M/s Insilica Semi Conductors India Pvt Ltd , BAngalore V. Deputy Commissioner of Income Tax Circle-11(4), Bangalore

ITA 590/BANG/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3902 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 02-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SAMPATH DIRECTOR OF COMPANY
• Keywords: Depreciation

Judgement Text

ITA.590/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.590/BANG/2018 (ASSESSMENT YEAR : 2010-11) M/S. INSILICA SEMICONDUCTORS INDIA P. LTD, C/O. RESOLVE BUSINESS SERVICES INDIA P. LTD, NO.231/236, RAHEJA ARCADE, KORAMANGALA, BENGALURU 560 095 .. APPELLANT PAN : AABCC9522F V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -11(4), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. S. SAMPATH, DIRECTOR OF COMPANY REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT HEARD ON : 06.09.2018 PRONOUNCED ON : .09.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT (A) -3, BENGALURU, DT.17.08.2017, FOR THE A SSESSMENT YEAR 2010-11, ON THE FOLLOWING GROUND NOS.6 AND 7, WHICH ARE PRESSED BY THE ASSESSEE : ITA.590/BANG/2018 PAGE - 2 6. IT IS CONTENDED THAT CIT (A) IN PARA 3.5 HAD CON CLUDED CATEGORICALLY THAT THE FOREIGN EXCHANGE LOSS OF RS. 47,23,020/- IS ON ACCOUNT OF INVOICES UP TO 31 ST AUGUST 2009. ACCORDINGLY, THE ENTIRE LOSS SHOULD HAVE BEEN ALLOWED AND CANNOT FORM A PART OF 45%. 7. IT IS CONTENDED THAT DEPRECIATION OF RS.8,47,270 /- IS TO BE ALLOWED FULLY. 02. BRIEF FACTS ARE, THE ASSESSEE FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL LOSS OF RS .4,26,91,901/-. CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. HO WEVER THE LD. AR OF THE ASSESSEE BEFORE THE AO HAD NOT FILED THE REQ UISITE DOCUMENT AND HAS ALSO NOT PARTICIPATED IN THE PROCEEDINGS, A S SUCH THE AO HAS PASSED THE EX-PARTE ORDER ASSESSING THE TOTAL INCOM E AT RS.69,81,252/-. WHILE ARRIVING AT THE ABOVE SAID I NCOME THE AO HAS DISALLOWED THE EXPENSES AT 50% I.E., RS.4,75,93 ,411/-. FEELING AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED APPEAL BEFORE THE CIT (A). 03. THE CIT (A) WITHOUT SEEKING THE REMAND REPORT H AD ALLOWED THE GROUND OF THE ASSESSEE AND HAS REDUCED THE EXPE NSES FROM 50% TO 45%. THE REVENUE FILED APPEAL BEFORE THE HONBL E HIGH COURT AND THEREAFTER THE MATTER WAS REMANDED BACK TO THE TRIBUNAL TO BE DECIDED AFRESH. 04. AT THE OUTSET THE LD. AR HAS DRAWN OUR ATTENTIO N TO THE CONDONATION PETITION FILED BEFORE THE TRIBUNAL FOR CONDONATION OF THE DELAY IN FILING THE APPEAL. IT WAS SUBMITTED T HAT ON ACCOUNT OF HIS INCAPACITY DUE TO ILL HEALTH, HE COULD NOT ATTE ND THE JOB OF FILING THE APPEAL ON TIME. HE HAS FILED AN AFFIDAVIT TO T HIS EFFECT. WE ARE ITA.590/BANG/2018 PAGE - 3 CONVINCED THAT THE ASSESSEE WAS PREVENTED WITH A RE ASONABLE CAUSE FROM FILING THE APPEAL WITHIN THE TIME. HENCE, WE DEEM IT APPROPRIATE TO ALLOW THE CONDONATION PETITION AND A DMIT THE APPEAL. 05. ON MERITS, IT IS THE CONTENTION OF THE LD. AR T HAT WHILE RESTRICTING THE DISALLOWANCE TO 45%, THE CIT (A) HA D NOT ALLOWED THE DEPRECIATION AS PER THE IT ACT, IN SO MUCH SO I T WAS SUBMITTED THAT AS PER THE BOOKS OF ACCOUNT THE DEPRECIATION W AS RS.10,62,392/- AND 55% OF THE AMOUNT I.E., RS.10,62,392/- IS ALLOW ABLE AS DEPRECIATION. IN THIS REGARD THE LD. AR RELIES UPO N THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER OF NECTAR B EVERAGES P. LTD V. DCIT [CA NO.5291 OF 2004, DT.6.7.2009]. WIT H RESPECT TO THE SECOND ISSUE CONCERNING FOREIGN EXCHANGE LOSS, IT WAS SUBMITTED THAT THE EXCHANGE LOSS AROSE TO THE ASSESSEE UP TO AUGUST 2009, WHICH IS REQUIRED TO BE ALLOWED AS PER THE PROFIT A ND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. 06. PER CONTRA, THE LD. DR HAS DRAWN OUR ATTENTION TO PARA 3.4 OF THE CIT (A) ORDER WHEREIN IT WAS MENTIONED AS REGAR DS DEPRECIATION, SINCE THE FIXED ASSETS WERE PUT TO USE ONLY UP TO 0 1.09.2003, I.E., FOR A PERIOD LESS THAN 180 DAYS, SO DEPRECIATION CAN AL SO NOT BE CLAIMED FOR THE ENTIRE YEAR. IN RESPECT OF FOREIGN EXCHANG E LOSS, HE SUBMITTED ALL THESE ARE REQUIRED TO BE VERIFIED. 07. WE HAVE GONE THROUGH THE RECORD AND PERUSED THE MATERIAL. CONSIDERING THE ORDER PASSED BY THE LOWER AUTHORITI ES AND THE REMAND REPORT OF THE AO, WE ARE OF THE CONSIDERED O PINION THAT ITA.590/BANG/2018 PAGE - 4 DESPITE THE SPECIFIC STAND TAKEN BY THE ASSESSEE BE FORE US AND ALSO BEFORE THE CIT (A), GROUNDS HAVE NOT BEEN PROPERLY ADJUDICATED BY THE BOTH THE AUTHORITIES WITH RESPECT TO DEPRECIATI ON AND THE ORDER PASSED BY THE AUTHORITIES IS CRYPTIC AND NON SPEAKI NG . 08. IN THE LIGHT OF THE ABOVE, WE DEEM IT APPROPRIA TE TO REMAND THE MATTER BACK TO THE AO TO DECIDE AFRESH IN THE L IGHT OF THE SUBMISSION MADE BY THE ASSESSEE BEFORE US AND ON TH E BASIS OF ANY OTHER ANY SUBMISSIONS MADE IN RESPECT OF THE DISALL OWANCE MADE BY THE AO TO THE EXTENT OF 50%. NEEDLESS TO SAY, WHIL E DECIDING THIS ISSUE THE AO SHALL NOT ONLY CONSIDER THE JUDGMENT O F THE HONBLE SUPREME COURT IN NECTAR BEVERAGES (SUPRA) BUT ALSO CONSIDER THE JUDGMENT RENDERED BY THE HONBLE SUPREME COURT IN T HE MATTER OF CIT V. WOODWARD GOVERNOR INDIA P. LTD [179 TAXMAN 3 26], WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT THE FOREIGN EXCHANGE LOSS OR GAIN ARISING ON CONVERSION OF THE LIABILITY AT THE CLOSING RATE SHOULD BE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT FOR THE REPORTING PERIOD.. ACCORDINGLY THE CIT(A) IS DIRECTED TO DECIDE AFRESH THE MATTER DE-NOVA BASED ON THE OBSERVATION S MADE HEREIN ABOVE. 09. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF SEPTEMBER, 2018. SD/- SD/- (JASON P. BOAZ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBE R BENGALURU DATED : 28.09.2018 ITA.590/BANG/2018 PAGE - 5 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.