MEFCO ENTERPRISES PVT. LTD., Jaipur V. ACIT, Jaipur

ITA 528/JPR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9702 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Keywords: Depreciation; Principle of natural justice; Question of law
• Section: 142(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.528/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 M/S MEFCO ENTERPRISES PVT. LTD.E-244, ROAD NO.13, VKI AEA, JAIPUR CUKE VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-4, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACB 7543 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI NAVIN GARG, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 06.03.2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 07/03/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), BIKANER DATED 28.05.2014 FOR ASSESSMENT YEAR 2008-0 9 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: (1) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IS NOT CONSIDERING THE FACT THAT ASSUMPTION O F JURISDICTION BY INCOME TAX OFFICER , WARD 4(2), JAIPUR OVER THE CASE FOR S CRUTINY AND ISSUANCE OF JURISDICTIONAL NOTICES WAS ERRONEOUS AGAINST THE CB DT INSTRUCTIONS/CIRCULARS AND ORDER OF HIGHER AUTHORIT IES, CONSEQUENTLY THE ASSESSEMENT PROCEEDINGS WERE WITHOUT JURISDICTION, THEREFORE ASSESSMENT ORDER IS VOID-AB-INITIO AND LIABLE TO BE QUASHED. (2) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE CASE WAS SELECTED FOR SCRUTINY IN ITA NO. 528/JP/14 M/S MEFCO ENTERPRISES PVT. LTD. J AIPUR VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 4, JAIPUR 2 CONTRAVENTION TO CBDT INSTRUCTION NO. 6/2007 DATED 18.07.2007, THEREFORE THE WHOLE ASSESSMENT IS VOID-AB-INITIO AN D LIABLE TO BE QUASHED. (3) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IN NOT CONSIDERING THE FACT THAT IN ABSENCE O F AN ORDER U/S 127 OF THE IT ACT, 1961, TRANSFERRING THE CASE FROM ITO, W ARD 4(2) JAIPUR TO THE ACIT, CIRCLE-4, JAIPUR, THE ASSESSMENT IS WITHOUT J URISDICTION, ILLEGAL AND THEREFORE CONSEQUENT ASSESSMENT ORDER DATED 28.12.2 010 AND IMPUGNED APPELLATE ORDER IS ILLEGAL AND LIABLE TO BE QUASHED . (4) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IS NOT CONSIDERING THE FACT THAT ASSUMPTION O F JURISDICTION FOR SCRUTINY ASSESSMENT BY THE LD. AO (ACIT-4, JAIPUR) AND ISSUANCE OF NOTICE U/S 142(1) DATED 16.07.2010 IS BARRED BY LIMITATION , THEREFORE THE ORDER PASSED BY THE LD. CIT(A), BIKANER IS INSUPPORTABLE IN LAW AND ON FACTS. (5) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE DEDUCTION MADE BY A.O. ON A CCOUNT OF BACK ENDED CAPITAL INVESTMENT SUBSIDY OF RS. 50 LACS OUT OF TH E COST OF PLANT AND MACHINERY AND COLD STORAGE BUILDING. (6) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 8,32,611/- ON ACCOUNT OF DISALLOWANCE OF ALLEGED EXCESS CLAIM OF DEPRECIATIO N ON COLD STORAGE BUILDING. (7) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 1,63,675/- ON ACCOUNT OF DISALLOWANCE OF ALLEGED EXCESS CLAIM OF DEPRECIATIO N ON PLANT AND MACHINERY. (8) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IN DENYING THE DEDUCTION OF RS. 9,27,000/- M ADE BY THE AO U/S 80IB(11) U/S OF THE IT ACT, 1961 TO THE APPELLANT. (9) BECAUSE THE LD. CIT(A), BIKANER CAMP AT JAIPUR HAS ERRED IN LAW AND ON THE FACTS IN NOT ALLOWING DEDUCTION U/S 80IB(11)OF THE INCOME TAX ACT, 1961. ITA NO. 528/JP/14 M/S MEFCO ENTERPRISES PVT. LTD. J AIPUR VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 4, JAIPUR 3 (10) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.2388/- MADE BY THE AO ALLEGING LATE DEPOSIT OF ESI EMPLOYEE CONTRIBUTION. (11) THAT THE LD. CIT(A), BIKANER (CAMP AT JAIPUR) HAS ERRED IN LAW AND ON FACTS IN REJECTING THE GROUND OF APPEAL FILED BEFO RE HIM. (12) THAT THE IMPUGNED APPELLATE ORDER PASSED BY TH E LD. CIT(A), BIKANER (CAMP AT JAIPUR) IS ILLEGAL AND IS AGAINST THE PRIN CIPLES OF NATURAL JUSTICE AND EQUITY THEREFORE, THE SAME IS LABEL TO BE QUASH ED. 2. DURING THE COURSE OF HEARING, THE LD. AR HAS SUBMIT TED THAT HE DID NOT WISH TO PRESS THE GROUNDS NOS. 1 TO 4 OF THE APPEAL . HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 3. GROUND NOS. 11 & 12 ARE GENERAL IN NATURE AND NO SPECIFIC ARGUMENTS HAVE BEEN MADE BY THE LD AR IN THIS REGARD. HENCE THE SAME ARE DISMISSED. 4. REGARDING GROUND NO.10 REGARDING ESI EMPLOYEE CO NTRIBUTION, THE SAME IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIO N OF HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. UDAIPUR DUGDH UTPADAK SAHA KARI SANGH LTD. REPORTED IN (2013) 35 TAXMAAN.COM 616 (RAJASTHAN). HENCE THE SAME IS ALLOWED. 5. REGARDING GROUND NOS. 8 & 9 IN RESPECT OF CLAIM OF DEDUCTION U/S 80IB(11) OF THE ACT, THE SAME IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN ASSESSE ES OWN CASE FOR A.Y. 2005- 06. HENCE THE SAME IS ALLOWED. 6. REGARDING GROUND NO.5 WHEREIN THE ASSESSEE HAS C HALLENGED DEDUCTION OF BACK ENDED CAPITAL INVESTMENT SUBSIDY OF RS. 50 LACS OUT OF THE COST OF PLANT ITA NO. 528/JP/14 M/S MEFCO ENTERPRISES PVT. LTD. J AIPUR VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 4, JAIPUR 4 AND MACHINERY AND COLD STORAGE BUILDING, IT IS NOTE D THAT THE ISSUE WAS CONSIDERED BY THE COORDINATE BENCH IN A.Y. 2005-06 AND WHICH HAS SUBSEQUENTLY BEEN AFFIRMED BY THE DECISION OF HON BLE RAJASTHAN HIGH COURT IN DB APPEAL NO.6610/2009 DATED 27.07.2011. THE RELEV ANT FINDINGS OF THE HONBLE RAJASTHAN HIGH COURT CONFIRMING THE FINDING S OF THE COORDINATE BENCH ARE REPRODUCED AS UNDER. IT WAS ALSO SUBMITTED BY THE LD. COUNSEL FOR THE APPELLANT THAT AO WAS JUSTIFIED IN DEDUCTING THE AMOUNT OF SUBSIDY FROM THE COST OF PLANT AND MACHINERY AND COLD STORAGE BUILDING. THE ITAT IN TH IS RESPECT HAS AFFIRMED THE FINDINGS OF CIT(A). FOLLOWING REASONS HAVE BEEN ASS IGNED BY ITAT: (12) CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THA T THE AO WHILE DEALING WITH THE ISSUE HAS NOT CONSIDERED THE MATERIAL CONC EPT OF BLACK ENDED SUBSIDY RELEASED BY NABARD TO THE BANK OF BARODA W ITH A DIRECTION TO SANCTION THE SUCH AMOUNT AS A TERM LOAN TO THE ASSE SSEE. IN THE BOOKS OF THE BANK AT THAT TIME THE SAID AMOUNT OF SUBSIDY WA S SANCTIONED TO THE ASSESSEE AS TERM LOAN AND IT WAS ACCOUNTED FOR BY T HE BANK OF BARODA, IN A SEPARATE ACCOUNT SUBSIDY RESERVE FUND ACCOUNT. THE SAID AMOUNT OF SUBSIDY WAS TO BE RELEASED ON COMPLETE REPAYMENT OF REMAINING TERM LOAN OUTSTANDING SUBSIDY AMOUNT AND BANK OF BARODA ITSELF IN THEIR LETTER DATED 30.01.2008 HAS CERTIFIED THAT RS. 50 LACS W AS TREATED AS THE REPAYMENT ON TERM LOAN ON 10.05.2006 WHICH REPRESE NTS THE SUBSIDY AMOUNT AS RECEIVED EARLIER FROM NABARD FOR THE EXEC UTION OF PROJECT OF COLD STORAGE BUT ON COMPLETION OF LOCK IN PERIOD. CONSIDERING THIS ASPECT OF THE MATTER WE ARE OF THE VIEW THAT THE L D. CIT(A) HAS RIGHTLY COME TO THE CONCLUSION THAT THE AO WAS NOT JUSTIFIE D IN REDUCING THE SUCH AMOUNT FROM THE COST RIGHT FROM ASSESSMENT YEAR 199 9-2000 FROM THE BLOCK VALUE OF SUCH AMOUNT OF SUBSIDY IS LIABLE TO BE REDUCED IN ASSESSMENT YEAR 2007-08 I.E. WHEN IT IS TREATED AS SUBSIDY. THE LD. CIT(A) HAS THUS RIGHTLY DIRECTED THE AO TO ALLOW THE CLAI MED DEPRECIATION AT RS. 22,48,421/- FOR BUILDING AND PLANT AND MACHINERY FO R THE YEAR CONSIDERATION N S AGAINST RS. 11,34,887/- ALLOWED BY THE AO. THE FIRST APPELLATE ORDER IS REASONED ONE HENCE THE SAME IS UPHELD. THE GROUND NO.3 IS ACCORDINGLY REJECTED. ITA NO. 528/JP/14 M/S MEFCO ENTERPRISES PVT. LTD. J AIPUR VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 4, JAIPUR 5 THE TRIBUNAL HAS CONSIDERED THAT WHEN THE SUBSID Y AMOUNT WAS RELEASED AND ADJUSTED, VARIOUS COMMUNICATIONS HAVE BEEN CONSIDER ED WHICH WERE RECEIVED ON COMPLETION OF LOCK IN PERIOD, IT HAS BEEN ADJUST ED IN 2007-08 I.E. WHEN IT IS TREATED AS SUBSIDY. THE REASONING WHICH HAVE BEEN ASSIGNED BY ITAT, HAVE NOT BEEN SHOWN TO BE PERVERSE IN ANY MANNER. THUS, WE FIND THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THE APPEAL. THE APPE AL BEING DEVOID OF MERIT IS HEREBY DISMISSED. 7. THE LD. DR SUBMITTED THAT THE SAID FINDINGS OF T HE HONBLE RAJASTHAN HIGH COURT HAS BEEN DULY FOLLOWED BY THE AO WHILE COMPLE TING THE ASSESSMENT PROCEEDINGS FOR THE SUBJECT ASSESSMENT YEAR WHEREIN THE WRITTEN DOWN VALUE OF THE ASSETS HAVE BEEN DETERMINED AFTER REDUCING T HE SUBSIDY FOR THE PURPOSES OF ALLOWABILITY OF DEPRECIATION. 8. PER CONTRA, THE LD AR TOOK US THROUGH THE FINDIN GS OF THE COORDINATE BENCH IN ITA NO. 716/JP/13 DATED 16.12.2015 FOR AY 2007-08. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE HONBLE RAJASTHAN HIGH COURT HAS APPRO VED THE FINDINGS OF THE COORDINATE BENCH THAT THE AO WAS NOT JUSTIFIED IN R EDUCING THE AMOUNT OF SUBSIDY FROM THE COSTS OF THE ASSETS FROM AY 1999-2 000 BUT SUCH SUBSIDY IS LIABLE TO BE REDUCED IN AY 2007-08 AND IN FACT HAS BEEN ADJUSTED IN AY 2007-08. RESPECTFULLY FOLLOWING THE JURISDICTIONAL HONBLE R AJASTHAN HIGH COURT DECISION AS REFERRED SUPRA, THE GROUND NO. 5 & 7 TAKEN BY TH E ASSESSEE ARE DISMISSED. ITA NO. 528/JP/14 M/S MEFCO ENTERPRISES PVT. LTD. J AIPUR VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 4, JAIPUR 6 10. REGARDING GROUND NO.6 REGARDING CLASSIFICATION OF COLD STORAGE BUILDING AND RESULTANT RATE OF DEPRECIATION, THE SAME IS COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF COORDINATE BENCH FOR A .Y. 2005-06 WHEREIN COLD STORAGE BUILDING HAVE BEEN HELD AS PLANT FOR THE PURPOSES OF CLAIMING DEPRECIATION. HENCE THE DEPRECIATION @ 15% ON COLD STORAGE BUILDING AS CLAIMED BY THE ASSESSEE IS SUSTAINED. THE GROUND N O.5 IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/03/ 2017. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 07/03/2017 VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S MEFCO ENTERPRISES, (P) LTD. JA IPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-4, JAIPUR 3. VK;DJ VK;QDR@ CIT II, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A) II, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.528/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR. ITA NO. 528/JP/14 M/S MEFCO ENTERPRISES PVT. LTD. J AIPUR VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 4, JAIPUR 7