Income Tax Appellate Tribunal - Chennai
Refex Refrigerants Ltd.,, Chennai vs Assessee on 31 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH "C" CHENNAI
Before Shri ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND
SHRI S.S. GODARA, JUDICIAL MEMBER
I.T.A. No. 967/Mds/2012
Asst. Year : 2008-09
M/s. REFEX REFRIGERANTS LTD.,
No.20 Mooker Nallamuthu Street,
George Town, CHENNAI-600001.
PAN :AACCR2495P.
(Appellant)
v.
The Income Tax Officer,
Company Ward - I(1),
CHENNAI.
(Respondent)
Appellant by : Shri M. Narayanan
Respondent by : Shri S. Dasgupta, CIT(D.R)
Date of hearing : 31 July 2012
Date of Pronouncement : 31 July 2012
O R D E R
PER S.S. GODARA, JUDICIAL MEMBER :
The Assessee is in appeal against the order of CIT(Appeals)-V dated 15.2.2012 passed in case No.CIT(A)-V/ITA No.342/2010-11 for Asst. Year 2008-09 in proceedings under sec.143(3(ii) of the Income Tax Act, in short 'the Act'.
2. The Authorised Representative before us submitted that in the instant appeal, two substantive grounds have been raised ie. claim of deduction under sec.35D of the Act of ₹ 18,53,614/- of share premium amount and that of additional depreciation of ₹ 66,07,471/-, disallowed by Assessing Officer and CIT(Appeals). He has fairly stated that he does not wish to press the first ground. Therefore, he has submitted that CIT(Appeals) has erred in confirming disallowance of additional depreciation made by Assessing Officer. The Authorised Representative's submission has been opposed by Departmental Representative who has supported the order. Therefore, we frame following issue for adjudication :-
"Whether order of CIT(Appeals) confirming disallowance of additional depreciation of ₹ 66,07,471/- made by Assessing Officer is liable to be upheld?
3. Brief facts of the case relevant to the issue are that the Assessee had filed 'return' on 30.9.2008 in scrutiny proceedings, the Assessee raised a new claim of additional depreciation alleged to have been omitted in return. Its contention in support thereof was that whilst filing return it was under bonafide premise that because the plant and machinery of above amount had been deleted from block of assets, it was not eligible for depreciation. It also stated that the claim was statutory deduction under sec.32(i)(iii) of the Act. The Assessing Officer repelled Assessee's contention by relying on Hon'ble Apex Court judgment in the case of Goetz India v. CIT (284 ITR 324) and vide Assessment Order dated 23.12.2010 disallowed entire amount as above. Along with the same, some other additions of ₹. 1,01,000/- on account of non-deduction of TDS on brokerage, payments, audit fees, addition of ₹ 50,000/- on account of non-deduction of TDS, disallowance under sec.40(a)(ia) etc. were also made. Accordingly, the Assessee's income was computed as ₹ 7,84,02,429/-.
4. Aggrieved, assessee preferred appeal in which disallowance of additional depreciation has been confirmed by CIT(Appeals). Therefore, the Assessee has raised instant issue.
5. The Authorised Representative in support of the issue has vehemently argued that the depreciation as claimed by the Assessee is a statutory deduction which has to be granted to the Assessee even if the same is not claimed. In support thereof, he has referred to statutory provisions, more particularly Explanation 5 of sec.32(1)(ii) of the Act. Regarding case law of Goetz India (supra) he clarified that the said decision does not impinge upon the power of the ITAT under sec.254 of the Act.
6. The Departmental Representative has opposed the Authorised Representative's submissions and placed reliance in CIT(Appeals)'s order.
7. We have considered rival contentions at length and also perused the relevant findings as well as case law referred. We find that admittedly, the Assessee had claimed the deduction of depreciation on machinery in question in scrutiny proceedings. It also explained the reason for not claiming the same before Assessing Officer(supra). The Assessing Officer relied on Goetz India case law while denying the benefit by holding that the Assessee should have filed revised return under sec.139(4) of the Act. The CIT(Appeals) has also confirmed Assessing Officer's opinion. This, in our view, is not in conformity with explanation 5 of sec.32(1)(ii) which reads as follows :-
"32. (1) [In respect of depreciation of--
(i) buildings, machinery, plant or furniture, being tangible assets;
(ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, X x x x x x x X x x x x x x X x x x x x x [Explanation 5.--For the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income;]' A bare perusal of the statutory provision itself makes it clear that the legislature in its wisdom has incorporated the language 'whether or not the Assessee has claimed'. The intention of legislature in enacting the the provision appears to be that of granting the benefit of deduction regarding depreciation to the Assessee even if it is not claimed. In view of the fact that it is 'deduction' provision, it is liable to be liberally construed in favour of the Assessee than Revenue.
8. There is yet another aspect of the issue. After going through the case law (supra), it emerges that Hon'ble Apex Court itself has clarified that the Tribunal's jurisdiction under sec.254(1) of the Act does not stand impinged in any manner so as to do justice.
9. Accordingly, we are of the considered view that on legal principles, the Assessee is entitled for mandatory deduction of additional depreciation. However, we find that there is no adjudication on merits either by Assessing Officer or CIT(Appeals). Faced with this situation, we deem it appropriate to direct the Assessing Officer to re-examine the claim in accordance with law after affording adequate opportunity of hearing to the Assessee who would be at liberty to justify its claim by leading cogent evidence in support thereof.
10. The appeal is partly allowed for statistical purpose.
11. The Order is pronounced in the Open Court after hearing the appeal on Tuesday, the 31st day of July 2012.
Sd/- sd/- (ABRAHAM P. GEORGE) (S.S. GODARA ) ACCOUNTAT MEMBER JUDICIAL MEMBER Chennai, Dated : 06 August 2012 Jls. Copy to:- (1) Appellant (2) Respondent (3) CIT(Appeals) (4) CIT, (5) D.R., (6) Guard File PAGE 5 I.T.A. No. 967/Mds/12