The DCIT, Circle-2,, Surat v. M/s. Priyanka Polyster, Surat

ITA 2905/AHD/2010 | 2006-2007
Pronouncement Date: 11-04-2014 | Result: Dismissed

Appeal Details

RSA Number 290520514 RSA 2010
Bench Ahmedabad
Appeal Number ITA 2905/AHD/2010
Duration Of Justice 3 year(s) 5 month(s) 23 day(s)
Appellant The DCIT, Circle-2,, Surat
Respondent M/s. Priyanka Polyster, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 11-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 11-04-2014
Date Of Final Hearing 09-04-2014
Next Hearing Date 09-04-2014
Assessment Year 2006-2007
Appeal Filed On 19-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER ITA NO.2905/AHD/2010 A.Y. 2006-07 DCIT SURAT. VS M/S. PRIYANKA POLYSTER 3/3973 NAGARDAS NI SHERI NAVAPURA SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI O.P. BATHEJA SR.D.R. ASSESSEE(S) BY : SHRI MEHUL SHAH AR / DATE OF HEARING : 09/04/2014 / DATE OF PRONOUNCEMENT: 11/04/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(A)-II SURAT DATED 12.08.2010 AND THE GROUND RAISED IS REPRODUCED BELOW: 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/ S.271(1)(C) BY THE AO WHEN THE ASSESSEE HAD FURNISHED INACCURATE PART ICULARS OF INCOME BY CLAIMING EXCESS DEPRECIATION ON MACHINERY USED F OR TEXTURISING BUSINESS. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 12.12.2008 AND THE CORRESPO NDING PENALTY ORDER PASSED U/S.271(1)(C) DATED 23 RD OF NOVEMBER 2009 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF TEXTURISING AND TRADING OF YA RN. THE ASSESSEE HAD CLAIMED DEPRECIATION @ 50% ON PLANT AND MACHINERY W HICH WAS PURCHASED UNDER TUF SCHEME. AS PER AO ON THE SAID MACHINERY THE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION @ 35%; HENCE DISALLOWED ITA NO.2905/AHD/2010 DCIT SURAT VS. M/S. PRIYANKA POLYSTER A.Y.2006-07 - 2 - THE CLAIM OF RS.16 94 920/-. IT WAS HELD THAT THE D EPRECIATION WAS WRONGLY CLAIMED; HENCE A PENALTY OF RS.5 70 510/- WAS LEVIED. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY IT WAS HELD AS UNDER: I HAVE DULY CONSIDERED THE FACTS OF THE CASE AND S UBMISSION OF THE APPELLANT AND FIND THAT THE ISSUE ON WHICH PENALTY HAS BEEN LEVIED IS NOT FREE FROM CONTROVERSY AND IS DEBATABLE ONE. THE APP ELLANTS CONTENTION IS THAT MACHINERY HAS BEEN PURCHASED UNDER TUF SCHE ME. THEREFORE THE QUESTION WHETHER THE TEXTURISING ACTIVITIES CAR RIED OUT ON THE SAID MACHINES CONSTITUTE WEAVING OR PROCESSING OR MANUFA CTURING OF GARMENT IN THE TEXTILE INDUSTRY SO AS TO BE ELIGIB LE FOR HIGHER DEPRECIATION @ 50% IS NOT FREE FROM DOUBT AND THE SAME WILL DEPEND ON INTERPRETATION OF PROVISIONS OF LAW TO SPECIFIC FACTS OF EACH CASE. IN SUCH CIRCUMSTANCES THE CLAIM OF THE APPELLANT FOR HIGHER DEPRECIATION ON PLANT & MACHINERY CANNOT BE TERMED AS CONCEALMEN T OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. FURTHER THE APPELLANT HAS NOT CONCEALED ANY FACTS RELATING TO THE ABOVE CLAIM EITHER IN THE RETURN OF INCOME OR FROM THE ASSESSING OFFICER. I THEREFO RE HOLD THAT THE ASSESSING OFFICER HAS NOT ESTABLISHED CONCEALMENT O R FILING OF INACCURATE PARTICULARS OF INCOME IN THE CASE OF THE APPELLANT AND ACCORDINGLY CANCEL THE PENALTY. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES. WE HAVE NOTED THAT ON IDENTICAL FACTS HONBLE ITAT D BENCH AHME DABAD IN THE CASE OF ITO WARD 1(2) SURAT VS. M/S. DESHRAJ TEXTURIZE RS PVT. LTD. BEARING ITA NO.660/AHD/2010 FOR A.Y. 2005-06 ORDER DATED 07 .09.2012 HAS DELETED THE PENALTY LEVIED U/S.271(1)(C) IN THE FOL LOWING MANNER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. THE FACTUAL POSITION ON THE BASIS OF ASSESS MENT ORDER AND SUBMISSIONS THAT EMERGES IS THAT ASSESSEE HAD AVAIL ED LOAN FROM BANK UNDER TUF SCHEME FOR PURCHASE OF MACHINERY. AS PER INCOME TAX RULES APPENDIX-1 PART-III ITEM NO.6 MACHINERY A ND PLANT USED IN WEAVING PROCESSING AND GARMENT SECTOR OF TEXTILE I NDUSTRY WHICH IS PURCHASED UNDER TUFS ON OR AFTER 1 ST APRIL 2001 BUT BEFORE 1 ST APRIL 2004 AND IS PUT TO USE BEFORE 1 ST APRIL 2004 ARE ELIGIBLE FOR DEPRECIATION @ 50%. IT IS AN UNDISPUTED FACT THAT A SSESSEE IS IN THE BUSINESS OF MANUFACTURING OF TEXTURISED YARN AND HA D PURCHASED ITA NO.2905/AHD/2010 DCIT SURAT VS. M/S. PRIYANKA POLYSTER A.Y.2006-07 - 3 - MACHINERY BY AVAILING LOAN UNDER TUFS SCHEME. THE A SSESSEE WAS UNDER A BONAFIDE BELIEF THAT SINCE IT HAS PURCHASED MACHINERY BY AVAILING LOAN FROM BANK UNDER TUF SCHEME IT WAS EL IGIBLE FOR DEPRECIATION @ 50% ON THE MACHINERY PURCHASED. THE CLAIM OF DEPRECIATION WAS NOT ALTOGETHER BOGUS. THE DISPUTE WAS ONLY WITH RESPECT TO THE RATE OF DEPRECIATION. THE BELIEF OF THE ASSESSEE IS NOT FOUND TO BE UNTRUE OR FALSE BY THE A.O. ON THESE FA CTS IT CANNOT BE SAID THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND IS THEREFORE LIABLE TO PENALTY U/S.271(1)(C ). IN THE CASE OF EA GLE FIBRES PVT. LTD. (SUPRA) THE COORDINATE BENCH ON SIMILAR FACTS HAD DELETED THE PENALTY BY HOLDING AS UNDER:- '5. WE HAVE CONSIDERED THE MATERIAL PLACED ON RECOR D. AS FAR AS THE REVENUE'S APPEAL IN RESPECT OF EXCESS CLAIM OF DEPR ECIATION ON MACHINERY IS CONCERNED THE A.O. HAD MADE A DISALLO WANCE OF DEPRECIATION OF RS.18 04 688/- PRIMARILY ON THE GRO UND THAT THE DEPRECIATION ON MACHINERY AND PLANT (TUF SCHEME) WA S ALLOWABLE @ 25% HOWEVER THE ASSESSEE HAD CLAIMED THE DEPRECIA TION AT 50%. ACCORDING TO A.O. THE ELIGIBLE DEPRECIATION AS PER THE INCOME TAX RULES WAS ONLY 25% HENCE THE SAME WAS RESTRICTED TO THA T EXTENT ONLY. THE EXCESS CLAIM OF DEPRECIATION WAS AFFIRMED BY THE LD . CIT (A) IN FIRST APPEAL. CONSEQUENT THEREUPON THE A.O. HAS THOUGHT I T PROPER TO LEVY THE PENALTY. HOWEVER WHEN THE QUESTION OF LEVY OF PENA LTY WAS CHALLENGED LD. CIT (A) HAS NOTED AS PER THE PARAGRAPH REPRODU CED ABOVE THAT THE MACHINERIES WERE ONLY PURCHASED OUT OF THE LOAN GIV EN BY THE BANK UNDER A TUF SCHEME FLOATED BY MINISTRY OF TEXTILE. THE ASSESSEE WAS UNDER AN IMPRESSION THAT THE CLAIM OF DEPRECIATION WAS AS PER THE SPECIFIC RATES PRESCRIBED HOWEVER IT WAS FOUND BY THE A.O. THAT THAT SPECIFIC RATE OF DEPRECIATION WAS NOT ADMISSIBLE AS PER THE INCOME TAX RULES 1962. 5.1. ON DUE EXAMINATION OF THE CIRCUMSTANCES ONCE THE CLAIM OF DEPRECIATION WAS NOT ALTOGETHER BOGUS OR MALAFIDES BUT THE DISPUTE WAS IN RESPECT OF THE CORRECT RATE OF DEPRECIATION THE N IN OUR CONSIDERED VIEW THAT THOUGH THE RATE OF DEPRECIATION AS PER A. O. WAS CORRECT BUT ASSESSEE'S ACTION SHOULD NOT BE HELD AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. IT IS ALSO EV IDENT THAT STILL THE ASSESSEE IS HARPING UPON THE INTERPRETATION OF ANNE XURE TO I T RULES 1962 FOR THE PURPOSE OF HIGHER DEPRECIATION ALLOWAN CE THEREFORE THIS FACT ITSELF PROVES THAT THE CORRECT ENTITLEMENT OF DEPRECIATION WAS A DEBATABLE ISSUE. TO BUTTRESS THIS VIEW WE PLACE RE LIANCE ON A LATEST DECISION OF HONBLE APEX COURT IN THE CASE OF CIT V S. RELIANCE PETROPRODUCTS (P) LTD REPORTED AT (2010) 322 ITR 1 58 (SC) WHEREIN IT WAS LAID DOWN THAT NO PENALTY COULD BE LEVIED MEREL Y ON DISALLOWANCE OF A DEDUCTION WE FIND NO FORCE IN THIS GROUND OF THE REVENUE AND AFFIRM THE FINDINGS OF THE LD. CIT(A). ITA NO.2905/AHD/2010 DCIT SURAT VS. M/S. PRIYANKA POLYSTER A.Y.2006-07 - 4 - 11. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTIC AL TO THAT OF EAGLE SYNTHETICS PRIVATE LIMITED (SUPRA) AND SINCE NOTHIN G HAS BEEN BROUGHT ON RECORD TO THE CONTRARY BY THE REVENUE AND RELYI NG ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF RELIANCE PETROPRO DUCTS (SUPRA) WE DO FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT (A). WE THEREFORE UPHOLD THE ORDER OF THE CIT (A). 4.1 SINCE ON IDENTICAL FACTS A RESPECTED CO-ORDINA TE BENCH HAS TAKEN A VIEW IN FAVOUR OF THE ASSESSEE; THEREFORE ON THE SAME LINES WE HEREBY HOLD THAT THERE WAS NO BASIS FOR LEVY OF PENALTY. T HE VIEW TAKEN BY LEARNED CIT(A) IS HEREBY APPROVED AND THE GROUND OF THE REVENUE IS DISMISSED. 5. IN THE RESULT REVENUES APPEAL IS DISMISSED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 11/04/2014 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