Shri Pravinchandra Chunilal Parekh(HUF), RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(4), RAJKOT-GUJARAT

ITA 644/RJT/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0486 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMAL MEHTA
• Assessee Lawyers: P C PAREKH
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.644/RJT/2014 / ASSESSMENT YEAR: 2009-2010 SHRI PRAVINCHANDRA CHUNILAL PAREKH (HUF), PARDES DEHYDRATION CO., GONDAL, 14/15, RAMKRISHNA NAGAR, PURVALAYA BUILDING, OPP. VIRANI HIGH SCHOOL, RAJKOT PAN : AAIHP 4156 Q VS INCOME-TAX OFFICER, WARD 1 (4), RAJKOT / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI P.C. PAREKH, CA REVENUE BY : SHRI VIMAL MEHTA, DR / DATE OF HEARING : 08/10/2015 /DATE OF PRONOUNCEMENT: 27/10/2015 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, RAJ KOT DATED 19.09.2014 PASSED FOR ASSESSMENT YEAR 2009-10. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.3,75 ,988/- OUT OF DEPRECIATION CLAIMED BY THE ASSESSEE. ITA NO. 644/RJT/ 2014 SHRI PRAVINCHANDRA CHUNILAL PAREKH (HUF) VS. ITO AY : 2009-10 - 2 - 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF DEHYDRATED VEGETABLES AND COMMODITIES. IT HAS FILED ITS RETURN OF INCOME ON 2 9.09.2009 DECLARING TOTAL INCOME AT RS. NIL. THE CASE OF THE ASSESSEE W AS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) WAS ISSUE D AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED A SUBSIDY OF RS.26,25,000/- FROM THE MINISTRY OF FOOD PROCESSING INDUSTRIES. THE ASSESSEE HAS CAPITALIZED THE ABOVE AMOUNT. ACCORDI NG TO THE ASSESSING OFFICER, THE SUBSIDY OUGHT TO HAVE BEEN R EDUCED FROM THE WRITTEN DOWN VALUE OF BUILDING AND PLANT & MACHINER Y; AND THEREAFTER, THE DEPRECIATION SHOULD HAVE BEEN CLAIM ED BY THE ASSESSEE. THE LEARNED ASSESSING OFFICER IN THIS WAY DISALLOWE D THE ALLEGED EXCESS DEPRECIATION BY THE ASSESSEE AND MADE AN ADD ITION OF RS.3,75,988/-. 4. THE APPEAL TO THE CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IN ASSESSMENT YEAR 2007-08 THE ASSESSEE HAS SHOWN A LO SS OF RS.85,61,520/-. THE ASSESSMENT ORDER WAS PASSED ON 03.12.2010 U/S 143(3) OF THE INCOME-TAX ACT. THE LOSS WAS DETERMI NED EQUIVALENT TO THE ONE DECLARED BY THE ASSESSEE. THUS, THE ASSESSE E HAS CARRIED FORWARD OF LOSS AMOUNTING TO RS.85,61,520/- IN ASSE SSMENT YEAR 2008- 09. SIMILARLY, THE ASSESSEE HAS PLACED ON RECORD TH E ORDER OF THE ASSESSING OFFICER DATED 26.11.2010 PASSED IN ASSESS MENT YEAR 2007- 08. IN THIS ORDER, LEARNED ASSESSING OFFICER HAS GIVEN EFFECT TO THE ITA NO. 644/RJT/ 2014 SHRI PRAVINCHANDRA CHUNILAL PAREKH (HUF) VS. ITO AY : 2009-10 - 3 - ORDER OF THE LEARNED CIT(A) AND COMPUTED THE TOTAL LOSS AT RS.12,67,538/-. THUS, ACCORDING TO THE LEARNED COUN SEL FOR THE ASSESSEE, THE SET OFF OF THIS BROUGHT FORWARD UNABS ORBED LOSS OUGHT TO BE GIVEN BY THE LEARNED ASSESSING OFFICER. HE FURTH ER CONTENDED THAT THE SUBSIDY CANNOT BE REDUCED FROM THE WRITTEN DOWN VALUE OF THE ASSETS WHILE CALCULATING THE DEPRECIATION. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. P.J. CHEMICALS LTD. ETC. IN CIVIL APPEAL NO.2474 OF 1991, DECIDED ON 14.09.1994, HAS HELD THAT SUBSIDY CANNOT BE REDU CED FROM THE WRITTEN DOWN VALUE OF THE ASSETS WHILE CALCULATING THE DEPRECIATION. THE LEARNED AUTHORITIES HAVE FAILED TO LOOK INTO TH IS JUDGMENT. THE ASSESSEE HAS ALSO NOT BROUGHT IT TO THE NOTICE OF T HE REVENUE AUTHORITIES. THEREFORE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO RE-ADJUDICATE THE ISSUE, BECAU SE THE DETAILS IN RESPECT OF NATURE OF SUBSIDY, DETAILS OF ASSETS AND HOW THE ASSESSEE HAS ACCOUNTED THE SUBSIDY ARE NOT AVAILABLE ON THE RECO RD NOR DISCOVERABLE FROM THE IMPUGNED ORDER. IN THE ALTERNATIVE GROUND , THE ASSESSEE HAS PRIMA-FACIE DEMONSTRATED THAT IT HAS SUFFICIENT BRO UGHT FORWARD LOSSES WHICH CAN BE ADJUSTED IF ANY DISALLOWANCE IS BEING MADE. THIS ASPECT HAS ALSO NOT BEEN LOOKED INTO BY THE ASSESSING OFFI CER BEFORE DETERMINING THE INCOME OF THE ASSESSEE AT RS.3,75,9 88/-. IN VIEW OF THE ABOVE, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE MATTER ITA NO. 644/RJT/ 2014 SHRI PRAVINCHANDRA CHUNILAL PAREKH (HUF) VS. ITO AY : 2009-10 - 4 - IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFIC ER FOR RE-ADJUDICATION ON BOTH THE ISSUES, VIZ, (I) WHETHER THE ALLEGED CA PITAL SUBSIDY CAN BE REDUCED FROM THE WRITTEN DOWN VALUE OF THE ASSETS W HILE CALCULATING THE DEPRECIATION, PARTICULARLY IN VIEW OF THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. P.J. CHEMICALS LTD. ETC. (SUPRA) AND (II) IF ADDITION BY WAY OF DISALLOWANCE OUT OF DEPRECIATION IS BEING MADE, THEN IT IS TO BE SET OFF AGAINST THE BROUGHT FORWARD LOSSES. THE LEARNED ASSESSING OFFICER SHALL RE-ADJUDICATE BOTH THESE ISSUES AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. 8. IN THE RESULT, THE ASSESSEES APPEAL IS DEEMED T O BE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 27.10.2015 SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD, DATED 27/10/2015 *BIJU T. ! / COPY OF ORDER FORWARDED TO:- 1. ! / APPELLANT- 2.#$ ! / RESPONDENT 3.&'& ( / CONCERNED CIT/DIT 4. (- / CIT (A) 5 .+,-#.. , , / DR, ITAT, RAJKOT 6 .-0123 / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) & ' / ITAT, RAJKOT