Income Tax Appellate Tribunal - Indore
Income Tax Officer -2, Ratlam vs Shri Rahul Chaprod, Prop.M/S Rahul Food ... on 24 October, 2018
Rahul Chaprod
I.T.A.No.498/Ind/2017
आयकर अपील
य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No. 498 /Ind/2017
Assessment Year 2012-13
Income Tax Officer-2, Vs. Shri Rahul Chaprod,
Ratlam Prop.M/s. Rahul Steel
Food Industries, 13, Pipli
Bazar,
Jaora, Dist. Ratlam (M.P)
(Appellant) (Respondent )
PAN No. ADNPC0133E
Revenue by Shri B.J Boricha, Sr. DR
Assessee by Shri S.S. Deshpande, CA
Date of Hearing 22.10.2018
Date of Pronouncement 24.10.2018
ORDER
PER SHRI MANISH BORAD,AM This appeal of Revenue pertaining to A.Y. 2012-13 is directed against the order of Ld. Commissioner of Income Tax(Appeals), Ujjain (in short 'CIT(A)'), dated 17.04.2017 which is arising out of the order u/s 154 of the Income Tax Act 1961(hereinafter called as the 'Act') framed on 10.01.2017 by ITO-2, Ratlam.
2. The revenue has raised following grounds of appeal; 1 Rahul Chaprod I.T.A.No.498/Ind/2017 "1. Whether on the facts and circumstances of the case Ld.CIT(A) was justified in deleting the addition of Rs.27,88,184/- made on account of incorrect depreciation claimed by the assessee. (Note - The case is covered under the exceptions mentioned in para 8(c) of Circular 21/2015.
3. Briefly stated facts as culled out from the records are that the assessee being an individual carries the business under sole proprietorship concern M/s. Rahul Steel & Foods Industries. The original return of income was filed on 21.09.2012 in which Income of Rs.4,22,050/- was declared which was subsequently revised on 22.09.2012 declaring income at Rs.4,90,390/-. Case picked up for scrutiny under CASS and assessment u/s 143(3) of the Act completed on 30.01.2016 assessing income at Rs.6,80,390/-. Subsequently the Ld.A.O under the provisions of Section 154 of the Act passed an rectification order observing that the assessee has wrongly claimed depreciation of Rs.27,88,184/- on machinery and building reflecting it only in the computation of income but in the audited balance sheet no such claim of depreciation has been made. He also observed that this action of the assessee of not showing the depreciation in the audited balance sheet shows that the alleged fixed assets have not been used for business purposes 2 Rahul Chaprod I.T.A.No.498/Ind/2017 and accordingly disallowed the claim of depreciation at Rs.27,88,184/- in the order framed u/s 154 of the Act on 10.01.2017.
4. Aggrieved assessee preferred an appeal before Ld.CIT(A) and succeeded as the ground of the assessee changing the addition of Rs.27,88,184/- was allowed by the Ld.CIT(A) observing as follows;
"4.1 Ground No.1 & 2:-Through these grounds of appeal the appellant has challenged the addition of Rs.27,88,184/- on account of- depreciation. The AO made the addition on 'the ground that the appellant has not debited the depreciation in the P&L Account. The AO while framing the assessment order u/s 143(3) has allowed the claim of the appellant in respect of the depreciation. The AO allowed the claim of the depreciation after due application of' the mind. The AO IS not correct in - withdrawing the claim of the appellant In respect of the depreciation u/s 154 of the LT. Act. The appellant in the audited balance sheet was having the fixed assets. The appellant is entitled for the depreciation on fixed assets. The appellant owns godown and rent has been received from MPWCL. The same view has also been upheld by Hon'ble ITA T, Indore in the case of Sudha Devi Oswal Vs JCIT, Ratlam Appeal No.ITA No. 212/Ind/2014 A.Y. 2010-11 order dated 16-11-2015. Therefore the addition made by the AO amounting to Rs.27,88,184/- is Deleted. Therefore, the appeal on these grounds is allowed".
5. Aggrieved revenue is now in appeal before the Tribunal raising sole grievance against the order of Ld.CIT(A) deleting the addition of 3 Rahul Chaprod I.T.A.No.498/Ind/2017 Rs.27,88,184/- on account of incorrect depreciation claimed by the assessee.
6. Ld. Departmental Representative vehemently argued supporting the order of Ld.A.O.
7. Per contra Ld. Counsel for the assessee submitted that it has been consistently held by the Hon'ble Courts that it is not mandatory to claim depreciation in the books of accounts and the assessee can claim the same while filing the income tax return showing it in the computation of income. The impugned assets i.e. machinery and factory building are being consistently used for business purposes. All necessary documents in support thereof have been filed before the lower authorities. Necessary documentary evidence of factory building given on rent to MPWCL since June,2011 are placed on record. He therefore prayed that the findings of Ld.CIT(A) may please be confirmed.
8. We have heard rival contentions and perused the records placed before us. Revenue's grievance is limited to the deletion of addition of Rs.27,88,184/- by Ld.CIT(A). From perusal of the submissions made by the assessee before Ld.CIT(A) it is revealed that the alleged addition of Rs.27,88,184/- includes two 4 Rahul Chaprod I.T.A.No.498/Ind/2017 components. Firstly depreciation of Rs.26,80,229/- and interest of Rs.1,07,955/-. Perusal of computation of income shows that the alleged interest amount of Rs.1,07,955/- was reduced from the business profits but has been shown as income under the head income from other sources and therefore no addition of the impugned interest of income of Rs.1,07,955/- was called for.
9. Ld.CIT(A) has wrongly mentioned the depreciation amount at Rs.27,88,184/- because the actual depreciation claim made by the assessee in the computation of income is Rs.26,80,229/-. Therefore our adjudication now is limited to the depreciation claim of Rs.26,80,229/-. This amount of depreciation includes depreciation of Rs.20,76,428/- claimed on the Written Down Value (In short 'WDV') of machinery and Rs.6,03,801/- claimed on the WDV on the factory building.
10. As far as the contention of the assessee that the claim of depreciation is eligible in the income tax return even if the same has not been claimed in the books of accounts certainly has merits as the issue is squarely covered by the decision of Co-ordinate Bench in the case of Sudha Devi Oswal Vs JCIT Ratlam ITA No.212/Ind/2014 order dated 16.11.2015 wherein similar facts 5 Rahul Chaprod I.T.A.No.498/Ind/2017 were there before the Tribunal wherein depreciation on the building and Warehouse was not claimed in the balance sheet but the claim for depreciation was lodged by the assessee before the Ld.A.O during the assessment proceedings. The Tribunal after examining the facts concluded that the warehouse building was in existence and was also used for business activities, therefore the assessee is entitled to depreciation.
11. In the instant appeal the facts are quite similar as the depreciation on machinery and factory building have not been claimed in the balance sheet i.e. not debited to the Profit & Loss Account but while preparing the computation of income the depreciation of Rs.26,82,229/- has been claimed. In the Tax Audit Report u/s 44AB of the Act, at the relevant column of Form 3CD. Auditor has given the details of depreciation calculated on the written down value of the machinery as well as factory building. There is no dispute at the end of Revenue about the WDV of Machinery and Factory Building. We are also satisfied that the impugned assets are being regularly used for business purposes. We therefore are of the considered view that the assessee has 6 Rahul Chaprod I.T.A.No.498/Ind/2017 rightly claimed the depreciation of Rs.26,80,229/- and Ld.CIT(A) made no error in allowing the claim of the assessee.
11. In the result the ground raised by the Revenue is dismissed.
The order pronounced in the open Court on 24.10.2018.
Sd/- Sd/-
(KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
दनांक /Dated : 24.10.2018
/Dev
Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file.
By order Asstt. Registrar 7