MEFCO ENTERPRISES PVT. LTD.,JAIPUR vs. ACIT, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh dqy Hkkjr] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ ITA No.528/JP/14 fu/kZkj.k o"kZ@Assessment Year : 2008-09 cuke M/s Mefco Enterprises Pvt. The Asstt. Commissioner of Vs. Ltd.E-244, Road No.13, VKI Aea, Income Tax, Circle-4, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAACB 7543 A vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by :Shri Navin Garg, Advocate jktLo dh vksj ls@ Revenue by : Shri R.A. Verma (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 06.03.2017 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 07/03/2017. vkns'k@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of Ld. CIT(A), Bikaner dated 28.05.2014 for assessment year 2008-09 wherein the assessee has taken following grounds of appeal: (1) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts is not considering the fact that assumption of jurisdiction by Income Tax Officer , Ward 4(2), Jaipur over the case for scrutiny and issuance of jurisdictional notices was erroneous against the CBDT instructions/circulars and order of higher authorities, consequently the assessement proceedings were without jurisdiction, therefore assessment order is void-ab-initio and liable to be quashed.

(2) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts in not appreciating the case was selected for scrutiny in

ITA No. 528/JP/14 M/s Mefco Enterprises Pvt. Ltd. Jaipur Vs. The Asstt. Commissioner of Income Tax, Circle-4, Jaipur contravention to CBDT Instruction No. 6/2007 dated 18.07.2007, therefore the whole assessment is void-ab-initio and liable to be quashed.

(3) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts in not considering the fact that in absence of an order u/s 127 of the IT Act, 1961, transferring the case from ITO, ward 4(2) Jaipur to the ACIT, Circle-4, Jaipur, the assessment is without jurisdiction, illegal and therefore consequent assessment order dated 28.12.2010 and impugned appellate order is illegal and liable to be quashed.

(4) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts is not considering the fact that assumption of jurisdiction for scrutiny assessment by the ld. AO (ACIT-4, Jaipur) and issuance of notice u/s 142(1) dated 16.07.2010 is barred by limitation, therefore the order passed by the Ld. CIT(A), Bikaner is insupportable in law and on facts.

(5) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts in sustaining the deduction made by A.O. on account of Back ended Capital Investment Subsidy of Rs. 50 lacs out of the cost of Plant and Machinery and cold storage building.

(6) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts in sustaining the addition of Rs. 8,32,611/- on account of disallowance of alleged excess claim of depreciation on cold storage building.

(7) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts in sustaining the addition of Rs. 1,63,675/- on account of disallowance of alleged excess claim of depreciation on Plant and Machinery.

(8) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts in denying the deduction of Rs. 9,27,000/- made by the AO u/s 80IB(11) u/s of the IT Act, 1961 to the appellant.

(9) Because the ld. CIT(A), Bikaner camp at Jaipur has erred in law and on the facts in not allowing deduction u/s 80IB(11)of the Income Tax Act, 1961.

ITA No. 528/JP/14 M/s Mefco Enterprises Pvt. Ltd. Jaipur Vs. The Asstt. Commissioner of Income Tax, Circle-4, Jaipur (10) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts in confirming the addition of Rs.2388/- made by the AO alleging late deposit of ESI employee contribution.

(11) That the ld. CIT(A), Bikaner (camp at Jaipur) has erred in law and on facts in rejecting the ground of appeal filed before him.

(12) That the impugned appellate order passed by the Ld. CIT(A), Bikaner (camp at Jaipur) is illegal and is against the principles of natural justice and equity therefore, the same is label to be quashed.

ITA No. 528/JP/14 M/s Mefco Enterprises Pvt. Ltd. Jaipur Vs. The Asstt. Commissioner of Income Tax, Circle-4, Jaipur and Machinery and cold storage building, it is noted that the issue was considered by the Coordinate Bench in A.Y. 2005-06 and which has subsequently been affirmed by the decision of Hon’ble Rajasthan High Court in DB appeal No.6610/2009 dated 27.07.2011. The relevant findings of the Hon’ble Rajasthan High Court confirming the findings of the Coordinate Bench are reproduced as under. “It was also submitted by the ld. Counsel for the appellant that AO was justified in deducting the amount of subsidy from the cost of plant and machinery and cold storage building. The ITAT in this respect has affirmed the findings of CIT(A). Following reasons have been assigned by ITAT: (12) Considering the above submissions, we find that the AO while dealing with the issue has not considered the material concept of “Black Ended Subsidy “released by NABARD to the Bank of Baroda with a direction to sanction the such amount as a term loan to the assessee. In the books of the bank at that time the said amount of subsidy was sanctioned to the assessee as term loan and it was accounted for by the Bank of Baroda, in a separate account “Subsidy Reserve Fund Account”. The said amount of subsidy was to be released on complete repayment of remaining term loan outstanding subsidy amount and bank of Baroda itself in their letter dated 30.01.2008 has certified that Rs. 50 lacs was treated as the repayment on term loan on 10.05.2006 which represents the subsidy amount as received earlier from NABARD for the execution of project of Cold Storage but on completion of lock in period. Considering this aspect of the matter we are of the view that the ld. CIT(A) has rightly come to the conclusion that the AO was not justified in reducing the such amount from the cost right from assessment year 1999-2000 from the block value of such amount of subsidy is liable to be reduced in assessment year 2007-08 i.e. when it is treated as subsidy. The ld. CIT(A) has thus rightly directed the AO to allow the claimed depreciation at Rs. 22,48,421/- for building and plant and machinery for the year consideration n s against Rs. 11,34,887/- allowed by the AO. The first appellate order is reasoned one hence the same is upheld. The ground No.3 is accordingly rejected.”

ITA No. 528/JP/14 M/s Mefco Enterprises Pvt. Ltd. Jaipur Vs. The Asstt. Commissioner of Income Tax, Circle-4, Jaipur “The Tribunal has considered that when the subsidy amount was released and adjusted, various communications have been considered which were received on completion of lock in period, it has been adjusted in 2007-08 i.e. when it is treated as subsidy. The reasoning which have been assigned by ITAT, have not been shown to be perverse in any manner. Thus, we find that no substantial question of law is involved in the appeal. The appeal being devoid of merit is hereby dismissed.”

Court has been duly followed by the AO while completing the assessment

proceedings for the subject assessment year wherein the written down value

of the assets have been determined after reducing the subsidy for the

purposes of allowability of depreciation.

ITA No. 716/JP/13 dated 16.12.2015 for AY 2007-08.

record. The Hon’ble Rajasthan High Court has approved the findings of the

Coordinate Bench that the AO was not justified in reducing the amount of

subsidy from the costs of the assets from AY 1999-2000 but such subsidy is

liable to be reduced in AY 2007-08 and in fact has been adjusted in AY 2007-08.

Respectfully following the jurisdictional Hon’ble Rajasthan High Court decision

as referred supra, the ground No. 5 & 7 taken by the assessee are dismissed.

ITA No. 528/JP/14 M/s Mefco Enterprises Pvt. Ltd. Jaipur Vs. The Asstt. Commissioner of Income Tax, Circle-4, Jaipur 10. Regarding ground No.6 regarding classification of cold storage building

and resultant rate of depreciation, the same is covered in favour of the

assessee by the decision of Coordinate Bench for A.Y. 2005-06 wherein cold

storage building have been held as “plant” for the purposes of claiming

depreciation. Hence the depreciation @ 15% on cold storage building as

claimed by the assessee is sustained. The ground No.5 is accordingly decided

in favour of the assessee.

In the result the appeal of the assessee is partly allowed.

Order pronounced in the open court on 07/03/2017.

Sd/- Sd/- (KUL BHARAT) (VIKRAM SINGH YADAV) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Jaipur Dated:- 07/03/2017 आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत.

ITA No. 528/JP/14 M/s Mefco Enterprises Pvt. Ltd. Jaipur Vs. The Asstt. Commissioner of Income Tax, Circle-4, Jaipur