRESCRIBED MONETARY LIMIT AND ALSO INSERTION OF SEC . 268A IN - 4 - THE ACT, THIS APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. THE BOARD VIDE INSTRUCTION NO. 5 OF 2008 DATED 15.5 .2008 SPECIFIED THE MONETARY LIMIT FOR FILING APPEAL BEFO RE VARIOUS COURTS/TRIBUNAL. THE BOARD INSTRUCTION NO. 1979 D ATED 23.3.2000, NO. 1985 DATED 19.6.2000, NO. 6 OF 2003 DATED 17.7.2003, NO. 19 OF 2003 DATED 23.12.2002, NO. 5 / 2004 DATED 27.5.2004, NO.2 / 2005 DATED 24.10.2005, NO.5 / 2007 DATED 16.7.2007 AND INSTRUCTION NO. 5/2008 DATED 15 .5.2008, WHEREIN MONETARY LIMIT FOR FILING DEPARTMENTAL APPE ALS (IN INCOME TAX MATTERS) AND OTHER CONDITIONS WERE SPECI FIED FOR FILING APPEALS BEFORE THE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT. IN SUPPRESSION OF THE ABOVE INSTRUC TIONS, IT WAS DECIDED BY THE BOARD THAT DEPARTMENTAL APPEAL W ILL BE FILED, CONSIDERING THE MONETARY LIMIT, AS UNDER:- S. NO . AUTHO RITY MONETA RY LIMIT (IN RS.) 1 ITAT 2,00,00 0/- 2 APPEAL UNDER SECTION 260A BEFORE HIGH COURT 4,00,000 /- 3 SUPREM E COURT 10,00,00 0/- THE BOARD FURTHER CLARIFIED THE TAX EFFECT, WHICH M EANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSE SSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE, HAD SUCH T OTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESP ECT OF THE ISSUE AGAINST WHICH APPEAL IS INTENDED TO BE FI LED. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THER EON. IN CASES OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN Q UANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEA LED AGAINST. IN THE PRESENT APPEAL, THE TOTAL DISPUT ED ADDITION IS RS.3,94,732/-, THEREFORE, AS AGREED/CANVASSED BY LD. REPRESENTATIVES FROM BOTH SIDES, THE TAX EFFECT IS BELOW RS.2 - 5 - LAKHS, THE LIMIT PRESCRIBED FOR FILING APPEAL BEFOR E THE TRIBUNAL, THEREFORE, APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. OUR VIEW FINDS SUPPORT FROM THE DECISIO N OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASES OF SH RI J.S. LUTHRA (ITA NO.712 TO 715/CHD/2009) AND ITO, WARD 2 (2), ROPAR VS. THE JHALLIAN KALAN PRI. COOP MILK PRODUCE SOCIETY LTD., JHALLIAN KALAN DISTT. ROPAR (ITA NO.721/CHD/2 009). THEREFORE, WITHOUT GOING INTO THE MERITS OF THE CAS E, FACTS AND THE JUDICIAL PRONOUNCEMENTS (SUPRA), THIS APPEA L OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES ON 6.10.2009. IN THE LIGHT OF THE ABOVE, THIS GROUND OF THE REVEN UE IS HAVING NO MERIT, THEREFORE, THE STAND OF THE LEARNED CIT(A) IS AFFIR MED CONSEQENTLY, THIS GROUND OF THE REVENUE IS DISMISSED. 4. THE NEXT GROUND RAISED IS THAT THE LEARNED FIRST APPELLATE AUTHORITY ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW C ARRY FORWARD OF BROUGHT FORWARD LOSSES OF EARLIER YEARS WITHOUT ANY BASIS. THE CONTENTION RAISED ON BEHALF OF THE REVENUE IS THAT IN COMING TO A PARTICULAR CONCLUSION, NO BASIS HAS BEEN ADDUCED BY THE LEARNED FIRST APPELLATE AUTHORITY AND IT WAS RIGHTLY DISALLOWED B Y THE ASSESSING OFFICER IN THE ABSENCE OF PROOF FURNISHED BY THE AS SESSEE. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. THE STAND OF THE REVENUE IS T HAT PROOF OF LAST YEARS LOSSES WAS NOT FURNISHED BY THE ASSESSEE CONSEQUENT LY THESE ARE NOT ALLOWABLE WHEREAS BEFORE THE LEARNED FIRST APPELLAT E AUTHORITY THERE IS A - 6 - FACTUAL FINDING THAT IN ALL PREVIOUS YEARS RETURNS WERE DULY FILED BY THE ASSESSEE AND THE SAME WERE AVAILABLE ON RECORD OF T HE ASSESSING OFFICER. IN THE IMPUGNED ORDER THE LEARNED FIRST APPELLATE A UTHORITY HAS DIRECTED THE ASSESSING OFFICER TO ALLOW CARRY FORWARD OF BRO UGHT FORWARD LOSSES OF EARLIER YEARS WHICH WERE NOT SET OFF AFTER VERIF ICATION OF RECORDS OF EARLIER YEARS. EVEN OTHERWISE, IT IS A CASE OF ASS ESSED LOSS WHICH HAS NOT BEEN SET OFF. CONSEQUENTLY, WE ARE IN AGREEMENT TH AT IN VIEW OF THE PROVISIONS OF SECTION 72 IT SHOULD BE ALLOWED. CON SEQUENTLY, THERE IS NO GRIEVANCE TO THE REVENUE SINCE IT HAS BEEN REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO DO THE NEEDFUL AFTER VERIF ICATION OF RECORDS OF EARLIER YEARS. MY VIEW FINDS SUPPORT FROM THE RATI O LAID DOWN IN CIT V. J.H. GOTLA; 156 ITR 323 (SC); TARA DEVI BEHL V. CI T; 218 ITR 541 (P&H). THE HONBLE APEX COURT IN THE CASE OF CIT V . MAHALAXMI SUGAR MILLS CO. LTD.; 160 ITR 920 EVEN WENT TO THE EXTEN T THAT ITO MUST ALLOW SET OFF EVEN IF IT IS NOT CLAIMED BY THE ASSE SSEE BECAUSE A DUTY IS CAST UPON THE ITO TO APPLY THE RELEVANT PROVISIONS OF THE INDIAN INCOMETAX ACT FOR THE PURPOSE OF DETERMINING THE TR UE FIGURE OF ASSESSEES TAXABLE INCOME AND THE CONSEQUENTIAL TAX LIABILITY. MERELY BECAUSE THE ASSESSEE FAILS TO CLAIM THE BENEFIT OF SET OFF CANNOT RELIEVE THE ITO OF HIS DUTY TO APPLY SECTION 72 IN AN APPRO PRIATE CASE. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, I HAVE FOUND NO INFIRMITY IN - 7 - THE IMPUGNED ORDER, CONSEQUENTLY, THIS GROUND OF TH E REVENUE ALSO FAILS. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF HEARING ON 1.12.2009. SD/- (JOGINDE SINGH) JUDICIAL MEMBER 2 ND DECEMBER, 2009 COPY TO APPELLANT, RESPONDENT, CIT, CIT(A), DR *DN/-