Income Tax Appellate Tribunal - Ahmedabad
National Dairy Development Board, ... vs Department Of Income Tax on 20 December, 2011
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ 'बी
बी'
बी अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" B " BENCH, AHMEDABAD
सव[ौी मुकुल कुमार ौावत, Ûयाियक सदःय एवं ौी बी.पी.जैन, लेखा सदःय के सम¢ ।
BEFORE SHRI MUKUL Kr.SHRAWAT, JUDICIAL MEMBER AND
SHRI B.P.JAIN, ACCOUNTANT MEMBER
Sl. ITA No(s) Assessment Appeal(s) by
No(s). Year(s) Appellant vs. Respondent
Appellant (s) Respondent(s)
1. 2928/Ahd/2008 2005-06 ACIT National Dairy
Anand Circle Development
Anand Board,
Anand-388 001
PAN: AABCN 2029 C
2. 4457/Ahd/2007 2004-05 -do- -do-
3. 2810/Ahd/2008 2005-06 Assessee Revenue
4. 4452/Ahd/2007 2004-05 Assessee Revenue
Assessee by : Shri S.N.Soparkar, Sr.Adv.
Shri Yogesh Shah
Revenue by: Alok Johri, CIT-Learned
Departmental Representative
सुनवाई कȧ तारȣख/
/ Date of Hearing : 20/12/2011
घोषणा कȧ तारȣख /Date of Pronouncement : 31.1.2012
आदे श/O R D E R
PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER :
The are cross appeals for A.Y. 2004-05 arising from the order of the CIT(A)-IV, Baroda dated 28.9.2007 and for A.Y. 2005-06 arising from the order of the CIT(A)-IV, Baroda dated 28.5.2008.
[A] Revenue's appeals; ITA No.4457/Ahd/2007 for A.Y. 2004-05 and ITA No.2928/Ahd/2008 for A.Y. 2005-06.
2. Ground No.1 (for A.Y. 2004-05) reads as under ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue)
& 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06 -2-
1. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in directing the A.O. to compute the depreciation on the W.D.V. for the A.Y. 2003-
04, without considering the fact that the assets which were acquired more than 10 years back and used when the assessee was not a taxable entity, gave a distorted picture of its profit & loss a/c in this year when the assessee claimed depreciation on the original cost of assets for the first time in A.Y. 2003-04 and also ignoring the underlying principle of accountancy that the wear and tear of the assets utilized by an assessee for earning profit has to be considered i.e. notional depreciation as laid down in CIT Vs. Bombay State Transport Corp. 118 ITR 399, 405 (Bom) and also not following the ration laid down in GR Govindrajulu Naidu Vs CIT 90 ITR 13 (Mad) wherein depreciation is capital loss whether claimed or not and which is contrary to the spirit of provision of Section 32.
2.1. National Dairy Development Board (hereinafter referred to as "NDDB") has several locations and its head office is at Anand (Gujarat) and regional offices are in Delhi, Mumbai, Calcutta, etc. The objective is to support dairy co-operatives. Its main role is to promote, finance and to provide technical support to dairy co-operatives. In the past, the NDDB was not a taxable entity in view of a special provision of section 44 of National Dairy Development Board Act, 1987. However, vide section 162 of Finance Act of 2002 and section 44 of NDDB Act, the said special provision was omitted w.e.f. 1.4.2003. In consequence thereof, the assessee-board had become a taxable entity from Asst.Year 2003-04. It is worth to mention that for A.Y. 2003-04 an order of the Tribunal dated 21.4.2011 is on record and to be referred if need be at the appropriate places. In respect of the above ground, it was noted by the AO that the assessee had claimed depreciation of ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06 -3- Rs.24,35,61,619/-. On the basis of the details in respect of the depreciation, it was found that the depreciation allowance was claimed on the cost of the assets after adjustment by the amount of grant received. As per AO, the depreciation was not computed on the basis of the "written down value" of the block of assets as on 1.4.2003. The AO has noted that for A.Y. 2003-04 similar fact was noticed and the amount of depreciation was re-computed by the AO. Thereafter, in the impugned asst.order, the AO has discussed the view taken for A.Y. 2003- 04, the immediate preceding asst.year, and finally worked out the depreciation at Rs.6,85,47,257/- as against the claim of the assessee and accordingly reduced the same.
3. The matter was carried before the first appellate authority who has followed the view of the ITAT pronounced in A.Y. 2003-04 and directed the AO to compute the depreciation accordingly. Now the Revenue is before us.
4. From the side of the Revenue, ld.DR Mr. Alok Johri appeared and stated that although the issue of depreciation has been decided against the Revenue by the Tribunal and that order of the Tribunal (in the case of National Dairy Development Board vs. Addl.CIT) is reported as [2009]310 ITR (AT) 325 (Ahmedabad) but still the question is that in view of the definition of WDV as prescribed u/s.43(6) of IT Act, means the actual cost to the assessee less depreciation actually allowed. Since in the case of the assessee the admitted factual position is that the depreciation was not provided in the books of account in the past, there ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06 -4- was no question of granting the same, nevertheless , a notional figure of depreciation should have been taken into account so as to arrive at the correct WDV. Ld. DR Mr.Alok Johri has also argued that the "actual cost" is defined in section 43(1) of IT Act. That actual cost has admittedly been reduced by the grants received. He has also referred section 32(1) of IT Act and argued that a depreciation in respect of block of assets are to be computed annually to arrive at the WDV for a particular year. Ld.DR has further elaborated his argument that as per the definition of "actual cost" as prescribed u/s.43(1) of IT Act read along with Explanation the cost should be on the date of acquisition. In the present case, since the date of acquisition was not the assessment year under consideration, but it was acquired much earlier, therefore the actual cost should not be the WDV. He has explained that since the date of acquisition of the assets was much earlier hence the carried over amount was nothing but the WDV and that ought not to be the " cost" and since it was in the nature of WDV so it had to be as per the norms of Depreciation prescribed in the Statute. He has also referred Explanation- 3 to section 43(1) that the purpose of the claim of higher depreciation was to reduce the tax liability, hence the AO has rightly recomputed the depreciation. Ld.DR has also referred Explanation 5 to section 43(1) of the IT Act for the legal proposition that the "actual cost" to the assessee should be the "actual cost" as reduced by an amount of depreciation calculated at the rate in force on that date that would have been allowable had the asset been used for the business purpose. Ld. DR has summed up that the assets in question have actually been used for the purpose of the business of the assessee, therefore the "actual cost" ought to have been ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06 -5- reduced by the amount of depreciation year-wise at the rates enforceable in those years.
5. From the side of the respondent-assessee, ld.ARs Mr.S.N.Soparkar and Mr.Yogesh Shah appeared and placed reliance on the order of the Tribunal referred supra and argued that once a view has already been taken, then at present there is no power to review that order.
6. Having heard the submissions of both the sides, we are of the considered view that the issue in hand now stood covered by the said order of the Tribunal; relevant portion is reproduced below:-
"The fifth ground is against the disallowance of Rs.26,16,20,204 out of depreciation claimed of Rs.35,75,40,636/-. The facts of the case are that the assessee had claimed depreciation of Rs.33,75,40,636 on the full amount of original cost of its assets. The Assessing Officer, however, was of the view that besides reduction of the grants amount from the cost of assets, notional depreciation also should have been reduced as if the assessee had been a taxable entity and accordingly, had been allowed depreciation since the date of its inception. The assessee claimed that as per the provisions of section 43(6) the written down value had to be computed by reducing the depreciation actually allowed against the cost of the assets and that there was no concept of mental calculations of the depreciation as having been allowed in the tax-free period. Therefore, the depreciation during the current year has to be computed on the original cost of the assets. The Assessing Officer rejected the contention of the assessee, as in his view, the principle governing the depreciation allowance is the effective life of the depreciable assets and the expenditure incurred on its wear and tear for the period of its consideration and since the assessee had been using the assets in question for years, such assets must have depreciated greatly by their use and some of them might have reached the stage of being discarded, hence, in order ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06 -6- to arrive at the correct income, normal wear and tear of the assets had to be taken into account."
....
"We have heard the parties ad considered the rival submissions. Section 32 provides for the depreciation on the written down value of the asset. Section 43(6) defines the written down value to mean in the case of assets acquired in the previous year like building, plant and machinery, furniture and fixtures etc., the actual cost of the assessee and in other case the actual cost to the assessee less all depreciation actually allowed to him under the Act. The short controversy is, as to whether, the "written down value" (WDV) of the asset is to be taken at their original cost or as reduced by the notional depreciation accounted for in the books of assessee and deemed to have been allowed in the earlier years when the assessee was not chargeable to tax. The term "actually allowed"
came up for consideration before the Supreme Court in the cases of Straw Products Ltd. [1966] 60 ITR 156, Dharampur Leather Co.Ltd. [1966] 60 ITR 165, Mahendra Mills [2000] 243 ITR 56, Madeva Upendra Sinai v. Union of India [1975] 98 ITR 209 wherein it has been held that the term "actually allowed" means allowed actually under the Act and not notionally. Accepting the theory propounded by the Assessing Officer, as upheld by the Commissioner of Income-tax (Appeals) and thereby reducing notional depreciation for computing the depreciation to arrive at the so-called real expenditure has no force and is contrary to the provisions of law and the decisions of the Supreme Court referred to above. In the earlier year the assessee was not liable to tax and therefore the question of allowing any depreciation to the assessee would not arise. In our opinion, the depreciation of the exempted period cannot be said to have been allowed to the assessee. Wherever the Legislature has wanted to reduce the written down value to be ascertained after allowing (notional depreciation), it has specially provided so, e.g. in section 10A(6) providing for the deemed allowance of depreciation for the assessment years ending before April 1, 2001. Section 10B(6) also provides for similar deemed allowance of depreciation for any of the relevant assessment years ending before April 1, 2001. These are specific ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06 -7- exclusions and not exposition of law that depreciation of the exempted period has to be assumed to have bee allowed and notionally allowed. In our opinion, in the preset case, there is no such specific provision for deemed allowance under the Act and, therefore, the written down value is to be ascertained by actual cost of the assets. As the income of the assessee was exempt until earlier year, no notional depreciation can be assumed and, therefore, it would be entitled to the depreciation on the original cost of the assets. We accordingly direct the Assessing Officer to allow the depreciation in accordance therewith."
6.1. It is worth to mention that for A.Y. 2003-04, the Revenue had gone in appeal before the Hon'ble Gujarat High Court and vide Tax Appeal No.672 of 2008 order dated 22/12/2008 this ground was dismissed as follows:-
"10. It is not in dispute that the provisions do not envisage any notional allowance and the Assessing Officer thus cannot work out such notional allowance and reduce the same from the depreciation claimed. The words actually allowed means actually allowed in the course of assessment. The assessee was not liable to be taxed and hence, no assessments were framed for the earlier years. Therefore, in absence of any legal infirmity in the impugned order of Tribunal, no question of law arises on this count."
6.2. We have been told that Revenue's SLP in Appeal (Civil) No.CC9999/2009 dated 31/07/2009 has also been dismissed.
7. Once the Hon'ble the Courts have held a view in favour of assessee by duly analyzing the provisions of the Act, as discussed hereinabove, we hereby hold that in terms of provisions of section 43(6) ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06 -8- of IT Act, WDV means the "actual cost" to the assessee less depreciation actually allowed. Since in the past when no depreciation was actually allowed, therefore the assessee has rightly claimed the depreciation as per its records. We hold accordingly and dismiss this ground of the Revenue for both the years.
8. Ground No.2 for A.Y. 2004-05 and Ground No.1 for A.Y. 2005- 06 of the Revenue are reproduced below:-
Ground No. 2 (for A.Y. 2004-05) reads as under:
2. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in deleting the addition of interest income of Rs.32,11,90,382/- following the ITAT's decision for A.Y. 2003-04 and ignoring the fact that the assessee was following cash system of accounting for interest income when it was not a taxable entity and switched over to mercantile system of accounting with retrospective effect when it became taxable, so that such interest income escaped from the tax net.
Ground No. 1 (for A.Y. 2005-06) reads as under:
1. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in deleting the addition of interest income of Rs.8,35,26,671/- following the ITAT's decision for the A.Y. 2003-04 and ignoring the fact that the assessee was following cash system of accounting for interest income when it was not a taxable entity and switched over to mercantile system of accounting with retrospective effect when it became taxable, so that such interest income escaped from the tax net.
8.1. The AO has observed that in A.Y. 2003-04 the assessee had changed its method of accounting in respect of interest income.
According to AO, from cash basis the assessee changed the method of ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06 -9- accounting of interest income to accrual basis. The AO has raised an objection that when the assessee was not a taxable entity a different method was adopted but when the assessee had come within the tax ambits it had changed its method of accounting retrospectively. After discussing the past history, the AO has concluded that the assessee has received interest of Rs.32,11,90,382/- which was accounted for in the Financial Year 2001-02 on mercantile basis. According to him, there was no material change in the facts for the year under consideration, i.e. A.Y. 2004-05. The interest income of Rs.32,11,90,382/- received during the year though credited in the F.Y. 2001-02 is liable to tax for A.Y. 2004-05. Resultantly the said amount was taxed.
9. When the matter was carried before the first appellate authority, the ld.CIT(A) has followed the order of the Tribunal for A.Y.2003-04 and deleted the addition.
10. Having heard the submissions of both the sides, this issue also stood decided by the order of the Tribunal reported as 310 ITR 325 (supra), wherein it was held as under:-
"Held, (i) that the policy of accounting the interest income was reviewed because the assessee was subject to tax under the provisions of the Income-tax Act. The resolutions being passed subsequent to the passing of the Finance Act, 2002 by itself could not be a ground for applying the provisions of section 145(3) read with section 145(1) of the Act to bring to tax, interest income pertaining to the period prior to the financial year 2002-03 but actually received during the year. The income of the assessee was chargeable to tax from the assessment year and the interest income ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06
- 10 -
was to be assessed following the mercantile system of accounting. The income that had accrued in the earlier year when the assessee was a non-taxable entity could not be assessed in the year under consideration merely because it had been received in that year. In the circumstances, the addition made by the Assessing Officer was to be deleted."
10. It is worth to note that the Revenue Department had gone in appeal before the Hon'ble Gujarat High Court and vide Tax Appeal No.672 of 2008 order dated 22/12/2008( supra) the said ground was dismissed vide following observation:-
"5. As can be seen from the facts which are not in dispute, the respondent-assessee was not liable to be taxed upto 31.3.2002 and became taxable only for the income earned during the period 1.4.2002 to 31.3.2003. In context of this position, the Tribunal has found as a matter of fact that the change in the method of accounting is bona fide, the change has been undertaken in consonance with the accounting standards prescribed by the Institute of Chartered Accountants on the advice of the Tax Consultant of the assessee. The said fact that the change in method of accounting is in line with the prescribed accounting standard has also been accepted by the Assessing Officer. The assessee has, consistently from the preceding year, preceding to the year under consideration, and in all subsequent years, followed the method of accounting adopted. Hence, the Tribunal has come to the conclusion that in light of the settled legal position, considering the two Resolutions and the background note relating to the Resolutions, it was apparent that there was no ground for applying provisions of Section 145(3) read with Section 145(1) of the Act to bring the interest income to tax pertaining to period prior to Financial Year 2002-03. That though the income in question might have been received during the year under consideration, it was not correct to state that the same would escape tax as the same was admittedly income of the earlier year and the assessee was not liable to tax by virtue of Section 44 of the Act, as it then stood.ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue)
& 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06
- 11 -
6. In light of the aforesaid findings recorded by the Tribunal, it is apparent that the Tribunal has recorded findings of fact after appreciating the evidence on record. Whether a change in the method of accounting is bona fide or not has to be examined in light of the facts and evidence on record and the Tribunal has applied the correct principles laid down by this Court to the facts found. The Tribunal is justified in holding that the action of respondent-assessee in changing the method of accounting with effect from 1.4.2001 cannot be read to mean that the act was mala fide because for the said period, admittedly, the assessee was not liable to tax. The contention of the Revenue that for the very same reason, the change in method of accounting was required to be ignored, namely, having been effected from 1.4.2001, is looking at the issue in a manner which can be termed to be one which no reasonable person would consider. Once the fact is admitted that for the said period, the assessee was not liable to tax, to say that the assessee should not have changed the method of accounting for the said period is ignoring the obvious, namely, the change is based on the advice received from the Consultant to adopt the prescribed accounting standards. It was only incidental that the change was effected at a point of time when provisions of Section 44 of the Act came to be omitted from the statute. Therefore, insofar as proposed question No. 1 is concerned, no question of law arises."
10.1. As noted above, SLP has also been dismissed by the Hon'ble Apex Court. Even in A.Y. 2006-07 ITAT "B" Bench in assessee's own case vide an order dated 25/05/2011 has dismissed that very ground of the Revenue. Respectfully following the view taken by the Hon'ble Courts we find no force in the grounds of the Revenue for both the years and dismiss the same.
[B] Assessee's Appeals:
11. ITA No.4452/Ahd/2007 & 2810/Ahd/2008 for A.Ys. 2004-05 and 2005-06 respectively.
ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue)& 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06
- 12 -
In ITA No.4452/Ahd/2007, Assessee raised the following grounds:
1. The order passed by the Commissioner of Income Tax (Appeals) is erroneous and contrary to the provisions of law and facts and therefore requires to be suitably modified. It is submitted that it be so done now.
2. The learned Commissioner of Income-tax (Appeals) has erred in confirming addition interest income earned on a project fund amounting to Rs.1,22,05,405/- as income of the appellant. It is submitted that in the facts and circumstances of the case, the appellant is acting as a nodal agency and income is diverted at source and not belonging to the appellant. It be so held now.
2.1. The learned Commissioner of Income-tax (Appeals) failed to appreciate that expenditure has been made out of the said income and therefore, if the interest received is treated as income chargeable to tax then similarly expenditure incurred therefrom has to be allowed as deduction. It be so done now.
11.1 Through an additional ground for A.Y. 2005-06 the assessee has raised the following grounds:
1. The learned Assessing Officer & learned CIT(A) has erred in taxing interest earned on North Kerala Project Development fund, amounting to Rs.1,16,92,827/- as income of the appellant. It is submitted that in the facts and circumstances of the case, the appellant is acting as a nodal agency and income is diverted at source and does not belong to the appellant.
1.1. Without prejudice to above, if the interest is considered as income of the assessee, direction be given to allow the expenditure in the same year in which they are incurred as deduction. It be so done now.ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue)
& 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06
- 13 -
11.2 Ground No.1 is general in nature needs no independent adjudication.
12. While deciding the appeal of the Assessee for A.Y. 2003-04, reported as 310 ITR (AT) 375 [Ahd.] vide Placitum 29 the Respected Co- ordinate Bench has held that interest had accrued to the assessee. Being consistent with the said view ground Nos.2 & 2.1 and the additional grounds of the assessee are hereby dismissed.
13. Ground No.3, 3.1 & 3.2 reads as under:- (A.Y. 04-05 Assessee's appeal)
3. The learned Commissioner of Income-tax has erred in confirming disallowance of grant of Rs.4,99,82,283 (for A.Y. 2005-06 of Rs.16,21,47,646/-) given to various cooperative societies as deductible expenditure u/s.36(1`)(xii) of the I.T. Act on the ground that the same are not in the nature of expenditure. Appellant submits that the grant given were in the nature of expenditure and allowable in accordance with section 36(1)(xii) of the I.T. Act. It is submitted that it be so held now. 3.1. The learned Commissioner of Income-tax has erred in not appreciating the fact that expenditure is booked only when advance given are utilized and therefore there is no question of possible conversion in such cases and hence the claim made ought to have been allowed. It be so held now. 3.2. In nay event the same is allowable u/s.37/28 of the I.T. Act and therefore, the same ought to have been allowed as deduction. It be so held now.
14. After the recall of the order for A.Y. 2003-04 an another order was passed by ITAT "B" Bench Ahmedabad bearing ITA No.454/Ahd/2006 ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06
- 14 -
order dated 21/04/2011 and the matter was restored to the file of the AO. Likewise, for A.Y. 2006-07 ITAT "B" Bench in ITA No.3328/Ahd/2009 vide an order dated 07/06/2011 has followed A.Y. 2003-04 and restored the matter to the file of the AO. It is worth to mention that a decision of ITAT Delhi "E" Bench pronounced in the case of Oil Industry Development Board reported in (2009) 31 SOT 226 (Delhi) has been followed for the proposition that expenditure incurred by way of disbursement of grant for the objection purposes would be allowable as deduction u/s.36 (1)(xii) of the Act. The non-refundable grants sanctioned needs verification at the end of the AO as directed by the Respected Bench following the past history. Following the past history a consistent view taken for this year as well and grounds are restored for de novo consideration, therefore deemed to be allowed but for statistical purposes.
15. Ground No.4
1. The learned Commissioner of Income-tax (Appeals) has erred in confirming disallowance of Rs.2,39,924/- being contribution made to Employees' Recreation Trust by invoking provisions of section 40A(9) of the I.T. Act. It is submitted that in the facts and circumstances of the case, section 40A(9) is not applicable and no disallowance was required to be made. It is submitted that it be so held now.
15.1) For A.Y. 2005-06, an additional ground was raised in this regard challenging the disallowance of Rs.4,75,394/-. For both the years, we hereby hold that the Tribunal has taken a view in A.Y. 2003-04 (310 ITR
325)[AT] in favour of the Revenue and held that the provisions of section 40A(9) are very clear in providing that any payment or contribution made by an employer on behalf of the employees to any fund, trust would not ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06
- 15 -
be an allowable expenses except the payment is made for expenses provided u/s.36(1)(iv) and (v). Taking a consistent view the addition is hereby confirmed and this ground of the Assessee is dismissed.
16. Rest of the grounds are either in general or consequence in nature. Resultantly, for A.Y. 2004-05 appeal of the assessee is dismissed except one ground which is restored back for reconsideration.
[B] In ITA No.2810/Ahd/2008 (A.Y. 05-06), Assessee raised the following grounds:
17. For A.Y. 2005-06 remaining grounds left for our adjudication are to be dealt with as follows.
18. Grounds Nos. are 2, 2.1,2.2 & 2.3, however a substantial question is as per ground No.2 is reproduced below.
2. The learned Commissioner of Income Tax (Appeals) has erred in disallowing the appellant claim for deduction u/s.36(1)(viii) Rs.4,02,06,000. It is submitted that appellant has satisfied necessary conditions and learned CIT(A) ought to have allowed the deduction as claimed. It is submitted that it be so held now.
2.1 The learned Commissioner of Income Tax (Appeals) has erred in upholding that producing milk and milk products is not an "industry" by relying on the finding of honorable ITAT that meaning of "industry" under the Industrial Development & Regulation Act cannot be imported under the Income Tax Act to grant benefit u/s.36(1)(viii). It is submitted ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue) & 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06
- 16 -
that production of milk and milk products is considered as an "industry" under the Income Tax Act itself in Notification no.SO627(E) dated 4-8-1999 issued by the Central Board of Direct Taxes (CBDT) and accordingly entitled to allowance u/s.36(1)(viii). It is submitted that it be so held now.
19. For A.Y.2003-04 (310 ITR 325)[AT] the issue was decided against the assessee and it was held that the conditions prescribed u/s.36(1)(viii) were not complied with by the assessee. Likewise, for A.Y. 2006-07 vide order dated 7/6/2011 that view of the Tribunal was followed and decided against the assessee. Consistent with the orders of the Tribunal for the year as well this ground is hereby dismissed.
20. We are also left with ground No.4 for A.Y. 2005-06; reproduced below:-
4. The learned Commissioner of Income tax (Appeals) erred in confirming the depreciation as computed by the AO in view of the retrospective amendment to section 43(6) of the Act. It is submitted that the depreciation computed by AO is not as per the amendment made to section4 3(6) and the CIT(A) ought to have directed the AO to compute depreciation considering the amendment in proper perspective. It is submitted that it be so held now.
21. For A.Y. 2005-06, the assessee has also raised an additional ground; reproduced below:-
ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue)& 2810/Ahd/08, 4452/Ahd/07(Assessee) ACIT vs. NDDB AYs - 2004-05 & 2005-06
- 17 -
The learned Assessing officer & learned CIT(A) have erred in not granting depreciation on the closing Written Down value of the Block of assets for the A.Y. 2004-05.
22. While deciding the appeal of the Revenue hereinabove, we have already taken a view in favour of the assessee and held that the notional depreciation could not be reduced. Accordingly, for this year these grounds are allowed and in consequence thereupon the additional ground survives so that the correct WDV as per law should be recomputed. Issue raised by the assessee is hereby allowed. Ground is allowed.
23. Rest of the grounds are either in general or consequential need no independent adjudication.
24. In the result, for A.Ys. 2004-05 & 2005-06 Revenue's appeal are dismissed and Assessee's appeal are partly allowed but for statistical purposes.
Sd/- Sd/-
(बी.पी.जैन) (मुकुल कुमार ौावत)
लेखा सदःय Ûयाियक सदःय
( B.P. JAIN ) ( MUKUL Kr. SHRAWAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 31 / 01 /2012
टȣ.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS
ITA Nos.2928/Ahd/08,4457/Ahd/07 (Revenue)
& 2810/Ahd/08, 4452/Ahd/07(Assessee)
ACIT vs. NDDB
AYs - 2004-05 & 2005-06
- 18 -
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. ू×यथȸ / The Respondent.
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ(अपील) / The CIT(A)-IV, Baroda
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाईल / Guard file.
आदे शानुसार/ BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) उप/ आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation.......................27.1.12
2. Date on which the typed draft is placed before the Dictating Member 30.1.12.................. Other Member.....................
3. Date on which the approved draft comes to the Sr.P.S./P.S.................
4. Date on which the fair order is placed before the Dictating Member for pronouncement......
5. Date on which the fair order comes back to the Sr.P.S./P.S.........31.1.12
6. Date on which the file goes to the Bench Clerk..................... 31.1.12
7. Date on which the file goes to the Head Clerk..................................
8. The date on which the file goes to the Assistant Registrar for signature on the order..........................
9. Date of Despatch of the Order..................