Income Tax Appellate Tribunal - Amritsar
S.S. Embroiders,, Amritsar. vs Department Of Income Tax on 17 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER
AND SH. B.P.JAIN, ACCOUNTANT MEMBER
I.T.A. No.357(Asr)/2010
Assessment year : 2005-06
PAN:AAQFS0551Q
The Asstt. Commr. of Income-tax, Vs. M/s. S.S. Embroiders,
Circle V, Amritsar, Majitha Road, Amritsar.
(Appellant) (Respondent)
I.T.A. No.358(Asr)/2010
Assessment year : 2006-07
PAN:AAQFS0551Q
The Income Tax Officer, Vs. M/s. S.S. Embroiders,
Ward 5(4), Amritsar, Majitha Road, Amritsar.
(Appellant) (Respondent)
Appellant By: Sh. Tarsem Lal, DR
Respondent By:Sh. Padam Bahl, CA
Date of hearing :17/04/2012
Date of pronouncement:23/04/2012
ORDER
PER BENCH;
These two appeals of the Revenue arise from two different orders of CIT(A), Amritsar, each dated 28.05.2010 for the assessment years 2005-06 & 2006-07 respectively. Since the issues involved in both the appeals are 2 identical and, therefore, both the appeals are being take up by this consolidated order for the sake of convenience.
2. The revenue has raised following grounds in both the appeals:
"1. Whether on the facts and circumstances of the case, the order of the ld. CIT(A) is bad in law.
2. Whether on the facts and circumstances of the case, the ld.
CIT(A) has erred in deleting the addition of Rs.17,36,202/- made by the A.O. and allowing depreciation @ 50% on machinery claimed to have been purchased under TUFS.
3. Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in holding that the use of words 'processing' and garment sector' are wide enough to include in its ambit utilization of machinery in any activity in textile industry to be eligible to claim depreciation.
4. The order of the Ld. CIT(A) be vacated and that of the A.O. be restored.
5. Appellant craves leave to amend or add any or more grounds of appeal."
3. First of all, we take up the appeal of the Revenue in ITA No. 357(Asr)/2010 for the assessment year 2005-06 and our decision in the said appeal shall be applicable in the appeal of the Revenue in ITA No. 358(Asr)/2010 for the assessment year 2006-07 being identical issues.
4. The brief fact during the assessment year 2005-06 are that the AO observed that the assessee had claimed depreciation of Rs.63,13,459/- @ 50% on machinery purchased under TUFS. The assessee contended that depreciation @ 50% was claimed as the machinery in question was purchased in accordance with the guidelines issued under Textiles 3 Upgradation Fund Scheme and was also eligible for TUFS Subsidy. The assessee also relied on the decision of Hon'ble Punjab & Haryana High Court in the case of Sovrin Knit works ( 109 ITR 310) wherein it was held that business of Bleaching, dyeing finishing & embroidery of grey cloth constitutes business of manufacture or producing Textiles. The AO, however, did not accept the contentions of the assessee and allowed depreciation @ 25% only by holding that the assessee did not use its machinery for the purposes which may entitle for depreciation of 50% as the machinery was used for embroidery work on grey cloth and the claim of 50% depreciation on machinery purchased under TUFS was not in accordance with provisions of the Act. The AO also distinguished the case law relied upon by the assessee.
5. The Ld. CIT(A) allowed the claim of the assessee by considering the para 6 of part -A-III of new Appendix-1 of Income Tax Rules, Resolution of Ministry of Textiles No.28/1/99-VTI dated 31.03.1999 and decisions relied upon by the assessee and the explanation submitted by the assessee.
6. The Ld. DR, Sh. Tarsem Lal, appearing for the Revenue argued and invited our attention to Income Tax Rules in new Appendix-1 where rates at which depreciation is admissible has been mentioned as machinery and plant used in weaving, processing and garment sector of textiles industry which is 4 purchased under TUFS on or after the Ist day of April, 2011 but before the Ist day of April, 2004 and is put to use before the Ist day of April, 2004. As per Note No.8 of Part-B of the said Appendix, the definition of TUFS is announced by the Govt. of India in the form of a Resolution of Ministry of the Textile vide No.28/1/99-CTI of 31.3.1999 has been referred. A copy of the said Resolution was placed by the Ld. DR on record during the course of hearing. It was argued by the Ld. DR, Sh. Tarsem Lal, that scope of the scheme is having 7 items and the legislation while making the Rules as referred hereinabove new Appendix-1, only included consciously weaving, processing and garments sector of textile industry, which are at point No.(vi) and other items numbering from (i) to (v) & (vii) including fabric embroidery and textiles were not included in the Income Tax Rules. Therefore, embroidery was not included in the TUFS consciously by the legislators for the higher depreciation in Appendix-1 mentioned hereinabove.
7. On the other hand, the Ld. counsel for the assessee, Sh. Padam Bahl, CA, agued in the first instance that the case of the assessee on identical facts is covered by the decisions of the co-ordinate Bench of Ahmedabad in following cases:
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i) M/s. Hari Fashions vs. ACIT Cir-2, Surat, ITA No.3105/AHD/2010 for the assessment year 2007-08, dated 27.05.2011.
ii) Income Tax Officer, Surat Vs. Shri Lakhabhia S. Gondalia, Surat, ITA No.372/AHD/2011 for the A.Y. 2007-09, dated22.07.2011.
iii) DCIT, Circle 2, Surat vs. Shri Dungarbhai Harjibhai Italia (HUF), Surat, dated 12.08.2011.
iv) ACIT Cir.2, Surat Vs. M/s. Anita Exports, Surat, ITA No.2892/AHD/2009 for the A.Y. 2006-07, dated 08/07/2011. 7.1. The Ld. counsel for the assessee, further relied upon the decisions of the Hon'ble Supreme Court in the case of S.S.M. Brothers (P) Ltd. and Others vs. CIT reported in 243 ITR 418 and in the case of CIT vs. Oracle Software India Ltd. reported at 320 ITR 546 (SC). He also invited our attention to various orders done by the A.O. available at pages 16 to 65 of the paper book where the A.O. on identical issues in different cases of assessees had allowed higher depreciation of 50% in the same i.e. Amritsar charge.
8. In the rejoinder, the Ld. DR argued that the decisions of Ahemdabad Bench are erroneous who had followed all the decision of SMC Bench in the 6 case of Income Tax Officer, Ward -1(2), Surat vs. Haripriya Processors Pvt. Ltd. ( ITA No.1569/Ahd/2010) dated 08.09.2009. The mistake, if any, done by the Tribunal cannot be perpetuated in the settled law.
9. We have heard the rival contentions and perused the facts of the case. The Ld. counsel for the assessee Mr. Padam Bahl, CA also invited our attention during the course of hearing to Circular No.6 of Govt. of India, Ministry of Textiles from the Office of the Textile Commissioner, Mumbai, bearing No.28(19)2000-MS dated 19th Feb.,2002 and Circular No.6 having a subject : Operational guidelines for Credit Linked Capital Subsidy under Technology Upgradation Fund Scheme (CLCS-TUFS) for Small Scale Textile and Jute Industries as approved by IMSC in its 11th meeting held on 15th Feb.,2002 and Annexure D-1 of the said Circular in para 3C(14) includes Fabric embroidery machine. List of machines eligible for weaving knitting units under TUFS are available at pages 2 to 4 of the paper book. He also invited our attention to page 8 of the paper book where the bankers of the assessee had given a confirmation that the bank had received Rs.11,33,072/- as interest subsidy of TUFS on behalf of the assessee. The bank had also given a certificate at PB-9 that two loans were advanced to the assessee which are covered under the project approved under TUFS. Therefore, the arguments made by the Ld. DR, Sh. Tarsem Lal, 7 were not found convincing. Once the Ministry of Textiles had submitted the circular for including Fabric, Embroidery Machines and the banks had also sanctioned loan under TUF Scheme and had received subsidy under TUFS. As regards the decision of the co-ordinate Bench of ITAT Ahmedabad relied upon by the ld. counsel for the assessee, the issue is covered by the decision of the co-ordinate Bench of ITAT, Ahmedabad 'C' Bench in ITA No.2892/Ahd./2009 dated 08.07.2011, in which on identical issue, the higher depreciation was claimed by the assessee which was rejected by the AO and the ld. CIT(A) allowed the claim of the assessee and the Tribunal in the said appeal had dismissed the appeal of the Revenue. In this appeal, the Tribunal relied upon the decision of the Hon'ble Karnataka High Court, in the case of CIT vs. Darshak Ltd. (2001) 247 ITR 489 (Kar.). Also on identical issue, the co-ordinate ITAT, Ahmedabad Bench had decided the issue in the case of M/s. Hari Fashions, Surat vs. Asstt. CIT, Cir.2, Surat (supra), Income Tax Officer vs. Shri Lakhabhai S. Gondalia, Surt (supra) and DCIT, Cir.2, Surat vs. Shri Dungarbhai Harjibhai Italia (HUF), Surat (supra) and copies of all the decisions are placed on record. The argument by the Ld. DR, Sh. Tarsem Lal that such orders of the ITAT, Ahmedabad Bench are erroneous since they have followed the SMC decision, is not a proper forum for the Ld. DR to raise such question before this Bench and point out the error. Once there 8 is a decision of the Co-ordinate Bench on identical issue and there is no contrary decision of our Bench at Amritsar or of any higher courts then we are bound to follow the decision of the Co-ordinate Bench, when the issue is identical. There is no dispute to the fact that the issue is identical in the present case, as decided by the Co-ordinate Bench of ITAT Ahemadabad in various decisions of the Bench hereinabove and also on the fact, we are of the view that the assessee is entitled for higher depreciation under TUFS and we find no infirmity in the order of the ld. CIT(A). Thus, all the grounds of the Revenue in ITA No.357(Asr)/2010 are dismissed.
9. As regards the appeal of the Revenue in ITA No.358(Asr)/2010, the issue is identical, as in Revenue's appeal in ITA No.357(Asr)/2010 which we have decided by our order of even date, hereinabove. Following the same, we dismiss all the grounds of the Revenue taken in this appeal. Thus, both the appeals of the Revenue are dismissed.
10. In the Result, both the appeals of the Revenue in ITA No. 357(Asr)/2010 & ITA No.358(Asr)/2010 are dismissed.
Order pronounced in the open court on 23rd April, 2012.
Sd/- Sd/-
(H.S. SIDHU) (B.P. JAIN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 23rd April, 2012
/SKR/
9
Copy of the order is forwarded to :
1. The Assessee:M/s. S.S. Builders, Majitha Road, Amritsar.
2. The ACIT Cir.V, Amritsar./ ITO Ward 5(4), Asr.
3. The CIT(A), Asr.
4. The CIT, Asr.
5. The SR DR, ITAT, Asr.
True copy By Order (Assistant Registrar) Income Tax Appellate Tribunal Amritsar Bench : Amritsar.