ACIT,, Coimbatore v. M/s. Harshini Textiles Limited,, Coimbatore

ITA 1029/CHNY/2012 | 2008-2009
Pronouncement Date: 31-07-2012 | Result: Allowed

Appeal Details

RSA Number 102921714 RSA 2012
Assessee PAN AABCH4375F
Bench Chennai
Appeal Number ITA 1029/CHNY/2012
Duration Of Justice 2 month(s) 20 day(s)
Appellant ACIT,, Coimbatore
Respondent M/s. Harshini Textiles Limited,, Coimbatore
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2012
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 31-07-2012
Date Of Final Hearing 30-07-2012
Next Hearing Date 30-07-2012
Assessment Year 2008-2009
Appeal Filed On 10-05-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI V. DURGA RAO JUDICIAL MEMBER] I.T.A.NO.980/MDS/2012 ASSESSMENT YEAR : 2008-09 M/S HARSHINI TEXTILES LTD 34-A KAMARAJ ROAD COIMBATORE 641 018 VS THE ACIT COMPANY CIRCLE I(1) COIMBATORE [PAN AABCH4375F] (APPELLANT) (RESPONDENT) I.T.A.NO.1029/MDS/2012 ASSESSMENT YEAR : 2008-09 THE ACIT COMPANY CIRCLE I(1) COIMBATORE VS M/S HARSHINI TEXTILES LTD 34-A KAMARAJ ROAD COIMBATORE 641 018 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. RAGHU CA DEPARTMENT BY : SHRI SHAJI P. JACOB ADDL. CIT DATE OF HEARING : 30-07-2012 DATE OF PRONOUNCEMENT : 31-07-2012 O R D E R PER N.S. SAINI ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY T HE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE CIT(A)-I COIMBATO RE DATED 22.02.2012. I.T.A.NO.980 & 1029/12 :- 2 -: 2. THE ASSESSEE IN ITS APPEAL HAS RAISED ONLY ONE ISS UE THAT THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPR ECIATION ON AUTO CORNER LEASED BY THE ASSESSEE. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE WAS HAVING AU TO CORNERS WHICH WERE USED BY THE ASSESSEE FOR THE PU RPOSE OF ITS BUSINESS AND WERE INCLUDED IN THE BLOCK OF ASSETS OF THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DID NOT USE THE AUTO CORNERS FOR ITS BUSINESS PURPOSES BUT LEASED OUT THE SAME. THE ASSESSEE HAS SHOWN THE LEASE INCOME UNDER THE HEAD BUSINESS INCOME AND THEREBY CLAIMED DEPRECIATION ON THE SAM E. ACCORDING TO THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECT ION 32 DEPRECIATION CANNOT BE ALLOWED TO THE ASSESSEE ON ANY ASSET WHIC H IS NOT USED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSE. THE AS SESSING OFFICER FURTHER OBSERVED THAT DEPRECIATION IS ALSO NOT ALLO WABLE ON LEASED ASSETS AS THE ASSESSEE WAS NOT IN LEASING BUSINESS AND HE RELIED ON THE DECISION OF HON'BLE ALLAHABAD HIGH COURT DECISION R EPORTED IN 262 ITR 70. HE THEREFORE DISALLOWED DEPRECIATION OF ` 8 55 125/- CLAIMED ON AUTO CORNERS BY THE ASSESSE. 4. ON APPEAL THE CIT(A) CONFIRMED THE ACTION OF THE A SSESSING OFFICER FOR THE SAME VERY REASONS. I.T.A.NO.980 & 1029/12 :- 3 -: 5. THE A.R OF THE ASSESSEE SUBMITTED THAT THE ASSETS W ERE INCLUDED IN THE BLOCK OF ASSETS AND EVEN IF THE A SSETS WERE NOT USED BY THE ASSESSEE DURING THE YEAR AT ALL THEN ALSO TH E ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 32 OF THE ACT. FOR THE SAME HE PLACED RELIANCE ON THE DECISION OF HON'BLE DELHI HIGH COUR T IN THE CASE OF CIT VS OSWAL AGRO MILLS LTD 341 ITR 467(DELHI) WHEREIN IT HAS BEEN HELD THAT DEPRECIATION IS ALLOWABLE ON BLOCK OF ASSETS AND REVENUE CANNOT SEGREGATE A PARTICULAR ASSET THEREFROM ON THE GROUN D THAT IT WAS NOT PUT TO USE. INDIVIDUAL ASSETS HAVE LOST THEIR IDEN TITY AND THE CONCEPT OF BLOCK OF ASSETS HAS BEEN INTRODUCED FOR CALCUL ATING DEPRECIATION. THEREFORE THE ASSESSES ARE NOT REQUIRED TO MAINTAI N PARTICULARS OF EACH ASSET SEPARATELY AND THE REVENUE CANNOT CLAIM THAT FOR ALLOWING DEPRECIATION USER OF EACH AND EVERY ASSET IS ESSENT IAL EVEN WHEN A PARTICULAR ASSET FORMS PART OF A BLOCK OF ASSETS. THE OTHER ARGUMENT OF THE A.R WAS THAT EVEN IF THE LEASE RENT RECEIVED BY THE ASSESSEE WAS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCE S THEN ALSO THE ASSESSEES CLAIM WAS ALLOWABLE U/S 57(III) OF THE A CT. 6. THE D.R ON THE OTHER HAND FULLY JUSTIFIED THE AC TION OF THE ASSESSING OFFICER. HE ALSO SUBMITTED THAT THE ASSE SSEE HAS NOT FILED ANY COPY OF THE LEASE AGREEMENT AND WITHOUT EXAMINI NG THE NATURE OF THE LEASE IT CANNOT BE SAID THAT DEPRECIATION CLAI MED WAS ALLOWABLE TO THE ASSESSEE EVEN WHEN THE INCOME FROM LEASE RENTAL WAS ASSESSABLE I.T.A.NO.980 & 1029/12 :- 4 -: UNDER THE HEAD INCOME FROM OTHER SOURCES. HE ALSO ARGUED THAT THE ASSESSEE HAS ALSO NOT FILED COPY OF THE BALANCE SHE ET OR COMPUTATION OF INCOME TO SHOW THAT THE LEASE RENT WAS INCLUDED BY THE ASSESSEE UNDER THE HEAD BUSINESS INCOME. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE UNDISPUTED FACTS ARE THAT THE AUT O CORNERS WHICH WERE USED BY THE ASSESSEE IN EARLIER YEARS FOR ITS BUSINESS PURPOSES WERE LEASED OUT DURING THE YEAR UNDER CONSIDERATION . THE REVENUE DISALLOWED THE CLAIM OF DEPRECIATION ON THE GROUND THAT LEASING OUT OF ASSETS IS NOT THE BUSINESS OF THE ASSESSEE AND THER EFORE AUTO CORNERS LEASED AND NOT USED FOR BUSINESS PURPOSES. WE FIND FORCE IN THE ARGUMENT OF THE A.R OF THE ASSESSEE THAT LEASING OF AUTO CORNERS BY THE ASSESSEE IS NOT TREATED AS ITS BUSINESS THEN AL SO DEPRECIATION IS ALLOWABLE ON AUTO CORNERS TO THE ASSESSEE AS PER TH E PROVISIONS OF SECTION 57(II) OF THE ACT. WE FIND THAT NONE OF T HE LOWER AUTHORITIES HAS GIVEN ITS FINDING IN RESPECT OF ALLOWABILITY OF DEPRECIATION ON AUTO CORNERS U/S 57(II) OF THE ACT. FROM THE RECORDS MA DE AVAILABLE BEFORE US BY BOTH THE PARTIES IT IS NOT DISCERNIBLE WHETH ER THE LEASE RENT RECEIVED BY THE ASSESSEE WAS ASSESSED UNDER THE HEA D BUSINESS INCOME OR UNDER THE HEAD INCOME FROM OTHER SOURCE S. IN OUR CONSIDERED OPINION IF THE RELEVANT LEASE RENT DERI VED FROM LEASING OF I.T.A.NO.980 & 1029/12 :- 5 -: AUTO CORNERS IS ASSESSED UNDER THE HEAD BUSINESS I NCOME THEN ASSESSEE IS ELIGIBLE FOR DEPRECIATION U/S 32 OF THE ACT AND IN CASE THE SAID LEASE RENT IS ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES THEN ASSESSEE IS ELIGIBLE FOR DEPRECIATION U/S 57(I I) OF THE ACT. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHOR ITIES AND DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION IN ACCORDAN CE WITH THE DISCUSSION MADE HEREIN ABOVE. THUS THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN REVENUES APPEAL THE ONLY ISSUE RAISED IS THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF BROKERAGE AND COMMISSION. 9. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEA R UNDER CONSIDERATION THE ASSESSEE HAS PAID BROKERAGE AND C OMMISSION OF ` 26 03 001/-. THE ASSESSING OFFICER OBSERVED THAT THE JOURNAL VOUCHER WAS DATED 10.6.2008 FOR COMMISSION PAYMENT TO M/S K EDIA ENTERPRISES ON WHICH TDS OF ` 3001/- WAS DEDUCTED AND PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT ON 5.7.2008. FROM THIS HE CONCL UDED THAT THE PAYMENT RELATES TO THE ASSESSMENT YEAR 2009-10 AND NOT THE ASSESSMENT YEAR 2008-09 AND THEREFORE DISALLOWED T HE CLAIM OF DEDUCTION TO THE ASSESSE. 10. ON APPEAL THE CIT(A) ALLOWED THE CLAIM OF DEDUCTIO N BY OBSERVING THAT THERE WAS RETROSPECTIVE AMENDMENT BY THE FINANCE ACT I.T.A.NO.980 & 1029/12 :- 6 -: 2008 EXTENDING THE TIME OF PAYMENT OF TDS DURING TH E LAST MONTH OF THE PREVIOUS YEAR ON OR BEFORE THE DUE DATE FOR FI LING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139. SINCE THE TDS WAS REMITTED ON 5.6.2008 5.7.2008 AND 5.9.2008 WITH RE FERENCE TO THE PROVISIONS OF COMMISSIONS AND BROKERAGE HE HELD TH AT THE PROVISIONS OF SECTION 40(A)(IA) WERE NOT APPLICABLE TO THE ASS ESSEE AND DELETED THE DISALLOWANCE OF ` 26 03 001/-. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND T HAT THE CLAIM FOR DEDUCTION OF COMMISSION OF ` 26 03 3001/- WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE RELEVA NT VOUCHER BEARS THE DATE 10.6.2008 WHICH IS RELEVANT TO ASSESSMENT YEAR 2009-10 AND THE YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 200 8-09. 12. ON APPEAL THE CIT(A) ALLOWED THE CLAIM OF THE ASSE SSEE ON THE GROUND THAT THE TDS ON THE RELEVANT COMMISSION WAS DEPOSITED ON 5.6.2008 5.7.2008 AND 5.9.2008 AND IN VIEW OF THE AMENDMENT MADE IN SECTION 40(A)(IA) WITH RETROSPECTIVE EFFECT FROM 1.4.2005 THE RELEVANT EXPENDITURE IS ALLOWABLE IN ASSESSMENT YE AR 2008-09. 13. WE FIND THAT IT IS NOT IN DISPUTE THAT THE METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE IS MERCANTILE. THEREFORE THE EXPENDITURE FOR WHICH LIABILITY ACCRUED TO THE ASSE SSEE ON OR BEFORE 31.3.2008 IS ALLOWABLE TO THE ASSESSEE IN ASSESSMEN T YEAR 2008-09 I.T.A.NO.980 & 1029/12 :- 7 -: IRRESPECTIVE OF THE DATE OF ENTRY MADE IN THE BOOKS OF ACCOUNT. WE FIND THAT BOTH THE LOWER AUTHORITIES HAVE NOT EXAMI NED AS TO THE DATE ON WHICH SUCH COMMISSION BECAME PAYABLE BY THE ASSE SSE. BEFORE US THE A.R FILED A CHART SHOWING THE SALES IN RESPECT OF WHICH COMMISSION IN QUESTION WAS INCURRED BY THE ASSESSE. IN OUR CO NSIDERED OPINION THESE DETAILS REQUIRES VERIFICATION AND BOTH THE P ARTIES BEFORE US AGREED THAT THE MATTER SHOULD BE RESTORED TO THE FI LE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE DETAILS AND THEREAF TER ADJUDICATION OF THE ISSUE AFRESH AS PER LAW AS DISCUSSED ABOVE. WE T HEREFORE RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICE R FOR ADJUDICATION AFRESH IN THE LIGHT OF THE DISCUSSION MADE HEREIN A BOVE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSE. THUS THE GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE AS W ELL AS OF THE REVENUE BOTH ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY THE 31 ST OF JULY 2012 AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 31 ST JULY 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR