B.A. Research India Ltd.( Now known as Cliantha Research Ltd. ), Ahmedabad V. The Principal CIT- I, Ahmedabad

ITA 869/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6181 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIVEK WADEKAR
• Assessee Lawyers: JIGAR M PATEL
• Keywords: Depreciation
• Section: 143(3); 142(1); 115JB; 263

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM AND SHRI AMARJIT SINGH, AM ./ITA.NO. 869/AHD/2015 ( / ASSTT YEAR :2010-11) B.A RESEARCH INDIA LTD. BA RESEARCH HOUSE, OPP. PUSPHARAJ TOWERS, NR. JUDGES BUNGALOWS, BODAKDEV, AHMEDABAD. PAN : AACCB4535A VS. THE PRINCIPAL CIT-1, AHMEDABAD. (APPELLANT) (RESPONDENT) / APPELLANT BY: JIGAR M. PATEL, A.R / RESPONDENT BY: VIVEK WADEKAR, CIT D.R / DATE OF HEARING 08-01-2017 /DATE OF PRONOUNCEMENT 02-02-2018 / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER: THIS ASSESSEES APPEAL FOR A.Y. 2010-11, ARISES FRO M ORDER OF THE PRINCIPAL CIT-1, AHMEDABAD DATED 20-03-2015 AND PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX AC T, 1961; IN SHORT THE ACT. 2. IN THIS CASE RETURN OF INCOME DECLARING INCOME O F RS.53,33,240/- WAS FILED ON 14.09.2010. SUBSEQUENTL Y THE CASE ITA.NO.869/AHD/2015 ASSESSMENT YEAR 2010-11 - 2 WAS SELECTED FOR SCRUTINY ASSESSMENT VIDE ISSUING N OTICE U/S. 142(1) ON 25.08.2011 AND ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 21.03.2013 BY DETERMINING TOTAL INCOME AT RS. 31,49,27,888/-. SUBSEQUENTLY THE PRINCIPAL CIT HAS ISSUED NOTICE U/S. 263 OF THE ACT STATING THAT THE ASSESSING OFFI CER HAS COMPLETED THE ASSESSMENT WITHOUT PROPERLY EXAMINING THE CLAIM OF DEPRECIATION AT HIGHER RATE BY THE ASSESSEE. IT WAS SEEN THAT ASSESSEE HAS CLAIMED DEPRECIATION @ 15% ON OFFICE A ND ELECTRIC EQUIPMENT UNDER HEAD PLANT AND MACHINERY. THE LD. C IT HAS PASSED ORDER U/S. 263 OF THE ACT ON 20.03.2015 AND HELD THAT IN TERMS OF RULE 5(1) OF INCOME TAX RULE 1962 DEPRECIA TION IS ALLOWABLE TO AN ASSESSEE AS PER THE RATES SPECIFIED IN APPENDIX-I OF THE RULE. 3. THE OFFICE EQUIPMENT INCLUDING FURNITURE AND FIT TING ARE ELIGIBLE FOR DEPRECIATION @ 10% ONLY. THEREFORE ALLO WANCE OF DEPRECIATION @ 15% BY THE A.O. IN THE ASSESSMENT ORD ER WAS NOT AS PER LAW. ACCORDINGLY IT WAS HELD THAT THE ASSESS MENT ORDER PASSED U/S. 143(3) DATED 21.03.2013 WAS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF REVENUE AND THE A.O. WAS DIRECTED TO MAKE AFRESH ASSESSMENT OF TOTAL INCOME OF THE ASSES SEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. DURING THE COU RSE OF APPELLATE PROCEEDINGS THE LD. A.R. HAS SUBMITTED PA PER BOOK CONTAINING COPY OF NOTICE ISSUED BY THE CIT. COPY OF REPLY FILED BY THE ASSESSEE AND COPY OF ASSESSMENT ORDER ETC. THE LEARNED COUNSEL HAS CONTENDED BEFORE US THAT TOTAL INCOME I N THE CASE OF THE ASSESSEE AS PER THE PROVISION OF INCOME TAX ACT WORKED OUT TO THE AMOUNT OF RS. 53,33,240/- ON WHICH THE TAX PAYA BLE WAS RS. 16,47,971/-. SINCE THE PROVISION OF MAT U/S. 115JB ARE ATTRACTED ITA.NO.869/AHD/2015 ASSESSMENT YEAR 2010-11 - 3 IN THE CASE OF THE ASSESSEE, THEREFORE IT HAD DECLA RED THE BOOK PROFIT AT RS. 31,90,17,879/- ON WHICH MAT OF RS. 5, 42,17,088/- WAS PAID. HE FURTHER CONTENDED THAT IN VIEW OF APP LICABILITY OF THE MAT PROVISION OF INCOME TAX ACT, IF THE AMOUNT OF D EPRECIATION UNDERGOES A CHANGE TO 10% AS AGAINST 15% IT WOULD N OT RESULT IN ANY DIFFERENCE IN THE RESULTANT TAX LIABILITY FOR T HE YEAR UNDER CONSIDERATION. IN VIEW OF THE SAME IF IT IS PRESUME D THAT THE ORDER OF THE A.O. IS ERRONEOUS IT STILL CANNOT BE SAID TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. 4. ON THE OTHER HAND THE LD. D.R. STATED THAT BY NO T MAKING CORRECTION IN THE AMOUNT OF DEPRECIATION ACCORDING TO THE PROVISION OF INCOME TAX RULE IT WILL AFFECT THE CLAIM OF DEPR ECIATION OF THE ASSESSEE IN THE FUTURE ASSESSMENT YEAR. THEREFORE H E VEHEMENTLY CONTENDED THAT IT IS REQUIRED TO RECTIFY THE ERROR COMMITTED BY THE A.O. 5. WE HAVE HEARD BOTH THE SIDES AND PURSUED THE MAT ERIAL ON RECORD CAREFULLY. IN TERMS OF RULE 5(1) OF THE INC OME-TAX RULES 1962 DEPRECIATION IS ALLOWABLE TO AN ASSESSEE AS PE R THE RATES SPECIFIED IN APPENDIX-1 OF THE RULES. THE OFFICE AN D ELECTRIC EQUIPMENT ARE ELIGIBLE FOR DEPRECIATION @ 10% AS AGA INST THE RATE OF 15 % CLAIMED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE CLAIM OF THE ASSESSEE OF CHARGING DEPRECIATION OF 15% IS NOT AS PER LAW. THEREFORE THE LD. CIT HAS CORRECTLY INITIA TED THE PROCEEDINGS U/S. 263 OF THE ACT WITH THE DIRECTION TO THE A.O. TO MAKE AFRESH ASSESSMENT FOR THE YEAR UNDER CONSIDERA TION. WE HAVE TAKEN INTO CONSIDERATION THE CONTENTION OF THE LD. COUNSEL THAT THE AMOUNT OF DEPRECIATION WOULD NOT RESULT IN ANY DIFF ERENCE IN TAX ITA.NO.869/AHD/2015 ASSESSMENT YEAR 2010-11 - 4 LIABILITY BECAUSE OF APPLICABILITY OF THE MAT PROVI SION IN THE CASE OF THE ASSESSEE RESULTANT IN PAYING MORE AMOUNT OF TAX FOR THE YEAR UNDER CONSIDERATION. WE HAVE ALSO CONSIDERED THE CO NTENTION OF THE DR THAT BY NOT CORRECTING THE RATE OF DEPRECIATION ACCORDING TO THE PROVISION OF INCOME TAX ACT FOR THE YEAR UNDER CONS IDERATION MAY AFFECT THE DETERMINATION OF CORRECT TAX LIABILITY O F THE ASSESSEE BECAUSE OF INCORRECT COMPUTATION OF DEPRECIATION IN RESPECT OF CONSEQUENT ASSESSMENT YEARS. 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE HAVE NOTICED THAT UNDER THE DIMINISHING BALANCE METHOD O F CALCULATING DEPRECIATION, THE AMOUNT OF DEPRECIATION IS CALCULA TED AS A FIXED PERCENTAGE OF THE REDUCING OR DIMINISHING VALUE OF ASSET STANDING IN THE BOOKS AT THE BEGINNING OF THE YEAR, SO AS TO BRING DOWN THE BOOK VALUE OF THE ASSET TO ITS RESIDUAL VALUE. THE AMOUNT OF DEPRECIATION CHARGED IN EACH PERIOD IS NOT FIXED BU T IS GRADUALLY DECREASING SUM. AFTER CONSIDERING THE AFORESAID FAC TS AND CIRCUMSTANCES WE ARE OF THE OPINION THAT IT WOULD N OT BE APPROPRIATE TO ALLOW HIGHER RATE OF DEPRECIATION ON ASSUMPTION BASIS THAT ASSESSEE HAS PAID THE TAX LIABILITY ON T HE BASIS OF MAT FOR THE YEAR UNDER CONSIDERATION, BECAUSE IT MAY AFFECT THE DETERMINATION OF UNPREDICTED TAX LIABILITY OF THE A SSESSEE IN THE CONSEQUENT ASSESSMENT YEARS. 7. THEREFORE, WE CONSIDER THAT THE ALLOWANCE OF DEP RECIATION AT THE RATE OF 15% BY THE A.O. AS AGAINST ELIGIBLE DEP RECIATION RATE OF 10% PROVIDED BY THE A.O. WAS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE. ITA.NO.869/AHD/2015 ASSESSMENT YEAR 2010-11 - 5 8. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES WE JUSTIFY THE DECISION AND FINDING OF THE LD. PR. CIT. THEREFORE THE APPEAL OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 02 / 02/2018 A T AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER DATED, 02 / 02/2018 MUKUL !' #' / COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &$% / THE RESPONDENT. 3. '(( ) * / CONCERNED CIT 4. ) * ( ) / THE CIT(A)- 5. '-. , , /DR,ITAT, AHMEDABAD. 6. .0 12 / GUARD FILE. ) ' / BY ORDER, ' (3 (ASSTT.REGISTRAR) ITAT, AHMEDABAD