Indo Fashions Pvt.Ltd., Surat v. The Dy.CIT.,Circle-1,, Surat

ITA 171/AHD/2012 | 2004-2005
Pronouncement Date: 30-04-2015 | Result: Allowed

Appeal Details

RSA Number 17120514 RSA 2012
Assessee PAN AAACI4952Q
Bench Ahmedabad
Appeal Number ITA 171/AHD/2012
Duration Of Justice 3 year(s) 3 month(s) 10 day(s)
Appellant Indo Fashions Pvt.Ltd., Surat
Respondent The Dy.CIT.,Circle-1,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-04-2015
Date Of Final Hearing 23-04-2015
Next Hearing Date 23-04-2015
Assessment Year 2004-2005
Appeal Filed On 19-01-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO S . 309 7 /AHD/20 1 1 AND 171/AHD/2012 A. Y S . 200 3 - 0 4 & 2004 - 05 INDO FASHIONS PVT. LTD. SURABHI ESTATE MOHANWA DI KATAGRAM SURAT . PAN: AAACI 4952Q VS DY. CIT SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : S HRI P.L. KUREEL SR. D.R. ASSESSEE(S) BY : SHRI MEHUL SHAH A.R. / DATE OF HEARING : 23 / 0 4 /201 5 / DATE OF PRONOUNCEMENT: 30 / 0 4 /201 5 / O R D E R PER SHRI S.S. GODARA JUDICIAL MEMBER TH E S E TWO ASSESSEE S APPEAL S FOR A.Y S . 2003 - 0 4 & 2004 - 05 ARISE FROM D IFFERENT ORDER S OF THE CIT(A) - I SURAT DATED 1 3.09. 2011 AND 17.11.2011 IN CASE NO S . CAS - I / 119 AND 120 / 10 - 11 REJECTING ITS CHALLENGE TO VALIDITY OF REOPENING THEREBY UPHOLDING DISALLOWANCE OF EXCESS DEPRECIATION OF RS.29 90 874/ - AND RS.14 95 437/ - @50% ON MACHINERY PURCHASED UNDER TUF SCHEME; RESPECTIVELY IN PROCEEDINGS U/S. 143 (3) R.W.S. 147 OF THE INCOME TAX ACT IN SHORT THE ACT . ITA NO S . 30 9 7 /AHD/201 1 & 171/AHD/2012 INDO FASHION P LTD. . FOR A.Y S . 200 3 - 0 4 & 2004 - 05 - 2 - 2. THE ASSESSEE DOES NOT PRESS FOR ITS LEGAL GROUND CHALLENGING VALIDITY OF THE REOPENING IN QUESTION IN BOTH CASES. THIS LE AVES US WITH ITS SUBSTANTIVE GROUND QUA EXCESS DEPRECIATION ABOVE SAID ON MERITS. WE TAKE UP ITA 3097 FOR A.Y.2003 - 04 AS THE LEAD CASE IN THESE FACTS FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. THE ASSESSEE - COMPANY IS IN THE BUSINESS OF TEXTURING TWISTIN G OF YARN MANUFACTURING AND TRADING OF GREY AND YARN. IT FILED ITS RETURN ON 27.05.2003 ADMITTING NIL INCOME. THE SAME WAS SUMMARILY PROCESSED. THEREAFTER THE ASSESSING OFFICER APPEARS TO HAVE TAKEN UP THE ASSESSEE S REGULAR ASSESSMENT FOR A.Y.2007 - 08. T HE ASSESSEE HAD CLAIMED EXCESS DEPRECIATION @50% UNDER TUF PLANT AND MACHINERY PURCHASED IN F.Y.2002 - 03 RELEVANT TO THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PLANT AND MACHINERY IN QUESTION UNDER TUF HAS TO BE PURCHASED B EFORE 1.4.2001 AND TO BE PUT TO USE BEFORE 1.4.2004 FOR BEING USED IN WEAVING PROCESSING AND GARMENT SECTOR OF TEXTILE INDUSTRIES ONLY FOR CLAIMING THE IMPUGNED DEPRECIATION AT THE HIGHER RATE INVOLVED HEREIN. HE QUOTED THE ASSESSEE S FAILURE IN PRODUCING SUPPORTIVE PROOF DEMONSTRATING THE USAGE OF THE IMPUGNED TUF MACHINERY IN WEAVING PROCESSING IN GARMENT SECTOR AND DISALLOWED THE VERY CLAIM IN ASSESSMENT FRAMED FOR ASSESSMENT YEAR 2007 - 08. THIS MADE HIM TO OBSERVE THAT THE ASSESSEE S CLAIM OF EXCESS DE PRECIATION READING RS.59 81 748/ - I.E. @50% INSTEAD OF 25% AT NORMAL RATE RAISED IN THE IMPUGNED ASSESSMENT YEAR PROCESSED HEREINABOVE RESULTED IN ESCAPEMENT OF ITS TAXABLE INCOME FROM BEING ITA NO S . 30 9 7 /AHD/201 1 & 171/AHD/2012 INDO FASHION P LTD. . FOR A.Y S . 200 3 - 0 4 & 2004 - 05 - 3 - ASSESSED. HE ISSUED A SECTION 148 NOTICE AND FRAMED RE - ASSESSMENT VIDE ORDER DATED 30.6.2010 ON THE SAME LINES RESULTING IN THE IMPUGNED DISALLOWANCE OF RS.29 90 874/ - . 4. THE CIT(A) HAS AFFIRMED THE ASSESSING OFFICER S ACTION. THEREFORE THE ASSESSEE IS IN APPEAL. 5. HEARD BOTH SIDES. RECORDS PERUSED. FACTS RELEVANT TO THE CASE STANDS NARRATED HEREINABOVE IN PRECEDING PARAGRAPHS. THE ASSESSEE HAD ADMITTEDLY PURCHASED THE MACHINERY IN QUESTION UNDER THE TECHNOLOGY UPGRADATION FUNDS SCHEME (TUF) IN F.Y.2002 - 03 RELEVANT TO THE IMPUGNED A.Y.2003 - 04 AND USED THE SAME WELL BEFORE 1.4.2004. THE AUTHORITIES BELOW HAVE DISALLOWED ITS EXCESS DEPRECIATION CLAIMED ON THE GROUND THAT THE MACHINERY IN QUESTION HAS NOT BEEN PUT TO USE FOR WEAVING PROCESSING IN GARMENT SECTOR BUT IN YARN PREPARATORY ACTIVITIES LIKE TEXTURING AND TWI STING ETC. WE FIND THAT A CO - ORDINATE BENCH IN ITA 3186/AHD/2007 IN AGARWAL RAYONS PVT. LTD. VS. ITO DECIDED ON 9.7.2003 HOLDS THAT THE WORD PROCESSING IN RULE 6 BLOCK 3 APPENDIX - I OF THE DEPRECIATION TABLE WOULD INCLUDE TEXTURING AND TWISTING OF YARN F INALLY USED IN THE TEXTILE INDUSTRY AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORDS. IN OUR CONSIDERED VIEW THE FACTS OF THE PRESENT CASE AND FACTS IN THE CASE OF REFERRED TO BY THE LD. A. R. PARTICULARLY IN THE C ASE OF NANGALIA SYNTHETICS PVT. LTD. ARE SIMILAR. IN THAT CASE THE TRIBUNAL HAS OBSERVED AS UNDER : - '7. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH THE PARTIES WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENU E BY THE DECISION OF ITAT ITA NO S . 30 9 7 /AHD/201 1 & 171/AHD/2012 INDO FASHION P LTD. . FOR A.Y S . 200 3 - 0 4 & 2004 - 05 - 4 - AHMEDABAD D BENCH IN THE CASE OF BIPINCHANDRA MOHANLAL GAJJAR VS. ITO WD - 6(1) SURAT IN ITA NO. 3128/AHD/2008 DATED 18 - 02 - 2009 RELATING TO A.Y. 2005 - 06.THE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS SIMILAR TO THAT OF THE CASE OF BIPINCHANDRA MOHANLAL GAJJAR (SUPRA) WE HOLD THAT SINCE ADMITTEDLY THE TWISTING MACHINE WAS USED BY WEAVING SECTOR OF TEXTILE INDUSTRY DEPRECIATION ON THE SAID MACHINERY @ 50% SHOULD BE ALLOWED. WE ACCORDINGLY ALLOW THE GROUND OF APPEAL.' 8. THE L D. D.R. HAS SOUGHT TO DISTINGUISH THE AUTHORITIES REFERRED TO BY THE LD. A.R. ON THE GROUND THAT THERE WAS A NEXUS OF BACKWARD AND FORWARD LINKAGES OF THE ACTIVITIES. THERE WAS COMPOSITE ACTIVITIES IN THESE CASES. WHEREAS IN THE CASE OF THE PRESENT ASSESSE E IT IS ONLY MANUFACTURING OF YARN AND NO WEAVING CARRIED OUT. HOWEVER DISTINCTION SOUGHT TO BE MADE BY THE LD. D.R. IS ARTIFICIAL AND DOES NOT CONFIRM TO THE LANGUAGE USED IN THE RULES. IN FACT TEXTURISING AND TWISTING ACTIVITIES ARE PART OF PROCESSING. IT IS INCORRECT ON THE PART OF THE A.O. TO HOLD THAT LANGUAGE USED IN THE RULE CONFINE PROCESSING OF CLOTH ONLY AND NOT TEXTURISING AND TWISTING OF THE YARN. THE LANGUAGE USED IN RULE - 6 OF BLOCK 3 OF APPENDIX - 1 OF DEPRECIATION TABLE READS AS UNDER : - ' MACHINERY AND PLANT USED IN WEAVING PROCESSING AND GARMENT SECTOR OF TEXTILE INDUSTRY WHICH IS PURCHASED UNDER TUFS..... FROM THIS IT CANNOT BE READ THAT WEAVING AND PROCESSING IS PROVIDED BY CLOTH SO AS TO INFER THAT IT IS ONLY WEAVING AND PROCESSING OF CLOTH WHOSE MACHINERIES ARE ENTITLED FOR HIGHER DEPRECIATION. THE WORDS USED ARE WEAVING PROCESSING AND GARMENTS SECTOR OF TEXTILE INDUSTRY.' 9. IN OTHER WORDS WEAVING PROCESSING AND GARMENTS SECTOR ARE PART OF TEXTILE INDUSTRIES WHICH IS A LARGER GROU P. IN THIS TEXTILE INDUSTRY THE WEAVING PROCESSING AND GARMENT SECTOR ARE COVERED IN RESPECT OF WHOSE MACHINERIES THE HIGH RATE OF DEPRECIATION IS PROVIDED. THUS THE WORD PROCESSING WOULD INCLUDE TEXTURISING AND TWISTING OF YARN WHICH IS FINALLY USED IN TEXTILE INDUSTRY. THUS RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL WE ALLOW THE CLAIM OF THE ASSESSEE. A PERUSAL OF THE CASE FILE REVEALS THAT THE ASSESSEE S CASE FROM THE VERY BEGINNING IS THAT ITS ACTIVITIES HEREINABOVE FORM PART OF WEAVI NG SECTOR OF TEXTILE INDUSTRY . IT HAD FILED RETURN SUBMISSION IN THE LOWER APPELLATE PROCEEDINGS TO THIS EFFECT . THE SAME HAVE BEEN ITA NO S . 30 9 7 /AHD/201 1 & 171/AHD/2012 INDO FASHION P LTD. . FOR A.Y S . 200 3 - 0 4 & 2004 - 05 - 5 - NOWHERE SPECIFICALLY DEALT WITH IN THE CIT(A) S ORDER. IN THESE CIRCUMSTANCES WE HOLD THAT THE ASSESSEE S ACTIVITIES COME W ITHIN THE NATURE AND AMBIT OF THE WORD PROCESSING INCLUSIVE OF TEXTURISING AND TWISTING OF YARN FINALLY USED IN THE TEXTILE INDUSTRIES. THE REVENUE FAILS TO DISCHARGE ITS ONUS IN CONTROVERTING THIS FACTUAL POSITION. THUS WE ACCEPT THE ASSESSEE S ARGUMENTS ON MERITS CHALLENGING THE IMPUGNED DISALLOWANCE OF EXCESS DEPRECIATION AMOUNTING TO RS.29 90 874/ - QUA MACHINERY PURCHASED UNDER THE TUF SCHEME. ITA 3097/AHD/2011 IS DECIDED IN THE ASSESSEE S FAVOUR. 6. SAME ORDER TO FOLLOW IN ITA 171/AHD/2012. 7. T HE ASSESSEE S BOTH APPEALS ITAS 3097/AHD/2011 AND 171/AHD/2012 ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON THIS DAY THE APRIL 201 5 AT AHMEDABAD. SD/ - SD/ - ( PRAMOD KUMAR ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30 / 0 4 / 20 1 5 PRABHAT KR. KESARWANI SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III AHMEDABAD 5. / DR ITAT AHMEDABAD 6. / GUARD FILE . / BY ORDER / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD