Decisiondraft Analytics Ltd., Ahmedabad V. The Dy.CIT.,(OSD),Range-1, Ahmedabad

ITA 713/AHD/2012

• Counselvise Citation: 71320514 RSA 2012
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 27-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: KRUTESH PATEL
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.713/AHD/2012 A. Y. 2007-08 DECISIONCRAFT ANALYTICS LTD. (NOW MERGED WITH AUDIENCE MEASUREMENT AND ANALYTICS PVT. LTD.) 601, SHAPATH-II, S.G. HIGHWAY, OPP. RAJPATH CLUB, AHMEDABAD PAN-AABCC5157E APPELLANT V. COMMISSIONER OF INCOME TAX (OSD) RANGI-1 AHMEDABAD RESPONDENT DEPARTMENT BY : SHRI B.L. YADAV, SR. D.R. ASSESSEE BY : SHRI KRUTESH PATEL, A.R. DATE OF HEARING : 21.05.2012 DATE OF PRONOUNCEMENT 22.06.2012 / ORDER PER : A.K. GARODIA, ACCOUNTANT MEMBER THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A)-6, AHMEDABAD DATED 17.01.2012 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS AS PER GROUND NO.1.1 TO 1.8 BUT IN COURSE OF HEARING BEFORE US, LD. A.R. OF THE ASSESSEE HAS PRESSED ONLY GROUND NO.1.7. THE REMAINING GROUNDS ARE REJECTED AS NOT PRESSED. GROUND NO.1.7 IS REPRODUCED AS UNDER:- I.T.A. NO.713/AHD/2012 A. Y. 2007-08 2 THE ASSESSING OFFICER HAS APPORTIONED THE TOTAL DE PRECIATION OF THE ASSESSEE BETWEEN THE TWO UNITS BASED ON SALES T URN OVER. THE ASSESSEE HAS CONSTANTLY ALLOCATED DEPRECIATION BASE D ON TOTAL INVESTMENT IN FIXED ASSETS IN EACH UNIT. THE SAME APPORTIONMENT HAS BEEN ACCEPTED BY THE DEPARTMENT SINCE MANY YEARS IN PAST AND EVEN IN THE SUBSEQUENT ASSESSMENT YEAR. THE ASSESSING O FFICER OR LD. CIT(A) HAS NOT PRODUCED ANY FINDING AS TO THE FACT THAT THE ASSESSEE HAS USED ASSETS LOCATED IN EXPORT ORIENTED UNITS FO R THE PURPOSE OF DOMESTIC BUSINESS. THE CONCLUSIONS, THEY HAVE REAC HED ARE MERELY BASED ON ASSUMPTIONS AND PRESUMPTIONS, WITHOUT SUFF ICIENT FACTS TO SUPPORT THEM. 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN PARA NO.6 OF THE ASSESSMENT ORDER THAT THE ASSESSEE IS DOING EXP ORT AND DOMESTIC BUSINESS FROM THE SAME UNDERTAKING AND EXPENSES WHICH ARE DI RECTLY RELATED TO THE EXPORT BUSINESS HAVE BEEN ALLOCATED DIRECTLY BUT WHERE SUC H DIRECT LINK IS NOT POSSIBLE, THE EXPENSES HAVE BEEN BIFURCATED ON THE BASIS OF T URN OVER BUT WHILE CLAIMING DEPRECIATION AS PER I.T., THE ALLOCATION OF EXPENSE S WAS NOT DONE ACCORDING TO TURN OVER AND MORE HAS BEEN DEBITED AGAINST DOMESTI C PROFIT AND LESS HAS BEEN DEBITED AGAINST EXPORT PROFITS. THE A.O. ISSUED SHO W CAUSE NOTICE ON THIS ISSUE AS TO WHY THE DEPRECIATION SHOULD NOT BE ALLOCATED ON THE BASIS OF TURNOVER. REPLY WAS FURNISHED BY THE ASSESSEE BUT THE A.O. WAS NOT SATISFIED AND HE ALLOCATED THE DEPRECIATION ALSO ON TURN OVER BASIS AND IN THIS MA NNER, THE PROFIT OF 10A UNITS WAS DECREASED FROM RS.1,62,26,813/- TO RS.1,29,94,3 51/- AND ACCORDINGLY, DEDUCTION U/S 10A WAS ALLOWED LESS. BEING AGGRIEVE D, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. IT WAS SUBMITTED BY THE A.R. OF THE ASSESSEE BE FORE US THAT DEPRECIATION WAS ALLOCATED ON THE BASIS OF INVESTME NT IN BOTH UNITS BECAUSE IT IS I.T.A. NO.713/AHD/2012 A. Y. 2007-08 3 THE SUBMISSION THAT THE ASSETS ARE NOT USED COMMONL Y BY BOTH UNITS. HE HAS ALSO SUBMITTED THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O. ON THE OTHER HAND, LD. D.R. SUPPORTED THE ORDER OF LD. CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW . CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT IF THE SAME ASSET WAS USED FOR BOTH PURPOSES OF DOMESTIC BUSINESS AND FOR EXPO RT BUSINESS, DEPRECIATION HAS TO BE ALLOCATED ON TURN OVER BASIS BUT IF SEPARATE ASSETS ARE USED FOR DOMESTIC BUSINESS AND OTHER ASSETS ARE USED FOR EXPORT BUSIN ESS EXCLUSIVELY, THEN DEPRECIATION CAN BE CHARGED TO BOTH UNITS ON THE BA SIS OF SUCH ASSETS USED FOR SPECIFIC BUSINESS. FACTS ON THIS ASPECT ARE NOT AV AILABLE ON RECORD AND HENCE, WE FEEL IT PROPER THAT THIS MATTER SHOULD GO BACK TO T HE FILE OF THE A.O. FOR FRESH DECISION. WE, THEREFORE, SET ASIDE THE ORDER OF LD . CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR FRESH DECISION. WE WANT TO MAKE IT CLEAR THAT THE BURDEN IS ON THE ASSESSEE TO ESTABLISH THAT THE ASSETS ARE NOT COMMONLY USED FOR BOTH THE UNITS AND THE ASSESS EE HAS TO ESTABLISH WITH EVIDENCE AS TO WHICH ASSETS ARE USED FOR DOMESTIC B USINESS UNIT AND 10A UNIT AND WHICH ASSETS ARE USED COMMONLY AND IF THE ASSESSEE IS ABLE TO DO SO, THE ALLOCATION OF DEPRECIATION CAN BE MADE ON THE BASIS OF SUCH EXCLUSIVE USER FOR RESPECTIVE UNITS BUT IN RESPECT OF THOSE ASSETS WHI CH ARE USED COMMONLY BY BOTH UNITS, ALLOCATION OF DEPRECIATION HAS TO BE MADE ON THE RATIO OF TURN OVER OF BOTH UNITS. THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW, AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I.T.A. NO.713/AHD/2012 A. Y. 2007-08 4 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 22.06.2012 SD/- SD/- (KUL BHARAT) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# *