R.C.C.(SALES) P. LTD, MUMBAI V. DCIT CEN CIR 38, MUMBAI

ITA 8200/MUM/2011

• Counselvise Citation: 820019914 RSA 2011
• Duration Of Justice: 3 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 07-12-2011
• Court: TRIBUNAL
• Assessee Lawyers: DR PRAYAG JHA
• Keywords: Depreciation; Additional depreciation
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA N O. 8200 / MUM/20 1 1 ( / ASSESSMENT YEAR : 200 5 - 06 ) M/S R.C.C.(SALES) PVT. LTD., MALHOTRA HOUSE, OPP.GPO, FORT, MUMBAI - 400001 VS. ACIT, CC - 38, MUMBAI ./ ./ PAN/GIR NO. : A A A C R 9675 D ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : DR. PRAYAG JHA /REVENUE BY : SHRI SANTOSH KUMAR / DATE OF HEARING : 0 7 /0 5 / 2015 / DATE OF PRONOUNCEMENT 10/06 /2015 / O R D E R PER R .C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 41, MUMBAI , DATED 13 - 9 - 2011, FOR THE ASSESSMENT YEAR 200 5 - 06 , IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.153C OF THE I.T.ACT. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RE LATES TO DISALLOWANCE OF CLAIM OF ADDITIONAL DEPRECIATION U/S.32(1)(IIA) AMOUNTING TO RS. 21,88,487/ - . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. IN THIS CASE, ORIGINAL ASSESSMENT U/S.143(3) WAS COMPLETED ON 27 - 11 - 2007, WHEREIN ASSESSEES CLAI M FOR ADDITIONAL DEPRECIATION WAS ALLOWED. ITA NO. 8200 / 1 1 2 THEREAFTER THE CIT INVOKED HIS POWER U/S.263 AND THE MATTER WAS RESTORED TO THE FILE OF AO AFTER HAVING THE FOLLOWING OBSERVATIONS : - T HE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION FOR RS. 21,88,487/ - ON PLANT & MACHINERY INSTALLED DURING THE YEAR. THE COMPANY EXISTED PRIOR TO 31 ST MARCH, 2002. ADDITIONAL DEPRECIATION IS ALLOWABLE WHEN THE INSTALLED CAPACITY IS INCREASED BY 10% AS ON 01.04.2002 AND THE SAME SHOULD HAVE BEEN CERTIFIED IN FORM 3AA BY A CHARTERED AC COUNTANT. IN THE ABSENCE OF THE CERTIFICATE IN FORM 3AA INDICATING SUBSTANTIAL EXPANSION OF THE COMPANY, THE CLAIM OF ADDITIONAL DEPRECIATION TO THE EXTENT OF RS. 21,88,487/ - NEEDS TO BE DISALLOWED. THE AO PASSED ORDER U/S.143(3) GIVING EFFECT TO THE ORDE R OF CIT U/S.263, WHEREIN HE OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE FILED VARIOUS DETAILS AND ALSO FILED FORM 3AA TO CLAIM THE ADDITIONAL DEPRECIATION U/S.32(1)(IIA) AMOUNTING TO RS.21,88,487/ - . THE AO REPRODUCED CONDITIONS TO B E FULFILLED BEFORE CLAIMING ADDITIONAL DEPRECIATION AT PARA 6 ON PAGE 2 OF THE ORDER. THE AO OBSERVED THAT THE CONDITION OF INCREASE IN CAPACITY BY NOT LESS THAN 10% O F INSTALLED CAPACITY IS TO BE MANDATORILY ACCOMPANIED BY THE CERTIFICATE IN THE FORM OF R EPORT OF A CHARTERED ACCOUNTANT IN FORM 3AA. AS PER THE AO IN THE INSTANT CASE, ASSESSEE HAS FAILED TO SUBMIT THE SAID FORM 3AA ALONG WITH THE RETURN OF INCOME AND ALSO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS U/S.143(3). HE, THEREFORE, DECLINED ASSESSEE S CLAIM ON ADDITIONAL DEPRECIATION. 4. THE CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDER : - FROM THE PERUSAL OF P&L A/C. IT WAS CLEAR THAT SALES WERE SHOWN AT RS.3.11 CRORES ONLY WHILE THE JOB WORK CHARGES AND OTHER INCOME WAS SHOWN AT RS. 43.52 CRORES AND RS.34.42 CRORES RESPECTIVELY. IT SHOWS THAT A MAJOR PORTION OF THE MANUFACTURING ACTIVITY WAS TOWARDS OUTSOURCING BECAUSE JOB CHARGES CONSTITUTE SUBSTANTIAL PART OF THE TOTAL INCOME. FINALLY, THE AO HAS HELD THAT THE ASPECT OF INSTALLED CA PACITY HAS TO BE MANDATORILY ACCOMPANIED BY A CERTIFICATE IN THE FORM OF REPORT OF A CHARTERED ACCOUNTANT IN FORM ITA NO. 8200 / 1 1 3 3AA WHICH WAS NOT SUBMITTED EVEN DURING THE PROCEEDINGS U/S.143(3) WHICH IS A MANDATORY CONDITION FOR CLAIMING ADDITION DEPRECIATION. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, IT IS HELD THAT THE APPELLANT HAS FAILED TO FULFILL THE CONDITIONS FOR CLAIMING ADDITIONAL DEPRECIATION . THEREFORE, THE DISALLOWANCE MADE BY THE AO IS UPHELD AND THE GROUND OF APPEAL IS DISMISSED. 5. WE HAVE CONSIDERED R IVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CLAIM OF ADDITIONAL DEPRECIATION U/S.32(1)(IIA) WAS DECLINED MERELY ON THE PLEA THAT ASSESSEE HAS NOT FILED AUDITOR CERTIFICATE IN FORM 3AA ALONG WITH THE RETURN OF INCOME . WE FOUND THAT ASSESSEES CLAIM FOR DEDUCTION OF ADDITIONAL DEPRECIATION WAS ALLOWED BY THE DEPARTMENT IN SCRUTINY ASSESSMENT U/S.143(3). THEREAFTER THE CIT(A) BY INVOKING PROVISIONS U/S.263 RESTORED THE MATTER BACK TO THE FILE OF THE AO. THE ASSESSEE FIL ED FORM NO.3AA BEING CERTIFICATE IN THE FORM OF REPORT OF CA BEFORE THE AO DURING THE COURSE OF PROCEEDINGS U/S.143(3) R.W.S.263, BUT THE AO AGAIN DECLINED THE CLAIM ON THE PLEA THAT THIS REPORT WAS NOT FILED ALONG WITH ORIGINAL RETURN OF INCOME. LD. AR D REW OUR ATTENTION TO THE LETTER DTD.18 - 9 - 2013 ISSUED BY THE CONCERNED AO TO THE ASSESSEE, WHEREIN COPY OF FORM 3AA ALONG WITH ITS ENCLOSURES WERE SUPPLIED TO THE ASSESSEE ON ITS REQUEST. AS PER THE REPORT IN FORM 3AA U/S.32(1)(IIA) DATED 30 - 9 - 2005 ASSESSEE IS ENTITLED TO CLAIM ADDITIONAL DEPRECIATION OF RS. 21,88,487/ - . THE REPORT ALSO CERTIFIED THAT AS PER PROVISIONS OF CLAUSE (B) OF THE FIRST PROVISO TO CLAUSE (IIA) OF SUB - SECTION (1) OF SECTION 32 OF THE IT ACT, 1961, IN RESPECT OF THE ASSESSMENT YEAR 200 5 - 06 I S RS.21,88,487/ - WHICH HAS BEEN DETERMINED ON THE BASIS OF NEW MACHINERY AND PLANT ACQUIRED AND INSTALLED BY THE ASSESSEE DURING THE COURSE OF SUBSTANTIAL EXPANSION BY WAY OF INCREASE IN INSTALLED CAPACITY OF ITA NO. 8200 / 1 1 4 THE INDUSTRIAL UNDERTAKING EXISTING BEFOR E THE 1 ST DAY OF APRIL, 2002. THE SAID AMOUNT HAS BEEN WORKED OUT ON THE BASIS OF THE DETAILS IN THE ANNEXURE - B. THE ANNEXURE - B ATTACHED WITH THE REPORT INDICATES EXPANSION OF CAPACITY BY 90%. MERE NON - FILING OF REPORT WITH THE ORIGINAL RETURN CANNOT BE MA DE THE GROUND FOR DECLINE OF CLAIM OF ADDITIONAL DEPRECIATION, WHEN UNDISPUTEDLY DURING THE COURSE OF SCRUTINY ASSESSMENT, THE SAME WAS FURNISHED BEFORE THE AO AND THE AO HAS ALSO CONSIDERED THE SAME. WE FOUND THAT ALL THE CONDITIONS PROVIDED UNDER CLAUSE B OF 1 ST PROVISO TO CLAUSE (IIA) TO SECTION 32 OF THE ACT WAS COMPLIED WITH. ACCORDINGLY, THE ASSESSEE WAS ENTITLED FOR CLAIM OF ADDITIONAL DEPRECIATION OF RS. 21,88,487/ - . 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10/06 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10/06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMB AI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBA I 6. / GUARD FILE. //TRUE COPY// ITA NO. 8200 / 1 1 5