M/s. Escorts Heart Institute & Research Centre Ltd., New Delhi V. ACIT, New Delhi

ITA 874/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6796 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-10-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 14-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBHASH VERMA
• Assessee Lawyers: R M MEHTA
• Keywords: Depreciation; Principle of natural justice
• Section: 143(3); 147; 154

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H - 1 : NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 874/DEL/2014 (ASSESSMENT YEAR: 2003 - 04 ) ESCORTS HEART INSTITUTE AND RESEARCH CENTRE LTD, OKHLA ROAD, OKHLA, NEW DELHI PAN:AAACE8731F VS. ACIT, CENTRAL CIRCLE - 3, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R . M . MEHTA, ADV REVENUE BY: SHRI SUBHASH VERMA, SR. DR DATE OF HEARING 09/10 /2017 DATE OF PRONOUNCEMENT 2 8 / 1 2 /2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - IV, NEW DELHI DATED 29.12.2013 FOR THE ASSESSMENT YEAR 2003 - 04 RAISING FOLLOWING GROUNDS OF APPEAL: - 1. THE LD COMMISSIONER OF INCOME - TAX(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF THE INCOME TAX ACT, 1961 (THE ACT) IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 2. THE LD COMMISSIONER OF INCOM E TAX (A) ERRED IN CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF THE ACT WITHOUT APPRECIATING THAT THE ISSUE WAS DEBATABLE AND CAPABLE OF TWO VIEWS THEREBY BEING OUTSIDE THE PURVIEW OF SECTION 154. 3. THE LD COMMISSIONER OF INCOME TAX (A ) PROCEEDED ON A WRONG PREMISE THAT THE ISSUE HAD NOT BEEN EXAMINED IN THE ASSESSMENT MADE U/S 143(3) AND WAS THEREFORE, NO DEBATABLE. THIS WAS NOT EVEN THE CASE OF THE ASSESSING OFFICER. 4. THE LD COMMISSIONER OF INCOME - TAX(A) FURTHER ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTEREST U/S 234D IN THE ORDER PASSED U/S 154. 2. THE BRIEF FACTS OF THE CASE IS THAT ASSESSEE IS A MEDICAL INSTITUTE AND RESEARCH CENTRE IN WHOSE CASE THE ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE A CT WAS COMPLETED ON 28.03.2006 AT AN INCOME OF RS. 356467770/ - . THE LD ASSESSING OFFICER ON VERIFICATION OF RECORDS FOUND THAT THERE IS MISTAKE APPARENT FROM THE RECORDS AS HIGHER RATE OF DEPRECATION IS ALLOWED ON WRITTEN DOWN VALUE OF THE ASSETS UNDER THE ELECTRIC INSTALLATION AND PLANT AND MACHINERY @25% INSTEAD OF PRESCRIBED RATE OF 15% RESULTING INTO EXCESS ALLOWANCE OF RS. 2793731/ - AND SIMILARLY, DEPRECATION ON UPS ETC WAS ALLOWED @80% INSTEAD OF 25% RESULTING INTO EXCESS DEPRECATION ALLOWANCE OF RS . 1319988/ - . ACCORDINGLY, NOTICE U/S 154 OF THE INCOME TAX ACT WAS ISSUED ON ESCORTS HEART INSTITUTE AND RESEARCH CENTRE LTD, VS. ACIT, ITA NO. 874/DEL/2014 (ASSESSMENT YEAR: 2003 - 04) PAGE | 2 23.03.2010 , WHICH WAS REPLIED BY THE ASSESSEE ON 30.03.2010. THE ASSESSEE SOUGHT MORE TIME IN VIEW OF THE OLD RECORDS BUT THE LD ASSESSING OFFICER DID NOT GRANT THE TIME AND DISAL LOWED THE ABOVE DEPRECIATION HOLDING IT THAT THERE IS A MISTAKE APPARENT FROM THE RECORD. CONSEQUENTLY ORDER U/S 154 OF THE ACT WAS PASSED ON 31.03.2010. THE ABOVE ORDER WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD CIT(A), WHO REJECTED THE CONTENTION OF THE ASSESSEE THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD. HENCE, ASSESSEE HAS PREFERRED APPEAL BEFORE US. 3. THE LD AR SUBMITTED AS UNDER: - A. BRIEF FACTS 1. THE AUDITORS HAVE CERTIFIED THE RATE OF DEPRECIATION 2. THE OPENING WDV IN THE SCHEDULE UNDERWENT DEPRECIATION AT THE RATES CLAIMED IN THE PRECEDING ASSESSMENT YEAR AND NO ACTION HAS BEEN INITIATED BY THE DEPARTMENT TO WITHDRAW IT. 3. THE AO ALLOWED DEPRECIATION AS CLAIMED IN AN ORDER PASSED U/S 143(3)/ 147 OF TH E ACT. B . SUBMISSION 1. IN THE ASSESSMENT MADE U/S 143(3) OF THE ACT IT IS PRESUMED THAT THE AO HAS APPLIED HIS MIND TO EVERY ASPECT OF THE MATTER 2. REVIEW OF AN ORDER CANNOT BE DONE IN THE GUISE OF AN ACTION U/S 154 OF THE ACT. 3. SOMETHING WHICH HAS TO BE DIS COVERED BY ELABORATE ARGUMENTS OR INVESTIGATION OF FACTS CANNOT CONSTITUTE A MISTAKE APPARENT FROM THE RECORD. 4. DEBATABLE ISSUES WHERE TWO VIEWS ARE POSSIBLE ARE OUTSIDE THE PURVIEW OF PROCEEDINGTS U/S 154. C. JUDGEMENT RELIED UPON 1. 256 ITR 1 (FB) (DELHI) PARAS 23 AND 15) AFFIRMED IN 320 ITR 561 (HON'BLE SUPREME COURT ) 2. CIT VS. VAC MET CORPORATION (P) LTD (1981) 127 ITR 676 (GUJ) 3. CIT VS. TIRUPATTUR CO - OP SUGAR MILLS LTD 246 ITR 227 (MAD) 4. CIT VS. SHIV NARAIN KARMENDRA NARAIN 280 ITR 355 (ALL) 5. CIT VS. MMTC LT D 246 ITR 725 (DELHI) 6. ACIT VS. INDIAN FARMER FERTILIZER CO - OP LTD 51 SOT 112 (URO) (DELHI) 7. DCIT VS. M/S. INSILCO LTD IN ITA NO. 3582/DEL/2007 DATED 05.08.2011 (ITAT DELHI) . 4. THE LD DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITTED THAT THE LD AO HAS CORREC TLY RECTIFIED THE ORDER AS WRONG DEPRECIATION RATES WERE APPLIED. HE RELIED ON THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN CASE OF CIT VS ITC HOTELS LTD 25 TAXMANN.COM 116. 5. THE LD AUTHORISED REPRESENTATIVE VEHEMENTLY SUBMITTED THAT RECTIFICATION IS N OT POSSIBLE IF THE QUESTION IS DEBATABLE AND FURTHER, THE POINT WHICH IS NOT EXAMINED ON FACT OR IN LAW CANNOT BE DEALT WITH AS THE MISTAKE APPARENT ON RECORD. HE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF CIT VS. HERO CYCLES LTD 228 ITR 463. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDER OF THE LD ASSESSING OFFICER . THE ASSES SEE HAS CLAIMED DEPRECIATION ON ELECTRICAL INSTALLATION @25% , WHEREAS ACCORDING TO THE AO THE DEPRECIATION SHOULD BE ALLOWED @15%. FURTHERMORE, DEPRECIATION ON ESCORTS HEART INSTITUTE AND RESEARCH CENTRE LTD, VS. ACIT, ITA NO. 874/DEL/2014 (ASSESSMENT YEAR: 2003 - 04) PAGE | 3 UPS ETC WERE CLAIMED BY THE ASSESSEE @80% WHEREAS ACCORDING TO THE LD AO IT IS ALLOWABLE @2 5 %. THE ASSESSEE HAS SHOWN ELECTRICAL INSTALLATION UNDER THE HEAD PLANT AND MACHINERY, WHICH IS SUBJECT TO DEPRECIATION @25% I.E. AT THE RATE THE PLANT AND MACHINERY ARE DEPRECIABLE. IF THIS IS REQUIRED TO BE CORRECTED ASSESSING OFFICER MUST CROSS THE THRESH OLD THAT ELECTRICAL INSTALLATION ARE NOT PLANT AND MACHINERY BUT FURNITURE AND FIXTURES AND THEREFORE, THEY ARE DEPRECIABLE @15%. THE ABOVE CORRECTION THEN BECOME S DEBATABLE WHICH IS OUTSIDE THE PURVIEW OF PROVISIONS OF SECTION 154 OF THE ACT. IT WILL ALS O AMOUNT TO EXAMINING THE NEW FACTS WHICH WILL NOT MAKE THE CORRECTION AS MISTAKE APPARENT FROM RECORD. SIMILARLY, IN CASE OF THE TRANSFORMER, STABILIZERS AND UPS HAVE BEEN SUBJECTED TO DEPRECIATION BY THE ASSESSEE @80% AS POWER SAVING DEVICES. IF THE SAME ARE CONSIDERED AS PLANT SIMPLICITOR AND NOT THE POWER SAVING DEVICES THEN ISSUE BECOME DEBATABLE. FURTHERMORE, THE ASSESSEE WAS ASSESSED U/S 143(3) READ WITH SECTION 147 OF THE ACT FOR THE IMPUGNED ASSESSMENT ORDER DATED 28.03.2006 . FOR REOPENING THE ASS ESSMENT , THE ISSUE WAS THE CLAIM OF DEDUCTIBILITY OF PREMIUM ON KEYMAN INSURANCE POLICIES AND SOFTWARE DEVELOPMENT CHARGES. THEREFORE, IT IS APPARENT THAT CLAIM OF THE DEPRECIATION WAS NOT AT ALL EXAMINED IN ORIGINAL ASSESSMENT PROCEEDING BY ASSESSING OFFI CER. THE HON'BLE SUPREME COURT IN CASE OF CIT VS. HERO CYCLES (SUPRA) HAS HELD THAT THE POINT WHICH WAS NOT EXAMINED ON FACT OR LAW CANNOT BE DEALT AS MISTAKE APPARENT ON RECORD. IN VIEW OF ABOVE WE ARE OF THE OPINION THAT THE LD ASSESSING OFFICER HAS ERRE D IN INVOKING THE PROVISIONS OF SECTION 154 OF THE ACT. HENCE, WE REVERSE THE FINDING OF THE LD CIT(A) AND QUASH THE ORDER PASSED U/S 154 OF THE ACT ON 31.03.2010 BY THE LD ASSESSING OFFICER. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED ON ALL THE GROU NDS. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 / 1 2 /2017. - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 / 1 2 /2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI