Asst. Commissioner of Income Tax, Circle-2(1), Panaji, Panaji V. M/s . Goa Shipyard Ltd., Vasco

ITA 54/PAN/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93557 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND S MARATHE LD
• Keywords: Depreciation; Additional depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NOS. 53 & 54/PNJ/2015 : (A.YS 2008 - 09 & 2011 - 12) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), PANAJI, GOA (APPELLANT) VS. M/S. GOA SHIPYARD LTD. VADDEM HOUSE, VASCO DA GAMA, GOA (RESPONDENT) PAN : AAACG7569F ASSESSEE BY : PRAMOD Y. VAIDYA, ADV. REVENUE BY : ANAND S. MARATHE, LD. DR DATE OF HEARING : 16/07/2015 DATE OF PRONOUNCEMENT : 16/07/2015 O R D E R PER GEORGE MATHAN : 1. ITA NO. 53/PNJ/2015 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), PANAJI IN ITA NO. 344/MRG/13 - 14 DT. 11.11.2014 FOR THE A.Y 2008 - 09 AND ITA NO. 54/PNJ/2015 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), PANAJI IN ITA NO. 260/MRG/13 - 14 DT. 11.11.2014 FOR THE A.Y 2011 - 12. SHRI ANAND S. MARATHE, LD. DR REPRESENTED ON BEHALF OF THE REVENUE A ND SHRI PRAMOD Y. VAIDYA, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. ITA NO. 53/PNJ/2015 : 2. IN THE REVENUES APPEAL, THE LD. DR SUBMITTED THAT THE ONLY ISSUE WAS AGAINST THE ACTION OF L D . CIT(A) IN DIRECTING THE AO TO ALLOW FULL AMOUNT OF TDS ON THE ADVANCE RECEIVED FROM THE CUSTOMERS WHEREIN PART OF THE ADVANCES 2 ITA NOS. 53 & 54/PNJ/2015 (A.YS : 2008 - 09 & 2011 - 12) WERE NOT OFFERED TO TAX DURING THE RELEVANT ASSESSMENT YEAR BUT WAS SHOWN AS WORK IN PROGRESS. IT WAS THE SUBMISSION THAT IN THE COURSE OF THE ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE HAD CLAIMED TDS CREDIT OF RS. 7,01,13,971/ - BUT THE ASSESSEE HAD SHOWN SALES OF ONLY RS. 26,94,13,119/ - . IT WAS THE SUBMISSION THAT CONSEQUENTLY THE AO HAD ALLOWED THE ASSESSEE ONLY THE CLAIM OF RS.56,60,440/ - AGAINST THE TDS. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD ALLOWED THE ASSESSEES CLAIM BY HOLDING THAT THE ASSESSEE HAD SHOWN GROSS RECEIPT OF RS. 400,93,84,713/ - OUT WHICH AN AMOUNT OF RS. 290,26,46,038/ - PERTAINS TO THE INCREASE IN THE WORK IN PROGRESS. IT WAS THE SUBMISSION THAT THE AMOUNT HAVING BEEN SHOWN ONLY IN THE WORK IN PROGRESS, SAME COULD NOT BE TREATED AS THE INCOME OF THE ASSESSEE AGAINST WHICH THE CREDIT OF TDS COULD BE GRANTED. 3. IN REPLY, THE LD. AR SUBMITTED THAT THE ASSESSEE HAS SHOWN INCREASE IN THE WORK IN PROGRESS AND C ONSEQUENTLY THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE UPHELD INSOFAR AS THE INCREASE IN THE WORK IN PROGRESS HAS BEEN SHOWN IN THE PROFIT AND LOSS ACCOUNT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMITTEDLY, A PERUSAL OF THE PROFIT AND LOSS ACCO UNT IN THE CASE OF THE ASSESSEE SHOWS THAT THE SALES AS DISCLOSED IN THE PROFIT AND LOSS ACCOUNT IS ONLY RS. 26,94,13,119/ - . T HOUGH THE LD. CIT(A) SAYS THAT THE ASSESSEE HAS SHOWN GROSS RECEIPT OF RS. 400 CRORES AND MORE, THE SAID AMOUNT OF RS. 400 CRORES INCLUDES VARIOUS OTHER ITEMS OF INCOME. ADMITTEDLY, THERE IS AN ACCRETION IN THE WORK IN PROGRESS IN THE PROFIT AND LOSS ACCOUNT BUT WHEN THE SAME IS VERIFIED WITH THE BALANCE SHEET IN I NVENTORIES , THE W ORK IN PROGRESS IN SCHEDULE - 5 IS A SUBSTANTIAL CO NTRA ENTRY OF THE VALUE OF THE WORK IN PROGRESS ACCRETION AND DECRETION IN SCHEDULE - 12 WHICH IS AS SHOWN IN THE PROFIT AND LOSS ACCOUNT. THIS IS BECAUSE THIS AMOUNT OF WORK IN PROGRESS AT THE CLOSE OF THE YEAR REPRESENTING RS. 622.46 CRORES IS ALSO CONSID ERED IN THE 3 ITA NOS. 53 & 54/PNJ/2015 (A.YS : 2008 - 09 & 2011 - 12) BALANCE SHEET IN THE WORK IN PROGRESS. IN THE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE HAS OFFERED THE INCOME IN RESPECT OF THE ADVANCES RECEIVED FROM THE CUSTOMERS ON WHICH THE TDS HAS BEEN DEDUCTED. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE WOULD BE ENTITLED TO CLAIM OF CREDIT OF TDS IN THE YEAR IN WHICH THE SAID PROJECTS IN RESPECT OF WHICH THE ADVANCES HAVE BEEN GIVEN ARE COMPLETED AS THAT WOULD BE THE YEAR IN WHICH THE INCOME IS OFFERED TO TAX . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED. ITA NO. 5 4 /PNJ/2015 : 5. IN THE REVENUES APPEAL, THE LD. DR SUBMITTED THAT THE ONLY ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(A) IN HOLDING THAT THE CIVIL STRUCTURES IN RESPECT OF THE SHIP LIFT SYSTEM FOR DOCKING AND UNDOCKING OF THE SHIPS WAS A PLANT WHICH WAS ENTITLED TO HIGHER RATE OF DEPRECIATION AND ADDITIONAL DEPRECIATION. IT WAS THE SUBMISSION THAT DURING THE YEAR THE ASSESSEE HAD PUT TO USE SHIP LIFT EQUIPMENT WHICH INCLUDED PIER 1 & 2 WHICH CONSISTED OF PLANT AND MACHINERY AND OTHER CIVIL WORKS. IT WAS THE SUBMISSION THAT ON THE CIVIL WORKS, DEPRECIATION WAS NOT LIABLE TO BE GRANTED. 6. IN REPLY, THE LD. AR DREW OUR ATTENTION TO PAGES 7 & 8 OF THE ORDER OF THE LD. CIT( A) WHICH WERE PHOTOGRAPHS IN RESPECT OF THE SHIP LIFT PLATFORM AS ALSO THE TECHNICAL DIAGRAM. IT WAS THE SUBMISSION THAT WITHOUT THE SAID CIVIL STRUCTURE THE PLANT AND MACHINERY ITSELF CANNOT BE OPERATED. IT WAS THE SUBMISSION THAT IF THE FUNCTIONAL TES T IS APPLIED, THE PLANT AND MACHINERY CANNOT FUNCTION ON A STAND ALONE BASIS AND THE CIVIL STRUCTURE WAS PART OF THE PLANT AND MACHINERY. IT WAS THE SUBMISSION THAT THE CIVIL STRUCTURE WAS NOT ANY BUILDING BUT WAS SPECIFIED PIERS WHICH WERE USED FOR LIFTI NG THE SHIPS FOR REPAIRS AND MAINTENANCE. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE CONFIRMED. 4 ITA NOS. 53 & 54/PNJ/2015 (A.YS : 2008 - 09 & 2011 - 12) 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE PHOTOGRAPHS AS WELL AS THE TECHNICAL DIAGRAM CLEARLY SHOWS THAT TH E SAID SHIP LIFT SYSTEM ITSELF IS A COMPLEX INTERLOCKING OF CIVIL CONSTRUCTION WITH PLANT AND MACHINERY. IN FACT, THE PLANT AND MACHINERY CANNOT FUNCTION INDEPENDENT OF THE SPECIFIED CIVIL STRUCTURES. CONSEQUENTLY, THE SAID CIVIL STRUCTURES WOULD HAVE TO BE TREATED AS PART OF THE PLANT AND MACHINERY AND WOULD BE ELIGIBLE FOR DEPRECIATION AND ADDITIONAL RATE OF DEPRECIATION AS PLANT AND MACHINERY. IN THE CIRCUMSTANCES, WE FIND NO ERROR IN THE ORDER OF THE LD. CIT(A) AND THE SAME STANDS CONFIRMED. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE BEING ITA NO. 53/PNJ/2015 STANDS ALLOWED AND ITA NO. 5 4 /PNJ/2015 STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 /07/2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 6 /07/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 5 ITA NOS. 53 & 54/PNJ/2015 (A.YS : 2008 - 09 & 2011 - 12) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 16/07/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 16/07/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 7 /07/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 7 /07/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 7 /07/2015 SR.PS 6. DATE OF PRONOUNCEMENT 16/07/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 7 /07/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER