ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, Ajmer V. AJMER VIDHYUT VITRAN NIGAM LTD., Ajmer

MA 87/JPR/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5351 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 05-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MEENA
• Assessee Lawyers: ASHOK GUPTA CA DH
• Keywords: Capital asset; Depreciation
• Section: 143(3); 32

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM M.A. NO. 87/JP/2018 (ARISING OUT OF ITA NO. 372/JP/2016) FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2011-12 THE DCIT CIRCLE-2, AJMER CUKE VS. M/S AJMER VIDYUT VITRAN NIGAM LTD., VIDYUT BHAWAN, PANCHSHEEL NAGAR, MAKARWALI ROAD, AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCA8562E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI K. C. MEENA (ADDL. CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SUNIL PORWAL & SHRI ASHOK GUPTA (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 28/09/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 04/10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS MISCELLANEOUS APPLICATION FILED BY THE REVE NUE AGAINST THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITA NO. 37 2/JP/2016 DATED 28/08/2017. 2. THE REVENUE HAS SUBMITTED THAT THE CO-ORDINATE B ENCH HAS DISPOSED OFF THE ASSESSEES APPEAL FOR AY 2011-12 F OLLOWING ITS EARLIER ORDER IN ITA NO. 362/JP/2016 FOR AY 2004-05 IN RESP ECT OF MATTER RELATING TO DEPRECIATION ON NON EXISTING ASSETS. HO WEVER, THE GROUND M.A. NO. 87/JP/2018 THE DCIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIG AM LTD., AJMER 2 WHICH HAS BEEN RAISED BY THE ASSESSEE IN THE IMPUNG ED ASSESSMENT YEAR RELATES TO DISALLOWANCE OF EXCESS DEPRECIATION U/S 32 READ WITH SECTION 43(1) AND EXPLANATION 10. IT WAS ACCORDING LY SUBMITTED THAT THE SAID MISTAKE IS APPARENT FROM THE RECORD AND SAME M AY KINDLY BE RECTIFIED. 3. THE LD. AR IS HEARD WHO HAS FAIRLY SUBMITTED TH AT THE GROUND RAISED BY THE ASSESSEE COMPANY BEFORE THE CO-ORDINA TE BENCH RELATES TO EXCESS DEPRECIATION AND NOT DEPRECIATION ON NON EXISTING ASSETS. IT WAS FURTHER SUBMITTED THAT IN ITA NO. 362/JP/2016 F OR AY 2004-05, THERE WAS ALSO MATTER RELATING TO EXCESS DEPRECIATI ON WHICH HAS BEEN DECIDED BY THE COORDINATE BENCH IN THE SAME CONSOLI DATED ORDER AND TO THAT EXTENT, THERE SEEMS TO BE A TYPOGRAPHICAL ERRO R WHICH MAY BE RECTIFIED AS THE MATTER ON MERIT ON EXCESS DEPRECIA TION HAS ALREADY BEEN DECIDED IN ITA NO. 362/JP/2016 FOR AY 2004-05. 4. AFTER HEARING BOTH THE PARTIES AND PURSUING THE CONSOLIDATED ORDER PASSED BY THE COORDINATE BENCH, WE FIND THAT THE GROUND RAISED FOR CONSIDERATION WAS THE LD CIT(A) HAS ERRED IN C ONFIRMING THE DISALLOWANCE OF RS 16,15,33,928 BEING DEPRECIATION ON ALLEGED NON- EXISTING ASSETS AND APPARENTLY FOR THE SAID REASON S, THE COORDINATE BENCH WHILE DISPOSING OFF THE SAID GROUND, HAS STAT ED THAT THE SAID ISSUE RELATING DISALLOWANCE OF DEPRECIATION ON NON- EXISTING ASSETS WAS ALREADY DECIDED IN ITA NO. 362/JP/2016 FOR AY 2004- 05 AND THE SAME WAS FOLLOWED. 5. HOWEVER, AS POINTED OUT BY THE REVENUE AND DULY ADMITTED BY THE LD AR ON BEHALF OF THE ASSESSEE, THE SAID DISAL LOWANCE OF M.A. NO. 87/JP/2018 THE DCIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIG AM LTD., AJMER 3 RS 16,15,33,928 RELATES TO EXCESS DEPRECIATION U/S 32 OF THE ACT. WE FIND THAT EVEN THE SAID ISSUE OF EXCESS DEPRECIATIO N HAS BEEN DECIDED BY THE COORDINATE BENCH VIDE ITS SAME CONSOLIDATED ORD ER DATED 28.08.2017 WHILE DISPOSING OF ASSESSEES APPEAL IN ITA NO. 362/JP/2016 FOR AY 2004-05 AND THE FINDINGS CONTAINED AT PARA 1 7-19 READS AS UNDER: 17. IN RESPECT OF GROUND NO. 3, BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER AFTER GOING THROUGH THE SCHED ULE-2 OF THE BALANCE SHEET OF THE ASSESSEE COMPANY NOTICED THAT THERE IS AN INCREASE IN CONTRIBUTION, GRANTS AND SUBSIDIES TOWARDS COST OF CAPITAL ASSETS DURING THE YEAR WHICH HAS NOT BEEN REDUCED FROM THE COST O F THE ASSETS FOR THE PURPOSE OF CALCULATION OF DEPRECIATION. IN VIEW OF SECTION 32(1)(III) READ WITH SECTION 43(1) AND EXPLANATION 10 THERETO AND A FTER GOING THROUGH THE SUBMISSION OF THE ASSESSEE, HE REDUCED SUCH CON TRIBUTION, GRANTS AND SUBSIDIES FROM THE COST OF CAPITAL ASSETS AND R ECALCULATED THE DEPRECIATION ALLOWABLE TO THE ASSESSEE COMPANY AND DISALLOWED THE AMOUNT OF RS. 22,05,23,697/- AS EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE COMPANY. ON APPEAL, THE LD. CIT(A) CONFIR MED THE SAID DISALLOWANCE OF EXCESS DEPRECIATION. 18. DURING THE COURSE OF HEARING, THE LD. AR FAIRLY CONCEDED THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE COORDINATE BENCH IN ITS CONSOLIDATED DECISION DATED 14.07.2016. THE REL EVANT FINDING OF THE COORDINATE BENCH IS CONTAINED AT PARA 14 WHICH IS R EPRODUCED AS UNDER:- 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. DURIN G THE COURSE OF M.A. NO. 87/JP/2018 THE DCIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIG AM LTD., AJMER 4 ARGUMENT, A POINTED QUERY WAS ASKED FROM THE LD AR, TO WHICH IT WAS FAIRLY STATED THAT THE CONTRIBUTION / GRANT IN THE FORM OF SUBSIDY WERE RECEIVED FROM THE STATE GOVT./OTHER DE PARTMENT TOWARDS THE COST OF CAPITAL ASSET AND FOR REPLACEME NT OF THE ASSETS. EXPLANATION 10 TO SECTION 43 OF THE ACT PRO VIDES AS UNDER:- [EXPLANATION 10.- WHERE A PORTION OF THE COST OF A N ASSET ACQUIRED BY THE ASSESSEE HAS BEEN MET DIRECTLY OR INDIRECTLY BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR ANY AUTHORITY ESTABLISHED UNDER ANY LAW OR BY ANY OTHER PERSON, IN THE FORM OF A SUBSIDY OR GRANT OR REIMBURSEMENT (BY WHATEVER NAME CALLED), THEN, SO MUCH OF THE COST AS IS RELATABLE TO SUCH SUBSIDY OR GRANT OR REIMBURSEMENT SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE : PROVIDED THAT WHERE SUCH SUBSIDY OR GRANT OR REIMBURSEMENT IS OF SUCH NATURE THAT IT CANNOT BE DIRECTLY RELATABLE TO THE ASSET ACQUIRED SO MUCH OF THE AMOUNT WHICH BEARS TO THE TOTAL SUBSIDY OR REIMBURSEMENT OR GRANT THE SAME PROPORTION AS SUCH ASSET BEARS TO ALL THE ASSETS IN RESPECT OF OR WITH REFERENCE TO WHICH THE SUBSIDY OR GRANT OR REIMBURSEMENT IS SO RECEIVED, SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE.] A BARE READING OF THE EXPLANATION 10 OF SECTION 43 OF THE ACT, WHICH CLEARLY PROVIDES THAT WHERE A PORTION OF THE COST OF AN ASSET ACQUIRED BY THE ASSESSEE HAS BEEN MET DIRECTL Y OR INDIRECTLY BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT IN THE FORM OF A SUBSIDY OR GRANT OR REIMBURSEMENT, THEN, SO MUCH OF THE SUBSIDY OR GRANT OR REIMBURSEMENT SHALL NOT BE INCL UDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE. ADMITTEDL Y, THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE IN THE FORM OF GRANT/REIMBURSEMENT/SUBSIDY FROM THE STATE GOVERNME NT M.A. NO. 87/JP/2018 THE DCIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIG AM LTD., AJMER 5 THEREFORE, IN OUR VIEW, THE ORDER PASSED BY THE LD CIT(A) IS REQUIRED TO BE UPHELD AND THE VALUE OF THE ASSETS S HALL BE TAKEN BY THE LD ASSESSING OFFICER AFTER ADJUSTING THE SUBSIDY/GRANT/REIMBURSEMENT FROM THE STATE GOVT. OR THE OTHER GOVERNMENT DEPARTMENTS. ACCORDINGLY, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THERE IS NO CHAN GE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. FOLLOWING THE DECISION OF THE COORDINATE BENCH REFERRED SUPRA, THE GROUND TAKEN BY THE ASSES SEE COMPANY IS DISMISSED. 6. IN LIGHT OF ABOVE, PARA 50-51 OF THE CONSOLIDAT ED ORDER PASSED BY THE CO-ORDINATE BENCH DATED 28.08.2017 WHICH READS AS UNDER:- 50. FOR AY 2011-12, THE ASSESSEE COMPANY HAS CHALL ENGED THE ORDER OF LD. CIT(A) DATED 25.01.2016 PASSED PURSUANT TO T HE ASSESSMENT ORDER U/S 143(3) OF THE ACT AND HAS TAKEN GROUNDS O F APPEAL RELATING TO DISALLOWANCE OF PRIOR PERIOD EXPENDITURE AND DEPREC IATION ON NON- EXISTING ASSETS. 51. WE HAVE EXAMINED THE SUBJECT ISSUES RELATING TO DISALLOWANCE OF PRIOR PERIOD EXPENDITURE AND DEPRECIATION ON NON-EXISTING ASSETS IN DETAIL IN ITA NO. 362/JP/2016 FOR AY 2004-05. UNDIS PUTEDLY, BOTH THE PARTIES AGREED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL. OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 362/JP/2016 SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL AS WELL . ..SHOULD BE READ AS M.A. NO. 87/JP/2018 THE DCIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIG AM LTD., AJMER 6 50. FOR AY 2011-12, THE ASSESSEE COMPANY HAS CHALL ENGED THE ORDER OF LD. CIT(A) DATED 25.01.2016 PASSED PURSUANT TO T HE ASSESSMENT ORDER U/S 143(3) OF THE ACT AND HAS TAKEN GROUNDS O F APPEAL RELATING TO DISALLOWANCE OF PRIOR PERIOD EXPENDITURE AND DEPREC IATION ON NON- EXISTING ASSETS. 51. WE HAVE EXAMINED THE SUBJECT ISSUES RELATING TO DISALLOWANCE OF PRIOR PERIOD EXPENDITURE AND EXCESS DEPRECIATION U/S 32 R/W SEC 43(1) R/W EXPLANATION 10 IN DETAIL IN ITA NO. 362/JP/2016 FOR AY 2004-05. UNDISPUTEDLY, BOTH THE PARTIES AGREED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL. OUR FINDIN GS AND DIRECTIONS CONTAINED IN ITA NO. 362/JP/2016 SHALL APPLY MUTATI S MUTANDIS TO THIS APPEAL AS WELL. 7. SUBJECT TO ABOVE, THERE IS NO CHANGE IN THE CONS OLIDATED ORDER PASSED BY THE COORDINATE BENCH DATED 28.08.2017. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISPOSED OFF IN LIGHT OF ABOVE DIRECTIONS. PRONOUNCED IN THE OPEN COURT ON 04/10/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/10/2018. * GANESH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, AJMER M.A. NO. 87/JP/2018 THE DCIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIG AM LTD., AJMER 7 2. IZR;FKHZ@ THE RESPONDENT- M/S AJMER VIDYUT VITRAN NIGAM LTD., AJMER 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {M.A NO. 87/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR