A.P. State Warehousing Corporation, Hyderabad V. Dy.CIT, Circle-1(1), Hyderabad

ITA 673/HYD/2014

• Counselvise Citation: 67322514 RSA 2014
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B SATYANARAYAN MURTHY
• Keywords: Depreciation; Opportunity of being heard; Revised return; Revenue expenditure
• Section: 80IB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER SL.NO. ITA NO. AY APPELLANT RESPONDENT 1 672/H/14 2008-09 AP STATE WAREHOUSING CORPORATION LTD., HYDERABAD PAN AABCA7364F DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), HYD. 2 673/H/14 2009-10 -DO- -DO- 3 452/H/14 2008-09 DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), HYD AP STATE WAREHOUSING CORPORATION LTD., HYDERABAD PAN AABCA7364F ASSESSEE BY SHRI B. SATYANARAYAN MURTHY REVENUE BY SHRI SOLGY JOSE T. KOTTARAM DATE OF HEARING 20-08-2014 DATE OF PRONOUNCEMENT 28-08-2014 O R D E R PER SAKTIJIT DEY, J.M.: THESE ARE THREE APPEALS TWO BY THE ASSESSEE AND ONE BY THE DEPARTMENT AGAINST TWO SEPARATE ORDERS OF CIT(A)-II , HYDERABAD PERTAINING TO AYS 2008-09 AND 2009-10. 2. SO FAR AS ASSESSMENT YEAR 2009-10 IS CONCERNED, APPEAL IS BY THE ASSESSEE ONLY, WHEREAS FOR AY 2008-09, THERE AR E CROSS APPEALS. SINCE FACTS ARE IDENTICAL AND ISSUE IN DISPUTE IS C OMMON, ALL THESE APPEALS WERE CLUBBED AND HEARD TOGETHER, AND THEREF ORE, DISPOSED OFF BY THIS COMMON ORDER. 2 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. ITA NO. 672/HYD/14 FOR AY 2008-09 3. THE ASSESSEE HAS RAISED ALTOGETHER NINE GROUNDS, GROUND NO. 1 BEING GENERAL IN NATURE IS NOT REQUIRED TO BE ADJUD ICATED. GROUND NOS. 2 TO 8 RELATES TO THE ISSUE OF DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80-IB(11A) OF AN AMOUNT OF RS. 4,04,20,767/-. 4. BRIEFLY THE FACTS RELATING TO THE AFORESAID ISSU E ARE, THE ASSESSEE A STATE GOVERNMENT UNDERTAKING IS IN THE B USINESS OF PROVIDING STORAGE FACILITIES FOR AGRICULTURAL PRODU CTS. FOR THIS PURPOSE, IT TAKES ON LEASE GODOWNS FROM PRIVATE PARTIES AND LETS THEM TO FCI FOR STORAGE OF AGRICULTURAL PRODUCTS. FOR THE AY UN DER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 30/09/2008 D ECLARING TOTAL INCOME OF RS. 15,39,11,020 AFTER CLAIMING DEDUCTION OF AN AMOUNT OF RS. 2,31,24,709 U/S 80IB OF THE ACT. INITIALLY THE RETURN WAS PROCESSED U/S 143(1) AND A REFUND OF RS. 5,08,56,890 WAS ISSU ED TO THE ASSESSEE. SUBSEQUENTLY, ON VERIFICATION OF RECORD THE AO NOTICED THAT DUE TO SOME TECHNICAL MISTAKE WHILE PROCESSING THE RETURN U/S 143(1) THE INCOME WAS ADOPTED AT RS. 13,29,40,273/-, WHICH RESULTED IN UNDERASSESSMENT/ESCAPEMENT OF ASSESSMENT OF INCOME TO THE EXTENT OF RS. 2,09,69,750/-. FURTHER, IT WAS NOTICED BY T HE AO THAT FOR THE AY UNDER CONSIDERATION ASSESSEE HAD CLAIMED DEDUCTI ON OF RS. 2,31,24,709 U/S 80IB OF THE ACT. WHEREAS ON VERIF ICATION OF EARLIER RECORDS, IT WAS NOTICED BY THE AO THAT ASSESSEES C LAIM OF DEDUCTION U/S 80IB(11A) HAS BEEN CONSISTENTLY REJECTED BY THE DEPARTMENT BY HOLDING THAT ASSESSEE WAS IN THE BUSINESS OF PROVID ING STORAGE FACILITY ONLY AND NOT INTEGRATED BUSINESS OF HANDLING, STORA GE AND TRANSPORTATION OF FOOD GRAINS. ON THE BASIS OF AFO RESAID REASONS, THE AO REOPENED THE ASSESSMENT BY ISSUING A NOTICE U/S 148 OF THE ACT CALLING UPON THE ASSESSEE TO FILE A RETURN OF INCOM E. IN RESPONSE TO THE SAID NOTICE AND SUBSEQUENT NOTICE ISSUED U/S 14 2(1), THE 3 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. ASSESSEE ON 12/07/2011 SUBMITTED A REVISED RETURN. IN COURSE OF THE ASSESSMENT PROCEEDING, THE AO ASKED THE ASSESSEE TO SHOW CAUSE WHY DEDUCTION CLAIMED U/S 80IB(11A) SHALL NOT BE DI SALLOWED. THOUGH, ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE OF D EDUCTION CLAIMED U/S 80IB(11A), BUT, THE AO REJECTING THE EXPLANATIO N OF THE ASSESSEE DISALLOWED THE DEDUCTION CLAIMED U/S 80IB(11A) OF T HE ACT, FOR THE FOLLOWING REASONS: 4.1 AO WAS OF THE VIEW THAT FOR AVAILING DEDUCTION U/S 80IB(11A) THE ASSESSEE MUST DERIVE PROFIT FROM THE ELIGIBLE BUSIN ESS I.E. INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS. THE ASSESSEE HAS TO BEGIN SUCH BUSINESS FROM THE INITIA L YEAR OF CLAIM OF DEDUCTION. THE UNIT IN RESPECT OF WHICH THE DEDUCTI ON CLAIMED SHOULD HAVE STARTED OPERATIONS ON OR AFTER 1 ST APRIL, 2001. WHEREAS, AS NOTED BY THE AO THE ASSESSEE CORPORATION WAS INCORP ORATED 05/08/1950 AND AS PER THE FUNCTIONS LISTED IN THE W AREHOUSING CORPORATIONS ACT, 1962, THE MAIN BUSINESS OF THE AS SESSEE IS PROVIDING WARE HOUSING FACILITIES FOR THE STORAGE O F FOOD GRAINS AND OTHER AGRICULTURE RELATED COMMODITIES, SUCH AS FERT ILIZERS AND AGRICULTURAL IMPLEMENTS. ACCORDING TO THE AO, ON E XAMINATION OF THE TENDER DOCUMENTS AND CONTRACT AGREEMENTS PRODUCED B Y THE ASSESSEE IN EARLIER ASSESSMENT YEARS, IT WAS FOUND THAT THE ASSESSEE WAS NOT ENGAGED IN INTEGRATED ACTIVITIES OF HANDLIN G, STORAGE AND TRANSPORTATION OF FOOD GRAINS AS HANDLING AND TRANS PORTATION ARE NOT MAIN FUNCTIONS OF THE ASSESSEE CORPORATION. HE FURT HER NOTED THAT THE BOOKS OF ACCOUNT ALSO REVEALED THAT THE ASSESSEE WA S NOT DERIVING ANY PROFIT FROM HANDLING AND TRANSPORTATION. THERE FORE, HE CONCLUDED THAT THE ASSESSEE IS NOT IN THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION. FURTHER, THE AO NOTED T HAT THE OTHER CONDITION U/S 80IB(11A) THAT THE ELIGIBLE UNIT MUST START ITS FUNCTIONS ON OR AFTER 01/04/2001 IS ALSO NOT AVAILABLE WITH T HE ASSESSEE AS THE INFORMATION AVAILABLE ON RECORD SHOWS THAT NO NEW A CTIVITY SUCH AS 4 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. HANDLING AND TRANSPORTATION WERE UNDERTAKEN BY THE ASSESSEE ON ITS OWN FROM 01/04/2001. THE AO WAS OF THE VIEW THAT T HE INTENTION OF LEGISLATURE IN INTRODUCING SECTION 80IB(11A) IS TO ENCOURAGE THE PERSONS TO COME FORWARD FOR CREATING FACILITIES FOR BRINGING THE FOOD GRAINS FROM REMOTE PLACES WITHOUT MUCH LOSS OF QUAN TITY OF THE COMMODITIES BY ADOPTING MODERN HANDLING AND STORAGE . AS THE ASSESSEE WAS NOT ENGAGED IN INTEGRATED ACTIVITY OF STORAGE, HANDLING AND TRANSPORTATION, THE CONDITIONS OF SECTION 80IB( 11A) ARE NOT SATISFIED. HE FURTHER NOTED THAT THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNT SO FAR AS NEW UNDERTAKING IS CONCERNED AND HAS COMPUTED THE ELIGIBLE DEDUCTION ON ESTIMATE BASIS. HE OBSERVED THAT THE ASSESSEE HAS NOT FILED VALID FORM 10CCB ALSO. ACCORDINGLY, THE AO CAME TO HOLD THAT THE ASSESSEE BEING NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80IB(11A), THE DEDUCTION CLA IMED OF RS. 4,04,20,767 HAS TO BE DISALLOWED AND ADDED TO THE R ETURNED INCOME. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). 5. THE CIT(A) ALSO SUSTAINED THE ADDITION BASICALLY FOR THE REASON THAT THE ASSESSEE HAS NOT STARTED ITS OPERATION ON OR AFTER 01/04/2001. FURTHER, THE CIT(A) ALSO TOOK NOTE OF THE FACT THAT IN THE PRECEDING AY I.E. AY 2007-08 HER PREDECESSOR HAS DISMISSED ASSES SEES APPEAL WITH REGARD TO CLAIM OF DEDUCTION U/S 80IB(11A) OF THE ACT. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON R ECORD. AT THE VERY OUTSET, THE LEARNED AR SUBMITTED BEFORE US THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE ORDER OF THE ITAT, HYDERABA D BENCH IN ASSESSEES OWN CASE FOR THE PRECEDING ASSESSMENT YE ARS 2005-06, 2006-07 AND 2007-08. ON PERUSAL OF THE ORDER OF THE COORDINATE BENCH DATED 24/01/2014 IN ITA NO. 834, 835 & 836/HY D/2012, WE FIND THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFO RE THE TRIBUNAL IN 5 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. ASSESSEES OWN CASE. THE COORDINATE BENCH AFTER CON SIDERING THE SUBMISSIONS OF THE PARTIES AND EXAMINING THE RELEVA NT STATUTORY PROVISION HELD AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. IT IS EVIDENT FROM TH E ORDERS OF THE LOWER AUTHORITIES THAT THE CLAIM OF THE ASSESSEE FO R RELIEF UNDER S.80IB(11A) HAS BEEN DISALLOWED MAINLY ON THE GROUN D THAT THE ACTIVITIES OF THE ASSESSEE DO NOT CONSTITUTE AN IN TEGRATED. THE NEXT REASON FOR WHICH THE CLAIM WAS DISALLOWED WAS ALSO THAT, ASSESSEE CORPORATION, HAVING BEEN INCORPORATED IN 1 958, AND IN THE ABSENCE OF ANYTHING ON RECORD TO SUBSTANTIATE T HAT THE ASSESSEE HAS TAKEN UP ANY NEW ACTIVITY OF HANDLING AND TRANSPORTATION OF FOODGRAINS SUBSEQUENT TO 2002, AS SESSEE IS NOT ENTITLED FOR RELIEF UNDER S.80IB(11A), SINCE RE LIEF UNDER THAT SECTION IS AVAILABLE ONLY FOR FIVE YEARS FROM INIT IAL YEAR, VIZ. EITHER FROM 1958 OR FROM THE YEAR IN WHICH SUCH NEW ACTIVITY WAS TAKEN UP BY THE ASSESSEE. WE DO NOT FIND MERIT IN THESE REASONS OF THE LOWER AUTHORITIES FOR MAKING THE DIS ALLOWANCE. WE MAY NOW EXAMINE THE CORRECTNESS OR OTHERWISE OF THESE REASONS GIVEN BY THE LOWER AUTHORITIES. 12. WE FIND THAT THE A SSESSEE-CORPORATION OWNS PREMISES ACCOMMODATING GODOWNS AT DIFFERENT PLACES ALL OVER THE STATE. IN EACH AREA IT EITHER CONSTRUCTS OR OFFERS AN INVESTOR TO CONSTRUCT NEW GODOWNS, WHICH THE CORPORATION TAKES ON LEASE. IT IS THE CLA IM OF THE ASSESSEE BEFORE THE CIT(A) THAT THE PLINTH AREA OF CONSTRUCT ION OF THE GODOWNS VARIES FROM MINIMUM AREA OF 10,000 SFT. UP TO A MAX IMUM AREA OF 50,000 SFT. AND THE SCHEME OF CONSTRUCTION OF GODOWNS STAR TED IN THE YEAR 2002. EACH UNIT IS AN UNDERTAKING BECAUSE FOOD-GRAINS ARE STORED AND HANDLED AND TRANSPORTED THERETO AND THEREFROM. IT MAY BE NO TED AT THIS JUNCTURE THAT THERE IS NO RESTRICTION IN S.80-IB THAT AN EXI STING BUSINESS UNIT CANNOT SET UP NEW UNDERTAKINGS TO CARRY ON THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS. THE GODO WNS WHERE THIS BUSINESS IS TO BE CARRIED ON NEED NOT BE OWNED BY T HE ASSESSEE. WHEN THE ASSESSEE-CORPORATION HAS SET UP THESE GODOWNS I N AS MANY AS IN 73 TOWNS AND AT DIFFERENT PLACES IN THOSE TOWNS, IT IS VERY MUCH ENTITLED FOR RELIEF UNDER S.80IB(11A) OF THE ACT IN RESPECT OF E ACH SUCH NEW UNDERTAKING SET UP BY IT. IT APPEARS FROM THE IMPUG NED ORDERS THAT THE LOWER AUTHORITIES HAVE PROCEEDED AS IF THE ASSESSEE S CLAIM FOR RELIEF UNDER S.80IB(11A) IS IN RESPECT OF EXISTING GODOWNS , AND NOT MERELY IN RESPECT OF THE NEW ONES STARTED AFTER 2001. IT IS S O BECAUSE THE PERIOD OF FIVE YEARS WAS SOUGHT TO BE COUNTED FROM THE YEAR O F INCORPORATION OF THE ASSESSEE, VIZ. 1958; AND ALSO OBSERVING THAT NO NEW ACTIVITY WAS TAKEN UP AFTER 2001. SINCE EACH NEW GODOWN IS AN UNDERTAK ING IN ITSELF, ASSESSEE IS ENTITLED FOR SUCH RELIEF UNDER S.80IB(1 1A) FOR FIVE YEARS IN 6 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. RESPECT OF EACH SUCH UNDERTAKING FROM THE INITIAL YEAR IN WHICH IT WAS SET UP. 13. AS FOR THE ELIGIBILITY OF THE ACTIVITY OF THE A SSESSEE TO THE RELIEF UNDER S.80IB(11A), IT IS WORTHWHILE TO REFER TO THE INTEN TION OF THE LEGISLATURE IN INTRODUCING SEC 80IB(11A), WHICH IS REPRODUCED HERE UNDER : UNDER THE EXISTING PROVISIONS OF SEC. 80-IB OF THE INCOME-TAX ACT, A DEDUCTION IS ALLOWED, IN COMPUTING THE TAXABLE IN COME, IN RESPECT OF PROFITS DERIVED FROM A NEW INDUSTRIAL UN DERTAKING OR A SHIP OR THE BUSINESS OF A HOTEL. TO ADDRESS THE COU NTRY'S BASIC CONCERNS RELATING TO ENHANCED FOOD SECURITY AND AGR ICULTURAL DEVELOPMENT, UPGRADATION AND MODERNIZATION OF INFRA STRUCTURE FOR STORAGE, HANDLING AND TRANSPORTATION OF FOOD GRAINS IS A CENTRAL CONCERN IN WHICH INTRODUCTION OF MODERN TECHNOLOGY WOULD BRING GREATER EFFICIENCY IN THE GRAIN MANAGEMENT SYSTEM A ND MINIMIZE POST HARVEST FOOD GRAIN LOSSES. IT IS EVIDENT FROM THE ABOVE, THAT THE INSERTION OF SUB-SECTION (11A) IS INTENDED TO ENCOURAGE BUILDING OF STORAGE CAPACITIE S, BY PROVIDING THAT ANY UNDERTAKING ENGAGED IN INTEGRATED BULK HANDLING , STORAGE AND TRANSPORTATION WOULD BE ALLOWED HUNDRED PER CENT DE DUCTION FOR THE FIRST FIVE YEARS AND THIRTY PER CENT DEDUCTION FOR THE NE XT FIVE YEARS. THUS, SEC 80IB(11A) IS APPLICABLE TO INCOME DERIVED FROM THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOODGRAI NS. A PERUSAL OF THE ACTIVITIES OF THE ASSESSEE IN ASSOCIATION WITH THE FOOD CORPORATION OF INDIA, AS DEMONSTRATED BY THE LEARNED COUNSEL FOR T HE ASSESSEE IN THE PAPER-BOOK FILED, CLEARLY INDICATES IT IS ENGAGED I N THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS. THERE IS NO DISPUTE THE ASSESSEES MAIN BUSINESS IS TO PROVI DE WAREHOUSING FACILITY FOR FOODGRAINS. THE ASSESSEE HAS BEEN CONS TITUTED UNDER WITH THESE VERY OBJECTS IN VIEW. MERELY BECAUSE THE ASSE SSEE HAS ENGAGED OUTSIDERS FOR TRANSPORTATION OR LEASED OUT SOME OF THE GODOWNS FOR STORAGE DOES NOT MEAN THAT THE ASSESSEE IS NOT ENGA GED IN THE INTEGRATED BUSINESS OF HANDLING AND STORAGE OF FOOD GRAINS. IN THE COURSE OF THEIR INTEGRATED BUSINESS, THE ASSESSEE HAD COLL ECTED RENTALS FOR STORING FOODGRAINS AND HAD ENGAGED OUTSIDERS TO TRA NSPORT THE FOOD GRAINS. FURTHER, THE FACT THAT THE ASSESSEE HAD BEE N CARRYING ON SIMILAR BUSINESS WOULD NOT DISENTITLE THE ASSESSEE FROM CLA IMING RELIEF U/S 80IB(11A), IN RESPECT OF THE NEW WAREHOUSES PUT TO USE AFTER THE INTRODUCTION OF SEC 80IB(11A) I.E ON OR AFTER 1.4.2 001. THE ASSESSEE HAS FURNISHED IN THE PAPER-BOOK LIST OF NEW GODOWNS, WH ICH HAVE BEEN PUT TO USE BY THE ASSESSEE AFTER 1.4.2001. IT IS WELL SETT LED THAT DEDUCTION UNDER CHAP VIA, IN RESPECT OF NEW UNDERTAKINGS SET UP BY THE ASSESSEE BY WAY OF EXPANSION OF THE EXISTING UNDERTAKINGS, AS HELD BY THE APEX COURT IN THE CASES OF TEXTILE MACHINERY CORPORATION LTD V CI T 107 ITR 195 SC AND CIT V INDIAN ALUMINIUM COMPANY LTD (108 ITR 367 ). THE NUMBER OF NEW GODOWNS OPERATED BY THE ASSESSEE AFTER 1.4.2001 CLEARLY SHOWS THAT THERE WAS SUBSTANTIAL EXPANSION OF THE ASSESSE ES BUSINESS OF 7 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. HANDLING, STORING AND TRANSPORTATION OF FOOD GRAINS , WHICH OBVIOUSLY COULD HAVE BEEN DONE ONLY BE UNDERTAKING NEW WAREHOUSING FACILITIES YEAR AFTER YEAR EVEN AFTER 2001. IN RESPECT OF THESE NEW WAREHOUSES, EACH OF WHICH CONSTITUTES AN ELIGIBLE UNDERTAKING, ASSESSEE IS SEPARATELY ENTITLED FOR DEDUCTION UNDER S.80IB(11A) OF THE ACT. IN OUR OPINION THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB(11A), IN RESPECT OF INCOME DERIVED FROM THE NEW UNDERTAKINGS, WAREHOUSES, SET UP AND OPERATED FROM 1.4.2001 FOR STORAGE, HANDLING AND TRANSPORTAT ION OF FOOD GRAINS. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDERS OF THE CI T(A) ON THIS ISSUE FOR ALL THE THREE YEARS AND SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO VERIFY THE CLAIM OF TH E ASSESSEE FOR DEDUCTION UNDER S.80IA(11A) OF THE ACT IN RESPECT OF NEW UNDE RTAKINGS SET UP AFTER 2001, AND ALLOW THE SAME IN ACCORDANCE WITH LAW, AN D AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. THE LEARNED DR HAS NEITHER CONTROVERTED THE FACT THAT THE ISSUE IS COVERED BY THE AFORESAID DECISION OF THE COORDIN ATE BENCH NOR COULD BRING ANY CONTRARY DECISION TO OUR NOTICE. FA CTS BEING IDENTICAL AND ISSUE IN DISPUTE BEING THE SAME, RESPECTFULLY F OLLOWING THE ORDER OF THE ITAT IN ASSESSEES OWN CASE (SUPRA), WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) AND DIRECT THE AO TO V ERIFY THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB(11A) IN RESPECT OF NEW UNDERTAKINGS/WAREHOUSES SETUP AFTER 01/04/2001 AND ALLOW DEDUCTION ACCORDINGLY. THE AO MUST AFFORD A REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. 8. GROUND NO. 9 RELATES TO DISALLOWANCE OF CLAIM OF DEDUCTION OF DEFERRED REVENUE EXPENDITURE OF RS. 35,33,240/-. 9. BRIEFLY THE FACTS ARE, DURING THE PROCEEDING BEF ORE LD. CIT(A) ASSESSEE CLAIMED THAT IT IS INCURRING EXPENDITURE T OWARDS PURCHASE OF LDP COVERS BUT IN THE ACCOUNTS TREATING IT AS DEFER RED REVENUE EXPENDITURE. DURING THE PREVIOUS EAR THE ASSESSEE H AD DEBITED AN AMOUNT OF RS. 9,63,302/- TO THE P&L A/C AS DEFERRED REVENUE BUT IN THE RETURN OF INCOME ASSESSEE ITSELF ADDED IT BACK TO THE INCOME RETURNED BUT ACTUAL EXPENDITURE INCURRED OF RS. 35, 33,240 WAS CLAIMED AS DEDUCTION. WHEREAS THE AO HAS ALLOWED A N AMOUNT OF RS. 9,63,302/- DEBITED TO THE P&L ACCOUNT AS DEFERRED R EVENUE 8 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. EXPENDITURE COMPLETELY IGNORING THE ACTUAL CLAIM OF THE ASSESSEE. THE CIT(A), HOWEVER DISMISSED THE GROUND RAISED BY THE ASSESSEE BY OBSERVING AS UNDER: 8. THE EIGHTH GROUND OF APPEAL RELATES TO THE CLAIM OF DEDUCTION IN RESPECT OF LDP COVERS TREATED AS DEFER RED REVENUE EXPENDITURE IN THE ACCOUNTS. THE APPELLANT SUBMITTE D IN STATEMENT OF FACTS THAT IT HAD BEEN TREATING THE EX PENDITURE ON LDP COVERS AS DEFERRED REVENUE EXPENDITURE IN ITS A CCOUNTS. IT WAS FURTHER SUBMITTED IN THE STATEMENT OF FACTS THA T IN THE RETURNS FILED, IT HAD ADDED BACK THE AMOUNT DEBITED TO THE PROFIT & LOSS ACCOUNT OF RS. 9,63,302/- AND CLAIMED THE AC TUAL EXPENDITURE INCURRED OF RS. 35,33,240/-. HOWEVER, T HE AO HAS ALLOWED ONLY THE AMOUNT OF DEFERRED REVENUE EXPENDI TURE DEBITED TO THE PROFIT AND LOSS ACCOUNT AND NOT THE ACTUAL EXPENDITURE. DURING THE COURSE OF APPELLATE PROCEED INGS THE APPELLANT HAS NOT MADE ANY WRITTEN SUBMISSIONS ON T HIS ISSUE. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDER OF THE CIT(A) ON THIS ISSUE. IT IS THE CO NTENTION OF THE LD. AR BEFORE US, ASSESSEE FROM THE EARLIER ASSESSMENT YEA RS HAS BEEN FOLLOWING THE SAME METHOD OF ACCOUNTING IN RESPECT OF EXPENDITURE INCURRED FOR LDP COVERS BY CLAIMING THE ACTUAL EXPE NDITURE INCURRED. THE DEPARTMENT ALSO NEVER DISALLOWED SUCH CLAIM IN PRECEDING ASSESSMENT YEARS. THE LD. AR SUBMITTED, CIT(A) WAS NOT CORRECT IN DISMISSING THE GROUND WITHOUT CONSIDERING IT ON MER IT. AS CAN BE SEEN, THE CIT(A) HAS DISMISSED THE GROUND RAISED BY THE A SSESSEE MERELY BECAUSE THE ASSESSEE HAS NOT REFERRED TO IT IN THE WRITTEN SUBMISSIONS FILED BEFORE HER. HOWEVER, FACT REMAINS THE ASSESS EE DID RAISE A SPECIFIC GROUND ON THE ISSUE OF DISALLOWANCE OF DED UCTION CLAIMED TOWARDS PURCHASE OF LDP COVERS. THEREFORE, THE CIT (A) SHOULD HAVE DONE WELL TO DECIDE THE ISSUE ON MERIT AFTER CONSID ERING THE FACTS AND MATERIALS ON RECORD. IN ANY CASE OF THE MATTER, CON SIDERING THE FACT THAT ASSESSEES GROUND HAS NOT BEEN DECIDED ON MERI T BY THE CIT(A) AND ALSO KEEPING IN VIEW SUBMISSIONS OF LD. AR THAT SIMILAR EXPENDITURE CLAIMED IN EARLIER ASSESSMENT YEARS HAV E BEEN ALLOWED ON ACTUAL BASIS, WE REMIT THIS ISSUE BACK TO THE FI LE OF THE AO TO VERIFY 9 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. ASSESSEES CLAIM OF ACTUAL EXPENDITURE INCURRED AND DECIDE ACCORDINGLY AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 452/HYD/14 FOR AY 2008-09 APPEAL BY REVEN UE 12. THE ONLY ISSUE IN THIS APPEAL OF THE DEPARTMENT IS IN RESPECT OF DISALLOWANCE OF CLAIM OF DEPRECIATION MADE BY THE A O ON WOODEN CRATES BUT ALLOWED BY THE CIT(A). 13. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PR OCEEDING THE AO NOTICED THAT ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 36,84,096 AT THE RATE OF 100% ON WOODEN CRATES. THE AO OPINED TH AT WOODEN CRATES CONSTITUTE PLANT AND MACHINERY, HENCE, ENTIT LED FOR DEPRECIATION @ 15% ONLY. FURTHER, HE NOTICED THAT THE ASSETS WER E PUT TO USE FOR LESS THAN 180 DAYS, AS RESULT OF WHICH THE ASSESSE E WOULD BE ENTITLED FOR 50% OF THE DEPRECIATION. ACCORDINGLY, THE AO AL LOWED DEPRECIATION AT 7.5% AND DISALLOWED AN AMOUNT OF RS. 15,56,470 O UT OF THE AMOUNT CLAIMED BY THE ASSESSEE. THE ASSESSEE CHALLENGED T HE DISALLOWANCE IN THE APPEAL PREFERRED BEFORE THE CIT(A). 14. THE CIT(A) FOLLOWING TRIBUNALS ORDER IN ITA NO . 651/HYD/07 DATED 22/07/2011 PASSED IN ASSESSEES OWN CASE FOR THE AY 2003-04 DIRECTED THE AO TO ALLOW DEPRECIATION ON THE WOODEN CRATES AT 100%. 15. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE. AS THE GROUND RAISED BY THE DEPARTMENT BEFORE US WOULD ITS ELF INDICATE, THE DEPARTMENT AGREES TO THE FACT THAT THE ISSUE IN DIS PUTE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT PAS SED IN ITA NO. 10 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. 651/HYD/2007 FOR THE AY 2003-04 IN ASSESSEES OWN C ASE. THE ONLY GROUND ON WHICH THE DEPARTMENT HAS SOUGHT TO CHALLE NGE THE DECISION OF THE CIT(A) IS, AGAINST THE ORDER PASSED BY THE TRIBUNAL AN APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT BEFORE THE HON BLE HIGH COURT. IN OUR VIEW, FILING OF AN APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL BY ITSELF WOULD NOT MAKE THE TRIBUNALS ORDER EITHER INEFFECTIVE OR INOPERATIVE UNLESS IT IS SET ASIDE OR REVERSED BY THE HONBLE HIGH COURT. IN THE AFORESAID CIRCUMSTA NCES, THE CIT(A) IN OUR VIEW WAS CORRECT IN FOLLOWING THE DECISION OF T HE TRIBUNAL DELIVERED IN ASSESSEES OWN CASE AS IT IS BINDING U PON HER. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, WE UPHOLD THE SAME BY DISMISSING THE G ROUNDS RAISED BY THE DEPARTMENT. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO. 673/HYD/14 FOR AY 2009-10 BY THE ASSESSEE 17. THE ONLY ISSUE IN THE AFORESAID APPEAL OF THE A SSESSEE IS IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80 IB(11A) OF THE ACT. THIS ISSUE IS IDENTICAL TO THE ISSUE DECIDED B Y US IN ASSESSEES APPEAL IN ITA NO. 672/HYD/12 (SUPRA). FOLLOWING OU R DECISION THEREIN WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH KEEPING IN VIEW OUR DIRECTION THEREIN AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE IN THE MATTER. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 11 ITA NOS. 672, 673 & 452/HYD/2014 AP STATE WAREHOUSING CORPN. LTD. 19. TO SUM UP, APPEALS IN ITA NOS. 672 & 673/HYD/14 ARE ALLOWED FOR STATISTICAL PURPOSES AND APPEAL IN ITA NO. 452/ HYD/14 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28/08/14 SD/- SD/- (B. RAMAKOTAIAH) (SAKTI JIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 28 TH AUGUST, 2014 KV COPY TO:- 1. AP STATE WAREHOUSING CORPORATION, C/O VENUGOPAL & CHENOY, CAS, 4-1-889/16/2, TILAK ROAD, HYDERABAD 500 001. 2. DCIT, CIRCLE 1(1), HYDERABAD 3. CIT(A)-II, HYDERABAD 4. CIT-I, HYDERABAD 5. THE DR, ITAT, HYDERABAD.