DCIT, Circle -5 Kolkata, Kolkata V. M/s Kesoram Industries Ltd., Kolkata

ITA 930/KOL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5068 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 14-06-2012
• Court: TRIBUNAL
• Department Lawyers: RAJAT SU BHRA BISWAS CIT LD; SALLONG YADEN JCIT LD
• Assessee Lawyers: R N BAJORIA SR ADVOC
• Keywords: Capital asset; Depreciation; Additional depreciation; Additional evidence; Revised return
• Section: 143(3); 115JB; 37(1); 32; 147; 28; 154

Judgement Text

ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, K OLKATA BEFORE : SHRI N.V. VASUDEVAN, JUDICIAL MEMBER, A ND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NOS. 930 & 931/KOL/2012 A.Y 2005-06 D.C.I.T, CIR-5, KOLKATA VS. M/S. KESORAM INDUSTRIES LTD PAN: ABCK 24 17P (APPELLANT) (RE SPONDENT) ITA NO. 782/KOL/2012 A.Y 2005-06 M/S. KESORAM INDUSTRIES LTD VS. ADDL. CI T, RANGE-5, KOLKATA PAN: ABCK 24 17P (APPELLANT) (RE SPONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI RAJAT SUBHRA BI SWAS,CIT, LD.DR & SHRI SALLONG YADEN, JCIT, LD.SR .DR FOR THE RESPONDENT/ASSESSEE : S /SHRI R.N BAJORIA, SR. ADVOCATE BIKASH CHANDA, FCA, LD.ARS DATE OF HEARING: 16-02-2016 DATE OF PRONOUNCEMENT: 29-02-201 6 ORDER SHRI M.BALAGANESH, AM THESE APPEALS OF THE ASSESSEE AS WELL AS THE REVENU E ARISE OUT OF THE ORDERS OF THE LEARNED CIT(A),VI KOLKATA IN APPEAL NO. 1254 /C IT(A)-VI/CIR-5/2009-10/KOL DATED 15.2.2012 AGAINST THE ORDER PASSED BY THE LEA RNED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) AND APPEAL OF THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A), VI KOLKATA IN APPE AL NO. 249 /CIT(A)-VI/CIR- 5/2009-10/KOL DATED 21.2.2012 AGAINST THE ORDER PAS SED BY THE LEARNED AO U/S 147 READ WITH SECTION 143(3) OF THE ACT. ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 2 2. AS THE ISSUES INVOLVED ARE IDENTICAL IN NATU RE, THEY ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. ITA NO. 782/KOL/2012 A.Y 2005-06 ASSESSEES APPEA L 3. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER, THE LEARNED CIT(A) IS JUSTIFIED IN DISALLOWING THE FOREIGN EXCHANGE FL UCTUATION LOSS INCURRED BY THE ASSESSEE BY RESTATEMENT OF FOREIGN CURRENCY LOAN AT THE END OF THE YEAR AMOUNTING TO RS. 21,25,864/- AND AT THE TIME OF ACTUAL REPAYMENT OF LOAN IN INSTALLMENTS AMOUNTING TO RS. 75,07,500/-, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE AVAILED FOREIGN CURRENCY LOAN (FCNR TERM LOAN) OF 105,00,000 USD IN THE FAG END O F THE FINANCIAL YEAR ENDED 31.3.2003 IN ORDER TO PREPAY 14% DEBENTURES FOR RS. 50 CRORES AND A SUM OF RS. 49,87,76,250/- WAS SHOWN AS LOAN OUTSTANDING AS ON 31.3.2003. THE SAID LOAN WAS SUBJECTED TO RESTATEMENT AT THE END OF THE YEAR ON 31.3.2004 WHICH RESULTED IN AN EXCHANGE GAIN OF RS. 4,20,26,250/-. PURSUANT TO TH IS RESTATEMENT, THE BALANCE OF LOAN OUTSTANDING AS ON 31.3.2004 WAS ARRIVED AT RS. 45,6 7,50,000/-. THE ASSESSEE DID NOT OFFER THE NOTIONAL GAIN OF RS. 4,20,26,250/- AS INC OME IN ASST YEAR 2004-05 WHICH WAS HOWEVER, ADDED TO INCOME BY THE LEARNED AO WHILE CO MPLETING THE ASSESSMENT FOR THE ASST YEAR 2004-05 U/S 143(3)OF THE ACT. THE SAME W AS SUBJECTED TO FIRST APPEAL BY THE ASSESSEE WHO DELETED THE ADDITION. ON FURTHER APPE AL BY THE REVENUE BEFORE THIS TRIBUNAL, THE TRIBUNAL HAD DELETED THE ADDITION. H OWEVER, THIS TRIBUNAL DECISION WAS RENDERED PRIOR TO THE JUDGEMENT RENDERED BY THE HON BLE SUPREME COURT ON THE IMPUGNED ISSUE IN THE CASE OF WOODWARD GOVERNOR OF INDIA (P) LTD REPORTED IN 312 ITR 254 (SC). AT PRESENT, THE TRIBUNAL ORDER HAS BEEN AGITATED BY THE REVENUE BEFORE THE HONBLE CALCUTTA HIGH COURT AND THE SAME IS PEN DING. ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 3 TAKING INTO ACCOUNT THE RESTATED LOAN OUTSTANDING V ALUE AS ON 31.3.2004 AMOUNTING TO RS. 45,67,50,000/- , THE ASSESSEE MADE CERTAIN REPA YMENTS OF FOREIGN CURRENCY LOAN AS PER THE TERMS OF THE LOAN AGREEMENT DURING THE FINA NCIAL YEAR 2004-05 RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL AMOUNTING TO RS. 22,83 ,75,000/- AND INCURRED ACTUALLY EXCHANGE FLUCTUATION LOSS OF RS. 75,07,500/- . THE LOAN BALANCE OUTSTANDING AFTER TAKING INTO ACCOUNT SUCH REPAYMENT WAS SUBJECTED TO RESTATEMENT AS ON 31.3.2005 BASED ON THE EXCHANGE RATE PREVAILING AT THE END OF THE YEAR , WHICH RESULTED IN FOREIGN EXCHANGE FLUCTUATION LOSS OF RS. 21,25,864/-. TH E ASSESSEE CLAIMED BOTH THE REALIZED EXCHANGE FLUCTUATION LOSS OF RS. 75,07,500/- AND NO TIONAL EXCHANGE LOSS OF RS. 21,25,864/- AS DEDUCTION FOR THE ASST YEAR 2005-06 WHICH WAS DISALLOWED BY THE LEARNED AO. ON FIRST APPEAL, THE LEARNED CITA HELD THAT SINCE THE FOREIGN EXCHANGE GAIN THAT AROSE IN ASST YEAR 2004-05 WAS NOT SUBJEC TED TO TAX , THE ASSESSEE IS NOT ENTITLED TO CLAIM THE FOREIGN EXCHANGE LOSS IN ASST YEAR 2005-06 WHICH HAD ADMITTEDLY AROSE PURSUANT TO COMPARISON OF THE LOAN BALANCES A FTER RESTATEMENT MADE IN THE EARLIER YEAR. HOWEVER, THE DECISION IN WOODWARD GOVERNOR CASE (312 ITR 254 SC) WAS NOT CONSIDERED IN THIS DECISION. AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1 THAT THE LD.CIT(A) ERRED IN FACTS AS WELL AS IN LAW BY CONFIRMING THE DISALLOWANCE OF RS.21,25,864/ - BEING THE LOSS SUFFERED BY THE APPELLANT DUE TO FLUCTUATION IN FOREIGN EXCHANGE RA TE, WITHOUT APPRECIATING THAT THE SAID LOSS WAS ASCERTAINED WIT H REFERENCE TO THE FOREIGN EXCHANGE RATE PREVAILING AS ON 31ST MARCH, 2005 AND WAS ALLOWABLE AS PER THE PRINCIPLES LAID DOWN BY THE AP EX COURT. 2 THAT THE LD.CIT (A) ERRED IN FACTS AS WELL AS IN LAW BY CONFIRMING THE DISALLOWANCE OF RS. 75,07,500/- AS CAPITAL IN N ATURE ON PURE ASSUMPTION, WITHOUT APPRECIATING THAT THE SAME WAS A REALIZED LOSS ARISING OUT OF FOREIGN EXCHANGE FLUCTUATION IN RESP ECT OF TERM LOAN TAKEN FROM STATE BANK OF INDIA FOR ITS WORKING CAPI TAL FUND REQUIREMENTS AND WAS ALLOWABLE U/ S.37(1) OF THE AC T. 3 WITHOUT PREJUDICE TO GROUND 2 (ABOVE), EVEN ASSUM ING BUT NOT ADMITTING, THAT SUCH REALIZED FOREIGN EXCHANGE LOSS IS TERMED AS CAPITAL IN NATURE AND COULD NOT BE ALLOWED AS REVEN UE LOSS U/S.37(1) ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 4 OF THE ACT, THE LD.CIT(A) ERRED IN NOT DIRECTING TH E ASSESSING OFFICER TO ALLOW DEPRECIATION ON THE CAPITAL ASSET, AS PRES UMABLY LINKED BY THE ASSESSING OFFICER TO SUCH REALISED FOREIGN EXCH ANGE LOSS. 4 THAT THE APPELLANT CRAVES LEAVE TO ADD TO AND/ OR AMEND, ALTER, MODIFY OR RESCIND THE GROUNDS HEREINABOVE BEFORE OR AT THE HEARING OF THE APPEAL. 3.2. THE LEARNED AR FAIRLY ARGUED THAT THE ISSUE R EQUIRES TO BE REMANDED BACK TO THE FILE OF THE LEARNED AO FOR REDETERMINATION AS THE L OWER AUTHORITIES HAD NOT CONSIDERED THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF W OODWARD GOVERNOR (SUPRA) WHICH SQUARELY COVERS THE ISSUE UNDER APPEAL. IN RESPONSE TO THIS, THE LEARNED DR FAIRLY CONCEDED TO THE SAME. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE FACTS STATED HEREINABOVE REMAIN UNDISP UTED AND HENCE ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT THE FOREIGN CURRENCY LOAN AGREEMENT HAS BEEN FILED BY THE ASSESSEE IN THE PAPER BOOK BEFORE US A ND THIS HAS BEEN FILED BEFORE US FOR THE FIRST TIME. ACCORDINGLY THE SAME IS CONSTRUED A S ADDITIONAL EVIDENCE AND IS ADMITTED HEREIN. WE FIND THAT THIS ISSUE REQUIRES TO BE SET ASIDE TO THE FILE OF THE LEARNED AO WHO WILL HAVE TO GIVE CLEAR CUT FINDING ON THE FOLLOWING MATTERS :- (A) WHETHER THE FOREIGN CURRENCY LOAN WAS UTILIZED FOR WORKING CAPITAL PURPOSES BY THE ASSESSEE. IF SO, THE RESULTANT FOREIGN EXCHANG E GAIN OR LOSS WOULD BE REVENUE IN NATURE AND WOULD BECOME TAXABLE OR ALLOWABLE AS DED UCTION AS THE CASE MAY BE IN THE LIGHT OF DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F WOODWARD GOVERNOR INDIA LTD REPORTED IN 312 ITR 254 (SC). ADMITTEDLY, THE FOREIGN CURRENCY LOAN WAS UTILIZED FOR PRE-PAYMENT OF HIGH COST DEBT OF 14% DEBENTURES FOR RS. 50 CRORES. THE LEARNED AO HAS TO GIVE A CA TEGORICAL FINDING THAT WHETHER THE DEBENTURES AT THE FIRST INSTANCE WERE UTILIZED FOR THE PURPOSE OF WORKING CAPITAL ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 5 PURPOSES OF THE COMPANY IN ORDER TO DECIDE WHETHER THE LOAN WAS UTILIZED ON REVENUE ACCOUNT. (B) ALTERNATIVELY, IF THE FOREIGN CURRENCY LOAN WAS UTILIZED FOR ACQUIRING FIXED ASSETS, THEN THE RESULTANT FOREIGN EXCHANGE GAIN OR LOSS WOULD GO TO REDUCE THE VALUE OF FIXED ASSETS AND TREATMENT TO BE GIVEN IN TERMS OF SECTION 43A OF THE ACT. SIMILARLY IF THE MONIES RAISED THROUGH ISSUE OF DEB ENTURES WERE UTILIZED BY THE ASSESSEE FOR CAPITAL PURPOSES, THEN THE RESULTANT F OREIGN EXCHANGE GAIN / LOSS SHOULD ALSO BE CONSIDERED IN THE LIGHT OF PROVISIONS OF SE CTION 43A OF THE ACT. (C ) IN RESPECT OF FOREIGN EXCHANGE LOSS WHICH IS A CTUALLY INCURRED AMOUNTING TO RS. 75,07,500/- (PURSUANT TO REPAYMENT OF LOANS IN PART DURING THE FINANCIAL YEAR 2004-05) , THE SAME IS ALLOWABLE AS DEDUCTION IF TH E SAID LOAN WAS UTILIZED ON REVENUE ACCOUNT AS STATED IN PARA (A) ABOVE. HOWE VER, IF THE FACTS OF THE CASE FALL IN CATEGORY OF PARA (B) ABOVE, THEN THE SAID ACTUAL EXCHANGE LOSS OF RS. 75,07,500/- WOULD HAVE TO BE TREATED IN ACCORDANCE WITH PROVISI ONS OF SECTION 43A OF THE ACT. SINCE THE REVENUES APPEAL FOR THE ASST YEAR 2004-0 5 IS PENDING BEFORE THE HONBLE CALCUTTA HIGH COURT WHEREIN THE NOTIONAL EXCHANGE G AIN HAS NOT BEEN SUBJECTED TO TAX, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO DIRECT THE LEARNED AO , TO DECIDE THE ISSUE UNDER APPEAL, IN T HE LIGHT OF THE DECISION TO BE RENDERED BY THE HONBLE CALCUTTA HIGH COURT AND THE DIRECTIONS CONTAINED IN PARA (A) TO (C ) ABOVE. THE ASSESSEE IS AT LIBERTY TO FILE FRESH EVIDENCES AND DOCUMENTS TO SUBSTANTIATE ITS CONTENTIONS BEFORE THE LEARNED AO. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 6 ITA NO. 930/KOL/2012 A.Y 2005-06 DEPARTMENTAL AP PEAL AGAINST SECTION 143(3) ORDER 4. AT THE OUTSET, THERE IS A DELAY IN FILING AP PEAL BY THE REVENUE BY 25 DAYS AND DURING THE COURSE OF HEARING, THE LEARNED AR FAIRLY AGREED FOR CONDONATION OF THE SAME. HENCE WE HOLD THAT THE DELAY IN FILING THE A PPEAL BY THE REVENUE BY 25 DAYS IS HEREBY CONDONED AND THE APPEAL OF THE REVENUE IS AD MITTED HEREIN. 5. THE ONLY ISSUE TO BE DECIDED IN THE APPEAL OF T HE REVENUE IS AS TO WHETHER WHILE COMPUTING THE BOOK PROFITS U/S 115JB OF THE ACT, A SUM OF RS. 18,86,02,604/- REPRESENTING PROVISION FOR CONTINGENCIES IS TO BE A DDED BACK OR NOT , AS THE SAME WAS OFFERED TO TAX AND ASSESSED U/S 115JB OF THE ACT IN THE YEARS IN WHICH THE PROVISION WAS MADE. 6. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE COMPANY HAD CREATED PROVISION FOR CONTINGENCIES AGGREGATING TO RS. 19,65,45,000/- BY DEBITING ITS PROFIT AND LOSS ACCOUNT DURING THE FINANCIAL YEARS 2001-02 , 2002-03 AND 20 03-04 BY RS.. 7,15,45,000/- , RS. 6,73,00,000/- AND RS. 5,77,00,000/- RESPECTIVELY. SINCE SUCH PROVISIONS WERE IN THE NATURE OF UNASCERTAINED LIABILITIES, THESE PROVISIO NS WERE DULY ADDED BACK BY THE ASSESSEE VOLUNTARILY IN THE COMPUTATION OF BOOK PRO FITS AS PER CLAUSE (C ) TO EXPLANTION 1 TO SECTION 115JB OF THE ACT IN THE RESPECTIVE ASS ESSMENT YEARS. OUT OF THESE PROVISIONS FIGURE OF RS. 19,65,45,000/- WHICH WERE CREATED IN EARLIER YEARS, THE ASSESSEE WROTE BACK PROVISION AGGREGATING TO RS. 18 ,86,02,604/- DURING FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR UNDER APPEAL WH ICH WAS CREDITED TO PROFIT AND LOSS ACCOUNT. SINCE THE SAME WAS ADDED BACK IN THE RESP ECTIVE YEARS AT THE TIME OF MAKING PROVISION IN SECTION 115JB COMPUTATION, THE ASSESSE E CHOSE TO REDUCE THE SAME FROM SECTION 115JB COMPUTATION IN ASST YEAR 2005-06 IN T HE YEAR OF WRITE BACK OF SAID PROVISION, IN ORDER TO AVOID DOUBLE TAXATION. HOWE VER, THIS DID NOT FIND FAVOUR WITH THE LEARNED AO WHO DID NOT REDUCE THE SAME WHILE CO MPUTING THE BOOK PROFITS U/S ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 7 115JB OF THE ACT. ON FIRST APPEAL, THE LEARNED CIT (A) DELETED THE ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUND:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, L D CIT(A) ERRED IN LAW AS WELL AS FACTS BY DELETING THE DISALLOWANC E THE RETAIN BACK PROVISION FOR CONTINGENCE AMOUNTING TO RS.18 ,86,02,604/- IN THE COMPUTATION OF THE BOOK PROFIT FOR THE A.Y 2005-06 U/S. 115JB WITHOUT EXAMINING ACCOUNTS AND DOCUMENTS. 6.1. THE LEARNED DR RELIED ON THE ORDER OF THE LEA RNED AO. IN RESPONSE TO THIS, THE LEARNED AR RELIED ON THE ORDER OF THE LEARNED CIT(A ). 6.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LEARNED CIT(A) HAD DELETE D THIS ADDITION BY OBSERVING THE FOLLOWING :- THE APPELLANT HAS BEEN ASSESSED AS PER ITS SUBMIS SIONS U/S 115JB IN THE ASSESSMENT YEAR 2002-03 , 2003-04 AND 2004-05. THE REFORE, SINCE THE SAID AMOUNTS HAVE BEEN TAXED IN THE YEAR OF CREATION OF PROVISIONS, THEREFORE, THE SAME CANNOT BE ADDED BACK IN THE ASSESSMENT YEA R 2005-06 WHEN THE ADDITION HAS BEEN WRITTEN BACK. THEREFORE, THE ADD ITION OF RS. 18,86,02,604/- IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. WE FIND THAT THE FACTUAL FINDINGS GIVEN BY THE LEAR NED CIT(A) WERE NOT CONTROVERTED BY THE REVENUE BEFORE US. MOREOVER, WE ARE ALSO CON VINCED FROM THE DETAILS FILED IN THE PAPER BOOK ABOUT THE TREATMENT OF THE PROVISION FOR CONTINGENCIES GIVEN BY THE ASSESSEE IN VARIOUS ASST YEARS AND HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CITA IN THIS REGARD AND HOLD THAT THE A SSESSEE IS ENTITLED FOR REDUCTION OF PROVISION FOR CONTINGENCIES AMOUNTING TO RS. 18,86, 02,604/- WHILE COMPUTING BOOK PROFITS U/S 115JB IN TERMS OF CLAUSE (I) OF EXPLANA TION 1 TO SECTION 115JB OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 8 6.3 IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 930/KOL/2012 IS DISMISSED. ITA NO. 931/KOL/2012 DEPARTMENT APPEAL AGAINST SE CTION 147 RWS 143(3) ORDER 7. AT THE OUTSET, THERE IS A DELAY IN FILING APP EAL BY THE REVENUE BY 25 DAYS AND DURING THE COURSE OF HEARING, THE LEARNED AR FAIRLY AGREED FOR CONDONATION OF THE SAME. HENCE WE HOLD THAT THE DELAY IN FILING THE A PPEAL BY THE REVENUE BY 25 DAYS IS HEREBY CONDONED AND THE APPEAL OF THE REVENUE IS AD MITTED HEREIN. 8. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 37,08 7/- TOWARDS VARIOUS ADVANCES AND DEPOSITS WRITTEN OFF IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 8.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE AS SESSEE HAD MADE CERTAIN DEPOSITS WITH CERTAIN PARTIES INCLUDING GOVERNMENT BODIES IN THE EARLIER YEARS AND THE SAME WERE LYING OUTSTANDING FOR A VERY LONG TIME AND HAD CHOS EN TO WRITE OFF THE SAME AS IRRECOVERABLE IN ASST YEAR 2005-06 AS BELOW:- SECURITY AGENT DEPOSIT 5,000 DEPOSIT WITH JIWANMAL CHANDMAL 45 DEPOSIT WITH BOMBAY ELECTRIC SUPPLY & TRANSPORT 20 ,460 DEPOSIT WITH BOMBAY CO-OP SOCIETY 11,577 NON-RECEIPT OF TDS CERTIFICATE 5 --------------- 37,087 THE LEARNED AO OBSERVED THAT THE LOSS ARISING ON AC COUNT OF AFORESAID DEPOSITS IS A CAPITAL LOSS AND CONDITIONS OF SECTION 36(1)(VII) R EAD WITH SECTION 36(2) OF THE ACT HAVE NOT BEEN FULFILLED BY THE ASSESSEE AND ACCORDI NGLY MADE THE DISALLOWANCE. ON FIRST APPEAL, THE ASSESSEE TRIED TO EXPLAIN THAT TH ESE AMOUNTS COULD NOT BE REALIZED AND THE OBSOLETE MATERIAL COULD NOT BE USED AND FURTHER THE COST OF SUCH RECOVERIES WOULD ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 9 HAVE BEEN HIGHER , THE ASSESSEE AS A PRUDENT PERSON AND OUT OF BUSINESS EXIGENCY WROTE OFF THESE AMOUNTS IN ITS BOOKS AND CLAIMED AS DEDUC TION. ON GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE, THE LEARNED CIT(A) HEL D THAT THE AFORESAID ADVANCES / DEPOSITS WERE MADE IN THE ORDINARY COURSE OF BUSINE SS AND THEREAFTER WRITTEN OFF AS IRRECOVERABLE AND SUCH WRITE OFF HAS BEEN CLAIMED A S DEDUCTION U/S 37(1) READ WITH SECTION 28 OF THE ACT. HE FOLLOWED THE DECISION O F HIS PREDECESSOR ON THE SAME ISSUE IN ASSESSEES OWN CASE AND DELETED THE ADDITION. A GGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN LAW AS WELL AS FACTS BY DELETING THE DISALLOWANC E OF RS.37,087/- BEING THE VARIOUS ADVANCES IN DEPOSITS WRITTEN OFF. 8.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDE R OF THE LEARNED AO. THE LEARNED AR VEHEMENTLY SUPPORTED THE ORDER OF THE LE ARNED CIT(A) AND FURTHER STATED THAT THIS ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 308/KOL/2007 DATED 2 3.11.2007 FOR ASST YEAR 2003- 04. THE LEARNED AR FURTHER STATED THAT SIMILAR DIS ALLOWANCE WAS DELETED BY THE LEARNED CIT(A) FOR ASST YEARS 2006-07 AND 2007-08 A GAINST WHICH NO FURTHER APPEALS WERE PREFERRED BY THE REVENUE. 8.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE FACTS OF THE CASE THAT TH E DEPOSITS AND ADVANCES WERE GIVEN IN THE ORDINARY COURSE OF BUSINESS AND WERE LYING I N THE BOOKS OF THE ASSESSEE COMPANY FOR QUITE A LONG TIME. THE SAME WERE CONSIDERED IR RECOVERABLE BY THE ASSESSEE AND HAD WRITTEN OFF THE SAME IN ASST YEAR 2005-06 AND HENCE THE SAME IS TO BE CONSIDERED AS A TRADING LOSS U/S 28 OF THE ACT. WE HOLD THAT THE L EARNED CIT(A) HAD RIGHTLY DELETED THE ADDITION MADE IN THIS REGARD. ACCORDINGLY, TH E GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 10 9. THE LAST GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DISALLOWING THE EXCESS DEPRECIATION WH ICH WAS CLAIMED BY WAY OF REVISED RETURN IN THE EARLIER YEARS HAVING CONSEQUENTIAL IM PACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 9.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE AS SESSEE WHILE FILING ITS ORIGINAL RETURN OF INCOME FOR THE ASST YEAR 1999-2000 HAD NOT CLAIMED ANY INCOME TAX DEPRECIATION . THIS RETURN WAS PROCESSED AND ACCEPTED U/S 143(1) O F THE ACT. LATER THE PROVISIONS OF SECTION 32 OF THE ACT WAS AMENDED AND EXPLANATION 5 WAS INSERTED WITH EFFECT FROM 1.4.2002 EMPOWERING THE ASSESSING OFFICER TO ALLOW SUCH CLAIM EVEN IF THE ASSESSEE HAS NOT CLAIMED SUCH DEDUCTION. IN VIEW OF THE SAI D AMENDMENT TO SECTION 32, THE ASSESSEE CLAIMED THE INCOME TAX DEPRECIATION THROUG H A PETITION U/S 154 DATED 24.5.2001 REQUESTING THE ASSESSING OFFICER TO ALLOW THE CLAIM AVAILABLE TO THE ASSESSEE WHICH WAS REJECTED BY THE LEARNED AO. SINCE THE PETITION FOR RECTIFICATION WAS FILED BEFORE THE AO ON 24.5.2001 REQUESTING HIM TO ALLOW THE CLAIM OF TAX DEPRECIATION IN ASST YEAR 1999-2000, THE ASSESSEE PRESUMED THAT SUC H DEPRECIATION WOULD BE ALLOWED AND HAD THEREAFTER COMPUTED ITS TAX DEPRECIATION ON THE REDUCED WRITTEN DOWN VALUE IN THE FOLLOWING YEARS INCLUDING ASST YEAR 2003-04. S INCE THE ASSESSEE HAD NOT BEEN ALLOWED THE DEPRECIATION FOR ASST YEAR 1999-2000, W HICH STANDS CONFIRMED BY THE ORDER OF THE AO DATED 5.5.2006, THE ASSESSEE IS ENT ITLED TO AVAIL DEPRECIATION ON THE ENHANCED WDV OF 1999-200 (WITHOUT GRANTING TAX DEPR ECIATION). THE ASSESSEE FILED RECTIFICATION PETITIONS BEFORE THE AO FOR THE ASST YEARS 2000-01 TO 2002-03 AND HAD CLAIMED THE SAME BEFORE THE LEARNED CIT(A) FOR THE ASST YEAR 2003-04. THE LEARNED CIT(A), HOWEVER, FOR THE ASST YEARS 2000-01 TO 200 3-04 HELD THAT SINCE THE ASSESSMENT HAS REACHED A FINALITY AND ALSO THAT THE APPELLANT HAD NOT PREFERRED ANY APPEAL BEFORE THE HIGHER FORUM, IT WAS OBVIOUS THAT THE WDV OF ASSETS WAS CONFIRMED. THE SAID WDV WAS TO BE GIVEN EFFECT TO IN SUBSEQUEN T YEARS AND ACCORDINGLY THE AO WAS DIRECTED TO GIVE EFFECT TO THE RECTIFICATION PE TITIONS. THE AO AGAIN REJECTED THE PETITIONS ON THE GROUND THAT NO CLAIM WAS MADE BY T HE ASSESSEE BY WAY OF REVISED ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 11 RETURN AND BY THE PRINCIPLE OF SUPREME COURT IN GOETZE INDIA LTD VS CIT REPORTED IN 284 ITR 323 (SC), THE SAID PETITION CANNOT BE ENTERTAINED. ON SUBSEQ UENT APPEAL BEFORE LEARNED CIT(A) IN APPEAL NO. 04/V/CIR-5/07-0 8, THE ADDITIONAL DEPRECIATION WAS ALLOWED BY THE LEARNED CIT(A). IT IS ALSO SEEN FROM THE RECORDS THAT THE APPEAL EFFECT HAS BEEN GIVEN BY THE AO IN RESTATING THE DE PRECIATION IN ASST YEAR 2004-05 AND SUBSEQUENT APPEALS BEFORE THIS TRIBUNAL BY THE REVE NUE HAVE BEEN DISMISSED. FURTHER NO APPEAL WAS FILED BY THE REVENUE BEFORE THIS TRIB UNAL AGAINST THE DIRECTION OF THE LEARNED CIT(A) IN ASST YEAR 2004-05 AND THEREFORE T HE CONTENTION OF THE REVENUE THAT THE MATTER IS BEING FILED BEFORE HIGH COURT IN ALL THE YEARS IS INCORRECT. ACCORDINGLY, THE ASSESSEE PLEADED BEFORE THE LEARNED CIT(A) TO D IRECT THE AO TO RESTATE THE DEPRECIATION BASED ON THE WDV OF THE PRECEDING YEAR S. 9.2. THE LEARNED CIT(A) OBSERVED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISIONS OF THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR EARL IER YEARS IN ITA NO. 2302, 2303 AND 2356/KOL/2007 DATED 29.2.2008 FOR THE ASST YEARS 20 00-01 , 2001-02 AND 2002-03 RESPECTIVELY AND HELD THAT THE ASSESSEE IS ENTITLED FOR ADDITIONAL DEPRECIATION. THE LEARNED CITA DIRECTED THE LEARNED AO TO VERIFY THE ARITHMETICAL CORRECTNESS OF THE CLAIM IN THE DEPRECIATION CHART AND DIRECTED TO ALL OW THE CLAIM OF ADDITIONAL DEPRECIATION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. CIT(A) ERRED IN LAW AS WELL AS FACTS BY DELETING THE DISAL LOWANCE OF EXCESS DEPRECIATION CLAIM BY WAY OF REVISED RETURN BEING R ELIED UPON THE JUDGEMENT OF HON'BLE ITAT, KOLKATA AND LD. CIT(A)-V I, KOLKATA IN ASSESSEE'S OWN CASE OF EARLIER YEAR WITHOUT GOING T HROUGH THE MERIT OF THE CASE. 9.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THIS ISSUE IS SQUARELY COVERE D BY THE ORDERS OF THIS TRIBUNAL IN THE EARLIER YEARS AS STATED ABOVE AND ALSO BY THE DECIS ION OF THIS TRIBUNAL IN ITA NO. 443/KOL/2011 DATED 12.12.2011 AND ITA NO. 190/KOL/2 011 DATED 2.11.2011 FOR ASST YEARS 2006-07 AND 2007-08 RESPECTIVELY . RESPECTFU LLY FOLLOWING THE SAME , WE DO ITA NOS.930,931 & 782/KOL/2012- A-AM M/S. KESORAM I NDUSTRIES LTD 12 NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN THIS REGARD. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 782/KOL/2012 FOR THE A.Y 2005-06 IS ALLOWED FOR STATISTICAL PURPOSES ; APPEA L OF THE REVENUE IN ITA NO. 930/KOL/2012 FOR THE A.Y 2005-06 IS DISMISSED AND THE APPEAL OF THE REVENUE IN ITA NO. 931/KOL/2012 FOR THE A.Y 2005-06 IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 29-02- 2016 1.. THE APPELLANT: THE DEPUTY COMMISSIONER OF INCO ME TAX, CIR-5/ ADDL. CIT, RANGE-5, P-7 CHOWRINGHEE SQUARE, KOL-69. 4 TH FL., AAYKAR BHAWAN POORVA, 110 SHANTI PALLY, E.M B YE PASS, KOL-107. 2 THE RESPONDENT- M/S. KESORAM INDUSTRIES LIMITED BIRLA BUILDING, 8 TH FLOOR, 9/1 R.N MUKHERJEE ROAD, KOLKATA-700 001. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS SD/- ( N.V. VASUDEVAN, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 29 -02-2016 COPY OF THE ORDER FORWARDED TO:-