ACIT, Hyderabad v. M/s.Ogene Systems India Pvt.Ltd, Hyderabad

ITA 133/HYD/2011 | 2007-2008
Pronouncement Date: 16-11-2011 | Result: Allowed

Appeal Details

RSA Number 13322514 RSA 2011
Assessee PAN AAACO7056R
Bench Hyderabad
Appeal Number ITA 133/HYD/2011
Duration Of Justice 9 month(s) 19 day(s)
Appellant ACIT, Hyderabad
Respondent M/s.Ogene Systems India Pvt.Ltd, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 16-11-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 16-11-2011
Date Of Final Hearing 06-07-2011
Next Hearing Date 06-07-2011
Assessment Year 2007-2008
Appeal Filed On 27-01-2011
Judgment Text
INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH BEFORE SHRI CHANDRA POOJARI A M. AND SMT. ASHA VIJAYARAGHAVAN J.M ITA NO.160/HYD/2011 ASSESSMENT YEAR 2007-08 M/S OGENE SYSTEMS INDIA PVT. LTD. HYDERABAD (PAN AAACO7056R) THE DCIT CIRCLE 16(3) HYDERABAD APPELLANT VS RESPONDENT ITA NO.133/HYD/2011 ASSESSMENT YEAR 2007-08 THE ACIT CIRCLE 16(3) HYDERABAD M/S OGENE SYSTEMS INDIA PVT. LTD. HYDERABAD (PAN AAACO7056R) APPELLANT VS RESPONDENT ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI B.V. PRASAD REDDY DATE OF HEARING : 25.10.2011 DATE OF PRONOUNCEMENT : ORDER PER ASHA VIJAYARAGHAVAN JM: THESE ARE CROSS APPEALS PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) HYDERABAD DATED 1.11.2010 AND PERTA INS TO THE ASSESSMENT YEAR 2007-08. 2. FOR THE ASSESSMENT YEAR 2007-08 THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 26.3.2009 DEC LARING A TOTAL INCOME AT NIL. ASSESSMENT WAS COMPLETED U/S 143(3) DETERMINING TOTAL INCOME OF RS.23 52 694/-. THE AS SESSING OFFICER MADE DISALLOWANCE OF DEPRECIATION CLAIM ON ADDITION TO COMPUTERS AND LEASE HOLD DEVELOPMENTS. DURING ITA NO.160 & 133/HYD/2011 M/S OGENE SYSTEMS INDIA PVT. LTD. HYDERABAD 2 ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ENQUIR ED ABOUT THE PROOF REGARDING THE ADDITIONS TO COMPUTER S AND LEASE HOLD DEVELOPMENTS. SINCE NO PROOF WAS GIVEN BY THE ASSESSEE THE DEPRECIATION CLAIM WAS DISALLOWED. 3. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A) AND SUBMITTED AS FOLLOWS: THE ASSESSEE COMPANY HAS ALREADY FURNISHED THE DETAILS OF DEPRECIATION ON ADDITIONS TO COMPUTERS A ND LEASE HOLD DEVELOPMENTS TO THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. HOWEVER THE SAME HAVE NOT BEE N CONSIDERED BY THE ASSESSING OFFICER AND THE DISALLOWANCE OF DEPRECIATION OF RS.2 60 369/- HAS BEEN MADE WHICH IS NOT CORRECT AND NOT JUSTIFIED. HENCE THE DISALLOWANCE OF DEPRECIATION BE DELETED . 4. THE CIT(A) HELD AS FOLLOWS: THE ONUS LIES SQUARELY ON THE ASSESSEE TO SUBSTANTI ATE THE ADDITIONS TO ASSETS AS CLAIMED BY IT. THE VERY FUNDAMENTAL STARTING POINT FOR DEPRECIATION IS THE EXISTENCE OF AN ASSET. IN THE PRESENT CASE NEITHE R DURING THE ASSESSMENT PROCEEDINGS NOR DURING THE APPEAL PROCEEDINGS HAS THE ASSESSEE BEEN ABLE TO SUBSTANTIATE THE EXISTENCE OF A NEW COMPUTERS OR OF LEASE HOLD DEVELOPMENTS. EVEN THOUGH THE ASSESSEE HAS STATED THAT IT HAD FURNISHED THE RELEVANT DETAI LS YET HE FOUND THAT NO SUCH DETAILS WERE FURNISHED. SINCE THE VERY PRESENCE OF THE ASSETS IS UNSUBSTANTIATED HE HELD THAT THE QUESTION OF ALLOW ING DEPRECIATION ON NON EXISTING ASSETS DOES NOT ARISE. ACCORDINGLY THE ADDITION ON THIS ACCOUNT IS HELD T O BE CORRECTLY MADE. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US A ND SUBMITTED AS FOLLOWS: ITA NO.160 & 133/HYD/2011 M/S OGENE SYSTEMS INDIA PVT. LTD. HYDERABAD 3 1. THE CIT(A) ERRED WHILE CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER WHERE BY THE EXPENSES CLAIMED BY THE ASSESSEE U/S 32 TOWARDS DEPRECIATION AMOUNTING TO RS.2 60 369/- HAS BEEN DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE WHICH IS NOT CORRECT NOT JUSTIFIED BAD IN LAW. 2. THE ASSESSEE HAS ALL BOOKS OF ACCOUNTS LEDGERS VOUCHERS OF PAYMENTS AND RELATING TO SUCH ADDITIONS INCURRED AND ARE PROPERLY MAINTAINED. 3. THE CIT(A) ERRED WHILE CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER BY ADDING AN AMOUNT OF RS.2 60 369/- TO THE TOTAL INCOME WITHOUT GIVING REASONABLE TIME TO SUBMIT THE BOOKS OF ACCOUNTS AND WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD WHICH IS NOT CORRECT AND NOT JUSTIFIED AND BAD IN LAW. 4. ON THE BASIS OF THE ABOVE THE DEPRECIATION MAY PLEA SE BE CONSIDERED AS PER THE BOOKS OF ACCOUNTS AND MAY BE ALLOWED TO CLAIM AS EXPENDITURE FOR THE ASSESSME NT YEAR 2007-08 AS THE ASSESSEE HAS ALREADY SUBMITTED ALL THE NECESSARY DOCUMENTS RELATING TO SUCH EXPENDITURE. 5. THE CIT(A) ERRED WHILE CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) STATING THAT THE ASSESSEE COMPANY HAS NOT FILED ALL THE NECESSARY DOCUMENTS RELATING TO EXPENDITURE AND DEDUCTIONS CLAIMED BY THE ASSESSEE WHICH IS NOT CORRECT AND NO T JUSTIFIED AND BAD IN LAW. 6. THE ASSESSING OFFICER ALSO MADE ADDITIONS TOWAR DS DISALLOWANCE OF 50% OF THE EXPENSES AMOUNTING TO RS.7 63 621/-. IT WAS SUBMITTED BY THE LEARNED AUT HORIZED REPRESENTATIVE THAT THE ASSESSEE HAS ALL BOOKS OF A CCOUNTS EVIDENCES/PROFITS LEDGERS VOUCHERS OF PAYMENTS AN D RECEIPTS MAINTAINED BY HIM REGARDING THE EXPENDITUR E INCURRED DURING THE YEAR. IT WAS FURTHER SUBMITTED THAT THE ITA NO.160 & 133/HYD/2011 M/S OGENE SYSTEMS INDIA PVT. LTD. HYDERABAD 4 ASSESSING OFFICER HAS NOT GIVEN REASONABLE TIME TO THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER INFORMATION AND HAS PASSED THE ORDER U/S 144 OF IT ACT 1961 WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD W HICH IS NOT CORRECT AND NOT JUSTIFIED AND BAD IN LAW. IT W AS CONTENDED THAT THE ASSESSING OFFICER HAS ADDED AN A MOUNT OF RS.7 63 621/- TO THE TOTAL INCOME WITHOUT GIVING REASONABLE TIME TO SUBMIT THE BOOKS OF ACCOUNTS AND WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD WHICH IS NOT CORRECT AND NOT JUSTIFIED AND BAD IN LAW. 7. THE CIT(A) HELD THAT THE ASSESSEE HAS NOT ABLE TO SUBSTANTIATE ITS CLAIM OF OTHER EXPENSES. HOWEVE R BUSINESS IS BEING CARRIED OUT AND REGULAR BOOKS HAD BEEN VERIFIED BY THE ASSESSING OFFICER. FURTHER HE SUB MITTED THAT THE BOOKS ALSO WERE NOT REJECTED BY THE ASSESSING O FFICER. THEREFORE IT IS CLEAR THAT SOME EXPENSES WERE DEFI NITELY INCURRED WITH RESPECT TO OTHER EXPENSES. THE CIT (A) OBSERVED THAT THE DISALLOWANCE OF 50% OF THE EXPENS ES IS AD HOC AND WITHOUT ANY BASIS OR FACTS. THE CIT(A) OBS ERVED THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE CLAIM O F THE EXPENSES AND ALSO THERE MIGHT BE INFLATION OF SOME OF THE EXPENSES BY THE ASSESSEE AND THEREFORE RESTRICTED T HE DISALLOWANCE TO 10%. 8. AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE CIT(A) AND RAISED THE FOLL OWING GROUNDS: 1. THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANC E MADE BY THE ASSESSING OFFICER TOWARDS OTHER ITA NO.160 & 133/HYD/2011 M/S OGENE SYSTEMS INDIA PVT. LTD. HYDERABAD 5 EXPENSES AS THE ASSESSEE COULD NOT PRODUCE ANY PRO OF IN SUPPORT THE EXPENSES CLAIMED. 2. THE CIT(A) IS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE OF EXPENDITURE TO 10% OF THE EXPENSES AS AGAINST 50% OF EXPENSES EVEN THOUGH THE ASSESSEE DI D NOT PRODUCE ANY PROOF IN SUPPORT OF THE CLAIM EVEN BEFORE THE CIT(A). 9. THE LEARNED COUNSEL FOR THE ASSESSEE APPEARED B EFORE US AND REITERATED THE SUBMISSIONS MADE WITH RESPECT TO CLAIM OF DEPRECIATION. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAS ALREADY FURNISHED DETAILS OF DEPRECIATION ON ADDITIONS TO COMPUTER AND LEASE HOL D DEVELOPMENTS TO THE ASSESSING OFFICER AT THE TIME O F ASSESSMENT. 10. WE HEARD BOTH THE PARTIES. WE FIND FROM THE O RDER OF THE CIT(A) THAT HE HAS OBSERVED THAT THE VERY PRESE NCE OF THE ASSETS HAVE BEEN UNSUBSTANTIATED AND HENCE DEPRECIATION CANNOT BE ALLOWED ON NON EXISTING ASSE TS. SINCE THE LEARNED COUNSEL FOR THE ASSESSEE INSISTED THAT DETAILS OF DEPRECIATION HAVE BEEN FURNISHED WE REM IT BACK THE MATTER TO THE CIT(A) TO GIVE ONE MORE OPPORTUNI TY TO THE ASSESSEE TO PRODUCE THE NECESSARY PROOF FOR THE EXI STENCE OF THE ASSETS AND THEREAFTER DECIDE IN ACCORDANCE WIT H LAW. 11. WITH RESPECT TO THE DEPARTMENT APPEAL OBJECTIN G TO THE RESTRICTION OF DISALLOWANCE OF EXPENDITURE TO 1 0% OF THE EXPENSES AS AGAINST 50% OF THE EXPENSES THE LEARNE D DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT NO PRO OF WAS PRODUCED IN SUPPORT OF THE CLAIM EITHER BEFORE HIM OR BEFORE ITA NO.160 & 133/HYD/2011 M/S OGENE SYSTEMS INDIA PVT. LTD. HYDERABAD 6 THE CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE C OUNTERED BY SAYING THAT THE ASSESSEE PRODUCED ALL BOOKS OF A CCOUNTS LEDGERS VOUCHERS OF PAYMENTS WHICH HAVE BEEN PROPE RLY MAINTAINED. IN THESE CIRCUMSTANCES WE REMIT THE I SSUE TO THE FILE OF CIT(A) TO VERIFY THE NECESSARY DOCUMENT S REGARDING TO EXPENDITURE AND DECIDE THE ISSUE IN AC CORDANCE WITH LAW. 11. IN THE RESULT BOTH THE ASSESSEES AS WELL AS THE REVENUE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT 16.11.2011 SD/- SD/- (CHANDRA POOJARI) ( (ASHA VIJAYA AGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 16 TH NOV 2011 COPY FORWARDED TO: 1. THE DCIT/ACIT CIRCLE 16(3) HYDERABAD. 2. M/S OGENE SYSTEMS INDIA PVT. LTD. 11-6/56 MOOSAPET VILLAGE KUKATPALLY HYDERABAD. 3. THE CIT(A)- V HYDERABAD 4. THE CIT HYDERABAD 5. THE DR ITAT HYDERABAD NP/