MAFATLAL DENIM LTD, MUMBAI V. DCIT RG 9(2), MUMBAI

ITA 8051/MUM/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8418 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 23-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SUMAN RATNAM
• Assessee Lawyers: K K VED
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM , , ITA NO. 8051 / MUM/ 20 1 0 ( / ASSESSMENT YEAR: 20 0 7 - 08 ) MAFATLAL DENIM LIMITED, 1 ST FLOOR,APSARA HOUSE, 7, S V ROD, SANTACRUS (W), MUMBAI - 400054. / VS. THE DY. COMMISSIONER OF INCOME TAX - 9 (2), A A YAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ( / APPELLANT) ( / RESPONDENT ) ./ PAN : AAACM3977B ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE BY : SHRI K K VED /RE VENUE BY : DR.SUMAN RATNAM / DATE OF HEARING : 8. 2 .2017 / DATE OF PRONOUNCEMENT : 17. 2.2017 / O R D E R PER RAJESH KUMAR, A. M: BY WAY OF THIS APPEAL, THE ASSESSEE IS CHALLENGING THE ORDER DATED 14.10.2010 PASSED BY THE LD.CIT ( A) - 45, FOR THE ASSESSMENT YEAR 200 7 - 08 . 2. THE ASSESSEE HAS TAKE N FOLLOWING GROUNDS OF APPEAL: 1:1 ) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF AO OF DISALLOWING THE DEDUCTION CLAIMED BY THE APPELLANT U/S 35D OF THE IT ACT, 1961 RS.1,77,176/ - ; 2 ITA NO. 8051 /MUM/201 0 1:2 ) THE APPELLANT SUBMITS THAT CONSIDERING FA CTS AND CIRCUMSTANCES OF THE CASE AND IN LAW PREVAILING ON THE SUBJECT THE SUM OF RS.1,77,176/ - IS ALLOWABLE AS A DEDUCTION U/S 35D OF THE IT ACT, 1961 AND THE LD. CIT(A) OUGHT TO HAVE HELD AS SUCH; (1:3)THE APPELLANTS SUBMITS THAT THE AO BE DIRECTED T O DELETE THE DISALLOWANCE SO MADE BY HIM AND TO RECOMPUTE ITS TOTAL INCOME ACCORDINGLY. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.1,77,176/ - ON ACCOUNT OF AMORTIZATION OF PRELIMINARY EXPENSES UNDER SECTION 35D OF THE AC T. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED ON THE BASIS OF PERUSAL OF THE TAX AUDIT REPORT CLAUSE 15(A) AND (B) THAT DUE TO NON - AVAILABILITY OF SUPPORTING DOCUMENTS, THE DEDUCTION ACTUALLY ADMISSIBLE UNDER SECTION 35D OF THE ACT COULD NOT BE ASCERTAINED AND THEREFORE DISALLOWED AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE BY FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 18.12.2009 ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.3,07,91,835/ - AS A GAINST RETURNED INCOME OF RS.3,06,14,656/ - FOR THE REASON THAT THE ASSESSEE DID NOT PRODUCE ANY MATERIAL OR EVIDENCE TO CONTRADICT THE OBSERVATIONS OF THE TAX AUDITOR. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE FAA WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER : 4 . I HAVE CONSIDERED THE ISSUE. I FIND THAT THE MATTER WAS DECIDED BY ME INFAVOUR OF THE APPELLANT IN ITS APPEAL FOR A.Y. 2004 - 05. HOWEVER, IT IS SEEN THAT THE APPELLANT HAD CLAIMED DEDUCTION IN THAT YEAR BEING THE 9TH YEAR OF AMORTIZATION OF EXPENSES UNDER SECTION 35D. THE PRESENT APPEAL IS FOR THE A.Y. 2007 - 08. THE DEDUCTION UNDER 3 ITA NO. 8051 /MUM/201 0 SECTION 35D IS PERMISSIBLE BY WAY OF AMORTIZATION OF EXPENSES OVER A PERIOD OF 10 YEARS. THE 10 TH YEAR FE LL IN THE A.Y. 2005 - 06. IT IS NOT UNDERSTOOD AS TO HOW THE APPELLANT HAS MADE THE CLAIM IN THE CURRENT YEAR WHICH HAPPENS TO BE 12 TH YEAR. IN THE CIRCUMSTANCES, I DECLINE TO INTERVENE AND CONFIRM THE DISALLOWANCE MADE O F RS.1,77,178/ - 4 . THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE ASSESSEE CLAIMED 1 /10 TH OF THE AMORTIZATION EXPENSES AS PER THE PROVISIONS OF SECTION 35D OF THE ACT AND THE FIRST YEAR OF SUCH CLAIM STARTED FROM ASSESSMENT YEAR 1998 - 99 AND FINDING AS GIVEN BY THE FAA WERE CONTRARY TO THE FACTS ON RECORD THAT THE 10TH YEAR OF AVAILING OF THE SAID DEDUCTION WAS FROM ASSESSMENT YEAR 2005 - 06 AND CURRENT ASSESSMENT YEAR BEYOND 10 TH YEAR. THE LD. AR DREW OUR ATTENTION TO THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M AFATLAL DENIM LTD V/S ADDL.CIT IN ITA NO.6552/MUM/2008 (AY - 2005 - 06) DATED 30.8.2011, WHEREIN IT HAS BEEN MENTIONED THAT THE PRELIMINARY EXPENSES HAVE BEEN ASCERTAINED FOR THE FIRST TIME IN THE ASSESSMENT YEAR 1998 - 99 AND THEREFORE IT WAS FIRST YEAR OF CLAI M OF DEDUCTION U/S 35D OF THE ACT AND WAS ACCORDINGLY ALLOWED BY THE TRIBUNAL VIDE PARA 8 OF THE ORDER . 5 . ON THE CONTRARY, THE LD. DR OBJECTED TO THE PLEA PUT FORTH BY THE LD.AR AND SUBMITTED THAT THE ISSUE BE RESTORED TO THE FILE OF THE AO FOR VERIFICAT ION OF THE FACTS WHETHER THE CURRENT YEAR IS THE 10 TH YEAR OR OTHERWISE. 6. THE LD. AR ARGUED BEFORE US THAT SINCE THE TRIBUNAL HAS RECORDED THE FINDING S IN THE ORDER PASSED FOR ASSESSMENT YEAR 2005 - 06 IN ITA NO 4 ITA NO. 8051 /MUM/201 0 6552/MUM/2008 THAT AY 1998 - 99 WAS FIRST YEAR FOR CLAIMING THE EXPENSES U/S 35D OF THE ACT AND THEREFORE THE SIMILAR DEDUCTION/ ALLOWANCE U/S 35D SHOULD BE MADE IN THE CURRENT YEAR AS BEING WITHIN THE PERIOD OF 10 YEARS FROM THE FIRST YEAR OF CLAIM OF DEDUCTION . 7 . HEARD THE RIVAL CONTENTIO NS , PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS O F AUTHORITIES BELOW AND DECISION RELIED UPON BY THE ASSESSEE. FROM THE PERUSAL OF DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.6552/MUM/2008(SUPRA) , IT IS EVIDENT T HAT THE CO - ORDINATE BENCH HAS RECORDED THE FACT THAT THE ASSESSMENT YEAR 1998 - 99 WAS FIRST YEAR OF CLAIM OF DEDUCTION U/S 35D OF THE ACT . IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND PROPER TO RESTORE THIS ISSU E BACK TO THE FILE OF THE AO TO VERIFY THE FACTS WHETHER THE PRESENT ASSESSMENT YEAR FALLS WITHIN 10 YEAR AND IF SO , THEN ALLOW THE CLAIM OF THE ASSESSEE ACCORDINGLY AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE . 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH FEB, 2017. S D S D ( /MAHAVIR SINGH ) ( / RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 17 . 2 .2017 SRL,SR.PS 5 ITA NO. 8051 /MUM/201 0 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPOND ENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI