M/s Chinni Constructions , Bangalore V. Income Tax Officer Ward-7(2)(4), Bangalore

ITA 862/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2344 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: PRASHANTH G S
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Rule of consistency
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 862 /BANG/201 7 ASSESSMENT YEAR : 2012 - 13 M/S. CHINNI CONSTRUCTIONS, 45/1, 3 RD CROSS, KATHRIGUPPE MAIN ROAD, BSK 3 RD STAGE, BANGALORE 560 085. PAN: AAEFC0076C VS. THE INCOME TAX OFFICER, WARD 7 (2) (4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI PRASHANTH G.S., CA RESPONDENT BY : DR. P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 24 . 0 7 .2018 DATE OF PRONOUNCEMENT : 31 . 0 8 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT(A)-7, BANGALORE DATED 17.01.2017 FOR ASS ESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THESE ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, WEIGHT OF EVIDENC E, NATURAL JUSTICE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPEL LANT'S CASE. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSE D ON A TOTAL INCOME OF RS.59,72,710/- AS AGAINST THE RETURNED INCOME OF RS .9,32,380/- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE AUTHORITIES BELOW ERRED IN DISALLOWING THE D EPRECIATION ON SHUTTERING AND CENTERING SHEETS OF RS.50,40,355/-UN DER THE FACTS AND CIRCUMSTANCES OF THE CASE 4. THE AUTHORITIES BELOW FAILED TO APPRECIATE THE F ACT THAT EACH OF THE SHUTTERING AND CENTERING SHEET IN ITSELF IS AN INDE PENDENT UNIT AND IT IS ELIGIBLE FOR 100 PER CENT DEPRECIATION UNDER THE FA CTS AND ITA NO. 862/BANG/2017 PAGE 2 OF 6 CIRCUMSTANCES OF THE CASE. 5. THE ACTION OF THE AUTHORITIES BELOW IN DISALLOWI NG THE DEPRECIATION BY RELYING ON THE JUDICIAL PRONOUNCEMENTS COVERED A GAINST THE ASSESSEE WITHOUT TAKING INTO ACCOUNT THE JUDICIAL P RONOUNCEMENTS IN FAVOUR OF THE ASSESSEE IS BAD IN LAW. 6. THE AUTHORITIES BELOW FAILED TO APPRECIATE THE F ACT THAT WHERE THERE ARE DIVERGENT VIEWS ARE POSSIBLE, THE VIEW FAVOURIN G THE ASSESSEE NEEDS TO BE ADOPTED UNDER THE FACTS AND CIRCUMSTANC ES OF THE CASE. 7. WITHOUT PREJUDICE, THE. DISALLOWANCE OF DEPRECIA TION IS AGAINST THE PRINCIPLES OF CONSISTENCY AS THE DEPRECIATION HAS B EEN ALLOWED IN THE EARLIER ASSESSMENT YEARS. 8. WITHOUT PREJUDICE, THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACT THAT THE SHUTTERING AND CENTERING MATERIALS AR E IN THE NATURE OF CONSUMABLES AND CONSEQUENTLY THE EXPENSES INCURRED ON THE SAME OUGHT TO HAVE BEEN ALLOWED AS DEDUCTION UNDER THE F ACTS AND CIRCUMSTANCES OF THE CASE. 9. THE APPELLANT DENIES ITSELF LIABLE TO BE LEVIED INTEREST UNDER SECTION 234B OF THE ACT AND FURTHER THE COMPUTATION OF INTE REST WAS NOT PROVIDED TO THE APPELLANT AS REGARD TO THE RATE, PE RIOD AND METHOD OF CALCULATION OF INTEREST UNDER THE FACTS AND CIRCUMS TANCES OF THE CASE. 10. WITHOUT PREJUDICE, THE INTEREST UNDER SECTION 2 34B IS NOT LEVIABLE AND OUGHT TO HAVE BEEN WAIVED ON THE FACTS OF THE C ASE. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELET E OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 12. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PR AYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICEAND EQUITY . 3. THE ASSESSEE HAS ALSO RAISED SOME ADDITIONAL GRO UNDS OF APPEAL WHICH ARE AS UNDER. 1. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE CENTERING SHEETS ARE PURELY TEMPORARY STRUCTURES ELIGIBLE FOR DEPREC IATION AT A RATE OF 100% AS PER THE INCOME TAX RULES, 1962 AND CONSEQUE NTLY THE ADDITION OF RS.50,40,335/- IS LIABLE TO BE DELETED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TREAT ING THE CENTERING SHEETS BEING TEMPORARY STRUCTURES AS 'PLANT & MACHI NERY' AND CONSEQUENTLY ERRED IN ALLOWING THE DEPRECIATION AT A LOWER RATE OF 15% AS AGAINST THE APPLICABLE RATE OF 100% UNDER TH E FACTS AND ITA NO. 862/BANG/2017 PAGE 3 OF 6 CIRCUMSTANCES OF THE CASE. 3. WITHOUT PREJUDICE, THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE COST OF CENTERING SHEETS IS AMORTIZED AS PER TH E ACCEPTED PRINCIPLES OF APPORTIONMENT AND THUS THE DISALLOWANCE IS NOT W ARRANTED ON THE FACTS OF THE CASE. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 5. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 4. IT IS SUBMITTED BY LD. AR OF ASSESSEE THAT THE D ISALLOWANCE OF DEPRECIATION IN THE PRESENT YEAR IS AGAINST THE PRINCIPLES OF CONSI STENCY AS THE DEPRECIATION HAS BEEN ALLOWED IN THE EARLIER ASSESSMENT YEARS. RELI ANCE HAS BEEN PLACED BY HIM ON TRIBUNAL ORDER RENDERED IN THE CASE OF U.P. STATE BRIDGE CORPORATION LTD. VS. DCIT AS REPORTED IN [2015] 171 TTJ 353 (LU CKNOW-TRIB.) AND IT WAS POINTED OUT THAT IN THAT CASE, THE TRIBUNAL HAS FOL LOWED THE RULE OF CONSISTENCY BECAUSE IN THAT CASE ALSO, NO DISALLOWANCE WAS MADE IN EARLIER YEARS AND THEREFORE, FOLLOWING RULE OF CONSISTENCY, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. IT IS ALSO SUBMITTED IN THE SYNOPSIS FIL ED BY THE ASSESSEE THAT THE SHUTTERING AND CENTERING MATERIALS ARE IN THE NATUR E OF CONSUMABLES AND CONSEQUENTLY, THE EXPENSES INCURRED ON THE SAME SHO ULD HAVE BEEN ALLOWED AS DEDUCTION AND AO WAS NOT JUSTIFIED IN TREATING THE SAME AS PLANT & MACHINERY AND ALLOWING DEPRECIATION @ 15% AS AGAINST ASSESSEE S CLAIM FOR 100% DEPRECIATION. 5. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AU THORITIES BELOW. HE PLACED RELIANCE ON A JUDGMENT OF HON'BLE KARNATAKA HIGH CO URT RENDERED IN THE CASE OF PATHANGE POULTRY FARM VS. CIT AS REPORTED IN [19 94] 210 ITR 668. HE ALSO PLACED RELIANCE ON A JUDGMENT OF HONBLE ANDHRA PRA DESH HIGH COURT RENDERED IN THE CASE OF CIT VS. S. VIJAYA KUMAR AS REPORTED IN [2015] 376 ITR 226. RELIANCE WAS ALSO PLACED ON A TRIBUNAL ORDER RENDER ED IN THE CASE OF U.P. STATE BRIDGE CORPORATION LTD. VS. DCIT AS REPORTED IN [2015] 171 TTJ 353 (LUCKNOW-TRIB.). ITA NO. 862/BANG/2017 PAGE 4 OF 6 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE EXAMINE THE APPLICABILITY OF THE TRIBUNAL ORDER RENDERED IN THE CASE OF U.P. STATE BRIDGE CORPORATION LTD. VS. DCIT (SUPRA). PARA 12 OF THIS TRIBUNAL ORDER IS RELEVANT AND THE SAME IS REPRODUCED HEREINBELOW. 12. WE HAVE ALSO CAREFULLY EXAMINED THE FACTS AVAIL ABLE ON RECORD IN THE LIGHT OF THE ASSESSEE'S CONTENTIONS AND WE ARE OF THE VIEW THAT THE ASSESSEE HAS BEEN MAINTAINING PROPER BOOKS OF ACCOU NT AND IN THE LIGHT OF THE NATURE OF ACTIVITIES UNDERTAKEN BY THE ASSESSEE, WE FIND FORCE IN THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT AT EVERY SITE TEMPORARY CONSTRUCTIONS ARE MADE AND A P ARTICULAR PERCENTAGE OF EXPENDITURE IS DEBITED TO THE ACCOUNT UNDER THE HEAD 'TEMPORARY SITE ACCOMMODATION' AND WHATEVER MATERIA LS WERE LEFT OUT FROM THE SITE THEY ARE BEING REUTILIZED FURTHER. TH EREFORE, NO EXCESS CLAIM WAS RAISED BY THE ASSESSEE. SINCE NO DISALLOW ANCE WAS EVER MADE IN EARLIER ASSESSMENT YEARS, WE FIND NO JUSTIF ICATION IN THE DISALLOWANCE MADE IN THIS VERY ASSESSMENT YEAR, AS THE AO CANNOT BLOW NOT AND COLD IN THE SAME BREATH BY ADMITTING T HE CLAIM OF THE ASSESSEE IN ONE ASSESSMENT YEAR AND DENYING THE SAM E IN THE SUCCEEDING ASSESSMENT YEAR. WE ARE, THEREFORE, OF T HE VIEW THAT THE CLAIM OF THE ASSESSEE IS REASONABLE AND IS ALLOWABL E. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LEARNED CIT (A) IN THIS REGARD AND ALLOW THE CLAIM OF THE ASSESSEE. ACCORDINGLY, THE ADDITION SU STAINED BY THE LEARNED CIT(A) IS HEREBY DELETED. 7. AS PER ABOVE PARA REPRODUCED FROM THE TRIBUNAL O RDER, IT IS SEEN THAT IT WAS HELD BY TRIBUNAL IN THIS CASE THAT THE AO CANNOT BL OW NOT AND COLD IN THE SAME BREATH BY ADMITTING THE CLAIM OF THE ASSESSEE IN ON E ASSESSMENT YEAR AND DENYING THE SAME IN THE SUBSEQUENT ASSESSMENT YEAR. IN THE PRESENT CASE ALSO, WE FIND THAT ON PAGE NO. 5 OF THE SYNOPSIS SU BMITTED BY LD. AR OF ASSESSEE BEFORE THE TRIBUNAL, IT IS STATED THAT THE DEPRECIATION WAS ALLOWED IN THE EARLIER ASSESSMENT YEAR UNDER SIMILAR FACTS. B UT THIS FACT IS NOT COMING OUT FROM THE ORDERS OF AUTHORITIES BELOW. IN FACT, IN PARA 4.1 OF THE ORDER OF CIT(A), IT IS NOTED BY HIM THAT ASSESSEE HAS CLAIMED 100% D EPRECIATION ON THE BROUGHT FORWARD OPENING BALANCES OF SHUTTERING AND CENTERIN G MATERIALS EACH OF WHICH IS SAID TO BE VALUE OF RS. 5,000/- OR LESS. THIS O BSERVATION OF CIT (A) IN THIS PARA OF HIS ORDER IS SAYING THAT THERE IS OPENING B ALANCES OF SHUTTERING AND CENTERING MATERIALS. IF THE ASSESSEE HAS CLAIMED 1 00% DEPRECIATION ON SUCH SHUTTERING AND CENTERING MATERIAL IN THE EARLIER YE AR THEN THERE WILL BE NO OPENING BALANCES BROUGHT FORWARD FROM THE EARLIER Y EAR BUT IT MAY BE THAT SHUTTERING AND CENTERING MATERIAL WHICH WAS PUT TO USE IN THE EARLIER YEAR, 100% ITA NO. 862/BANG/2017 PAGE 5 OF 6 DEPRECIATION MIGHT HAVE BEEN CLAIMED AND ALLOWED AN D ONLY THOSE MATERIAL NOT PUT TO USE IN THE EARLIER YEAR MIGHT HAVE BEEN BROU GHT FORWARD IN THE PRESENT YEAR. THIS MAY ALSO BE A FACT THAT PART OF THE ASSE TS MIGHT HAVE BEEN PUT TO USE FOR LESS THAN 180 DAYS AND IN THAT SITUATION, ONLY 50% OF DEPRECIATION IS ALLOWABLE AND AS A RESULT, EVEN IF DEPRECIATION IS ALLOWED @ 100%, IN FACT, ONLY 50% WILL BE ALLOWED IN THE EARLIER YEAR AND THE BAL ANCE 50% IS TO BE ALLOWED IN THE PRESENT YEAR. THEREFORE, MERELY ON THIS BASIS T HAT THERE IS OPENING BALANCE OF WDV, IT CANNOT BE CONCLUDED THAT 100% DEPRECIATI ON WAS NOT ALLOWED IN THE EARLIER YEAR. HENCE WE FEEL IT PROPER TO RESTORE TH E MATTER BACK TO THE FILE OF CIT (A) FOR FRESH DECISION AFTER FINDING OUT FACTS ON T HIS ASPECT AS TO WHETHER ANY SUCH 100% DEPRECIATION IS CLAIMED IN EARLIER YEARS AND WHETHER SUCH CLAIM WAS ALLOWED BY THE AO IN THE EARLIER YEARS. IN THE ABS ENCE OF THIS FACTUAL POSITION, THE MATTER ON MERIT CANNOT BE DECIDED BY US AND THE REFORE, WE SET ASIDE THE ORDER OF CIT (A) AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION WITH THE DIRECTION THAT CIT (A) SHOULD FIRST FIND OUT WH ETHER 100% DEPRECIATION WAS CLAIMED IN THE EARLIER YEAR OR NOT AND WHETHER IT W AS ALLOWED OR NOT. IF IT IS FOUND THAT UNDER SIMILAR FACTS, DEPRECIATION WAS AL LOWED @ 100% IN EARLIER YEAR THEN AS PER THE RULE OF CONSISTENCY, SAME SHOULD BE ALLOWED IN THE PRESENT YEAR ALSO. THE CIT (A) SHOULD PASS NECESSARY ORDER AS P ER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. IF REQUIRED, HE MAY OBTAIN REMAND REPORT FROM THE AO. IN VIEW OF THIS DECISION, NO FURTHER ADJUDICATION IS CALLED FOR AT THE PRESENT S TAGE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DA TE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST AUGUST, 2018. /MS/ ITA NO. 862/BANG/2017 PAGE 6 OF 6 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.