Income Tax Appellate Tribunal - Ahmedabad
B.A. Research India Ltd.( Now Known As ... vs The Principal Cit- I,, Ahmedabad on 2 February, 2018
आयकर अपील य अ
धकरण, अहमदाबाद यायपीठ 'C' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JM AND SHRI AMARJIT SINGH, AM
आयकर अपील सं./ITA.No. 869/AHD/2015
( नधा रण वष / Asstt Year :2010-11)
B.A Research India Ltd. Vs. The Principal CIT-1,
BA Research House, Opp. Ahmedabad.
Puspharaj Towers, Nr.
Judges Bungalows,
Bodakdev, Ahmedabad.
PAN : AACCB4535A
(Appellant) (Respondent)
अपीलाथ
ओर से / Appellant by: Jigar M. Patel, A.R
यथ
क ओर से/Respondent by: Vivek Wadekar, CIT D.R
सन
ु वाई क तार ख / Date of Hearing 08-01-2017
घोषणा क तार ख /Date of Pronouncement 02-02-2018
आदे श/O R D E R
PER AMARJIT SINGH, ACCOUNTANT MEMBER:
This assessee's appeal for A.Y. 2010-11, arises from order of the Principal CIT-1, Ahmedabad dated 20-03-2015 and proceedings under section 263 of the Income Tax Act, 1961; in short "the Act".
2. In this case return of income declaring income of Rs.53,33,240/- was filed on 14.09.2010. Subsequently the case ITA.No.869/Ahd/2015 Assessment year 2010-11 -2- was selected for scrutiny assessment vide issuing notice u/s. 142(1) on 25.08.2011 and assessment u/s. 143(3) of the Act was completed on 21.03.2013 by determining total income at Rs. 31,49,27,888/-. Subsequently the Principal CIT has issued notice u/s. 263 of the Act stating that the Assessing Officer has completed the assessment without properly examining the claim of depreciation at higher rate by the assessee. It was seen that assessee has claimed depreciation @ 15% on office and electric equipment under head plant and machinery. The Ld. CIT has passed order u/s. 263 of the Act on 20.03.2015 and held that in terms of Rule 5(1) of Income tax Rule 1962 depreciation is allowable to an assessee as per the rates specified in Appendix-I of the Rule.
3. The office equipment including furniture and fitting are eligible for depreciation @ 10% only. Therefore allowance of depreciation @ 15% by the A.O. in the assessment order was not as per law. Accordingly it was held that the assessment order passed u/s. 143(3) dated 21.03.2013 was erroneous and prejudicial to the interest of Revenue and the A.O. was directed to make afresh assessment of total income of the assessee for the assessment year under consideration. During the course of appellate proceedings the Ld. A.R. has submitted paper book containing copy of notice issued by the CIT. Copy of reply filed by the assessee and copy of assessment order etc. The Learned counsel has contended before us that total income in the case of the assessee as per the provision of Income tax Act worked out to the amount of Rs. 53,33,240/- on which the tax payable was Rs. 16,47,971/-. Since the provision of MAT u/s. 115JB are attracted ITA.No.869/Ahd/2015 Assessment year 2010-11 -3- in the case of the assessee, therefore it had declared the book profit at Rs. 31,90,17,879/- on which MAT of Rs. 5,42,17,088/- was paid. He further contended that in view of applicability of the MAT provision of Income tax Act, if the amount of depreciation undergoes a change to 10% as against 15% it would not result in any difference in the resultant tax liability for the year under consideration. In view of the same if it is presumed that the order of the A.O. is erroneous it still cannot be said to be prejudicial to the interest of Revenue.
4. On the other hand the Ld. D.R. stated that by not making correction in the amount of depreciation according to the provision of Income Tax Rule it will affect the claim of depreciation of the assessee in the future assessment year. Therefore he vehemently contended that it is required to rectify the error committed by the A.O.
5. We have heard both the sides and pursued the material on record carefully. In terms of Rule 5(1) of the Income-tax Rules 1962 depreciation is allowable to an assessee as per the rates specified in Appendix-1 of the Rules. The office and electric equipment are eligible for depreciation @ 10% as against the rate of 15 % claimed by the assessee for the year under consideration. The claim of the assessee of charging depreciation of 15% is not as per law. Therefore the Ld. CIT has correctly initiated the proceedings u/s. 263 of the Act with the direction to the A.O. to make afresh assessment for the year under consideration. We have taken into consideration the contention of the Ld. counsel that the amount of depreciation would not result in any difference in tax ITA.No.869/Ahd/2015 Assessment year 2010-11 -4- liability because of applicability of the MAT provision in the case of the assessee resultant in paying more amount of tax for the year under consideration. We have also considered the contention of the DR that by not correcting the rate of depreciation according to the provision of Income tax Act for the year under consideration may affect the determination of correct tax liability of the assessee because of incorrect computation of depreciation in respect of consequent assessment years.
6. In view of the above facts and circumstances we have noticed that under the diminishing balance method of calculating depreciation, the amount of depreciation is calculated as a fixed percentage of the reducing or diminishing value of asset standing in the books at the beginning of the year, so as to bring down the book value of the asset to its residual value. The amount of depreciation charged in each period is not fixed but is gradually decreasing sum. After considering the aforesaid facts and circumstances we are of the opinion that it would not be appropriate to allow higher rate of depreciation on assumption basis that assessee has paid the tax liability on the basis of MAT for the year under consideration, because it may affect the determination of unpredicted tax liability of the assessee in the consequent assessment years.
7. Therefore, we consider that the allowance of depreciation at the rate of 15% by the A.O. as against eligible depreciation rate of 10% provided by the A.O. was erroneous and prejudicial to the interest of Revenue.
ITA.No.869/Ahd/2015Assessment year 2010-11 -5-
8. Considering the above facts and circumstances we justify the decision and finding of the Ld. Pr. CIT. Therefore the appeal of the assessee is dismissed.
9. In the result appeal of the assessee is dismissed.
Order pronounced in the Court on 02 / 02/2018 at Ahmedabad.
Sd/- Sd/-
(RAJPAL YADAV) (AMARJIT SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 02 / 02/2018
Mukul
आदे श क त!ल"प अ#े"षत/Copy of the Order forwarded to :
1. अपीलाथ% / The Appellant
2. &यथ% / The Respondent.
3. संबं
धत आयकर आयु*त / Concerned CIT
4. आयकर आय*
ु त(अपील) / The CIT(A)-
5. "वभागीय त न
ध, आयकर अपील य अ
धकरण, अहमदाबाद /DR,ITAT,
Ahmedabad.
6. गाड फाईल / Guard file.
आदे शानस
ु ार/ BY ORDER,
सहायक पंजीकार (Asstt.Registrar)
आयकर अपील य अ
धकरण
ITAT, Ahmedabad