ACIT, CHENNAI V. M/s. Khivraj Motors Pvt.Ltd., CHENNAI

ITA 822/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64375 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-10-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: N DEVANATHAN
• Keywords: Depreciation; Earning of tax free income; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 822 & 823/MDS/2012 ASST. YEARS : 2001-02 & 2006-07 THE ASST. COMMISIONER OF INCOME TAX, COMPANY CIRCLE-II(4), CHENNAI. (APPELLANT) V. M/S. KHIVRAJ MOTORS PVT. LTD., 623, ANNA SALAI, CHENNAI 600 006. PAN : AAACK2572Q (RESPONDENT) APPELLANT BY : DR. S. MOHARANA, CIT( DR) RESPONDENT BY : SHRI N. DEVANATHAN, ADVOCATE DATE OF HEARING : 18 OCT 2012 DATE OF PRONOUNCEMENT : 18 OCT 201 2 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THESE APPEALS FILED BY THE DEPARTMENT ARISE OUT O F SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPE ALS)-III, CHENNAI, IN ITA NO.524/08-09/A.III DATED 27.1.2012 AND NO.525/08- 09/A.III DATED 27.1.2012 UNDER SEC.143(3) READ WITH SEC.147 AND ITA 822,823/MDS/12 2 SEC.143(3) OF THE I.T. ACT RESPECTIVELY . SINCE TH ESE APPEALS PERTAIN TO THE SAME PARTIES, THEY WERE CLUBBED TOGETHER, HE ARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON CONSOLIDATED O RDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO.822/MDS/2012 ASST. YEAR : 2001-02 : THE ONLY ISSUE AGITATED BEFORE US IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SEC.80IA O F THE I.T. ACT AS THERE WAS NO UNABSORBED DEPRECIATION AVAILABLE FOR SET OFF AS PER RECORDS. 3. A CAREFUL PERUSAL OF THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS) AGAINST WHICH THE REVENUE IS A GITATED REVEALS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS O NLY DIRECTED THE ASSESSING OFFICER TO VERIFY THE DETAILS SUBMITTED B Y THE ASSESSEE FOR THE PURPOSE OF SET OFF OF BROUGHT FORWARD LOSS AND ALLOW DEDUCTION AS IS EVIDENT FROM PARA 4.2 OF COMMISSIONER OF INCO ME TAX (APPEALS)S ORDER. THE RELEVANT PORTION OF THE ORD ER OF THE FIRST APPELLATE AUTHORITY IS REPRODUCED HEREUNDER FOR CLA RITY :- 4 . SINCE BOTH THE G R OUN DS - ARE RELATED , THEY ARE TA K EN UP TOGETHER ITA 822,823/MDS/12 3 FOR AD J UDICAT I ON. THE F I RST I SSUE RE L ATES TO DISA LL OWANCE OF DEDUCTION OF RS.26 , 41 , 139/- U/S 80-IA THE SECOND ISSU E RE L ATES TO NON AVA IL AB IL ITY OF BROUGHT FORWARD DEPRECIAT I ON . THE AO HAS D I SA LL OWED DEDUCT I ON U/S 80- I A BY ADJUST I NG THE BROUGHT FORWARD DEPREC I AT I ON OF G. 47,27,132/- FOR THE A Y . 2001-02 . 4 . 1 THE I D . AR HAS CONTESTED THE DEN I AL OF DEDUC TI ON U/S 80 - IA BY SETT I NG O FF NON - EX I S T ENT BROUGHT FORWARD DEPRECIATION . HE SUBM I T T ED THAT AO HAS MADE AN ADDITION OF RS . 26 , 41,139/ - BY WAY OF D I SAL L OWANCE OF DEDUCTION U/S 80- I A STAT I NG THAT ' AFTER ADJUSTING THE BROUGHT FORWARD DEPRECIATION OF RS . 47 , 27 , 132 FOR THE ASSESSMENT YEAR 2001-02 , THE ASSESSEE ' S CLAIM FOR DEDUCTION U/S BO-IA OF RS . 26 , 41 , 139IS DISALLOWED . ' HE FURTHER SUBM I TTED THAT APPELLAN T H AS NO T BEEN MADE AWARE OF T H E BA S I S ON WHICH THE BROUG H T FORWARD DEPRECIA TI ON OF RSA7 , 27, 1 32/- HAS BEEN ARR I VED AT S I NCE AS PER THE RECORDS OF THE APPE LL ANT AND T H E R ETURN F I L ED F OR AY 2000-01, NO S U CH U NABSORBED DEPREC I A TI ON EX IS ED . THE APPE LL ANT HAD ADM ITT ED A TAXAB L E I NCOME OF RS.62 , 84,670/- FO R THE AY 2000-01 WHICH WAS A L SO ACCEP T ED. I N T H E SUBSEQUENT SUBM I SSION HE HAS STATED AS UNDE R : ' THE DETAILS OF UNABSORBED DEPRECIA TI ON AND I TS ADJUSTMENTS IN T H E SUBSEQUENT Y E ARS UPTO ASSESSMENT YEAR 2000-01 ARE A S UNDER: UNABSORBED DEPR E CI A TION A S PER AS ST . ORD E R DATED 30-10 - 1998 FOR 1996 - 97 G 67,88,407 UNABSORBED DEPRECIATION AS PER ASST.OR D ER DATED 8-9-1999 FOR ASST . YEAR 1997-98 G 59,94,646 G. 1,27,83,053 LESS : UNABSORBED DEPRECIATION ADJUSTED 1998-99(VIDE ORDER D T . 27 . 3 . 2001 G . 22 , 07,134 1999-00 (VIDE STATEMENT OF TOTAL INCOME - NO ORDER) G. 44,72,013 2000-01 (VIDE STATEMENT OF TOTAL INCOME - NO ORDER) G . 64,68 , 477 G.1 , 31 , 47 , 624 ITA 822,823/MDS/12 4 IT CAN THUS BE SEEN THERE WAS NO UNABSORBED DEPRECI ATION WHICH REQUIRED TO BE A DJUS T ED IN THE ASSESSME NT FOR ASSESSMENT YE A R 2001-02 FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80-IA OF T H E4 INCOME-TAX ACT . COPIES OF THE A CKNO W LEDGEMEN T S / S TAT EMENT OF COMPU T ATION FOR THE ASSESSMENT YEARS 1996-97 TO 2 001-02 ARE ENCLOSED . ' 4 . 2 I HAVE CARE F U LL Y CO N S I DERED THE FACTS OF T HE CASE AND T H E SUBM I SSIONS OF THE I D . AR . I HAVE A L SO PERUSED THE COP I ES OF THE ORDERS AND STATEMENT SUBMITTED BY THE I D . AR . I T I S C L EAR FROM THE WORKING SUBM I T T ED BY THE APPEL L ANT THAT NO BROUGHT FORWARD BU S I NESS L OSS OR UNABSORBED DEPREC I AT I ON WAS AVAILABLE FO R SET OFF IN AY 2001-02. ACCO R D IN G L Y, T HE AO I S DIREC T ED TO VER I FY THE DE T A IL S SUBM I TTED BY THE APPE L LANT FOR T HE P UR POSE OF SET OF F OF B R OUGHT FORWARD LOSS OR UNABSO R BED DEPREC I A T ION AND A LL OW D EDUCT I ON U/S 80- I A THEREAF T ER I N ACCORDANCE WITH L AW . THE GROUND IS AL L OWED F OR S TATI S TI CA L P U RP OSE. IN VIEW OF THE ABOVE POSITION, WE FEEL THAT THERE S HOULD NOT BE ANY GRIEVANCE TO THE DEPARTMENT IN AGITATING THE ISSUE BEFORE THIS TRIBUNAL SINCE THE COMMISSIONER OF INCOME TAX (APPE ALS) HAS ONLY DIRECTED THE ASSESSING OFFICER TO VERIFY THE DETAIL S OF UNABSORBED DEPRECIATION/LOSSES ELIGIBLE FOR SET OFF AND ALLOW DEDUCTION UNDER SEC.80IA OF THE ACT IN ACCORDANCE WITH LAW. THEREF ORE, WE DECLINE TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INC OME TAX (APPEALS) AND REJECT THE PLEA TAKEN BY THE REVENUE. 4. THE APPEAL OF THE DEPARTMENT IS DISMISSED. ITA 822,823/MDS/12 5 5. ITA NO.823/MDS/2012 ASST. YEAR : 2006-07: THE ONLY ISSUE RAISED BY THE DEPARTMENT IN THIS A PPEAL IS AGAINST RESTRICTING THE DISALLOWANCE TO G 2 LAKHS AS AGAINST G.32.10 LAKHS UNDER SEC.14A OF THE I.T. ACT READ WITH RULE 8D OF THE I.T. RULES. 6. WE HAVE PERUSED THE MATERIAL AND RELEVANT ORDER S PLACED ON RECORD. THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF GODREJ & BOYCE MFG. CO. LTD. V. DCIT (328 ITR 81), HELD THAT RULE 8D OF I.T. RULES ARE APPLICABLE ONLY PROSPECTIVELY FROM THE AS ST. YEAR 2008-09. FOR THE ASST. YEAR PRIOR TO 2008-09, THE PROVISIONS OF RULE 8D HAVE NO APPLICATION. THE HIGH COURT ALSO HELD THAT EVEN THOUGH RULE 8D HAS NO APPLICATION TO THE ASST. YEARS PRIOR TO 2008 -09, REASONABLE DISALLOWANCE UNDER SEC.14A TOWARDS EXPENSES INCURRE D IN EARNING EXEMPT INCOME MAY BE MADE BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) IN THIS CASE R ESTRICTED THE DISALLOWANCE TO G.2 LAKHS AS REASONABLE EXPENSES AT TRIBUTABLE TO EARN EXEMPT INCOME. THE DECISION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS IN CONFORMITY WITH THE DECISION OF THE HON'BLE BOMBAY ITA 822,823/MDS/12 6 HIGH COURT (SUPRA). ACCORDINGLY, WE SUSTAIN THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 18 TH OF OCTOBER 2012, AT CHENNAI . SD/- SD/- ( DR. O.K. NARAYANAN) (CHALLA NAGENDR A PRASAD) VICE PRESIDENT JUDICIAL MEMBE R CHENNAI, DATED : 18 TH OCTOBER 2012. JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT-III, CHENNAI (4) THE CIT, CHENNAI (5) D.R. (6) GUARD FILE