Hindumal Balmukund Investment Co.Pvt.Ltd., Pune V. Deputy Commissioner of Income tax, Pune

ITA 570/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5874 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Depreciation; Opportunity of being heard; Set aside
• Section: 80HH; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.570/PUN/2017 / ASSESSMENT YEAR : 2013-14 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., 2 ND FLOOR, LOHIA JAIN HOUSE, BHANDARKAR ROAD, SHIVAJINAGAR, PUNE-411045. PAN : AAACH4226Q ....... / APPELLANT / V/S. DCIT, CIRCLE-11, PUNE. / RESPONDENT ASSESSEE BY : SHRI VARDHAMAN JAIN REVENUE BY : SHRI S. P. WALIMBE / DATE OF HEARING : 11.09.2020 / DATE OF PRONOUNCEMENT : 14.09.2020 / ORDER PER P.M. JAGTAP, VP : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-1, PUNE DATED 16.01.2017 ON THE FOLLOWING GROUNDS AS ORIGINALLY RAISED :- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.6,13,115, BEING DEPRECIATION ON CAR. 2. THE LEARNED CIT(A) FURTHER ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF THE CLAIM OF RS.1,88,07,686 U/S 80IA(4) OF THE I T ACT, 1961. 2. AT THE TIME OF HEARING BEFORE US, LD. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED IN GROUND NO.1 OF THIS APPEAL RELATING TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) OUT OF THE DEPRECIATION ON CAR FOR PERSONAL USE OF DIRECTORS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. A.Y. 2012-13 VIDE 2 ITA NO.570/PUN/2017 ORDER DATED 30 TH JANUARY, 2019 PASSED IN ITA NO.569/PUN/2017 WHEREIN A SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL VIDE PARAGRAPHS NO.3 TO 5 AS UNDER :- 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY CLAIMED DEPRECIATION ON CARS AMOUNTING TO RS.4,16,535/-. THE AO NOTICED THAT THE CARS WERE NOT PURCHASED IN THE NAME OF THE ASSESSEE BUT ITS DIRECTORS. INVOKING THE PROVISIONS OF SECTION 38(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED `THE ACT), THE AO MADE DISALLOWANCE ON ACCOUNT OF PERSONAL USE OF CARS AT HALF OF THE AMOUNT OF DEPRECIATION CLAIMED. THIS RESULTED INTO AN ADDITION OF RS.2,08,267/-, WHICH CAME TO BE SUSTAINED IN THE FIRST APPEAL. 4. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS SEEN THAT THE AO HAS BASICALLY MADE DISALLOWANCE U/S. 38(2) OF THE ACT. THE VERY FACT THAT HE ALLOWED DEPRECIATION @ 50% OF THE AMOUNT CLAIMED ON CARS GOES TO PROVE THAT HE ACCEPTED THE OWNERSHIP OF CARS IN THE NAME OF THE ASSESSEE COMPANY. 5. NOW TURNING TO THE DISALLOWANCE ON ACCOUNT OF PERSONAL USE OF CARS U/S. 38(2) OF THE ACT, WE FIND THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THERE IS NO DEARTH OF JUDICIAL PRECEDENTS HOLDING THAT THERE CANNOT BE ANY DISALLOWANCE OF EXPENSES IN THE HANDS OF COMPANY ON ACCOUNT OF PERSONAL USE EVEN BY ITS DIRECTORS. THE HONBLE GUJARAT HIGH COURT IN SAYAJI IRON AND ENGINEERING COMPANY VS. CIT (2002) 253 ITR 749 (GUJ) HAS HELD THAT THERE CANNOT BE ANY DISALLOWANCE OF PERSONAL EXPENSES FOR CARS ON ACCOUNT OF PERSONAL USE BY THE DIRECTOR. IT HAS BEEN FURTHER HELD THAT NO DISALLOWANCE CAN BE MADE EVEN BY TREATING SUCH EXPENDITURE AS NOT HAVING BEEN INCURRED FOR THE BUSINESS PURPOSE. SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF THE TRIBUNAL IN SEVERAL CASES INCLUDING DY. CIT VS. HARYANA OXYGEN LTD. (2001) 76 ITD 32 (DEL). THUS IT IS EVIDENT THAT THERE CAN BE NO DISALLOWANCE ON ACCOUNT OF PERSONAL USE BY THE DIRECTOR-EMPLOYEES OF THE ASSESSEE. SUCH AN AMOUNT CAN BE TREATED AS A PERQUISITE IN THE HANDS OF THE EMPLOYEES. IN VIEW OF THE ABOVE DECISIONS, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE TO THIS EXTENT. THE ADDITION IS DELETED. 3. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF A.Y. 2012-13, WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR A.Y. 2012-13 AND DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF DEPRECIATION ON CAR. GROUND NO.1 IS ACCORDINGLY ALLOWED. 4. AS REGARDS THE ISSUE INVOLVED IN GROUND NO.2 RELATING TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF ASSESSEES CLAIM FOR DEDUCTION U/S 80IA(4) OF THE INCOME TAX ACT, 1961, IT IS OBSERVED THAT THE SAME IS ALSO SQUARELY COVERED BY THE COMMON ORDER OF THIS TRIBUNAL DATED 24.08.2018 PASSED IN ASSESSEES OWN CASE FOR A.Y. 2010-11 & 2011-12 IN ITA NOS.266 & 267/PUN/2015 WHEREIN A SIMILAR ISSUE WAS DECIDED 3 ITA NO.570/PUN/2017 BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPHS NO.6 TO 8 WHICH READ AS UNDER :- 6. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE OF APPLICABILITY OF THE RATIO OF THE BINDING JUDGMENT OF HONBLE JURISDICTION HIGH COURT IN THE CASE OF CIT VS. PAUL BROTHERS (SUPRA). THE SAID JUDGMENT IS RELEVANT FOR THE FOLLOWING PROPOSITION : 6. EITHER IN SECTION 80HH OR IN SECTION 80J, THERE IS NO PROVISION FOR WITHDRAWAL OF SPECIAL DEDUCTION FOR THE SUBSEQUENT YEARS FOR BREACH OF CERTAIN CONDITIONS. HENCE UNLESS THE RELIEF GRANTED FOR THE ASSESSMENT YEAR 1980-81 WAS WITHDRAWN, THE INCOME-TAX OFFICER COULD NOT HAVE WITHHELD THE RELIEF FOR THE SUBSEQUENT YEARS. FROM THE ABOVE, IT IS EVIDENT THAT UNLESS THE RELIEF CLAIMED IN THE FIRST YEAR OF UNDERTAKING IS WITHDRAWN, THE AO CANNOT WITHHOLD THE RELIEF FOR THE SUBSEQUENT YEARS. IN THE PRESENT CASE, THOUGH AN ATTEMPT IS MADE TO WITHDRAW THE CLAIM OF DEDUCTION THROUGH THE INVOKING OF THE PROVISIONS OF SECTION 148 OF THE ACT, THE SAME DID NOT FRUCTIFY FOR ONE REASON OR THE OTHER AND THE JUDGMENT OF THE HONBLE HIGH COURT IN THE WRIT PROCEEDINGS EVIDENCES THE SAME. IN EFFECT, THE CLAIM OF THE ASSESSEE U/S.80IA(4) OF THE ACT STANDS ALLOWED IN THE FIRST YEAR OF UNDERTAKING. CONSIDERING THE FACT THAT THE SAME IS ALLOWED IN THE FIRST YEAR OF UNDERTAKING, THE AO CANNOT WITHDRAW THE DEDUCTION WHEN THE FACTS ARE IDENTICAL. THEREFORE, WE ARE OF THE OPINION THAT THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PAUL BROTHERS (SUPRA) STANDS APPLICABLE TO THE FACTS OF THE PRESENT CASE LEGALLY. 7. FURTHER, FOR COMMENTING OUR VIEW ON THE ISSUE, WE ALSO PERUSED THE JUDGMENT IN THE CASE OF CIT VS. WESTERN OUTDOOR INTERACTIVE PVT. LTD. REPORTED IN 349 ITR 309 (BOM.) WHEREIN THE HONBLE HIGH COURT HELD AS UNDER: 6) WE HAVE CONSIDERED THE SUBMISSIONS. WE FIND THAT THE SUBMISSIONS MADE BY MR. PARDIWALLA ON THE BASIS OF THE DECISION OF THIS COURT IN THE MATTER OF PAUL BROTHERS (SUPRA) AND DIRECTOR OF INFORMATION PVT. LTD. (SUPRA) MERITS ACCEPTANCE. THEREFORE, IN THIS CASE, IT IS NOT NECESSARY FOR US TO DECIDE WHETHER SEEPZ UNIT WAS SET UP/FORMED BY SPLITTING UP OF THE FIRST UNIT. IN BOTH THE ABOVE DECISIONS, THIS COURT HAS HELD THAT WHERE A BENEFIT OF DEDUCTION IS AVAILABLE FOR A PARTICULAR NUMBER OF YEARS ON SATISFACTION OF CERTAIN CONDITIONS UNDER THE PROVISIONS OF THE INCOME TAX ACT, THEN UNLESS RELIEF GRANTED FOR THE FIRST ASSESSMENT YEAR IN WHICH THE CLAIM WAS MADE AND ACCEPTED IS WITHDRAWN OR SET ASIDE, THE INCOME TAX OFFICER CANNOT WITHDRAW THE RELIEF FOR SUBSEQUENT YEARS. MORE PARTICULARLY SO, WHEN THE REVENUE HAS NOT EVEN SUGGESTED THAT THERE WAS ANY CHANGE IN THE FACTS WARRANTING A DIFFERENT VIEW FOR SUBSEQUENT YEARS. IN THIS CASE FOR THE ASSESSMENT YEARS 2000-01 AND 2001 02 THE RELIEF GRANTED UNDER SECTION 10A OF THE ACT TO SEEPZ UNIT HAS NOT BEEN WITHDRAWN. THERE IS NO CHANGE IN THE FACTS WHICH WERE IN EXISTENCE DURING THE ASSESSMENT YEAR 2000 01 VIS A VIS THE CLAIM TO EXEMPTION UNDER SECTION 10A OF THE ACT. THEREFORE, IT IS NOT OPEN TO THE DEPARTMENT TO DENY THE BENEFIT OF SECTION 10A FOR SUBSEQUENT ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2002 03 AND 2003 04 AND 2004 05. BESIDES THAT, ON CONSIDERATION OF THE FACTS INVOLVED BOTH THE COMMISSIONER OF INCOME TAX APPEALS) AND THE TRIBUNAL HAVE RECORDED A FINDING OF FACT THAT THE SEEPZ UNIT IS NOT FORMED BY SPLITTING UP OF THE FIRST UNIT. 8. FURTHER, IN THE CASE OF M/S. YGYAN CONSULTING PVT. LTD. VS. DCIT IN ITA NO.65/PUN/2015 DATED 13-10-2017, THE PUNE BENCH OF THE TRIBUNAL OBSERVED AS UNDER : 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE FIRST GROUND RAISED IN APPEAL BY ASSESSEE IS WITH RESPECT TO ASSESSEE'S ELIGIBILITY FOR CLAIMING DEDUCTION U/S. 10A OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE COMPANY WAS INCORPORATED IN THE YEAR 1991. THE DOCUMENTS ON RECORD SHOW THAT THE ASSESSEE WAS GRANTED STPI APPROVAL 4 ITA NO.570/PUN/2017 ON 30-03-2000. BEFORE GRANT OF APPROVAL THE ASSESSEE COULD NOT HAVE CLAIMED DEDUCTION U/S. 10A OF THE ACT. THE LD. AR HAS STATED AT THE BAR THAT FIRST YEAR FOR CLAIMING DEDUCTION U/S. 10A WAS ASSESSMENT YEAR 2001- 02. THOUGH THE LD. AR COULD NOT PLACE ON RECORD ASSESSEE'S RETURN OF INCOME IN ASSESSMENT YEAR 2001-02 AND THE ASSESSMENT ORDER FOR THE SAID ASSESSMENT YEAR, HOWEVER, THE ASSESSEE HAS FURNISHED A COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004-05. A PERUSAL OF THE SAID ASSESSMENT ORDER AT PAGES 30 TO 40 OF THE PAPER BOOK CLEARLY INDICATE THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 10A IN RESPECT OF PROFITS FROM STPI UNIT AND THE SAME HAS BEEN ALLOWED BY THE ASSESSING OFFICER IN SCRUTINY ASSESSMENT. ONCE HAVING ACCEPTED THE CLAIM OF ASSESSEE, THE REVENUE CANNOT QUESTION ASSESSEE'S ELIGIBILITY FOR CLAIMING SUCH DEDUCTION IN SUBSEQUENT ASSESSMENT YEARS. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PAUL BROTHERS (SUPRA) HAS OBSERVED THAT THERE IS NO PROVISION FOR WITHDRAWAL OF SPECIAL DEDUCTION FOR THE SUBSEQUENT YEARS FOR BREACH OF CERTAIN CONDITIONS. UNLESS THE RELIEF ITA NO. 65/PUN/2015, A.Y. 2005-06 GRANTED FOR THE INITIAL ASSESSMENT YEAR IS WITHDRAWN, THE ITO COULD NOT HAVE WITHHELD THE RELIEF FOR THE SUBSEQUENT YEARS. THUS, IN VIEW OF THE FACT THAT THE ASSESSEE'S CLAIM OF DEDUCTION U/S. 10A WAS NEVER QUESTIONED BY THE REVENUE IN INITIAL ASSESSMENT YEAR, THE ASSESSING OFFICER CANNOT RAISE QUESTION OVER ASSESSEE'S ELIGIBILITY FOR CLAIMING DEDUCTION IN ANY OF THE SUBSEQUENT ASSESSMENT YEARS. THE LD. DR HAS ALSO ACCEPTED THE FACT THAT IN ASSESSMENT YEAR 2004-05, ASSESSEE'S CLAIM OF DEDUCTION U/S. 10A WAS ALLOWED BY ASSESSING OFFICER IN SCRUTINY ASSESSMENT PROCEEDINGS. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT, GROUND NO. 1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. CONSIDERING THE ABOVE, WE ARE OF THE CONSIDERED OPINION, IN VIEW OF THE BINDING RATIO IN THE CASE OF CIT VS. PAUL BROTHERS (SUPRA) THAT THE ASSESSEE IS ENTITLED TO RELIEF FOR BOTH THE YEARS ON THIS LEGAL ISSUE ALONE. CONSIDERING THE RELIEF GRANTED TO THE ASSESSEE ON TECHNICALITIES, WE ARE OPINION THAT ADJUDICATION OF THE GROUNDS ON MERITS BECOMES AN ACADEMIC EXERCISE. ACCORDINGLY, THE RELEVANT GROUNDS ARE DISMISSED. 5. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF A.Y. 2010-11 & 2011-12, WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR A.Y. 2010-11 & 2011-12 AND DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF ASSESSEES CLAIM FOR DEDUCTION U/S 80IA(4) OF THE ACT. GROUND NO.2 IS ACCORDINGLY ALLOWED. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL, THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND AS UNDER :- THE LEARNED ASSESSING OFFICER ERRED IN LAW AND FACTS IN DISALLOWING THE PROVISION FOR EXPENSES TO THE EXTENT OF RS.2,53,81,255/-. 7. THE ASSESSEE HAS ALSO MOVED AN APPLICATION SEEKING ADMISSION OF THE ADDITIONAL GROUND AS ABOVE ON THE GROUND THAT EVEN THOUGH THE ISSUE RAISED IN 5 ITA NO.570/PUN/2017 THE ADDITIONAL GROUND WAS ARISING FROM THE ORDER OF THE ASSESSING OFFICER AND THE SAME WAS SPECIFICALLY MENTIONED IN THE STATEMENT OF FACTS FILED BEFORE THE LD. CIT(A), GROUND RAISING THE SAID ISSUE SPECIFICALLY WAS INADVERTENTLY NOT TAKEN IN THE APPEAL FILED BEFORE THE LD. CIT(A). THE LD. DR HAS NOT RAISED ANY OBJECTION FOR ADMISSION OF THE SAID ADDITIONAL GROUND. HE HOWEVER HAS CONTENDED THAT SINCE THE ISSUE RAISED IN THE ADDITIONAL GROUND WAS NOT SPECIFICALLY TAKEN BY THE ASSESSEE IN THE APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAD NO OPPORTUNITY OR OCCASION TO CONSIDER AND DECIDE THE SAME ON MERIT, THE MATTER MAY BE SENT BACK TO THE LD. CIT(A) FOR GIVING SUCH OPPORTUNITY. SINCE THE LD. COUNSEL FOR THE ASSESSEE HAS NO OBJECTION FOR SENDING THE MATTER BACK TO THE LD. CIT(A) AS SOUGHT BY THE LD. DR, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AND REMIT THE MATTER BACK TO THE LD. CIT(A) FOR CONSIDERING AND DECIDING THE ISSUE RAISED THEREIN ON MERIT IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. THE ADDITIONAL GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED ON THIS 14 TH DAY OF SEPTEMBER, 2020. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) ( P.M. JAGTAP ) JUDICIAL MEMBER VICE PRESIDENT / PUNE; / DATED : 14 TH SEPTEMBER, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, PUNE. 4. THE PR. CIT-1, PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.