PATEL HOSIERY MILLS, MUMBAI v. JOINT C.I.T. 17(3), MUMBAI

ITA 5963/MUM/2008 | 2003-2004
Pronouncement Date: 12-02-2010 | Result: Allowed

Appeal Details

RSA Number 596319914 RSA 2008
Assessee PAN AAAFP1758N
Bench Mumbai
Appeal Number ITA 5963/MUM/2008
Duration Of Justice 1 year(s) 4 month(s) 12 day(s)
Appellant PATEL HOSIERY MILLS, MUMBAI
Respondent JOINT C.I.T. 17(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 12-02-2010
Date Of Final Hearing 14-01-2010
Next Hearing Date 14-01-2010
Assessment Year 2003-2004
Appeal Filed On 30-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NOS. 5963 & 5964/MUM/2008 (ASSESSMENT YEAR: 2003-04 & 2004-05) M/S. PATEL HOSIERY MILLS JCIT 17(3) C/O. JAYANT & COMPANY INCOME TAX OFFICE LALBAUG 402 HAMAN HOUSE 4TH FLOOR VS. MUMBAI AMBALAL DOSHI MARG MUMBAI 400023 PAN - AAAFP 1758 N APPELLANT RESPONDENT APPELLANT BY: SHRI DILIP LAKHANI RESPONDENT BY: SHRI GURUSAMY O R D E R PER B. RAMAKOTAIAH A.M. THESE APPEALS BY THE ASSESSEE ARE AGAINST THE ORDER OF THE CIT(A) XXVII MUMBAI DATED 24.07.2008 HAVING SOME COMMON ISSUES A ND SO THEY ARE CONSIDERED TOGETHER AND DECIDED BY THIS COMMON ORDE R. ITA NO. 5963/MUM/2008 2. GROUND NO. 1 PERTAINS TO THE ISSUE OF NON-ALLOWANCE OF DEPRECIATION OF RS.2 86 414/- WHICH ON PLANT & MACHINERY WHICH WAS PURCHASED IN THE A.Y. 2001-02. THE ASSESSEE HAS IMPORTED HIGH SPEED CIRCU LAR KNITTING MACHINE VALUED AT RS.20 36 723/- AND THE MACHINE WAS INSTAL LED IN THE PREMISES OF M/S. DARSHAN HOSIERY INDUSTRIES LTD. THE A.O. ENQUI RED IN THAT YEAR AND DISALLOWED DEPRECIATION STATING THAT THE ASSESSEE H AS NOT USED THE MACHINERY HENCE NOT ENTITLED FOR DEPRECIATION. IN T HE NEXT YEAR HOWEVER DEPRECIATION AS CLAIMED WAS ALLOWED UNDER SECTION 1 43(1) BUT THE SAME WAS DISALLOWED IN THE IMPUGNED ASSESSMENT YEAR. IT WAS SUBMITTED THAT THE ISSUE IN A.Y. 2001-02 WAS SET ASIDE TO THE FILE OF THE A.O. BY THE ORDER OF THE ITAT H BENCH IN ITA NO. 2461/MUM/2005 DATED 10.04 .2008. ACCORDINGLY IT WAS SUBMITTED THAT THE MATTER CAN BE RESTORED TO THE FILE OF THE A.O. TO ITA NO. 5963 & 5964/MUM/2008 M/S. PATEL HOSIERY MILLS 2 DECIDE ACCORDING TO THE FININGS IN ASSESSMENT YEAR 2001-02. SINCE THE FIRST YEAR IN WHICH THE MACHINERY WAS PURCHASED AND INSTA LLED AND PUT TO USE WAS YET TO BE DECIDED AND THIS IS CONSEQUENTIAL TO THAT THE MATTER PERTAINING TO THIS GROUND IS ALSO RESTORED TO THE F ILE OF THE A.O. TO DECIDE THE ALLOWANCE DEPRECIATION WHICH IS A CONSEQUENTIAL MAT TER ON THE BASIS OF FINDINGS IN THE A.Y. 2001-02. THE GROUND IS CONSIDE RED ALLOWED FOR STATISTICAL PURPOSES. 3. GROUND NO. 2 PERTAINS TO THE CLAIM OF TRAVELLING EX PENSES OF RS.2 00 319/- PERTAINING TO MRS. SAVITABEN I. PATEL A PARTNER. THE FACTS INDICATE THAT THE SAID PARTNER WAS INVITED BY THE C LIENT M/S. BILL BOARD SPORTSWEAR FOR BUSINESS VISIT. THE A.O. DISALLOWED THE CLAIM OF TRAVELLING EXPENSES TO USA STATING THAT SHE IS A NON-WORKING P ARTNER NOT AWARE OF THE BUSINESS DEALINGS OF THE FIRM. HER CHILDREN ARE RES IDING IN USA. THE ASSESSEE HAS CONTESTED THE ABOVE FINDINGS HOLDING THAT THERE IS NO WORKING PARTNER IN THE FIRM AND SHE IS PARTICIPATING IN THE BUSINESS D EALINGS OF THE FIRM AND NONE OF THE FAMILY MEMBERS ARE STAYING ABROAD AND T HEY ARE STAYING IN MUMBAI ALONGWITH HER. THE CIT(A) HOWEVER CONFIRME D THE SAME ON THE OBSERVATION OF THE A.O. THAT SMT. SAVITABEN I. PATE L IS A NON WORKING PARTNER. 4. IT WAS SUBMITTED THAT SHE IS ALSO A WORKING PARTNER AND THE TOTAL EXPENDITURE ON FOREIGN TRAVEL WAS MORE THAN RS.2.75 LAKHS AND MR. BHARAT I. PATEL ALSO TRAVELLED IN APRIL AND MAY TO USA AND TH E EXPENDITURE WAS ALLOWED. THE CIT(A) WITHOUT GOING INTO THE DETAILS HAS CONFIRMED THE FINDINGS OF THE A.O. 5. WE HAVE CONSIDERED THE ISSUE. THE REASONS FOR DISAL LOWANCE IS ONLY ON THE OBSERVATION THAT THE SAID PERSON IS A NON-WORKI NG PARTNER AND HAS NOT BEEN AWARE OF THE BUSINESS DEALINGS OF THE FIRM. FU RTHER IT IS ALSO STATED THAT HER FAMILY MEMBERS ARE RESIDING IN USA. THESE OBSER VATIONS OF THE A.O. ARE NOT SUPPORTED BY ANY EVIDENCE ON RECORD NOR ANY ENQ UIRY HAS BEEN MADE BY THE A.O. THE CIT(A) ALSO HAS NOT DECIDED THE ISSUE EITHER ON FACTS BUT ONLY ON THE OBSERVATIONS OF THE A.O. BEFORE US THE LEARN ED COUNSEL PLACED THE RECORDS GIVEN TO THE ACIT DURING THE COURSE OF ASSE SSMENT BUT THERE IS NO ITA NO. 5963 & 5964/MUM/2008 M/S. PATEL HOSIERY MILLS 3 FINDING THAT THE SAID TRIP MADE TO USA WAS FOR THE PURPOSE OF BUSINESS OR NOT. IN VIEW OF THIS WE ARE OF THE OPINION THAT THE ISSUE CAN BE RE-EXAMINED BY THE A.O. AFRESH CONSIDERING THE FACTS ON RECORD AND THE EVIDENCES AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE. THE A.O. IS DIRECTED TO GIVE A FINDING WHETHER THE TRIP IS FOR BUSINESS PURPOSE OR NOT AND ACCORDINGLY CONSIDER THE CLAIM. THE MATTER IS SET ASIDE TO THE FILE OF THE A.O. 6. GROUND NO. 3 PERTAINS TO THE ISSUE OF BANK INTEREST RECEIVED. THE A.O. EXCLUDED AN AMOUNT OF RS.13 26 536/- AS INCOME FROM OTHER SOURCES WHEREAS IT IS THE CONTENTION OF THE ASSESSEE THAT T HE BANK INTEREST RECEIVED WAS ONLY RS.3 20 792/-. THE ASSESSING OFFICERS FIN DINGS IN THE ORDER IS THAT THE GROSS AMOUNT RECEIVED WAS RS.13 26 536/- WHICH HAS BEEN NETTED OFF AGAINST BANK INTEREST PAID AND THE NET INTEREST REC EIVED HAS BEEN CREDITED TO THE P & L ACCOUNT. THE SAME IS REITERATED BY THE CI T(A) INSPITE OF THE OBJECTION FROM THE ASSESSEE. NOTHING WAS ON RECORD TO VERIFY THE GROSS INTEREST OF RS.13 26 536/- CONSIDERED BY THE AO. IN VIEW OF THIS THE ISSUE IN GROUND NO. 3 IS ALSO RESTORED TO THE FILE OF THE A. O. TO EXAMINE THE EXACT AMOUNT OF INTEREST AND DECIDE THE ISSUE AFRESH AFTE R QUANTIFYING THE NET INTEREST TO BE CONSIDERED FOR THE PURPOSE OF 80HHC. ACCORDINGLY THE ISSUE IN GROUND NO. 3 IS ALSO RESTORED TO THE FILE OF THE A. O. NEEDLESS TO STATE THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY BEFORE DECI DING THE ISSUE. 7. IN THE RESULT APPEAL IS ALLOWED FOR STATISTICAL PU RPOSES. ITA NO. 5964/MUM/2008 8. IN THIS APPEAL THE ASSESSEE IS CONTESTING THREE GRO UNDS AS UNDER: - I) THE LEARNED ADDL. COMM. OF INCOME TAX ERRED IN DISALLOWING DEPRECIATION OF RS.2 14 810.00 ON MACHINERY WHICH W AS USED BY YOUR APPELLANT FOR MANUFACTURING HOSIERY CLOTH FROM YARN PURCHASED BY THEM. YOUR APPELLANT STATES THAT THEY HAD USED IMPORTED HIGH SPEED CIRCULAR KNITTING MACHINE DURIN G THE YEAR. YOUR APPELLANT PRAYS THAT DEPRECIATION BE ALLOWED. II) THE LEARNED ADDL. COMM. OF INCOME TAX ERRED IN NOT ALLOWING DEDUCTION U/S 80HHC ON DEPB LICENSE PREMIUM RECEIVE D. YOUR APPELLANT STATES THAT DEPB RECEIPTS ARE BUSINESS RE CEIPTS IN VIEW OF EXPORTS MADE BY YOUR APPELLANT. YOUR APPELLANT T HEREFORE PRAYS THAT 80HHC BE ALLOWED ON DEPB INCOME OF RS.1 41 74 249/-. ITA NO. 5963 & 5964/MUM/2008 M/S. PATEL HOSIERY MILLS 4 III) THE LEARNED ADDL. COMM. OF INCOME TAX ERRED IN TREATING INTEREST INCOME OF RS.3 73 326/- AS INCOME FROM OTHER SOURCE S AND NOT ALLOWING 80HHC ON THIS INCOME. YOUR APPELLANT STATE S THAT INTEREST RECEIVED IS RELATING TO BUSINESS ADVANCES. 9. GROUND NO. 1 PERTAINS TO THE ISSUE OF DEPRECIATION ON THE MACHINERY USED WHICH IS CONTESTED IN THE OTHER APPEAL AT GRO UND NO. 1. FOR THE REASONS STATED THEREIN THE ISSUE IS SET ASIDE TO TH E FILE OF THE A.O. TO DECIDE ACCORDINGLY ON THE FINDINGS GIVEN IN A.Y. 2001-02. GROUND IS CONSIDERED ALLOWED. 10. GROUND NO. 2 PERTAINS TO THE ISSUE OF ALLOWING DEDU CTION UNDER SECTION 80HHC ON DEPB LICENCE RECEIVED. THIS ISSUE IS NOW DECIDED BY THE HON'BLE SPECIAL BENCH OF THE ITAT IN M/S. TOPMAN EX PORTS 318 ITR (AT) 87. THE A.O. IS DIRECTED TO DECIDE THE ISSUE ACCORDING TO THE PRINCIPLES LAID DOWN BY THE ABOVE SAID SPECIAL BENCH DECISION AND FOR TH IS THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. TO DO THE NEEDFUL. 11. GROUND NO. 3 PERTAINS TO THE TREATMENT OF INTEREST INCOME OF RS.3 73 326/- RECEIVED AS INCOME FROM OTHER SOURCES AND NOT ALLOWING 80HHC ON THIS ISSUE. IT IS THE CONTENTION OF THE AS SESSEE THAT INTEREST IS RECEIVED IN THE COURSE OF BUSINESS. THE NATURE OF I NTEREST IS NOT EXAMINED BY THE A.O. AND ASSESSEES CONTENTIONS HAVE NOT BEEN CONSIDERED IN PROPER PERSPECTIVE. THE CIT(A) FOLLOWED HIS OWN ORDER FOR EARLIER YEAR. SINCE THE ISSUE IN EARLIER YEAR WAS RESTORED TO THE A.O TO EXAMINE THE QUANTUM OF INTEREST AS WELL AS NATURE OF INTEREST ALONG WITH NETTING OF IN TEREST THE ISSUE IN THIS YEAR ALSO IS RESTORED TO THE FILE OF THE A.O. TO DECIDE IT AFRESH AFTER EXAMINING THE FACTS. GROUND CONSIDERED ALLOWED. 12. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY 2010. SD/- SD/- (R.K. GUPTA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 12 TH FEBRUARY 2010