Udyog Bandhu, Lucknow V. ITO II (3), Lucknow

ITA 514/LKW/2011

• Counselvise Citation: 51423714 RSA 2011
• Duration Of Justice: 2 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-06-2014
• Assessment Year: misc
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Assessee Lawyers: S C AGARWAL
• Keywords: Depreciation
• Section: 234B; 32

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 514 /LKW/201 1 ASSESSMENT YEAR:20 05 - 06 M/S UDYOG BANDHU, 12 - C, MALL AVENUE, LUCKNOW. PAN:AAATU0698J VS. INCOME TAX OFFICER - II(3), LUCKNOW. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. C. AGARWAL, ADVOCATE RESPONDENT BY SHRI R. K. RAM, D. R. DATE OF HEARING 20 /06/2014 DATE OF PRONOUNCEMENT 0 4 /07 /2014 O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A) - I , LUCKNOW DATED 11 / 07 /20 11 FOR ASSESSMENT YEAR 200 5 - 20 06 . 2. IN THIS APPEAL , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LEARNED CIT (APPEAL) WAS WRONG AND ERRED IN UPHOLDING THE COMPUTATION OF SURPLUS BY THE LEARNED AO WITHOUT CONSIDERING THE CLAIM OF DEPRECIATION BY WRONGLY APPLYING THE PRINCIPLE OF LAW IN THE CONTEXT OF SECTION 35/32 OF THE INCOME TAX ACT, WHEREAS THE CLAIM OF T HE APPELLANT WAS BASED ON COMMERCIAL PRINCIPLES. 2. THAT THE LEARNED AO AND CIT (APPEAL) WRONGLY AND BY IGNORING THE NOTICE OF ACCUMULATION UNDER SECTION 11(2) OF THE ACT FILED BY THE ASSESSEE BEFORE THE ASSESSMENT AND ALSO NOT APPRECIATING THE FACTS THAT THE ENTIRE SUM OF 2 RS.13,15,271/ - WAS DULY INVESTED IN MODES PRESCRIBED UNDER SECTION 11(5) OF THE INCOME TAX ACT. 3. THAT THE LEARNED CIT (APPEAL) WAS WRONG IN UPHOLDING THE REJECTION OF APPELLANT'S CLAIM BEYOND 15% ON ACCOUNT OF DELAY IN SUBMITTING OF N OTICE IN FORM 10 AND THE INCORRECT INDICATION OF AMOUNT SOUGHT TO BE ACCUMULATED. 4. THE LEARNED CIT (APPEAL) ERRED IN NOT GIVING ANY FINDING ON THE FOLLOWING GROUNDS TAKEN BY THE APPELLANT '(V) BECAUSE LD A.O. HAS WRONGLY LEVIED INTEREST U/S 234A CONTR ARY TO THE JUDGMENT OF JURISDICTIONAL TRIBUNAL IN THE CASE OF SHADI RAM AND SONS WHICH WAS ACCEPTED BY THE DEPARTMENT. (VI) BECAUSE L D. A.O. HAS WRONGLY LEVIED INTEREST U/S 234 B CONTRARY TO THE JUDGMENT OF JURISDICTIONAL HIGH COURT TRIBUNAL. (VII) BECA USE L D. A.O. HAS WRONGLY CALCULATED INTEREST U/S 234B CONTRARY TO THE DEFINITION OF 'ASSESSED TAX' IN EXPLANATION - 1 TO S. 234B PRIOR TO ITS AMENDMENT BY FINANCE ACT WITH EFFECT FROM 1.4.2007 & THAT TOO WITHOUT GIVING SET OFF TAX DEDUCTIBLE AT SOURCE AS PER S 209(1)(D). (VIII) BECAUSE A.O. HAS WRONGLY CALCULATED INTEREST U/S 234C CONTRARY TO EXPLANATION TO THE SECTION AND CIRCULAR OF BOARD NO. 549 DT . 31.10.1989.' 5. THAT THE APPELLANT BE PERMITTED TO RAISE ADDITIONAL GROUNDS OF APPEAL IF PRAYED FOR. 6. THAT THE ORDER PASSED BY THE TAX AUTHORITIES WERE AGAINST FACTS AND LAW. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE REGARDING ALLOWABILITY OF DEPRECIATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY A JUDGMENT OF HON'BLE BO MBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) AS REPORTED IN [2003] 131 TAXMAN 386. 3 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE REGARDING DEPRECIATION ON THE BASIS THAT SINCE THE ASSESSEE HAS CLAIMED THE AMOUNT SPENT ON ACQUISITION OF FIXED ASSETS AS APPLICATION OF INCOME IN THE YEAR OF ACQUISITION OF FIXED ASSETS, NO DEPRECIATION IS ALLOWABLE IN RESPECT OF THOSE ASSETS BECAUSE IT WILL RESULT INTO DOUBLE DEDUCTION. IN THIS REGARD, WE ARE OF THE CONSIDERED OPINION THAT THIS STAND OF THE ASSESSING OFFICER IS NOT CORR ECT BECAUSE ALLOWING EXEMPTION OF INCOME IN RESPECT OF ACQUISITION OF FIXED ASSETS FOR FULFILLMENT OF THE OBJECT OF THE ASSESSEE, IT CANNOT BE SAID THAT ANY DEDUCTION WAS ALLOWED BY THE ASSESSEE. IN FACT, BY WAY OF GRANTING EXEMPTION U/S 11 OF THE ACT, TH E AMOUNT OF INCOME DOES NOT REDUCE AND IT REMAINS SAME ALTHOUGH THE SAME IS NOT TAXABLE BECAUSE OF EXEMPTION AND THEREFORE, THIS IS NOT ALLOWING OF DEDUCTION TO THE ASSESSEE. HENCE, THE STAND OF THE ASSESSING OFFICER IS NOT CORRECT. THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT CITED BY LEARNED A.R. OF THE ASSESSEE WHEREIN IT WAS HELD BY HON'BLE BOMBAY HIGH COURT THAT INCOME OF TRUST IS REQUIRED TO BE COMPUTED U/S 11 OF THE ACT ON COMMERCIA L PRINCIPLES AFTER PROVIDING FOR ALLOWANCE OF NORMAL DEPRECIATION. LEARNED D.R. OF THE REVENUE HAS CITED A JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF ESCORTS LIMITED, 199 ITR 4 3 . IN THIS CASE, THE ISSUE IN DISPUTE WAS ABOUT THE CLAIM OF THE AS SESSEE FOR DEDUCTION U/S 32 & 35(1) OF THE ACT ON SAME ASSETS . U NDER THESE FACTS, IT WAS HELD BY HON'BLE APEX COURT THAT THIS AMOUNTS TO DOUBLE DEDUCTION AND THEREFORE, NOT ALLOWABLE. IN OUR CONSIDERED OPINION, THIS JUDGMENT OF HON'BLE APEX COURT IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE BECAUSE WE HAVE ALREADY SEEN THAT GRANTING EXEMPTION U/S 11 ON THE BASIS OF ACQUISITION OF FIXED ASSETS FOR THE PURPOSE OF ASSESSEE AND 4 THEREAFTER GRANTING DEPRECIATION ON USER OF SUCH ASSET DO NOT AMOUNT TO G RA NTING DOUBLE DEDUCTION. HENCE, THIS JUDGMENT IS NOT APPLICABLE. THEREFORE, RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE BOMBAY HIGH COURT, CITED BY LEARNED A.R. OF THE ASSESSEE, WE DECIDE THE DISPUTE IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT, THE A PPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ABOVE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 4 /07 /2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR