The DCIT, Circle-1, Surat V. M/s. Envision Enviro Engineers Pvt.Ltd., Surat

ITA 984/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62933 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: MRS URVASHI SHODHAN
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

ITA NO 984/ AHD/2012 A.YR.. 2005 -06 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AH MEDABAD (BEFORE SHRI MUKUL KR.SHRAWAT JM & SHRI ANIL CHATUR VEDI A.M.) I.T.A. NO.984 /AHD/2012. (ASSESSMENT YEAR: 2005 -06) THE DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-1, ROOM NO.108, AAYAKAR BHAVAN, MAJURA GATE, SURAT. (APPELLANT) VS. M/S. ENVISION ENVIRO ENGINEERS PVT.LTD., 208,G-TOWER, SHANKHESHWAR COMPLEX, MAJURA GATE, SURAT. (RESPONDENT) PAN: AAACE9785F APPELLANT BY : MR. B. L. YADAV RESPONDENT BY : MRS. URVASHI SHODHAN. ( )/ ORDER DATE OF HEARING : 5-7-2012 DATE OF PRONOUNCEMENT : 7-9-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF LD. CIT (A)-I, SURAT DATED 10-2-2012 FOR THE ASSESSMENT YEAR 2005- 06. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A)-I, SURAT HAS ERRED IN DELETING PENALTY U/S. 271(1)(C) OF RS.9,41,599/- WITHOUT APPRECIATING THE FACTS THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, AND ALSO DURING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE HAS NOT FILED ANY EXPLANAT ION/JUSTIFICATION ITA NO 984/ AHD/2012 A.YR.. 2005 -06 2 OF THEIR CLAIM AND HAVE FURNISHED INACCURATE PARTIC ULARS TO CLAIM DEDUCTION U/S. 80IAA OF THE I.T. ACT. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF SOLID WASTE MANAGEMENT. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31-10-2005 DECLARING TOTAL INCOME AT RS.64,42,040/-.THE ASSESS MENT UNDER SECTION 143(3) WAS COMPLETED ON 17-12-2007 DETERMINING TOTA L INCOME AT RS.1,21,40,190/-. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE HAS NOT CLAIMED DEPRECIAT ION CORRECTLY FROM THE BEGINNING OF THE PROJECT AND THEREBY WORKING THE DE DUCTION U/S. 80IA WAS WRONG. THE ASSESSEE SUBMITTED BEFORE THE A.O. THAT THE DATE OF COMMENCEMENT OF OPERATION BY THE UNDERTAKING WAS 1- 1-2003 AND THE FIRST YEAR OF THE OPERATION THEREFORE WAS A.Y. 2003-04 BU T THE ASSESSEE HAS CHOSEN THE INITIAL YEAR TO BE F.Y. 2005-06. THE A.O . DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE CHOICE OF INITIAL YEAR IS ONLY FOR MAKING THE CLAIM OF DEDUCTION U/S. 80IA AN D NOT FOR COMPUTING BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION. ACCORDINGLY THE A.O. DISALLOWED THE EXCESS DEDUCTION OF RS.25,73,208/- C LAIMED U/S. 80IA OF THE ACT. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT (A). THE DISALLOWANCE WAS UPHELD BY LD. CIT (A). IT IS ON THE AFORESAID D ELETION OF EXCESS DEDUCTION PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WAS INITIATED FOR CONCEALMENT OF INCOME BY FURNISHING INACCURATE PART ICULARS. BEFORE CIT (A) IN THE MATTER WITH REFERENCE TO PENALTY, IT WAS SUB MITTED THAT THE A.O. HAS ALLOWED THE CLAIM OF THE ASSESSEE U/S. 80IA IN A.Y. 2004-05 VIDE ORDER DATED 9-11-2006.THE ASSESSEE ALSO SUBMITTED THAT TH E CASE OF M. PALLONJI & CO. VS. JCIT (2006) (6 SOT 287) A SIMILAR VIEW WA S TAKEN AND ACCORDINGLY THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT DEDUCTION IS ITA NO 984/ AHD/2012 A.YR.. 2005 -06 3 ALLOWABLE TO THE EXTENT IT CLAIMED AND THERE WAS NO CONCEALMENT ON THE PART OF THE ASSESSEE. CIT (A) ACCEPTED THE CONTENTIONS O F ASSESSEE. CIT (A) HELD THAT THE CASE OF THE ASSESSEE FALLS UNDER EXPL ANATION (1B) TO SECTION 271(1)(C ) OF THE I.T. ACT. ACCORDING TO HIM THE S ITUATION IN WHICH THE DEEMED CONCEALMENT COULD BE INVOKED IS WHEN THE ASS ESSEE FAILS TO PROVE THAT ITS EXPLANATION IS BONA FIDE AND ALL THE MATER IAL FACTS WERE DISCLOSED. IN THE CASE OF THE ASSESSEE SINCE HIS CLAIM WAS ALLOWE D IN A.Y. 2004-05 AND THERE WERE SOME JUDICIAL PRONOUNCEMENTS IN ITS FAVO UR HE HELD THAT THE ASSESSEES EXPLANATION WAS BONAFIDE AND THERE WAS N O CONCEALMENT OF MATERIAL FACTS AND ACCORDINGLY HE DELETED THE PENAL TY. 4. THE REVENUE BEING AGGRIEVED BY THE ORDER OF CIT (A) IS NOW IN APPEAL BEFORE US. 5. BEFORE US THE LD. D.R. SUBMITTED THAT THE A.O. H AD NOTICED THAT THE ASSESSEE HAS NOT CLAIMED DEPRECIATION CORRECTLY FRO M THE BEGINNING OF THE PROJECT. THE ASSESSEE HAD SUBMITTED THAT THE DATE O F COMMENCEMENT OF THE OPERATION BY THE ASSESSEE IN THE PRESENT CASE W AS 1-1-2003 AND THE FIRST YEAR OF OPERATION WAS A.Y. 2003-04 BUT THE AS SESSEE HAS CHOSEN INITIAL YEAR TO BE F.Y. 2005-06. IT WAS SUBMITTED THAT CHOI CE OF INITIAL YEAR IS ONLY FOR TAKING THE DEDUCTION AND NOT FOR COMPUTING THE BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION. THE LAW PROVIDES THE A SSESSEE TO CHOOSE ITS INITIAL YEAR TO CLAIM DEDUCTION U/S. 80IA BUT THE C ARRY FORWARD OF LOSS AND UNABSORBED DEPRECIATION IS NOT THE CHOICE OF THE AS SESSEE AND IT HAS TO BE WORKED OUT FROM THE BEGINNING OF THE PROJECT. IN VI EW OF THE CLEAR PROVISIONS OF THE LAW, A.O. HAD RIGHTLY DISALLOWED THE DEDUCTI ON CLAIMED U/S. 80IA OF THE ACT. HE FURTHER SUBMITTED THAT DURING PENALTY P ROCEEDINGS THE ASSESSEE ITA NO 984/ AHD/2012 A.YR.. 2005 -06 4 HAD NOT FILED ANY EXPLANATION OR JUSTIFICATION WHIC H CLEARLY SUGGESTS THAT THE ASSESSEE HAS DELIBERATELY NOT CLAIMED THE CORRECT A MOUNT OF DEPRECIATION WITH THE INTENTION TO REDUCE ITS TAXABLE INCOME. IT WAS THUS A CLEAR CASE WHERE THE ASSESSEE HAS FURNISHED INACCURATE PARTICU LARS AND THEREBY CONCEALED INCOME TO THE EXTENT OF RS.25,73,208/- BY CLAIMING DEDUCTION AND AS SUCH A.O. HAS RIGHTLY LEVIED THE PENALTY. 6. ON THE OTHER HAND LD. A.R. SUBMITTED THAT THE DI SPUTE IS WITH RESPECT TO THE METHOD OF CLAIM OF DEDUCTION UNDER SECTION 8 0IA. HE POINTED OUT TO THE FACT THAT IN ASSESSEES OWN CASE IN ITA NO.2902 /AHD/2008 FOR A.Y. 2005-06 CO-ORDINATE BENCH OF AHMEDABAD TRIBUNAL HAD IN THE QUANTUM PROCEEDINGS ALLOWED THE ASSESSEES APPEAL BY HOLDIN G AS UNDER: THE A.O. HAS TAKEN THE FIGURE OF THE INCOME AS PER THE RETURN AND THEN ADDED THE DISALLOWANCE OF DEDUCTION U/S. 80IA OF THE ACT. THIS FACT HAS ALSO TO BE LOOKED INTO BY LD. CIT (A) LAST LY, WE WANT TO PLACE ON RECORD THAT A DECISION OF HONBLE MADRAS HIGH CO URT PRONOUNCED IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LT D. VS. ACIT IN TAX CASE REPORTED AT (2010) 231 CTR (MAD.)368/340 I TR 470 AND AN ORDER OF ITAT MUMBAI IN M. PALLONJI & CO. (P) LTD. (2006) 6 SOT 287 HAVE BEEN CITED, HOWEVER, THESE DECISIONS WERE NOT AVAILABLE WHEN THE FIRST APPEAL WAS DECIDED. DUE TO THIS REASON AS WELL, WE DEEM IT PROPER TO REFER THIS ISSUE BACK TO THE STAGE OF CIT (A) TO RECONSIDER AS PER LAW, NEEDLESS TO SAY AFTER PROVIDING ADEQUATE O PPORTUNITIES OF HEARING TO BOTH THE PARTIES. RESULTANTLY, THIS GROU ND OF THE ASSESSEE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPO SES. 7. THUS IT WAS SUBMITTED BY THE ASSESSEE THAT IT WA S UNDER BONA FIDE BELIEF THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION AS CLAIMED BY IT IN VIEW OF THE DECISIONS IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ITA NO 984/ AHD/2012 A.YR.. 2005 -06 5 ACIT AND M. PALLONJI & CO. (P) LTD.(SUPRA) S INCE THERE WERE TWO POSSIBLE VIEWS NO PENALTY IS LEVIABLE IN THE CASE OF ASSESSE E. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE WE ARE REQUIRED TO EXAMINE AS T O WHETHER ON THE AFORESAID FACTS PENALTY PROVISIONS CAN BE INVOKED I N THE CASE OF THE ASSESSEE AND WHETHER THE ASSESSEES CASE FALLS WIT HIN THE AMBIT OF THE EXPLANATION TO SECTION 271(1)(C) SO AS TO LEVY PENA LTY. 9. PART-B OF THE EXPLANATION TO SECTION 271(1)(C) W OULD BE APPLICABLE ONLY IF TWO CONDITIONS ARE SATISFIED I.E. WHERE THE ASSESSEE IS UNABLE TO SUBSTANTIATE HIS EXPLANATION AND ALSO UNABLE TO PRO VE THAT THE EXPLANATION IS BONAFIDE. IF THE ASSESSEE IS ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME HAVE BEEN DI SCLOSED THE ASSESSEES CASE WILL NOT FALL WITHIN PART-B OF THE EXPLANATION . 10. SEEN IN THE LIGHT OF ABOVE, THE FACTS OF THE PR ESENT CASE, ARE THAT THE ASSESSEE, SUBMITTED AN EXPLANATION WITH RESPECT TO ITS CLAIM OF DEDUCTION U/S. 80IA. THE ASSESSEE HAD RELIED ON THE DECISION OF HIGH COURT AND A TRIBUNAL TO JUSTIFY ITS CLAIM. THE ASSESSEE HAD ALS O OFFERED EXPLANATION BY FURNISHING THE NECESSARY DETAILS AND HAD ALSO SUBST ANTIATED ITS CLAIM. THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE FAL SE BY REVENUE. CIT (A) HAS ALSO GIVEN A FINDING THAT ASSESSEES CLAIM WAS ALLOWED IN ASSESSMENT YEAR 2004-05 AND THERE WERE JUDICIAL PRONOUNCEMENTS IN ASSESSEES FAVOUR. IN VIEW OF THESE FACTS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT (A) AND THUS UPHOLD HIS ORDER. THUS THE APP EAL OF REVENUE IS DISMISSED. ITA NO 984/ AHD/2012 A.YR.. 2005 -06 6 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 7 - 9 - 2012. SD/- SD/- (MUKUL KUMAR SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOU NTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-I, SURAT. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA NO 984/ AHD/2012 A.YR.. 2005 -06 7 1.DATE OF DICTATION 20 - 7 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 1,14,24 / 8 / 2012 MEMBER .OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 5 - 9 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 7 - 9 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 7 - 9 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 - 9 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..