The DCIT, Baroda Circle-1(2), Baroda V. Elmex Control Pvt. Ltd., Baroda

ITA 869/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6061 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. MOHAN ALAN KAMONY, AM) ITA NO.869/AHD/2009 A.Y .: 2005-06 THE D. C. I. T., CIRCLE-1(2) AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA VS M/S. ELMEX CONTROLS P. LTD., 12, G.I. D. C. INDUSTRIAL ESTATE, MAKARPURA, DIST. BARODA, PA NO. AAACE 4965 H (APPELLANT) (RESPONDENT) APPELLANT BY SHRI P. R. GHOSH, DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-I, BARODA DATED 29 TH DECEMBER, 2009 FOR ASSESSMENT YEAR 2005-06. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF THE NOTICE OF HEARING. THE ASSESSEE IS P ROCEEDED EX-PATE. A WRITTEN NOTE OF THE ASSESSEE ALONG WITH COPIES OF TWO ORDERS OF THE TRIBUNAL IS AVAILABLE ON RECORD 3. ON GROUND NO.1, THE REVENUE CHALLENGED THE DELET ION OF ADDITION OF RS.9,15,619/- ON ACCOUNT OF EXCESS INTE REST PAID TO PERSONS COVERED U/S 40A(2) (B) OF THE IT ACT. ON GR OUND NO.2, REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.1 ,80,412/- ON ITA NO.869/AHD/2009 DCIT, CIRCLE -1(2), BARODA VS M/. ELMEX CONTROLS PV T. LTD. 2 ACCOUNT OF PAYMENT OF UNDER WRITERS LABORATORY CHAR GES TREATED AS CAPITAL EXPENDITURE. IT WAS SUBMITTED BEFORE THE LE ARNED CIT(A) THAT ITAT HAS VIDE ORDER DATED 23-09-2008 IN ITA NOS. 1 45, 696/AHD/2005 AND ITA NO. 306/AHD/2008 IN RESPECT OF ASSESSMENT YEARS 2001-02 AND 2004-05 IN ASSESSEES OWN CASE DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LEARNED CIT(A) QUOTED PARA 19 OF THE ORDER OF THE TRIBUNAL DATED 23-09-2008 IN TH E IMPUGNED ORDER AND NOTED THAT THE FACTS ARE IDENTICAL IN WHICH THE TRIBUNAL DELETED THE ADDITION U/S 40 A(2) (B) OF THE IT ACT. THE LEARNED CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL DELETED THE ADDITION OF RS.9, 15,619/-. FURTHER, WITH REGARD TO LABORATORY CHARGES, THE LEARNED CIT( A) REFERRING TO PARA 20 TO 23 OF THE ORDER OF THE TRIBUNAL DATED 23 -09-2008 NOTED THAT IT WAS HELD THAT EXPENDITURE INCURRED IN OBTAI NING ISO CERTIFICATE WHICH WAS VALID FOR THREE YEARS IS NOT A CAPITAL EX PENDITURE BUT IT IS REVENUE EXPENDITURE. ORDER OF ITAT JODHPUR BENCH IN THE CASE OF ACIT VS TIRUPATI MICROTECH P. LTD. 111 TTJ 149, WAS ALSO RELIED UPON IN WHICH ADDITION ON ACCOUNT OF LABORATORY EXPENSES WAS DELETED. THE LEARNED CIT(A), THEREFORE, NOTED THAT GROUND NO.2 IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL AND ACCORDINGLY RS.1,80,412/- WAS DELETED. 4. THE LEARNED DR CONCEDED THAT BOTH THE ISSUES RAI SED IN GROUNDS NO.1 AND 2 ARE COVERED BY THE ORDER OF THE TRIBUNAL DATED 23-09-2008 AS IS NOTED BY THE LEARNED CIT(A). COPY OF THE SAID ORDER IS AVAILABLE ON RECORD. ITA NO.869/AHD/2009 DCIT, CIRCLE -1(2), BARODA VS M/. ELMEX CONTROLS PV T. LTD. 3 5. IN VIEW OF THESE FACTS AND SUBMISSION OF THE LEA RNED DR, WE FIND THAT BOTH THE GROUNDS ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL DATED 23-09-2008. ACCORDI NGLY, BOTH THE GROUNDS OF THE REVENUE HAVE NO MERIT AND ARE ACCORD INGLY DISMISSED. 6. ON GROUND NO.3, THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF RS.1 ,54,600/- ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED ON MOULDS AN D DIES. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT IN ASSESSE ES OWN CASE THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE A SSESSEE BY THE LEARNED CIT(A) IN ASSESSMENT YEAR 2002-03 AND CLAIM OF THE DEPRECIATION OF 40% HAS BEEN ALLOWED. THE LEARNED C IT(A) FOUND THAT HIS PREDECESSOR HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ON IDENTICAL FACTS AS IS NOTED ABOVE. ADDITION WAS ACC ORDINGLY DELETED. IN THE NOTE OF THE ASSESSEE IT IS STATED THAT THE LEAR NED CIT(A) FOLLOWED HIS ORDER FOR ASSESSMENT YEAR 2002-03 IN WHICH THOU GH THE DEPARTMENT HAS PREFERRED APPEAL BEFORE THE TRIBUNAL , BUT ON THIS ISSUE THE DEPARTMENT IS NOT IN APPEAL. COPY OR THE ORDER DATED 06-10- 2006 IS AVAILABLE ON RECORD IN ITA NO.120/AHD/2006 WITH C. O. NO.41/AHD/2006. THE LEARNED DR DID NOT DISPUTE THIS FACT. ON CONSIDERATION OF THE FINDINGS OF THE LEARNED CIT(A) IN THE LIGHT OF THE DECISION OF THE TRIBUNAL DATED 06-10-2006 FOR ASSES SMENT YEAR 2002- 03, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) FOLL OWED HIS ORDER FOR ASSESSMENT YEAR 2002-03 AND DELETED THE ADDITION BY GRANTING HIGHER DEPRECIATION. THOUGH THE REVENUE PREFERRED APPEAL B EFORE THE TRIBUNAL IN ITA NO.120/AHD/2006 FOR ASSESSMENT YEAR 2002-03, BUT THE SIMILAR ISSUE IS NOT RAISED IN THE APPEAL. IN T HE DEPARTMENTAL ITA NO.869/AHD/2009 DCIT, CIRCLE -1(2), BARODA VS M/. ELMEX CONTROLS PV T. LTD. 4 APPEAL ONLY THE ISSUE OF DISALLOWANCE OF ROYALTY HA S BEEN RAISED AND THAT TOO HAS BEEN DISMISSED BY THE TRIBUNAL. IT, TH EREFORE, APPEARS THAT THE ORDER OF THE LEARNED CIT(A) FOR ASSESSMENT YEAR 2002-03 IS ACCEPTED BY THE DEPARTMENT BY NOT PREFERRING ANY AP PEAL BEFORE THE TRIBUNAL. THEREFORE, THE LEARNED CIT(A) WAS JUSTIFI ED IN FOLLOWING HIS ORDER FOR DELETING THE ADDITION. THERE IS NO MERIT IN THIS APPEAL OF THE REVENUE. SAME IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-07-2011 SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 22-07-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD