JCT Electronics Limited, Mohali V. DCIT, Chandigarh

ITA 550/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80973 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: MAHESH SAHAI; S K SOOD
• Keywords: Capital asset; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 550/CHD/2011 ASSESSMENT YEAR : 2007-08 JCT ELECTRONICS LIMITED, VS. THE D.C.I.T., PHASE VIII, INDUSTRIAL AREA, CIRCLE 6(1) MOHALI. CHANDIGARH. PAN: AAACJ5084A (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI MAHESH SAHAI & S.K.SOOD RESPONDENT BY : SHRI J.S.NAGAR, DR DATE OF HEARING : 29.10.2014 DATE OF PRONOUNCEMENT : 31.10.2014 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S), CHANDIGARH DATED 31.3.2011 FOR ASSESSMENT YEAR 2007 -08. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 3. ON GROUND NO.1, THE ASSESSEE CHALLENGED THE ORDE R OF LEARNED CIT (APPEALS) IN DISALLOWING DEPRECIATION A MOUNTING TO RS.56,51,251/- ON THE ASSETS HELD BY THE ASSESSE E COMPANY AT MOHALI. THE LEARNED CIT (APPEALS) FOUND THAT T HE ASSESSEE COMPANY HAD TWO MANUFACTURING UNITS, ONE AT MOHALI, PUNJAB AND OTHER AT VADODARA, GUJRAT. THE OPERATION OF M OHALI UNIT 2 WAS SUSPENDED IN MAY, 2001 ON ACCOUNT OF LOSSES AND FINANCIAL CONSTRAINTS, ULTIMATELY LEADING TO LOCK O UT ON 13.3.2002. THE MATTER WAS ULTIMATELY REFERRED TO BIFR. THE LEARNED CIT (APPEALS) DISMISSED THIS GROUND OF APPE AL OF THE ASSESSEE BY FOLLOWING HIS APPELLATE ORDER FOR PRECE DING ASSESSMENT YEAR 2006-07. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IN THE CASE OF SAME ASSESSEE FOR ASSESSMENT YEAR 2004- 05, THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITA NO.161 O F 2010 DATED 31.1.2011 DISMISSED SIMILAR GROUND OF APPEAL OF THE ASSESSEE. THE ISSUE IS COVERED AGAINST THE ASSESSE E. THE COPY OF THE ORDER IS PLACED ON RECORD. CONSIDERING THE ABOVE AND SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSE SSEE, IT IS CLEAR THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS ALREADY DISMISSED THE APPEAL OF THE ASSESSEE ON IDE NTICAL ISSUE IN THE PRECEDING ASSESSMENT YEAR 2004-05. T HEREFORE, THERE IS NO MERIT IN THIS GROUND OF APPEAL OF THE A SSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 4. ON GROUND NO.2, THE ASSESSEE CHALLENGED THE ORDE R OF THE LEARNED CIT (APPEALS) IN DISALLOWING MEMBERSHIP FEE PAID TO THE CLUB IN DELHI AND ONLY OF A MINOR AMOUNT TO CLU B IN CHANDIGARH AMOUNTING TO RS.1,99,381/-. THE ASSESSEE CONTENDED BEFORE THE CIT (APPEALS) THAT DESPITE MOH ALI UNIT WAS CLOSED, THE ASSESSEE MADE EFFORTS TO REVIVE IT AND IN THIS CONNECTION, EXECUTIVES OF THE ASSESSEE COMPANY IN C HANDIGARH UTILIZED THE MEMBERSHIP OF THE CHANDIGARH CLUB FOR FURTHERING THE BUSINESS OF THE ASSESSEE COMPANY. THE LEARNED CIT 3 (APPEALS), HOWEVER, FOLLOWING HIS ORDER FOR ASSESSM ENT YEAR 2006-07 DISMISSED THIS GROUND OF APPEAL OF THE ASSE SSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOW THE ISSUE IS COVERED BY THE JUDGMENT OF FULL BENCH OF T HE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. GROZ BECKERT ASIA LTD., 31 TAXMAN.COM 155 (P & H) IN WHI CH IT WAS HELD THAT CORPORATE MEMBERSHIP HAD ADVANTAGE TO THE ASSESSEE FOR LIMITED PERIOD FOR RUNNING OF BUSINESS AND BENEFIT OF ASSESSEE AND, THEREFORE, EXPENDITURE CANNOT BE T REATED AS CAPITAL ASSET. THE LEARNED D.R. FOR THE REVENUE D ID NOT DISPUTE THIS PROPOSITION. FOLLOWING THE JUDGMENT O F THE HON'BLE PUNJAB & HARYANA HIGH COURT ABOVE, WE SET A SIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDI TION. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF OCTOBER, 2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31 ST OCTOBER, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4