SPX Flow Technology (India) Pvt. Ltd., Ahmedabad V. The Deputy Commissioner of Income Tax, Circle-4(1)(1), Ahmedabad

ITA 80/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0916 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 10-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: P B PARMAR
• Keywords: Depreciation
• Section: 143(3); 32

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./I.T.A. NO. 80/AHD/2017 ( / ASSESSMENT YEAR : 2012-13) SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. SURVEY NO. 275, OPP. MURLIDHAR SOCIETY, ODHAV ROAD, ODHAV, AHMEDABAD- 382 415 / VS. DCIT, CIRCLE 4(1)(1), AHMEDABAD ./ ./PAN/GIR NO. : AAA CS7 234 B ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : P. B. PARMAR A.R. / RESPONDENT BY: SURENDRA KUMAR, CIT DR / DATE OF HEARING 19/03/2019 ! / DATE OF PRONOUNCEMENT 25/03/2019 '# /O R D E R PER AMARJIT SINGH - AM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE FOR A.Y. 2012-13, ARISE FROM ORDER OF THE DCIT, CIRCLE-4(1)(1), AHMEDABAD DATED 31-12-2015, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 144C (1) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE AO MADE U/S. 144C(1) OF THE ACT. IN MAKING DISALLOWANCE OF DEPR ECIATION OF RS. 45,419/- AND ALSO MAKING ADDITION OF RS. 37,83,062/- IN RESPECT OF MODVAT BY INVOKING PRESENT OF SEC. 145A ON THE BASIS OF DIRECTION OF T HE DISPUTE RESOLUTION PANEL ITA NO. 80/AHD/2017 A.Y. 2012-13 2 (DRP). THE BRIEF FACT IS THAT ASSESSEE HAS CLAIMED DEPRECIATION ON COMPUTER SOFTWARE @ 60 PER CENT. HOWEVER, THE AO HAS RESTRIC TED THE CLAIM OF DEPRECIATION @ 26 PERCENTAGE AS APPLICABLE IN TANGIBLE ASSETS ON THE GROUND THAT THE SOFTWARE ON WHICH THE DEPRECIATION WAS CLAIMED WAS APPLICATION SOFTWARE WHICH FALL WITHIN THE AMBIT OF INTANGIBLE ASSETS. REGARDING SECOND ISSU E THE AO HAS NOTICED THAT ASSESSEE WAS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTI NG AND MADE ADDITION OF RS. 37,83,062/- U/S. 145A IN RESPECT OF UNUTILISED CENV AT CREDIT ON THE GROUND THAT IT MUST BE ADDED TO THE CLOSING STOCK OF RAW MATERIAL. 3. AT THE TIME APPELLATE PROCEEDINGS BEFORE US IT W AS BROUGHT TO OUR NOTICE BY THE LD. COUNSEL THAT BOTH THE ISSUE CONTESTED IN THE QUESTION APPEAL HAD BEEN ADJUDICATED BY THE COORDINATE BENCH OF THE ITAT VIDE ITA NO. 1883/AHD/2013 IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2009-10 IN FAVOUR OF THE ASSESSEE. 4. THE LD. AR WAS FAIR ENOUGH TO COULD NOT CONTRADICT THIS MATERIAL FACT. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES WE HAVE G ONE THROUGH THE AFORESAID CITED ORDER OF THE COORDINATE BENCH OF THE ITAT AND NOTICE THAT BOTH THE ISSUE IN THE PRESENT APPEAL HAVE BEEN ADJUDICATED EARLIER BY THE ITAT IN FAVOUR OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF THE ITAT VIDE AF ORESAID ORDER IS REPRODUCED AS UNDER:- THE FIRST ISSUE IS:- 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS NOTICED THAT AS PER RULE 5 OF INCOME TAX RULE S 1962 DEPRECIATION ALLOWANCE U/S. 32 OF THE INCOME TAX ACT SHALL BE CALCULATED A T THE PERCENTAGE SPECIFIED IN THE SECOND COLUMN OF THE TABLE IN APPENDIX 1 EFFECT IVE FROM ASSESSMENT YEAR 2006-07 ON WARDS DEPRECIATION IS TO BE CALCULATED @ PRESCRIBED IN NEW APPENDIX-1 ENTRY AT SERIAL NO. 5 OF PART-III (WHICH DEALS WITH RATE DEPRECIATION ON MACHINERY AND PLANT) OF THE SAID TABLE REFERRED TO COMPUTER, INCLUDING COMPUTER SOFTWARE AND THE RATE OF DEPRECIATION PRES CRIBED IN THE SAID TABLE AGAINST THIS ENTRY IS 60% . AS PER NOTE 7 BELOW THE SAID TABLE COMPUTER SOFTWARE MEANS ANY COMPUTER PROGRAM RECORDED IN AN Y DISC, TAPE, PERFORATED MEDIA OTHER INFORMATION STORAGE DEVICE. IN THE LIGHT OF THE ABOVE PROVISION OF INCOME TAX, WE OBSERVED THAT INCOME TA X ACT DOES NOT MAKE ANY DIFFERENCE BETWEEN THE SYSTEM SOFTWARE AND APPLICAT ION SOFTWARE, THEREFORE, WE JUSTIFY THE DECISION OF LD. CIT(A) IN ALLOWING T HE CLAIM OF THE ASSESSEE OF ITA NO. 80/AHD/2017 A.Y. 2012-13 3 DEPRECIATION @ 60% ON THE COMPUTER SOFTWARE. ACCOR DINGLY THIS GROUND OF REVENUE IS DISMISSED. THE SECOND ISSUE IS:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IN THIS CONNECTION, WE HAVE NOTI CED THAT ASSESSEE WAS FOLLOWING SIMILAR METHOD IN THE PRECEDING YEARS AND THERE WERE NOTES IN THE AUDIT REPORT THAT IF THE ADJUSTMENT ON ACCOUNT OF S ECTION 145A WAS MADE, THERE WOULD BE NO EFFECT ON THE INCOME. IT IS NOTI CED THAT THE ASSESSEE IS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING FOR LAST M ANY YEARS AND ALL PURCHASES AND SALES OF GOODS ARE ACCOUNTED NET OF M ODVAT INCLUDING INVENTORY I.E. OPENING STOCK AND CLOSING STOCK. ON THIS ISSUE THE HON'BLE ITAT BENCH OF AHMEDABAD IN THE CASE OF ALPANIL INDUSTRI ES V. ACIT IN ITA NO. 169/AHD/2005 AND 170/AHD/2005 FOR A.Y. 1999-2000 & 2000-2001 HAS DISCUSSED THE PRINCIPLE RELATED TO VALUATION OF CLO SING STOCK U/S.145A OF THE ACT. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. AFTER CONSIDERING THE FINDING OF THE LD . CIT(A) ALONG WITH JUDICIAL FINDING, WE CONSIDER THAT THERE WILL BE NO EFFECT I N THE TAXABLE PROFIT OF THE ASSESSEE BY INCLUDING THE AMOUNT OF EXCISE DUTY PAI D ON PURCHASE IN THE VALUATION OF CLOSING STOCK OF RAW MATERIAL SINCE THE ASSESSEE WAS FOLLOWING EXCUSIVE METHOD OF ACCOUNTING AS ELABORATED IN THE FINDINGS OF THE LD.CIT(A), THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE I N THE DECISION OF LD. CIT(A). ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 5. RESPECTFULLY FOLLOWING THE FINDINGS OF THE COORD INATE BENCH AS REPRODUCED ABOVE ON THE SAME FACTS AND IDENTICAL ISSUE IN THE CASE OF THE ASSESSEE ITSELF WE ARE NOT INCLINED WITH THE DECISION OF THE LD. CIT(A). THEREFORE, APPEAL OF THE ASSESSEE ON BOTH THE ISSUE IS ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (MADHUMITA ROY) (AMARJ IT SINGH) JUDICIAL MEMBER ACCOUNTANT MEM BER AHMEDABAD: DATED 25/03/2019 TANMAY TRUE COPY ! '! / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. ' / ASSESSEE 3. ( )* + / CONCERNED CIT THIS ORDER PRONOUNCED IN OPEN COURT ON 25/ 03/2019 ITA NO. 80/AHD/2017 A.Y. 2012-13 4 4. +- / CIT (A) 5. /01 22)*, )*!, 45'(' / DR, ITAT, AHMEDABAD 6. 178 9 / GUARD FILE. BY ORDER / '# , :/4 )*!, 45'(' < 1.DATE OF DICTATION ON 20.03.2019 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 25.03.2019 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 25.03.2019 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 25.03.2019 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 25.03.2019 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.03.2019 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER