DEPUTY COMMISSIONER OF INCOME-TAX, COIMBATORE V. MS.PROMETHEAN MEDIA PRIVATE LIMITED, COIMBATORE

ITA 2532/CHNY/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had allowed the depreciation and additional depreciation claimed by M/s. Promethean Media Pvt. Ltd. for the Assessment Year 2015-16. The Assessing Officer (AO) had initially disallowed these claims due to the absence of a log book and electricity bill, but the CIT(A) reversed this decision based on the installation certificate and sales evidence provided by the assessee. Additionally, the Revenue contested the deletion of an addition made under section 2(22)(e) of the Act, which was treated as deemed dividend. The CIT(A) had deleted this addition, citing that the advances were trade advances and not deemed dividends as per CBDT Circular No.19 of 2017. The Tribunal agreed with the CIT(A)'s findings and dismissed the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126554 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: R.K.V. SUNDAR
• Keywords: Depreciation; Additional depreciation; Deemed dividend
• Section: 143(3); 2(22)(e)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0019ी एबी टी. वक , \u0011ा ियक सद! एवं \u0019ी जगदीश, लेखा सद! क े सम( BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2532/Chny/2024 िनधा9रण वष9 /Assessment Year: 2015-16 The Dy. Commissioner of Income Tax, Corporate Circle-1, Coimbatore. Vs. M/s. Promethean Media Pvt. Ltd., 53 Ganesh Nagar, GN Mill Post, Coimbatore – 641 029. [PAN: AAHCP 6412H] (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीलाथ की ओर से/ Assessee by : Shri R.K.V. Sundar, Advocate HIथ की ओर से /Revenue by : Ms. Gouthami Manivasagam, JCIT सुनवाई की तारीख/Date of Hearing : 11.03.2025 घोषणा की तारीख /Date of Pronouncement : 22.04.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the Revenue for Assessment Year (AY) 2015-16 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 29.07.2024 in the matter of assessment framed by the Assessing Officer [AO] u/s. 143(3) of the Income-tax Act,1961 (hereinafter “the Act”) dated 29.12.2017. ITA No.2532/Chny/2024 :- 2 -: 2. The ground of appeal raised by the Revenue are as under: 2. Ground No.1 is general in nature hence, no adjudication is required for the same. 3. Grounds No.2 & 3 are relating to the disallowance of depreciation made by the A.O. 3.1 The assessee has claimed depreciation of Rs.50,16,305/- and additional depreciation of Rs.66,53,301/- totaling to Rs.1,16,69,606/- on the machinery of Rs.6,68,84,060/- installed during the year. The ITA No.2532/Chny/2024 :- 3 -: assessee has submitted the installation certificate and evidence for sale effected after installation in support of the claim that the machines were installed and production had started. However, the A.O disallowed the claim of deprecation and additional depreciation on the ground that the assessee had failed to produce log book of machinery and electricity bill. On appeal, the Ld. CIT(A) allowed the depreciation as assessee had submitted installation certificate, invoices transport details to substantiate the claim that production has been started. 3.2 The Ld. Departmental Representative (DR) relying on the order of A.O submitted that the assessee had only submitted evidence on machinery installed and few sales bills and ledger accounts of sales, but had not submitted log book and therefore, the A.O has correctly made disallowance. 3.3 The Ld. Authorized Representative (A.R) of the assessee, on the other hand supporting the order of Ld. CIT(A) has submitted a copy of installation certificate, electricity bill and sales made during the month of February in support of its contention that production has been started and therefore, assessee is eligible for depreciation as well as additional depreciation. ITA No.2532/Chny/2024 :- 4 -: 3.4 We have heard the rival submissions, and perused the materials available on record. The assessee before the A.O has submitted that evidence of machinery installed and the first sale made during February, 2015, but the A.O has disallowed the claim of depreciation and additional depreciation. The Ld. CIT(A) after calling the remand report has allowed the appeal as the assessee has submitted all the relevant documents to establish that machines have been installed and production has started. The assessee before us has also submitted the evidence of installation, electricity bill and sales bills in support of the claim the production has already been started. We therefore, do not find any infirmity in the order of Ld. CIT(A) and we uphold the same. 4. Grounds No.4 & 5 are relating to deleting the addition made by A.O u/s. 2(22)(e) of the Act on deemed dividend of Rs. 1,18,82,523/-. 4.1 The A.O has made the addition of trade advance of Rs.1,18,82,523/- made to its sister concern M/s. Chromaprint India Pvt. Ltd. as deemed dividend u/s. 2(22)(e) of the Act . The AO has made the addition for the reason that M/s. Chromaprint India Pvt. Ltd. is not appearing in the list of trade creditor and the said advance is appearing under the head unsecured loan and advances. On appeal, ITA No.2532/Chny/2024 :- 5 -: the Ld. CIT(A) has deleted the addition after examining the ledger account and invoices depicting the nature of the services provided by the assessee to its sister concern M/s. Chromaprint India Pvt. Ltd. The Ld. CIT(A) also relied on CBDT Circular No.19 of 2017, wherein it was held that trade advance received from sister concern do not fall under the category of advance u/s. 2(22)(e) of the Act. 4.2 The Ld. DR relying on the order of A.O has submitted that the assessee-company has shown advance received from M/s. Chromaprint India Pvt. Ltd. under unsecured loans and advances and therefore, A.O rightly treated the same as deemed dividend u/s. 2(22)(e) of the Act. 4.3 The Ld A.R, on the other hand, relying on the order of A.O, drew our attention to the ledger account of M/s. Chromaprint India Pvt. Ltd., wherein there is regular transactions with M/s. Chromaprint India Pvt. Ltd. The Ld AR, therefore argued that the advance given is trade advance, not amenable to section 2(22)(2) as has been clarified in CBDT circular No 19 of 2017. 4.4 We have heard the rival submissions, and perused the materials available on record. The A.O has made the addition of advance given ITA No.2532/Chny/2024 :- 6 -: to its sister concern as deemed dividend u/s 2(22)(e) as the assessee in the balance sheet has shown the advance under the head “unsecured loan and advance”. However, the Ld. CIT(A) after examining the nature of advances and ledger account found them trade advances and therefore, deleted the addition relying on CBDT Circular No.19 of 2017. We have perused the ledger accounts and agree with the finding of the Ld. CIT(A) that the advances were in the nature of trade advances and therefore, section 2(22)(e) of the Act is not applicable. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) and therefore, we uphold the same. 5. In the result, the appeal filed by the Revenue is dismissed. Order pronounced on 22nd April, 2025. Sd/- Sd/- (एबी टी. वक ) (ABY. T. Varkey) \u0011ाियक सद! / Judicial Member (जगदीश) (Jagadish) लेखा सद! /Accountant Member चे\u0010नई/Chennai, \u0013दनांक/Dated: 22nd April, 2025. EDN/- आदेश क\u0016 \bितिल\u0019प अ\u001aे\u0019षत/Copy to: 1. अपीलाथ\b/Appellant 2. थ\b/Respondent 3. आयकर आयु\u0010/CIT, Coimbatore 4. िवभागीय ितिनिध/DR 5. गाड\u0019 फाईल/GF "