ACIT, Jaipur V. M/S. GANGAUR EXPORT PVT. LTD., Jaipur

ITA 1034/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5640 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 25-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: SATISH AJMERA CA L
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 1034/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. M/S. GANGAUR EXPORT PVT. LTD., ANOKHI FARM, TODI RAMZANIPURA, JAGATPURA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACG 8877 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SANJEEV KUMAR MATHUR (CA) AND SHRI SATISH AJMERA (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24.01.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 30/01/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-2, JAIPUR DATED 20.09.2016 PERTAINING TO ASSESSMENT YE AR 2012-13. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD. CIT (APPEALS) WAS JUSTIFIED IN DELETING TH E ADDITION OF RS. 93,48,826/- MADE BY THE AO ON ACCOUNT OF DISALLOWAN CE OF DEPRECIATION CLAIMED IGNORING THE FACT THAT CIVIL S TRUCTURES AND INTERNAL/EXTERNAL POWER LINES DO NOT CONSTITUTE THE PLANTS. 2. (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, LD. CIT (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 15,29,425/- MADE BY THE AO FOR DEPOSITING THE EMPLO YEES CONTRIBUTION TO PF & ESI BEYOND THE PRESCRIBED TIME LIMIT PROVIDED IN THE RESPECTIVE ACTS. 2 ITA NO. 1034/JP/2016 M/S. GANGAUR EXPORT PVT. LTD. (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE HONBLE ITAT WAS JUSTIFIED IN HOLDING T HAT THE EMPLOYEES CONTRIBUTION TO PF & ESI ARE GOVERNED BY THE PROVISIONS OF SECTION 43BG AND NOT BY SECTION 36(1)(VA) R.W.S. 2(24)(X) OF THE INCOME TAX ACT, 1961. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS COMPLETE D UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) VIDE ORDER DATED 17.03.2015. THE AO WHILE ASSESSING THE INCOME, MAD E ADDITIONS ON ACCOUNT OF PF AND ESI FOR NOT MAKING THE PAYMENT WITHIN THE PRESC RIBED DATES AS PRESCRIBED IN THE RESPECTIVE ACT AND ALSO MADE DISALLOWANCE OF EXCESS DEPRECIATION CLAIMED, APART FROM OTHER DISALLOWANCES. AGGRIEVED BY THIS, THE A SSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMI SSIONS, PARTLY ALLOWED THE APPEAL. WHILE ALLOWING THE APPEAL, THE LD. CIT (A) ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF PF & ESI BY FOLLOWING THE JUDGMENTS OF T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF JAIPUR DIDHYUT VITHRAN NIGAM LTD. 265 CTR 62 (RAJ.), CIT VS. STATE BANK OF BIKANER & JAIPUR (2014) 99 DTR 131 (R AJ.) AND THE ORDER OF ITAT JAIPUR. THE LD. CIT (A) ALSO PARTLY ALLOWED THE C LAIM OF DEPRECIATION AFTER CONSIDERING THE SUBMISSIONS AND FOLLOWING HIS EARLI ER ORDER FOR THE A.Y. 2011-12 IN THE ASSESSEES OWN CASE. AGGRIEVED, THE REVENUE HA S FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. 3. THE LD. D/R SUBMITTED THAT THE LD. CIT (A) WAS N OT JUSTIFIED IN DELETING THE ADDITIONS. HE SUPPORTED THE ORDER OF THE A.O. 3 ITA NO. 1034/JP/2016 M/S. GANGAUR EXPORT PVT. LTD. 3.1. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THAT BOTH THE ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS JUDGMENTS OF HONBLE HIGH COURTS AND THE DECISIONS OF ITAT JAIPUR. 3.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. IN RESPECT OF GROUND NO. 1, WE FIND THAT THE SIMILAR ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 17.06.2016 FOR THE IM MEDIATELY PRECEDING YEAR2011-12 BY OBSERVING IN PARA 4.3 AS UNDER :- 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. THE LD. CIT (A) HAS DECIDED T HIS ISSUE IN PARA 3.4.1 TO 3.4.6 OF HER ORDER BY OBSERVING AS UNDER : - 3.4.1. I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT. THE FACTS OF THIS ISSUE ARE SIMILAR TO THE FACTS IN THE PRECEDIN G YEAR (ASSESSMENT YEAR 2010-11). IN ASSESSMENT YEAR 2020- 11, THE CIT (A)-II, JAIPUR (APPEAL NO. 02/13-14) HAS ALSO D ECIDED THE MATTER BY HOLDING AS UNDER :- THE ISSUE IN QUESTION IS WHETHER THE FOUNDATION, P LINTH STRUCTURE, CRANE PLATFORM, CONTROL ROOM FOR WINDMIL L CAN BE CONSIDERED AS BUILDING OR IS AN INTEGRAL PART OF WINDMILL. SO ALSO, WHETHER ELECTRICAL ITEMS AND INTERNAL / EXTER NAL LINES FALL UNDER THE HEAD PLANT AND MACHINERY DISTINCT FROM A WINDMILL. I HAVE PERUSED THE CASE LAWS CITED BY THE APPELLANT A ND THE ASSESSING OFFICER. THE CASE LAWS WHICH DIRECTLY DEA L WITH THE ISSUE AT HAND ARE : 1. DCIT VS. AMINITY DEVELOPERS AND BUILDERS ITA NO. 1505/PN/2008-09 A.Y. 2008-09 (ITAT-PUNE). 2. POONAWALA FINVEST & AGRO (P) LTD. VS. ACIT ITA NO . 188 OF 2006 DATED 26.06.2008 (ITAT-PUNE) 4 ITA NO. 1034/JP/2016 M/S. GANGAUR EXPORT PVT. LTD. 3. CIT-III, AHEMDABAD VS. PARRY ENGINEERING AND ELECTR ONICS P VT. LTD. TAX APPEAL NO. 604 OF 2012 DATED 29.01.2 013 (HIGH COURT, GUJARAT). 3.4.2. IT HAS BEEN HELD IN THE CASE OF POONAWALA FINVEST (SUPRA)- THE EMPHASIS FOR GRANTING HIGHER RATE OF DEPRECIATION AS FAR AS CIVIL CONSTRUCTION WORK IS CONCERNED, THE NECESSITY WAS TO EXAMINE THE FUNCTIONAL TEST OF THE SAID STRUCTURE. A CATEGORICA L EVIDENCE HAS TO BE PLACED THAT THE STRUCTURE IS NOT A BUILDING BUT IT IS AN INTEGRAL PART OF PLANT AND MACHINERY AS FAR AS THE QUESTION OF DEPRECIATION IN RESPECT OF TRANSFORMER UP TO DP STRUCTURE WAS CONCERNED, THE APPELLANT HAS PAID CERTAIN AMOUNT FO R THE PURPOSE OF SUPPLYING OF ELECTRICAL ITEMS LIKE TRANSFORMER UP TO DP STRUCTURE, INTERNAL LINE UP TO METERING. THIS GADGET WAS FOR TRANSMISSION OF ELECTRICAL POWER GENERATED UP TO SUB-STATION OF MSE B AT SITE. THE ELECTRICAL ENERGY SO PRODUCED BY THE WINDMILL WAS A WASTE IF IT WAS NOT TRANSMITTED TO MSEB SUB-STATIONS. THE FUNCTION OF SUCH UNIT WAS TH AT THE ELECTRICITY SO GENERATED WAS REQUIRED TO BE TRANSFERRED AND TRANSMITTED TO CABLE LINE UP TO SUB - STATION, WHERE THE ACTUAL UNITS SO GENERATED WERE STORED AND METERED. SINCE THIS WAS THE FUNCTION OF TRANSFORMER UP TO DP STRUCTURE, HENCE IT OUGHT TO B E HELD AS AN INTEGRAL PART OF THE WINDMILL. 3.4.3. IN THE CASE OF AMINITY BUILDERS AND DEVELOPERS (SUPRA) IT HAS BEEN HELD THAT THERE SHOULD NOT BE QUARREL THAT CIVIL WORK IS INVOLVED IN THE ERECTIO N OF THE FOUNDATION, BUT EVERY CIVIL WORK CANNOT BE TREA TED AS CIVIL WORK AS REQUIRED FOR BRINGING CONSTRUCTION . IN OUR OPINION, COST ON THE FOUNDATION OF THE WIND MIL L IS ELIGIBLE FOR THE DEPRECIATION AT THE RATE 80% OR TH E RATE WHICH IS APPLICABLE TO THE WIND MILL AS IT IS INTEGRAL PART OF COST OF WIND MILL ERECTION. 3.4.4. IT HAS BEEN HELD IN THE CASE OF PARRY ENGINEERING & ELECTRONICS LTD. (SUPRA) THAT WINDMILL WOULD REQUIRE A SCIENTIFICALLY DESIGNED MACHINERY IN ORDER TO HAR NESS THE WIND ENERGY TO THE MAXIMUM POTENTIAL. SUCH 5 ITA NO. 1034/JP/2016 M/S. GANGAUR EXPORT PVT. LTD. DEVICE HAS TO BE FITTED AND MOUNTED ON A CIVIL CONSTRUCTION, EQUIPPED WITH ELECTRIC FITTINGS IN OR DER TO TRANSMIT THE ELECTRICITY SO GENERATED. SUCH CIVIL STRUCTURE AND ELECTRIC FITTINGS, THEREFORE, IT CAN BE WELL IMAGINED, WOULD BE HIGHLY SPECIALIZED. THUS, SUCH C IVIL CONSTRUCTION AND ELECTRIC FITTING WOULD HAVE NO USE OTHER THAN FOR THE PURPOSE OF FUNCTIONING OF THE WINDMILL. ON THE OTHER HAND, IT CAN BE EASILY IMAGINED THAT WINDMILL CANNOT FUNCTION WITHOUT APPROPRIATE INSTALLATION AND ELECTRIFICATION. IN OT HER WORDS, THE INSTALLATION OF WINDMILL AND THE CIVIL STRUCTURE AND THE ELECTRIC FITTINGS ARE SO CLOSELY INTERCONNECTED AND LINKED AS TO FORM THE COMMON PLANT. AS ALREADY NOTED, THE LEGISLATURE HAS PROVID ED FOR HIGHER RATE OF DEPRECIATION OF 80 PER CENT ON RENEWABLE ENERGY DEVISES INCLUDING WINDMILL AND ANY SPECIALLY DESIGNED DEVISE, WHICH RUNS ON WINDMILL. THE CIVIL STRUCTURE AND THE ELECTRIC FITTING, EQUIPMENT S ARE PART AND PARCEL OF THE WINDMILL AND CANNOT BE SEPARATED FROM THE SAME. THE ASSESSEE CLAIM OF HIGHER DEPRECIATION ON SUCH INVESTMENT WAS, THEREFORE, RIGHTLY ALLOWED. 3.4.5. IN VIEW OF THE ABOVE JUDGMENTS, IT IS HELD THAT FOUNDATION, ELECTRICAL ITEMS INTERNAL / EXTERNAL LI NES ARE AN INTEGRAL PART OF THE WINDMILL AND ARE SO CLO SELY INTERCONNECTED AND LINKED WITH THE WINDMILL SO AS T O FORM A COMMON PLANT AS WINDMILL. THEREFORE, DEPRECIATION OF THE ABOVE ITEMS HAS TO BE ALLOWED A T THE SAME RATE AS WINDMILL. 3.4.6. IN RESPECT TO THE CIVIL WORK FOR THE CONTROL ROOM E TC. IT HAS BEEN HELD IN THE CASE OF POONAWALA FINVEST (SUPRA) IN THE INSTANT APPEAL NOTHING WAS ON RECORD TO ESTABLISH THAT ON THE TOUCHSTONE OF FUNCTIONAL TEST THE CONTROL ROOM OR SITE DEVELOPMEN T EXPENDITURE OR EVEN INTERNAL ROADS, WERE SO DESIGNE D THAT THEY COULD ONLY BE USED FOR POWER GENERATION A S DONE BY THE WINDMILL AND MEANT FOR NO OTHER USE. THERE WAS NOTHING ON RECORD, SUCH AS A REPORT FROM A QUALIFIED PERSON TO ESTABLISH THAT THE SITE CONSTRU CTION OF CONTROL ROOM, INTERNAL ROAD, ETC, WAS DESIGNED I N SUCH A MANNER TO FACILITATE THE POWER GENERATION AN D DISTRIBUTION OF WINDMILL. IN THIS CASE ALSO, THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THAT THE C IVIL 6 ITA NO. 1034/JP/2016 M/S. GANGAUR EXPORT PVT. LTD. WORK FOR THE CONTROL ROOM, PLINTH PLATFORM OR THE CRANE PLATFORM IS AN INTEGRAL PART OF THE PLANT AND MACHINERY OF WINDMILL. THE CIVIL WORK FOR THE CONTR OL ROOM IS A MERE STRUCTURE TO HOUSE THE EQUIPMENT OF THE CONTROL ROOM SINCE THE CIVIL WORK OF THE CONTRO L ROOM HAS NOT BEEN SPECIALLY DESIGNED FOR A WINDMILL . THEREFORE, DEPRECIATION ON THE CIVIL WORK FOR THE CONTROL ROOM, PLINTH PLATFORM AND CRANE PLATFORM, S HALL BE ALLOWABLE AT THE RATE APPLICABLE TO A BUILDING . FOLLOWING THE ABOVE JUDGMENT OF MY PREDECESSOR CIT (A)-II, IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 201 0-11. THE DEPRECIATION ON FOUNDATION, ELECTRICAL ITEMS, INTER NAL / EXTERNAL LINES ARE AN INTEGRAL PART OF THE WINDMILL AND DEPR ECIATION IS ALLOWED AT THE SAME RATE AS WINDMILL, AND DEPRECIAT ION ON THE CIVIL WORK FOR THE CONTROL ROOM, PLINTH PLATFORM AN D CRANE PLATFORM, SHALL BE ALLOWABLE AT THE RATE APPLICABLE TO A BUILDING. THE GROUND OF APPEAL IS PARTLY ALLOWED. THE LD. CIT (A) HAS GIVEN A DETAILED FINDING OF FAC T. THE REVENUE HAS NOT CONTROVERTED THESE FINDINGS. WE, THEREFORE, FIN D NO INFIRMITY IN THE ORDER OF LD. CIT (A), WHICH IS HEREBY UPHELD. THE G ROUND OF THE REVENUE IS REJECTED. IN VIEW OF THE ABOVE DISCUSSION, WE FIND NO MERIT I N THE GROUND OF THE REVENUE. THE SAME IS HEREBY REJECTED. THE ORDER OF THE LD. CIT ( A) IS UPHELD. 3.3. IN RESPECT OF GROUND NO. 2 RELATING TO DELAYED PAYMENT OF PF & ESI, WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE JUDGMENTS OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAIPUR VIDHYUT VITHRAN NIGAM L TD. 265 CTR 62 (RAJ.) AND CIT VS. STATE BANK OF BIKANER & JAIPUR (2014) 99 DTR 131 (R AJ.) AND ALSO BY THE COORDINATE BENCH OF THE TRIBUNAL, JAIPUR IN THE ASSESSEES OWN CASE. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE HONBLE JURISDICTION AL HIGH COURT AND THE COORDINATE BENCH, WE AFFIRM THE ORDER OF LD. CIT (A). THE GROU ND OF THE REVENUE IS REJECTED. 7 ITA NO. 1034/JP/2016 M/S. GANGAUR EXPORT PVT. LTD. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.01.2 017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 30/01/2017. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT CIRCLE-6, JAIPUR. 2. THE RESPONDENT M/S. GANGAUR EXPORT PVT. LTD., JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1034/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 8 ITA NO. 1034/JP/2016 M/S. GANGAUR EXPORT PVT. LTD.