GHODAWAT SKYSTAR LLP (FORMERLY GHODAWAT CONSUMER PRODUCTS LLP),KOLHAPUR V. DCIT CIRCLE 1, KOLHAPUR

ITA 1400/PUN/2025

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The case involves Ghodawat Skystar LLP, which appealed against the order of the CIT(A) / NFAC confirming the disallowance of depreciation and interest expenses by the Assessing Officer for the assessment year 2018-19. The primary contention was regarding the disallowance of depreciation amounting to Rs.1,00,05,726 and interest expenses of Rs.1,68,60,314, which were disallowed on the grounds that the assets were not put to use as required. The Assessing Officer had disallowed these amounts based on the tax audit report and the dates of purchase and use of the assets, which were found to be on the same day, leading to suspicion about their actual use. The CIT(A) upheld the disallowances after a remand report from the Assessing Officer, but the Tribunal found that the CIT(A) did not properly appreciate the facts and restored the matter for further examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792110 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 29-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWALI
• Assessee Lawyers: B S RAJPUROHIT
• Keywords: Set aside; Depreciation
• Section: 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1400/PUN/2025 Assessment year : 2018-19 Ghodawat Skystar LLP (Formerly Ghodawat Consumer Products LLP) Plot No.438, AP Chipri VIA Jaysingpur Shirol, Kolhapur – 416101 Vs. DCIT, Circle – 1, Kolhapur PAN: AAMFG7028C (Appellant) (Respondent) Assessee by : Shri B S Rajpurohit Department by : Shri Rajesh Gawali, Addl.CIT Date of hearing : 08-12-2025 Date of pronouncement : 09-12-2025 O R D E R PER R.K. PANDA, VP: This appeal filed by the assessee is directed against the order dated 11.03.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2018-19. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in confirming the disallowance of depreciation of Rs.1,00,05,726/- made by the Assessing Officer and Rs.1,68,60,314/- disallowed by the Assessing Officer out of interest expenses. 3. Facts of the case, in brief, are that the assessee is an LLP and filed its return of income on 31.10.2018 declaring total income at Rs.Nil. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Printed from counselvise.com 2 ITA No.1400/PUN/2025 Act’) and subsequently selected for complete scrutiny assessment through CASS. Accordingly, statutory notice u/s 143(2) of the Act was issued and served on the assessee. Subsequently notice u/s 142(1) of the Act along with a questionnaire was issued and served on the assessee. 4. During the course of assessment proceedings the Assessing Officer noticed from the tax audit report that the assessee has made huge additions to the fixed assets to the tune of Rs.17.08 crores under various blocks. However, he noticed that in many of the cases the date of purchase and the date of put to use of the asset is stated 31.03.2018. Since the machinery requires some time for installing the same in the factory before commencing its commercial production, the Assessing Officer asked the assessee to explain as to why depreciation should not be disallowed on such assets. The assessee replied that there was some error occurred due to different way of filing the tax audit report adopted by the auditor. It was submitted that certain assets were purchased between 1st April to 30th September and certain other assets were purchased between 1st October 2017 to 31st March 2018. 5. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that the assessee has furnished a summary of the additions and their actual dates of purchases unit-wise. However, the assessee has not furnished even a single bill pertaining to these additions to make the submission authentic. Rejecting the various explanations given by the assessee, Printed from counselvise.com 3 ITA No.1400/PUN/2025 the Assessing Officer disallowed depreciation of Rs.1,00,05,726/- since the assets according to him were not put to use to the tune of Rs.14,05,02,616/- which were purchased on 31.03.2018. The Assessing Officer, adopting the rate of interest @ 12% attributable to purchase of those assets, disallowed interest of Rs.1,68,60,314/-. 6. In appeal the assessee filed certain details based on which the Ld. CIT(A) / NFAC called for a remand report from the Assessing Officer. So far as the disallowance of depreciation is concerned, the Assessing Officer in the remand report submitted as under which has been reproduced by the Ld. CIT(A) / NFAC in the body of the order: Printed from counselvise.com 4 ITA No.1400/PUN/2025 7. So far as the disallowance of interest is concerned, the Assessing Officer in the remand report submitted as under which has been reproduced by the Ld. CIT(A) / NFAC in the body of the order: 8. After considering the remand report of the Assessing Officer and the rejoinder of the assessee to such remand report, the Ld. CIT(A) / NFAC upheld the disallowance of depreciation made by the Assessing Officer, by observing as under: Printed from counselvise.com 5 ITA No.1400/PUN/2025 9. Similarly, the Ld. CIT(A) / NFAC upheld the interest disallowed by the Assessing Officer by observing as under: 10. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal. 11. The Ld. Counsel for the assessee at the outset submitted that when the Assessing Officer in the remand report has accepted the contention of the assessee, the Ld. CIT(A) / NFAC without appreciating the facts properly has confirmed the disallowance of depreciation as well as interest. Therefore, the order of the Ld. CIT(A) / NFAC be set aside and the disallowance made by the Assessing Officer on account of interest be deleted. Printed from counselvise.com 6 ITA No.1400/PUN/2025 12. The Ld. DR on the other hand submitted that the Assessing Officer in the remand report has categorically mentioned that the date of put to use could not be ascertained solely based on the details provided in Annexure-1. Therefore, the Ld. CIT(A) / NFAC is justified in upholding the disallowance of depreciation and interest made by the Assessing Officer. 13. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We find the Assessing Officer, in the instant case in absence of sufficient details filed before him, disallowed depreciation amounting to Rs.1,00,05,726/- and interest amounting to Rs.1,68,60,314/-. We find the Ld. CIT(A) / NFAC after obtaining the remand report from the Assessing Officer and the rejoinder of the assessee to such remand report, sustained the disallowance of depreciation as well as interest made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that when the Assessing Officer in the remand report has admitted positively in favour of the assessee, the Ld. CIT(A)/NFAC should not have upheld the disallowance of depreciation as well as interest. A perusal of the order of the Ld. CIT(A) / NFAC shows that although the Assessing Officer has partially accepted the contention of the assessee, however, he has also mentioned that the date of put to use could not be ascertained solely based on the details provided in Annexure-1. A perusal of the details given before the Assessing Officer during the remand proceedings as well as before the Ld. Printed from counselvise.com 7 ITA No.1400/PUN/2025 CIT(A) / NFAC shows that certain assets were purchased prior to 30.09.2017 and some other assets were purchased on or before 31.03.2018. In our opinion, the Ld. CIT(A) / NFAC in the instant case has not appreciated the facts properly and also there is some contradictory statement given by the Assessing Officer in the remand report while giving his opinion on the issue of put to use of assets as well as disallowance of interest. Since the issue requires a thorough verification at the level of the Assessing Officer on each and every item as to when the same was put to use with full details, therefore, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant an opportunity to the assessee to substantiate the date of put to use of each item of addition of plant and machinery to his satisfaction and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 14. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 9th December, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 9th December, 2025 GCVSR Printed from counselvise.com 8 ITA No.1400/PUN/2025 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 08.12.2025 Sr. PS/PS 2 Draft placed before author 09.12.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "