JCIT(OSD), C-1(1), Chandigarh V. M/s Kuantum Papers Ltd., Chandigarh

ITA 55/CHANDI/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4962 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 18-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDERKANTA ADD
• Keywords: Depreciation; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE MS DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.55/CHD/2018 (ASSESSMENT YEAR : 2014-15) THE D.C.I.T., VS. M/S KUANTUM PAPERS LTD., CIRCLE-1(1), SCO 18-19, 1 ST FLOOR, SECTOR 8-C, CHANDIGARH. CHANDIGARH. PAN: AADCA2231K (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. CHANDERKANTA, ADD.CIT RESPONDENT BY : SHRI VINEET KRISHAN, ADV. DATE OF HEARING : 03.05.2018 DATE OF PRONOUNCEMENT : 10.05.2018 ORDER PER ANNAPURNA GUPTA, A.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-2, NOIDA DATED 25.10.2017, RELATING TO ASSESSMENT YEAR 2014-15. 2. GROUND NOS. 1 AND 2 RAISED BY THE REVENUE RELATE TO THE ISSUE OF DISALLOWANCE OF DEPRECIATION ON PAPER BRAND AND ARE BEING TAKEN UP TOGETHER. THE SAID GROUNDS READ AS UNDER: 1. 'WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS)-2, NOIDA HAS ERRED IN DE LETING THE ADDITION OF RS.18,23,590/- MADE BY ASSESSING OFFICER ON A/C OF DISALLOWANCE OF DEPRECIATION ON 'P APER BRAND' WHEN BRANDS ARE NOT COVERED UNDER THE PROVISION OF 32(1) AND ARE NOT A DEPRECIABLE ASSETS?' 2. 'WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(APPEALS)-2, NOIDA HAS ERRED IN DELETING THE ADDITI ON OF RS.18,23,590/- MADE BY ASSESSING OFFICER ON A/C OF DISALLOWANCE OF DEPRECIATION ON 'PAPER BRAND' BY REL YING ON THE DECISION OF HON'BLE ITAT, NEW DELHI IN ITA 2 NO.2263/DEL/2012 DATED 11.05.2017 FOR THE ASSESSEE'S CASE FOR A.Y. 2008-09, WITHOUT ADVERTING TO THE FACT THAT EACH ASSESSMENT YEAR IS SEPARATE AS P ER THE INCOME TAX ACT,1961?' 3. BRIEFLY STATED THE ASSESSEE IS ENGAGED IN THE B USINESS OF MANUFACTURING OF WRITING & PRINTING PAPER. WHILE FRAMING ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR, THE AO DISALLOWED DEPRECIATION CLAIMED BY THE ASSESSEE OF RS. 18,23,590/-ON PAPER BRANDS PURCHASED BY THE ASSE SSEE IN F.Y 2005-06 FOR A TOTAL CONSIDERATION OF RS.6,03,52,000/-, HOLDING THAT PAPER BRAND WAS NO T A DEPRECIABLE ASSET AND RATHER IT WAS AN APPRECIABLE ASSET WHOSE VALUE ENHANCED WITH TIME, FOLLOWING HIS ORDER PASSED U/S 143(3) OF THE ACT, FOR A.Y 2008-09 IN THE CASE OF THE ASSESSEE. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO DELETED THE DISALLOWANCE, FOLLO WING THE DECISION OF THE I.T.A.T. IN THE CASE OF THE ASSESSE E FOR ASSESSMENT YEAR 2008-09 AND ASSESSMENT YEARS 2006-0 7 TO 2013-14, WHEREIN IDENTICAL ISSUE WAS FOUND TO HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE. 5. DURING THE COURSE OF HEARING BEFORE US, THE LD. DR THOUGH FAIRLY CONCEDED THAT THE I.T.A.T. HAD DECIDE D IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESS MENT YEAR 2008-09 AND ASSESSMENT YEARS 2006-07 TO 2013-14 VID E THEIR ORDERS PASSED IN ITA NO.2263/DEL/2012 AND IN ITA NOS.1339 TO 1346/DEL/2012,HE HOWEVER RELIED UPON TH E ORDER OF THE ASSESSING OFFICER. 3 6. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 7. WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND NO MERIT IN THE PRESENT GROUNDS RAISED BY THE REVENUE. ADMIT TEDLY, IDENTICAL ISSUE HAS BEEN DECIDED BY THE I.T.A.T. IN THE CASE OF THE ASSESSEE ITSELF, IN ITS FAVOUR. NO DISTINGUI SHING FACTS HAVE BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. WE, THEREFORE, SEE NO REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(APPEALS) WHO HAS FOLLOWED THE ORDER OF THE I .T.A.T. PASSED IN THE CASE OF THE ASSESSEE ITSELF ON IDENTI CAL ISSUE WHILE DELETING THE DISALLOWANCE SO MADE. GROUND OF APPEAL NOS.1 AND 2 RAISED BY THE REVENUE ARE, THEREFORE, DISMISSED. 8. GROUND NOS.3, 4 AND 5 RAISED BY THE REVENUE ALL RELATE TO THE ISSUE OF DISALLOWANCE OF DEPRECIATION ON CHE MICAL RECOVERY PLANT. THE SAME ARE, THEREFORE, BEING TAK EN UP TOGETHER FOR ADJUDICATION. GROUND NOS.3, 4 AND 5 R EAD AS UNDER: 3. 'WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(APPEALS)-2, NOIDA HAS ERRED IN DELETING THE ADDITION OF RS.17,06,892/- MADE BY ASSESSING OFFICE R ON A/C OF DISALLOWANCE OF DEPRECIATION ON 'CHEMICAL RECOVERY PLANT' WHEN THE COMPLETE PLANT WAS NOT PUT TO USE BY THE ASSESSEE DURING THE YEAR?' 4. 'WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(APPEALS)-2, NOIDA HAS ERRED IN DELETING THE ADDITION OF RS.20,08,107/- MADE BY ASSESSING OFFICER WHEN DURING THE APPELLATE PROCEEDINGS FOR A.Y. 2008-0 9 BEFORE THE LD. CIT(A), NEW DELHI THE ASSESSING OFFIC ER IN HIS REMAND REPORT HAD STRONGLY OBJECTED TO ADMISSIO N OF ADDITIONAL EVIDENCES & THUS THE ORDER OF THE HON'BL E ITAT IS AGAINST THE DECISION OF THE HON'BLE ITAT, NEW DELH I IN THE CASE OF ITO, WARD-24(3) VS KULDEEP & AGAINST TH E DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF 4 MANISH BUILDWELL PVT. LTD., (2012) WHEREIN IT HAS BEEN HELD THAT LD. CIT(A) WAS NOT JUSTIFIED IN DELETING TH E ADDITION WITHOUT FURTHER GIVING AN OPPORTUNITY TO THE AO & THUS THE REQUIREMENT OF GIVING THE AO ANDOPPORTUNITYASPERRULE46A(3),WAS NOT MET?' 5. 'WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(APPEALS)-2, NOIDA HAS ERRED IN DELETING THE ADDITION OF RS.17,06,892/- MADE BY ASSESSING OFFICER ON A/C OF DISALLOWANCE OF DEPRECIATION ON 'CHEMICAL RE COVERY PLANT' BY RELYING ON ITS DECISION IN ITA NO. 2263/DEL/2012 DATED 11.05.2017 FOR THE ASSESSEE'S CASE FOR A.Y. 2008-09, WITHOUT ADVERTING TO THE FAC T THAT EACH ASSESSMENT YEAR IS SEPARATE AS PER THE INCOME TAX ACT, 1961?' 9. BRIEF FACTS RELEVANT TO THE ISSUE ARE, DURING TH E YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEPRE CIATION OF RS.2,33,55,272/- ON THE CHEMICAL RECOVERY PLANT WHICH HAD BEEN INSTALLED AT THE FACTORY PREMISES OF THE A SSESSEE AT SAILA KHURD, DISTRICT HOSHIARPUR, PUNJAB. THE TO TAL COST OF PLANT WAS AT RS.42,53,48,679/-. THE ASSESSING OF FICER NOTED THAT THE ISSUE HAD BEEN DEALT WHILE FRAMING T HE ASSESSMENT U/S 143(3) OF THE ACT FOR ASSESSMENT YEA R 2008- 09 OF THE ASSESSEE, WHEREIN DEPRECIATION HAD BEEN DISALLOWED ON FINDING THAT THE AFORESAID PLANT & MA CHINERY HAD NOT BEEN PUT TO USE IN THE MONTH OF MARCH, 2008 AS CLAIMED BY THE ASSESSEE, BUT HAD BEEN PUT TO USE IN THE MONTH OF APRIL, 2008. THE ASSESSING OFFICER NOTED T HAT THE ASSESSEES APPEAL AGAINST THE SAID ORDER HAD BEEN A LLOWED BY THE CIT(APPEALS). BUT FURTHER TAKING NOTE OF THE FACT THAT AGAINST THE AFORESAID ORDER OF THE CIT(APPEALS), TH E REVENUE HAD FILED AN APPEAL BEFORE THE HON'BLE ITAT AND THEREFORE TO KEEP THE MATTER ALIVE, DEPRECIATION CL AIMED ON CHEMICAL RECOVERY PLANT WAS DISALLOWED FOR ASSESSM ENT YEAR 2008-09, FOR CALCULATING WRITTEN DOWN VALUE 5 (HEREINAFTER REFERRED TO AS WDV) OF THE ASSET AND ACCORDINGLY THE DEPRECIATION FOR THE IMPUGNED YEAR WAS WORKED OUT AT RS. 2,16,48,380/- AS AGAINST RS.2,33,55,272/- CLAIMED BY THE ASSESSEE. THE DISALLOWANCE TO THE EXTENT OF EXCESS DEPRECIATION CLAIMED THEREFORE OF RS. 17,06,892/- WAS MADE. THE RELEVAN T FINDINGS OF THE ASSESSING OFFICER AT PARA 4 OF HIS ORDER IS AS UNDER: 4. THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION, HAS CLAIMED DEPRECIATION OF RS.2,33,55,272/- ON THE CHEMICAL RECOVERY PLANT WHICH HAS BEEN INSTALLED AT THE FACTORY PREMISES OF THE ASSES SEE AT SAILA KHURD, DISTRICT HOSHIARPUR, PUNJAB. THE TOTAL COS T OF PLANT IS AT RS.42,53,48,679/-. A DETAILED DISCUSSION O N THE ABOVE MATTER HAS BEEN MADE IN THE ASSESSMENT ORDER U/S 143(3) DATED 30.12.2010 FOR A.Y. 2008-09. THE A O DISALLOWED DEPRECIATION IN A.Y. 2008-09 AND HAS CONCLUDED THAT THE AFORESAID PLANT & MACHINERY WAS NOT PUT TO USE IN THE MONTH OF MARCH, 2008 AS CLAIMED BY THE ASSESSEE BUT HAS BEEN PUT TO USE IN THE MONTH OF APRIL, 2008. THE REFORE, DISALLOWANCE OF DEPRECIATION WAS MADE IN A.Y. 2008-09. THE ASSESSEE FILED AN APPEAL AGAINST ORDER U/S 143(3) AN D THE HON'BLE CIT(A)-IV, NEW DELHI VIDE ORDER DATED 16.02.2012 IN APPEAL NO. 98/10-11 HAS DELETED THE DISALLOWANCE OF DEPRECIATION ON CHEMICAL RECOVERY PLANT. AGAINST THE AFORESAID ORDER OF THE CIT(A), THE REVENUE HAS FILED A N APPEAL BEFORE THE HON'BLE ITAT AND THEREFORE TO KEEP THE MA TTER ALIVE DEPRECIATION CLAIMED ON CHEMICAL RECOVERY PLAN T HAS BEEN DISALLOWED IN THE ASSESSMENT U/S 143(3)/153A FOR A.Y. 2008-09. AS THE DEPRECIATION FOR A.Y. 2008-09 HAS BEEN DISALLOWED AND THE DEPRECIATION IN A.Y. 2009-10 HAS BEEN ALLOWED ON THE FULL COST OF PLANT AS THE SAME WAS PU T TO USE IN APRIL, 2008. TOTAL DEPRECIATION OF RS. 14,88,72,038 /- HAS BEEN ALLOWED IN A.Y. 2009-10, DEPRECIATION OF RS. 4,14,71,496/- HAS BEEN ALLOWED IN A.Y. 2010-11, DEPRECIATION OF RS. 3,52,50,772/-HAS BEEN ALLOWED, IN A.Y. 2011-12, DEPRECIATION OF RS.2,99,63,156/- HAS BEEN ALLOWED IN A.Y. 2012-13 AND DEPRECIATION OF RS.2,54,68,683/- HAS BEEN ALLOWED IN A.Y. 2013-14. THE WDV AS ON 01.04.2013 A MOUNTS TO RS.14,43,22,535/- ON WHICH DEPRECIATION ALLOWABLE F OR THE YEAR UNDER CONSIDERATION COMES TO RS.2,16,48,380/- AS AGAINST DEPRECIATION OF RS.2,33,55,272/- CLAIMED BY T HE ASSESSEE. THEREFORE, THE NET DISALLOWABLE DEPRECIATION COMES TO RS.17,06,892/-. IN VIEW OF THE ABOVE, DEPRECIATION OF RS.17,06,982/- IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE FURNISHED INACCURATE PARTICU LARS OF INCOME AND THEREFORE, PROVISIONS OF SECTION 271( L)(C) 6 ARE ATTRACTED AND THEREFORE, PENALTY PROCEEDINGS U/ S 271(L)(C) ARE ALSO CONSIDERED SEPARATELY. 10. THE LD.CIT(APPEALS) DELETED THE DISALLOWANCE FO LLOWING THE ORDERS OF THE I.T.A.T. IN THE CASE OF THE ASSES SEE FOR ASSESSMENT YEAR 2008-09 AND FOR ASSESSMENT YEARS 20 06- 07 TO 2013-14 WHEREIN HE FOUND THAT IDENTICAL ISSUE OF DISALLOWANCE OF DEPRECIATION OF CHEMICAL RECOVERY P LANT HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE. 11. DURING THE COURSE OF HEARING BEFORE US, AT THE OUTSET, IT WAS POINTED OUT THAT GROUND NO.4 RELATING TO THE ADMISSION OF ADDITIONAL EVIDENCES WAS NOT RELEVANT TO THE PRESENT CASE SINCE NO ADDITIONAL EVIDENCES WERE FIL ED IN THE PRESENT CASE. GROUND NO.4 RAISED BY THE REVENUE, THEREFORE, IS DISMISSED. 12. VIS--VIS GROUND NOS.3 AND 5, THE LD. DR ADMITT ED THAT THE BASIS FOR MAKING DISALLOWANCE IN THE PRESE NT CASE, WAS THE DISALLOWANCE OF DEPRECIATION ON THE SAID AS SET IN ASSESSMENT YEAR 2008-09 AND THE ALLOWANCE THEREOF I N SUBSEQUENT YEARS ,WHICH CONSEQUENTLY RESULTED IN WD V AS AT THE BEGINNING OF THE IMPUGNED YEAR BEING RS.14,43,22,535/- ,ENTITLING THE ASSESSEE TO DEPREC IATION THEREON OF RS.2,16,48,380/- AS AGAINST RS.2,33,55,2 72/- CLAIMED BY THE ASSESSEE. THE LD.DR FAIRLY ADMITTED THAT THE DISALLOWANCE OF DEPRECIATION MADE IN A.Y 2008-09 HAD BEEN DELETED BY THE I.T.A.T. IN ITS AFORESTATED ORD ER AND THE BASIS OF DISALLOWANCE MADE IN THE IMPUGNED YEAR THE REFORE DID NOT SURVIVE. 7 13. LD.COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). 14. IN VIEW OF THE ABOVE, SINCE IT HAS BEEN FAIRLY ADMITTED BY THE LD. DR THAT THE DISALLOWANCE OF DEPRECIATION IN THE CHEMICAL RECOVERY PLANT DOES NOT SURVIVE, SINCE THE VERY BASIS ON WHICH IT WAS MADE BY THE ASSESSING OFFICER WAS THE DISALLOWANCE OF DEPRECIATION ON THE CHEMICAL RE COVERY PLANT IN ASSESSMENT YEAR 2008-09, RESULTING IN REDU CING THE CLAIM OF DEPRECIATION IN THE IMPUGNED YEAR, WHI CH HAS BEEN DELETED BY THE I.T.A.T. IN ITS ORDER PASSED IN ASSESSMENT YEAR 2008-09, WE FIND NO REASON TO INTER FERE IN THE ORDER OF THE CIT(A). GROUND NOS.3 AND 5 RAISED BY THE REVENUE ARE ALSO DISMISSED . 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH MAY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 8