DCIT, New Delhi V. M/s. Orient Bell Ltd., New Delhi

ITA 5715/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4256 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NO.-5715/DEL/2014 ( ASSESSMENT YEAR: 2010-11) DCIT CIRCLE 13(1) NEW DELHI. VS ORIENT BELL LTD. (FORMERLY KNOWN AS M/S ORIENT CERAMICS AND INDUSTRIES LTD.) IRIS HOUSE, 16 BUSINESS CENTRE, NANGAL RAYA, NEW DELHI. AAACO0305P ASSESSEE BY SH. MANOJ KUMAR, CA REVENUE BY MS. SHAFALI SWAROOP, CIT DR SH. PRADEEP KUMAR NEEL, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER CHALLENGING THE ORDER DATED 09.07.2014 IN APPEAL NO . 149/2013-14 PASSED BY THE LD. COMMISSIONER OF INCOM E TAX (APPEALS)-XVI, DELHI (HEREINAFTER FOR SHORT CALLED AS THE LD.CIT (A)). THE REVENUE PREFERRED THIS APPEAL ON THE FO LLOWING GROUNDS: DATE OF HEARING 07.09.2017 DATE OF PRONOUNCEMENT 26.09.2017 2 ITA NO.5715/DEL/2014 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF DEPRECIATION CLAIMED ON CUSTOMS DU TY PAYMENT OF RS. 24,55,891/- BY NOT CONSIDERING THE F ACT THAT THE ASSESSEE HAS NOT ACCEPTED THE PAYMENT OF CUSTOM S DUTY AS A LIABILITY AND IS DISPUTING THE SAME. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF DEPRECIATION CLAIMED ON CUSTOMS DUTY PAYMENT OF RS. 24,55,891/- BY NOT CONSIDERING THE OBSERVATI ON IN THE ASSESSMENT ORDER THAT THE ASSESSEE DID NOT ACCEPTED THE LIABILITY OF PAYMENT OF CUSTOM DUTY AND HAD FILED A PPEAL AGAINST THE ORDER OF CUSTOM AUTHORITY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF DEPRECIATION CLAIMED ON CUSTOMS DUTY PAYMENT OF RS. 24,55,891/- BY NOT CONSIDERING THE OBSERVATI ON IN THE ASSESSMENT ORDER THAT THE CRYSTALLIZATION OF LIABIL ITY WAS DEPENDENT ON THE DECISION OF APPELLATE AUTHORITIES AND HENCE THE SAME WAS TREATED AS UNASCERTAINED/CONTINGENT LI ABILITY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APP ELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUNDS OF AP PEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL . 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE WAS E ARLIER KNOWN AS M/S ORIENT CERAMICS & INDUSTRIES LTD., AND ENGAGED IN THE MANUFACTURING OF GLAZED WHITE, COLORED AND D ECORATIVE CERAMIC WALL/FLOOR TILES AT SIKANDRABAD, DISTT. BUL ANDSHAHR, U.P. UNDER THE NAME AND STYLE OF ORIENT TILES. T HE ASSESSEE HAD IMPORTED MACHINERY UNDER DUTY EXEMPTIO N CERTIFICATE ISSUED BY THE MINISTRY OF FINANCE DUE T O WHICH ASSESSEE DID NOT PAY ANY CUSTOM DUTY ON IMPORT OF T HE SAID MACHINERY. HOWEVER, IN THE AY 2004-05 THE CUSTOM 3 ITA NO.5715/DEL/2014 DEPARTMENT DISPUTED THE SAID CERTIFICATE AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AND CALLED UPON THE AS SESSEE TO PAY THE DIFFERENTIAL AMOUNT OF CUSTOM DUTY AND DEMA ND OF RS. 4,25,34,028/-WHICH THE ASSESSEE PAID WITHOUT PREJUD ICE TO THEIR CONTENTION THAT THE CERTIFICATE ISSUED BY THE MINISTRY OF FINANCE WAS VALID, LEGAL AND PROPER AND NO CUSTOM D UTY NEED TO BE PAID. THE ASSESSEE HAD CAPITALIZED THE SAID AMOUNT UNDER THE HEAD PLANT AND MACHINERY. DURING THE A Y 2010- 11 THE ASSESSEE MENTIONED IN THE NOTES TO ACCOUNT I N THE ANNUAL REPORT AS FOLLOWS: CUSTOM/EXCISE DUTY/SERVICE TAX/SALES TAX DEMANDS A ND SHOW CAUSE NOTICE ISSUED AGAINST COMPANY HAS PREFER RED APPEALS AMOUNTING TO RS. 1,62,20,709/- (DURING THE YEAR CONTINGENT LIABILITY OF RS. 53,613/- PENDING IN CON SUMER COURT HAS BEEN SETTLED). ASSESSEE FILED THEIR RETURN OF INCOME FOR THE AY 20 10-11 ON 04.10.2010 DECLARING A TOTAL INCOME OF RS. 20,75,83 ,273/- BUT THE ASSESSING OFFICER ADDED A SUM OF RS. 24,55,891/- WH ILE DISALLOWING THE DEPRECIATION ON CUSTOM DUTY PAYMENT . HOWEVER, IN APPEAL LD. CIT (A) DELETED THE SAME, AS SUCH, TH E REVENUE IS IN THIS APPEAL BEFORE US. 4 ITA NO.5715/DEL/2014 3. LD. DR CONTENDED THAT THE LD. CIT (A) SHOULD HAV E CONSIDERED THE FACT THAT THE ASSESSEE HAD NOT ACCEPTED THE PAY MENT OF CUSTOM DUTY AS A LIABILITY AND IN FACT WHILE DISPUTING THE SAME FILED AN APPEAL AGAINST THE ORDERS OF THE CUSTOMS AUTHORITIE S, AS SUCH, THE CRYSTALLIZATION OF LIABILITY WAS DEPENDENT ON THE D ECISION OF THE APPELLATE AUTHORITIES AND HENCE THE SAME WAS RIGHTL Y TREATED BY THE ASSESSING OFFICER AS UNASCERTAINED /CONTINGENT LIABILITY. HE, THEREFORE, PRAYED TO RESTORE THE ORDER OF THE AO. PER CONTRA, IT IS THE ARGUMENT OF THE LD. AR THAT THE LD. CIT (A) FOL LOWED THE ORDERS OF HIS PREDECESSORS CONFIRMED BY THE HIGHER FORUMS LIKE THE TRIBUNAL AND THE HONBLE JURISDICTIONAL HIGH COURT, AS SUCH, THE SAID ORDER CANNOT BE INTERFERED WITH. 4. BY WAY OF THE PAPER BOOK, LD. AR PRODUCED THE OR DERS OF THE TRIBUNAL FOR THE YEARS 2005-06 TO 2008-09 AND ALSO THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NOS. 6 5 & 66/DEL/2011, ALL THE ORDERS IN ASSESSEES OWN CASE UPHOLDING THE CORRECTNESS OF THE CAPITALIZATION OF THE PAYMENT OF EXCISE DUTY AMOUNTING TO RS. 4,25,34,028/-, AND THE DEPRECIATIO N ON THE SAID AMOUNT HAS TO BE ALLOWED. IN VIEW OF THIS BINDING PRECEDENT BY THE 5 ITA NO.5715/DEL/2014 HONBLE JURISDICTIONAL HIGH COURT, BY NO STRETCH OF IMAGINATION COULD IT BE SAID THAT THE IMPUGNED ORDER SUFFERS AN Y ILLEGALITY OR IRREGULARITY WARRANTING ANY INTERFERENCE BY THIS TR IBUNAL. WE, THEREFORE, UPHOLD THE SAME AND DISMISSED THE GROUND S OF APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.09.2017 SD/- SD/- (N.K. SAINI) (K.N. CHA RY) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 26.09.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO.5715/DEL/2014 DRAFT DICTATED ON 15.09.2017 DRAFT PLACED BEFORE AUTHOR 18.9.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 26.09.2017 KEPT FOR PRONOUNCEMENT ON 26.09.2017 FILE SENT TO THE BENCH CLERK 26.09.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.