MIRC ELECTRONICS, V. D.C.I.T.-C.C.37,

MA 205/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 7264 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 11-11-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 30-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALEXANDER CHANDY
• Assessee Lawyers: ARVIND SONDE
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E,MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI R.K. PANDA (A M) M.A.NO.205/MUM/2011 (ARISING OUT OF I.T.A.NO.4017/MUM/2001 (A.Y. 1997-98) M/S. MIRC ELECTRONICS LTD., 13-A, NAND BHAWAN, INDUSTRIAL ESTATE, MAHAKALI CAVES ROAD, ANDHERI (E), MUMBAI-400 003. PAN:AAACM 8055 A VS. DY. COMMR. OF INCOME-TAX, CENT. CIR. 37, MUMBAI. APPLICANT RESPONDENT APPLICANT BY SHRI ARVIND SONDE. RESPONDENT BY SHRI A LEXANDER CHANDY. DATE OF HEARING 11 - 11 - 2011 DATE OF PRONOUNCEMENT 16 - 11 - 2011 O R D E R PER D.K. AGARWAL, JM : THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSE E IS DIRECTED AGAINST THE ORDER PASSED BY THE TRIBUNAL IN ITA NO.4017/MUM/200 1 FOR THE ASSESSMENT YEAR 1997-98 DATED 25-09-2007. 2. THE ASSESSEE IN ITS MISC. APPLICATION DATED 25-0 3-2011, INTER ALIA, STATED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE HAS CLAIMED DEPRECIATION ON PLANT & MACHINERY OF VASAI UNIT AT RS.1,15,10,4 83/-. IT WAS EXPLAINED BY THE ASSESSEE TO THE LOWER AUTHORITIES THAT THE SAID MAC HINERIES WERE USED IN THE EARLIER YEARS AND DURING THE YEAR UNDER CONSIDERATI ON DUE TO CERTAIN DISPUTES NO M.A.NO.205/MUM/2011 MIRC ELECTRONICS LTD. 2 MANUFACTURING ACTIVITIES COULD BE CARRIED OUT IN TH E SAID UNIT AND ACCORDINGLY THE MACHINERIES WERE NOT USED DURING THE YEAR UNDER CON SIDERATION. IT WAS FURTHER EXPLAINED THAT EVEN IF THE MACHINERIES WERE NOT ACT UALLY USED, THE SAID MACHINERIES WERE READY TO USE AND DEPRECIATION ON T HE SAME IS ALLOWABLE. MOREOVER, WITH THE CONCEPT OF BLOCK OF ASSETS, IT IS NOT NECESSARY TO SEGREGATE THE ASSETS WHICH WERE USED EARLIER AND NOT USED DUR ING THE YEAR UNDER CONSIDERATION. HOWEVER, THE AO DISALLOWED THE DEPRE CIATION ON THE GROUND THAT THE SAID PLANT & MACHINERY HAVE NOT BEEN USED DURIN G THE YEAR UNDER CONSIDERATION. ON APPEAL, THE LD. CIT(A), FOR THE S AME REASONS, UPHELD THE DISALLOWANCE MADE BY THE AO. ON FURTHER APPEAL BEFO RE THE TRIBUNAL, THE ASSESSEE, WHILE REITERATING THE SAME SUBMISSIONS, F URTHER SUBMITTED THAT ONCE THE ASSETS FORMED PART OF THE BLOCK, IT LOSES ITS INDIVIDUAL IDENTITY. IT WAS FURTHER SUBMITTED THAT THE SAID GROUND IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 1988-89, 1 999-2000 AND 2000-01. IN THE REJOINDER, ON THE DECISION CITED BY THE LD. D.R . IN THE CASE OF DINESH KUMAR GULABCHAND AGRAWAL (2004) 267 ITR 192(BOM), IT WAS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE IN PARA 12 OF THE TRIBUNA L ORDER THAT IN THE SAID CASE THE ASSESSEE HAS SET UP HIS INDUSTRY AND THE PLANTS WERE NOT USED AND FOR THIS REASON DEPRECIATION WAS NOT ALLOWED BUT, IN THE INS TANT CASE, THE PLANT & MACHINERY WERE USED IN EARLIER YEAR BUT ON ACCOUNT OF DISPUTE IT COULD NOT BE USED. AS SUCH, THE IMPUGNED ISSUE CANNOT BE CALLED TO BE COVERED BY THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT. HOWE VER, THE TRIBUNAL HELD THAT MERE READY FOR USE WOULD NOT SUFFICE FOR THE CLAIM OF DEPRECIATION AND SINCE THE MACHINERIES WERE NOT USED ON ACCOUNT OF CLOSURE OF BUSINESS, THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE AFORESAID CASE AND ACCORDINGLY CONFIRMED THE M.A.NO.205/MUM/2011 MIRC ELECTRONICS LTD. 3 ORDER OF CIT(A). IT WAS FURTHER SUBMITTED THAT SINC E THE DECISION OF DINESH KUMAR GULABCHAND AGRAWAL (SUPRA) HAS BEEN DISTINGUISHED B Y THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. G.R. SHIPPING LTD . IN ITA NO.598/MUM/2009 DATED 28-07-2009 AND HAS ALLOWED THE DEPRECIATION O N THE BARGE THOUGH IT WAS NOT USED EVEN FOR A SINGLE DAY DURING THE RELEVANT ASSESSMENT YEAR. THE HONBLE HIGH COURT, AFTER ANALYZING THE CASE OF DINESH KUMA R GULABCHAND AGRAWAL (SUPRA), HAS RENDERED THE JUDGMENT IN THE ASSESEES FAVOUR. THUS, THE SAID CASE IS SQUARELY APPLICABLE TO THE ASSESSEES CASE. IT W AS FURTHER SUBMITTED THAT THE TRIBUNAL, VIDE ITS ORDER DATED 20-10-2009 IN THE AS SESSEES OWN CASE FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04, HAS ALLOWED D EPRECIATION ON PLANT & MACHINERY OF VASAI UNIT BY FOLLOWING THE DECISION I N THE CASE OF G.R. SHIPPING LTD. (SUPRA). IT WAS, THEREFORE, SUBMITTED THAT THE RE IS A MISTAKE IN THE ORDER PASSED BY THE TRIBUNAL AND, THEREFORE, THE ORDER PA SSED BY THE TRIBUNAL BE RECTIFIED. 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITS THAT THE ASSESSEE COMPANY HAS NOT FILED AN APPEAL BEFORE THE HONBLE HIGH COURT ON THE SAID ISSUE RELATING TO DEPRECIA TION ON VASAI UNIT AMOUNTING TO RS.1,15,10,483/- FOR THE YEAR UNDER CONSIDERATION A ND IN SUPPORT HE PLACED ON RECORD AN AFFIDAVIT DATED 22-09-2011 OF SHRI MANISH DESAI, VICE PRESIDENT (FINANCE) OF THE ASSESSEE COMPANY. HE FURTHER SUBMI TS THAT THE TRIBUNAL, WHILE APPLYING THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF DINESH KUMAR GULABCHAND AGRAWAL (SUPRA), HAS NOT CONSIDERED THE MAIN DISTINGUISHING FEATURE THAT IS IN THAT CASE THE ASSESSEE HAS SET UP HIS I NDUSTRY AND THE PLANTS WERE NOT PUT TO USE, WHEREAS IN THE ASSESSEES CASE, THE IND USTRY WAS ALREADY SET UP AND THE PLANT & MACHINERY WERE IN USED AND THE DEPRECIA TION ON PLANT & MACHINERY WAS ALLOWED IN EARLIER YEARS AND IN SUBSEQUENT YEAR S ALSO. IT COULD NOT BE USED IN M.A.NO.205/MUM/2011 MIRC ELECTRONICS LTD. 4 THE YEAR UNDER CONSIDERATION ON ACCOUNT OF DISPUTE WHICH LATER ON WAS SETTLED BY THE HONBLE HIGH COURT. THEREFORE, THE DECISION REL IED ON BY THE TRIBUNAL IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND THE ASSESSEES CASE IS FULLY COVERED BY THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN G.R. SHIPPING LTD. (SUPRA). IT WAS FURTHER SUBMITTED THAT THE SUB SEQUENT DECISION OF THE HONBLE SUPREME COURT OR THE JURISDICTIONAL HIGH COURT IS BINDING ON THE TRIBUNAL AND, THEREFORE, CONSTITUTES AN APPARENT MISTAKE IN THE O RDER WHICH MAY BE RECTIFIED U/S.254(2) OF THE ACT. IN SUPPORT, THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO FILED COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF V. R. CHITTANANDAM VS. ACIT (2010) 5 ITR (TRIB) 258 (CHENNAI). THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED ON RECORD THE COPY OF THE JUDGMENT IN CIT V S. G.R. SHIPPING LTD. (SUPRA) AND ORDER OF THE TRIBUNAL IN THE CASE OF G.R. SHIP PING LTD. VS. DCIT IN ITA NO.822/MUM/2005 FOR ASSESSMENT YEAR 2001-02 DATED 1 7-07-2008 AND ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSM ENT YEARS 2002-03 AND 2003- 04 IN ITA NOS.4363 & 4364/MUM/2007 AND 3919 & 3920/ MUM/2007 DATED 20- 10-2009. 4. ON THE OTHER HAND, THE LD. D.R., WHILE RELYING O N THE ORDER OF THE TRIBUNAL, SUBMITS THAT THERE IS NO MISTAKE IN THE ORDER OF TH E TRIBUNAL. THE ASSESSEE WANTS TO REVIEW WHICH IS NOT PERMISSIBLE U/S.254(2) OF TH E ACT AND, THEREFORE, THE ORDER PASSED BY THE TRIBUNAL BE UPHELD. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT ON THE P LANT & MACHINERY THE DEPRECIATION WAS ALLOWED TO THE ASSESSEE IN PRECEDI NG YEARS AS WELL AS IN SUCCEEDING YEARS. IT WAS DISALLOWED BY THE AO, CIT( A) AND THE TRIBUNAL ON THE GROUND THAT DURING THE YEAR UNDER CONSIDERATION THE PLANT & MACHINERY WERE NOT M.A.NO.205/MUM/2011 MIRC ELECTRONICS LTD. 5 PUT TO USE AND FOR THIS PURPOSE THE TRIBUNAL HAS RE LIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DI NESH KUMAR GULABCHAND AGRAWAL (SUPRA). WE FURTHER FIND THAT AT THE TIME O F HEARING OF THE APPEAL, IN THE REJOINDER, IT WAS STATED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE SAID DECISION IS NOT APPLICABLE AS IN THAT CASE THE MACHINERY WAS NOT PUT TO USE AND FOR THIS REASON THE DEPRECIATION WAS NOT ALLOWED, WHEREAS IN THE ASSESSEES CASE, THE MACHINERY WAS USED IN EARLIER YEARS AND ON ACCOUNT OF DISPUTE IT COULD NOT BE USED FOR THE YEAR UNDER CONSIDERATION AND, THEREFOR E, THE SAID DECISION IS DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. HOWEVER, WE FIND THAT THE TRIBUNAL, WHILE APPLYING THE RATIO OF THE DECISION IN THE CASE OF DINESH KUMAR GULABCHAND AGRAWAL (SUPRA), HAS NOT CO NSIDERED THE SAID DISTINGUISHING FEATURE AND HAS APPLIED THE SAID DEC ISION AGAINST THE ASSESSEE. WE FURTHER FIND THAT IN THE SUBSEQUENT DECISION THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF G.R. SHIPPING LTD. (SUPRA), HAS ALLO WED THE DEPRECIATION FOLLOWING THE DECISION IN THE CASE OF WHITTLE ANDERSON LTD. V S. CIT (79 ITR 613)(BOM.) AND IN THE CASE OF CIT VS. G.N. AGARWAL (INDIVIDUAL) (2 17 ITR 250) (BOM.). SINCE THE THE TRIBUNAL WHILE APPLYING THE DECISION IN THE CAS E OF DINESH KUMAR GULABCHAND AGRAWAL (SUPRA) HAS NOT CONSIDERED THE DISTINGUISH ING FEATURE POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE IN PARA 12 OF ITS ORDE R, THEREFORE, THERE IS AN APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL IN TE RMS OF SEC. 254(2) OF THE ACT. THIS BEING SO AND KEEPING IN VIEW THAT THE MATTER R EQUIRES PROPER APPRECIATION OF FACTS AND LAW, THEREFORE, IN THE INTEREST OF JUSTIC E, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE TRIBUNAL ON THE ISSUE OF DEPREC IATION MAY BE RECALLED AND ACCORDINGLY WE RECALL THE ORDER DATED 25-09-2007 FO R THE LIMITED PURPOSE TO RECONSIDER THE ISSUE OF DEPRECIATION AFRESH AND ACC ORDING TO LAW. THE MISC. M.A.NO.205/MUM/2011 MIRC ELECTRONICS LTD. 6 APPLICATION FILED BY THE ASSESSEE IS, THEREFORE, PA RTLY ALLOWED. THE REGISTRY IS DIRECTED TO FIX THE DATE OF HEARING ON 16-01-2012. 6. IN THE RESULT, THE MISC. APPLICATION IS PARTLY A LLOWED. ORDER PRONOUNCED ON THE 16TH DAY OF NOVEMBER, 2 011. SD/- SD/- (R.K. PANDA) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 16TH NOVEMBER , 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A),MUMBAI, CONCERNED. 4 CIT,MUMBAI CITY, CONCERNED. 5.DR,E BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. M.A.NO.205/MUM/2011 MIRC ELECTRONICS LTD. 7 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 11-11-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 14-11-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER