M/S SANJAY SHANKARRAO JADHAO, AMRAVATI V. JIOINT C.I.T. AMRAVATI RANGE, AMRAVATI

ITA 66/NAG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7585 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 28-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Revised return
• Section: 54B; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.66/NAG./2017 ( ASSESSMENT YEAR : 201112 ) SHRI SANJAY SHANKARRAO JADHAO PROP: M/S. JADHAO GEARS, M/S. JADHAO ICONS AND M/S. JADHAO COEX MIDC, AMRAVATI 444 607 PAN AARPJ6547L APPELLANT V/S JT. COMMISSIONER OF INCOME TAX AMRAVATI RANGE, AMRAVATI .... RESPONDENT ASSESSEE BY : SHRI K.P. DEWANI REVENUE BY : SHRI GITESH KUMAR DATE OF HEARING 07.05.2018 DATE OF ORDER 08.05 .2018 O R D E R PER SHAMIM YAHYA, J.M. THE PRESENT APPEAL FILED THE ASSESSEE IS AGAINST TH E IMPUGNED ORDER DATED 2 ND DECEMBER 2016, PASSED BY THE LEARNED COMMISSIONER (APPEALS)1, NAGPUR, RELEVANT TO THE ASSESSMENT YEA R 201112. 2. THE GROUNDS RAISED BY THE ASSESSEE IS REPRODUCED BE LOW: 1. THE ADDITION OF RS.2,88,986/- ON ACCOUNT OF DEP RECIATION UPHELD BY CIT(A) IS UNJUSTIFIED, UNWARRANTED AND BA D IN LAW. 2. THE DEPRECIATION CLAIM OF RS.2,88,986/- ON PLANT & MACHINERY AT M/S. JADHAO COTEX OUGHT TO HAVE BEEN ALLOWED AS CLAIMED. 3. THE CLAIM OF ASSESSEE AS REGARD TO EXEMPTION U/S 54B OF I.T. 2 SHRI SANJAY SHANKARRAO JADHAO ACT 1961 AT RS.67,90,180/- OUGHT TO HAVE BEEN ALLOW ED AS CLAIMED 4. THE LEARNED CIT(A) ERRED IN UPHOLDING THE DENIAL OF EXEMPTION U/S 54B OF I.T. ACT 1961. 5. THE ASSESSEE DENIES LIABILITY TO PAY INTEREST UN DER SECTION 234A, 234B AND 2340 OF IT ACT 1961. WITHOUT PREJUDICE, LEVY OF INTEREST UNDER SECTION 234A, 234B AND 234C OF L.T A CT 1961 IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE . 2. APROPOS GROUND RELATING TO DISALLOWANCE OF CLAIM OF ` 2,88,986 ON PLANT AND MACHINERY. 3. THE ASSESSEE, IN THIS CASE, IS A PROPRIETOR OF SEVE RAL BUSINESSES. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, NOTED THAT IN CASE OF ONE OF ITS BUSINESS CONCERNS NAMELY M/S. JADHAO COTEX, NO BUSINESS ACTIVITY HAD BEEN UNDERTAKEN DUR ING THE YEAR. IT WAS ALSO NOTED THAT THE BUSINESS ACTIVITY WAS CLOSE D SINCE THE ASSESSMENT YEAR 200809. THE ASSESSING OFFICER DISA LLOWED ADMINISTRATIVE EXPENDITURE AND DEPRECIATION TOTALIN G TO ` 3,13,584 ON THIS ACCOUNT. 4. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) ALLOWED T HE ADMINISTRATIVE EXPENDITURE BUT DISALLOWED DEPRECIAT ION EXPENSES AMOUNTING TO ` 2,88,986. THE LEARNED CIT(A) DID NOT ACCEPT ASSESS EES CONTENTION THAT THERE WAS A TEMPORARY SUSPENSION, H ENCE, HE DISTINGUISHED THE DECISION OF THE HONBLE SUPREME C OURT IN CIT V/S VIKRAM COTTON MILLS LTD., [1988] 169 ITR 597 (SC), WHICH WAS RELIED 3 SHRI SANJAY SHANKARRAO JADHAO UPON BY THE LEARNED COUNSEL FOR ASSESSEE. AGAINST T HE ABOVE ORDER, ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. 5. LEARNED COUNSEL FOR ASSESSEE MADE FOLLOWING SUBMISS IONS: C) IT IS UNDISPUTED FACT THAT PLANT AND MACHINERY ON WHICH DEPRECIATION IS CLAIMED AT ` 2,88,986 IS PART OF BLOCK OF ASSETS OF THE OPENING WRITTEN DOWN VALUE; D) IT IS SETTLED PROPOSITION OF LAW THAT INDIVIDUAL USE OF ASSET OF BLOCK OF ASSET IS NOT THE CONDITION PRECEDENT FOR A LLOWANCE OF DEPRECIATION AT THE HANDS OF ASSESSEE. ISSUE COVERE D IN FAVOUR OF THE ASSESSEE BY DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF OSWAL AGRO MILLS. LTD. I) CIT V/S OSWAL AGRO MILLS LTD., [2012] 341 ITR 467 (DEL). E) THE FINANCIAL STATEMENT OF JADHAO COTEX PLACED I N PAPER BOOK AT PAGE1 TO 5 WOULD INDICATE THAT ASSESSEE HA D OPENING STOCK AS WELL AS CLOSING STOCK AND HAS ALSO DEBTORS AND CREDITORS IN RESPECT TO THIS BUSINESS. THE BUSINESS IS TEMPOR ARILY SUSPENDED AND NOT CLOSED AND THEREFORE ALLOWANCE OF EXPENSES AND DEPRECIATION CANNOT BE DISPUTED. F) RELIANCE ON : I) HONBLE DELHI HIGH COURT ORDER IN ITA NO.530/ 2011 IN THE CASE OF INTEGRATED TECHNOLOGIES LTD., VIDE ORDER DATED 16.12.2011; II) CIT V/S VIKRAM COTTON MILLS LTD., [1988] 169 ITR 597 (SC); III) DCIT V/S DEMPO INDUSTRIES PVT. LTD., [2015] 45 CCH 105 (PANAJI) (TRIB.); IV) ITO V/S MOKUL FINANCE PVT. LTD., [2007] 110 TTJ 445. 6. PERCONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4 SHRI SANJAY SHANKARRAO JADHAO 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. UPON CAREFUL CONSIDERATION, W E FIND THAT IN THE PRESENT CASE, THE ASSESSEE RUNS SEVERAL BUSINESS CO NCERNS AND HAS COMBINED BLOCK OF ASSETS. IN SUCH A SITUATION, THE DECISION OF THE HONBLE DELHI HIGH COURT IN OSWAL AGRO LTD. (SUPRA) HAS BEEN RIGHTLY RELIED UPON BY THE LEARNED COUNSEL FOR ASSESSEE. WH EN A PARTICULAR ASSET IS ADDED INTO THE PARTICULAR BLOCK OF ASSETS IRRESPECTIVE OF THE FACT THAT AN INDIVIDUAL ITEM IN THE SAID BLOCK REMA INS UNUTILIZED DEPRECIATION IN THE BLOCK OF ASSET HAS TO BE GRANTE D. THIS POSITION DULY FOLLOW THE DECISION OF THE HONBLE DELHI HIGH COURT IN OSWAL AGRO LTD. (SUPRA). FURTHERMORE, THE ASSESSEE HAS CLAIMED THAT THE BUSINESS WAS TEMPORARILY SUSPENDED AND OPENING AND CLOSING STOCK AS WELL AS DEBTORS AND CREDITORS CONTINUED TO BE IN THE BUSINE SS. IN SUCH CIRCUMSTANCES, THE CLAIM OF DEPRECIATION IS FURTHER ALLOWABLE ON THE TOUCH STONE OF THE DECISION OF THE HONBLE SUPREME COURT IN VIKRAM COTTON MILLS LTD. (SUPRA). CONSEQUENTLY, FOLLOWING THE PRECEDENT, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. THIS GROUND IS ALLOWED. 8. APROPOS THE ISSUE OF EXEMPTION UNDER SECTION 54B OF THE ACT AMOUNTING TO ` 67,90,180. 5 SHRI SANJAY SHANKARRAO JADHAO 9. IN THIS CASE, ASSESSEE HAS NOT DISCLOSED ITS SALE A ND PURCHASE OF AGRICULTURAL LAND IN ITS ORIGINAL RETURN OF INCOME. IT CAME TO BE NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSES SMENT. ASSESSEE FILED BELATED REVISED RETURN OF INCOME. THE ASSESSI NG OFFICER ADDED CAPITAL GAIN ON SALE OF LAND BUT DID NOT GRANT ANY BENEFIT UNDER SECTION 54B OF THE ACT FOR PURCHASE OF AGRICULTURAL LAND ON THE GROUND THAT THE SAME WAS NOT BASED ON THE ORIGINAL RETURN OF INCOME BUT RAISED IN THE REVISED RETURN OF INCOME UPON PLACING RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN GOETZ INDIA LTD. V/S CIT, 284 ITR 323 (SC). 10. BEFORE US, THE LEARNED COUNSEL FOR ASSESSEE HAS MADE SUBMISSIONS WHICH ARE SUMMARIZED AS UNDER: A) THE ASSESSEE SUBMITTED REVISED RETURN CLAIMING EXEMPTION UNDER SECTION 54B IN RESPECT TO INVESTMENT IN AGRIC ULTURAL LAND. A.O. HELD THAT ORIGINAL RETURN IS NOT IN TIME AND T HEREFORE, NO VALID REVISED RETURN CAN BE SUBMITTED. THE EXEMPTION U/S 54B WAS THEREFORE REJECTED ON THIS TECHNICAL GROUND. IN THE CASE OF ASSESSEE LONG TERM CAPITAL GAIN ON S ALE OF AGRICULTURAL LAND HAS BEEN ASSESSED TO TAX AT RS.92 ,57024/-. THE INVESTMENT HAS BEEN MADE IN RESPECT TO AGRICULTURAL LAND TO THE TUNE OF RS.65 LACS FOR WHICH EXEMPTION HAS BEEN CLA IMED U/S 54B OF I.T. ACT 1961 ALONG WITH EXPENSES INCURRED ON RE GISTRATION TO THE TUNE OF RS.2,90180/-. ELIGIBILITY TO CLAIM EXEM PTION U/S 54B HAS NOT BEEN DISPUTED BY A.O. AS WELL AS BY CIT(A). A.O. HAS NOT ALLOWED THE EXEMPTION AS ACCORDING TO HIM THE SAME WAS NOT CLAIMED IN THE ORIGINAL RETURN AND THERE IS NO VALID REVISED RETURN SUBMITTED BY THE ASSESSEE. THE CIT(A) HAS NOT ACCEPTED THE CLAIM OF ASSESSEE A S ACCORDING TO HER ASSESSEE COULD NOT HAVE LEGALLY MADE CLAIM BEFO RE A.O. THE DECISION OF HON'BLE 011(A) IS CONTRARY TO THE D ECISION OF HON'BLE BOMBAY HIGH COURT IN CASE OF M/S PRUTHVI BR OKERS AND 6 SHRI SANJAY SHANKARRAO JADHAO SHAREHOLDERS PVT. LTD. REPORTED AT 349 ITR 336 (BOM .). THE DETAILS OF PURCHASE AND SALE OF AGRICULTURAL LA ND ARE PLACED IN PAPER BOOKS AT PAGE 7 TO 29. 11. PERCONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UPON CAREFUL CONSIDERATION, WE FIND THAT THE ASSESSEE HAS NOT BEEN ABLE TO MAKE THE CLAIM OF EXE MPTION UNDER SECTION 54B OF THE ACT IN THE ORIGINAL RETURN OF INC OME. THE ASSESSING OFFICER HAS FAILED TO ENTERTAIN THE SAME BY PLACING RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN GOETZ INDI A LTD. (SUPRA). HOWEVER, IN THE SAME CASE OF GOETZ INDIA LTD. (SUPR A) THE HONBLE SUPREME COURT HAD EXPOUNDED THAT THE SAID DECISION WILL NOT IMPINGE UPON THE APPELLATE AUTHORITIES RIGHT TO ENTERTAIN ADDITIONAL GROUNDS. FURTHERMORE, TO THE SAME EFFECT, THERE IS EXPOSITIO N OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRUTHVI BRO KERS AND SHAREHOLDERS PVT. LTD. (SUPRA). CONSEQUENTLY, IN OU R CONSIDERED OPINION, WHEN THE ASSESSEE HAS DULY SUBMITTED THE D OCUMENTS REGARDING PURCHASE OF AGRICULTURAL LAND AND THE SAM E ARE ALREADY ON RECORD BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER HAS NOT FIND ANY FAULT IN THE PURCHASE DOCUMENTS. ACCORDINGLY, B EING ALL THE NECESSARY PURCHASE DOCUMENTS ARE ON RECORD, IN OUR CONSIDERED 7 SHRI SANJAY SHANKARRAO JADHAO OPINION, THE ASSESSEE DESERVES TO SUCCEED ON THIS C OUNT. HENCE, WE ARE OF THE CONSIDERED OPINION THAT ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 54B OF THE ACT IS TO BE ALLOWED. ACCORDINGLY , WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) AND DEC IDE THE ISSUE IN FAVOUR OF THE ASSESSEE. THIS GROUND IS ALLOWED. 13. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.05.2018 SD / - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR, DATED: 08.05.2018 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. P.S./P.S.) ITAT, NAGPUR