M/s. Gujarat Narmada Valley Fertilizers Co.Ltd., Bharuch V. The Addl.CIT.,Bharuch Range, Bharuch

MA 227/AHD/2012

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9919 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER M.A. NO. 22 7 /AHD/ 201 2 ASSESSMENT YEAR : 2006-07 (ARISING OUT OF ITA NO. 827/AHD/2010) ASSESSMENT YEAR :2006-07 GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. P.O. NARMADANAGAR 392 015 DIST. BHARUCH V/S . ADDITIONAL COMMISSIONER OF INCOME-TAX, BHARUCH RANGE, BHARUCH PAN NO. AA A C G8372Q (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI SANJAY R. SHAH, A.R. /BY RESPONDENT SHRI RAHUL KUMAR, SR.D.R. /DATE OF HEARING 0 1 . 02 .201 3 /DATE OF PRONOUNCEMENT 22.02.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS M.A. IS FILED BY THE ASSESSEE AGAINST ORIGINAL ORDER DATED 14.09.2012 IN RESPECT OF ASSESSEES OWN APPEAL IN I TA NO.827/AHD/2010 FOR A.Y. 2006-07, WHERE THE ASSESSEE FILED THE APPEAL A GAINST THE ORDER OF CIT(A)-VI, BARODA, DATED 31.12.2009. THE ASSESSEE S APPEAL IS PARTLY ALLOWED AND NOW THE ASSESSEE MOVED THIS M.A. NO. 22 7/ AHD/ 2012, WHICH IS REPRODUCED AS UNDER: THIS MISCELLANEOUS APPLICATION ARISES OUT OF A ORD ER DATED 14- 09-2012 (COPY ENCLOSED) PASSED BY THE HONBLE ITAT, BENCH D IN M.A. NO.227/AHD/12, A/O ITA NO. 827/AHD/2010, A.Y. 06-07 PAGE 2 THE CASE OF M/S. GUJARAT NARMADA VALLEY FERTILIZERS & CHEMICALS LTD. [FORMERLY KNOWN AS M/S. GUJARAT NARMADA VALLEY FERT ILIZERS CO. LTD.] VS. ACIT, BHARUCH RANGE, BHARUCH FOR A.Y. 200 6-07 IN RESPECT OF ISSUE RELATING TO DISALLOWANCE OF DEPRECIATION O N LEASED ASSETS. 1.0 BEFORE THE HONBLE ITAT THE APPLICANT HAD RAISE D THE FOLLOWING GROUND NO.4. IN ITS APPEAL NO. 827/A/2010: IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED COMMISSIONER OF INCOM E TAX(APPEALS) HAS ERRED IN CONFIRMING DEPRECIATION AMOUNTING TO RS. 7,93,490/- ON THE ASSETS LEASED BY THE APPELLANT TO WESTERN RAILWAYS. IT IS SUBMITTED THA T ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) OUGHT TO HAVE ALLOWED DEPRECIATION AS CLAIMED BY THE APPELLA NT. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2.0 THE ABOVE GROUND WAS ADJUDICATED BY THE HONBLE BENCH VIDE PARA 17 ON PAGE 13 OF THE ORDER WHICH IS REPRODUCED HERE UNDER: WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE TERMS AND CONDITIONS OF LEASE AGREEMENT MENTIONED ON PAGE NO.29 AND EXPLANATION AT PAGE NO.30 BY THE A.O. IN ASSESSMENT ORDER AND SPECIAL BENCH DECISION IN CASE OF M/S.INDUSIND BANK LIMITED VS. THE ADDL. COMMISSIONE R OF INCOME-TAX IN ITA NO. 6566/MUM/2002 FOR A.Y. 1998-9 9 AND ITA NO. 606/MUM/2003 FOR A.Y 1999-2000. A FRES H RE- LOOK IS REQUIRED AS CO-ORDINATE BENCH HAD GIVEN FIN DINGS IN ABOVE CASE AFTER CONSIDERING THE HONBLE SUPREME CO URT DECISION IN CASE OF ABB LTD. (SUPRA). THEREFORE, T HIS ISSUE IS SET ASIDE TO THE A.O. FOR DE NOVO AFTER CONSIDER ING THE DECISION OF M/S. INDUSLND BANK LTD. (SUPRA). ACCOR DINGLY, THIS GROUND OF APPEAL IS RESTORED BACK TO THE A.O. M.A. NO.227/AHD/12, A/O ITA NO. 827/AHD/2010, A.Y. 06-07 PAGE 3 3.0 DURING THE COURSE OF HEARING, IT WAS BROUGHT TO THE NOTICE OF HONBLE BENCH THE DECISION IN APPLICANTS OWN CASE FOR EARLIER YEARS I.E. A.Y. 2003-04 TO 2005-06 IN ITA NOS. 1373 & 399 3/AHD/07 & 2401/AHD/2008 DATED 30-12-2011 IN WHICH THE HONBLE D BENCH, ITAT, AHMADABAD HAS ALLOWED THE GROUND OF APPLICANT IN RESPECT OF DEPRECIATION DISALLOWED ON VERY SAME LEASED ASSETS. THE CONCLUDING PARA OF THE SAID DECISION IS ALSO REPROD UCED IN THE PARA 15 OF THE ORDER UNDER CONSIDERATION. IT WAS ALSO MENTIONED AT THE TIME OF HEARING THAT A LLEGED LEASED ASSETS I.E. RAILWAY WAGONS WERE GIVEN ON LEASE TO W ESTERN RAILWAY SINCE A.Y. 1997-98. THE APPLICANT'S CLAIM OF DEPREC IATION ON SUCH LEASED ASSETS WAS ALLOWED SINCE A.Y. 1997-98 EITHER BY THE AO IN ASSESSMENT PROCEEDINGS OR BY THE HON'BLE ITAT AS ME NTIONED ABOVE. THE HON'BLE ITAT IN EARLIER YEARS HAS ALLOWED THE C LAIM OF DEPRECIATION AFTER VERIFYING THE TERMS AND CONDITIO NS OF THE LEASE AGREEMENT AS WELL AS AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ASIAN BROWN BOVERI LTD . (ABB LTD) WHICH WAS REFERRED TO BY THE SPECIAL BENCH IN THE C ASE OF INDUSLND BANK LTD AND ON THE BASIS OF THAT VERY DECISION OF SUPREME COURT THE SPECIAL BENCH HAD MADE THE DISTINCTION BETWEEN FINANCIAL LEASE AND OPERATING LEASE. 4.0 HOWEVER, HON'BLE BENCH HAS SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR FRESH RE-LOOK IN VIEW OF THE DECISION OF SPECIAL BENCH IN CASE OF INDUSLND BANK LTD. (SUPRA) AND HON'BLE SUPR EME COURT DECISION IN CASE OF ABB LTD (SUPRA). M.A. NO.227/AHD/12, A/O ITA NO. 827/AHD/2010, A.Y. 06-07 PAGE 4 5.0 IN VIEW OF THE ABOVE FACTS, THE APPLICANT MOST RESPECTFULLY MENTIONS THAT FOLLOWING MISTAKES HAVE CREPT IN THE IMPUGNED ORDER. 5.1 THE APPLICANT HEREBY SUBMITS THAT WHEN TH E CO-ORDINATE BENCH IN CASE OF APPLICANT ITSELF IN EARLIER YEARS AFTER VERIFYING THE TERMS AND CONDITIONS OF THE LEASE AGREEMENT AND AFTER CONSIDERING THE SUPREME COURT JUDGMENT HELD THAT IT IS OPERATING LEASE AND ALLOWED THE DEPRECIATION TO THE APPLICANT I.E. LESSOR, HOW IS IT JUSTIFIABLE TO SEND BACK THE SAME ISSUE TO THE FILE OF THE AO IN SUBSEQUENT YEAR TO RE-ADJUDIC ATE ON THE STATUS OF SAME LEASE AGREEMENT IN RESPECT OF THE SA ME ASSETS WHICH ARE ALREADY MERGED IN TO THE BLOCK OF ASSETS. 5.2 IT IS ALSO UNTENABLE IN LAW AS WELL AS IN FACTS THAT IN EARLIER YEARS LESSOR CLAIMS DEPRECIATION ON LEASED ASSETS AND IN SUBSEQUENT YEARS LESSEE CLAIMS DEPRECIATION ON SAME ASSETS WITHOUT ANY CHANGE IN ANY OF THE TERMS AND CONDITIO NS OF THE LEASE AGREEMENT. IN FACT ONCE DEPRECIATION IS ALLOW ED TO LESSOR IN THE EARLIER YEAR, LEASED ASSETS ARE ALREADY PART OF BLOCK OF ASSETS IN THAT YEAR AND THEREAFTER WHAT IS FOLLOWED IN SUBSEQUENT YEAR IS ONLY WDV OF THAT ASSET WHICH GOE S ON REDUCING BY GRANTING DEPRECIATION ON YEAR TO YEAR B ASIS. CHANGING THE TEXTURE OF THE DECISION IN-BETWEEN THE YEARS CAN ONLY CREATE CONFUSION AND POSE THE DIFFICULTIES IN PASSING CONSEQUENTIAL ORDER. 5.3 THE ABOVE BEING THE MISTAKES APPARENT FROM RECO RD, THE APPLICANT REQUESTS HONBLE BENCH TO RECTIFY THE SAM E AND FOLLOW THE ORDER OF EARLIER YEARS IN ITS OWN CASE IN THE INTER EST OF JUSTICE BY SUITABLY MODIFYING THE IMPUGNED ORDER. M.A. NO.227/AHD/12, A/O ITA NO. 827/AHD/2010, A.Y. 06-07 PAGE 5 2. WE HAVE CONSIDERED THE ASSESSEES APPLICATION AN D ACCORDINGLY, WE ALLOW THE MISCELLANEOUS APPLICATION. THE REGISTRY IS DIRECTED TO FIX THE CASE BEFORE THE REGULAR BENCH. 3. IN THE RESULT, THE M.A. OF THE ASSESSEE IS ALLOW ED. THIS ORDER PRONOUNCED IN OPEN COURT ON 22.02.2013 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;