ACIT, Circle- 2(1), Sambalpur V. M/s. Konark Cotton Growers Co-operative Spinnning Mill Ltd., Kesinga

ITA 60/CTK/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5707 (ITAT-CUTTACK)
• Duration Of Justice: 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 22-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Reasonable cause; Tax effect
• Section: 13

Judgement Text

P A G E 1 | 4 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO .60 /CTK/20 20 ASSESSMENT YEAR : 2 007 - 2008 ASST. CIT, CIRCLE 2(1), SAMBALPUR VS. M/S. KONARK COTTON GROWERS CO - OPERATIVE SPINNING MILLS LTD., KESINGA, DIST: KALAHANDI PAN/GIR NO. AAALK 0062 C (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 13 / 0 2 / 20 20 DATE OF PRONOUNCEMENT : 13 / 0 2 / 2020 O R D E R THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 25.10.2019 OF THE CIT(A), SAMBALPUR FOR THE ASSESSMENT YEAR 2007 - 08 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), SAMBALPUR IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 13,35,355/ - MADE TOWARDS 'EXCESS DEPRECIATION ON SPINNING UNIT' IN THE ASSESSMENT ORDER FOR THE A.Y.2007 - 08 IGNORING THE FACT THAT THE MACHIN E WAS NOT OPERATED DURING THE YEAR IN THE SPINNING UNIT. 2. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), SAMBALPUR IS NOT JUSTIFIED IN ALLOWING DEPRECIATION ON 'GINNING UNIT' AT THE RATE OF 50% INSTEAD OF 40% FOR THE A.Y.2007 - 08. 3. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), SAMBALPUR IS NOT JUSTIFIED IN ALLOWING DEPRECIATION ON 'ELECTRICAL FITTING' AT THE RATE OF 15% INSTEAD OF 10% FOR THE A.Y.2007 - 08. 4. ON THE FACT AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), SAMBALPUR IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 11 ,49,918/ - MADE TOWARDS ITA NO.60/CTK/2020 ASSESSMENT YEAR : 2007 - 2008 P A G E 2 | 4 'EXCESS CLAIM OF EXPENDITURE ON COST OF MANAGEMENT' IN THE ASSESSMENT ORDER FOR THE A.Y.2007 - 08. BUT, THE ASSESSEE IS ELIGIBLE FOR ' COST OF MANAGEMENT' @ 2% OF WORKING CAPITAL. 5. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), SAMBALPUR IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.7,00,485/ - MADE TOWARDS ' INTEREST RECEIVED & RECEIVABLE' 3. THE APPEAL IS TIME BARRED BY 08 DAYS. THE DEPARTMENT HAS FILED CONDONATION PETITION FOR CONDONING THE DELAY. AFTER GOING THROUGH THE CONDONATION PETITION, I AM SATISFIED THAT THERE WAS REASONABLE CAUSE IN FILING THE APPEAL BEFORE THE TRIBUNAL. HENCE, I CONDONE THE DELAY OF 8 DAYS AND ADMIT THE A PPEAL FOR ADJUDICATION. 4 . NONE APPEARED ON BEHALF OF THE RESPONDENT ASSESSEE. HENCE, WE PROCEED TO DECIDE THE APPEAL OF THE REVENUE EXPARTE THE RESPONDENT QUA ASSESSEE AFTER HEARING LD D.R. AND ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. 5 . I HAVE HEARD THE SUBMISSIONS OF LD D.R. AND PERUSED THE RECORD OF THE CASE. I FIND THAT THE CBDT IN ITS CIRCULAR NO.17/2019 IN F.NO.279/MISC.142/2007 - ITJ(PT) DATED 8TH AUGUST, 2019, HAS LIBERALIZED ITS POLICY FOR NOT FILING APPEALS AGAINST THE DECISION S OF THE APPELLATE AUTHORITIES IN FAVOUR OF THE TAXPAYERS, WHEREIN TAX INVOLVED IS BELOW CERTAIN THRESHOLD LIMITS, AND ANNOUNCED ITS POLICY DECISION NOT TO FILE, OR PRESS, THE APPEALS, BEFORE THIS TRIBUNAL, AGAINST THE APPELLATE ORDERS FAVOURABLE TO THE AS SESSEE IN THE CASES IN WHICH OVERALL TAX EFFECT, EXCLUDING INTEREST EXCEPT WHEN INTEREST ITSELF IS IN DISPUTE, IS RS 50,00,000/ - OR LESS. 6 . THIS CIRCULAR, ONLY ENHANCES THE MONETARY LIMITS AND GIVES FURTHER RELAXATION. THE OLD CIRCULAR, BEYOND ANY DISPUT E OR CONTROVERSY, CATEGORICALLY APPLIED TO THE PENDING APPEALS AS ON THE DATE OF ISSUANCE OF CIRCULAR. ITA NO.60/CTK/2020 ASSESSMENT YEAR : 2007 - 2008 P A G E 3 | 4 7 . THE CIRCULAR DATED 8TH AUGUST 2019 IS NOT A STANDALONE CIRCULAR. IT IS TO BE READ IN CONJUNCTION WITH THE CBDT CIRCULAR NO. 3/2018 (SUBSEQUENT AMENDM ENT THERETO), AND ALL IT DOES IS TO REPLACE PARAGRAPH NOS. 3 AND 5 OF THE SAID CIRCULAR. 8 . THE HON'BLE SUPREME COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX - 5,NEW DELHI VS. KESHAV POWER LTD., IN SLP NO.21497/2019 DATED 16.08.2019 REPORTED IN 2019(8 )TMI 811(SC) HAS ALSO APPLIED THE CIRCULAR NO.17/2019 DATED 08.08.2019 AND HAS DISMISSED THE APPEAL HOLDING AS FOLLOWS: 'SINCE THE TAX EFFECT INVOLVED IN THE MATTER IS LESS THAN RS.2 CRORES, GOING BY THE LATEST CIRCULAR ISSUED BY THE CBDT, WE SEE NO REASON TO INTERFERE IN THIS MATTER. THE SPECIAL LEAVE PETITION IS DISMISSED, LEAVING ALL THE QUESTIONS OF LAW OPEN'. 9 . LEARNED D.R. SUBMITS THAT LIBERTY MAY KINDLY BE GIVEN TO POINT OUT, UPON NECESSARY FURTHER VERIFICATIONS, AND TO SEEK RECALL THE DISM ISSAL OF APPEAL AND RESTORATION OF THE APPEAL IN THE CASE: (I) IN WHICH IT CAN BE DEMONSTRATED THAT THE APPEALS ARE COVERED BY THE EXCEPTIONS, AND (II) WHICH ARE INADVERTENTLY INCLUDED IN THIS BUNCH OF APPEALS, WHEREIN THE TAX EFFECT, IN TERMS OF THE CBDT CIRCULAR (SUPRA), EXCEEDS RS 50,00,000. 10 . I ACCEPT THE REQUEST OF LD D.R. I ALSO MAKE IT CLEAR THAT THE APPELLANT SHALL BE AT LIBERTY TO POINT OUT THE CASE WHICH IS WRONGLY INCLUDED IN THE APPEAL SO SUMMARILY DISMISSED, EITHER OWING TO WRONG COMPUTATIO N OF TAX EFFECT OR OWNING TO SUCH CASES BEING COVERED BY THE PERMISSIBLE EXCEPTIONS OR FOR ANY OTHER REASON, AND WE WILL TAKE APPROPRIATE REMEDIAL STEPS IN THIS REGARD. ITA NO.60/CTK/2020 ASSESSMENT YEAR : 2007 - 2008 P A G E 4 | 4 1 1 . IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON' BLE SUPREME COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX - 5, NEW DELHI VS. KESHAV POWER LTD. (SUPRA) AND IN THE LIGHT OF THE ABOVE DISCUSSIONS, THE APPEAL FILED BY THE REVENUE IS FOUND TO BE NON - MAINTAINABLE. 1 2 . IN THE RESULT, THE APPEAL OF REVENUE STANDS DISMISSED. ORDER PRONOUNCED ON 13 / 0 2 /20 20 . S D/ - ( CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 13 / 0 2 /20 20 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : ASST. CIT, CIRCLE 2(1), SAMBALPUR 2. THE RESPONDENT. /S. KONARK COTTON GROWERS CO - OPERATIVE SPINNING MILLS LTD., KESINGA, DIST: KALAHANDI 3. THE CIT(A) - , SAMBALPUR 4. PR.CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//