M/s. Leora Jewellery, Surat v. The Income Tax Officer, Ward-9(2), Surat

ITA 1625/AHD/2013 | 2008-2009
Pronouncement Date: 28-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 162520514 RSA 2013
Assessee PAN AACFL7071Q
Bench Ahmedabad
Appeal Number ITA 1625/AHD/2013
Duration Of Justice 3 year(s) 4 month(s) 28 day(s)
Appellant M/s. Leora Jewellery, Surat
Respondent The Income Tax Officer, Ward-9(2), Surat
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 28-10-2016
Date Of Final Hearing 03-08-2016
Next Hearing Date 03-08-2016
Assessment Year 2008-2009
Appeal Filed On 31-05-2013
Judgment Text
I.T.A. NO . 1625 /AHD/20 1 3 A SSESSMENT Y EAR: 20 0 8 - 09 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD [CORAM: PRAMOD KUMAR AM] I.T.A. NO. 1 625 /A HD/ 20 1 3 ASSESSMENT Y EAR : 20 0 8 - 09 LEORA JEWELLERY ..... ...... . ... . APPELLANT 55/A SPECIAL ECONOMIC ZONE SACHIN G.I.D. C. SURAT 394 230. [ PAN: AACFL 7071 Q ] VS. INCOME TAX OFFICER WARD 9 ( 2 ) SURAT . ............... . RESPONDENT APPEARANCES BY: PARIN SHAH FOR THE APPELLANT SATISH SOLANKI FOR THE RESPONDENT D ATE OF CONCLUDI NG THE HEARING : 0 2 .0 8 .2016 DATE OF PRONOUNCING THE ORDER : 28 .10.2016 O R D E R 1. THIS APPEAL FILED BY THE ASSESSEE CALLS INTO QUESTION CORRECTNESS OF THE LEARNED CITA S ORDER DATED 20 TH MARCH 2013 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX AT 1961 FOR THE ASSESSMENT YEAR 20 0 8 - 09 . 2. IN THE FIRST GROUND OF APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CO NFIRMING THE DISALLOWANCE OF THE EXPENSES 'TO THE TUNE OF RS.2 08 002/ - U/S. 40(A)(IA) OF THE ACT. 3. SO FAR AS THIS GRIEVANCE IS CONCERNED IT IS SUFFICIENT TO TAKE NOT E OF THE FACT THAT AN AMOUNT OF RS.2 08 002/ - PAID TO DIAMONDS & GEMS DEVELOPMENT COR PORATION WITHOUT DEDUCTION OF TAX AT SOURCE AND IT WAS FOR THIS RE A SON THAT THE EXPENDITURE WAS DISALLOWED I.T.A. NO . 1625 /AHD/20 1 3 A SSESSMENT Y EAR: 20 0 8 - 09 PAGE 2 OF 7 UNDER SECTION 40(A)(IA) OF THE ACT IN APP EA L LEARNED CIT (A) CONFIRMED THE DISALLOWANCE. NOT SATISFIED THE ASSESSEE IS IN FURTHER APPEAL BEFORE M E. 4. I HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 5. SO FAR AS DISALLOWANCE UNDER SECTION 40(A)(IA) IS CONCERNED IN VIEW OF HON BLE DELHI HIGH COURT S JUDGEMENT IN THE C A SE OF CIT VS . ANSAL LANDMARK TOWNSHIPS PVT . LTD . [(2015 377 ITR 635 (DEL)] SECOND PROVISO IS REQUIRED TO BE TREATED A S RETROSPECTIVE IN EFFECT AND THEREFORE A LONG AS RECIPIENT HAS DISCHARGED HIS TAX LIABILITY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED. A DIVISION BENCH OF THIS TRIBUNAL HAS IN THE CASE OF RKP & CO. VS. ITO (ITA NO.106/RPR/2016 ORDER DATED 24.06.2016) OBSERVED AS FOLLOWS : - 4. WE FIND THAT HON BLE DELHI HIGH COURT HAS SPECIFICALLY APPROV ED THE STAND TAKEN BY A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF RAJEEV KUMAR AGARWAL VS ACIT [(2014) 149 ITD 363 (AGRA)] AND UPHELD THE ACTION OF THE TRIBUNAL IN FOLLOWING THE SAME. 9. . NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION AND THUS OBVIATE THE UNINTENDED HARDSHIPS SUCH AN AMENDMENT IN LAW IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RE TROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSIONS AS ALSO FOR THE DET AILED REASONS SET OUT EARLIER WE CANNOT SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN INTENDED CONSEQUENCE TO PUNISH THE ASSESSEES FOR NON DEDUCTION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS EVEN WHEN THE CORRESPONDI NG INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL 2005 BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT 2004. 10. IN VIEW OF THE ABOVE DISCUSSIONS WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH I.T.A. NO . 1625 /AHD/20 1 3 A SSESSMENT Y EAR: 20 0 8 - 09 PAGE 3 OF 7 ADJUDICATION IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND AFTER CARRYING OUT NECESSARY VERIFICATIONS REGARDING RELATED PAYMENTS HAVING BEEN TAKEN INTO ACCOUNT BY THE RECIPIENTS IN COMPUTATION OF THEIR INCOME REGARDING PAYMENT OF TAXES IN RESPECT OF SUCH INC OME AND REGARDING FILING OF THE RELATED INCOME TAX RETURNS BY THE RECIPIENTS. WHILE GIVING EFFECT TO THESE DIRECTIONS THE ASSESSING OFFICER SHALL GIVE DUE AND FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE DECIDE THE MATTER IN ACCORDANCE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. WE ORDER SO 5. IN EFFECT THUS THEIR LORDSHIPS HAVE APPROVED THE ACTION OF THE TRIBUNAL IN REMITTING THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ASCERTAIN WHETHER THE RECIPIENT HAS TAKEN INTO ACCOUNT RELAT ED PAYMENTS INTO COMPUTATION OF HIS INCOME AND OFFERING THE SAME TO TAX AND IF SO DELETE THE DISALLOWANCE UNDER SECTION 40(A)(IA) IN RESPECT OF THE SAME. 6. WHEN HOWEVER WE ASKED THE LEARNED DEPARTMENTAL REPRESENTATIVE AS TO WHY WE SHOULD ALSO NOT REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE SAME DIRECTIONS HE ALONGWITH HIS SENIOR COLLEAGUE SHRI DARHAN SINGH WHO HAPPENS TO BE THE CIT(A) AUTHORING THE IMPUGNED ORDER AND WHO WAS ON DUTY AS CIT(DR) BEFORE US HAD THREE POINTS TO M AKE - FIRST THAT THERE ARE DECISIONS IN SUPPORT OF THE STAND OF THE ASSESSING OFFICER S STAND BY WAY OF HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT VS CIT [(2015) 63 TAXMANN.COM 99 (KERALA)] ; SECOND THAT EVEN IF INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) CAN BE CONSTRUED AS RETROSPECTIVE IN EFFECT THE CORRESPONDING RULE IN THE INCOME TAX RULES 1962 IS NOT AND HAS NOT BEEN HELD TO BE RETROSPECTIVE AND THE SECOND PROVISO TO SECTION 40(A)(IA) CANNOT THEREFORE BE GIVE RETROSPECTIVE EFFECT; AND THIRD THAT THERE IS NO DECISION ON THIS ISSUE BY HON BLE JURISDICTIONAL HIGH COURT AND AS SUCH THE STAND OF THE ASSESSING OFFICER CANNOT BE FAULTED. 7. AS FOR HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA) UNDOUBTEDLY OUTSIDE THE JURISDICTION OF HON BLE KERALA HIGH COURT AND OUTSIDE THE JURISDICTION OF HON BLE DELHI HIGH COURT - WHICH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE THERE ARE CONFLICTING DECISIONS ON THE ISSUE OF RESTROSPE CTIVITY OF SECOND PROVISO TO SECTION 40(A)(IA). IT IS THUS EVIDENT THAT VIEWS OF THESE TWO HIGH COURTS ARE IN DIRECT CONFLICT WITH EACH OTHER. CLEARLY THEREFORE THERE IS NO MEETING GROUND BETWEEN THESE TWO JUDGMENTS. THE DIFFICULTY ARISES AS TO WHICH OF THE HON BLE NON JURISDICTIONAL HIGH COURT IS TO BE FOLLOWED BY US IN THE PRESENT SITUATION. IT WILL BE WHOLLY INAPPROPRIATE FOR US TO CHOOSE VIEWS OF ONE OF THE HIGH COURTS BASED ON OUR PERCEPTIONS ABOUT REASONABLENESS OF THE RESPECTIVE VIEWPOINTS AS SUC H AN EXERCISE WILL DE FACTO AMOUNT TO SITTING IN JUDGMENT OVER THE VIEWS OF THE HIGH COURTS SOMETHING DIAMETRICALLY OPPOSED TO THE VERY BASIC PRINCIPLES OF HIERARCHICAL JUDICIAL SYSTEM. WE HAVE TO WITH OUR HIGHEST RESPECT OF BOTH THE HON BLE HIGH COURTS ADOPT AN OBJECTIVE CRITERION FOR DECIDING AS TO WHICH OF THE HON BLE HIGH COURT SHOULD BE FOLLOWED BY US. WE FIND GUIDANCE FROM THE JUDGMENT OF HON BLE SUPREME COURT IN THE MATTER OF CIT VS. VEGETABLE PRODUCTS LTD. [(1972) 88 ITR 192 (SC)] . HON BLE SUPREME COURT HAS LAID DOWN A PRINCIPLE THAT 'IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED'. THIS PRINCIPLE HAS BEEN CONSISTENTLY FOLLOWED BY THE VARIOUS AUTHORITIES AS ALSO BY T HE HON BLE I.T.A. NO . 1625 /AHD/20 1 3 A SSESSMENT Y EAR: 20 0 8 - 09 PAGE 4 OF 7 SUPREME COURT ITSELF. IN ANOTHER SUPREME COURT JUDGMENT PETRON ENGG. CONSTRUCTION (P) LTD. & ANR. VS. CBDT & ORS. (1988) 75 CTR (SC) 20 : (1989) 175 ITR 523 (SC) IT HAS BEEN REITERATED THAT THE ABOVE PRINCIPLE OF LAW IS WELL ESTABLISHED AND TH ERE IS NO DOUBT ABOUT THAT. HON BLE SUPREME COURT HAD HOWEVER SOME OCCASIONS TO DEVIATE FROM THIS GENERAL PRINCIPLE OF INTERPRETATION OF TAXING STATUTE WHICH CAN BE CONSTRUED AS EXCEPTIONS TO THIS GENERAL RULE. IT HAS BEEN HELD THAT THE RULE OF RESOLVING AMBIGUITIES IN FAVOUR OF TAX - PAYER DOES NOT APPLY TO DEDUCTIONS EXEMPTIONS AND EXCEPTIONS WHICH ARE ALLOWABLE ONLY WHEN PLAINLY AUTHORISED. THIS EXCEPTION LAID DOWN IN LITTMAN VS. BARRON 1952(2) AIR 393 AND FOLLOWED BY APEX COURT IN MANGALORE CHEMICALS & FERTILIZERS LTD. VS. DY. COMMR. OF CT (1992) SUPPL. (1) SCC 21 AND NOVOPAN INDIA LTD. VS. CCE & C 1994 (73) ELT 769 (SC ) HAS BEEN SUMMED UP IN THE WORDS OF LORD LOHEN 'IN CASE OF AMBIGUITY A TAXING STATUTE SHOULD BE CONSTRUED IN FAVOUR OF A TAX - PAYER DOES NOT APPLY TO A PROVISION GIVING TAX - PAYER RELIEF IN CERTAIN CASES FROM A SECTION CLEARLY IMPOSING LIABILITY'. THIS EXCEPTION IN THE PRESENT CASE HAS NO APPLICATION. THE RULE OF RESOLVING AMBIGUITY IN FAVOUR OF THE ASSESSEE DOES NOT ALSO APPLY WHERE THE INTERPRETATION IN FAVOUR OF ASSESSEE WILL HAVE TO TREAT THE PROVISIONS UNCONSTITUTIONAL AS HELD IN THE MATTER OF STATE OF M.P. VS. DADABHOY S NEW CHIRMIRY PONRI HILL COLLIERY CO. LTD. AIR 1972 (SC) 614 . THEREFORE WHAT FOLLOWS IS THAT IN THE PECULIAR CIRCUMSTANCES OF THE CASE AND LOOKING TO THE NATURE OF THE PROVISIONS WITH WHICH WE ARE PRESENTLY CONCERNED THE VIEW EXPRESSED BY THE HON BLE DELHI HIGH COURT IN THE CASE OF ANSAL LANDMARK (SUPRA) WHICH IS IN FAVOUR OF ASSESSEE IS REQUIRED TO BE FOLLOWE D BY US. REVENUE DOES NOT THEREFORE DERIVE ANY ADVANTAGE FROM HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA). 8. THE SECOND ISSUE IS WITH RESPECT TO THE SECOND PROVISO TO SECTION 40(A)(IA) BEING HELD TO BE RETROSPECTIV E WITHOUT CORRESPONDING ENABLING PROVISION IN THE RULES BEING HELD TO BE RETROSPECTIVE. THAT IS A HYPER TECHNICAL ARGUMENT AND TOO PEDANTIC AN APPROACH. THE SECOND PROVISO TO SECTION 40(A)(IA) WAS HELD TO BE RETROSPECTIVE IN IN THE CONTEXT OF FINDING SOLU TION TO THE PROBLEM TO THE TAXPAYER AND THE MATTER WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS ABOUT FACTUAL VERIFICATIONS ON THE RECIPIENT HAVING INCLUDED THE SAME IN THE RECEIPTS BASED ON WHICH TAXABLE INCOME IS COMPUTED AND THE INCOME HAVING BEEN OFFERED TO TAX. IT IS THIS ACTION OF THE COORDINATE BENCH THAT WAS UPHELD BY THE TRIBUNAL AND THE COURSE OF ACTION SO ADOPTED BY THE COORDINATE BENCH APPROVED BY THEIR LORDSHIPS. IT IS IMPERMISSIBLE TO PICK UP ONE OF THE ASPECTS OF THE DECISION OF THE JUDICIAL AUTHORITY AND READ THE SAME IN ISOLATION WITH OTHER ASPECTS. THE DECISION IS NOT ON THE RETROSPECTIVITY OF THE PROVISO ALONE ITS ALSO ON DELETION OF DISALLOWANCE IN THE EVENT OF THE RECIPIENT HAVING TAKEN INTO ACCOUNT THESE RECEIPTS IN THE COMPUTATION OF INCOME. THE JUDGE MADE LAW IS AS BINDING ON THE AUTHORITIES BELOW AS IS THE LEGISLATED STATUE. THE HYPER TECHNICAL STAND OF THE DEPARTMENTAL REPRESENTATIVES THEREFORE DOES NOT MERIT OUR APPROVAL. 9. AS REGARDS LACK OF GUI DANCE FROM HON BLE JURISDICTIONAL HIGH COURT THAT CAN NOT BE REASON ENOUGH TO DISREGARD THE DECISIONS FROM NON - JURISDICTIONAL HIGH COURTS. HON BLE COURTS ABOVE BEING A HIGHER TIER OF THE JUDICIAL HIERARCHY BIND THE LOWER FORUMS NOT ONLY IN THE JURISDICT ION OF RESPECTIVE HIGH COURTS BUT UNLESS THERE IS ANYTHING CONTRARY THERETO BY THE JURISDICTIONAL HIGH COURTS OTHER JURISDICTIONS AS WELL. THERE CANNOT BE ANY DISPUTE ON THE FUNDAMENTAL PROPOSITION I.T.A. NO . 1625 /AHD/20 1 3 A SSESSMENT Y EAR: 20 0 8 - 09 PAGE 5 OF 7 THAT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE BETTER WISDOM OF THE COURT BELOW HAS TO YIELD TO HIGHER WISDOM OF THE COURT ABOVE AND THEREFORE WE HAVE TO HUMBLY BOW BEFORE THE VIEWS EXPRESSED BY HON BLE COURTS ABOVE. SUCH A HIGH COURT BEING A NON - JURISDICTIONAL HIGH COURT DOES NOT ALTER THE POSITION A S LAID DOWN BY HON BLE BOMBAY HIGH COURT IN THE MATTER OF CIT VS. GODAVARI DEVI SARAF ([1978) 113 ITR 589 (BOM)] AND AS ANALYSED BY A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS AURANGABAD HOLIDAY RESORTS PVT LTD [(2009) 118 ITD 1 (PUNE)] . 10 . IN VIEW OF THE ABOVE DISCUSSIONS AS ALSO BEARING IN MIND ENTIRETY OF THE CASE WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR LIMITED VERIFICATION ON THE ASPECT AS TO WHETHER RECIPIENT OF PAYMENT HAS INCLUDED THE SAME IN HIS COMPUTATION OF BUSINESS INCOME OFFERED TO TAX AND IF FOUND TO BE SO DELETE THE DISALLOWANCE IN QUESTION. WITH THESE DIRECTIONS THE MATTER STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 6. IN VIEW OF THE VIEW SO TAKEN BY THE DIVISIO N BENCH AND IN THE LIGHT OF HON BLE DELHI HIGH COURT DECISION IN THE CASE OF ANSAL LANDMARK TOWNSHIP (SUPRA) I REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO IN THE LIGHT OF OUR ABOVE OBSERVATIONS . ORDER ACCORDINGLY. 7. GR OUND NO.1 IS THUS ALLOWED. 8 . IN GROUND NO.2 THE GRIEVANCE IS AS FOLLOWS : - 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITIONS TO THE TUNE OF RS.4 57 875 / - ON ACCOUNT OF ALLEGED BALANCE SH EET DIFFERENCE. 9 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE CAPITAL EXPENDITURE OF RS. 4 57 875/ - FOR PURCHASE OF MACHINERY W AS WRONGLY DEBITED TO PROFIT AND LOSS ACCOUNT BUT SUBSEQUENTLY REVERSED. THE PROOF OF M ACHINERY PURCHASE WAS ALSO FILED BEFORE THE ASSESSING OFFICER. YET T HE AS SESSING OFFICER PROCEEDED TO MAKE ADDITION OF RS.4 57 875/ - AS BALANCE SHEET DIFFERENCE. AGGRIEVED ASSESSEE CARRIED T HE MATTER IN APPEAL BEFORE THE LEARNED CIT ( A ) WHO CONFIRMED TH E ACTION OF THE ASSESSING OFFICER BY OBSERVING A FOLLOWS : - I.T.A. NO . 1625 /AHD/20 1 3 A SSESSMENT Y EAR: 20 0 8 - 09 PAGE 6 OF 7 6.2.1 THE CONTENTION OF THE APPELLANT IS MISPLACED IN VIEW OF THE ACCOUNTING PRINCIPLES AND TAXATION PROVISIONS. THE FACT REMAINS THAT THE ASSET WHICH WAS PURCHASED IN THE RELEVANT A.Y. WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS AND BALANCE SHEET. THE CONTENTION THAT IT ACTUALLY MAKES NO EFFECT IN THE REPORTING OF PROFIT IS INCORRECT BECAUSE THE PROVISIONS OF THE LAW HAVE TO BE FOLLOWED IN LETTER AND SPIRITS BOTH. THE APPELLANT HAS ADMITTED THAT DUE TO THE ERROR THE MACHINERY PURCHASED DURING THE YEAR COULD NOT HAVE BEEN REFLECTED IN THE BALANCE SHEET. THE NON DISCLOSURE OF THIS TRANSACTION IS IN VIOLATION OF THE ACCOUNTING PRINCIPLE AND INCOME TAX ACT AND THEREFORE THE ADDITION MADE BY THE ASSE SSING OFFICER IS UPHELD AND THE GROUND OF APPEAL IS DISMISSED. 6.3 T HE GROUNDS OF APPEAL - GROUND NO. 3 PERTAINS TO ADDITION OF THE SUM OF RS.1 72 090 / - BEING THE AMOUNT OF DEPRECIATION NOT DEBITED BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS. ON VERIFICATION BY THE ASSESSING OFFICER IT WAS FOUND THE ELIGIBLE DEPRECIATION HAS BEEN QUANTIFIED AT RS. 1 72 0907 - ON THE ASSETS. IT IS SEEN THAT THE APPELLANT HAS NOT DEDUCTED THE SAID DEPRECIATION BEFORE ARRIVING AT THE THEREBY CLAIMED EXCESS DEDUCTION U/S. 10AA OF TH E IT ACT TO THE EXTENT I.E. RS. 1 72 090 / - . THE APPELLANT WAS LIABLE TO REDUCE THE AMOUNT OF DEPRECIATION AS PER THE PROVISIONS OF IT ACT WHICH HAS NOT BEEN DONE. THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER IS UPHELD AND THE GROUND OF APPEAL IS DISMISSED. 10 . AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE ME. 1 1 . HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PURSED THE MATERIAL ON RECORD I FIND THAT ADDITION IS INDEED DEVOID OF ANY LEGALLY SUSTAINABLE MERITS INASMUCH AS THE ENTRY IS REASONABLY E XPLAINED AND JUST BECAUSE A MACHINERY IS NOT SHOWN DUE TO ACCOUNTING ERROR IT CANNOT BE ADDED TO INCOME. I THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.4 57 875/ - ON ACCOUNT OF BALANCE SHEET DIFFERENCE. 12. GROUND NO.2 IS THUS A LLOWED. 1 3 . GROUND NO.3 IS NOT PRESSED BY THE APPELLANT AND IS DISMISSED AS SUCH. 1 4 . IN GROUND NO.4 THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: - 4) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING T HE ACTION OF THE ID. A.O. IN NOT ALLOWING THE EXEMPTION U/S 10AA OF THE ACT. I N RESPECT OF TOTAL BUSINESS INCOME OF RS.10 59 95 776/ - DETERMINED BY THE ID. A.O. VIDE THE ORDER OF ASSESSMENT DATED 29/12/2010. IT IS THEREFORE PRAYED THAT THE EXEMPTION U/S . 10AA OF THE ACT BE GRANTED TO THE EXTENT OF ASSESSED BUSINESS INCOME OF RS.10 59 95 776/ - AS DETERMINED BY THE ID. A.O. I.T.A. NO . 1625 /AHD/20 1 3 A SSESSMENT Y EAR: 20 0 8 - 09 PAGE 7 OF 7 1 5 . WHILE COMPUTING THE ASSESSED INCOME THE ASSESSING OFFICER RESTRICTED THE EXEMPTION UNDER SECTION 10AA TO THE AMOUNT AS CLAIMED AND DID NOT EXTEND THE SAME TO ENTIRE BUSINESS INCOME. AGGRIEVE D ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. NOT SATISFIED THE ASSESSEE IS IN FURTHER APPEAL BEFORE ME. 16 . I HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 17 . I FIND THAT THE ISSUE IS NOW SETTLED IN FAVO UR OF THE ASSESSEE BY HON BLE BOMBAY HIGH COURT S JUDGEMENT IN THE CAS E OF CIT VS. GEM PLUS J EWELLERY INDI A LIMITED [(2011) 330 ITR 175 (BOM)] A ND BY HON BLE JURISDICTIONAL HIGH COURT S JUDGEMENT IN THE CASE OF CIT V. MITE S H IMPEX [(2014) 270 CTR 66 (GUJ)]. THE ASSESSING OFFICER IS THEREFORE DIRECTED TO GRANT EXEMPTION UNDER SECTION 10AA IN RE SPECT OF ASSESSED BUSINESS INCOME . 18. GROUND NO.4 IS THUS ALLOWED . 19. IN THE RESULT THE APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 28 TH DAY OF OCTOBER 2016. SD/ - PRAMOD KUM AR (ACCOUNTANT MEMBER) DATED: THE 28 TH DAY OF OCTOBER 2016. PBN/* COPIES TO: (1) THE APPELLANT ( 2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT R EGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD