SMS Pharmaceuticals Limited , Hyderabad V. Dy. Commissioner of Income Tax , Central Circle-1(3), Hyderabad

ITA 517/Hyd/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0711 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2015-2016
• Appeal Filed On: 10-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y.V.S.T. SAI
• Keywords: Depreciation; Audit objection; Additional depreciation
• Section: 263; 115JB; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.517/HYD/2019 ASSESSMENT YEAR: 2015 - 16 M/S. SMS PHARMACEUTICALS LTD, PLOT NO.72,8 - 2 - 334/3 & 4, ROAD NO.5, OPP. SBI EXECUTIVE ENCLAVE, BANJARA HILLS, HYDERABAD 500034. PAN: AADCS 2221 D VS. DCIT, CENTRAL CIRCLE - 1(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.C. DEVDAS REVENUE BY: SRI Y.V.S.T. SAI, CIT - DR DATE OF HEARING: 01/07/2019 DATE OF PRONOUNCEMENT: 19 /07/2019 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. PR. CIT (CENTRAL), HYDERABAD IN ORDER NO. PR. CIT(C)/H/263/10/2018 - 19, DATED 08/03/2019 PASSED U/S. 263 OF THE ACT FOR THE ASSESSMENT YEAR 2015 - 16. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED SEVERAL GROUNDS HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. PR. CIT HAD ERRONEOUSLY INVOK ED HIS POWERS U/S. 263 OF THE ACT BASED ON AUDIT OBJECTION AND BY HOLDING THAT THE 50% OF THE DEPRECIATION PERTAINING TO AY: 2014 - 15 ALLOWED BY THE LD. AO IN THE RELEVANT ASSESSMENT YEAR TOWARDS ADDITIONAL DEPRECIATION IS ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING BULK DRUGS AND INTERMEDIARIES FILED ITS RETURN OF INCOME FOR THE AY 2015 - 16 ON 30/11/2015 DECLARING TOTAL INCOME OF RS . 15,73,40,900/ - UNDER NORMAL PROVISIONS AND RS. 67,48,34,653/ - U/S. 115JB OF THE ACT. INITIALLY THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND THEREAFTER THE ASSESSMENT WAS COMPLETED ON 31/10/2016 WHEREIN THE LD. AO ALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION BEING THE 50% OF THE DEPRECIATION PERTAINING TO THE EARLIER ASSESSMENT YEAR AS IT COULD NOT BE CLAIMED DURING THAT ASSESSMENT YEAR BECAUSE THE ASSET WAS PUT TO USE LESS THAN 180 DAYS. THE LD. PR. CIT TAKING CUE FROM THE AUDIT OBJECTION OPINED THAT THE CLAIM OF 50% OF THE DEPRECIATION OF THE EARLIER ASSESSMENT YEAR CANNOT BE ALLOWED AS ADDITIONAL DEPRECIATION FOR THE RELEVANT ASSESSMENT YEAR AND THEREFORE INVOKED HIS POWERS U/S. 263 OF THE ACT. WHILE DOING SO, THE LD. PR. CIT REJECTED THE CASE LAWS CITED BY THE ASSESSEE STATING THAT THEY ARE NOT BINDING ON THE REVENUE. 4. AT THE OUTSET, WE FIND THAT THE TRIBUNAL ON SEVERAL OCCASIONS HAS HELD THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING DECISIONS: - (I) THE DECISION OF HONBLE ITAT DELHI IN THE CASE OF DY. CIT VS. COSMO FILMS LTD (131 ITR (TRIB) 340) (II) THE DECISION OF HONBLE ITAT, HYDERABAD IN THE CASE OF DIVIS LABORATORIES LTD IN ITA NO.11/HYD/2012 (III) THE DECISION OF HONBLE ITAT, COCHIN IN THE CASE OF APOLLO TYRES LTD., VS. ACIT (2014) 45 TAXMANN.COM 37. (IV) THE DECISION OF HONBLE ITAT, AHMEDABAD IN THE CASE OF ASWANI INDUSTRIES IN ITA NO. 140/AHD/2013. (V) THE DECISION OF HONBLE ITAT, CHENNAI IN THE CASE OF AUTOMOTIVE COACHES & COMPONENTS LTD., IN ITA NO.1789/MDS/2014. (VI) THE DECISION OF HONBL E ITAT DELHI IN THE CASE OF ACIT VS. SIL INVESTMENT LTD., IN ITA NO. 2341 (DEL.) 2010. 5. SINCE PLETHORA OF DECISIONS OF THE TRIBUNAL ARE IN FAVOUR OF THE ASSESSEE ON THE ISSUE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. AO , FOR ALLOWING THE CLAIM OF 50% DEPRECIATION OF THE EARLIER ASSESSMENT YEAR , IN THE RELEVANT ASSESSMENT YEAR AS ADDITIONAL DEPRECIATION , AS THE SAME COULD NOT B E CLAIMED IN THE PRECEDING ASSESSMENT YEAR , SINCE IN THAT YEAR THE ASSET WAS PUT TO USE FOR LESS THAN 180 DAYS . THEREFORE, WE HEREBY QUASH THE ORDER OF THE LD. PR. CIT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 19 TH JULY, 2019. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 19 TH JULY , 2019 OKK COPY TO: - 1) M/S. SMS PHARMACEUTICALS LTD, PLOT NO.72,8 - 2 - 334/3 & 4, ROAD NO.5, OPP. SBI EXECUTIVE ENCLAVE, BANJARA HILLS, HYDERABAD 500034. 2) DCIT CENTRAL CIRCLE - 1(3), HYDERABAD. 3) THE CIT (CENTRAL) , HYDERABAD , 4) THE PR. CI T (CENTRAL) , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE