Smt. Kaumudi Shamsunder Somani,, Aurangabad v. Assistant Commissioner of Income-tax ,,

ITA 1650/PUN/2014 | 2010-2011
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 165024514 RSA 2014
Assessee PAN AQSPS1626G
Bench Pune
Appeal Number ITA 1650/PUN/2014
Duration Of Justice 2 year(s) 28 day(s)
Appellant Smt. Kaumudi Shamsunder Somani,, Aurangabad
Respondent Assistant Commissioner of Income-tax ,,
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-09-2016
Date Of Final Hearing 19-09-2017
Next Hearing Date 19-09-2017
Assessment Year 2010-2011
Appeal Filed On 01-09-2014
Judgment Text
] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE ! ' $ % BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURV EDI AM ITA NO.1650/PN/2014 ASSESSMENT YEAR : 2010-11 SMT. KAUMUDI SHAMSUNDER SOMANI PROP. OF M/S SUDARSSHAN POLLYALLOYS PLOT NO.K-25 MIDC WALUJ DIST. AURANGABAD. PAN : AQSPS1626G . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 2 AURANGABAD. . RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI P. L. KUREEL / DATE OF HEARING : 27.09.2016 / DATE OF PRONOUNCEMENT: 30.09.2016 & / ORDER PER ANIL CHATURVEDI AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AURANGABAD DATED 21.07.201 4 FOR THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER :- 2.1 ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF MASTER BATCHES AND GRA NUALS IN THE NAME AND STYLE OF M/S SUDARSHAN POLLYALLOYS. THE ASSESSEE FILED HER RETURN OF INCOME FOR 2 ITA NO.1650/PN/2014 ASSESSMENT YEAR 2010-11 ON 22.09.2010 AND SUBSEQUEN TLY REVISED THE RETURN OF INCOME ON 08.01.2011 DECLARING TOTAL INCOME OF RS.3 5 64 500/- AND AGRICULTURAL INCOME OF RS.2 05 000/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE I NCOME TAX ACT 1961 (IN SHORT THE ACT) DATED 22.11.2012 AND THE TOTAL INCOME WA S DETERMINED AT RS.40 16 898/-. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER AS SESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 21.07.2014 DISMISS ED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE IS N OW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS :- 1. HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING DISALLOWANCE OF DEPRECIATION OF RS. 1 23 398/- BY R EDUCING WRITTEN DOWN VALUE OF ASSETS BY SUBSIDY RECEIVED RS. 10 LAKHS. APPELLANT PRAYS TO CANCEL THE DISALLOWANCE AS SUBSI DY RECEIVED IS FOR ESTABLISHING UNIT IN BACKWARD AREA AND CREATING EMPLOYMENT HAS N O NEXUS WITH INVESTMENT/COST OF ASSETS. 2. APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. 3. IN THIS CASE THE NOTICE FOR HEARING WAS SERVED ON THE ASSESSEE THROUGH RPAD COPY OF WHICH IS PLACED ON RECORD. HOWEVER ON THE DATE OF HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNM ENT APPLICATION WAS FILED. WE THEREFORE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CREDITED RS.10 00 000/- TO RESERV ES AND SURPLUS ON ACCOUNT OF SUBSIDY RECEIVED. THE ASSESSEE WAS ASKED AS TO WHE THER SHE HAD REDUCED THE AMOUNT OF SUBSIDY FROM THE RESPECTIVE BLOCK OF ASSE T AS PER THE PROVISIONS OF SECTION 43 READ WITH EXPLANATION 10 TO WHICH ASSESS EE INTER-ALIA SUBMITTED THAT THE AMOUNT WAS RECEIVED FOR DOING BUSINESS IN BACKWARD AREA AND TO ENCOURAGE THE ENTREPRENEURS AND WAS THEREFORE NOT TAXABLE. THE L D. ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTIONS OF ASSESSEE. HE WAS OF THE VIEW THAT THE ASSESSEE WAS 3 ITA NO.1650/PN/2014 REQUIRE TO BE REDUCED THE SUBSIDY AMOUNT RECEIVED F ROM THE RESPECTIVE BLOCK OF ASSET AND THEREAFTER ON AFTER REDUCED AMOUNT THE A SSESSEE SHOULD HAVE CLAIMED THE DEPRECIATION. THE LD. ASSESSING OFFICER THEREA FTER REDUCING THE SUBSIDY AMOUNT FROM THE BLOCK OF ASSETS RE-WORKED THE EXCESS DEPRE CIATION TO THE EXTENT OF RS.1 23 398/- AND DISALLOWED THE SAME. AGGRIEVED B Y THE ORDER OF LD. ASSESSING OFFICER ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A) WHO UPHELD THE ORDER OF LD. ASSESSING OFFICER BY HOLDING AS UNDER :- 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICED THAT EXPLA NATION-10 TO SECTION 43(1) WAS INTRODUCED WITH EFFECT FROM A.Y.1999-2000 AND THE D ECISION RELIED ON BY THE APPELLANT OF HONBLE SUPREME COURT IN THE CASE OF C IT VS. P. J. CHEMICALS LTD. (1994) 210 ITR 830 HAS BEEN DELIVERED MUCH PRIOR TO THE INTRODUCTION OF EXPLANATION-10 TO SECTION 43(1) IN THE STATUTE. IN ORDER TO DECIDE THE ISSUE UNDER APPEAL THE PROVISIONS OF SECTION 43(1) ARE TO BE C ONSIDERED AND HENCE THE SAME ARE REPRODUCED BELOW '43. IN SECTION 28 TO 41 AND IN THIS SECTION UNLES S THE CONTEXT OTHERWISE REQUIRES- (1) 'ACTUAL COST' MEANS THE ACTUAL COST OF THE ASSE TS TO THE ASSESSEE REDUCED BY THAT PORTION OF THE COST THEREOF IF ANY ' AS HAS BEEN MET DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHO RITY- EXPLANATION 10- WHERE A PORTION OF COST OF AN ASSET ACQUIRED BY THE ASSESSEE HAS BEEN MET DIRECTLY OR INDIRECTLY BY THE CENTRAL OR A STATE GOVERNMENT OR ANY AUTHORITY ESTABLISHED UNDER ANY L AW OR BY ANY OTHER PERSON IN THE FORM OF A SUBSIDY OR GRANT OR REIMBURSEMENT (BY WHATEVER NAME CALLED) THEN SO MUCH FOR THE COST A S 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 REIMBU RSEMENT IS OF SUCH NATURE THAT IT CANNOT BE DIRECTLY RELATABLE TO THE ASSET ACQUIRED SO MUCH OF THE AMOUNT WHICH BEARS TO THE TOTAL SUBS IDY OR REIMBURSEMENT OR GRANT THE SAME PROPORTION AS SUCH ASSET BEARS TO ALL THE ASSETS IN RESPECT OF OR WITH REFERENCE TO W HICH THE SUBSIDY OR GRANT OR REIMBURSEMENT IS SO RECEIVED SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE. FROM THE FACTS OF THE CASE IT HAS BEEN NOTICED THA T THE APPELLANT HAS RECEIVED SUBSIDY FROM STATE GOVERNMENT UNDER CAPITA L INCENTIVE SCHEME ON THE BASIS OF COST OF CAPITAL ASSETS ACQUIRED BY THE APP ELLANT. THE SUBSIDY IS CERTAINLY RELATABLE TO THE COST OF ASSETS AND CERTAINLY REDUC ED THE COST OF ASSETS INCURRED BY THE APPELLANT. IN VIEW OF THE ABOVE PROVISIONS OF E XPLANATION-10 TO SECTION 43 THE APPELLANT SHOULD HAVE DEDUCTED THE PROPORTI ONATE SUBSIDY FROM THE COST OF ASSETS FOR ARRIVING AT ALLOWABLE DEPRECIATION. T HIS PROPOSITION IS SUPPORTED BY THE FOLLOWING DECISIONS - 4 ITA NO.1650/PN/2014 (1) ALFA LAVAL INDIA LTD. VS. DCIT (2008) 117 TTJ 9 02 (PUNE) - IN THIS CASE IT HAS BEEN LAID DOWN THAT SPECIAL CAPITAL INCENTIVE THOUGH ACCRUED IN FINANCIAL YEAR 1995-96 HAVING BEEN RECEIVED BY THE ASSESSEE IN PREVIOUS YEAR 1999-2000 AND BOOK VALUE OF ASSETS HAVING ALSO BEEN ADJUSTED IN THIS YEAR ACCORDINGLY CIT(A) WAS RIGHT IN INVOKING PROVISIONS OF EXPLANAT ION 10 TO SECTION 43(1) TO CORRESPONDINGLY REDUCE THE ACTUAL COST/WDV OF ASSET S AND ALLOWING DEPRECIATION ACCORDINGLY. (2) CIT VS. JANAK STEEL TUBES (P) LTD. 179 ITR 536 (P & H) - IN THIS CASE IT HAS BEEN LAID DOWN THAT CAPITAL SUBSIDY RECEIVED BY THE ASSESSEE SHOULD BE DEDUCTED FROM THE VALUE OF PLANT AND MACHINERY AND BUILDING WHILE WORKING OUT WDV FOR ALLOWING DEPRECIATION TO THE ASSESSEE U/S 32. (3) CIT VS. JINDAL BROS. RICE MILLS 179 ITR 470 (P & H ) - IN THIS CASE IT HAS BEEN LAID DOWN THAT CAPITAL SUBSIDY OF 15% ALLOWED BY THE STATE GOVT. ON THE COST OF PLANT AND MACHINERY BUILDING ETC. FOR SETTING U P INDUSTRIES IN BACKWARD AREA WOULD REDUCE THE ACTUAL COST THEREOF WITHIN THE MEA NING OF SECTION 43(1). THE APPELLANT HAS RELIED ON THE FOLLOWING DECISIONS IN SUPPORT OF HER CONTENTION THAT THE EXPLANATION-10 TO SECTION 4 3(1) IS NOT APPLICABLE TO THE CASE UNDER APPEAL - (1) CAPITAL FOOD EXPORT (P) LTD. VS. ASSTTT.CIT A.Y .2007-08 (2012) 139 ITD 584 (MUM) - IN THIS CASE IT HAS BEEN LAID DOWN THAT SUBSIDY NOT GRANTED TOWARDS ANY SPECIFIC ASSET OR PLANT & MACHINERY IS NOT TO BE RE DUCED FROM COST OF THE ASSETS WHILE COMPUTING DEPRECIATION. THE HON'BLE ITAT HAS NOT CONSIDERED AND DISCUSSED E XPLANATION 10 TO SECTION 43. (2) DCIT VS. COSMO FILMS LTD. & ORS. A.Y.2004-05 (2 012) 13 ITR 340 (DELHI TRIB.) & DCIT VS. RELIANCE INDUSTRIES LTD. A.Y.1986 -87 (2004) 88 ITD 273 (MUMBAI SB) IN THESE CASES THE ASSESSEES HAVE RECEIVED SALES T AX SUBSIDY FOR A PERIOD OF 5 YEARS UNDER THE GOVERNMENT OF MAHARASHT RA POLICY FOR DISPERSAL OF INDUSTRIES IN UNDER DEVELOP AND DEVELOPING AREAS OF THE STATE. THE HON'BLE ITATS HAVE NOT CONSIDERED EXPLANATION-1 0 TO SECTION 43 IN VIEW OF THE FACT THAT NO SUBSIDY HAS BEEN RECEIV ED TOWARDS INVESTMENT IN ASSETS. (3) CIT VS. RELIANCE INDUSTRIES LTD. A.Y. 1986-87 (2011) 339 ITR 632 (BOM.) IN THIS CASE THE ASSESSEE HAS RECEIVED SALES TAX S UBSIDY FOR A PERIOD OF 5 YEARS UNDER THE GOVERNMENT OF MAHARASHT RA POLICY FOR DISPERSAL OF INDUSTRIES IN UNDER DEVELOP AND DEVELOPING AREAS OF THE STATE. THE HON'BLE ITAT HAS NOT CONSIDERED EXPLANATION-10 TO SECTION 43 IN VIEW OF THE FACT THAT NO SUBSIDY HAS BEEN RECEIV ED TOWARDS INVESTMENT IN ASSETS. (4) CIT VS. PONNI SUGARS AND CHEMICALS LTD. A.Y.19 86-87 (2008) 306 ITR 392 (SC) IN THIS CASE IT HAS BEEN HELD THAT INCENTIVE SUBSI DY UNDER A SCHEME FLOATED WITH A VIEW TO BOOST THE TEMPO OF ESTABLISHING NEW SUGAR FACTORIES AND SUBSTANTIAL EXPANSION OF EXISTING FACTORIES AND TO FACILITATE REPAYMENT OF TERM LOANS TOR THAT PURPOSE WAS CAPITAL IN NATURE NOTWI THSTANDING THE MECHANISM OF PRICE AND DUTY DIFFERENTIAL THROUGH WHICH IT WAS RO UTED. 5 ITA NO.1650/PN/2014 THE HON'BLE COURT HAS NOT CONSIDERED EXPLANATION-10 AS THE SAME WAS INTRODUCED FROM A.Y.99-2000 AND THE YEAR UNDER APPEAL IS 1986-87. (5) SHRI BALAJI ALLOYS VS. CIT (2011) 333 ITR 335 (J&K) IN THIS CASE EXCISE REFUND AND INTEREST SUBSIDY WA S RECEIVED BY THE ASSESSEE IN THE STATE OF JAMMU & KASHMIR AS PER NEW INDUSTRIAL POLICY OF CENTRAL GOVERNMENT. THE HON'BLE COURT HAS NOT CONSIDERED EXPLANATION-10 TO SECTION 43 IN VIEW OF THE FACT THAT NO SUBSIDY HAS BEEN RECEIV ED TOWARDS INVESTMENT IN ASSETS. (6) SASISRI EXTRACTIONS LTD. VS. ACIT A.Y.2003-04 (2010) 122 ITD 428 (VIZAG) IN THIS CASE IT HAS BEEN HELD THAT INCENTIVE IN TH E FORM OF SUBSIDY FOR SETTING- UP INDUSTRIES IN THE STATE OF ANDHRA PRADESH UNDER TARGET-2000 SCHEME CANNOT BE CONSIDERED AS PAYMENT DIRECTLY OR INDIRECTLY TO MEE T ANY PORTION OF ACTUAL COST OF ASSET AND THEREFORE CANNOT BE REDUCED FROM CAPITAL ASSETS FOR PURPOSE OF COMPUTING DEPRECIATION; THE SUBSIDY IS OUT OF THE KEN OF EXPL ANATION-10 TO SECTION 43(1). IN RESPECT OF THE DECISIONS RELIED ON BY THE APPELL ANT AT SR.NO.(1) TO (5) IT HAS BEEN NOTICED THAT THE FACTS OF THE SAID CASES A RE DIFFERENT AND INCENTIVE SCHEME UNDER WHICH THE SUBSIDY GRANTED WAS ALSO DIFFERENT AND IN THESE CASES EXPLANATION- 10 TO SECTION 43(1) HAS NOT BEEN CONSIDERED. THEREF ORE THESE DECISIONS ARE NOT APPLICABLE TO THE CASE OF THE APPELLANT. IN RESPECT OF DECISION RELIED ON BY THE APPELLANT AT SR.NO.(6) IT HAS BEEN NOTICED THAT IN CENTIVE SCHEME UNDER WHICH THE SUBSIDY GRANTED IS DIFFERENT FROM THE CASE OF THE A PPELLANT. FURTHER THE DECISION OF HON'BLE JURISDICTIONAL ITAT PUNE IN THE CASE OF AL FA LAVAL INDIA LTD. VS. DCIT (2008) 117 TTJ 902 SHALL PREVAIL OVER THE DECISION OF NON-JURISDICTIONAL ITAT VISAKHAPATNAM. IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND RESPE CTFULLY FOLLOWING THE RATIO LAID DOWN BY THE ABOVE REFERRED DECISION OF HON'BLE ITAT PUNE I HOLD THAT THE A.O. IS JUSTIFIED IN HOLDING THAT EXPLANAT ION-10 TO SECTION 43(1) IS APPLICABLE TO THE CASE OF THE APPELLANT. THE ADDITI ON OF RS.1 23 398/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION MADE BY THE A.O. IS THEREFORE CONFIRMED. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE I S NOW IN APPEAL BEFORE US. BEFORE US LD. DR SUPPORTED THE ORDERS OF LOWER AUT HORITIES. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L ON RECORD. THE ISSUE IS IN THE PRESENT CASE IS WHETHER THE AMOUNT OF SUBSID Y RECEIVED IS TO BE REDUCED FROM THE BLOCK OF ASSETS FOR CLAIMING DEPRECIATION. WE FIND THAT THE LD. CIT(A) HAS GIVEN A FINDING THAT ASSESSEE HAD RECEIVED SUBSIDY FROM STATE GOVERNMENT UNDER CAPITAL INCENTIVE SCHEME ON THE BASIS OF COST OF CA PITAL ASSET ACQUIRED BY THE ASSESSEE AND IT WAS RELATABLE TO THE COST OF ASSET AND WAS THEREFORE REQUIRED TO BE 6 ITA NO.1650/PN/2014 REDUCED FROM THE COST OF ASSET AS PER THE PROVISION S OF EXPLANATION-10 TO SECTION 43 OF THE ACT. THE LD. CIT(A) HAS FURTHER RELIED UPON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ALFA LAVAL INDIA LTD. VS. D CIT (2008) 117 TTJ 902 AND HAD HELD THAT THE DECISIONS RELIED BY THE ASSESSEE IN S UPPORT HER CONTENTION WERE NOT APPLICABLE TO THE PRESENT FACT. BEFORE US NO MATE RIAL HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO CONTROVERT THE FINDINGS OF LD. CIT( A). IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD . CIT(A) AND THUS THE GROUND OF ASSESSEE IS DISMISSED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF SEPTEMBER 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 30 TH SEPTEMBER 2016. & ' (!)* +*! / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A) AURANGABAD; 4) THE CIT AURANBAGAD; 5) THE DR B BENCH I.T.A.T. PUNE; 6) GUARD FILE. & / BY ORDER ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* / ITAT PUNE