M/s Priyansh Sea Foods Pvt Ltd., Visakhapatnam v. The ACIT, Range-4, Visakhapatnam

ITA 297/V/2009 PRIYANSH SEA FOODS PVT. LTD. VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 297 /VIZAG/ 20 09 ASSESSMENT YEAR : 2004 - 05 PRIYANSH SEA FOODS PVT. LTD VISAKHAPATNAM ACIT RANGE - 4 VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AACCP 0347C APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI TH.L.PETER CIT(DR) ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT CIT(A) HAS ERRED IN CONFIRMING TH E ACTION OF THE A.O. IN DISALLOWING THE CLAIM OF DEPRECIATION OF RS.1 58 37 422/ - IN THE VESSELS. 2. DURING THE COURSE OF HEARING OF THE APPEAL OUR ATTENTION WAS INVITED TO THE FACT THAT THIS APPEAL WAS FILED LATE BY 565 DAYS. THEREFORE IT IS BARRED BY LIMITATION. THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION OF DELAY ALONG WITH AN AFFIDAVIT OF THE CHARTERED ACCOUNTANT SRI T. VENKATESWA RLU WITH THE SUBMISSION THAT THE ASSESSEE HAS HANDED OVER THE PAPERS TO HIM FOR FILING AN APPEAL BEFORE THE TRIBUNAL. THE SAID APPEAL WAS PREPARED AND IT WAS HANDED OVER TO HIS ASSISTANT FOR FILING IT BEFORE THE TRIBUNAL BUT HE OMITTED TO DO SO DUE TO OVE RSIGHT. HE REALIZED HIS MISTAKE IN THE MONTH OF MAY 2009 WHEN HE WAS RE - ARRANGING HIS FILES AND IMMEDIATELY THEREAFTER HE FILED AN APPEAL. THEREFORE THE DELAY IN FILING OF THE APPEAL WAS CAUSED DUE TO MISTAKE OF HIS ASSISTANT. TH ESE FACT S SWORN IN THE AFFIDAVIT WERE NOT DISPUTED BY THE LD. D.R. WE HAVE ALSO EXAMINED THESE FACTS AND ARE OF THE VIEW THAT FOR THE NEGLIGENCE OF THE PROFESSIONALS THE ASSESSEE SHOULD NOT SUFFER. WE ACCORDINGLY CONDONE THE DELAY AND ADMITTED AN APPEAL FOR HEARING. ITA 297/V/2009 PRIYANSH SEA FOODS PVT. LTD. VSKP 2 3 . WH ILE COMING ON MERIT OUR ATTENTION WAS INVITED TO THE FACT THAT THE VESSELS ON WHICH DEPRECIATION WAS CLAIMED WAS ACQUIRED BY THE ASSESSEE BY VIRTUE OF AN AGREEMENT ENTERED WITH DEEP SEA FISHERIES MANAGEMENT LIMITED SINGAPORE IN THE YEAR 2000. AS PER THE AGREEMENT THE ASSESSEE WAS REQUIRED TO MAKE THE PAYMENT OF THE SALE CONSIDERATION IN TWO INSTALMENTS TO BE PAID IN 23 RD & 35 TH MONTH RESPECTIVELY FROM THE DATE OF RECEIPT OF THE SAID VESSELS IN INDIA. BUT IN THIS AGREEMENT DATE OF PURCHASE WAS NOT MENTI ONED. IN THE ABSENCE OF DATE OF PURCHASE THE PASSING OF PURCHASE CONSIDERATION ACCORDING TO THE AO WAS NON - OPERATIVE. THE A.O. HAS ALSO NOTED THAT THE PURCHASE CONSIDERATION WAS NOT PAID BY THE ASSESSEES AND FINALLY THE VESSELS WERE SURRENDERED BY THE A SSESSEE TO THE ORIGINAL OWNERS. HE HAS ALSO INVITED OUR ATTENTION TO THE LETTER OF MANAGING DIRECTOR OF THE ASSESSEE COMPANY DATED 24 TH JULY 2006 THROUGH WHICH THE ASSESSEE WITHDREW THE CLAIM OF DEPRECIATION ON THOSE VESSELS AS NO INSTALMENT WAS PAID TO WARDS THE COST OF THE VESSELS. RELYING UPON THIS EVIDENCE THE A.O. DISALLOWED THE DEPRECIATION ON THESE VESSELS CLAIMED BY THE ASSESSEES. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) BUT DID NOT FIND FAVOUR WITH HIM. NOW THE ASSESSEE HAS APPR OACHED THE TRIBUNAL WITH THE SUBMISSION THAT HIS CASE IS COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. BALAJI SEA FOODS PVT. LTD 52/VIZAG/2009 IN WHICH UNDER IDENTICAL CIRCUMSTANCES THE DEPRECIATION WAS ALLOWED ON THE VESSELS ACQUIRED BY TH E ASSESSEES. 5. THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED THAT THE FACTS OF THIS CASE ARE DIFFERENT WITH THAT OF THE CASE OF BALAJI SEA FOODS PVT. LIMITED. IN THAT CASE THE ENTIRE SALE CONSIDERATION WAS PAID BY THE ASSESSEE TO THE SELLER BUT IN THE INSTANT CASE THE SALE CONSIDERATION WAS NOT PASSED ON TO THE SELLER. THEREFORE WITHOUT MAKING THE PAYMENT OF THE SALE CONSIDERATION THE ASSESSEE CANNOT BECOME THE OWNER OF THE VESSEL AND CAN NOT CLAIM DEPRECIATION THEREON. OUR ATTENTION WAS ALSO INVIT ED TO THE BUYER/SELLER AGREEMENT APPEARING AT PG.NO.126 OF THE COMPILATION OF THE ASSESSEES. ITA 297/V/2009 PRIYANSH SEA FOODS PVT. LTD. VSKP 3 6 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDER OF THE LOWER AUTHORITIES AND THE BUYER/SELLER AGREEMENT APPEARED AT PG.NO.126 AND WE FIND THAT THOUGH THE ASSESSEE IS AC QUIRED THE VESSELS THROUGH THE BUYER/SELLER AGREEMENT FOR TOTAL PURCHASE PRICE AMOUNTING TO US$ 1 48 000 / - WHICH WAS TO BE PAID IN TWO INSTALMENTS BUT THE ASSESSEE DID NOT MAKE THE PAYMENT TO THE SELLER AND AS PER ITS CL AUSE 5 THE SELLER WOULD BE AT LIBERTY TO RE - SALE THE GOODS TO SOME OTHER PERSON. IN THE INSTANT CASE ON NON - PAYMENT OF SALE CONSIDERATIONS THE VESSELS WERE TAKEN BACK BY THE SELLER. WHEN THE PROPERTY DO NOT P ASSES TO THE ASSESSEE HE CANNOT BECOME THE OWNER OF THE ASSET AND THEREFORE IT IS NOT ENTITLED FOR DEPRECIATION. THE FACTS OF THIS CASE ARE DIFFERENT WITH THAT OF THE BALAJI SEA FOODS IN WHICH THE ENTIRE SALE CONSIDERATION WAS PAID BY THE ASSESSEES. THEREFORE THE RATIO LAID DOWN IN THAT CASE CAN NOT BE FOLLOWED HERE. 7 . WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE CIT(A) A ND WE FIND NO INFIRMITY THEREIN AS WHILE ADJUDICATING THE ISSUE HE HAS EXAMINED ALL PROVISIONS OF THE AGREEMENT AND THE SURROUNDING FACTORS. THEREFORE WE CONFIRM THE ORDE R OF THE CIT(A). 8 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 4.2. 20 1 1 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SP S VISAKHAPATNAM DATED 4 TH FEBRUARY 20 1 1 ITA 297/V/2009 PRIYANSH SEA FOODS PVT. LTD. VSKP 4 COPY TO 1 M/S. PRIYANSH SEA FOODS PVT. LTD. SHOP NO.11 CLASSIC COMPLEX MAHARANIPETA VISAKHAPATNAM - 530 002. 2 ACIT RANGE - 4 VISAKHAPATNAM 3 THE CI T VISAKHAPATNAM 4 THE CIT (A) - I VISAKHAPATNAM 5 TH E DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM