GRASIM BHIWANI TEXTILES LTD, MUMBAI V. ASST CIT CIR 4(2), MUMBAI

ITA 790/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3591 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 05-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2014
• Court: TRIBUNAL
• Department Lawyers: P NAGENDRA KUMAR
• Assessee Lawyers: J D MISTRI
• Keywords: Depreciation; Rectification of order; Additional depreciation; Capital receipt
• Section: 143(3); 32; 10; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANJAY GARG , JM ./ ITA NO S . 790&791 / MUM/20 1 4 ( / ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 1 1 ) GRASIM BHIWANI TEXTILES LIMITED, 409, COTTON EXCHANGE BUILDING, KALBADEVI ROAD, MUMBAI - 400002 VS. ACIT, CIRCLE - 4(2), MUMBAI ./ ./ PAN/GIR NO. : A A CCG 9347 F ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI J.D.MISTRI & MADHUR AGRAWAL /REVENUE BY : SHRI P.NAGENDRA KUMAR / DATE OF HEARING : 05 / 0 5 /201 6 / DATE OF PRONOUNCEMENT 31/05 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH ESE ARE THE APPEAL S FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI , FOR THE ASSESSMENT YEAR 2009 - 10 & 20 10 - 11 . 2. COMMON GRIEVANCE OF THE ASSESSEE IN BOTH THE YEARS RELATES TO NOT ALLOWING ADDITIONAL DEPRECIATION. THE ASSESSEE IS ALSO AGGRI EVED FOR THE ORDER PASSED U/S.154 OF THE ACT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS OF THE CASE ARE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED ON 30/11/2011 DETERMINING TOTAL LOSS AT RS.15,17,46,440/ - . SUBSEQUENTLY, ON PERUSAL OF T HE RECORDS, THE AO NOTICED THAT THE ASSESSEE HAD DEDUCTED AN AMOUNT OF RS. 72,91,851/ - IN THE COMPUTATION OF INCOME ON ACCOUNT OF ADDITIONAL ITA NO. 790&791 /1 4 2 DEPRECIATION U/ S. 32(IIA) (2007 - 08). THE AO FURTHER OBSERVED THAT THIS DEDUCTION WAS NOT IN ORDER AS THE ADDITIONA L DEPRECIATION U/ S. 32(IIA) IS ALLOWABLE ONLY IN THE YEAR IN WHICH THE ASSET WAS PUT TO USE AND BY ALLOWING THE SAME HAS RESULTED UNDER ASSESSMENT TO THE EXTENT OF RS. 72,91,851/- LEADING TO POTENTIAL SHORT LEVY OF TAX OF RS.22,53,181/ - . HENCE, THE AO ISSU ED A RECTIFICATION NOTICE U/ S. 154 TO THE ASSESSEE ASKING IT TO SHOW CAUSE AS TO WHY THE ADDITIONAL DEPRECIATION CLAIMED SHOULD NOT BE DISALLOWED. IN REPLY, THE ASSESSEE SUBMITTED THAT THE DEPRECIATION CLAIMED AND ALLOWED ARE IN ORDER, THE BIFURCATION OF WHICH ARE AS UNDER: - 1) NORMAL DEPRECIATION 17,46,68,652 2) ADDITIONAL DEPRECIATION ON ASSES ACQUIRED IN AY 09 - 10 3,32,52,814 3) 50% OF ADDITIONAL DEPRECIATION ON ASSETS ACQUIRED IN AY 08 - 09 WHICH WERE PUT TO USE FOR LESS THAN 180 DAYS 72,91,851 4) TOTAL DEPRECIATION CLAIMED IN AY 09 - 10 21,52,13,317 THE ASSESSEE FURTHER SUBMITTED THAT SECTION 32(1)(IIA) OF THE ACT PROVIDES THAT ADDITIONAL DEPRECIATION @ 20% SHALL BE ALLOWED TO THE ASSESSEE ON THE ACTUAL COST OF NEW PLANT AND MACHINERY , WHICH HAS BEEN ACQUIRED AFTER 31.03.2005. THE SECOND PROVISO TO S ECTION 32 RESTRICTS DEPRECIATION ALLOWANCE AT 50% IF THE ASSET IS USED FOR LESS THAN 180 DAY IN A PREVIOUS YE AR. THE ASSESSEE FURTHER CONTENDED THAT THE INTENT OF THE LEGISLATIVE BEHIND INT RODUCTION OF SECTION 32(1)(IIA) WAS TO GIVE STIMULUS TO THE MANUFACTURING SECTOR BY GRANTING ADDITIONAL DEPRECIATION. THUS, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(1 )(IIA) AND THE S ECOND PROVISO TO SECTION 32(1), THE ASSESSEE COMPANY CLAIMED 50% O F ADDITIONAL DEPRECIATION IN AY 2 008 - 09 ON THE ACTUAL COST OF ASS ETS ITA NO. 790&791 /1 4 3 ACQUIRED AND PUT TO US FOR LESS THAN 180 DAYS IN AY 2008 - 09 AND THE BALANCE 50% ADDITIONAL DEPRECIATION IS CLAIMED IN SUBSEQUENT ASSESSMENT YEAR (I.C, AY 2009 - 10). THE ASSESSEE ALSO PLACE D RELIANCE ON THE DECISIONS IN THE CASE OF DCIT VS. COSMO FILMS LTD. (113 ITR 340) (DELHI TRIB) AND ACIT VS. SIL INVESTMENT LTD. IN ITA 0.2431/DEL/2010 AND SUBMITTED THAT THERE WAS NO MISTAKE IN ALLOWING ADDITIONAL DEPRECIATION U/S. 32(IIA). HOWEVER, THIS SUBMISSION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO . ON VERIFICATION OF THE RECORD, THE A O NOTICED THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION @ 10% IN AY 2008 - 09 ON THE ACTUAL COST OF ASSET ACQUIRED AND THE BALANCE ADDITIONAL DEPRECIATION @ 10 % IN THE SUBSEQUENT ASSESSMENT YEAR I.E. AY 2009 - 10. AS THE ADDITIONAL DEPRECIATION U/ S. 32(IIA) IS ALLOWABLE ONLY IN THE YEAR IN WHICH THE ASSET WAS PUT TO USE, THE AO DID NOT FIND APPELLANT'S CLAIM IN ORDER AND HENCE, THE ADDITIONAL DEPRECIATION ALREADY ALLOWED OF RS.72,91,851/ - WAS WITHDRAWN AND THE NET LOSS WAS R E COMPUTED AT RS.14,44,54,589/ - . 4. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF AO AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED RIVAL CONTENTION S AND FOUND FROM THE RECORD THAT IN THE RETURN OF INCOME ASSESSEE HAD CL AIMED ADDITIONAL DEPRECIATION OF RS.72,91,851/ - U/ S 32(1)(IIA) OF THE INCOME TAX ACT, 1961 ('THE ACT') @ 10% ON THE ELIGIBLE ASSETS ACQUIRED DURING THE FINANCIAL YEAR 2007 - 08 AND WHI CH WERE USED FOR LESS THAN 180 DAYS IN THE FINANCIAL YEAR 2007 - 08. THE ASSESSING OFFICER ['A O'] COMPLETED ASSESSMENT U/ S 143(3) VIDE DATED 30.11.2011 AFTER DETAILED SCRUTINY AND ALLOWED THE CLAIM OF THE ASSESSEE ITA NO. 790&791 /1 4 4 COMPANY FOR ADDITIONAL DEPRECIATION ALLOWANC E. S UBSEQUENTLY, THE AO ISSUED NOTICE DATED 11.07.2012 U/S 154 PROPOSING TO WITHDRAW ADDITIONAL DEPRECIATION OF RS. 72,91,85 1/ - . SECTION 32(1)(IIA) OF THE ACT PROVIDES THAT ADDITIONAL DEPRECIATION @ 20% SHALL BE ALLOWED TO THE ASSESSEE ON THE ACTUAL COST O F NEW PLANT AND MACHINERY, WHICH HAS BE EN ACQUIRED AFTER 31.03.2005. THE SECOND PROVISO TO SECTION 32 RESTRICTS DEPRECIATION ALLOWANCE AT 50% IF THE ASSET IS USED FOR LESS THAN 180 DAYS IN A PREVIOUS YEAR. THERE IS NO MENTION IN SECTION 32(1)(IIA) THAT THE 20% ADDITIONAL DEPRECIATION IS ALLOWABLE IN FIRST YEAR ONLY. PROVISIONS OF SECTION 32(1)(IIA) AND SECOND PROVISO TO SECTION 32 SHOULD BE READ AND CONSTRUED REASONABLY, LIBERALLY AND PURPOSE FULLY . IF THE ACQUIRED ASSET IS USED FOR LESS THAN 180 DAYS IN YEA R ONE THAN THE ALLOWABLE ADDITIONAL DEPRECIATION IS RESTRICTED TO 50% IN THE FIRST YE A R AND BALANCE 50% ADDITIONAL DEPRECIATION IS ALLOWABLE IN SUBSEQUENT YEAR. T HERE IS NO RESTRICTION VIS - A - VIS THE NUMBER OF ASSESSMENT YEARS OVER WHICH THE ADDITIONAL DEPR ECIATION IS TO BE ALLOWED. 6. THE ISSUE UNDER CONSIDERATION IS ALSO SQUARELY COVERED BY THE ORDER OF COORDINATE BENCH IN THE CASE OF SIL INVESTMENT LTD., 73 DTR 0233, WHEREIN IT WAS HELD THAT ADDITIONAL DEPRECIATION, WHICH WAS RESTRICTED IN THE YEAR OF PUR CHASE TO THE EXTENT OF 50% ON THE PLEA OF MACHINERY HAVING BEEN PUT TO USE FOR A PERIOD OF LESS THAN 180 DAYS, THE BALANCE OF ADDITIONAL DEPRECIATION IS REQUIRED TO BE ALLOWED IN THE SUCCEEDING YEAR. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT FOR DISA LLOWING ASSESSEES CLAIM FOR DEPRECIATION . ITA NO. 790&791 /1 4 5 8. IN THE ASSESSMENT YEAR 2009 - 2010, ASSESSEE HAS RAISED ADDITIONAL GROUND WITH REGARD TO TUF SUBSIDY RECEIVED FROM CENTRAL GOVERNMENT UNDER TECHNOLOGY UPGRADATION FUND SCHEME (TUF). 9. WE FIND THAT THE ASSESSEE HIMSELF HAD OFFERED THE SAID SUBSIDY FOR TAXATION IN THE RETURN OF INCOME AS A REVENUE RECEIPT. THE AO ACCORDINGLY ASSESSED THE INCOME OF THE ASSESSEE TREATING THE SAID SUBSIDY AS REVENUE RECEIPT. THE ASSESSEE NEVER RAISED THIS ISSUE IN APPEAL BEFORE THE C IT(A). THEREAFTER THE AO DISALLOWED THE ADDITION CLAIM OF DEPRECIATION BY WAY OF RECTIFICATION U/S.154 OF THE ACT AS DISCUSSED IN THE GROUND NO.1. EVEN DURING THE RECTIFICATION PROCEEDINGS U/S.154 OF THE ACT NEITHER BEFORE THE AO NOR DURING THE APPEAL BEFO RE THE CIT(A), THE ASSESSEE EVEN RAISED THIS ISSUE OF TREATMENT OF TUF SUBSIDY AS TO WHETHER A CAPITAL RECEIPT OR REVENUE RECEIPT. NOW, IN THIS APPEAL AGAINST THE RECTIFICATION ORDER U/S.154, THE ASSESSEE HAS AGITATED THIS ISSUE BY WAY OF RELYING UPON THE DECISION OF KOLKATA BENCH IN THE CASE OF M/S GLOSTER JUTE MILLS LTD., 33 ITR (TRIB) 322 TO CONTEND THAT THE SAID SUBSIDY WAS A CAPITAL RECEIPT. WE ARE OF THE VIEW THAT THIS GROUND TAKEN IN THIS APPEAL AGAINST THE ORDER U/S.154 OF THE INCOME TAX ACT IS NOT MAINTAINABLE. THE ASSESSEE HIMSELF HAD OFFERED THE TAXATION FOR THE SAID SUBSIDY AND THE AO HAD ASSESSED THE SAME ACCORDINGLY. IT IS NOT THE CASE THAT THE AO AT THE TIME OF ASSESSING INCOME OF THE ASSESSEE HAD PROCEEDED IN VIOLATION OF ANY STATUTORY PROVIS ION. IF SUBSEQUENTLY IN A CASE LAW , THE COORDINATE BENCH OF THE TRIBUNAL HAS GIVEN A FINDING THAT SUCH RECEIPT IS A CAPITAL RECEIPT THAT CANNOT BE FORM THE BASIS TO ITA NO. 790&791 /1 4 6 REOPEN /READJUDICATE THE ISSUE WHICH HAS ALREADY ATTAINED FINALITY. THE ASSESSEE HAS NEITHER AGITATED THIS ISSUE ON MERITS DURING THE ASSESSMENT PROCEEDINGS N OR BY WAY OF APPEAL BEFORE THE CIT(A). EVEN THE SAME CANNOT BE CONSIDERED AS A MISTAKE APPARENT ON RECORD U/S.154 PROCEEDINGS, AS THE AO HA D ASSESSE D THE INCOME AS OFFERED BY THE ASSESSEE AN D WHILE DOING SO HE HA D NOT DIRECTLY VIOLATED ANY STATUTORY PROVISION OF THE ACT. HENCE, IT CANNOT BE SAID TO BE ANY MISTAKE APPARENT ON RECORD WITH REGARD TO NATURE OF TUF SUBSIDY . EVEN AS DISCUSSED ABOVE, THE ASSESSEE HAS NOT RAISED THE SAID ISSUE EVEN D URING THE PROCEEDINGS U/S.154 BEFORE THE AO OR DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A). MERELY BECAUSE SUBSEQUENTLY A COORDINATE BENCH OF THE TRIBUNAL HAS TAKEN SOME VIEW WITH REGARD TO NATURE OF TUF SUBSIDY IN CASE OF SOME OTHER ASSESSEE THAT I TSELF CANNOT BE SAID TO BE SUFFICIENT GROUND TO READJUDICATE OR TO RECONSIDER THE ALREADY CONCLUDED ASSESSMENT. IF SUCH A COURSE WOULD BE ALLOWED TO BE ADOPTED , THEN , IT MAY GIVE RISE TO A NUMBER OF CLAIM S FOR READJUDICATION OF SEVERAL ALREADY CONCLUDED CA SES AND SUCH COURSE WILL BE AGAINST THE PRINCIPLE OF FINALITY OF PROCEEDINGS AT ONE STAGE AND WOULD VIOLATE THE OBJECT AND PURPOSE OF THE INDIAN LIMITATION ACT, 1963. IN VIEW OF THIS, WE DO NOT FIND THAT TREATMENT OF TUF SUBSIDY OFFERED BY ASSESSEE AND ACC EPTED BY THE AO AS REVENUE RECEIPT , UNDER THE FACTS AND CIRCUMSTANCES OF TH IS CASE , WAS A MISTAKE APPARENT ON RECORD. WE ALSO HOLD THAT THIS CLAIM OF ASSESSEE IS NOT MAINTAINABLE AT THIS STAGE. THIS GROUND OF APPEAL OF THE ASSESSEE IS, THEREFORE, DISMISSED . ITA NO. 790&791 /1 4 7 10 . IN THE RESULT, APPEAL FOR A.Y.2009 - 10 IS ALLOWED IN PART, WHEREAS APPEAL FOR A.Y.2010 - 11 IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 31/05 / 201 6 . SD/ - ( SANJAY GARG ) SD/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 31/05 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE R ESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//