GAUTAM GUPTA, MUMBAI V. ITO 8(1)(4), MUMBAI

ITA 5072/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62405 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 29-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T C SUBRAMANIAN
• Keywords: Depreciation
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI VIJAY PAL RAO (JUDICIAL MEMBER) AND SHRI N.K. BILLAIYA (ACCOUNTANT MEMBER ) ITA NO. 5072/MUM/2011 ASSESSMENT YEAR-2007-08 GAUTAM GUPTA, 42, IRISH PARK, JUHU, MUMBAI-400 049 PAN-AAJPG 9747K VS. THE ITO 8(1)(4), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PANKAJ R. TOPRANI RESPONDENT BY: SHRI T.C. SUBRAMANIAN DATE OF HEARING : 10.05.2012 DATE OF PRONOUNCEMENT:16.5.12 O R D E R PER N.K. BILLAIYA (AM): THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST ORDER OF LD. CIT(A) -16 DT. 30.9.2010. 2. THE APPEAL HAS BEEN FILED AFTER A DELAY OF 191 D AYS. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTI ON TO THE AFFIDAVIT DT. 17.6.2011 FILED BY THE ASSESSEE. THE LD. COUNSEL S UBMITTED THAT THE ASSESSEE COULD NOT FILE THE APPEAL ON TIME ON THE ADVICE OF HIS CHARTERED ACCOUNTANT SHRI HIREN MEHTA. HOWEVER, ON SUBSEQUENT ADVICE OF SENIOR ADVOCATE SHRI Y.P. TRIVEDI AND SHRI PANKAJ TOPRANI WHO ADVISED TH E ASSESSEE THAT HE CAN RIGHTFULLY CLAIM DEPRECIATION. THEREAFTER, THE ASS ESSEE IMMEDIATELY FILED THE APPEAL. 3. WE HAVE PERUSED THE AFFIDAVIT AND THE CONTENTS T HEREOF. WE FIND THAT THE DELAY HAS BEEN CAUSED DUE TO MISCONCEPTION/INAP PROPRIATE ADVICE FROM CA SHRI HIREN MEHTA AND THERE IS NO DELIBERATE OR I NTENTIONAL ACT ON THE PART ITA NO. 5072/M/2011 2 OF THE ASSESSEE TO CAUSE THE DELAY. THUS THE LD. A R HAS PLEADED THAT DELAY IN FILING THE APPEAL MAY BE CONDONED. WE ACCORDINGL Y CONDONED THE DELAY. THE APPEAL IS MAINTAINABLE. 4. THE ASSESSEE HAS SHOWN HIS GRIEVANCE AGAINST THE ORDER OF LD. CIT(A) WHO HAS CONFIRMED THE DISALLOWANCE OF DEPRECIATION OF RS. 96,850/- ON THE ALLEGED GROUND THAT NO BUSINESS ACTIVITY WAS CARRIE D ON DURING THE YEAR. 5. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIL ED ITS RETURN ON 15.11.2007 DECLARING TOTAL INCOME OF RS. 18,20,851 /-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S. 143(2) AND 142(1) WER E ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT DONE ANY BU SINESS IN HIS PROPRIETARY CONCERNS M/S. G.G. FILM LAB AND G.G. DIAMOND INTERNA TIONAL WHICH IS IN THE BUSINESS OF BULLION TRADING. ON THAT REASON THE AO DISALLOWED EXPENSES FROM SALARIES AND DEPRECIATION. THE DEPRECIATION SO DISALLOWED WAS TO THE TUNE OF RS.95,850/-. THE ASSESSMENT WAS COMPLETED AFTER MAK ING OTHER DISALLOWANCES ALSO. WE ARE CONCERNED ONLY WITH DISALLOWANCE OF D EPRECIATION OF RS. 95,850/-. THE MATTER WAS AGITATED BEFORE THE LD. C IT(A). 6. IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE LD. C IT(A) THAT IN THE YEAR UNDER CONSIDERATION, NO BUSINESS ACTIVITY WAS CARRI ED ON IN THE ASSESSEES PROPRIETARY CONCERN DUE TO UNFAVOURABLE CONDITION. SINCE SOME EMPLOYEES WHO WERE OLD AND LOYAL WERE RETAINED FOR LOOKING AF TER BUSINESS ASSETS AS THE BUSINESS WAS IN LULL PHASE. THE ASSESSEE CONTENDED THAT HE HAS RIGHTFULLY CLAIMED THE DEPRECIATION OF RS. 95,850/-. THE LD. CIT(A) REJECTED THE SUBMISSION OF ASSESSEE ON THE CLAIM OF DEPRECIATION . IT WAS HELD BY THE LD. CIT(A) THAT SINCE ASSESSEE HAS NOT UNABLE TO ADDUCE ANY EVIDENCE AS TO THE UTILIZATION OF THE BUSINESS ASSETS ON WHICH DEPRECI ATION WAS CLAIMED FOR THE PURPOSES OF EARNING THE INCOME FROM OTHER SOURCES. THEREFORE IN HIS OPINION, THE SAME COULD NOT BE ALLOWED. 7. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. ITA NO. 5072/M/2011 3 8. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE DEPRECIATION HAS BEEN CLAIMED ON FURNITURES AND FIXTURES. SINCE THE MARKET CONDITIONS WERE NOT CONDUCIVE, THE ASSESSEE DID NOT CARRY ON ANY BU SINESS ACTIVITY DURING THE YEAR. IT WAS ONLY THAT THE BUSINESS WAS IN LULL P HASE. IT WAS ALSO CONTENDED THAT ONCE THE BLOCK OF ASSETS AND THE BUSINESS HAVI NG BEEN CARRIED ON DEPRECIATION IS ALLOWABLE ON THE WDV COMPRISING THE BLOCK OF ASSETS SO LONG AS THE BUSINESS HAS BEEN CARRIED ON. THE USER COND ITION IS NOT APPLICABLE UNDER THE CONCEPT OF ALLOWING DEPRECIATION ON BLOCK OF ASSETS. 9. THE LD. DEPARTMENTAL REPRESENTATIVE RELYING UPON THE ORDER OF LOWER AUTHORITIES ARGUED THAT SINCE NO BUSINESS WERE CARR IED ON DURING THE YEAR, THE ASSESSEE IS NOT ENTITLED FOR ANY DEPRECIATION. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES. THERE MAY BE A PHASE FOR SOME PERIOD OF TIME WHICH MAY RESULT IN LULL IN THE BUSINESS OR A PERIOD OF INACTIVITY W HICH MAY REFLECT EITHER TO CEASE DOING BUSINESS ALTOGETHER OR MERELY NOT TO DO BUSINESS BECAUSE OF ADVERSE CONDITIONS. A PERIOD OF INACTIVITY CANNOT BE CONCLUSIVE IN DECIDING WHETHER A PERSON WAS OR WAS NOT DOING ANY BUSINESS. WE FIND THAT THE DEPRECIATION HAS BEEN CLAIMED ONLY ON FURNITURES AN D FIXTURES. WE ALSO FIND THAT SOME OF THE EMPLOYEES WERE INFACT WORKING FOR THE ASSESSEE. THEY MUST HAVE USED THE ASSETS OF THE ASSESSEE. WE THEREFORE DO NOT CONCUR WITH THE FINDING OF LD. CIT(A). WE DIRECT THE AO TO ALLOW T HE DEPRECIATION AS CLAIMED BY THE ASSESSEE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 16 TH DAY OF MAY, 2012 SD/- SD/- (VIJAY PAL RAO) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 16 TH MAY, 2012 RJ ITA NO. 5072/M/2011 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI