Income Tax Appellate Tribunal - Mumbai
Wimco Ltd, Mumbai vs Dcit Cir 2(3), Mumbai on 16 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "G", MUMBAI
BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND
SHRI MANOJ KUMAR AGGARWAL, HON'BLE ACCOUNTANT MEMBER
ITA NO.3815/MUM/2012 (A.Y: 2007-08)
&
ITA NO.5574/MUM/2014 (A.Y: 2008-09)
M/s. Wimco Ltd. v. The Deputy Commissioner of
Indian Mercantile Chambers Income -tax, Circle - 2(3)
Kamani Marg, Ballard Estate Aayakar Bhavan, M.K. Road,
Mumbai - 400 028 Mumbai-400 020
PAN NO: AAACW 3082 B
(Appellant) (Respondent)
Assessee by : Shri K.K. Ved
Revenue by : Shri V. Vidhyadhar
Date of Hearing : 15.03.2018
Date of pronouncement : 16.03.2018
ORDER
PER C.N. PRASAD (JM)
1. These two appeals are filed by the assessee against different orders of the Ld.CIT(A) for the Assessment Year 2007-08 & 2008-09.
2. In so far as the appeal for the Assessment Year 2007-08 is concerned, the first issue in the grounds of appeal of the assessee is in respect of short granting of deduction u/s. 35DDA of the Act. 2
ITA NO.3815/MUM/2012 (A.Y: 2007-08) ITA NO.5574/MUM/2014 (A.Y: 2008-09) M/s. Wimco Ltd.
3. At the outset, Learned Counsel for the assessee submitted that on similar issue for the Assessment Year 2006-07 the Tribunal vide its order dated 30.01.2018 has restored the appeal to the file of the Ld.CIT(A) for adjudication. It is also submitted before us that similar disallowance was made in the Assessment Year 2004-05 by reopening the assessment. However, for the Assessment Year 2005-06 the Assessing Officer allowed the claim for deduction u/s. 35DDA of the Act.
4. On a query from the Bench as to whether the appeal can be restored to the file of the Ld.CIT(A) the Ld. DR has expressed no objection.
5. In view of the fact that the similar issue is pending before the Ld.CIT(A) for the Assessment Year 2006-07 for adjudication, we restore this issue to the file of the Ld.CIT(A) who shall consider the issue and decide afresh in accordance with law.
6. Ground No.2 raised by the assessee is, in respect of erroneous directions given by the Ld.CIT(A) in respect of the payment made to employees on individual negotiations under separate scheme not forming part of Voluntary Retirement Scheme [in short "VRS"].
7. It is the submission of the Ld. Counsel for the assessee that this ground becomes infructuous as the Assessing Officer has already 3 ITA NO.3815/MUM/2012 (A.Y: 2007-08) ITA NO.5574/MUM/2014 (A.Y: 2008-09) M/s. Wimco Ltd.
reopened the assessment for Assessment Year 2004-05 u/s. 147 of the Act and disallowed such expenses and since the said expenses were already disallowed by reopening the assessment the directions are erroneous.
8. On hearing the rival contentions and on perusal of the record before us, we observe from the Assessment Order passed on 24.03.2014 u/s.143(3) r.w.s. 147 of the Act for the Assessment Year 2004-05, the Assessing Officer disallowed ₹.32,95,324/- being 1/5th of expenses of ₹.1,69,10,939/- claimed as deduction u/s. 35DDA of the Act and these expenses represent the payments made to the employees on their separation from the company and not forming part of VRS. Therefore, since the Assessing Officer had already disallowed expenses by reopening the assessment for Assessment Year 2004-05, there is no need for reopening and examining the issues again hence to that extent we reverse the findings of the Ld.CIT(A).
9. Coming to the appeal for the Assessment Year 2008-09, the first ground is again in respect of short granting of deduction u/s. 35DDA of the Act. Since this issue was already restored to the file of the Ld.CIT(A) in the Assessment Years 2006-07 & 2007-08, this year also we restore 4 ITA NO.3815/MUM/2012 (A.Y: 2007-08) ITA NO.5574/MUM/2014 (A.Y: 2008-09) M/s. Wimco Ltd.
this issue to the file of the Ld.CIT(A) who shall decide in accordance with law.
10. The second ground of appeal is in respect of disallowance of depreciation on fixed assets.
11. In the course of the Assessment Proceedings the assessee was required to furnish copies of invoices, bills, vouchers etc., in respect of the additions to fixed assets. However, the assessee could not produce the bills, vouchers before completion of the assessment and therefore the Assessing Officer denied the depreciation on fixed assets and disallowed ₹.2,53,81,562/-. Before the Ld.CIT(A) the assessee produced the bills, vouchers etc., in respect of various assets and the Ld.CIT(A) considering the same partly allowed the depreciation. As the assessee could not produce the bills, vouchers even before him on certain assets depreciation to an extent of ₹.62,95,593/- was disallowed.
12. Before us the Learned Counsel for the assessee submitted that, the assessee could not produce the bills, vouchers as the assessee could not receive such bills, vouchers from its unit in Madras and ultimately the unit was closed. It was the submission that as there was no adverse remarks by the auditors in the Tax Audit Report the depreciation be allowed. 5
ITA NO.3815/MUM/2012 (A.Y: 2007-08) ITA NO.5574/MUM/2014 (A.Y: 2008-09) M/s. Wimco Ltd.
13. The Ld. DR strongly objected and submitted that in the absence of vouchers and bills, assessee did not prove that it had in fact purchased the assets and put to use and hence the depreciation was rightly denied by the Assessing Officer/Ld.CIT(A).
14. On hearing both the parties and pursing the orders of the authorities below, we are not inclined to accept the submissions of the Ld. Counsel for the assessee. The basic documents like Bills, vouchers in respect of the fixed assets were not produced either before the Assessing Officer or before the Ld.CIT(A) to prove that the assessee had in fact acquired assets. In the absence of such documentary evidence, the depreciation to an extent of ₹.62,95,593/- cannot be allowed, and the Ld.CIT(A) has rightly restricted the depreciation on the assets for which the bills and vouchers were produced before him. Thus, this ground of assessee is rejected.
15. Ground No.3 is in respect of not allowing additional depreciation u/s.32(1)(iia) of the Act on fixed assets.
16. This claim of the assessee was made for the first time before the Ld.CIT(A) and the Ld.CIT(A) rejected the claim of the assessee observing 6 ITA NO.3815/MUM/2012 (A.Y: 2007-08) ITA NO.5574/MUM/2014 (A.Y: 2008-09) M/s. Wimco Ltd.
that this issue does not arise out of the Assessment Order passed by the Assessing Officer.
17. Before us the Learned Counsel for the assessee submitted that additional depreciation is a legal claim and since it was made before the Ld.CIT(A) he should have considered the same in view of the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Pruthvi Brokers and Shareholders (P.) Ltd. [349 ITR 336] wherein it was held that a fresh claim can be made before Appellate Authority.
18. Ld.DR submitted that since there was no claim before the Assessing Officer the same may be rejected.
19. We have heard the rival submissions, perused the orders of the authorities below. The assessee made detailed submissions before the Ld. Counsel for the assessee contending that additional depreciation was computed u/s. 32(1)(iia) of the Act and it was attached to the Tax Audit Report as Annexure 1. It was contended that additional deprecation was claimed by the assessee while preparing and filing its return for the year. However, on account of an inadvertent error the additional depreciation was left out to be claimed in the statement showing computation of the total income. The submissions of the assessee were not appreciated by 7 ITA NO.3815/MUM/2012 (A.Y: 2007-08) ITA NO.5574/MUM/2014 (A.Y: 2008-09) M/s. Wimco Ltd.
the Ld.CIT(A) and not entertained the claim observing that this issue does not arise from Assessment Order. In the case of CIT v. Pruthvi Brokers and Shareholders (P.) Ltd. (supra) the Hon'ble Jurisdictional High Court held that assessee is entitled to raise not merely additional legal submissions before the Appellate Authorities but is also entitled to raise additional claims before them. Therefore, since the assessee made this claim for additional depreciation before the Ld.CIT(A), he should have entertained or rejected the claim of the assessee. In the circumstances, we restore this issue to the file of the Ld.CIT(A) who shall examine the claim and decide in accordance with law.
20. Ground No.4 is with respect to set-off of brought forward business losses.
21. Learned Counsel for the assessee submitted that this ground is only a consequential to the issues pending before the Ld.CIT(A) for the Assessment Years 2006-07 and 2007-08. He further submitted that a direction may be given to the Assessing Officer to allow set-off of the losses consequent to the issues decided in the Assessment Year 2006-07 and 2007-08 by the Appellate Authorities. 8
ITA NO.3815/MUM/2012 (A.Y: 2007-08) ITA NO.5574/MUM/2014 (A.Y: 2008-09) M/s. Wimco Ltd.
22. We find that this ground is only a consequential in nature and the Assessing Officer shall pass appropriate orders based on the issues decided in the Assessment Years 2006-07 and 2007-08. If the assessee is eligible to carry forward the losses from the Assessment Year 2006-07 and 2007-08 the same may be considered and appropriate order may be passed in accordance with law for the Assessment Year 2008-09.
23. In the result, both the appeals of the assessee are partly allowed for statistical purposes.
Order pronounced in the open court on 16th March, 2018.
Sd/- Sd/-
(MANOJ KUMAR AGGARWAL) (C.N. PRASAD)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai / Dated 16/03/2018
Giridhar, SPS
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
//True Copy//
BY ORDER,
(Asst. Registrar)
ITAT, Mum