Shri Tuljabhavani Shetkari Sah. Sakhar Karkhana Ltd., Osmanabad V. ITO, Nanded

ITA 885/PUN/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3300 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 17-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S SINGH
• Assessee Lawyers: P S SHINGTE
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 885/PN/08 (ASSTT. YEAR 2004-05) SHRI TULJABHAVANI SHETKARI SAH. SAKHAR KARKHANA LTD., A/P. NALDURG TAL. TULJAPUR DIST. OSMANABAD PAN NO. AABTS7313R .... APPELLANT VS. ITO, WARD 3(2), NANDED . RESPONDENT APPELLANT BY : SHRI P.S. SHINGTE RESPONDENT BY : SHRI A.S. SINGH ORDER PER D. KARUNAKARA RAO AM THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT(A) DATED 1.4.2008. DURING THE PROCEEDINGS BEFORE US LD CO UNSEL FOR THE ASSESSEE FILED A CHART SHOWING NINE GROUNDS. THE COUNSEL MENT IONED THAT THE GROUNDS 3, 4 AND 5 ARE NOT PRESSED. WE ACCORDINGLY DISMISS GROUNDS 3, 4 AND 5 AS NOT PRESSED. OTHER GROUNDS ARE ADJUDICATED AS UNDER. 2. REGARDING GROUND NO. 1 RELATING TO THE GUEST HOUSE EXPENSES, LD. COUNSEL FAIRLY MENTIONS THAT IT IS COVERED AGAINST AS SESSEE BY THE JUDGMENT OF BRITANIA INDUSTRIES LIMITED, 278 ITR 546. ACCORDINGLY, GROUND NO. 1 IS DISMISSED . 3. REGARDING GROUND NO. 2 RELATING TO ADVERTISEMENT EXPENSES, LD. COUNSEL MENTIONS THAT THE SAME IS DECIDED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF BOMBAY HIGH COURT JUDGMENT IN THE CASE OF CIT VS. SH RI PANCHGANGA SSK LTD. 254 ITR 572 (BOM). WE DIRECT THE A.O TO DECIDE THE I SSUE IN THE LIGHT OF THE ITA NO. 885/PN/08 A.Y 2004-05 PAGE 2 OF 4 BINDING JUDGMENT OF HONBLE BOMBAY HIGH COURT AFTER E XAMINING AND COMPARING FACTS OF BOTH THE CASES. ACCORDINGLY, GROUND NO. 2 IS SET ASIDE . 4. REGARDING GROUND 6, LD COUNSEL MENTIONED IN THE C HART THAT IT RELATES LOSS OF NURSERY AND IN FACT, IT IS A WRONG NARRATION A ND NOMENCLATURE. ACTUALLY, IT RELATES TO LOSS OF DIESEL ACTIVITY AND CLAIM IS FULL Y ALLOWABLE. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. PRIMA FACI E, WE FIND THERE IS SOME MISTAKE IN THE ORDERS AND THEREFORE, IT HAS TO GO TO TH E FILES OF THE AO FOR APPROPRIATE SPEAKING ORDER ON THE ISSUE. WE DIRECT THE A .O TO DECIDE THE ISSUE AFRESH AFTER GRANTING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO. 6 IS SET ASIDE . 5. REGARDING GROUND NO. 7 AND 8 RELATING TO SALARY WAG ES AND ELECTRICITY EXPENSES. THE COUNSEL MENTIONED THAT HE HAS NO OBJE CTION IF THESE TWO ISSUES ARE SET ASIDE TO THE FILES OF THE A.O FOR DECIDING T HE ISSUE AFRESH CONSIDERING THE EXPENDITURE INCURRED IN THE PAST YEARS. FURTHER, HE HAS OFFERED TO FILE NECESSARY INFORMATION BEFORE THE A.O THIS TIME FOR COMING AT THE CORRECT CONCLUSIONS THAT THE NON OF THE EXPENDITURE IN QUESTION IS RELATES TO ANY MANUFACTURING ACTIVITY. CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT THESE TWO GROUNDS SHOULD BE SET ASIDE. A.O IS DIRECTED TO D ECIDE THE ISSUE AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDIN GLY GROUNDS 7 AND 8 ARE SET ASIDE . 6. REGARDING GROUND NO. 9 RELATING TO DEPRECIATION, TH E ASSESSEE COUNSEL SUBMITTED THAT, THE ISSUE IS COVERED BY THE DECISIO N OF THE MUMBAI BENCH VIDE ITA NO. 598 OF 2009 IN THE CASE OF CIT VS. G.R. SHI PPING LTD. (BOM) AND ALSO THE DECISION OF SAME BENCH IN THE CASE OF M/S. SWATI SY NTHETICS LTD. VS. ITO, ITA NO. 1165/M/2006 FOR THE PROPOSITION THAT THE CLAIM OF THE ASSESSEE RELATING TO THE DEPRECIATION IS ALLOWABLE, ONCE THE ASSETS FOUND PLACE IN THE RELEVANT BLOCK OF ASSETS. 7. WE HAVE PERUSED THE SAID DECISIONS FOR THE SAKE OF COMPLETENESS. PARA 9 TO 12 ARE REPRODUCED AS UNDER:- 9. THUS, FOR THE ASSESSMENT YEAR 1988-89, THE W.D. V OF ALL THE ASSETS FALLING WITHIN THAT BLOCK OF ASSETS AT THE BEGINNIN G OF THE PREVIOUS YEAR. ITA NO. 885/PN/08 A.Y 2004-05 PAGE 3 OF 4 FROM THIS, THE ADJUSTMENT HAS TO BE MADE FOR THE IN CREASE OR REDUCTION IN THE BLOCK OF ASSETS DURING THE YEAR UNDER CONSIDERA TION. 10. THE LEGISLATURE FELT THAT KEEPING THE DETAILS W ITH REGARD TO EACH AND EVERY DEPRECIABLE ASSETS WAS TIME CONSUMING BOT H FOR THE ASSESSEE AND THE ASSESSING OFFICER. THEREFORE, THEY AMENDED THE LAW TO PROVIDE FOR ALLOWING OF THE DEPRECIATION ON THE ENTIRE BLOCK OF ASSETS INSTEAD OF EACH INDIVIDUAL ASSETS. THE BLOCK OF ASSETS HAS ALSO BEE N DEFINED TO INCLUDE THE GROUP OF ASSETS FALLING WITH THE SAME CLASS OF ASSE TS. HENCE, AFTER THE AMENDMENT WITH EFFECT FROM 01.04.1998, THE INDIVIDU AL ASSETS HAVE LOST ITS IDENTITY AND FOR THE PURPOSE OF ALLOWING OF DEP RECIATION, ONLY THE BLOCK OF ASSETS HAS TO BE CONSIDERED. IF A BLOCK OF ASSETS IS OWNED BY THE ASSESSEE AND USED FOR THE PURPOSE OF BUSINESS, DEPR ECIATION WILL BE ALLOWED. THEREFORE, THE TEST OF USER HAS TO BE APPLIED UPON THE BLOCK AS A WHOLE INSTEAD OF UPON AN INDIVIDUAL ASSET. 11. THE ABOVE PRINCIPLE HAS BEEN LAID DOWN IN THE F OLLOWING DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE NAM ELY; (A) NOTCO EXPORTS VS. DCIT 86 ITD 445 (HYD.), (B) ACIT VS. SRF LTD., VOL 21 SOT 122 (DEL.) & (C) UNITEX PRODUCTS LTD. VS. ITO, VOL. 22 SOT 429 (MUM.) 12. THE LD, DR HOWEVER SUBMITTED THE USER WAS A CON DITION FOR ALLOWING DEPRECATION AND IN THIS REGARD RELIED TO THE DECISI ON OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DINESHKUMAR GULABC HAND AGRAWAL VS. CIT, 267 ITR 768(BOM). WE HAVE PERUSED THE AFORESAI D DECISION AND ARE OF THE VIEW THAT THE SAME IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, THE ASSESSEE HAS ALREADY ENTERED THE BLOCK OF ASSETS. IN THE CASE BEFORE THE HONBLE BOMBAY HIGH COURT, THE ASSET IN QUESTION WAS NOT AT ALL PUT TO USE. WE THEREFORE, F IND THE DECISION RELIED UPON THE LD. DR IS OF NO ASSISTANCE TO THE PLEA OF THE DR. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNALS REFERRED TO THE ABOVE, WE HOLD THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEPRECIATION AND THE ASSESSING OFFICER DIRECTED TO ALLOW THE SAME. 8. IN VIEW OF THE ABOVE SETTLED POSITION AND IN THE ABSENCE OF ANY INFORMATION CONTRARY TO THE ABOVE, ASSESSEE IS ENTITL ED TO DEPRECIATION. ACCORDINGLY, GROUND 9 IS ALLOWED . 9. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 08 TH OCTOBER, 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 08 TH OCTOBER, 2010 R ITA NO. 885/PN/08 A.Y 2004-05 PAGE 4 OF 4 COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ITO, WARD 3(2), NANDED 3. CIT(A), AURANGABAD 4. CIT, AURANGABAD 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE