Shri Tuljabhavani Shetkari Sah. Sakhar Karkhana Ltd., Osmanabad v. ITO, Nanded

ITA 885/PUN/2008 | 2004-2005
Pronouncement Date: 08-10-2010 | Result: Partly Allowed

Appeal Details

RSA Number 88524514 RSA 2008
Assessee PAN AABTS7313R
Bench Pune
Appeal Number ITA 885/PUN/2008
Duration Of Justice 2 year(s) 3 month(s) 21 day(s)
Appellant Shri Tuljabhavani Shetkari Sah. Sakhar Karkhana Ltd., Osmanabad
Respondent ITO, Nanded
Appeal Type Income Tax Appeal
Pronouncement Date 08-10-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 08-10-2010
Assessment Year 2004-2005
Appeal Filed On 17-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 885/PN/08 (ASSTT. YEAR 2004-05) SHRI TULJABHAVANI SHETKARI SAH. SAKHAR KARKHANA LTD. A/P. NALDURG TAL. TULJAPUR DIST. OSMANABAD PAN NO. AABTS7313R .... APPELLANT VS. ITO WARD 3(2) NANDED . RESPONDENT APPELLANT BY : SHRI P.S. SHINGTE RESPONDENT BY : SHRI A.S. SINGH ORDER PER D. KARUNAKARA RAO AM THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT(A) DATED 1.4.2008. DURING THE PROCEEDINGS BEFORE US LD CO UNSEL FOR THE ASSESSEE FILED A CHART SHOWING NINE GROUNDS. THE COUNSEL MENT IONED THAT THE GROUNDS 3 4 AND 5 ARE NOT PRESSED. WE ACCORDINGLY DISMISS GROUNDS 3 4 AND 5 AS NOT PRESSED. OTHER GROUNDS ARE ADJUDICATED AS UNDER. 2. REGARDING GROUND NO. 1 RELATING TO THE GUEST HOUSE EXPENSES LD. COUNSEL FAIRLY MENTIONS THAT IT IS COVERED AGAINST AS SESSEE BY THE JUDGMENT OF BRITANIA INDUSTRIES LIMITED 278 ITR 546. ACCORDINGLY GROUND NO. 1 IS DISMISSED . 3. REGARDING GROUND NO. 2 RELATING TO ADVERTISEMENT EXPENSES LD. COUNSEL MENTIONS THAT THE SAME IS DECIDED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF BOMBAY HIGH COURT JUDGMENT IN THE CASE OF CIT VS. SH RI PANCHGANGA SSK LTD. 254 ITR 572 (BOM). WE DIRECT THE A.O TO DECIDE THE I SSUE IN THE LIGHT OF THE ITA NO. 885/PN/08 A.Y 2004-05 PAGE 2 OF 4 BINDING JUDGMENT OF HONBLE BOMBAY HIGH COURT AFTER E XAMINING AND COMPARING FACTS OF BOTH THE CASES. ACCORDINGLY GROUND NO. 2 IS SET ASIDE . 4. REGARDING GROUND 6 LD COUNSEL MENTIONED IN THE C HART THAT IT RELATES LOSS OF NURSERY AND IN FACT IT IS A WRONG NARRATION A ND NOMENCLATURE. ACTUALLY IT RELATES TO LOSS OF DIESEL ACTIVITY AND CLAIM IS FULL Y ALLOWABLE. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. PRIMA FACI E WE FIND THERE IS SOME MISTAKE IN THE ORDERS AND THEREFORE IT HAS TO GO TO TH E FILES OF THE AO FOR APPROPRIATE SPEAKING ORDER ON THE ISSUE. WE DIRECT THE A .O TO DECIDE THE ISSUE AFRESH AFTER GRANTING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY GROUND NO. 6 IS SET ASIDE . 5. REGARDING GROUND NO. 7 AND 8 RELATING TO SALARY WAG ES AND ELECTRICITY EXPENSES. THE COUNSEL MENTIONED THAT HE HAS NO OBJE CTION IF THESE TWO ISSUES ARE SET ASIDE TO THE FILES OF THE A.O FOR DECIDING T HE ISSUE AFRESH CONSIDERING THE EXPENDITURE INCURRED IN THE PAST YEARS. FURTHER HE HAS OFFERED TO FILE NECESSARY INFORMATION BEFORE THE A.O THIS TIME FOR COMING AT THE CORRECT CONCLUSIONS THAT THE NON OF THE EXPENDITURE IN QUESTION IS RELATES TO ANY MANUFACTURING ACTIVITY. CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT THESE TWO GROUNDS SHOULD BE SET ASIDE. A.O IS DIRECTED TO D ECIDE THE ISSUE AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDIN GLY GROUNDS 7 AND 8 ARE SET ASIDE . 6. REGARDING GROUND NO. 9 RELATING TO DEPRECIATION TH E ASSESSEE COUNSEL SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISIO N OF THE MUMBAI BENCH VIDE ITA NO. 598 OF 2009 IN THE CASE OF CIT VS. G.R. SHI PPING LTD. (BOM) AND ALSO THE DECISION OF SAME BENCH IN THE CASE OF M/S. SWATI SY NTHETICS LTD. VS. ITO ITA NO. 1165/M/2006 FOR THE PROPOSITION THAT THE CLAIM OF THE ASSESSEE RELATING TO THE DEPRECIATION IS ALLOWABLE ONCE THE ASSETS FOUND PLACE IN THE RELEVANT BLOCK OF ASSETS. 7. WE HAVE PERUSED THE SAID DECISIONS FOR THE SAKE OF COMPLETENESS. PARA 9 TO 12 ARE REPRODUCED AS UNDER:- 9. THUS FOR THE ASSESSMENT YEAR 1988-89 THE W.D. V OF ALL THE ASSETS FALLING WITHIN THAT BLOCK OF ASSETS AT THE BEGINNIN G OF THE PREVIOUS YEAR. ITA NO. 885/PN/08 A.Y 2004-05 PAGE 3 OF 4 FROM THIS THE ADJUSTMENT HAS TO BE MADE FOR THE IN CREASE OR REDUCTION IN THE BLOCK OF ASSETS DURING THE YEAR UNDER CONSIDERA TION. 10. THE LEGISLATURE FELT THAT KEEPING THE DETAILS W ITH REGARD TO EACH AND EVERY DEPRECIABLE ASSETS WAS TIME CONSUMING BOT H FOR THE ASSESSEE AND THE ASSESSING OFFICER. THEREFORE THEY AMENDED THE LAW TO PROVIDE FOR ALLOWING OF THE DEPRECIATION ON THE ENTIRE BLOCK OF ASSETS INSTEAD OF EACH INDIVIDUAL ASSETS. THE BLOCK OF ASSETS HAS ALSO BEE N DEFINED TO INCLUDE THE GROUP OF ASSETS FALLING WITH THE SAME CLASS OF ASSE TS. HENCE AFTER THE AMENDMENT WITH EFFECT FROM 01.04.1998 THE INDIVIDU AL ASSETS HAVE LOST ITS IDENTITY AND FOR THE PURPOSE OF ALLOWING OF DEP RECIATION ONLY THE BLOCK OF ASSETS HAS TO BE CONSIDERED. IF A BLOCK OF ASSETS IS OWNED BY THE ASSESSEE AND USED FOR THE PURPOSE OF BUSINESS DEPR ECIATION WILL BE ALLOWED. THEREFORE THE TEST OF USER HAS TO BE APPLIED UPON THE BLOCK AS A WHOLE INSTEAD OF UPON AN INDIVIDUAL ASSET. 11. THE ABOVE PRINCIPLE HAS BEEN LAID DOWN IN THE F OLLOWING DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE NAM ELY; (A) NOTCO EXPORTS VS. DCIT 86 ITD 445 (HYD.) (B) ACIT VS. SRF LTD. VOL 21 SOT 122 (DEL.) & (C) UNITEX PRODUCTS LTD. VS. ITO VOL. 22 SOT 429 (MUM.) 12. THE LD DR HOWEVER SUBMITTED THE USER WAS A CON DITION FOR ALLOWING DEPRECATION AND IN THIS REGARD RELIED TO THE DECISI ON OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DINESHKUMAR GULABC HAND AGRAWAL VS. CIT 267 ITR 768(BOM). WE HAVE PERUSED THE AFORESAI D DECISION AND ARE OF THE VIEW THAT THE SAME IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE THE ASSESSEE HAS ALREADY ENTERED THE BLOCK OF ASSETS. IN THE CASE BEFORE THE HONBLE BOMBAY HIGH COURT THE ASSET IN QUESTION WAS NOT AT ALL PUT TO USE. WE THEREFORE F IND THE DECISION RELIED UPON THE LD. DR IS OF NO ASSISTANCE TO THE PLEA OF THE DR. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNALS REFERRED TO THE ABOVE WE HOLD THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEPRECIATION AND THE ASSESSING OFFICER DIRECTED TO ALLOW THE SAME. 8. IN VIEW OF THE ABOVE SETTLED POSITION AND IN THE ABSENCE OF ANY INFORMATION CONTRARY TO THE ABOVE ASSESSEE IS ENTITL ED TO DEPRECIATION. ACCORDINGLY GROUND 9 IS ALLOWED . 9. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 08 TH OCTOBER 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 08 TH OCTOBER 2010 R ITA NO. 885/PN/08 A.Y 2004-05 PAGE 4 OF 4 COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ITO WARD 3(2) NANDED 3. CIT(A) AURANGABAD 4. CIT AURANGABAD 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE