Appeal details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 86209 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-03-2015
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
24-03-2015
Assessment Year
2009-2010
Appeal Filed On
27-09-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO.980/CHD/2012 ASSESSMENT YEAR: 2008-09 M/S. JCT ELECTRICALS LIMITED, VS. THE DCIT A-32, INDUSTRIAL AREA CIRCLE 6(1) PHASE VILL, MOHALI MOHALI PAN NO. AAACJ4084A & ITA NOS. 981 & 982/CHD/2012 ASSESSMENT YEAR: 2009-10 M/S. JCT ELECTRICALS LIMITED, VS. THE ADDL. CIT A-32, INDUSTRIAL AREA RANGE VI PHASE VILL, MOHALI MOHALI PAN NO. AAACJ4084A ASSESSEE BY : SHRI. S.K. SOOD RESPONDENT BY : SHRI. S.K. MITTAL DATE OF HEARING : 24/03/2015 DATE OF PRONOUNCEMENT : 26/03/2015 ORDER PER H.L.KARWA, V.P THESE THREE APPEALS BY THE ASSESSEE WERE HEARD ALTO GETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. ITA NO. 980/CHD/2012 2. FIRSTLY, WE WILL TAKE UP ITA NO. 980/CHD/2012 RE LATING TO THE AY 2008-09. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS:- 1 . THE CIT(APPEALS) HAS ERRED IN DISALLOWING DEPRECI ATION AMOUNTING TO RS. 49,52,380/- ON ASSETS HELD BY THE COMPANY AT THEIR MOHALI UNIT EVEN THOUGH SOME PRODUCTION TOOK PLACE DURING THE YEAR, THE ASSETS ARE 2 OWNED BY THE ASSESSEE COMPANY AND DEPRECIATION IS C OMPUTED ON THE BLOCK OF ASSETS METHOD ON THE MOHALI AND VADODARA UNITS OF THE COMPANY. 2. THE CIT(APPEALS) HAS ERRED IN DISALLOWING MEMBER SHIP FEES PAID TO CLUBS, IN DELHI AND ONLY OF A MINOR AMOUNT TO CLUBS IN CHA NDIGARH AMOUNTING TO RS. 2,14,179 ON THE GROUNDS THAT THE MOHALI UNIT W AS NON-FUNCTIONAL EVEN THOUGH THE VADODARA UNIT WAS OPERATIONAL AND THE EX PENSE RELATED MAINLY TO THEM . 3. GROUND NO. 1 OF THE APPEAL RELATES TO DISALLOWAN CE OF DEPRECIATION AMOUNTING TO RS. 49,52,380/- ON ASSETS HELD BY THE COMPANY AT THEIR MOHALI UNIT. THE COMPANY IS IN THE BUSINESS OF MANUFACTURING OF COLOUR PICTURE TUBES OF VARIOUS SIZES AND HAVE TWO MANUFACTURING UNITS SITU ATED AT MOHALI, PUNJAB AND VADODARA, GUJARAT. THE OPERATIONS AT THE MOHALI UNI T OF THE COMPANY HAVE BEEN SUSPENDED SINCE MAY 2001 ON ACCOUNT OF LOSES A ND FINANCIAL CONSTRAINTS ULTIMATELY LEADING TO LOCKOUT ON 13 MARCH 2002. TH E MATTER WAS ULTIMATELY REFERRED TO BIFR. THE AO DISALLOWED DEPRECIATION ON MOHALI UNIT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE AO OB SERVED THAT SIMILAR DISALLOWANCES WERE ALSO MADE IN THE ASSESSMENT YEAR S 2004-05 AND 2005-06 WHICH HAVE BEEN CONFIRMED BY THE TRIBUNAL VIDE ITS ORDER DT. 30/04/2009 IN ITA NO. 134 & 135/CHANDI/2009. 4. ON APPEAL, THE CIT(A) FOLLOWING THE ORDER OF HIS PREDECESSOR PASSED IN ASSESSEES OWN CASE FOR AY 2007-08, CONFIRMED THE D ISALLOWANCE OF DEPRECIATION CLAIMED IN RESPECT OF MOHALI UNIT, AND HENCE THE AS SESSEE HAS PREFERRED THE INSTANT APPEAL BEFORE THIS BENCH OF THE TRIBUNAL. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE OBSER VE THAT THE ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE R EVENUE BY THE ORDER OF ITAT, CHANDIGARH BENCH B, CHANDIGARH DT. 31/10/2014 IN ITA NO. 550/CHD/2011 IN ASSESSEES OWN CASE RELATING TO AY 2007-08. WHILE D ECIDING A SIMILAR ISSUE, THE TRIBUNAL HELD AS UNDER: THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED TH AT IN THE CASE OF SAME ASSESSEE FOR ASSESSMENT YEAR 2004-05, THE HONBLE P UNJAB & HARYANA HIGH COURT IN ITA NO. 161 OF 2010 DATED 31.1.2011 DISMISSED SI MILAR GROUND OF APPEAL OF THE ASSESSEE. THE ISSUE IS COVERED AGAINST THE ASSESSEE . THE COPY OF THE ORDER IS PLACED ON RECORD. CONSIDERING THE ABOVE AND SUBMISS IONS OF THE LEARNED COUNSEL FOR THE ASSESSEE, IT IS CLEAR THAT THE HONBLE PUNJ AB & HARYANA HIGH COURT HAS ALREADY DISMISSED THE APPEAL OF THE ASSESSEE ON IDE NTICAL ISSUE IN THE PRECEDING ASSESSMENT YEAR 2004-05. THEREFORE, THERE IS NO MER IT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 6. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THA T OF AY 2007-08, AND WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL PA SSED IN ITA NO. 550/CHD/2011 RELATING TO AY 2007-08, UPHOLD THE ORDER OF THE CIT (A) AND DISMISS THE GROUND NO. 1 OF THE APPEAL. 3 7. GROUND NO. 2 OF THE APPEAL RELATES TO DISALLOWAN CE OF MEMBERSHIP FEES PAID TO CLUBS. THIS ISSUE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF ITAT CHANDIGARH BENC H B, CHANDIGARH IN ASSESSEES OWN CASE IN ITA NO. 550/CHD/2011 RELATIN G TO THE AY 2007-08. WHILE ALLOWING A SIMILAR CLAIM OF THE ASSESSEE, THE TRIBU NAL HELD AS UNDER: ON GROUND NO. 2, THE ASSESSEE CHALLENGED THE ORDER OF THE LEARNED CIT(APPEALS) IN DISALLOWING MEMBERSHIP FEE PAID TO THE CLUB IN DELHI AND ONLY OF A MINOR AMOUNT TO CLUB IN CHANDIGARH AMOUNTING TO R S. 1,99,381/-. THE ASSESSEE CONTENDED BEFORE THE CIT(APPEALS) THAT DESPITE MOHA LI UNIT WAS CLOSED, THE ASSESSEE MADE EFFORTS TO REVIVE IT AND IN THIS CONN ECTION, EXECUTIVES OF THE ASSESSEE COMPANY IN CHANDIGARH UTILIZED THE MEMBERS HIP OF THE CHANDIGARH CLUB FOR FURTHERING THE BUSINESS OF THE ASSESSEE CO MPANY. THE LEARNED CIT(APPEALS), HOWEVER, FOLLOWING HIS ORDER FOR ASSE SSMENT YEAR 2006-07 DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOW THE ISSUE IS COVERED BY THE JUDG MENT OF FULL BENCH OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. GROZ BECKERT ASIA LTD., 31 TAXMAN. COMPENSATION 155(P&H) IN WHICH IT WAS HELD THAT CORPORATE MEMBERSHIP HAD ADVANTAGE TO THE ASSESSEE FOR LIMITE D PERIOD FOR RUNNING OF BUSINESS AND BENEFIT OF ASSESSEE AND, THEREFORE, EX PENDITURE CANNOT BE TREATED AS CAPITAL ASSET. THE LEARNED D.R. FOR THE REVENUE DID NOT DISPUTE THIS PROPOSITION. FOLLOWING THE JUDGMENT OF THE HONBLE PUNJAB & HARY ANA HIGH COURT ABOVE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ELETE THE ADDITION. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL, WE ALLOW THE GROUND NO. 2 OF THE APPEAL . ITA NO. 981/CHD/2012 8. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THE CIT(APPEALS) HAS ERRED IN DISALLOWING DEPRECIAT ION AMOUNTING TO RS. 46,69,522/- ON ASSETS HELD BY THE COMPANY AT THEIR MOHALI UNIT EVEN THOUGH SOME PRODUCTION TOOK PLACE DURING THE YEAR, THE ASS ETS ARE OWNED BY THE ASSESSEE COMPANY AND DEPRECIATION IS COMPUTED ON TH E BLOCK OF ASSETS METHOD ON THE MOHALI AND VADODARA UNITS OF THE COM PANY. 2. THE CIT(APPEALS) HAS ERRED IN DISALLOWING MEMBERSHI P FEES PAID TO CLUBS, IN DELHI AND ONLY OF A MINOR AMOUNT TO CLUBS IN CHA NDIGARH AMOUNTING TO RS. 2,23,237 ON THE GROUNDS THAT THE MOHALI UNIT WAS NO N-FUNCTIONAL EVEN THOUGH THE VADODARA UNIT WAS OPERATIONAL AND THE EXPENSE R ELATED MAINLY TO THEM. 9. IN VIEW OF OUR FINDINGS GIVEN IN RESPECT OF GROU ND NO. 1 OF THE APPEAL IN ITA NO. 980/CHD/2012 RELATING TO AY 2008-09, THIS G ROUND OF THE APPEAL IS DISMISSED. 10. AS REGARDS GROUND NO. 2 OF THE APPEAL, WE OBSER VE THAT THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THAT OF AY 2008-09 AND THE ISSUE INVOLVED IS IDENTICAL, AND THEREFORE, IN VIEW OF OUR FINDINGS GIVEN IN RES PECT OF GROUND NO. 2 IN ITA NO. 980/CHD/2012 RELATING TO AY 2008-09, WE ALLOW GROUN D NO. 2 OF THE APPEAL. 4 982/CHD/2012 11. THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS APPEAL READS AS UNDER: 1. THE CIT(APPEALS) HAS ERRED IN TAKING A NARROW VIEW OF THE WORDS TO CONSIDER USED BY THE BIFR IN THE REHABILITATION SC HEME SANCTIONED BY THEM IN WHICH THEY HAVE ASKED THE TAX DEPARTMENT T O CONSIDER EXEMPTING THE COMPANY FROM THE APPLICATION OF FBT W HEREAS WHERE WORDS ARE CAPABLE OF ALTERNATE MEANING, THE INTERPR ETATION WHICH IS FAVOURABLE TO THE APPELLANT COMPANY SHOULD ORDINARI LY BE FOLLOWED. THAT BY MAKING AN ADVERSE INTERPRETATION THE CIT(A) WILL HAMPER, IF NOT TOTALLY FRUSTRATE, THE INTENTION OF BIFR TO REHABILITATE TH E COMPANY. 12. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE B Y THE DECISION OF ITAT CHANDIGARH BENCH B, CHANDIGARH IN ASSESSEES OWN CASE IN ITA NO. 551/CHD/2011 AND ITA NO. 729/CHD/2011 RELATING TO A SSESSMENT YEARS 2007-08 AND 2008-09 RESPECTIVELY. WHILE DECIDING A SIMILAR ISSUE, THE TRIBUNAL HELD AS UNDER : ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESS EE ARGUED THAT THE INCOME TAX DEPARTMENT SHOULD HAVE GRANTED EXEMPTION TO THE ASS ESSEE AS WAS DIRECTED BY THE BIFR. HOWEVER, HE HAS FAIRLY CONCEDED THE SO MU CH APPROVAL OF EXEMPTION OF FBT TAX HAS YET BEEN GRANTED BY THE INCOME TAX DEPA RTMENT. IT, THEREFORE, APPEARS THAT THE ASSESSEE MAY HAVE SOME OTHER REMED Y UNDER DIFFERENT LAWS BUT IN THE PROCEEDINGS BEFORE THE ASSESSING OFFICER IN CHARGING FBT TAX, NO SATISFACTORY EXPLANATION HAS BEEN FILED AND NO ORDE R FROM CBDT HAS BEEN FILED TO SHOW THAT ANY EXEMPTION HAS BEEN GRANTED TO THE ASS ESSEE COMPANY FROM PAYING FBT OR ANY OTHER TAX UNDER THE INCOME TAX AC T. ON THE FACE OF IT, THE APPEAL OF THE ASSESSEE WOULD HAVE NO MERIT AND IS L IABLE TO BE DISMISSED. THE ASSESSEE SEEKS EXEMPTION FORM PAYING TAX ON FBT, WH ICH IS NOT WITHIN THE POWERS OF THE ASSESSING OFFICER OR THE LEARNED CIT (APPEAL S). THE AUTHORITIES BELOW WERE, THEREFORE, JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. THE APPEAL OF THE ASSESSEE HAS NO MERIT AND THE SAME IS DISMISSED. 13. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO TH AT AY 2007-08 AND 2008-09. THE ISSUE INVOLVED IS ALSO IDENTICAL. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL DT. 31/10/20014 PASSED IN ITA NO. 551/CHD/2011 & IT A NO. 729/CHD/2011, WE DISMISS THE GROUND OF APPEAL RAISED BY THE ASSESSEE . 14. IN THE RESULT APPEALS OF THE ASSESSEE IN ITA NO . 980/CHD/2012 AND ITA NO. 981/CHD/2012 ARE PARTLY ALLOWED, WHILE APPEAL OF TH E ASSESSEE IN ITA NO. 982/CHD/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/03/2015 SD/- SD/- (T.R. SOOD) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 26/03/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR
