USHA GARMENTS MANUFACTURING CO P. LTD,MUMBAI vs. DCIT 8(3), MUMBAI

During hearing the crux of argument advanced by Shri Pankaj R. Toprani alongwith Ms. Keyuri Desai was that details of property and property-wise depreciation was duly filed before the Assessing Officer and the assessee is manufacturing garments. The observation made in the assessment order that no details were furnished is in fact wrong for which our attention was invited to paper book page 31. On the other hand, the ld. AR, Shri Mukundraj M. Chate defended the conclusion arrived at in the impugned order.

2.1 We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee, a private limited company, at the relevant time was engaged in manufacturing and export of readymade garments, declared income of Rs.2,46,42,031/- on 6.10.2010 in the return. The assessee rented out the premises and also paid municipal taxes. The assessee claimed depreciation u/s 32 of the Act on factory building and also the rented premises which was disallowed. On appeal, the ld. Commissioner of Income Tax (Appeals) affirmed the stand of the Assessing Officer. The assessee is in further appeal before this Tribunal. It is noted that while adjudicating the appeal, the ld. Commissioner of Income Tax (Appeals) considered the submissions of the assessee and also sought remand report from the Assessing Officer. However, the claim of depreciation was disallowed. It was purely on the plea that property-wise details of depreciation were not filed by the assessee. However, from the paper book, filed before this Tribunal, it is noticed that the details were duly furnished before the Assessing Officer and the property-wise depreciation chart was duly filed before the ld. Commissioner of Income Tax (Appeals). Without going into much deliberation, we are of the view that the claim of the assessee cannot be summarily rejected, therefore, this issue is remanded back to the file of the ld. Assessing Officer to examine the claim of the assessee and decide in accordance with law. The assessee be given opportunity of being heard with further liberty to furnish evidence, if any, in support of its claim. This ground is allowed for statistical purpose only.

The next ground pertains to upholding the disallowance of Rs.5,42,580/- made u/s. 14A of the Act. The crux of argument advanced on behalf of the assessee is that the assessee earned certain exempt income and the ld. Assessing Officer wrongly applied Rule 8D. It was contended that no borrowed funds were utilized by the assessee for making the investment for which our attention was invited to page 8 of the paper book. Reliance was placed upon the decision of Hon’ble Punjab & Haryana High Court in CIT v. Abhishek Industries Ltd. [2016] 380 ITR 652. Plea was also raised that the ld. Assessing Officer has not recorded satisfaction while making the disallowance. On the other hand, the ld. DR defended the disallowance made by the Assessing Officer and confirmed by the ld. Commissioner of Income Tax (Appeals).

Finally, the appeal of the assessee is partly allowed for statistical purpose.