Nirma Limited, Ahmedabad V. The Dy.CIT., Circle-5, Ahmedabad

ITA 661/AHD/2010

• Counselvise Citation: 66120514 RSA 2010
• Duration Of Justice: 2 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-04-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 02-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KARTAR SINGH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO. 661/ AHD/2010 (ASSESSMENT YEAR 2000-01) NIRMA LIMITED, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD VS. DCIT, CIRCLE 5, AHMEDABAD PAN/GIR NO. : AAACN5350K I.T.A.NO. 559/AHD/2010 (ASSESSMENT YEAR 2000-01) DCIT, CIRCLE 5, VS. NIRMA LIMITED, NIRMA HOUSE, AHMEDABAD ASHRAM ROAD, AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S N SOPARKAR, AR RESPONDENT BY: SHRI KARTAR SINGH, CIT DR DATE OF HEARING: 17.04.2012 DATE OF PRONOUNCEMENT: 18.05.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) II, AH MEDABAD DATED 20.11.2009 FOR THE ASSESSMENT YEAR 2000-01. BOTH T HESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. 2. FIRST, WE TAKE UP THE APPEAL OF THE REVENUE IN I .T.A.NO. 559/AHD/2010. THE GROUNDS RAISED BY THE REVENUE A RE AS UNDER: I.T.A.NO.66,559 /AHD/2010 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) - II, AHMEDABAD HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWAN CE OF DEPRECIATION AMOUNTING TO RS.3,52,81,743/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) -II, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3 - IT IS THEREFORE PRAYED THAT THE ORDER OF T HE LD. COMMISSIONER OF INCOME TAX (A) - II, AHMEDABAD MAY BE ET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). HE FURTHER SUBMITTED THAT LD. CIT(A) HAD DECIDED THIS ISSUE BY FOLLOWING THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR THE ASSES SMENT YEARS 2002-03 AND 2004-05 IN I.T.A.NO. 2280/AHD/2004 AND I.T.A.NO . 3725/AHD/2008 DATED 13.097.2009. HE ALSO SUBMITTED COPIES OF THE SE TRIBUNAL ORDERS WHICH ARE AVAILABLE ON PAGE 109-139 OF THE PAPER BO OK. HE DREW OUR ATTENTION TO PARAS 105-108 OF THIS TRIBUNAL ORDER O N PAGES 132 AND133 OF THE PAPER BOOK. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORDED AND HAVE GONE THROUGH THE ORDERS OF AUTHOR ITIES BELOW AND THE TRIBUNAL ORDER CITED BY THE LD. A.R. OF THE ASSESSE E. THE RELEVANT PARAS OF THE TRIBUNAL ORDER ARE PARAS 105-108 WHICH ARE REPR ODUCED BELOW FOR THE SAKE OF READY REFERENCE: 105. GROUND NO. 7 TAKEN BY THE ASSESSEE READS A S UNDER: 7. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANT'S CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN HOLDING T HAT BENEFIT OF SALES-TAX IS REVENUE RECEIPT CHARGEABLE TO TAX. 106. WE HAVE ALREADY CONSIDERED AND DISPOSED OF IDE NTICAL ISSUE IN 'THE 'ASSESSES A MERIT YEAR 2002-2003. FOLLOWING THE SAME, GROUND NO. 7 IS ALLOWED. 107. THE ASSESSEE HAS FILED ADDITIONAL GROUND OF AP PEAL CHALLENGING THE -OBSERVATIONS MADE BY THE LEARNED C IT(A) IN PARA 8.11 OF HIS APPELLATE ORDER. IN PARA 8.11 OF HIS O RDER, THE LEARNED I.T.A.NO.66,559 /AHD/2010 3 CIT(A) HAS MADE THE OBSERVATION THAT THE IMPUGNED R ECEIPTS SHOULD BE REDUCED FROM THE COST OF ASSETS. THE LEARNED CIT (A) HAS HOWEVER NOT ISSUED ANY DIRECTION TO THE AFORESAID EFFECT TO THE AO AS HE HAS TREATED THE IMPUGNED RECEIPT AS, REVENUE RECEIPTS . SINCE THE ISSUE RAISED IN THE ADDITIONAL GROUND OF APPEAL ARISES OU T OF THE ORDER OF CIT(A) AND IS ALSO CONNECTED WITH THE MAIN GROUND, OF APPEAL, IT IS ADMITTED. AT THE TIME OF HEARING, IT WAS POINTED OU T BY THE LEARNED : COUNSEL FOR THE ASSESSEE THAT SUCH A COURSE OF ACTI ON WAS NOT AT AIR WARRANTED AS EXPLANATION (1O) TO SECTION 43(1) HAD NO APPLICATION TO THE FACTS OF THE CASE. ACCORDING TO HIM, THE LEARNE D CIT(A) HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW AS TO HOW TH E REQUIREMENTS OF THE AFORESAID EXPLANATION WERE SATISFIED IN THE PRESENT CASE BEFORE RECORDING THE AFORESAID OBSERVATIONS. HE INVITED OU R ATTENTION TO EXPLANATION (10) TO SECTION 43(1), WHICH PROVIDES T HAT WHERE A PORTION OF THE COST OF AN ASSET ACQUIRED BY THE ASS ESSES WAS MET DIRECTLY OR INDIRECTLY BY, INTER-ALIA, THE CENTRAL GOVERNMENT OR STATE GOVERNMENT IN THE FORM OF A SUBSIDY OR GRANT OR REI MBURSEMENT; THEN, SO MUCH OF THE COST AS WAS RELATABLE TO SUCH SUBSIDY OR GRANT OR REIMBURSEMENT WOULD NOT BE INCLUDED IN THE ACTUAL C OST OF .THE ASSET TO THE ASSESSEE, AND SUBMITTED THAT THE GOVERNMENT HAD NOT PROVIDED THE IMPUGNED SALES TAX EXEMPTION TOWARDS ACQUISITIO N OF ANY PARTICULAR ASSET AND THEREFORE EXPLANATION (10) HAD NO APPLICATION. 108. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE PARTIES. THE INCENTIVE, PROVIDED TO THE ASSESSEE IS IN THE FORM OF SALES TAX EXEMPTION AND HOT TOWARDS MEETING THE COST OF ANY P ARTICULAR ASSET. BESIDES, CIT(A) HAS GIVEN NO BASIS TO SHOW AS TO HO W THE REQUISITES OF EXPLANATION (10) TO SECTION 43(1) WERE SATISFIED IN THE CASE. IT IS QUITE POSSIBLE THAT A SUBSIDY OR INCENTIVE .IS IN C APITAL FIELD BUT AT THE SAME TIME MAY NOT BE ASSET-SPECIFIC. IN SUCH CASES, THE SUBSIDY OR INCENTIVE CANNOT BE TAKEN INTO ACCOUNT FOR REDUCING THE COST OF THE ASSET THE COST OF ASSET CAN BE REDUCED BY SUBSIDY O R GRANT IT IS GRANTED TO MEET DIRECTLY OR INDIRECTLY THE COST OF AN ASSET. IN THE ABSENCE OF ANY SUCH FINDING THE CIT(A), IT IS NOT P OSSIBLE FOR US TO SUSTAIN HIS OBSERVATIONS. THE OBSERVATIONS OF THE CIT(A) IN PARA 8.11 OF HIS APPELLATE ORDER ARE THEREFORE VACATED. 5. LD. D.R. OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS IN THE PRESENT YEAR AND HENCE, WE DO NOT FIND ANY R EASON TO INTERFERE IN THE ORDER OF LD. CIT(A) BY TAKING A CONTRARY VIEW. WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). I.T.A.NO.66,559 /AHD/2010 4 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 7. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN I. T.A.NO. 661/AHD/2010. THE ASSESSEE HAS RAISED AS MANY AS 8 GROUNDS BUT THE ONLY ISSUE IS REGARDING VALIDITY OF REASSESSMENT PR OCEEDINGS. THE LD. A.R. DID NOT PRESS THESE GROUNDS AND HENCE, THE SAM E ARE REJECTED AS NOT PRESSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALSO DI SMISSED. 9. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE ASSESSEE AND THE REVENUE ARE DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION4/5 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14/5 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 18/5/12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.18/5 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18 /5/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .