ACIT,Circle-3, Kolkata, Kolkata V. M/S Ankit Metal & Power Ltd., Kolkata

ITA 517/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74960 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 03-04-2012
• Court: TRIBUNAL
• Department Lawyers: S P LAHIRI LD CITSR
• Assessee Lawyers: S K TULSIYAN LD
• Keywords: Depreciation; Additional depreciation; Capital expenditure
• Section: 43B; 32; 139

Judgement Text

, A , INCOME TAX APPELLATE TRIBUNAL, BENCH- A KOLKATA ( ) BEFORE . . , SHRI P.K.BANSAL, ACCOUNTANT MEMBER !' /AND #$#% 1 ' , SHRI GEORGE MATHAN, JUDICIAL MEMBER '( / ITA NO.517/KOL/2012 A.Y 2008-09 ACIT, CIRCLE-3, KOLKATA - ! - - VERSUS - . M/S. ANKIT METAL & POWER LTD PAN: AAECA 5230B ( '* / APPELLANT ) ( +,'* / RESPONDENT ) C.O NO. 46/KOL/2012 [ IN ITA NO.517/KOL/2012] A.Y 2008-09 M/S. ANKIT METAL & POWER LTD PAN: AAECA 5230B - ! - - VERSUS - . ACIT, CIRCLE-3, KOLKATA ( '* / APPELLANT ) ( +,'* / RESPONDENT ) '* . /FOR THE APPELLANT /SHRI S.P. LAHIRI, LD. CIT/SR.DR +,'* . / FOR THE RESPONDENT: / SHRI S.K. TULSIYAN, ADVOCATE, LD.AR /!0 1 2 /DATE OF HEARING : 06-01-2014 34 1 2 /DATE OF PRONOUNCEMENT:08-01-2014 / ORDER #$#% 1 ' , SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO.517/KOL/2012 IS AN APPEAL FILED BY THE RE VENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)- 1, KOLKATA IN APPEAL NO.208/CIT(A)-I/R-3/10-11 DATED 11-01-2012 FOR TH E ASSESSMENT YEAR 2008-09 AND THE C.O NO. 46/KOL/2012 IS A CROSS OBJECTION FIL ED BY THE ASSESSEE IN THE REVENUES APPEAL IN ITA NO. 517/KOL/2012 FOR THE ASSESSMENT YEAR 2008-09 2. SHRI S.P. LAHIRI, LEARNED CIT/SR.DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI S.K. TULSIYAN, ADVOCATE, LEARNED AR REPRES ENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUE APPEAL IN ITA NO. 517/KOL/2012 F OR THE A.Y 2008-09, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- ITA NO.517/KOL/12 & C.O NO. 46/KOL/12-A- 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS.4,17,28,8 68/- MADE BY THE ASSESSING OFFICER ON THE GROUND OF ADDITIONAL DEPRE CIATION WITHOUT APPRECIATING THE FACT THAT THE CASE OF THE ASSESSEE FALLS UNDER CLAUSE(I) OF SUB SECTION (1) OF SECTION 32 FOR WHIC H THERE IS NO ADDITIONAL DEPRECIATION AVAILABLE IN CLAUSE(IIA) O F SUB SECTION (1) OF SECTION 32 OF THE I.T ACT 1961. 2. THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 4,17,28,868/- ON THE GROUND OF ADDITIONAL DEPRECIAT ION WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HAS NOT E XERCISED THE OPTION AVAILABLE AS PER SECOND PROVISION OF RULE 5 BEFORE DUE DATE FOR FURNISHING RETURN OF INCOME UNDER SUB SECTION (1) OF SECTION 139 OF THE INCOME-TAX ACT, 1961 AND HAS CLAIMED DEPRECI ATION ON ACTUAL COST I.E. ON STRAIGHT LINE METHOD AND THEREFORE, T HE CASE OF THE ASSESSEE COMES UNDER CLAUSE(I) OF SUB SECTION (1) U NDER SECTION 32 FOR WHICH THERE IS NO ADDITIONAL DEPRECIATION AVAIL ABLE. 3. THAT LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 35D ON RS.28,78,839/- & RS.35,000/- WHICH ARE PROFESSIONAL FEES AS PER FINDINGS OF THE AO. 4. THAT IN DOING SO, LD. CIT(A) HAS ADMITTED FRESH EVIDENCE IN THE FORM OF COPY OF AGREEMENT AND COPY OF BILL IN V IOLATION OF RULE 46A(3). THAT, OTHERWISE ALSO, LD.CIT(A) HAS ALLOWED EXCESS DEDUCTION U/S. 35D, WHICH IS LIMITED TO 2.5% OF THE CAPITAL EMPLOYED OR COST OF THE PROJECT AS PER PROVISIONS OF SUB-SEC TION(3) OF SECTION 35D 4. IN C.O NO. 46/KOL/2012 [ITA NO.517/KOL/2012 A.Y 2008-09], THE ASSESSEE HAS RAISED FOLLOWING GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) ERRED IN HOLDING THAT THE A.O HAD RIGHT LY DISALLOWED THE SERVICE TAX PAYMENTS BY RELYING UPON THE JUDGMENT OF THE ITAT, CHENNAI BENCH, IN THE CASE OF REAL IMAGE TECHNOLOGI ES PVT. LTD [(2008) 114 ITD 573 (CHENNAI)] AND IN THAT VIEW, IN SUSTAINING THE DISALLOWANCE OF RS.9,20,997/- BEING SERVICE TAX PAI D DURING THE YEAR. 5.. IN REGARD TO GROUND NOS.1 & 2 OF REVENUES APP EAL, IT WAS SUBMITTED BY THE LEARNED CIT/SR.DR THAT IN THE COURSE OF ASSESSMEN T THE AO HAD DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION MADE BY THE ASSESSEE IN RESPECT OF POWER PLANT. IT WAS THE SUBMISSION THAT THE AO WAS OF THE VIEW THAT AS DEPR ECIATION HAVING BEEN ALLOWED TO THE ASSESSEE U/S. 32(1)(I) OF THE ACT, ADDITIONAL D EPRECIATION U/S. 32(1)(IIA) WAS NOT ITA NO.517/KOL/12 & C.O NO. 46/KOL/12-A- 3 AVAILABLE IN SO FAR AS ADDITIONAL DEPRECIATION U/S. 32(1)(IIA) OF THE ACT WAS ALLOWABLE ONLY U/S. 32(1)(II). IT WAS THE SUBMISSION THAT T HE LD.CIT(A) HAD WRONGLY ALLOWED THE ASSESSEES CLAIM OF ADDITIONAL DEPRECIATION BY RELY ING UPON THE DECISIONS OF THE HONBLE MADRAS HIGH COURT IN THE CASES OF CIT VS. V TM LTD REPORTED IN (2009) 319 ITR 336, CIT VS. HI-TECH ARAI LIMITED REPORTED IN ( 2010) 321 ITR 477 AND CIT VS. TEXMO PRECISION CASTINGS REPORTED IN (2010) 321 ITR 481 (MAD.). HE HAS VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 6. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS S UBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISIONS OF THE HONBLE M ADRAS HIGH COURT IN THE CASES OF CIT VS. HI-TECH ARAI LIMITED REPORTED IN (2010) 321 ITR 477 (MAD.), CIT VS. VTM LIMITED REPORTED IN (2009) 319 ITR 336(MAD.) AND C IT VS. TEXMO PRECISION CASTINGS REPORTED IN (2010) 321 ITR 481(MAD). IT WAS THE FUR THER SUBMISSION THAT THE AMENDMENT TO SECTION 32(1)(IIA) IN 2012 TO INCLUDE POWER GENERATION PLANT WAS CLARIFICATORY IN NATURE AND THIS ALSO SUPPORTED THE CLAIM OF THE ASSESSEE THAT, ELECTRICITY BEING AN ARTICLE OR THING MANUFACTURED BY THE ASSES SEE WITH THE USE OF POWER GENERATION PLANT, SUCH PLANT WAS ENTITLED TO ADDITI ONAL DEPRECIATION. 6.1 ON A SPECIFIC QUERY TO THE LEARNED SR.DR BY THE BENCH AS TO WHETHER THERE WAS ANY CONTRARY DECISION TO THE DECISIONS OF THE HONB LE MADRAS HIGH COURT, WHICH HAS BEEN RELIED UPON BY THE LD.CIT(A) FOR DELETING THE ADDITIONS, THE LEARNED SR.DR REPLIED IN NEGATIVE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ORDER OF THE LD.CIT(A) MORE SPECIFICALLY IN PARAS 4.3 TO 4.5 OF HIS ORDER CLEARLY SHOWS THAT THE LD.CIT(A) HAS RELIED UPON THE DECISIONS OF THE HON BLE MADRAS HIGH COURT IN THE CASES OF HI-TECH ARAI LIMITED, VTM LIMITED TEXMO PRECIS ION CASTINGS (REFER TO SUPRA) FOR THE PURPOSE OF HOLDING THAT THE ASSESSEE IS ELIGIBL E FOR ADDITIONAL DEPRECIATION AS PER PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT. IN TH E ABSENCE OF ANY DECISION TO THE CONTRARY MUCH LESS ANY DECISION OF THE HONBLE JUR ISDICTIONAL HIGH COURT ON THE ISSUE TO THE CONTRARY, WE ARE OF THE VIEW THAT THE ORDER OF THE LD.CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENC E, IN SO FAR AS HE HAS FOLLOWED THE JUDICIAL DISCIPLINE IN FOLLOWING THE DECISIONS OF T HE HONBLE MADRAS HIGH COURT (REFER TO ITA NO.517/KOL/12 & C.O NO. 46/KOL/12-A- 4 SUPRA) AND GRANTED THE RELIEF TO THE ASSESSEE. IN THE CIRCUMSTANCES, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) IN DOING SO. CONSEQUENTLY, THE GROUND NOS. 1 & 2 OF THE REVENUES APPEAL STAND DI SMISSED. 8. IN REGARD TO GROUND NOS.3 AND 4, IT WAS THE SUBM ISSION BY THE LEARNED SR.DR THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CI T(A) IN ALLOWING DEDUCTION U/S. 35D BY ADMITTING FRESH EVIDENCES IN THE FORM OF COPY OF AGREEMENT AND COPY OF BILL IN VIOLATION OF RULE 46A(3) OF THE I.T RULES 1962. TH E LEARNED SR.DR DREW OUR ATTENTION TO PAGE 20 OF THE ORDER OF THE LD.CIT(A), WHEREIN IN PARA 7.2 CLAUSES 3.1 AND 3.2 THE LD.CIT(A) HAS RECOGNISED A COPY OF UNDERWRITING AG REEMENT ENCLOSED AT PAGES 85- 125 OF THE ASSESSEES PAPER BOOK AND COPY OF BILL FROM MR. R.K KOTHARI ENCLOSED AT PAGE 126 OF THE ASSESSEES PAPER BOOK. IT WAS THE SUBMISSION THAT THESE EVIDENCES WERE NOT BEFORE THE AO. 9. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS SU BMITTED THAT FACT THAT THE AO WAS ABLE TO QUANTIFY THE FIGURES IN PARA 4.9 OF TH E ASSESSMENT ORDER, CLEARLY SHOWS THAT ALL THE PAPERS WERE BEFORE HIM. IT WAS THE F URTHER SUBMISSION THAT THE GENUINENESS OF EXPENDITURE IS NOT DISPUTED. THE AO HAS ONLY MADE AN ADHOC DISALLOWANCE @1/5 TH OF THE EXPENDITURE BY HOLDING THAT THE SAME FELL WITHIN THE CATEGORY OF CAPITAL EXPENDITURE. IT WAS THE SUBMIS SION THAT THE LD.CIT(A) HAS DELETED THE ADHOC DISALLOWANCE ON THE GROUND THAT THE SAME WAS NOT CAPITAL EXPENDITURE. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD.CIT(A) ON THIS ISSUE WAS LIABLE TO BE UPHELD. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSION. A PERU SAL OF THE ORDER OF THE LD.CIT(A) CLEARLY SHOWS THAT THE LD.CIT(A) HAS DELE TED THE DISALLOWANCE BY HOLDING THAT THE PAYMENTS ARE IN THE NATURE OF EXPENDITURE FOR U NDERWRITING COMMISSION AND BROKERAGE PAID FOR CERTIFICATION FEES ALLOWABLE UND ER SECTION 35D OF THE ACT. ADMITTEDLY, THE FACT THAT THE AO IS ABLE TO EXTRACT THE FIGURES IN PARAS 4.8 AND 4.9 OF HIS ORDER WOULD CLEARLY SHOW THAT ALL THE PAPERS W ERE BEFORE THE AO. FURTHER, NO AFFIDAVIT HAS BEEN FILED BEFORE THE TRIBUNAL UNDER RULE 11 OF THE I.T RULES NOR THE REVENUE HAS BEEN ABLE TO SUBSTANTIATE THAT SUCH EV IDENCES WERE NOT BEFORE THE AO BY PRODUCTION OF ANY RECORD. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING ITA NO.517/KOL/12 & C.O NO. 46/KOL/12-A- 5 OF THE LD.CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTIN G AND DOES NOT CALL FOR ANY INTERFERENCE. THE GROUND NOS. 3 & 4 OF THE REVENUE S APPEAL STAND DISMISSED. 11. IN THE CIRCUMSTANCES, THE REVENUES APPEAL IN ITA NO. 517/KOL/2012 FOR THE A.Y 2008-09 STANDS DISMISSED. 12. IN THE CROSS OBJECTION, IT WAS SUBMITTED BY THE LEARNED AR FOR THE ASSESSEE THAT SERVICE TAX HAS BEEN PAID BEFORE THE DUE DAT E AS PROVIDED U/S. 43B OF THE I.T ACT 1961. CONSEQUENTLY, THE SAME IS LIABLE TO BE A LLOWED. 13. IN REPLY, THE LEARNED SR.DR HAS VEHEMENTLY S UPPORTED THE ORDER OF THE AO. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMIT TEDLY, THE PROVISIONS OF SECTION 43B OF THE ACT APPLIES TO PAYMENT OF SERVICE TAX. IT IS NOTICED THAT SERVICE TAX ALONG WITH INTEREST FOR AN AMOUNT OF RS.9,20,997/- HAS B EEN PAID ON 5-12-2007 AS PER CHALLANS. THE SERVICE TAX RELATES TO ASSESSMENT YEA R 2007-08, WHICH HAS BEEN PAID DURING THE ASSESSMENT YEAR 2008-09. CONSEQUENTLY, I N VIEW OF THE PROVISIONS OF SECTION 43B OF THE ACT AS THE SERVICE TAX IS PAID O N 5-12-2007, THE SAME IS LIABLE TO BE ALLOWED IN COMPUTING THE TOTAL INCOME FOR THE ASSESSMENT YEAR 2008-09. CONSEQUENTLY, THE AO IS DIRECTED TO GRANT THE ASSES SEE THE BENEFIT OF DEDUCTION U/S. 43B OF THE ACT TOWARDS SERVICE TAX PAID BY THE ASSE SSEE TO THE EXTENT OF RS.9,20,997/- . ACCORDINGLY, THE CROSS OBJECTION FILED BY THE ASS ESSEE STANDS ALLOWED. 15. IN THE RESULT, THE REVENUES APPEAL IN ITA NO .517/KOL/2012 FOR THE ASSESSMENT YEAR 2008-09 STANDS DISMISSED AND CROSS OBJECTION O F THE ASSESSEE IN C.O NO. 46/KOL/2012 FOR THE ASSESSMENT YEAR 2008-09 STANDS ALLOWED AS STATED ABOVE. 5 / 6 / 7 58 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT 08/01 /2014 SD/- SD/- ( . . , ) ( P.K.BANSAL, ACCOUNTANT MEMBER ) ( #$#% 1 ' , ) (GEORGE MATHAN, JUDICIAL MEMBER) ( (( ( 2 2 2 2 ) )) ) DATE 8.1.14 ITA NO.517/KOL/12 & C.O NO. 46/KOL/12-A- 6 ** PRADIP SPS 1 +..9 :94; / COPY OF THE ORDER FORWARDED TO: 1. . '* / THE APPELLANT : ACIT, CIRCLE-3 8/2 ESPLANADE EA ST, DWARLI HOUSE, 2 ND FL., KOL-69. 2 +,'* / THE RESPONDENT- M/S. ANKIT METAL & POWER LTD 3 5 C.R AVENUE, KOL - 12. 3 4. . . / THE CIT, . ( )/ THE CIT(A) 5 . !<.7 +. / DR, KOLKATA BENCH 6 . GUARD FILE . ,9 +./ TRUE COPY, // BY ORDER, 5 '# /ASSTT REGISTRAR