M/s Amalgam Foods Ltd, Cochin v. DCIT, Alappuzha

ITA 436/COCH/2010 | 2006-2007
Pronouncement Date: 29-03-2012 | Result: Dismissed

Appeal Details

RSA Number 43621914 RSA 2010
Assessee PAN AABCA8283D
Bench Cochin
Appeal Number ITA 436/COCH/2010
Duration Of Justice 1 year(s) 8 month(s) 20 day(s)
Appellant M/s Amalgam Foods Ltd, Cochin
Respondent DCIT, Alappuzha
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 29-03-2012
Date Of Final Hearing 08-03-2012
Next Hearing Date 08-03-2012
Assessment Year 2006-2007
Appeal Filed On 09-07-2010
Judgment Text
1 ITA NO.435 & 436/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 435&436/COCH/2010 (ASSESSMENT YEAR 2005-06 & 2006-07) M/S AMALGAM FOODS LTD VS DY.CIT CIR.1 WILLINGDON ISLAND KOCHI ALLEPPEY PAN : AABCA8283D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R SREENIVASAN RESPONDENT BY : SR SIVAKUMAR DATE OF HEARING : 08-03-2012 DATE OF PRONOUNCEMENT : 29-03-2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST TWO INDEPENDENT ORDERS OF COMMISSIONER OF INCOME-TAX(A)-IV KOCHI DATE D 19-05-2010 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07. SINCE COMMON I SSUE ARISES FOR CONSIDERATION BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF DEPRECIATION. 3. SHRI R SREENIVASAN THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE ON THE GROUND THAT THE 2 ITA NO.435 & 436/COCH/2010 PLANT AND MACHINERY WAS NOT USED FOR THE PURPOSE OF BUSINESS. ACCORDING TO THE LD.REPRESENTATIVE THE ASSESSEE LET OUT THE ENTIRE BUSINESS ASSET TEMPORARILY. THEREFORE THE INCOME HAS TO BE ASSESSED AS BUSINES S INCOME AND THE DEPRECIATION HAS TO BE ALLOWED. EVEN IF THE RENTAL INCOME WAS ASSESSED AS INCOME FROM OTHER SOURCES THE ASSESSEE WAS ENTITL ED FOR DEPRECIATION. THE LD.REPRESENTATIVE RELIED UPON THE JUDGMENT OF THE KE RALA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS M/S GEO TECH CONSTRUCTI ON CORPORATION (2000) 244 ITR 452 (KER). ON A QUERY FROM THE BENCH WHETHE R THE ASSESSEE RE-STARTED ITS BUSINESS THE LD.DR SUBMITTED THAT EVEN NOW THE ASS ESSEE COULD NOT RE-START HIS BUSINESS AND THE ASSET WAS CONTINUES TO BE ON LEASE . 4. ON THE CONTRARY SHRI R SIVAKUMAR THE LD.DR SUBM ITTED THAT THE ASSESSEE HAS CLOSED DOWN THE BUSINESS PERMANENTLY AND THE AS SETS WERE LEASED OUT. IT IS NOT A CASE OF TEMPORARY LULL IN THE BUSINESS. THER EFORE THE INCOME HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES. SINCE THE ASSESSEE HAS NOT USED THE PLANT AND MACHINERY FOR HIS BUSINESS THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSMENT Y EARS UNDER CONSIDERATION ARE 2005-06 AND 2006-07. EVEN NOW THE ASSESSEE COULD NO T RESTART ITS BUSINESS. THEREFORE IT CANNOT BE SAID THAT THERE IS A TEMPOR ARY LULL IN THE BUSINESS. THE VERY FACT THAT THE BUSINESS COULD NOT BE RESTARTED EVEN NOW FAIRLY SHOWS THAT THE ASSESSEE HAS PERMANENTLY CLOSED DOWN THE BUSINESS A ND LEASED OUT THE BUSINESS ASSETS. ONCE THE PLANT AND MACHINERY WAS NOT USED FOR THE BUSINESS OF THE ASSESSEE IT IS NOT ENTITLED FOR ANY DEPRECIATION A T ALL. SECTION 32 OF THE INCOME- TAX ACT VERY CLEARLY SAYS THAT THE PLANT AND MACHIN ERY WHICH IS USED FOR THE 3 ITA NO.435 & 436/COCH/2010 BUSINESS ALONE IS ELIGIBLE FOR DEPRECIATION. SINCE IT IS NOT THE CASE OF THE ASSESSEE THAT LEASING OUT OF PLANT AND MACHINERY IS THE BUSI NESS OF THE ASSESSEE THIS TRIBUNAL IS OF THE OPINION THAT THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION. 6. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF T HE KERALA HIGH COURT IN THE CASE OF M/S GEO TECH CONSTRUCTION CORPORATION (S UPRA). IN THE CASE BEFORE THE KERALA HIGH COURT THE ASSESSEE PURCHASED TWO TI PPERS ON MARCH 29 1986 AND CLAIMED DEPRECIATION FOR ASSESSMENT YEAR 1986-8 7. THE ASSESSING OFFICER DID NOT ALLOW DEPRECIATION ON THE GROUND THAT THE ASSES SEE HAS NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE TIPPERS WERE PUT TO USE B EFORE MARCH 31 1986. ON THESE FACTS THE KERALA HIGH COURT HELD THAT WHEN TH E ASSET WAS READY FOR USE THE ASSESSEE IS ENTITLED FOR EXEMPTION. IN THE CASE ON OUR HAND THE FACTS ARE ENTIRELY ON DIFFERENT SET OF FACTS. HERE THE ASSESSEE LEASE D OUT THE ENTIRE PLANT AND MACHINERY. THEREFORE THIS TRIBUNAL IS OF THE OPIN ION THAT THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF M/S GEO TECH CONSTRU CTION CORPORATION (SUPRA) IS NOT APPLICABLE. 7. IN VIEW OF THE ABOVE DISCUSSION WE FIND NO INFI RMITY IN THE ORDER OF LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 8. IN THE RESULT BOTH THE APPEAL OF THE ASSESSEE S TAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MARCH 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN DT : 29 TH MARCH 2012 PK/-