ACIT, New Delhi V. M/s. Sampark Industries Ltd., New Delhi

ITA 5289/DEL/2013

• Counselvise Citation: 528920114 RSA 2013
• Duration Of Justice: 1 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 13-10-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 23-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR SENIOR
• Assessee Lawyers: SANJIV KUMAR JHA
• Keywords: Depreciation; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5289/DEL./2013 (ASSESSMENT YEAR : 2003-04) ACIT, CIRCLE 7 (1), VS. M/S. SAMPARK INDUSTRIES L TD., NEW DELHI. PANCHVATI, RAM MANDIR, VASANT KUNJ, NEW DELHI-110 070. (PAN : AAFCS4898E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJIV KUMAR JHA, CA REVENUE BY : SHRI B.R.R. KUMAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE CIT (APPEALS)-X, NEW DELHI DATED 17.07.2013 FOR THE ASSESSMENT YEAR 2003-04. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF FLEXIBLE PACKAGING. THE ASSESSEE HAS STARTED COMMERCIAL PRO DUCTION IN THE FINANCIAL YEAR 2002-03. DURING THE YEAR, ASSESSEE HAS ALSO PURCHASED CPP PLANT, HOWEVER, IT WAS NOT PUT TO USE FOR THE Y EAR AND ASSESSEE HAS NOT CLAIMED ANY DEPRECIATION THEREUPON. THE ASSESS ING OFFICER MADE THE ADDITION ON ACCOUNT OF NOT ALLOWING DEPRECIATION UP TO RS.66,92,932/- AND ITA NO.5289/DEL/2013 2 ALSO MAKING ADDITION ON ACCOUNT OF ADDITIONAL GOODS SOLD OF RS.53,60,395/-. THESE ADDITIONS HAVE BEEN DELETED BY THE CIT (A) AND NOW, THE REVENUE IS IN APPEAL BY TAKING THE FOLLOWI NG GROUNDS OF APPEAL :- 1. THE LD. CIT (A) HAS ERRED IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.66,92,932/- ON ACCOUNT OF EXCESS DEPRECIATION. 2. THE LD. CJT(A) HAS ERRED IN THE FACT AND THE CIRCUMSTANCES OF THE CASE DELETING THE ADDITIONS OF RS.53,60,395/- MADE BY THE AO ON ACCOUNT OF ADDITIO NAL GOODS SOLD. 3. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, AD D OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE O R DURING THE HEARING OF THIS APPEAL. 3. IN THE GROUND NO.1, THE ISSUE INVOLVED IS AGAINS T DELETING THE ADDITION OF RS.66,92,932/- MADE ON ACCOUNT OF EXCES S DEPRECIATION AS PER ASSESSING OFFICERS VERSION. 4. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE ASSESSING OFFICER MADE THIS ADDITION ON THE BASIS THAT ASSESSEE HAS C LAIMED DEPRECIATION ON PLANT AND MACHINERY VALUED AT RS.5,35,43,458/- WHIC H WERE PUT TO USE AFTER 18.03.2003 AND ON THIS CONCLUSION, THE ASSESS ING OFFICER RELIED ON THE CUSTOM CLEARANCE CERTIFICATE DATED 18.03.2013 A ND HELD THAT ONLY 12.5% DEPRECIATION IS ALLOWABLE ON SUCH MACHINERY. HOWEVER, THE CIT (A) ADMITTED THE ADDITIONAL EVIDENCES AND ALSO ACCE PTED THE ASSESSEES CLAIM THAT MACHINERY WHICH HAS BEEN CLEARED BY THE CUSTOMS ON 18.03.2003 HAS NOT BEEN PUT TO USE DURING THE YEAR AND NO DEPRECIATION ITA NO.5289/DEL/2013 3 HAS BEEN CLAIMED ON THIS MACHINERY. THE CIT (A) HA S GRANTED THE RELIED BY HOLDING AS UNDER :- 2.4 AFTER GOING THROUGH THE FACTS OF THE CASE, OBS ERVATIONS OF THE A.O., SUBMISSIONS OF THE A.R., REMAND REPORT AND THE REJOINDER, THIS GROUND IS BEING FINALIZED AFTER MAK ING THE FOLLOWING OBSERVATIONS : (A) THE ASSESSING OFFICER HAS MADE THE DISALLOWANC E OF DEPRECIATION ON THE BASIS OF THE DETAILS REGARDING CERTAIN PLANT & MACHINERY WHICH WAS CLEARED BY THE CUSTOM ON 18-0 3-2003. THE A.R. OF THE APPELLANT CONTENDED THAT NO DEPRECI ATION ON THIS MACHINERY HAD BEEN CLAIMED BY THE APPELLANT AN D, THEREFORE, THERE WAS NO QUESTION OF DISALLOWING THE SAME. DURING THE REMAND PROCEEDINGS, THE ASSESSING OFFICE R HAS CLEARLY MENTIONED THAT THIS PLANT & MACHINERY HAD N OT BEEN PUT TO USE DURING THE YEAR ENDING ON 31-03-2003 AND HAS BEEN SHOWN AS CAPITAL WORK-IN-PROGRESS IN THE BALANCE SH EET ALONG WITH VARIOUS OTHER MACHINERIES TOTALING RS.7,60,.29 ,621/- WHICH INCLUDED THE FIGURE OF RS.5,68,80,L16/-. ACC ORDINGLY, THIS IMPLIES THAT NO DEPRECIATION HAS BEEN CLAIMED ON THIS PLANT & MACHINERY WHICH HAS NOT BEEN PUT TO USE DURING TH E YEAR. (B) EVEN ON GOING THROUGH THE BALANCE SHEET AS WEL L AS THE CONTENTIONS AND REPORT OF THE ASSESSING OFFICER IN THE REMAND REPORT, THE ARGUMENTS AND SUBMISSIONS OF THE A.R. A RE FOUND TO BE FACTUALLY CORRECT. AFTER CONSIDERING THESE FACTS IT IS CLEAR THAT UNLESS THE DEPRECIATION HAS ACTUALLY BEEN CLAI MED BY THE APPELLANT, THERE WAS NO QUESTION OF DISALLOWING THE SAME. IN VIEW OF THE ABOVE OBSERVATIONS, THE DEPRECIATION DISALLOWED BY THE ASSESSING OFFICER APPEARS TO BE W ITHOUT ANY BASIS AS IT HAS NEVER BEEN CLAIMED BY THE APPELLANT . THEREFORE, THIS GROUND OF THE APPELLANT IS TREATED AS ALLOWED. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE ASSE SSEE HAS NOT CLAIMED DEPRECIATION ON THE MACHINERY WHICH HAS BEEN CLEARE D BY THE CUSTOMS ON 18.03.2003, THEREFORE, WE FIND NO FAULT IN THE ORDE R OF THE CIT (A). ITA NO.5289/DEL/2013 4 ACCORDINGLY, THE ORDER OF THE CIT (A) IS SUSTAINED ON THIS GROUND OF REVENUES APPEAL. THIS GROUND IS DISMISSED. 5. IN THE GROUND NO.2, THE ISSUE RAISED BY THE REVE NUE IS WITH REGARD TO DELETION OF ADDITION OFRS.53,60,395/- ON ACCOUNT OF ADDITIONAL GOODS SOLD. 6. WE HAVE HEARD BOTH THE SIDES ON T HE ISSUE. THE ASSESSING OFFICER COMPARED THE UTILIZATION OF RAW MATERIAL OF 11,76,4 91.96 KGS. WITH OUTPUT OF 11,30,364.95 KGS. AND HELD THAT ASSESSEE HAS NOT SHOWN SALE OF GOODS OF 46,127.015 KGS. AND MADE THE ADDITION. HOWEVER, THE ASSESSEE HAS EXPLAINED THE DIFFERENCE BY STATING THAT THESE GOOD S OF 46,127.015 KGS. WERE PART OF THE WORK-IN-PROGRESS WHICH HAS BEEN RE FLECTED IN THE BOOKS OF ACCOUNTS WORTH RS.57,80,745/-, THEREFORE, THERE WAS NO DIFFERENCE. THE ASSESSING OFFICER WAS NOT ABLE TO CONTROVERT THIS C ONTENTION OF THE LD. AR IN THE REMAND REPORT. BEFORE US ALSO, THE REVENUE HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE CIT (A) RECORDED IN PARA 3.3 OF HIS ORDER WHICH READ AS UNDER :- 3.3 AFTER GOING THROUGH THE FACTS OF THE CASE, OBS ERVATIONS OF THE A.O., SUBMISSIONS OF THE A.R., REMAND REPORT AND THE REJOINDER, THIS GROUND IS BEING FINALIZED AFTER MAK ING THE FOLLOWING OBSERVATIONS : (I) ON GOING THROUGH THE ARGUMENTS OF THE ASSESSIN G OFFICER, IT WAS OBSERVED THAT THE ASSESSING OFFICER INITIALLY MADE THE ADDITION BY IDENTIFYING QUANTITATIVE MIS-MATCH AND, THEREFORE, TREATED THE QUANTITY OF 46,127.015 KG AS OUTSIDE THE BOOKS. HOWEVER, SUBSEQUENTLY THE ASSESSING OFFICE R HAS STATED THAT IN THE BOOKS OF ACCOUNTS THE SAME HAD BEEN EXP LAINED UNDER THE ANNEXURE 'R' OF FORM 3CD FOR A.Y. 2003-04 . THE A.R. OF THE APPELLANT HAS ALSO CONSISTENTLY ARGUED THAT THIS ITA NO.5289/DEL/2013 5 DIFFERENCE IN QUANTITY WAS SELF-EXPLANATORY IN THE AUDITED ACCOUNTS OF THE APPELLANT AND, THEREFORE, NO ADDITI ON COULD HAVE BEEN MADE. (II) THE A.R. OF THE APPELLANT HAS ARGUED THAT THIS DIFFERENCE OF RS.53,60,395/- WAS INCLUDED IN THE W ORK-IN- PROGRESS WHICH HAD BEEN SHOWN AT RS.57,80,745/-. D ETAILS REGARDING THE NATURE OF GOODS AMOUNTING TO 46,127.0 15 KG WERE PROVIDED ALSO THROUGH COPY OF AUDITED ACCOUNTS AND BALANCE SHEET. IT APPEARS THAT THE ASSESSING OFFICE R IS SATISFIED WITH THE EXPLANATION OF THE A.R. Q THE APPELLANT, A S NO ADVERSE COMMENTS HAVE BEEN GIVEN IN THE REMAND. REPORT WITH REGARD TO THE EXPLANATION OF THE A.R. OF THE APPELLANT. KEEPING IN VIEW THE EXPLANATION OF THE A.R. OF THE APPELLANT AND ALSO SUPPORTING DOCUMENTS, WHICH WERE FORWARDED TO THE A.O. FOR HIS COMMENTS, SINCE NO AD VERSE FINDINGS HAVE BEEN GIVEN BY THE ASSESSING OFFICER, THIS ADDITION DOES NOT APPEAR TO BE JUSTIFIED. THE A.O. IS DIRECT ED TO DELETE THE ADDITION SINCE PROPER QUANTITIES HAD BEEN PROVI DED BY THE EXPLANATION FOR THIS MIS-MATCH OF APPELLANT AND NO DISPUTED BY THE A.O. THIS GROUND IS TREATED AS ALLOWED. IN THE ABOVE FACTUAL MATRIX, WE FIND NO MERITS IN T HIS GROUND OF APPEAL AND WE SUSTAIN THE ORDER OF THE CIT (A) ON THIS GRO UND. THIS GROUND IS DISMISSED. 7. GROUND NO.3 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY ADJUDICATION. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF OCTOBER, 2014. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 21 ST DAY OF OCTOBER, 2014/TS ITA NO.5289/DEL/2013 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-X, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT