Jailaxmi Auto Works & Agencies (P) Ltd., Erode V. DCIT, Erode

CO 13/CHNY/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5086 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-08-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-08-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A BEFORE SHRI PRADEEP PARIKH, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NO.283/MDS/2010 ASSESSMENT YEAR : 2005-06 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-I, ERODE. VS. M/S. JAILAXMI AUTO WORKS & AGENCIES (P) LTD. NO.82/B VEERAPPANPALAYAM ROAD CHINNA SENGODAMPALAYAM THINDAL (PO), ERODE-638 009 PAN AAACJ 5269 K (APPELLANT) (RESPONDENT) C.O.NO.13/MDS/2010 I.T.A. NO.283/MDS/2010 ASSESSMENT YEAR : 2005-06 M/S. JAILAXMI AUTO WORKS & AGENCIES (P) LTD. THINDAL. VS. THE DY. COMMISSIONER OF INCOME-TAX, ERODE. (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI SHAJI P. JACOB CROSS OBJECTOR BY : SHRI S.SRIDHAR, ERODE O R D E R PER PRADEEP PARIKH, V.P. THIS APPEAL BY THE DEPARTMENT AND CROSS OBJECTION B Y THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), DATED 21.12.2009 FOR ASSESSMENT YEAR 2005-06. BOTH ARE DISPOSED OF TOGETHER BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. THE ONLY GRIEVANCE OF THE DEPARTMENT IS AGAINST ALLOWING THE CLAIM OF THE ASSESSEE FOR DEPR ECIATION ON WINDMILL. 2 ITA 283 & CO 13/10 2. THE ASSESSEE FIRM IS IN THE BUSINESS OF AUTOMOBILE SERVICE, DEALER IN SPARE PARTS AND HAS ALSO COMMISS IONED A WINDMILL POWER GENERATION PROJECT. IT RETURNED A TO TAL INCOME OF ` NIL BUT BOOK PROFIT UNDER SEC.115JB OF THE INCOME- TAX ACT, 1961 (THE ACT) WAS COMPUTED AT ` 26,05,914/- FOR THE YEAR UNDER CONSIDERATION. IT WAS NOTICED BY THE ASS ESSING OFFICER THAT THE ASSESSEE HAD NOT EXERCISED THE OPT ION AVAILABLE TO IT AS PER THE SECOND PROVISO TO RULE 5 (1A) OF THE INCOME-TAX RULES, 1962 (THE RULES) AND HENCE PROPOS ED TO DISALLOW THE EXCESS DEPRECIATION CLAIMED BY THE ASS ESSEE AT 80%. FURTHER, THE DETAILS REVEALED THAT NO ELECTRI CITY HAD BEEN GENERATED BY THE ASSESSEE DURING THE YEAR UNDE R CONSIDERATION AND HENCE ON THAT GROUND ALSO THE DEP RECIATION WAS DISALLOWED. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. 3. THE LD. D.R. RELIED ON THE DECISION OF THE BANGALO RE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V. MOHIT K. MEHTA, 3 ITR (TRIB) 580. THE LD. COUNSEL RELIED ON THE THI RD MEMBER DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN TH E CASE OF ACIT V. CHENNAI PETROLEUM CORPORATION LTD., 2 ITR ( TRIB) 325. 4. 4. SO FAR AS DISALLOWING THE DEPRECIATION ON THE G ROUND OF NOT EXERCISING THE OPTION UNDER RULE 5(1A) IS CONCE RNED, THE DEPARTMENT IS NOT IN APPEAL BEFORE US AND HENCE THE SAME NEED NOT BE ADJUDICATED UPON. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND T HE MATERIAL ON RECORD. IN THE CASE OF MOHIT K. METHA (SUPRA), THE TRIBUNAL DISALLOWED THE CLAIM OF THE ASSESSEE O N THE GROUND THAT THE WINDMILL SET UP BY THE ASSESSEE WAS NOT TO 3 ITA 283 & CO 13/10 SUPPORT AN EXISTING AND RUNNING BUSINESS BUT TO COM MENCE A NEW BUSINESS. NO SUCH FACTS ARE OBTAINED IN THE APP EAL BEFORE US. ON THE OTHER HAND, IN THE THIRD MEMBER D ECISION CITED SUPRA, THE THIRD MEMBER AGREEING WITH THE DEC ISION OF THE ACCOUNTANT MEMBER, HELD THAT SINCE THE PLANT WA S KEPT READY FOR USE, BUT COULD NOT BE ACTUALLY USED DUE T O LACK OF RAW MATERIAL, IT WAS ELIGIBLE FOR DEPRECIATION AS C LAIMED BY THE ASSESSEE. IN THE PRESENT CASE, THE WINDMILL WAS NOT ONLY READY FOR USE BUT TRIAL PRODUCTION WAS CARRIED OUT AND HENCE IT IS ELIGIBLE FOR HIGHER DEPRECIATION. THE JUDGMEN TS CITED BY THE ASSESSEE BEFORE THE CIT(A) SUPPORT ITS CLAIM A ND ACCORDINGLY, RESPECTFULLY FOLLOWING ALL THOSE JUDGM ENTS AS WELL AS THE DECISION OF THE THIRD MEMBER CITED SUPRA, WE UPHOLD THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE FOR HIGHER DEPRECIATION. THE CROSS OBJECTION OF THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE CIT(A) AND HENCE IS RENDERED INFRUCTUOUS IN VIEW OF OUR DECISION ABOVE. 6. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE I S DISMISSED AS INFRUCTUOUS. THE ORDER WAS PRONOUNCED IN THE COURT ON 6-8-2010. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER (PRADEEP PARIKH) VICE-PRESIDENT CHENNAI, DATED THE 6 TH AUGUST, 2010 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR