The ACIT, Circle-4,, Ahmedabad v. Gujarat Gas Company Ltd., Ahmedabad

ITA 1652/AHD/2007 | 1992-1993
Pronouncement Date: 21-04-2010 | Result: Dismissed

Appeal Details

RSA Number 165220514 RSA 2007
Assessee PAN AAACG5600M
Bench Ahmedabad
Appeal Number ITA 1652/AHD/2007
Duration Of Justice 2 year(s) 11 month(s) 28 day(s)
Appellant The ACIT, Circle-4,, Ahmedabad
Respondent Gujarat Gas Company Ltd., Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 21-04-2010
Date Of Final Hearing 21-04-2010
Next Hearing Date 21-04-2010
Assessment Year 1992-1993
Appeal Filed On 23-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI N.S.SAINI ACCOUNTANT MEMBER DATE OF HEARING : 21.04.2010 DRAFTED ON:21.04.1 0 ITA NO.1652/AHD/2007 ASSESSMENT YEAR : 1992-1993 ACIT CIRCLE-4 1 ST FLOOR NAVJIVAN TRUST BUILDING OFF. ASHRAM ROAD AHMEDABAD. VS. GUJARAT GAS CO. LTD. 2 SHANTISADAN SOCIETY NR. PARIMAL GARDEN ELLISBRIDGE AHMEDABAD. PAN/GIR NO. : AAACG 5600 M (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI RAJA RAM SAH SR. D.R. RESPONDENT BY: SHRI SANJAY R. SHAH C.A. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VIII A HMEDABAD DATED 23.01.2007. 2. GROUND NOS.1 2 AND 3 OF THE APPEAL ARE AS UNDE R:- 1. THE LD.CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O. TO REWORK THE COST OF DEPRECIABL E ASSETS OF SURAT PROJECT AND ALLOW DEPRECIATION IN ACCORDANCE WITH RULES AND ALSO TO REWORK THE CARRIED FORWARD WDV OF ALL THE RELEVANT ASSETS AFTER HOLDING THAT THE DIRECTIONS O F LD. CIT(A) CONTAINED IN HIS ORDER DATED 16.03.1999 WERE NO GIV E EFFECT PROPERLY WITHOUT APPRECIATING THE FACT THAT IN THE LD. CIT(A)S ORDER DATED 16.03.1999 THERE WERE NO DIRE CTIONS TO THE A.O. TO GRANT OR EXAMINE THE ISSUE OF DEPRECIAT ION AND THE A.O. IN HIS ORDER DATED 9.07.2004 HAD GIVEN A CATEG ORICAL FINDING THAT THE ASSESSEE HAD FAILED TO GIVE ANY EV IDENCE OR SUBSTANTIATE ITS CLAIM THAT THE ASSETS UNDER CONSID ERATION WERE - 2 - PUT TO USE FOR BUSINESS PURPOSES IN THE YEAR UNDER CONSIDERATION. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DECIDING THE PRESENT APPEAL WHEN THERE WAS NO MISTAKE/DEFECT IN GIVING EFFECT TO THE LD.CIT(A)S ORDER DATED 16.031999 THEN IT WAS NOT OPEN FOR THE LD.CI T(A)IN THE PRESENT APPEAL TO GO BEYOND THE DIRECTIONS GIVE N IN THE LD.CIT(A)S ORIGINAL ORDER DATED 16.03.1999. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O. TO RECOMPUTE THE TAX IN VIEW OF HIS DIRECTIONS IN RESPECT OF GROUND NO.1 ABOVE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNE D ASSESSING OFFICER WHILE PASSING ORDER UNDER SECTION 250 OF TH E ACT FOR GIVING EFFECT TO THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DATED 4.05.1999 DID NOT ALLOW DEPRECIATION ON INCREASED C OST OF PROJECT OF RS.93 38 432/- BY OBSERVING AS UNDER:- AS REGARDS THE CLAIMS FOR ENHANCED DEPRECIATION CI TS DIRECTIONS ARE AS FOLLOWS:- AS REGARDS ALLOWABILITY OF DEPRECIATION THE ISSUE IS NOT VERY RELEVANT AT THIS STAGE AS THE APPELLANT WOULD BE EN TITLED FOR DEPRECIATION ON THE FIXED ASSETS OR AT THE ENHANCED COST OF FIXED ASSETS ONLY WHEN THE ASSETS IN QUESTION ARE USED FO R BUSINESS PURPOSE.. THERE IS NO SPECIFIC DIRECTIONS ON THE ORDER OF THE CIT(A) FOR GRANT OF DEPRECIATION ON THE ENHANCED COST OF FIXED ASSET S FOR THE YEAR UNDER CONSIDERATION. NO EVIDENCE HAS BEEN ADDUCED T O PROVE THAT THE WORK OF PROJECT DEVELOPMENT/EXPANSION WAS COMPL ETE AND THAT THE FIXED ASSETS TO WHICH SUCH CAPITAL EXPENDITURE HAS BEEN APPORTIONED WHERE PUT TO USE FOR THE PURPOSE OF TH E BUSINESS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. IN THE C IRCUMSTANCES QUESTION OF ANY FURTHER RELIEF OF DEPRECIATION ON T HE ENHANCED VALUE OF FIXED ASSETS DOES NOT ARISE. 4. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS DECIDED THESE ISSUES AS UNDER:- THIS APPEAL IS FILED AGAINST THE ORDER GIVING EFFE CT TO THE APPELLANT ORDER DATED 16.03.1999. THE APPELLANT VID E THEIR LETTER DATED 29 06 2004 REQUESTED THE AO THAT THE O RDER DATED - 3 - 04.05.1999 DID NOT GIVE PROPER EFFECT TO THE APPELL ATE DIRECTIONS. SUBSEQUENTLY THE AO PASSED ORDER DATE D 09.07.2004 WHEREIN INTEREST EXPENDITURE OF RS.16.7 6 LACS WAS ALLOWED THOUGH HOWEVER DEPRECIATION ON EXPENS ES CAPITALIZED TO THE TUNE OF RS.93 38 482/- IN RESPEC T OF ASSETS CLAIMED TO HAVE BEEN PUT TO USE DURING THE YEAR WAS NOT ALLOWED. THE PRESENT APPEAL IS FILED ON THE DISALLO WANCE OF DEPRECIATION. 2. BEFORE ME THE LEARNED COUNSEL FOR THE APPELLANT SHRI SANJAY R.SHAH C.A. STATED THAT IN THE ORIGINAL RET URN INTEREST INCOME OF RS.93.38 LACS WAS SET OFF AGAINST THE PRE -OPERATIVE EXPENSES AND AS THE SAID INTEREST INCOME WAS ASSESS ED SEPARATELY THE PROJECT EXPENSES NOW NOT SET OFF TO THE EXTENT OF INTEREST INCOME WILL HAVE TO BE CAPITALIZED AND DEPRECIATION ON THE INCREASED AMOUNT FOR SURAT PROJ ECT WAS TO BE ALLOWED. 3. IT IS SEEN FROM THE SUBMISSIONS FILED THE PROJE CT EXPENSES OF RS.128.89 LACS WAS NETTED AGAINST INTER EST INCOME OF RS.93.38 LACS AND AS A RESULT OF ASSESSME NT OF THE INCOME SEPARATELY UNDER OTHER SOURCES IN THE LIGHT OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF T UTORIN ALKALIES & CHEMICALS LIMITED THE PROJECT EXPENSES OF RS.128.89 LACS OTHER THAN INTEREST EXPENSES ALLOWED AS REVENUE EXPENSES NEED TO BE CONSIDERED FOR CAPITALI ZATION AND ALLOWANCE OF DEPRECIATION. IN SHORT THE SPECIF IC AMOUNT OF RS.93.38 LACS REMAINS AS PREOPERATIVE EXPENSES T HAT IS TO BE ADDED TO THE COST OF DEPRECIABLE ASSETS. THOUGH IT WAS CLAIMED IN THE REMAND REPORT THAT THE ASSESSEE DID NOT RECONCILE ALL THESE FIGURES THE CLAIM CANNOT BE DI SALLOWED SUMMARILY. NOW THAT IT IS SPECIFICALLY CLAIMED THAT THESE DETAILS WERE FILED BEFORE THE AO FOR GIVING EFFECT TO THE APPELLATE ORDER AND AS TO THE ALLOCATION OF THE SAI D EXPENSES TOWARDS BUILDING AND PLANT AND MACHINERY AND CONNEC TED DEPRECIATION AT RS.22 22 035/- AND AS SPECIFICALLY STATED IN PAGE 18 OF CIT(A)S ORDER TO THE EFFECT THAT THE AP PELLANT WOULD BE ENTITLED FOR DEPRECIATION ON FIXED ASSETS ON THE ENHANCED COST WHEN THE ASSET IN QUESTION WERE USED FOR THE BUSINESS PURPOSE. IT IS ALSO CLARIFIED THAT AS SPEC IFICALLY STATED IN THE ANNUAL REPORT THE SURAT PROJECT COMM ENCED ITS ACTIVITIES FROM 02.09.1991 AND HENCE DEPRECIATION ON ENHANCED COST ON ACCOUNT OF CAPITALIZATION OF EXPEN SES WAS TO BE ALLOWED. IN THE LIGHT OF THE ABOVE I AM OF T HE VIEW THAT THE DIRECTIONS OF CIT(A) VIDE HIS ORDER DATED 16.03 .1999 WERE NOT GIVEN DUE EFFECT THAT THE AO IS DIRECTED T O REWORK THE COST OF DEPRECIABLE ASSETS OF SURAT PROJECT AND ALLOW - 4 - DEPRECIATION IN ACCORDANCE WITH RULES. CARRIED FORW ARD WDV OF ALL THE RELEVANT ASSETS SHOULD ALSO BE ACCOR DINGLY REWORKED. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE SUBMITTED THAT THE TRIBUNAL IN THE ASSESSMENT YEAR 1992-93 IN THE APPEAL OF THE ASSESSEE AGAINST ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) DATED 16.03.1999 PASSED ORDER ON 28.02 .2007 IN ITA NO.1266/AHD/1999 OBSERVING AS UNDER:- 2.4 WE HAVE HEARD THE LEARNED REPRESENTATIVE OF BO TH THE PARTIES AND PERUSED THE RECORDS. WE FIND THAT THE INTEREST INCOME EARNED OR UTILIZATION OF SHARE APPLICATION MONEY IS TAXABLE U NDER THE HEAD INCOME FROM OTHER SOURCES AND THIS CONTROVERSY IS COVERED BY THE JUDGEMENT OF THE APEX COURT IN THE CASE OF TUTICORI N ALKALI & CHEMICALS AND FERTILIZERS LTD. (SUPRA).WE FIND FORC E IN THE ALTERNATIVE SUBMISSION OF THE LEARNED AR THAT THE I NTEREST INCOME WAS ADJUSTED AGAINST THE COST OF PROJECT WHEN THIS INTEREST INCOME IS SEPARATELY TAXED THE COST OF PROJECT IS REQUIRE D TO BE ENHANCED/INCREASED AND ACCORDINGLY DEPRECIATION IS ALLOWABLE ON INCREASED COST OF THE PROJECT. ACCORDINGLY THIS PA RT OF THE CONTENTION OF THE LD.AR IS ACCEPTED. SINCE THE RA TE OF DEPRECIATION AND THE RELEVANT ASSETS WHEREIN THE COST OF PROJECT /ASSETS HAVE BEEN REDUCED ARE TO BE VERIFIED FROM THE RECORDS AND THE RELEVANT RECORD IS NOT READILY AVAILABLE AT THIS STAGE UNDER THE C IRCUMSTANCES WE FIND JUST AND PROPER TO SEND BACK THIS ISSUE TO THE FILE OF AO FOR LIMITED PURPOSE OF VERIFYING THE ALTERNATIVE CONTEN TION OF THE ASSESSEE AND ALLOW DEPRECIATION IN ACCORDANCE WITH LAW KEEPING IN VIEW THE ABOVE OBSERVATIONS. THEREFORE THE MATTER SHOULD BE CONSIDERED BY ASSES SING OFFICER FOR DECIDING THE ISSUE OF DEPRECIATION IN LIGHT OF THE ORDER OF THE TRIBUNAL DATED 28.02.2007 AND LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) ALREADY RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFF ICER THEREFORE NO INTERFERENCE IS REQUIRED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED WITH THE SUBMISSIONS MADE BY THE LEARNED AUTHORISED REPRESEN TATIVE OF THE ASSESSEE. - 5 - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BOTH THE PARTIES B EFORE US HAS AGREED THAT THE TRIBUNAL VIDE ITS ORDER DATED 28.02.2007 I N ITA NO.1266/AHD/1999 HAS RESTORED THE MATTER TO THE F ILE OF THE LEARNED ASSESSING OFFICER FOR LIMITED PURPOSE FOR VERIFICAT ION OF RATE OF DEPRECIATION AND THE RELEVANT ASSETS WHEREIN THE C OST OF PROJECT/ASSETS HAVE BEEN REDUCED AS THE RELEVANT RECORDS WERE NOT AVAIL ABLE BEFORE THE TRIBUNAL AND ALSO FOR VERIFYING THE ALTERNATIVE CONTENTION O F THE ASSESSEE TO ALLOW DEPRECIATION IN ACCORDANCE WITH LAW AND FOLLOWING T HE SAID ORDER THE ISSUE IN THE PRESENT APPEAL SHOULD BE RESTORED BACK TO TH E FILE OF THE LEARNED ASSESSING OFFICER WITH THE SIMILAR DIRECTION AS CON TENDED IN THE ORDER OF THE TRIBUNAL DATED 28.02.2007 IN ITA NO.1266/AHD/19 99. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALREADY RESTORE D THE ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR CONSIDERA TION AS PER RULE. THEREFORE NO INTERFERENCE IS REQUIRED. WE THEREFOR E ORDER ACCORDINGLY. ACCORDINGLY THE GROUNDS OF APPEAL ARE DISMISSED. 8. GROUND NOS.4 TO 7 OF THE APPEAL OF THE ASSESSEE READS AS UNDER: 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O. TO CHARGE CORRECT INTEREST U/ S.234B IN VIEW OF HIS DIRECTIONS IN RESPECT OF GROUND NO.1 ABOVE. 5. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O. TO COMPUTE THE TOTAL INCOME A ND GRANT REFUND IF ANY AFTER COMPLYING WITH HIS DIRECTION IN RESPE CT OF GROUND NO.1 ABOVE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASS ESSING OFFICER. 7. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD .CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. - 6 - 9. NO SUBMISSIONS WHERE MADE BY THE LEARNED DEPART MENTAL REPRESENTATIVE AT THE TIME OF HEARING ON THE ABOVE GROUNDS OF APPEAL. THEREFORE THE SAME ARE DISMISSED FOR WANT OF PROSE CUTION. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 21 ST DAY OF APRIL 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 21 ST APRIL 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VIII AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 21.04.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 22.04.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 22.04.2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 22.04.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 22.04.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK 22.04.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------