Mundra International Container Terminal Pvt. Ltd., Kutch V. The Pr. CIT-2, Ahmedabad

ITA 825/AHD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8443 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 05-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MRUNAL SHAH AR
• Keywords: Depreciation; Assessment record
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.825/AHD/2017 ( / ASSESSMENT YEAR : 2011-12) THE PRINCIPAL OFFICER MUNDRA INTERNATIONAL CONTAINER TERMINAL PVT.LTD., NAVINAL NEW PORT PO BOX NO.8, MUNDRA KUTCH 370 421 / VS. THE PR.CIT-2 1 ST FLOOR NAVJEEVAN TRUST BLDG B/H.GUJARAT VIDYAPITH AHMEDABAD-380 014 # ./ ./ PAN/GIR NO. : AADCA 0917 C ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI MRUNAL SHAH, AR '#& )( / RESPONDENT BY : SHRI SURENDRA KUMAR, CIT-DR *+ ), / DATE OF HEARING 26/09/2017 -./0 ), / DATE OF PRONOUNCEMENT 29/ 09 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PR.COMMISSIONER OF INCOME TAX-2, AHMEDABAD [PR.CIT IN SHORT] PASSED UNDER S.263 OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS 'THE ACT') DATED 23/02/2017 FOR THE ASSESSMENT YEAR (AY) 2011-12. ITA NO.825/AHD/ 2017 MUNDRA INTERNATIONAL CONTAINER VS. THE PR.CIT ASST.YEAR 2011-12 - 2 - 2. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLEN GED THE REVISIONAL JURISDICTION OF THE PR.CIT INVOKED UNDER S.263 OF T HE ACT WHEREBY ORDER OF THE ASSESSING OFFICER (AO) UNDER S.143(3) R.W.S. 144C OF THE ACT DATED 27/02/2015 IS SOUGHT TO BE SET ASIDE BY THE PR.CIT PRIMARILY ON GROUNDS OF LACK OF ENQUIRY. 3. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF OPERATING CONTAINER HANDLING TERMINAL AND CONTAINER FREIGHT S TATION OPERATIONS. THE RETURN OF INCOME FOR AY 2011-12 FILED BY THE ASSESS EE WAS SUBJECTED TO SCRUTINY ASSESSMENT AND THE ASSESSMENT UNDER S.143( 3) R.W.S. 144C WAS FINALIZED ON 27/02/2015. AFTER THE COMPLETION OF T HE ASSESSMENT, THE PR.COMMISSIONER, ON REVIEW OF THE ASSESSMENT RECORD S, FOUND THAT ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PR.CIT ACCORDINGLY I NVOKED REVISIONAL JURISDICTION CONFERRED UNDER S.263 OF THE ACT TO S HOW CAUSE THE ASSESSEE ON THE INFIRMITY IN THE ASSESSMENT ORDER WHICH IS B ROADLY NARRATED BY THE PR.CIT IN PARA NO.2 OF HIS ORDER REPRODUCED HEREUND ER:- 'YOU HAVE CLAIMED THE DEPREDATION OF RS.13,50,97,95 9/- ON INFRASTRUCTURE USAGE FACILITY @ 25% ON W.D.V. OF RS.54,03,91,835/- TREATING THE SAME AS INTANGIBLE A SSET. THE ASSESSING OFFICER ALLOWED THE SAME. YOU HAVE BEEN U SING INFRASTRUCTURE FACILITY DEVELOPED BY MUNDRA PORT AN D ECONOMIC ZONE. THE EXPENDITURE INCURRED BY YOU FOR USAGE OF INFRASTRUCTURE FACILITY WAS CAPITAL IN NATURE AND DERIVING ENDURIN G BENEFITS OUT OF IT. THE RIGHT OF USAGE OF SAME IS NOT SIMILAR TO KN OW-HOW, PATENTS, COPYRIGHTS, TRADE MARK, LICENCE OR ANY OTHER BUSINE SS OR ITA NO.825/AHD/ 2017 MUNDRA INTERNATIONAL CONTAINER VS. THE PR.CIT ASST.YEAR 2011-12 - 3 - COMMERCIAL RIGHTS WHERE THE ASSETS ARE ACQUIRED AND THE PAYEE BECOMES THE OWNER. YOU HAVE BEEN ALLOWED TO USE THE INFRASTRUCTURE FACILITY NOT IN THE CAPACITY OF THE OWNER AS THE OWNER IS MUNDRA PORT AND SPECIAL ECONOMIC ZONE, WHO ARE C LAIMING DEPRECIATION ON THE SAME (MARINE STRUCTURES, DREDGI NG - CT, PLANT AND MACHINERY ETC.) AT THE PRESCRIBED RATE WHICH AR E LESSER THAN THAT THE RATES CLAIMED BY YOU. IN VIEW OF THE ABOVE FACTS, WRONG DEPRECIATION ALLOWED ON 'INFRASTRUCTURE USAGE FACIL ITY WAS REQUIRED TO BE DISALLOWED, WHICH RESULTED IN UNDERA SSESSMENT OF RS.13,50,97,959/-.' 4. THE PR.CIT IN ESSENCE ALLEGED THAT THE ORDER OF THE AO IN ACCEPTING THE CLAIM OF DEPRECIATION ALLOWANCES ON INFRASTRUCTURE USAGE FACILITY AS AN INTANGIBLE ASSET IS LEGALLY INCORRE CT AND UNSUSTAINABLE IN LAW. SECONDLY, THE ORDER OF THE AO SUFFERS FROM NO N-APPLICATION OF MIND WHILE CONCLUDING IN FAVOUR OF ASSESSEE. THIRDLY, I N THE ABSENCE OF OWNERSHIP OF IMPUGNED INTANGIBLE ASSET, IT DOES NOT QUALIFY FOR DEPRECIATION AS PER SECTION 32(1)(II) OF THE ACT. FOURTHLY, DEPRECIATION CANNOT BE CLAIMED BY TWO PERSONS SIMULTANEOUSLY I.E . THE OWNER (MUNDRA PORT AND SPECIAL ECONOMIC ZONE) AND THE USER (ASSES SEE). THE PR.CIT ACCORDINGLY CONCLUDED THAT THE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT CARRYING OUT ANY WORTHWHILE ENQUIRIES ON THE ALLEGE D CLAIM OF DEPRECIATION ALLOWANCES. IT WAS THUS CONCLUDED THA T THE ASSESSMENT ORDER PASSED UNDER S.143(3) R.W.S.144C IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. CONSEQUENTLY, THE PR .CIT SET ASIDE THE ITA NO.825/AHD/ 2017 MUNDRA INTERNATIONAL CONTAINER VS. THE PR.CIT ASST.YEAR 2011-12 - 4 - ASSESSMENT ORDER AND DIRECTED THE AO TO FRAME THE A SSESSMENT AFTER CONDUCTING THE NECESSARY ENQUIRY ON THE ISSUE INVOL VED. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD.AR FOR THE ASSESSEE MR.MRUNAL SHAH SUBMIT TED AT THE OUTSET THAT THE DEPRECIATION HAS BEEN CLAIMED ON TH E OPENING BALANCE OF WRITTEN DOWN VALUE (WDV) OF THE INTANGIBLE ASSET IN QUESTION. IT WAS SUBMITTED THAT THE DEPRECIATION WAS CLAIMED EARLIER FROM 2004-05 ONWARDS AND THIS IS NOT THE FIRST YEAR SUCH CLAIM. THE LD.AR THEREAFTER SUBMITTED THAT THE ACTION UNDER S.263 OF THE ACT WA S IDENTICALLY TAKEN BY THE PR.CIT AGAINST THE ASSESSEE FOR THE AY 2009-10 ALSO. THE AFORESAID ORDER PASSED UNDER S.263 OF THE ACT FOR AY 2009-10 WAS CHALLENGED BEFORE THE COORDINATE BENCH OF ITAT. THE COORDINAT E BENCH IN ITA NO.1253/AHD/2016 ORDER DATED 23/01/2017 CANCELLED T HE ORDER FRAMED UNDER S.263 OF THE ACT ON THE SAME ISSUE INVOLVED I N IDENTICAL FACTS. THEREFORE THE CASE OF THE ASSESSEE IS COVERED BY IT S OWN PRECEDENT IN THE PREVIOUS YEAR. IT WAS THEREAFTER SUBMITTED THAT SI NCE AY 2004-05 TILL AY 2011-12, THE AO IN THE RESPECTIVE ASSESSMENT YEAR H AS BEEN ALLOWING DEPRECIATION ON INFRASTRUCTURE USAGE FACILITY CON SCIOUSLY. THE LD.AR THEREAFTER SUBMITTED THAT EVEN IN AYS 2007-08, 2008 -09 AND 2010-11 WHERE THE CASE WAS REOPENED BY ISSUE OF NOTICE UNDE R S.148 OF THE ACT, IT WAS FOUND BY THE HONBLE GUJARAT HIGH COURT THAT AN OPINION ON THE ITA NO.825/AHD/ 2017 MUNDRA INTERNATIONAL CONTAINER VS. THE PR.CIT ASST.YEAR 2011-12 - 5 - ALLOWABILITY OF DEPRECIATION OF INFRASTRUCTURE USA GE FACILITY WAS DULY FORMED AT THE ASSESSMENT STAGE AND THEREFORE JURISD ICTION USURPED UNDER S.147 OF THE ACT WAS FOUND ILLEGAL AND BAD IN LAW I N THESE YEARS. THE LD.AR SUBMITTED THAT IN THESE CIRCUMSTANCES, THE OR DER UNDER S.263 IN CHALLENGE CANNOT BE SUSTAINED IN LAW IN DEPARTURE WITH THE EARLIER YEARS. 7. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF THE PR.CIT PASSED UNDER S.263 OF THE ACT. 8. WE HAVE EXAMINED THE RIVAL SUBMISSIONS AND PERUS ED THE ORDER OF THE PR.CIT PASSED UNDER S.263 OF THE ACT AS WELL AS THE DECISIONS REFERRED TO IN THIS REGARD. VARIOUS ALLEGATIONS MADE BY THE PR.CIT FOR INVOKING SECTION 263 OF THE ACT HAS BEEN SUMMARIZED IN THE P RECEDING PARAS. WE FIND THAT THE IDENTICAL CHALLENGE TO THE ASSUMPTION OF JURISDICTION UNDER S.263 OF THE ACT FOR PRECEDING ASSESSMENT YEAR 2009 -10 IN ASSESSEES OWN CASE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL. THEREFORE, WE DO NOT SEE A NY REASON TO DEPART THEREFROM. THUS, ON THIS GROUND ALONE THE ORDER OF THE PR.CIT PASSED UNDER S.263 OF THE ACT REQUIRES TO BE SET ASIDE. N OTWITHSTANDING AFORESAID, WE ALSO FIND SUBSTANCE IN THE PLEA MAR SHELLED ON BEHALF OF THE ASSESSEE THAT DEPRECIATION CLAIM HAS BEEN ADMITTED AND ACCEPTED YEAR- AFTER-YEAR IN THE EARLIER YEARS AND THUS THE DEPREC IATION CLAIMED IN THE PRESENT YEAR IS MERELY A CONTINUATION OF THE EARLIE R YEAR CLAIMS. THIS ITA NO.825/AHD/ 2017 MUNDRA INTERNATIONAL CONTAINER VS. THE PR.CIT ASST.YEAR 2011-12 - 6 - BEING SO, WE DO NOT SEE ANY OCCASION FOR THE AO TO EMBARK UPON A THREADBARE ENQUIRY ON THE ISSUE IN REPETITION WHERE POSITION OF THE ASSESSEE ALREADY STANDS ACCEPTED IN THE PAST. HEN CE, WE DO NOT FIND THE ASSESSMENT ORDER PASSED BY THE AO AS ERRONEOUS PER SE WHICH WARRANTS EXERCISE OF REVISIONAL JURISDICTION. WE F URTHER TO NOTE THAT THE HONBLE GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICA TION NO.15463 OF 2015 ORDER DATED 11/01/2016 DID NOT APPROVE THE ACT ION OF AO IN 147 PROCEEDINGS RAISED ON THE SAME ISSUE IN AY 2010-11. SIMILAR ORDERS HAVE BEEN PASSED FOR OTHER ASSESSMENT YEARS ALSO BY THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE. HENCE WE ARE OF THE VIEW THAT THE IMPUGNED REVISIONAL ACTION OF PR.CIT IS NOT BEFITTING TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THUS, WE HOL D THAT ACTION OF PR.CIT IS WITHOUT SATISFACTION OF PRE-REQUISITES CONTEMPL ATED UNDER S.263 OF THE ACT. THE ORDER PASSED UNDER S.263 OF THE ACT IS TH US LIABLE TO BE SET ASIDE AND CANCELLED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/ 09 /2017 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29/ 09 /2017 ITA NO.825/AHD/ 2017 MUNDRA INTERNATIONAL CONTAINER VS. THE PR.CIT ASST.YEAR 2011-12 - 7 - 4..*,.*../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE PR.CIT(A)-2, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. P '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 26.9.17 (DICTATION-PAD 1 6-PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.9.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.29.9.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.9.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER