M/s. INDO NIPPOM CHEMICAL CO. LTD., MUMBAI V. DCIT APL. Eg. - 25, MUMBAI

ITA 7864/MUM/2004

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9286 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 06-12-2012
• Assessment Year: 1995-1996
• Appeal Filed On: 03-11-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A P SINGH
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Depreciation; Assessment record

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . !'#$ , % &' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NOS. 7863 & 7864/MUM/2004 ( ( ( ( ( / ASSESSMENT YEARS : 1994-95 & 1995-96 M/S. INDO NIPPON CHEMICAL CO. LTD., MAKER BHAVAN 2, 18, NEW MARINE LINES, MUMBAI - 400 020 / VS. THE ACIT, CIRCLE 1(2), MUMBAI ') % ./ *+ ./PAN/GIR NO. : AAACI 2898B ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: DR. K. SHIVARAM -.), 0 / / RESPONDENT BY : SHRI A.P. SINGH 0 12% / DATE OF HEARING : 06.12.2012 34( 0 12% / DATE OF PRONOUNCEMENT :12.12.2012 &5 / O R D E R PER N.K. BILLAIYA, AM: THESE TWO APPEALS ARE DIRECTED AGAINST THE TWO SEPA RATE ORDERS OF THE LD. CIT(A)-I, MUMBAI DT.10.3.2004 AND 4.3.2004 PERTAINING TO A.YRS 1994-95 AND 1995-96. AS COMMON ISSUES ARE INVOLVED IN BOTH THESE YEARS, THESE APPEALS WERE HEARD TOGETHER AND ARE DI SPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVIT Y. BOTH THE APPEALS ARE BARRED BY LIMITATION. ASSESSEE HAS FILED A LETT ER PRAYING FOR THE CONDONATION OF DELAY. WE FIND THAT THE ASSESSEE HAS REASONABLE AND SUFFICIENT CAUSE, THEREFORE THE DELAY FOR BOTH THE YEARS ARE CONDONED. ITA NO. 7863/M/04 A.Y. 1994-95 ITA NOS. 7863 & 7864/M/04 2 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL AND ALSO AN ADDITIONAL GROUND OF APPEAL. AT THE TIME OF HEA RING, THE LD. SENIOR COUNSEL DID NOT PRESS GROUND NO. 1. ACCORDINGLY GRO UND NO. 1 IS DISMISSED AS NOT PRESSED. 3. GROUND NO. 2 RELATES TO DISALLOWANCE OF DEPRECIA TION OF RS. 2,07,63,120/- RELATABLE TO MACHINERIES WHICH ARE PU RCHASED FROM THE PARTIES TO WHOM IT HAS BEEN LEASED WHICH ACCORDING TO THE REVENUE AUTHORITIES IS NOT ELIGIBLE FOR DEPRECIATION. 4. THE LD. SENIOR COUNSEL FAIRLY CONCEDED THAT THE GRIEVANCE RAISED BY THE ASSESSEE BY GROUND NO. 2 HAS BEEN DECIDED A GAINST THE ASSESSEE IN ASSESSEES OWN CASE BY THE TRIBUNAL IN ITA NO. 5860 /MUM/2004 PERTAINING TO A.Y. 1993-94. THE SENIOR COUNSEL DRE W OUR ATTENTION TO PAGE-24 OF THE SAID ORDER AND POINTED OUT THAT AT P ARA-17, THE TRIBUNAL HAS UPHELD THE ORDERS OF THE AUTHORITIES BELOW ON THE P OINT OF DISALLOWANCE OF DEPRECIATION. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE ORDER OF THE TRIBUNAL IN ITA NO. 5860/M/04 (SUP RA) AND APPRECIATE THE LD. SR. COUNSEL WHO BROUGHT THESE FACTS TO OUR NOTICE. AS THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE TRIBUN AL IN A.Y. 1993-94, WE RESPECTFULLY FOLLOW THE SAME AND UPHELD THE ORDE R OF THE AUTHORITIES BELOW ON THE POINT OF DISALLOWANCE OF DEPRECIATION. GROUND NO. 2 IS ACCORDINGLY DISMISSED. 6. IN THE ADDITIONAL GROUND, THE ASSESSEE HAS TAKEN UP A PLEA THAT IF DEPRECIATION IS DISALLOWED, THEN THE CORRESPONDING LEASED RENT COULD NOT BE TREATED AS INCOME. ITA NOS. 7863 & 7864/M/04 3 7. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OBJ ECTED FOR THE ADMISSIBILITY OF THIS ADDITIONAL GROUND STATING THA T THIS ISSUE DOES NOT ARISE FROM THE ASSESSMENT RECORD. 8. WE FIND THAT AN IDENTICAL ISSUE WAS RAISED BEFOR E THE TRIBUNAL FOR A.Y. 1993-94 IN ITA NO. 5860/M/04 WHEREIN WE FIND T HAT AT PAGE-24 PARA 17.1, THE TRIBUNAL HELD THAT AS REGARDS THE FULL AMOUNT OF RENTAL RECEIPTS HAS BEEN TAXED, THIS ISSUE HAS NOT BEEN AD JUDICATED BY THE CIT(A). ACCORDINGLY, THE ISSUE OF CAPITAL COMPONEN T IN THE RENTAL RECEIPT NOT TO BE TAXED IS SET ASIDE TO THE RECORD OF THE C IT(A) TO BE ADJUDICATED IN THE LIGHT OF DECISION OF SPECIAL BENCH OF THIS T RIBUNAL. 9. THE FACTS AND ISSUE BEING IDENTICAL, RESPECTFULL Y FOLLOWING THE FINDING OF THE TRIBUNAL (SUPRA), WE RESTORE THIS IS SUE BACK TO THE FILE OF THE LD. CIT(A). THE LD. CIT(A) IS DIRECTED TO DECIDE T HIS ISSUE AFRESH AFTER CONSIDERING THE OBJECTIONS RAISED BY THE LD. DR, IN ACCORDANCE WITH LAW. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. ITA NO. 7864/M/04- A.Y. 1995-96 10. GROUND NO. 1 IS OF GENERAL IN NATURE AND NEED N O ADJUDICATION. 11. GROUND NO. 2 IS IDENTICAL TO GROUND NO. 2 OF IT A NO. 7863/M/04. FOLLOWING THE SAME REASONING, GROUND NO. 2 IS DISMI SSED. 12. GROUND NO. 3 RELATES TO DISALLOWANCE OF SERVICE CHARGES AMOUNTING TO RS. 22,65,536/-. THIS ISSUE FINDS PLACE AT PAGE -16 OF THE ASSESSMENT ORDER AT PARA.6.18. DURING THE COURSE OF THE SCRUT INY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE A SSESSEE COMPANY HAS CLAIMED EXPENSES OF RS. 22,65,536/- UNDER THE HEAD SERVICES CHARGES PAID IN RESPECT OF SO CALLED ASSETS REQUIRED UNDER HIRE PURCHASE BASIS ITA NOS. 7863 & 7864/M/04 4 FROM M/S. I.T.C. CLASSIC FINANCE LTD. AND M/S. INDB ANK MERCHANT BANKING SERVICES LTD. THE AO DISALLOWED THE ENTIRE EXPENSES STATING THAT THE ENTIRE TRANSACTION OF HIRE PURCHASE AND LE ASE HAS BEEN TREATED AS FINANCE TRANSACTION IN REALITY. 13. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT (A), WE FIND THAT THE CIT(A) AT PAGE-23 OF HIS ORDER HAS NOT DECIDED THIS ISSUE ON MERIT. WE, THEREFORE, RESTORE THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A). THE CIT(A) IS DIRECTED TO DECIDE THIS ISSUE BY A SPEAKI NG ORDER. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 14. IN THE ADDITIONAL GROUND, THE ASSESSEE HAS TAKE N UP A PLEA THAT IF DEPRECIATION IS DISALLOWED, THEN THE CORRESPONDING LEASED RENT COULD NOT BE TREATED AS INCOME. 15. THIS ADDITIONAL GROUND IS IDENTICAL TO THE ADDI TIONAL GROUND OF ITA NO. 7863/M/04 TAKEN AT PARA-6 ABOVE. FOLLOWING THE SAME REASONING, THE ADDITIONAL GROUND IS ALLOWED FOR STATISTICAL PURPOS E AS PER THE DIRECTIONS GIVEN IN PARA-9 OF THIS ORDER. 16. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6 17 61 0 8 90 :;< 5 '=1 0 *1 ># ORDER PRONOUNCED IN THE OPEN COURT ON 12.12.2012 . &5 0 4( % 8 ?&7 12.12.2012 4 0 @ SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; ?& DATED 12.12.2012 . . ./ RJ , SR. PS ITA NOS. 7863 & 7864/M/04 5 &5 &5 &5 &5 0 00 0 -1! -1! -1! -1! A!(1 A!(1 A!(1 A!(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. B ( ) / THE CIT(A)- 4. B / CIT 5. !C@ -1 , , / DR, ITAT, MUMBAI 6. @D / GUARD FILE. &5 &5 &5 &5 / BY ORDER, .!1 -1 //TRUE COPY// : :: : / > > > > * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI