DCIT, CIRCLE-12(1), NEW DELHI vs. INDO RAMA SYNTHETICS (I) LTD., GURGAON
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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI NARENDRA KUMAR BILLAIYA & SHRI KUL BHARAT
1 ITA no. 2265/Del/2019
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI
BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER
ITA No. 2265/DEL/2019 [Assessment Year: 2006-07
DCIT, Circle-12(1), Vs Indo Rama Synthetic (I) Ltd., 20th Floor, DLF Square, NH-8, New Delhi. DLF Phase-II, Gurgaon, Haryana-122002
PAN- AAACI1530L APPELLANT RESPONDENT Assessee represented by Shri Rohit Jain, Adv. Department represented by Shri K.M. Mahesh, CIT-DR Date of hearing 22.11.2022 Date of pronouncement 30.11.2022
O R D E R PER KUL BHARAT, JM:
This appeal, by the Revenue, is directed against the order of the learned
Commissioner of Income-tax (Appeals)-22, New Delhi, dated 31.12.2018, pertaining to
the assessment year 2006-07. The Revenue has raised following grounds of appeal:
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 58,49,10,000/- made by the AO on account of disallowance of depreciation claimed on Sales Tax Subsidy capitalized as part of block of fixed assets.
1.a) Whether the Ld CIT(A) has erred in deleting the addition on account of depreciation on Sales Tax Subsidy on the ground that there is no basis for the finding of the AO that the assessee has capitalized the Sales Tax Subsidy and
2 ITA no. 2265/Del/2019 claimed depreciation thereon, ignoring the fact that the Tax Auditor has categorically observed vide footnote 4 of the Annexure E to the Tax Audit Report (Form 3CD, read with Note 1 of Annexure R to Column 25 of Form 3CD, that the assessee has treated the Subsidy as capital receipt and has claimed depreciation thereon 2. The Appellant craves leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.”
Facts giving rise to the present appeal are that in this case the assessment was
completed u/s 143(3) of the Income-tax Act, 1961 (in short “the Act”) on 31.12.2008 at
total income of Rs. Nil after set off of unabsorbed depreciation of Rs. 1,02,44,85,521/-
under normal provisions of the Act. Subsequently th case was reopened u/s 147 and a
notice u/s 148 of the Act was issued. Thereafter, reassessment was completed on
27.03.2014 u/s 143(3) read with section 147 of the Act. Thereby the Assessing officer
made disallowance of foreign exchange fluctuation of Rs. 4,88,14,000/- and disallowance
of depreciation on capital receipt amounting to Rs. 58,49,10,000/-. Thus, computed total
income at Rs. 63,37,24,000/-. Aggrieved against this assessee preferred appeal before the
learned CIT(Appeals), who after considering the submissions partly allowed the appeal
and deleted the addition relating to depreciation on sales-tax subsidy holding that no
depreciation was claimed on sales-tax subsidy.. Aggrieved against this the Revenue is in
appeal before this Tribunal.
The only effective ground in this appeal is against deletion of disallowance of
depreciation claimed on sales-tax subsidy capitalized as part of block of fixed assets.
3 ITA no. 2265/Del/2019
At the outset, learned counsel for the assessee pointed out that the assessee has not
claimed any depreciation as duly recorded by the learned CIT9Appeals).
However, learned DR opposed the submissions and pointed out tha the assessee in
the note ha stated that the subsidy granted on account of exemption of sales-tax being a
capital receipt, has been reduced while computing total income following the decision of
the ITAT Special bench, Delhi in the case of CIT Vs. Reliance industries Ltd.
We have heard rival contentions, perused the material on record. The grievance of
the Revenue is misconceived as the assessee has not claimed any depreciation on the
capital receipt. It is categorically stated by the learned CIT(Appeals) in para 5.5 of the
impugned order. For the sake of clarity, the same is reproduced herein below:
“5.5 On perusal of the facts, it is noted that sales tax subsidy of Rs.74.37 crores was received by the appellant and not Rs.389.94 crores as alleged by AO which shows complete non-application of mind by the AO. In fact the total figure of Rs.389.94 crores taken by the AO is coming from subsidy received in earlier years of Rs.315 crores and Rs.74 crores of this year totaling to Rs.389 crores. The AO has not bothered to give the breakup of the same. The AO has also not pointed out that how the appellant has claimed depreciation on this by classifying in which block of asset. Further, I have gone through the tax audit report and it is nowhere mentioned that the appellant has capitalized the sales tax subsidy and claimed depreciation thereon. Further, it is also brought to the notice that the addition made by the AO in original assessment order treating sales tax subsidy as revenue receipt was decided in favour of the appellant by CIT(A) holding such subsidy to be a capital receipt, which was upheld by the ITAT, Delhi. Therefore, considering all the facts, I am inclined to accept the submission of the AR. In view of these finding the addition made by the ^AO is deleted and these grounds of appeal are allowed.”
4 ITA no. 2265/Del/2019
The Revenue could not rebut the above finding of learned CIT(Appeals).
Therefore, we do not see any reason to interfere in the finding of the learned
CIT(Appeals) and the same is hereby affirmed.
In the result, Revenue’s appeal stands dismissed.
Order pronounced in open court on 30th Nov. 2022.
Sd/- Sd/- (NARENDRA KUMAR BILLAIYA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
Draft dictated 22.11.2022 Draft placed before author 22.11.2022 Approved Draft comes to the Sr. PS/PS Order signed and pronounced on File comes to P.S. File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk Date of dispatch of Order Date of uploading on the website
