ACIT 1(1), MUMBAI V. GANNON DUNKERLEY & CO LTD, MUMBAI

ITA 5500/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78646 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 01-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Assessee Lawyers: AJAY I THAKORE
• Keywords: Depreciation; Additional depreciation
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G B ENCH, MUMBAI , , , !'# , $ % BEFORE SHRI VIJAY PAL RAO, JM AND SHRI N.K. BIL LAIYA, AM ./ I.T.A. NOS.5499 &5500/MUM/2012 ( & & & & / ASSESSMENT YEARS :2009-10 & 2007-08 THE ACIT-1(1), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. GANNON DUNKERLEY & CO. LTD., 3 RD FLOOR, NEW EXCELSIOR BLDG., A.K. NAYAK MARG, FORT, MUMBAI-400 001 ' $ ./ ( ./ PAN/GIR NO. : AAACG 1846P ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , / APPELLANT BY: SHRI S.J. SINGH *+') - , / RESPONDENT BY: SHRI AJAY I. THAKORE - ./$ / DATE OF HEARING : 01.04.2014 01& - ./$ / DATE OF PRONOUNCEMENT :01.04.2014 2 / O R D E R PER N.K. BILLAIYA, AM: THESE ARE APPEALS BY THE REVENUE FOR A.YRS 2009-10 AND 2007-08 ARE PREFERRED AGAINST THE TWO SEPARATE ORDERS OF TH E LD. CIT(A)-1, MUMBAI DT.22.6.2012. SINCE BOTH THESE APPEALS WERE HEARD TOGETHER, THEY ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE AND BREVITY. ITA NOS.5499. &5500/M/2012 2 2. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE ISSUES RAISED BY THE REVENUE HAVE BEEN DECIDED BY T HE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2006-07 VIDE ITA NO. 52 63/MUM/2010, A.Y 2007-08 VIDE ITA NO. 6151/M/2010 AND A.Y. 2008-09 V IDE ITA NO. 5716/MUM/2011. THE LD. COUNSEL SUBMITTED THAT THE SAME VIEW DESERVES TO BE FOLLOWED. 3. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCE DED TO THIS. 4. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES IN A.Y. 2009-10. THE REVENUES GRIEVANCES READ AS UND ER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 10,91,444/- BEING PREVIOUS YEAR EXPENSES? 2. WHETHER FROM THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN RESTRICTING TH E DISALLOWANCE U/S. 14A TO RS.4,30,561/- AGAINST RS.31,45,177/- MADE BY THE ASSESSING OFFICER RELYIN G ON THE DECISION IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT . LTD. AND OTHERS IN ITA NO.5087/M/03 AND IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN GODREJ & B OYCE LTD. VS DCIT REPORTED IN 284 ITR 1 (BOM)? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) FURTHER ERRED IN DE LETING THE DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS. 18,53,97,141/- SINCE THE ACTIVITIES OF THE COMPANY CANNOT BE CONSTRUED TO MEAN MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) FURTHER ERRED IN DE LETING THE ITA NOS.5499. &5500/M/2012 3 DISALLOWANCE OF CLUB ENTRANCE FEES OF RS.2,60,776/- TREATED BY THE A.O. AS CAPITAL IN NATURE? 4.1. THE RELIANCE PLACED BY THE CIT(A) ON THE DECI SION OF BOMBAY HIGH COURT IN THE CASE OF OTIS ELEVATOR CO. (INDIA) LTD. 195 ITR 682 IS MISPLACED WHEREAS THE DECISION OF THE KERALA HIGH COURT IN THE CASE OF FRAMATONE CONNECTO R OEN LTD. 294 ITR 559 RELIED BY THE A.O. IS DIRECTLY APP LICABLE TO THE FACTS OF THE CASE. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) IS RIGHT IN ALLOWIN G DEDUCTION OF EMPLOYEES PROVIDENT FUND RELYING ON TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM ESTRUSIONS 319 ITR 306 (SC) IS MISPLACED WHEREAS TH E DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CAS E OF PAMVI TISSUES LTD. 313 ITR 137 RELIED BY THE A.O. I S DIRECTLY APPLICABLE TO THE FACTS OF THE CASE? 5. THE FIRST GRIEVANCE RELATES TO DISALLOWANCE OF P RIOR PERIOD EXPENSES. THIS ISSUE HAS BEEN DECIDED BY THE LD. C IT(A) VIDE PARA-3.3 ON PAGE-2 OF HIS ORDER WHEREIN HE HAS FOLLOWED THE FINDINGS OF HIS PREDECESSOR FOR A.Y. 2004-05 TO 2006-07. THE TRIBU NAL IN A.Y 2006-07 IN ITA NO. 5263/M/2010 HAS CONSIDERED A SIMILAR ISS UE AT PARA-4 OF ITS ORDER AND AT PARA-9, THE TRIBUNAL HAS RESTORED THIS ISSUE BACK TO THE FILES OF THE AO TO DECIDE AFRESH IN THE LIGHT OF THE DIRE CTIONS GIVEN BY THE TRIBUNAL IN A.Y. 2004-05 AND 2005-06. FACTS AND IS SUE BEING IDENTICAL, RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH, THIS ISSUE IS RESTORED BACK TO THE FILES OF THE AO TO DECIDE AFRE SH IN THE LINE OF THE DIRECTIONS GIVEN BY THE TRIBUNAL FOR EARLIER ASSESS MENT YEARS. GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSE. 6. GROUND NO. 2 RELATES TO RESTRICTING THE DISALLOW ANCE MADE U/S. 14A. THIS ISSUE HAS BEEN DISCUSSED BY THE LD. CIT(A) AT PARA 4.1 OF HIS ORDER ITA NOS.5499. &5500/M/2012 4 AND AT PARA 4.3, THE LD. CIT(A) FOLLOWED THE FINDIN GS OF HIS PREDECESSOR FOR A.YRS. 2004-05 TO A.YRS. 2008-09 AND CONCLUDED THAT THE FACTS IN THE CURRENT YEAR ARE IDENTICAL TO THOSE IN EARLIER ASSE SSMENT YEAR 2008-09 AND ACCORDINGLY SUSTAINED THE DISALLOWANCE TO THE EXTEN T OF RS. 4,30,561/-. IN A.Y 2008-09, WE FIND THAT THE TRIBUNAL IN ITA NO. 5 716/M/2011 HAS CONSIDERED A SIMILAR ISSUE QUA GROUND NO. 1 OF THAT APPEAL AND AT PARA-36 OF ITS ORDER THE TRIBUNAL SET ASIDE THE ISSUE BACK TO THE FILES OF THE AO TO BE DECIDED AFRESH KEEPING IN MIND THE DEPLOYMENT OF BORROWED CAPITAL VIS--VIS INVESTMENT IN SHARES. FACTS AND ISSUE BEI NG IDENTICAL, RESPECTFULLY FOLLOWING THE DIRECTIONS OF THE CO-OR DINATE BENCH FOR A.Y. 2008-09, WE SET ASIDE THIS ISSUE BACK TO THE FILES OF THE AO TO BE DECIDED AFRESH IN THE LIGHT OF THE FINDING FOR A.Y. 2008-09 . GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSE. 7. GROUND NO. 3 RELATES TO THE CLAIM OF ADDITIONAL DEPRECIATION. THIS ISSUE HAS BEEN CONSIDERED BY THE LD. CIT(A) AT PARA -5 ON PAGE-7 OF HIS ORDER AND AT PARA-5.3 THE LD. CIT(A) FOLLOWED THE F INDINGS OF HIS PREDECESSOR FOR A.Y. 2008-09. WE FIND THAT IN A.Y. 2008-09 IN ITA NO. 5716/MUM/2011 TRIBUNAL HAS CONSIDERED THIS ISSUE AT PARA-37 OF ITS ORDER AND AT PARA-38 FOLLOWED ITS OWN FINDING FOR A.Y. 20 06-07 IN ITA NO. 5263/M/2010. FACTS AND ISSUE BEING IDENTICAL, RESP ECTFULLY FOLLOWING THE FINDING OF THE TRIBUNAL, WE DIRECT THE AO TO ALLOW THE CLAIM OF ADDITIONAL DEPRECIATION. GROUND NO. 3 IS ACCORDINGLY DISMISSE D. 8. GROUND NO. 4 RELATES TO THE DELETION OF THE ADDI TION ON ACCOUNT OF CLUB ENTRANCE FEES. THIS ISSUE HAS BEEN CONSIDERED BY THE LD. CIT(A) AT PARA-6 ON PAGE-14 OF HIS ORDER AND AT PARA-6.3 DELE TED THE ADDITION FOLLOWING THE FINDINGS OF HIS PREDECESSOR FOR A.Y. 2008-09. WE FIND THAT THE TRIBUNAL HAS CONSIDERED THIS ISSUE FOR A.Y 2008 -09 IN ITA NO. ITA NOS.5499. &5500/M/2012 5 5716/M/2011 AT PARA-39 OF ITS ORDER AND AT PARA-40 FOLLOWED ITS OWN DECISION IN ITA NO. 6151/M/2010 FOR A.Y. 2007-08. RESPECTFULLY FOLLOWING THE FINDINGS OF THE TRIBUNAL, WE RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO DECIDE THIS ISSUE AFRESH IN THE LIGHT OF THE DIRECTIONS OF THE TRIBUNAL GIVEN FOR A.Y. 20 07-08 AND 2008-09. GROUND NO. 4 IS ALLOWED FOR STATISTICAL PURPOSE. 9. GROUND NO. 5 RELATES TO DEDUCTION OF EMPLOYEES PROVIDENT FUND. THIS ISSUE HAS BEEN CONSIDERED BY THE LD. CIT(A) AT PARA-7 ON PAGE 16 OF HIS ORDER AND AT PARA 7.3 ALLOWED THE CLAIM OF DEDU CTION. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN A.Y. 2008-09 VIDE ITA NO. 5716/MUM/2011 AT PARA 46 OF ITS ORDER CONFIRMED THE DIRECTIONS OF THE LD. CIT(A) BY WHICH THE LD. CIT(A) HAS DIRECTED THE AO TO VERIFY THE DATE OF PAYMENT AND WHETHER THE PAYMENTS HAVE BEEN MADE BEFORE FILING THE RETURN OF INCOME. RESPECTFULLY FOLLOWING THE F INDINGS OF THE TRIBUNAL IN A.Y. 2008-09, WE RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO VERIFY WHETHER THE PAYMENTS HAVE BEEN MADE BEFORE FILING THE RETURN OF INCOME AND THEREAFTER FOLLOW T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION 319 ITR 306. GROUND NO. 5 IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 5500/M/2012 A.Y. 2007-08 10. THE SOLE GRIEVANCE OF THE REVENUE RELATES TO TH E DELETION OF THE DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS. 16,6 2,63,051/-. 11. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY US IN ITA NO. 5499/M/12 FOR A.Y. 2009-10 QUA GROUND NO. 3. FACTS AND ISSUE BEING IDENTICAL, THE AO IS DIRECTED TO ALLOW THE CLAIM OF ADDITIONAL DEPRECIATION. ITA NOS.5499. &5500/M/2012 6 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE I N ITA NO. 5499/M/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPO SE AND THE APPEAL FILED BY THE REVENUE IN ITA NO. 5500/M/2012 FOR A.Y. 2007 -08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.04.2014 2 - 1& $ 3 45 01.04.2014 1 - 6 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 4 DATED 01.04.2014 . . ./ RJ , SR. PS 2 2 2 2 - -- - *. *. *. *. 7&. 7&. 7&. 7&. / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 96 *. , , / DR, ITAT, MUMBAI 6. 6: ; / GUARD FILE. 2 2 2 2 / BY ORDER, +. *. //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI