The ACIT, Circle-5,, Ahmedabad v. Patel Alloy Steel Pvt.Ltd.,, Ahmedabad

ITA 1901/AHD/2007 | 2004-2005
Pronouncement Date: 28-07-2011 | Result: Allowed

Appeal Details

RSA Number 190120514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 1901/AHD/2007
Duration Of Justice 4 year(s) 2 month(s) 21 day(s)
Appellant The ACIT, Circle-5,, Ahmedabad
Respondent Patel Alloy Steel Pvt.Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-07-2011
Date Of Final Hearing 01-07-2011
Next Hearing Date 01-07-2011
Assessment Year 2004-2005
Appeal Filed On 07-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MUKUL KUMAR SHRAWAT JUDICIAL MEMBER) ITA NO.1901/AHD/2007 [ASSTT. YEAR : 2004-2005] ACIT CIR.5 AHMEDABAD. VS. PATEL ALLOY STEEL CO. P. LTD. 297/300 PHASE-II GIDC VATVA AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI G.S.SURYABANSHI ASSESSEE BY : SHRI J.P. SHAH O R D E R PER G.D. AGARWAL VICE-PRESIDENT : THIS IS REVENUES APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XI AHMEDABAD DATED 27.02.2007 ARISING OU T OF THE ORDER OF THE AO UNDER SECTION 144 OF THE INCOME TAX ACT 196 1. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME TAX (A) - XI AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.78 44 703/-ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON MOULDING BOX AND PATTERN. 2. THE LD. COMMISSIONER OF INCOME TAX (A) - XI AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTIN G THE ASSESSING OFFICER TO ALLOW ADDITION OF RS.92 98 537 /- TO MOULDS AS CURRENT REPAIRS AND WRITTEN DOWN VALUE OF RS.40 58 618/-CLAIMED AS WRITTEN OFF FOR DEPRECIATI ON BE ALLOWED AS REVENUE REPAIRS. 3. THE LD. COMMISSIONER OF INCOME TAX (A) - XI AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTIN G THE ASSESSING OFFICER TO ALLOW DEPRECIATION OF RS.85 32 394/- ON NEW ADDITIONS MADE TO FIXED ASSETS WITHOUT VERIF YING THE ITA NO.1901/AHD/2007 -2- FACT WHETHER THE ADDITION TO ASSETS WERE ACTUALLY P UT TO USE OR NOT. 4. THE LD. COMMISSIONER OF INCOME TAX (A) - XI AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.13 36 080/-ON ACCOUNT OF DISALL OWANCE OF TRANSPORTATION CHARGES. 5. THE LD. COMMISSIONER OF INCOME TAX (A) - XI AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTIN G THE ASSESSING OFFICER TO ALLOW LOSS ON SALE OF MUTUAL F UND TO RS.2 64 171/-. 6. THE LD. COMMISSIONER OF INCOME TAX (A) - XI AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING LOSS ON SALE OF MUTUAL FUND OF RS.2 64 171/- BY ADMITTIN G ADDITIONAL EVIDENCE AS PER PARA 7.1 OF THE APPELLA TE ORDER IN CONTRAVENTION OF RULE 46A(3) OF THE INCOME - TAX RULES 1962. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (A) XI AHMEDABA D OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 8. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX (A) XI AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE GROUND NOS.1 TO 3 INVOLVE RELATED ISSUES TH EREFORE THE SAME ARE CONSIDERED TOGETHER. 4. THE ASSESSEE DERIVES INCOME FROM MANUFACTURING O F DIFFERENT TYPES OF CASTING. FOR THE PURPOSE OF MANUFACTURING PROCE SS MOULDING BOX IS REQUIRED IN RESPECT OF WHICH THE ASSESSEE CLAIMED 1 00% DEPRECIATION ON THE GROUND THAT THE MOULDING BOXES USED FOR THE PUR POSE OF CASTING HAVE A VERY SHORT LIFE OF TWO TO THREE MONTHS. IT WAS A LSO CLAIMED THAT SUCH CLAIM OF THE ASSESSEE WAS ACCEPTED IN THE EARLIER Y EARS. IN RESPECT OF PART ITA NO.1901/AHD/2007 -3- OF MOULDING BOXES PURCHASED DURING THE YEAR UNDER C ONSIDERATION THE ASSESSEE CLAIMED THE SAME AS CURRENT REPAIRS. HOWE VER THE AO DID NOT ACCEPT THE ASSESSEES CLAIM OF 100% DEPRECIATION OR CURRENT REPAIR BUT ALLOWED THE DEPRECIATION AT THE RATE OF 25%. THE C IT(A) ACCEPTED THE ASSESSEES CONTENTION HENCE THE APPEAL BY THE REVE NUE. 5. WE FIND THAT SIMILAR ISSUE CAME UP BEFORE THE IT AT IN ASSESSEES OWN CASE FOR A.Y.2003-04 IN ITA NO.1537/AHD/2007 VI DE ORDER DATED 3- 6-2008 WHEREIN THE TRIBUNAL HELD AS UNDER: 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MAT ERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGE WE ARE IN AGREEMEN T WITH LEARNED DR THAT OSTENSIBLY THE CORRECT RATE OF DEPRECIATION AL LOWABLE TO ASSESSEE ON MB&P IS AT THE RATE OF 25%. AO HAS ALLOWED IT AT 100% WITHOUT ASSIGNING ANY REASON AND MERELY FOLLOWING EARLIER O RDERS. IN OUR VIEW EACH YEAR UNDER INCOME-TAX IS A SEPARATE UNIT OF AS SESSMENT AND RULE OF RES-JUDICATA DOES NOT APPLY. IN VIEW THEREOF AO IS UNDER STAT UTORY OBLIGATION TO APPLY CORRECT RATE OF DEPRECIATION. ANY ERROR IN THIS MATTER WILL RENDER HIS ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW THEREOF WE UPHOLD INVOCATION OF JURISDICTION UNDER SECTION 263. 3.1 HOWEVER WE FIND MERIT IN ALTERNATE CONTENTION OF THE LEARNED COUNSEL THAT HAVING GOT ALLOWANCE OF 100% DEPRECIAT ION IT HAD NO OCCASION TO MAKE OUT AN ALTERNATE CLAIM THAT MB&P ARE FREQUENTLY REPLACEABLE AND SHORT LIFE ASSETS WHICH MAY BE ELI GIBLE TO BE TREATED AS REVENUE EXPENDITURE. IN VIEW THEREOF IN THE INTER EST OF JUSTICE WE ENLARGE SCOPE OF DIRECTION OF CIT AND DIRECT AO TO EXAMINE ALTERNATE CLAIM OF ASSESSEE AS MENTIONED ABOVE ALONG WITH ISS UE ABOUT EXAMINATION OF CLAIM OF 100% DEPRECIATION IN ACCORD ANCE WITH LAW. THAT IN THE ABOVE YEAR I.E. A.Y.2003-04 THE AO HAD ACCEPTED THE ASSESSEES CLAIM OF 100% DEPRECIATION ON MOULDS. T HE CIT IN THE ORDER PASSED UNDER SECTION 263 SET ASIDE THE ORDER OF THE AO. ON APPEAL THE ITAT UPHELD THE ORDER OF THE CIT TO THE EXTENT THAT THE RATE OF DEPRECIATION ON MOULDS IS 25%. HOWEVER THE ITAT S ET-ASIDE MATTER ITA NO.1901/AHD/2007 -4- BACK TO THE FILE OF THE AO FOR EXAMINING THE ASSESS EES CONTENTION THAT THE MOULDS ARE FREQUENTLY REPLACEABLE AND HAS A VERY SH ORT LIFE SPAN. THEREFORE THE SAME SHOULD BE TREATED AS REVENUE EX PENDITURE. SINCE GROUND NOS.1 TO 3 OF THE REVENUES APPEAL RAISED TH E SIMILAR ISSUE WE RESPECTFULLY FOLLOWING THE DECISION OF ITAT IN ASSE SSEES OWN CASE FOR A.Y.2003-04 SET ASIDE THE ORDER OF THE AUTHORITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO. WE DIRECT HIM TO RE- ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW AND KEE PING IN VIEW THE OBSERVATION OF THE ITAT FOR A.Y.2003-2004. NEEDLES S TO MENTION THE AO WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE WHILE RE-ADJUDICATING THE MATTER. 6. WITH REGARD TO GROUND NO.4 5 AND 6 ARE CONCERNE D IT IS SUBMITTED BY THE LEARNED DR THAT DURING THE APPELLATE PROCEED INGS THE CIT(A) HAS ADMITTED CERTAIN ADDITIONAL EVIDENCES WHICH WERE NO T PRODUCED BEFORE THE AO OR THEY WERE NOT CONFRONTED TO THE AO FOR HIS CO MMENTS WHICH IS IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES 1962 . THEREFORE IT IS SUBMITTED THAT THE ISSUE MAY BE SET ASIDE BACK TO T HE FILE OF THE AO FOR RECONSIDERATION TO EXAMINE THE ADDITIONAL EVIDENCES PRODUCED BEFORE THE CIT(A) AND TO PASS APPROPRIATE ORDER. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NO OBJECTION IF THE ISSUE IS SET ASIDE BACK TO THE FILE OF THE AO TO RECONSIDER THE ISSUE IN LIGHT OF THE ADDITION AL EVIDENCES PRODUCED BEFORE THE CIT(A) DURING THE APPELLATE PROCEEDINGS. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. ADMITTEDLY THE CIT(A) HAS ADMITTED CER TAIN ADDITIONAL EVIDENCES DURING THE APPELLATE PROCEEDINGS AND DID NOT ALLOW THE OPPORTUNITY TO THE AO TO EXAMINE SUCH EVIDENCES AND TO PRODUCE ANY ITA NO.1901/AHD/2007 -5- EVIDENCE OR DOCUMENTS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. THE ACTION OF THE CIT(A) IS CLEARLY IN VIOLATION OF RULE 46A(3). IN VIEW OF THE ABOVE WE SET ASIDE THE ORD ER OF THE AUTHORITIES BELOW WITH REGARD TO GROUND NOS.4 5 AND 6 AND REST ORE THE MATTER BACK TO THE FILE OF THE AO. WE DIRECT THE ASSESSEE TO P RODUCE ALL THE EVIDENCES INCLUDING THE EVIDENCES PRODUCED BEFORE THE CIT(A) BEFORE THE AO AND THEREAFTER THE AO IS DIRECTED TO RE-ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THE AO WILL ALLOW ADEQU ATE OPPORTUNITY TO THE ASSESSEE TO PRODUCE ALL THE EVIDENCES BEFORE HIM. 8. IN THE RESULT REVENUES APPEAL IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 28 TH JULY 2011 SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 28-07-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD