Amalgam foods P.Ltd, Cochin V. DCIT, Alappuzha

MA 23/COCH/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8654 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Keywords: Business income; Depreciation
• Section: 32

Judgement Text

1 M.A.NO. 23/COCH/2012 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) M.A. NO.23/COCH/2012 (ARISING OUT OF I.T.A NO. 435/COCH/2010) (ASSESSMENT YEAR 2005-06) M/S AMALGAM FOODS LTD VS DY.C.I.T, CIR.1 WILLINGDON ISLAND, KOCHI ALLPPEY PAN : AABCA8283D (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI R SREENIVASAN RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 22-06-2012 DATE OF PRONOUNCEMENT : 29-06-2012 O R D E R PER N.R.S. GANESAN (JM) THE ASSESSEE FILED THE MISCELLANEOUS APPLICATION O N THE GROUND THAT THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL. 2. SHRI R SRINIVASAN, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN GROUND NO.2, THE ASSESSEE HAS TAKEN A SPECIFIC GROUND THAT EVEN IF THE INCOME WAS CLASSIFIED AS INCOME FROM OTHER SOURCES, THE ASSESSEE IS ENTIT LED FOR DEPRECIATION. HOWEVER, AT PARAGRAPH 5 OF THE TRIBUNAL ORDER, THE TRIBUNAL FOU ND THAT THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION. IF THE INCOME WAS NOT ASSESSED A S BUSINESS INCOME IT HAS TO BE NECESSARILY ASSESSED AS INCOME FROM OTHER SOURCES AND THE ASSESSEE IS ENTITLED FOR DEPRECIATION. TO THAT EXTENT, ACCORDING TO THE LD. REPRESENTATIVE, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL. 2 M.A.NO. 23/COCH/2012 3. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR SU IBMITTED THAT THIS TRIBUNAL SPECIFICALLY FOUND THAT THE ASSESSEE COULD NOT REST ART THE BUSINESS, THEREFORE, IT CANNOT BE SAID THAT THERE WAS A TEMPORARY LULL IN THE BUSI NESS OF THE ASSESSEE. THE TRIBUNAL HAS ALSO FOUND THAT LEASING OUT OF THE PLANT AND MACHIN ERY IS NOT THE BUSINESS OF THE ASSESSEE. THEREFORE, THE TRIBUNAL FOUND THAT THE A SSESSEE IS NOT ENTITLED FOR DEPRECIATION. ON A QUERY FROM THE BENCH THAT MEREL Y BECAUSE THE INCOME WAS ASSESSED AS INCOME FROM OTHER SOURCES WHETHER THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION, THE LD.DR SUBMITTED THAT EVEN THOUGH THE INCOME OF THE ASSESSEE HAS BEEN ASSESSED AS INCOME FROM OTHER SOURCES, THE ASSESSEE IS ENTITLE D FOR DEPRECIATION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD.REPRESENTATIVE FOR THE ASSESSEE THE CLASSIFICATION OF INCOME EITHER AS BUS INESS INCOME OR AS INCOME FROM OTHER SOURCES MAY NOT HAVE ANYTHING TO DO WITH GR ANT OF DEPRECIATION. IN FACT, SECTION 57(II) CLEARLY SAYS THAT IN RESPECT OF INCOME OF TH E NATURE REFERRED TO IN CLAUSE (II) OF SUB SECTION (2) OF SECTION 56, THE DEDUCTION SHALL BE A LLOWED U/S 32 OF THE INCOME-TAX ACT ALSO. SECTIONS 56(2)(II) & 56(2)(III) REFER TO INC OME FROM MACHINERY, PLANT AND FURNITURE BELONGING TO THE ASSESSEE AND LET OUT ON HIRE. THE REFORE, THE INCOME WHICH WAS RECEIVED BY THE ASSESSEE ON LETTING OUT THE PLANT A ND MACHINERY WHICH WAS CLASSIFIED AS INCOME FROM OTHER SOURCES IS ALSO ELIGIBLE FOR DE PRECIATION U/S 57(II) OF THE ACT. THEREFORE, TO THIS EXTENT, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL DATED 29-03-2012 AND NEEDS TO BE RECTIFIED. ACCORDINGLY THE ORDER O F THIS TRIBUNAL DATED 29-03-2012 IS RECTIFIED AS FOLLOWS: 5. PARAGRAPHS 5, 6, 7 & 8 OF THE ORDER ARE DELETED. HOWEVER, THE FOLLOWING SHALL BE INCORPORATED AS PARAGRAPHS 5 & 6: 3 M.A.NO. 23/COCH/2012 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ASSESSME NT YEARS UNDER CONSIDERATION ARE 2005-06 AND 2006-07. THOUGH THE ASSESSEE CLAIMS THAT THE RENT RECEIVED BY THE ASSESSEE FROM LETTING OUT OF THE PLANT AND MACHINERY IS BUSINESS INCOME, THIS TRIBUNAL COULD N OT ACCEPT THE SAME SINCE THE ASSESSEE COULD NOT RESTART THE BUSINESS E VEN AS ON DATE. THEREFORE, IT IS NOT A TEMPORARY LULL IN THE BUSINE SS. IT IS A CASE OF SIMPLE LETTING OUT OF PLANT AND MACHINERY. AT THE BEST, T HE PROVISIONS OF SECTION 57(II) OF THE ACT MAY BE APPLICABLE TO THE CASE OF THE ASSESSEE. A CLOSE READING OF SECTIONS 56(2)(II) & 56(2)(III) R.W.S. 5 7(II) CLEARLY SHOWS THAT EVEN THOUGH THE INCOME IS CLASSIFIED AS INCOME FRO M OTHER SOURCES, THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION U/S 32. EVEN THE LD.DR HAS VERY FAIRLY CONCEDED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTIO N U/S 32 THOUGH THE INCOME HAS BEEN CLASSIFIED AS INCOME FROM OTHER SO URCES. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE ASSESSEE S HALL BE GRANTED DEPRECIATION AT THE RATE APPLICABLE. ACCORDINGLY, THE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO GRANT DEPRECIATION AT THE APPROPRIATE RATE. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 7. THE OTHER PARTS OF THE ORDER, VIZ. PARAGRAPHS 1 TO 4 WILL REMAIN AS SUCH. 8. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE ASSESEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THIS 29 TH DAY OF JUNE, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 29 TH JUNE, 2012 PK/- 4 M.A.NO. 23/COCH/2012 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH