The Thiruvamdai Rubber Co. Ltd, Cochin V. The Jt CIT(OSD), Cochin

ITA 553/COCH/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90781 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: R V VEERAMANI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 43B; 143(3); 115JB; 147; 148

Judgement Text

1 ITA NO .553/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI V DURGA RAO, JM AND SHRI B.R. BASKARAN, AM I.T.A. NO. 553/COCH/2014 (ASSESSMENT YEAR : 2006-07) THE THIRUVAMBADI RUBBER CO LTD VS THE JT.CIT (OSD ) THIRVAMBADI ESTATE CIRCLE 4(2), RANGE 4 MUKKOM 673 602 KOCHI CALICUT DISTRICT PAN : AABCT0021G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R V VEERAMANI RESPONDENT BY : SHRI K.K. JOHN DATE OF HEARING : 13-05-2015 DATE OF PRONOUNCEMENT : 14-05-2015 O R D E R PER SHRI V DURGA RAO, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE CIT(A)-II, KOCHI FOR THE ASSESSMENT YEAR 2006-0 7. 2. THE ASSESSEE IS A DOMESTIC COMPANY ENGAGED IN GR OWING NATURAL RUBBER AND ALLIED PRODUCTS. THE ASSESSEE FILED A RETURN O F INCOME DECLARING INCOME OF RS.73,380 ON 18-11-2006. THE RETURN FILED BY THE A SSESSEE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON 29-12- 2008 ACCEPTING THE INCOME DECLARED BY THE ASSESSEE AT RS.73,380 U/S 14 3(3) OF THE ACT. SUBSEQUENTLY, THE CASE WAS REOPENED U/S 147 BY ISSU ING NOTICE U/S 148 OF THE ACT AND AN ASSESSMENT U/S 143(3) R.W.S. 147 WAS COM PLETED ON 23-11-2011 BY 2 ITA NO .553/COCH/2014 DETERMINING THE TOTAL INCOME AT RS. RS.73,380. HOW EVER, SINCE THE INCOME DETERMINED WAS LESS THAN 30% OF THE BOOK PROFIT, IN COME WAS ASSESSED AT RS.20,02,530 U/S 115JB OF THE ACT. 3. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFI CER HAS MADE DISALLOWANCE OF DEPRECIATION, DISALLOWANCE U/S 43B, SALE OF RUBBER TREES, AND UNABSORBED DEPRECIATION. THE ASSESSING OFFICER WHI LE DISALLOWING DEPRECIATION HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIA TION ON OFFICE EQUIPMENTS, OVERHEAD CABLES AND WIRES WHICH FELL UNDER THE CATE GORY OF FURNITURE AND FITTINGS ADMISSIBLE FOR DEPRECIATION AT 10% ONLY. THE ASSES SEE BEFORE THE ASSESSING OFFICER CLAIMED THAT DEPRECIATION ON OFFICE EQUIPME NTS, OVERHEAD CABLES AND WIRES FALLS UNDER THE CATEGORY OF PLANT AND MACHINE RY AND THEREFORE ELIGIBLE FOR DEPRECIATION AT 15%. THE ASSESSING OFFICER, HOWEVE R, ALLOWED THE DEPRECIATION AT 10% ONLY. WHEN THE ASSESSEE CARRIED THE ISSUE IN A PPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE VERY SAME CLAIM HAS BEEN ACCEPTED BY THE ASSESSING OFFICER FO R ASSESSMENT YEARS 2004-05 AND 2005-06 AND THEREFORE, THERE IS NO APPARENT REA SON FOR RESTRICTING THE DEPRECIATION CLAIM AT 10% FOR THIS YEAR AS AGAINST 15% CLAIMED BY THE ASSESSEE. ON THE OTHER HAND, THE LD.DR HAS RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW. 3 ITA NO .553/COCH/2014 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH SIDES WE FIND THAT THE AMOUNT OF DISALLOWANCE IS ONLY RS. 13,112. IT STANDS UNDISPU TED THAT THE VERY SAME CLAIM OF THE ASSESSEE WAS ALLOWED AT 15% FOR THE ASSESSMENT YEARS 2004-05 AND 2005- 06. APPARENTLY, THERE IS NO REASON FOR RESTRICTING THE CLAIM OF DEPRECIATION AT 10% FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE , WE DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON OFFICE EQUIPMENTS, OVERHEAD CABLES AT 15% AS CLAIMED BY THE ASSESSEE. THIS GROUND OF THE ASSESS EE IS ALLOWED. 6. SO FAR AS DISALLOWANCE U/S 43B IS CONCERNED, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHILE MAKING THE DISALLOWAN CE, THE ASSESSING OFFICER HAS TAKEN INTO CONSIDERATION OF THE LAND RENT PAID BY THE ASSESSEE AND ALSO THE OPENING BALANCE OF LEAVE ENCASHMENT. THE LD.COUNSE L SUBMITTED THAT BOTH CANNOT BE DISALLOWED U/S 43B OF THE ACT. WE FIND T HAT THE SUBMISSION MADE BY THE ASSESSEE IS JUSTIFIED. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE CLAIM AND ALLOW THE SAME. 7. SO FAR AS PROFIT ON RUBBER SALE IS CONCERNED, TH E LD.CIT(A) BY FOLLOWING THE DECISION OF THE KERALA HIGH COURT IN I.T.A. NOS 51, 31, 37 AND 43 OF 2010 UPHELD THE ORDER OF THE ASSESSING OFFICER. WE FIND NO INF IRMITY IN THE SAME. ACCORDINGLY, THE ORDER OF THE CIT(A) IS UPHELD AND THE GROUND OF THE ASSESSEE REJECTED. 8. SO FAR AS THE CLAIM OF THE ASSESSEE WITH REGARD TO THE UNABSORBED DEPRECIATION IS CONCERNED, THE ASSESSING OFFICER HA S OBSERVED THAT IN THE 4 ITA NO .553/COCH/2014 COMPUTATION OF BOOK PROFIT, THE ASSESSEE HAS REDUCE D AN AMOUNT OF RS. 76,36,414 AS UNABSORBED DEPRECIATION. HOWEVER, THI S AMOUNT IS ALREADY CLAIMED AND ALLOWED TO BE SET OFF AGAINST BOOK PROFIT FOR A SSESSMENT YEAR 2005-06 IN THE PROFIT COMPUTED U/S 115JA. IT IS ALSO SEEN THAT TH E ASSESSEE HAS NOT ADJUSTED THE BOOK PROFIT FOR THE ASSESSMENT YEAR 2004-05 AGAINST THE UNABSORBED DEPRECIATION OF RS.76,36,414 TO WORK OUT THE CORREC T AMOUNT AVAILABLE TO BE SET OFF IN THE ASSESSMENT YEAR 2005-06 AND HENCE, THE A SSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. ON APPEAL, THE CIT(A) H AS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 9. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAS CONSIDERED PRO VISO (III) TO SECTION 115JB(1) OF THE ACT AND SUBMITTED THAT THIS ISSUE MAY BE REM ITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE FACTS VIS.A.VIS PR OVISO (III) TO SECTION 115JB(1) OF THE ACT. THE LD.DR DID NOT OBJECT TO THE PROPOSIT ION MADE BY THE LD.COUNSEL FOR THE ASSESSEE. 10. AFTER HEARING BOTH SIDES WE FIND THAT THE ISSUE HAS TO GO BACK TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE T HE ORDERS OF THE AUTHORITIES BELOW AND REMIT THIS ISSUE TO THE FILE OF THE ASSES SING OFFICER. WE DIRECT THE ASSESSING OFFICER TO RECONSIDER THE ISSUE IN THE LI GHT OF MATERIAL FACTS VIS--VIS PROVISO (III) TO SECTION 115JB(1) OF THE ACT AND TH EN DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF HEA RING TO THE ASSESSEE. 5 ITA NO .553/COCH/2014 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, 14 TH DAY OF MAY, 2015. SD/- SD/- ( B.R. BASKARAN) ( V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 14 TH MAY, 2015 PK/- COPY TO: 1. THE THIRUVAMBADI RUBBER CO LTD, THIRUMVAMBADI ES TATE, MUKKOM 673 602 CALICUT DISTRICT 2. THE JT. CIT (OSD), CIRCLE 4(2), RANGE-4, KOCHI 3. THE CIT, KOCHI 4. THE CIT(A)-II, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, ITAT, COCHIN BENCH