ACIT 5(2), MUMBAI V. INDIA SECURITIES LTD, MUMBAI

ITA 805/MUM/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4624 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 16-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI A.L. GEHLOT, A.M. AND SMT. ASHA VIJAYAR AGHAVAN, J.M. ITA NO. 805/M/2010 ASSESSMENT YEAR: 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX, APPELLANT 5(2), ROOM NO. 571, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 VS. M/S INDIA SECURITIES LTD., RESPONDENT ESSAR HOUSE, K.K. MARG, MAHALAKSHMI, MUMBAI 400 034 (PAN AAAC19010K) APPELLANT BY : MR. S.K. SINGH RESPONDENT BY : MR. VIJAY MEHTA ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 9, MUMBAI, PASSED ON 19/11/2009 FOR THE A SSESSMENT YEAR 2006-07 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUND OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW D EPRECIATION OF RS. 7,99,343/- ON NON PERFORMING ASSETS IGNORING TH E FACT THAT ONLY THOSE EXPENSES ARE ADMISSIBLE WHICH ARE INCIDE NTAL TO THE INCOME OFFERED TO TAX. 2. THE AO DISALLOWED DEPRECIATION CLAIM OF THE ASSE SSEE AS THE ASSETS DID NOT YIELD ANY INCOME IN THE YEAR UNDER C ONSIDERATION. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING HIS EARLIER ORDER FOR AY 2005-06, 2002-03 AND 2004-05. ITA NO. 805/M/10 M/S INDIA SECURITIES LTD. 2 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT ON IDENTICAL SET O F FACTS THE ISSUE HAS BEEN DECIDED IN AY 2004-05 BY THE ITAT IN ASSESSEE S OWN CASE IN ITA EVEN NOS. 2781/M/07(ASSESSEES APPEAL) & 3223/M/07( REVENUES APPEAL) DATED. FOR THE SAKE OF CLARITY, THE GROUND, FACTS AND FINDINGS OF THE ITAT IN AY 2004-05 ARE REPRODUCED BELOW:- 13. GROUND NO. 2 OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE DEPRECIATION AMOUNTING TO RS. 11,18,83 3/- BEING DEPRECIATION PROVIDED ON NON-PERFORMING ASSETS. 14. BRIEFLY THE FACTS RELATING TO THIS GROUND ARE T HAT THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 11,18,883/- IN RESPECT OF ASSETS AGAINST WHICH NO I NCOME HAS BEEN ACCOUNTED FOR. THE AO DID NOT ACCEPT THE ASSES SEES SUBMISSION THAT DEPRECIATION ON THESE ASSETS IS ADM ISSIBLE EVEN IN THE EVENT OF BEING NO INCOME IN THE YEAR UNDER C ONSIDERATION. THE CIT(A) FOLLOWED HIS PREDECESSORS DECISION IN A Y 2002-03 AND ALLOWED THE DEPRECIATION CLAIM OF THE ASSESSEE OBSE RVING THAT FACTS ARE IDENTICAL AND THERE IS NO REASON DEVIATE FROM THE FINDING GIVEN BY HIS PREDECESSOR. 15. THE LEARNED AR HAS SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN A SSESSEES OWN CASE IN REVENUES APPEAL FOR AY 2001-02. THE RELEVA NT FINDING OF ITAT IS REPRODUCED BELOW:- 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE PAPER BOOK F ILED BEFORE US. THE AO HAS FAILED TO DISTINGUISH THE CONCEPT OF THE USE OF THE ASSET BY MAKING THE SAME AS SUBJECT MATTER OF THE LEASE TRANSACTION FROM THE ACTUAL USE OF THE ASSET BY THE LESSEE, WHO PAYS THE LEASE RENTALS. CIT(A) HAS RIGHTLY RECTIFIE D THE ORDER AS DISCUSSED IN THE IMPUGNED ORDER. FACTUALLY, THE ASS ESSEE CLAIMED DEPRECIATION UNDOUBTEDLY I RESPECT OF THE LEASE ASS ETS LEASED OUT BY THE ASSESSEE TO THE LESSEES DESPITE THE FAILURES BY THE LESSEES IN MATTERS OF THE PAYMENT OF THE LEASE RENTALS AND ALSO DESPITE ASSESSEES DECISION TO NOT TO RECOGNIZE THE INCOME IN VIEW OF THE REAL INCOME CONCEPT. ASSESSEE CLAIMED THE SAME IN V IEW OF THE FACT OF EXISTENCE OF LEASE AND ALSO THE NON TERMINA TION OF LEASE AGREEMENTS, WHICH IS STILL IN FORCE. WHEN THE ASSET S ARE THE SUBJECT MATTER OF THE LEASE TRANSACTIONS, THE ALLEG ED ASSETS ARE IN USE BY THE ASSESSEE IN ANY CASE, THERE IS NO DISPUT E ABOUT THE OWNERSHIP OF THE SAID ASSETS. UNDER THESE CIRCUMSTA NCES, THE CLAIM OF DEPRECIATION MUST NOT BE LINKED TO THE REC OGNIZING OF THE ITA NO. 805/M/10 M/S INDIA SECURITIES LTD. 3 LEASE INCOME IN RESPECT OF THE SAID LEASE ASSETS. T HEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY GROUND NO. 4 OF THE REVENUE IS DISMISSED. 16. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF AO. 17. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND PERUSED THE RECORD. WE FIND THAT ON IDENTICAL S ET OF FACTS THE ITAT HAS ALREADY DECIDED THE ISSUE IN AY 2001-02 IN ASSESSEES OWN CASE CITED SUPRA, THEREFORE, WE RESPECTFULLY FO LLOW THE DECISION OF ITAT IN THAT YEAR AND IN THE LIGHT OF T HAT WE HEREBY CONFIRM THE ORDER OF CIT(A). ACCORDINGLY, GROUND NO . 2 IS DISMISSED. 4. SINCE THE FACTS OF THE UNDER CONSIDERATION ARE I DENTICAL TO THAT OF AY 2004-05, WE FOLLOW THE ORDER OF ITAT IN AY 20 04-05 AND IN THE LIGHT OF THAT WE CONFIRM THE ORDER OF CIT(A) IN THI S REGARD AND DISMISS GROUND OF APPEAL RAISED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2010. SD/- SD/- (ASHA VIJAYARAGHAVAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH SEPTEMBER, 2010 ITA NO. 805/M/10 M/S INDIA SECURITIES LTD. 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, I BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV