INDEX EQUITIES P.LTD, V. DCIT 2(2),

MA 180/MUM/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1157 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-10-2013
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 13-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 14-05-2013
• Court: TRIBUNAL
• Department Lawyers: D P SINGH
• Keywords: Depreciation; Opportunity of being heard; Capital expenditure
• Section: 32; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I , MUMBAI BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER M.A. NO. 180/MUM/2013 ( ARISING OUT OF ITA NO. 6159/MUM/2010) ASSESSMENT YEAR : 2007 - 08 M/S. IN DEX EQUITIES PVT. LTD. 7/10, BOTAWALA BLDG. 1 ST FLOOR, HORNIMAN CIRCLE, MU MBAI - 400 001 PAN : AAACI 2801 A VS. DCIT 2(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MADHUR AGARWAL RESPONDEN T BY : SHRI D.P. SINGH DATE OF HEARING : 18.10.2013 DATE OF PRONOUNCEMENT : 30 .10 .2013 O R D E R PER DR . S.T.M. PAVALAN , J M: THIS MISCELLANEOUS APPLICATION IS FI LED BY THE ASSESSEE ON 13.05.201 3 U/S 254 CLAUSE 2 OF THE INC OME TAX ACT SEEKING RECTIFICATION WITH REFERENCE TO GROUND S NO. 1 & 2 OF APPEAL ITA NO. 6159/MUM/2010 FOR THE A SSESSMENT YEAR 2007 - 08, WHICH HAS BEEN ADJUDICATED BY US VIDE ORDER DATED 27.02.2013 . 2. D URING THE PROCEEDING BEFORE US , SHRI MADHUR AGRAWAL, L D.C OUNSEL FOR THE ASSESSEE HAS BROUGHT OUR ATTENTION TO THE MISCELLANEOUS APPLICATION AND STATED THAT THERE IS NEED FOR MAKING A COUPLE OF RECTIFICATION S IN THE SAID ORDER OF THE TRIBUNAL DATED 27.02.2013. THE IMPUGNED RECTIFICATION S ARE REQUIRED TO BE DON E QUA THE GROUND S NO. 1 & 2 OF TH E APPEAL. T HE DETAILS OF RECTIFICATIONS AND THE DECISIONS ARE GIVEN IN THE SUCCEEDING PARAGRAPHS. 3. FIRST REQUEST FOR RECTIFICATION RELATES TO OUR ADJUDICATION QUA THE GROUND NO.1 OF THE APPEAL. IN THIS REGARD, IT IS TH E SUBMISSION OF THE ASSESSEE THAT F OR THE PURPOSE OF COMPUTING THE CAPITAL GAINS ON THE PROCEEDS OF TENANCY RIGHTS ON THE FLATS, THE WDV ON THE BLOCK OF EMBODIED FURNITURE AND FIXTURES OF THE FLAT SHOULD BE REDUCED. THE SAID M.A. NO. 180/MUM/2013 ( ARISING OUT OF ITA NO. 6159/MUM/2010) M/S. INDEX EQUITIES PVT. LTD. ASSESSMENT YEAR : 2007 - 08 2 SUBMISSION H AS NOT BEEN ACCEPT ED BY THE TRIBUNAL AND THE RELEVANT DECISION IS DISCUSSED IN PARA 7 TO 7.3 OF OUR ORDER DATED 27.2.2013. ABSENCE OF ANY REFERENCE IN THE TENANCY AGREEMENT IN THIS REGARD AND ASSESSEES FAILURE TO PRODUCE THE EVIDENCE , AMONG OTHERS THINGS, ARE THE REASONS FOR SUCH CONCLUSION AGAINST THE ASSESSEE. IN THIS REGARD, VIDE THE PRESENT MISCELLANEOUS APPLICATION, THE LD. COUNSEL NOW SUBMITS THAT THE ALTERNATIVE ARGUMENT FOR GRANT OF DEPRECIATION ON THE IMPUGNED BLOCK OF E MBODIED FURNITURE AND FIXTURES H AS NOT BEEN ADJUDICATED AND C ONSEQUENTLY, ASSESSEE IS DENIED OF THE RIGHTFUL CLAIM OF DEPRECIATION U/S 32 ON THIS BLOCK OF ASSETS. IN RESPECT OF H IS SUBMISSIONS RAISING OF AN ORAL GROUND BEFORE US, A SSESSEE FILED AN AFFIDAVIT DATED 9.10.2013 OF MR. JUGAL BAJAJ, DIREC TOR OF THE ASSESSEE - COMPANY AS WELL AS THE AFFIDAVIT OF LD COUNSEL FOR THE ASSESSEE MR. MADHU R AGARWAL, DATED 16.10.2013 AND HE READ OUT THE RELEVANT PARAS IN THIS REGARD. THUS, THE LD.COUNSEL IS OF THE OPINION THAT THE FAILURE OF THE TRIBUNAL TO ADJUDICA TE THE ALTERNATIVE ORAL SUBMISSION RAISED B Y THE LD. COUNSEL CONSTITUTES A MISTAKE APPARENT FROM THE RECORD, WHICH REQUIRES RECTIFICATION WITHIN THE MEANING OF SECTION 254(2) OF THE ACT. THE LD . COUNSEL FOR THE ASSESSEE REASONED THAT THE EMBODIED FURNITURE AND FIXTURES OF THE FLAT ARE INDEPENDENTLY ENTITLED FOR THE CLAIM OF DEPRECIATION U/S 32 OF THE ACT AND ENTRIES IN THE BOOKS . IF THEY ARE NOT ELIGIBLE FOR DEDU CTION U/S 48, THE SAME CONTINUES TO BE THE BUSINESS ASSET AND , INDEPENDENTLY ENTITLED FOR DEPRE CIATION. 4. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF THE TRIBUNAL AND MENTIONED THAT ANY AMENDMENT TO THE SAID ORDER OF THE TRIBUNAL WILL AMOUNT TO REVIEW , WHICH IS NOT PERMITTED UNDER THE LAW. 5. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. WE HAVE ALSO CONSIDERED THE CONTENTS OF THE AFFIDAVITS FILED BEFORE US. NOT H ING IS BROUGHT ON TO THE RECORD BY THE LD . DR TO SUGGEST THAT THE CONTENTS ARE NOT CORRECT. THE RELEVANT PARA IN THIS REGARD READS AS UNDER: I SAY THAT WITHOUT PREJUDICE TO THE AF ORESAID ARGUMENT, I HAD FURTHER ARGUED THAT IF THE BENCH WERE TO COME TO THE CONCLUSION THAT THE FURNITURE WAS NOT TRANSFERRED WITH THE SALE OF THE TENANCY RIGHT, THEN THE BLOCK OF FURNITURE AND FIXTURES COULD NOT BE REDUCED BY THE AMOUNT OF RS. 42,15,518/ - AND THE APPLICANT OUGHT TO BE ALLOWED DEPRECIATION ON SUCH FURNITURE AS IT CANNOT BE THAT FOR COMPUTING CAPITAL GAINS THE FURNITURE IS NOT TRANSFERRED, BUT FOR COMPUTING DEPRECIATION, THE SAME FURNITURE IS TRANSFERRED. 6. FROM THE ABOVE, IT IS EVIDENT THAT IT IS REASONABLE TO INFER THAT THE ASSESSEE S AR HAS MADE SUCH ARGUMENT BEFORE US AND THE SAME IS NOT ADJUDICATED AS EVIDENT FROM THE CONTENTS OF PARA 7.3 OF THE IMPUGNED ORDER OF THE TRIBUNAL. TH EREFORE, THE ARGUMENT OF M.A. NO. 180/MUM/2013 ( ARISING OUT OF ITA NO. 6159/MUM/2010) M/S. INDEX EQUITIES PVT. LTD. ASSESSMENT YEAR : 2007 - 08 3 THE LD. AR MADE IN THE MISCELL ANEOUS APPLICATION MERITS CONSIDERATION. ON ACCEPTING THE SAME, NOW WE ARE TO DECIDE IF SUCH A CLAIM OF DEPRECIATION U/S 32 OF THE ACT IS ALLOWABLE TO THE ASSESSEE OR NOT. IN THIS REGARD, WE HAVE PERUSED THE ORDER OF THE AO AS WELL AS THE LD. CIT (A) AND FIND THAT THERE IS NOT RELEVANT ADJUDICATION BY THE AUTHORITIES ON THE SPECIFIC ISSUE THAT THESE ASSETS ARE OTHERWISE ELIGIBLE FOR CLAIM OF DEPRECIATION. ALTHOUGH, THERE IS SOME REFERENCE OF THE LD. CIT (A) VIDE PARA 8 FOR NON - CLAIMING OF DEPRECIATIO N U/S 32(1)(III) OF THE ACT, THIS REFERENCE IS MADE IN THE CONTEXT OF CLAIM OF DEPRECIATION IN RESPECT OF MOVABLE FURNITURE AND NOT ON THE BLOCK OF EMBODIED FURNITURE AND FIXTURES. IN ALL FAIRNESS, WE ARE OF THE OPINION THAT THIS PART OF THE ISSUE SHOULD BE REM ANDED T O THE FILES OF THE AO FOR FRESH LOOK INTO THE MATTER BEFORE GRANT OF DEPRECIATION, IF ANY, IN ACCORDANCE WITH THE LAW. NEEDLESS TO EMPHASIS THAT THE AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7 . THE OTHER RECTIFICATION REQUEST RELATES TO GROUND NO. 2 OF THE MISCELLANEOUS APPLICATION . T HE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT HE HAS ARGUED THAT THE EXPENDITURE OF RS.5,91,360/ - INCURRED WITH RESPECT TO AN ASSET WHICH IS TRANSFERRE D DURING THE YEAR IS ALLOWABLE A S A REVENUE DEDUCTION DURING THE YEAR. WITHOUT PREJUDICE , IF THE SAME IS TREATED AS A CAPITAL EXPENDITURE , THEN IT OUGHT TO BE ALLOWED A COST OF IMPROVEMENT WHILE COMPUTING THE CAPITAL GAIN ON THE SALE OF TENANCY RIGHT. IT IS RELEVANT TO NOTE THAT WHILE DIS PO SING GROUND NO. 2 ON THE ISSUE OF DISALLOWANCE OF ADV ANCE WRITTEN OF F AMOUNTING TO RS.5,91,360/ - , THE ORDER OF THE LD.CIT(A) HAS BEEN CONFIRMED BY US ON THE GROUND THAT THE ASSESSEE HAS NO T PRODUCED ANY EVIDENCE BEFORE THE AO AND THE LD.CIT(A) FOR NON RECE IPT OF BILLS AND THE EFFORTS TAKEN TOWARDS THE RECEIPT OF THE SAME . A LSO , NO MATERIAL HAS BEEN BROUGHT ON RECORD FROM THE PARTIES IN RES PECT OF WHICH ADVANCE IS WRITTEN OF F WI TH REGARD TO NON SUBMISSION OF THE BILLS BY THEM FOR SUCH A LONG PERIOD. FURTHER, IT HAS BEEN FO UND THAT THE EXPENDITURE WRITTEN O F F RELATES TO THE FINANCIAL YEAR 2001 - 02. THUS , FOR WAN T OF EVIDENCES AND THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS , THE C ONCLUSION OF THE LD.CIT(A) HAVE BEEN CONFIRMED BY THE TRIBUNAL. THE CONTENTS OF P ARA 8 OF THE ORDER OF THE TRIBUNAL DATED 27. 0 2.13 ARE RELEVANT. THEREFORE, THE ISSUES RAISED BY THE ASSESSEE IN THIS REGARD IN THE MISCELLANEOUS APPLICATION IS UNSUSTAINABLE CONSIDERING THE LIMITED SCOPE PROVIDED TO THE TRIBUNAL UNDER THE PROVISIONS OF SE C TION 254 CLAUSE 2 OF THE ACT . THEREFORE, THIS PART OF THE M.A. IS DISMISSED. M.A. NO. 180/MUM/2013 ( ARISING OUT OF ITA NO. 6159/MUM/2010) M/S. INDEX EQUITIES PVT. LTD. ASSESSMENT YEAR : 2007 - 08 4 8 . IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN CO URT ON THIS 30 TH DAY OF OCTOBER , 2013. SD/ - SD/ - ( D. K ARUNAKARA RAO ) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30 .10 . 2013. * S RIVASTAVA COPY TO: THE APPELLANT THE RESPON DENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR I BENCH // TRUE COPY // BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.