Shadi Lal Enterprises Ltd., New Delhi V. ACIT, New Delhi

MA 519/DEL/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 5355 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2001-2002
• Appeal Filed On: 20-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: RUPESH J AIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL M.A.NO. 519 (DEL)/2010 (ARISING OUT OF ITA NO.5134(DEL.)/2004) ASSESSMENT YEAR: 2001-02 & M.A.NO. 520 (DEL)/2010 (ARISING OUT OF ITA NO.34(DEL.)/2006 ASSESSMENT YEAR: 2002-03 SIR SHADI LAL ENTERPRISES LTD., A DDL. COMMISSIONER OF 4A, HANSALYA, 15, BARAKHAMBA VS. INCOME-T AX, RANGE-8, ROAD, NEW DELHI. NEW DELHI. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI RUPESH JAIN, CA RESPONDENT BY : SMT. ANUSHA KHURANA, SR. DR ORDER PER K.G. BANSAL :AM IN THIS CASE, THE TRIBUNAL HAD PASSED A CONSO LIDATED ORDER ON THE APPEALS OF THE ASSESSEE AND REVENUE FOR ASSESSM ENT YEARS 2001-02 TO 2003-04 ON 04.06.2010. THE ASSESSEE MOVED TWO APPLICATIONS IN RESPECT OF ASSESSMENT YEARS 2001-02 AND 2002-03 MENTIONI NG THAT AN IDENTICAL ERROR HAS CREPT IN THE ORDER FOR THESE YEARS, W HICH IS APPARENT FROM RECORD. THEREFORE, IT WAS REQUESTED THAT THE O RDER MAY BE RECTIFIED IN MA NOS. 519 & 520(DEL)/2010 2 RESPECT OF THE ERROR FOR BOTH THE YEARS. SINCE T HE APPLICATIONS WERE ARGUED IN A CONSOLIDATED MANNER, WE THINK IT FIT TO PA SS A CONSOLIDATED ORDER. MA NO. 519(DEL)/2010 2. IN THE APPLICATION, IT IS STATED THAT THE ASSESSEE HAD CHALLENGED THE ACTION OF THE CIT(APPEALS) IN CONFIRMING THE DISAL LOWANCE OF RS. 21,91,222/- ON ACCOUNT OF LOSS INCURRED BY WRI TING OFF AND DISPOSAL OF SOME ASSETS, WHICH WERE FOUND TO BE NO MORE US ABLE. THIS LOSS PERTAINED TO CURRENT ASSETS AND NOT TO DEPRECIABLE-FIXED A SSETS. WHILE DISPOSING OFF THE APPEAL, THE TRIBUNAL HELD AS UNDER IN PARAGRAP H NO. 5.5:- 5.5 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT IT HAD BEEN EXPLAINED THAT EQUIPMENTS AND STORES FOR BOTTLING, POUCHING AND PACKING OF COUNTRY LIQUOR, LOCATED IN WAREHOUSES IN DISTRICTS, HAVE BEEN WRITTEN OFF AS A RESULT OF CHANGE IN THE POLICY OF THE GOVERNMENT. CONSEQUENTLY, THE WAREHOUSES WERE VACATED AND THE S TORES AND EQUIPMENTS BECAME USELESS. THEREFORE, THEY HAVE BEEN WRITTEN OFF. THUS, THE SUBMISSIONS OF THE LD. CO UNSEL ARE BASED UPON FACTS ON RECORD. HOWEVER, AFTER INTRODUCTION OF THE CONCEPT OF BLOCK OF ASSETS, THE SALE V ALUE REALIZED ON DISCARDED DEPRECIABLE ASSETS, IS TO BE REDUCE D FROM THE VALUE OF THE BLOCK OF ASSETS TILL SUCH TIME THAT THE BLOCK IS EXHAUSTED. THIS POINT HAS NOT BEEN EXAMINED BY THE LOWER AUTHORITIES. THIS POINT HAS ALSO NOT BEEN ARGU ED BEFORE US. THEREFORE, WE RESTORE THIS GROUND TO THE FILE O F THE AO FOR APPROPRIATE DECISION IN THE LIGHT OF AFORESAID OB SERVATION. 2.1 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS SCHEDULE-I OF THE CURRENT ASSETS, LOANS A ND ADVANCES, WHICH MA NOS. 519 & 520(DEL)/2010 3 SHOWS THAT FIXED ASSETS OF RS. 4,32,698/- AND OT HER ASSETS OF RS. 24,40,716/- HAVE BEEN REDUCED ON ACCOUNT OF L OSS ON SALE AND DISPOSAL OF THE ASSETS. THE CASE OF THE LD. COUNSEL IS THAT THESE ASSETS WERE CURRENT ASSETS AND NOT FIXED ASSETS ON WHICH DE PRECIATION WAS CLAIMED. THEREFORE, THE ASSETS DID NOT FORM PART OF B LOCK OF DEPRECIABLE ASSETS. THEREFORE, THE DEDUCTION CLAIMED BY THE ASSESSEE WAS TO BE ALLOWED AS A REVENUE LOSS. IN REPLY, THE LD. DR CLARIFIED THAT THIS ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO AND WAS ALSO NOT A RGUED BY THE LD. COUNSEL BEFORE THE TRIBUNAL. SINCE THE MATTER HAS BEEN RE STORED TO THE FILE OF THE AO, THE ASSESSEE MAY MAKE REPRESENTATION REGARDI NG THE CLASSIFICATION OF THE ASSETS ALSO. IN THE REJOINDER, THE LD. CO UNSEL SUBMITTED THAT ALTHOUGH THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO, BUT AN OBSERVATION HAS BEEN MADE THAT AFTER INTRODUCTION OF THE CONC EPT OF BLOCK OF ASSETS, THE SALE VALUE REALIZED ON DISCARDED DEPRECIAB LE ASSETS IS TO BE REDUCED FROM THE VALUE OF BLOCK OF ASSETS TILL SUCH TIME THAT THE BLOCK IS EXHAUSTED. THIS IS LIKELY TO CREATE CONFUSION I N THE MIND OF THE AO THAT THE ASSETS WERE DEPRECIABLE ASSETS. THEREFORE, IT IS URGED THAT THE MATTER MAY BE CLARIFIED SO THAT THE AO MAY PASS THE C ONSEQUENTIAL ORDER AFTER CONSIDERING THE FACTS IN PROPER PERSPECTIVE. MA NOS. 519 & 520(DEL)/2010 4 2.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. IN PARAGRAPH 5.5, IT IS MENTIONED THAT FROM THE ASSESSMENT ORDER, IT IS SEEN THAT EQUIPMENTS AND STORES FOR BOTTLING, POUCHING, AND PACKING OF COUNTRY LIQUOR LOCATED IN WAREHOUSES I N DISTRICTS HAVE BEEN WRITTEN OFF AS A RESULT OF CHANGE IN THE POLICY OF THE GOVERNMENT. CONSEQUENTLY, THE WAREHOUSES WERE VACATED AND E QUIPMENTS AND STORES BECAME USELESS. THEREFORE, THEY WERE WRITTEN OFF. NO ERROR HAS BEEN POINTED OUT IN THIS PORTION OF THE IMPUGNED PARAG RAPH. THEREAFTER, IT IS MENTIONED THAT AFTER INTRODUCTION OF THE CONCEP T OF BLOCK OF ASSETS, THE SALE VALUE REALIZED ON DISCARDED DEPRECIABLE A SSETS, IS TO BE REDUCED FROM THE VALUE OF BLOCK OF ASSETS TILL SUCH TIME THAT THE BLOCK IS EXHAUSTED. THIS IS THE POSITION OF LAW IN REGARD TO DEPRECIABLE ASSETS WHICH CANNOT BE CHALLENGED AND WHICH HAS NOT BEEN CHALLENGED BY THE ASSESSEE. IT HAS ALSO BEEN MENTIONED THAT THIS POINT HAS NOT BEEN EXAMINED BY THE LOWER AUTHORITIES. THIS POINT HAS NOT BEEN ARGUED BEFORE US. THEREFORE, THE MATTER WAS RESTORED TO THE F ILE OF THE AO FOR APPROPRIATE DECISION IN THE LIGHT OF ABOVE-MENTI ONED OBSERVATIONS. IT IS HERE THAT THE ERROR IS SAID TO HAVE CREPT IN THE ORDER, THE REASON BEING THAT THE ASSETS HAVE BEEN CLASSIFIED IN THE BAL ANCE-SHEET AS CURRENT ASSETS. HAVING CONSIDERED THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THERE IS MA NOS. 519 & 520(DEL)/2010 5 NO SUCH MISTAKE IN THE ORDER WHICH CAN BE SAID TO BE A MISTAKE APPARENT FROM RECORD. THE PARAGRAPH NOTES THE FACTS OF T HE CASE, THE LEGAL POSITION IN RESPECT OF DEPRECIABLE ASSETS AND RESTORES T HE MATTER TO THE FILE OF THE AO TO BE DECIDED AFTER EXAMINATION, WHICH WAS NOT DONE EARLIER, BY TAKING INTO ACCOUNT THE AFORESAID OBSERVATION. S INCE THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO WITHOUT ANY FETTER ON HIS RIGHT TO EXAMINE IT, HE WILL BE WITHIN HIS RIGHT TO EXAMINE WHETHER ANY OF THE ASSET WAS DEPRECIABLE OR NOT. IF FACTUALLY IT IS FOUND TH AT THE ASSETS WERE NOT DEPRECIABLE ASSETS, HE MAY DEAL WITH THE ISSUE A S SUCH AND DECIDE WHETHER THE LOSS OCCURRED ON WRITING OFF OF THE NON-DE PRECIABLE ASSETS IS DEDUCTIBLE OR NOT. HOWEVER, IF IT IS FOUND THAT ANY OR ALL ASSETS WERE DEPRECIABLE ASSETS, HE WILL TAKE INTO ACCOUNT TH E OBSERVATIONS MADE BY THE TRIBUNAL. MA NO. 520(DEL)/2010 3. THE ASSESSEE, AS MENTIONED IN APPLICATION NO . 519(DEL)/2010, HAS ALSO STATED THAT AN ERROR CREPT IN PARAGRAPH N O. 25 OF THE ORDER ON THE APPEAL OF THE REVENUE IN ITA NO. 34(DEL)/2006 FO R ASSESSMENT YEAR 2002- 03. IN THIS PARAGRAPH, IT IS MENTIONED THAT THE ISSUE REGARDING DEDUCTION OF RS. 2,08,488/- IN RESPECT OF LOSS ON SALE OF OBS OLETE ITEMS IN SUGAR UNIT, IS MA NOS. 519 & 520(DEL)/2010 6 STATED TO BE COVERED IN PARAGRAPH NOS. 5 TO 5. 6 OF THE ORDER. THESE PARAGRAPHS DEAL WITH SIMILAR ISSUE IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2001-02, WHICH HAS BEEN DISCUSSED BY US EARLIER. IT IS FURTHER MENTIONED THAT THE LOWER AUTHORITIES HA VE NOT CONSIDERED THE REDUCTION OF REALIZABLE VALUE FROM THE BLOCK OF ASSETS AND, THEREFORE, THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO FO R FRESH DECISION IN THE MATTER. ACCORDINGLY, FOLLOWING THAT ORDER, THE G ROUND WAS RESTORED TO THE FILE OF THE AO FOR FRESH DECISION TO BE TAKEN AFTER HEARING THE ASSESSEE. THE FACTS AND THE SUBMISSIONS IN RESPECT OF THI S GROUND ARE IDENTICAL TO THE FACTS AND DECISION DEALT WITH ABOVE IN M.A. NO. 519(DEL)/2010. AS THE MATTER IS WIDE OPEN, AND THE ORDER IS TO BE PASS ED BY THE AO AFTER HEARING THE ASSESSEE, THE DECISION TAKEN ON THE APPLICAT ION IS ALSO APPLICABLE TO THIS YEAR. 4. IN THE RESULT, THERE IS NO MISTAKE IN THE ORDE R FOR ANY OF THESE TWO YEARS, WHICH CAN BE SAID TO BE MISTAKE APPARENT FR OM RECORD. ACCORDINGLY, THE APPLICATIONS ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11 MARCH, 2011. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 11.3.2011. SP SATIA MA NOS. 519 & 520(DEL)/2010 7 COPY OF THE ORDER FORWARDED TO:- SIR SHADI LAL ENTERPRISES LTD., NEW DELHI. ADDL. CIT, RANGE-8, NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.