Prima Private Ltd., Pune V. Assistant Commissioner of Income-tax,

CO 19/PUN/2015

• Counselvise Citation: [2016] 111 COUNSELVISE.COM (IT) 0063 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-11-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 24-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Depreciation; Difference of opinion; Condonation of delay; Change of opinion; Reassessment proceedings
• Section: 148; 6

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.478/PN/2014 '% % / ASSESSMENT YEAR : 2000-01 ACIT, CIRCLE - 10, PUNE . / APPELLANT V/S PRIMA PAPER ENGINEERING PVT. LTD., T-73, MIDC, BHOSARI, PUNE 411026 PAN NO. AABCP1938J . / RESPONDENT C.O. NO.19/PN/2015 (ARISING OUT OF ITA NO.478/PN/2014) '% % / ASSESSMENT YEAR : 2000-01 PRIMA PAPER ENGINEERING PVT. LTD., T-73, MIDC, BHOSARI, PUNE 411026 PAN NO. AABCP1938J .. CROSS OBJECTOR V/S ACIT, CIRCLE-10, PUNE .. APPELLANT IN THE APPEAL ASSESSEE BY : SHRI SHARAD SHAH REVENUE BY : SHRI HITENDRA NINAWE / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NAS HIK / DATE OF HEARING :09.06.2016 / DATE OF PRONOUNCEMENT:29.06.2016 2 ITA NO.478/PN/2014 & CO NO.19/PN/2015 DATED 19-12-2013 FOR THE ASSESSMENT YEAR 2000-01. TH E ASSESSEE HAS ALSO FILED CROSS OBJECTIONS AGAINST THE ORDER OF CIT(A). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RE CORDS ARE : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFAC TURING OF PLASTIC MOULDED PRODUCTS. THE ASSESSEE HAS ALSO INSTALLED WINDMILLS FOR GENERATION OF POWER. THE ASSESSEE FILED ITS RETU RN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30-11-2000 DECLARING TOTAL INCOME OF RS.86,81,798/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTIC E U/S.143(2) WAS ISSUED TO THE ASSESSEE ON 28-11-2001. TH E ORIGINAL ASSESSMENT ORDER WAS PASSED IN THE CASE OF ASSE SSEE U/S.143(3) ON 31-03-2003 ACCEPTING THE INCOME RETURNED B Y ASSESSEE WITHOUT MAKING ANY ADDITION/DISALLOWANCE. THEREAFT ER, REASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSE SSEE AND NOTICE U/S.148 WAS ISSUED TO THE ASSESSEE ON 30-03-200 6. IN REASSESSMENT PROCEEDINGS THE AO MADE DISALLOWANCE OF DEPRECIATION TO THE TUNE OF RS.1,04,05,000/- CLAIMED BY ASS ESSEE ON WINDMILL. THE AO HELD THAT THE ASSESSEE HAS NOT FURNISHED ANY AUTHENTIC PROOF TO SHOW THAT DURING THE F.Y. 1999-2000 T HE ASSESSEE HAS ACTUALLY STARTED PRODUCTION OF POWER AND HAS EARNED INCOME. 3. AGGRIEVED BY THE ASSESSMENT ORDER DATED 08-12-200 6 PASSED U/S.143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A) CHALLENGING THE VALIDITY OF NOTICE ISSU ED U/S.148 AND THE DISALLOWANCE OF DEPRECIATION MADE BY THE AO. THE CIT(A) UPHELD THE VALIDITY OF NOTICE ISSUED U/S.148 AND SUBSEQUENT PROCEEDINGS ARISING THERE FROM. HOWEVER, ON M ERITS THE CIT(A) ACCEPTED THE APPEAL OF THE ASSESSEE AND ALLOWE D THE 3 ITA NO.478/PN/2014 & CO NO.19/PN/2015 DEPRECIATION ON WINDMILL AS CLAIMED BY THE ASSESSEE. AGAINST THESE FINDINGS OF THE CIT(A) THE REVENUE IS IN APPEAL AND TH E ASSESSEE HAS FILED CROSS OBJECTION. 4. SHRI HITENDRA NINAWE APPEARING ON BEHALF OF THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE AO IN DISALLOWING THE CLAIM OF DEPRECIATION ON WINDMILL. THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE ASSESS EE HAS NOT FURNISHED ANY EVIDENCE WHATSOEVER TO SHOW THAT THE WIND MILL WAS INSTALLED AND PUT TO USE ON 28-03-2000 OR BEFORE 31-03- 2000. THE ASSESSEE HAS NOT FURNISHED COPY OF ANY SALE BILL OF THE ELECTRICITY GENERATED. IN THE PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDING ON 31-03-2000 THE ASSESSEE HAS NO T SHOWN ANY INCOME FROM SALE OF POWER. THEREFORE, THE CLAIM OF DEPRECIATION ON WINDMILL IS NOT TENABLE. THE LD. DEPARTMENT AL REPRESENTATIVE PRAYED FOR REVERSING THE FINDINGS OF THE CI T(A) ON THIS ISSUE. 5. SHRI SHARAD SHAH APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS STARTED OPERATING WIND MILL AND GENERATING ELECTRICITY ON 28-03-2000. THE ASSESSEE GENE RATED 473 UNITS DURING THE PERIOD 28-03-2000 TO 31-03-2000. IN S UPPORT OF HIS CONTENTION, THE LD. AUTHORISED REPRESENTATIVE PLACED R ELIANCE ON THE JOINT METER READING TAKEN BY THE ASSESSEE AND THE OFFICIALS OF MAHARASHTRA STATE ELECTRICITY BOARD (MSEB) ON 01-04-20 00. THE LD. AUTHORISED REPRESENTATIVE ALSO REFERRED TO THE COMMUNICATION DATED 11-05-2000 BETWEEN SUPERINTENDING ENGINEER, MSEB, SATARA CIRCLE AND CHIEF ENGINEER, MSEB, PUN E URBAN ZONE. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT A PERUSAL OF THE SAID COMMUNICATION WOULD SHOW THE METER RE ADING 4 ITA NO.478/PN/2014 & CO NO.19/PN/2015 AS ON 28-03-2000 AND 31-03-2000 AND THE TOTAL UNITS OF ELECTRICITY GENERATED. THE LD. AUTHORISED REPRESENTATIVE CONTENDED THAT THE ORDER OF CIT(A) IN ALLOWING THE DEPREC IATION ON WINDMILL IS WELL REASONED, THEREFORE, THE SAME SHOULD BE SUSTAINED. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED TH E ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE DOCUME NTS PLACED AT PAGES 55 AND 56 OF THE PAPER BOOK ON WHICH THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS PLACED HIS RELIANCE. THE REVENUE HAS RAISED 5 GROUNDS IN THE GROUNDS OF APP EAL. ALL THE GROUNDS RELATE TO SINGLE ISSUE, I.E. DELETING OF DISALLOWANCE OF DEPRECIATION ON WINDMILL CLAIMED BY THE ASSESSEE. THE ASSE SSEE HAD INSTALLED WINDMILL AND PURPORTEDLY THE WINDMILL WAS PUT TO USE BY THE ASSESSEE ON 28-03-2000. THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE JOINT METER READING TAKEN ON 01-04-20 00 BY THE ASSESSEE AND THE REPRESENTATIVES OF MSEB. THE DETAILED METER READING HAS BEEN REPRODUCED BY THE CIT(A) IN HIS ORDER. THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO THE COMMUNIC ATION BETWEEN THE SUPERINTENDING ENGINEER, MSEB, SATARA CIRCLE A ND THE CHIEF ENGINEER, MSEB, PUNE DATED 11-05-2000 WHICH ENDORSED THE FACT THAT DURING THE PERIOD STARTING FROM 2 8-03-2000 TO 31-03-2000 THE ASSESSEE HAS GENERATED 473 UNITS O F ELECTRICITY WHICH WERE RECEIVED BY MSEB. THESE COMMUNICATIONS CLEARL Y SHOW THAT THE ASSESSEE HAD PUT TO USE THE WINDMILL DURI NG THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2000-01. 7. FOR CLAIMING DEPRECIATION U/S.32 OF THE ACT, THE NECESS ARY CONDITIONS WHICH ARE REQUIRED TO BE SATISFIED ARE : 5 ITA NO.478/PN/2014 & CO NO.19/PN/2015 (1) THE ASSET MUST BE OWNED BY THE ASSESSEE (2) IT MUST BE USED FOR THE PURPOSE OF BUSINESS (3) THE ASSET SHOULD BE USED DURING THE RELEVANT PREVIOUS YEAR IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAS SAT ISFIED ALL THE 3 CONDITIONS. THERE IS NO DISPUTE AS TO OWNERSHIP & PURPOSE OF ASSET, I.E. THE WINDMILL. THE ONLY DISPUTE WAS WHE THER THE ASSET WAS PUT TO USE DURING THE RELEVANT PERIOD. T HE ASSESSEE HAS BEEN ABLE TO SUBSTANTIATE THAT THE WINDMILL STARTED O PERATING DURING THE PERIOD RELEVANT TO A.Y. 2000-01. ALTHOUGH THE ASSESSEE HAD USED THE ASSET FOR LESS THAN 180 DAYS. SINCE THE ASSESSEE HAS SATISFIED ALL THE CONDITIONS FOR CLAIMING DEPRECIATION THE ASSES SEE IS ELIGIBLE TO CLAIM DEPRECIATION ON THE WINDMILL. IN SO FAR AS T HE CONTENTION OF LD. DEPARTMENTAL REPRESENTATIVE THAT THE A SSESSEE HAS NOT SHOWN ANY INCOME FROM WINDMILL DURING THE F.Y. 1999 - 2000 IS CONCERNED, WE DO NOT FIND MERIT IN THE SAME. FOR C LAIMING DEPRECIATION, THE CONDITIONS MENTIONED HEREIN ABOVE HAVE T O BE SATISFIED AND NOT THAT ANY INCOME SHOULD BE GENERATED FRO M THE USE OF THAT ASSET. WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE CIT(A) IN ACCEPTING THE CLAIM OF DEPRECIATION. IN VIEW OF THE FACTS OF THE CASE AND DOCUMENTS ON RECORD WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS DISMISSED. 8. THE ASSESSEE HAS FILED CROSS OBJECTION NO.19/PN/2015 AGAINST THE FINDINGS OF CIT(A) IN UPHOLDING THE VALIDITY OF NOTICE ISSUED U/S.148 OF THE ACT. THE CONTENTION OF THE ASSESS EE IS THAT THE NOTICE ISSUED U/S.L48 OF THE ACT IS TIME BARRED AND HE NCE THE SUBSEQUENT PROCEEDINGS ARISING THERE FROM ARE LIABLE TO BE QUASHED. 6 ITA NO.478/PN/2014 & CO NO.19/PN/2015 9. THE CROSS OBJECTION FILED BY THE ASSESSEE IS TIME BARR ED BY 15 DAYS. THE ASSESSEE HAS FILED THE APPLICATION SEEKING CONDONATION OF DELAY CITING REASONS FOR THE DELAY IN FILING OF T HE CROSS OBJECTION. AFTER PERUSING THE REASONS GIVEN IN THE APPLICATION FOR CONDONATION OF DELAY, WE ARE SATISFIED THAT TH E DELAY IN FILING OF THE SAME WAS NOT WILLFUL OR DELIBERATE. THE DELAY OCCURRED DUE TO BONAFIDE REASONS. ACCORDINGLY, THE DELAY OF 15 DAYS IN FILING OF THE CROSS OBJECTION IS CONDONED AND THE C ROSS OBJECTION OF THE ASSESSEE IS TAKEN UP FOR ADJUDICATION ON MERITS. 10. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED AFTER THE P ERIOD OF 4 YEARS. IN SUCH CIRCUMSTANCES THE PROVISO TO SECTION 1 47 IS ATTRACTED. THERE IS NO FAILURE ON THE PART OF THE ASSESS EE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THERE WAS NO FRESH INCRIMINATING MATERIAL AVAILAB LE BEFORE THE AO FOR INITIATING REASSESSMENT PROCEEDINGS. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE INIT IAL ASSESSMENT ORDER WAS PASSED U/S.143(3). DURING THE SCR UTINY ASSESSMENT PROCEEDINGS THE AO HAD ISSUED QUESTIONNAIRE WHEREIN SPECIFIC QUERY WAS RAISED WITH REGARD TO THE COMMISSIONING AND INSTALLATION OF WINDMILL. THE LD. AUTHORISED REPRESENTATIVE REFERRED TO THE QUESTIONNAIRE AT PAGE 37 OF THE PAPER B OOK. HE FURTHER SUBMITTED THAT THE DETAILED REPLY WAS GIVEN TO T HE AO ON 24-03-2003 PLACED AT PAGES 38 TO 40 OF THE PAPER BOOK . THE ASSESSEE HAD FURNISHED ALL THE RELEVANT DOCUMENTS IN SUPP ORT OF THE QUESTIONS RAISED. IT WAS CLEARLY MENTIONED IN THE R EPLY TO THE QUESTIONNAIRE THAT THE WINDMILLS WERE INSTALLED AND WERE REA DY FOR OPERATION ON 28-03-2000. IN SUPPORT OF THE CONTENTIONS THE 7 ITA NO.478/PN/2014 & CO NO.19/PN/2015 ASSESSEE PLACED ON RECORD THE LETTER OF PERMISSION DATED 01-03- 2000 RECEIVED FROM MSEB, MUMBAI, PERMISSION FOR COMMISSIONING OF WINDMILL FROM MEDA VIDE LETTER DATED 21-03- 2000, THE COMMISSIONING REPORT OF MSEB, SATARA VIDE LETTER DATED 10-05-2000, INSTALLATION REPORT FROM VASTAS DATED 25-02 -2000. THE JOINT METER READING REPORT DATED 01-04-2000, CREDIT NOTE ISSUED BY MSEB IN FAVOUR OF THE ASSESSEE DATED 11-05-2000 ETC. THE AO AFTER EXAMINING THE DOCUMENTS AND INFORMATION FURNISHED BY THE ASSESSEE ACCEPTED THE CLAIM O F DEPRECIATION ON WINDMILL. THE LD. AUTHORISED REPRESENTATIVE FURTHER REFERRED TO THE NOTICE ISSUED U/S.148 AND THE RE ASON FOR INITIATING REASSESSMENT PROCEEDINGS PLACED AT PAGES 25 AN D 26 OF THE PAPER BOOK NO.2 11. THE LD. DEPARTMENTAL REPRESENTATIVE CONTROVERTING TH E SUBMISSIONS ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE REASONS FOR REOPENING PLACED ON RECORD BY THE ASSESSEE ARE NOT THE ACTUAL REASONS. THE LD. DEPARTMENTAL REPRESENTATIVE FURNISHED A COPY OF REASONS DATED 29-03-2006 FOR INVOKING THE PROVISIONS O F SECTION 147 OF THE ACT. THE LD. DEPARTMENTAL REPRESENTATIVE FUR THER SUBMITTED THAT A PERUSAL OF THE REASONS FOR REOPENING WO ULD CLEARLY SHOW THAT THE ASSESSEE HAD NOT DISCLOSED ANY IN COME FROM THE SALE OF ELECTRICITY DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2000-01. SINCE THE ASSESSEE HAS DISCLOSED THE INCO ME FROM GENERATION OF ELECTRICITY IN THE SUBSEQUENT ASSESSMENT Y EAR, THE AO HAS ALLOWED THE CLAIM OF DEPRECIATION TO THE ASSESSEE IN A.Y. 2001-02. THE FURNISHING OF DETAILS BEFORE THE AO WOULD NOT BAR THE POWER OF AO IN INVOKING THE ASSESSMENT UNDER SECTION 148. 8 ITA NO.478/PN/2014 & CO NO.19/PN/2015 THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORT ED THE ACTION OF AO IN INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT. 12. BOTH SIDES HEARD. A PERUSAL OF THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE, I.E. THE QUESTIONNAIRE ISSUED BY THE AO DURING SCRUTINY ASSESSMENT PROCEEDINGS AND THE REPLY O F THE ASSESSEE THEREON CLEARLY SHOW THAT THE AO HAD APPLIED HIS MIND ON THE ISSUE OF ELIGIBILITY OF ASSESSEE TO CLAIM DEPRECIATION ON WINDMILL. ONCE THE AO HAS ALREADY APPLIED HIS MIND ON THE IS SUE AND HAS TAKEN A VIEW, THE AO CANNOT BE GRANTED SECOND INNINGS UNDER THE PROVISIONS OF SECTION 148 R.W.S.147 TO REVIEW H IS ORDER. THE PROVISIONS OF SECTION 147 DO NOT PERMIT THE AO TO RE VIEW HIS OWN ORDER AND SUBSTITUTE HIS ORIGINAL OPINION WITH THE FRESH/CONTRARY VIEW, WITHOUT THERE BEING ANY FRESH INCRIMINA TING MATERIAL IN HIS POSSESSION. 13. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. REPORTED AS 320 ITR 561 HAS HELD THAT ONCE THE ASSESSEE HAS TRULY AND FULLY DISCLOSED THE FACTS REG ARDING THE CLAIM OF DEDUCTION AND THE FACT IS VERY MUCH IN THE KNOWLED GE OF THE AO WHEN HE WAS FRAMING THE ORIGINAL ASSESSMENT, THE SUBSEQUENT REOPENING OF THE ASSESSMENT WAS BASED ON A MERE CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER THE PROVISIO NS OF SECTION 147 OF THE ACT. THUS IN VIEW OF THE WELL SETTLED LAW AND THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE REASSESSMENT PR OCEEDINGS IN THE PRESENT CASE WERE NOTHING BUT ARISING OUT OF CHA NGE OF OPINION. HENCE, THE REASSESSMENT PROCEEDINGS INITIATED IN THE 9 ITA NO.478/PN/2014 & CO NO.19/PN/2015 CASE OF THE ASSESSEE ARE BAD IN LAW. THE CROSS OBJECTIO N FILED BY THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED A ND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 29 TH DAY OF JUNE, 2016. SD/- SD/- ( R.K.PANDA ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER IQ.KS PUNE ; DATED : 29 TH JUNE, 2016. LRH'K ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT(A)-II, NASHIK CIT-II, NASHIK ! $$%, %, IQ.KS / DR, ITAT, B PUNE; * / GUARD FILE. / BY ORDER , ! $ //TRUE COPY// ,- $ % / SR. PRIVATE SECRETARY %, IQ.KS / ITAT, PUNE