The ACIT, Circle-8, Ahmedabad V. Unipon (India) Ltd, Ahmedabad

ITA 1042/AHD/2009

• Counselvise Citation: 104220514 RSA 2009
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-01-2012
• Assessment Year: 1995-1996
• Appeal Filed On: 06-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Depreciation

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , . .!'#$, % & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ./ I.T.A. NO.1042/AHD/2009 ( ( ) ( ) ( ) ( ) / / / / ASSESSMENT YEAR : 1995-96) THE ACIT CIRCLE-8 AHMEDABAD ( ( ( ( / VS. UNIPON (INDIA) LTD. 13/14, RADHAKUNJ B/H.KAMLA KAMDHENU HALL DRIVE IN ROAD AHMEDABAD * % ./+, ./ PAN/GIR NO. : - ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 / APPELLANT BY : SHRI C.K.MISHRA, SR.D.R. ./*- 1 0 / RESPONDENT BY : SHRI SUNIL TALATI, A.R. (2 1 3% / / / / DATE OF HEARING : 04/01/2012 4') 1 3% / DATE OF PRONOUNCEMENT : 29/02/2012 5 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHI CH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XIV, AHMEDAB AD DATED 05/01/2009 AND THE GROUNDS RAISED ARE REPRODUCED BELOW:- 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE @ 100% THE ADDITION OF RS.1,36,81,813/- BEING DIFFERENCE O F DEPRECIATION. ITA NO.1042/AHD /2009 ACIT VS. UNIPON (INDIA) LTD. ASST.YEAR 1995-96 - 2 - 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ENHANCEMENT OF RS.39,60,605/- MADE BY THEN CIT(A) V IDE HIS ORDER DT.28/3/2003. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE L D. COMMISSIONER OF INCOME-TAX(A)-XIV, AHMEDABAD MAY BE SET-ASIDE AND T HAT OF THE ASSESSING OFFICER BE RESTORED. 2. APROPOS TO GROUND NO.1, FACTS IN BRIEF AS EMERGE D FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) R. W.S.147 OF THE I.T.ACT DATED 11.3.2002 ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN MANUFACTURING OF TEXTURISED YARN. IT WA S NOTED BY THE AO THAT THE ASSESSEE HAD CLAIMED 100% DEPRECIATION ON MACHINES PURCHASED DURING THE YEAR. THE PURCHASES WERE TO THE TUNE OF RS.1,82,42,418/-. IT HAS ALSO BEEN OBSERVED THAT EACH ITEM OF MACHINERY HAS COSTED LESS THAN RS.5000/-. THEREFORE DEPRECIATION @ 100% WAS CLAIM ED FIRST PROVISO TO SECTION 32(1)(II) OF THE ACT. ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS:- A. CENTRAL INDIA GASES (P.) LTD. VS. ACIT - 66 ITD 571 B. EXCELL TIMBER MART VS. ITO - 75 ITD 163 C. PATEL ENTERPRISES VS. ITO - 35 IT D 220 D. DR.P.K. CHOPADE VS. ITO - 13 TTJ 4 22 E. ANSAL CONSTRUCTION CO. VS. IAC - 36 TTJ 24 F. ANUSHREE CONTRACTORS & CONS.P.LTD. VS. ACIT - 53 TTJ 80 . ITA NO.1042/AHD /2009 ACIT VS. UNIPON (INDIA) LTD. ASST.YEAR 1995-96 - 3 - 2.1. THE AO WAS NOT CONVINCED AND REMARKED THAT THE VERY APPLICABILITY OF THE FIRST PROVISO TO SECTION 32(1) (II) WAS SUBJECT TO QUESTION. PLACING RELIANCE ON AN ORDER OF THE TRIB UNAL REFERRED AS ITO VS. FIRST LEASING COMPANY, NO REFERENCE OF ANY LAW MAGA ZINE HAS BEEN MADE BY THE AO, THE AO HAS SAID THAT THE ASSESSEE I S ENTITLED TO DEPRECIATION AT THE NORMAL RATE OF 25% AS APPLICABL E TO ANY PLANT AND MACHINERY. THE RE-WORKING OF THE DEPRECIATION WAS THEREFORE MADE AS UNDER:- COST OF ASSETS PURCHASED DURING THE YEAR RS.1,82, 42,418 DEPRECIATION ALREADY ALLOWED TO THE ASSESSEE RS.1 ,82,42,418 ADMISSIBLE DEPRECIATION @ OF 25% RS. 45,60,605 ADDITION ON ACCOUNT OF DISALLOWANCE OF 100% DEPRECIATION RS.1,36,81,813 3. BEFORE THE FIRST APPELLATE AUTHORITY, AT FIRST DISCUSSED THE QUESTION OF REOPENING OF THE ASSESSMENT BEING SET ASIDE BY THE RESPECTED COORDINATE BENCH B, ITAT AHMEDABAD BEARING ITA NO.1605/AHD/2003 FOR A.Y. 1995-96 DATED 10/08/2007 . AFTER CONSIDERING THE FACTUAL AS ALSO LEGAL ASPECT OF THI S ISSUE, LD.CIT(A) VIDE PARA 7.9 HAS HELD THAT THE AO PRIMA-FACIE HAD REASO N TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THIS GROUND OF THE ASSESSEE WAS DISMISSED. IT IS WORTH TO MENTION, AT THIS JUNCTUR E, THAT AT PRESENT AGAINST THE DISMISSAL OF THE SAID GRANT THE ASSESSEE IS NOT IN APPEAL. ONLY THE REVENUE IS IN APPEAL. 4. IN RESPECT OF THE QUESTION OF 100% CLAIM OF DEP RECIATION, LD.CIT(A) HAS HELD AS UNDER:- ITA NO.1042/AHD /2009 ACIT VS. UNIPON (INDIA) LTD. ASST.YEAR 1995-96 - 4 - 9. I HAVE CONSIDERED THE MERITS OF THE CASE ALSO A S DIRECTED BY THE TRIBUNAL. HAVING GIVEN THOUGHTFUL CONSIDERATIO N ON THE SUBMISSION AND DETAILED FUNCTIONAL TEST OF EACH ITE M OF PLANT AND MACHINERY, I AM INCLINED TO AGREE WITH THE LEARNED COUNSEL THAT IT IS NOT IN DISPUTE AS OBSERVED BY THE A.O. IN PARA- 4 THAT THE COST OF EACH UNIT IS LESS THAN RS.5,000/-. THE A.O. HOWEVE R, OBSERVED THAT MORE THAN ONE UNIT OF EACH ASSET HAS BEEN PURCHASED AT ONE TIME. HE, THEREFORE, OBSERVED THAT PURCHASES HAVING BEEN MADE IN BULK, THESE ITEMS ARE CAPABLE OF BEING USED IN BULK ONLY AND AS A SINGLE METAL COP HAS NO USE UNLESS IT IS USED IN COMBINATI ON WITH A CERTAIN MINIMUM NUMBER OF OTHER METAL COPS, THEY AR E NOT ELIGIBLE TO 100% DEPRECIATION. HE, THEREFORE, CONSIDERED TH AT THOUGH EACH UNIT OF ASSET HAS AN INDEPENDENT EXISTENCE AND COST IS LESS THAN RS.5,000/- BECAUSE IT HAS TO BE USED IN BULK, THE D EPRECIATION UNDER FIRST PROVISO TO SEC.32(1)(II) WAS NOT TO BE ALLOWE D AND ONLY NORMAL DEPRECIATION @ 25% I.E. RS.45,60,605/- WAS A LLOWED. AS ALREADY SUBMITTED BY THE LEARNED COUNSEL AND ALSO A S HELD BY THE MADRAS HIGH COURT IN THE CASE OF FIRST LEASING CO. OF INDIA REPORTED IN 244 ITR 238 AND GUJARAT HIGH COURT IN T HE CASE OF SAURASHTRA BOTTLING PVT.LTD. REPORTED IN 232 ITR 27 0, EACH ITEM IS AN INDEPENDENT UNIT EVEN THOUGH THEY WERE NORMALLY USED BY THE APPELLANT IN BULK DUE TO LINE UP OF PLANT AND MACHI NERY IN THIS LINE OF BUSINESS. UNDER THE ABOVE CIRCUMSTANCES I HAVE NO HESITATION IN HOLDING THAT ON MERITS THE APPELLANT IS ENTITLED TO CLAIM OF 100% DEPRECIATION ON EACH ITEM TOTALING TO RS.1,82,42,41 8/- IN THE AGGREGATE AS AGAINST 25% DEPRECIATION GRANTED BY TH E A.O. THE C.I.T.(A) IN ORDER DATED 28-03-2003 HAD ALLOWED ONL Y RS.6,00,000/- AS DEPRECIATION AND DISALLOWED THE BA LANCE AMOUNT OF RS.39,60,605/- ON THE GROUND THAT THE PURCHASE O F EQUIPMENTS/PARTS HAS NOT BEEN PROVED TO BE USED IN THE MACHINERIES, THEREBY HE HAD ENHANCED THE DISALLOWAN CE. AS AGAINST THIS OBSERVATION OF THE C.I.T.(A), THE A.O. HAD ALREADY ALLOWED DEPRECIATION ON ALL THE EQUIPMENTS, BUT HE HAD RESTRICTED THE DEPRECIATION TO 25%. AS THE MATTER HAS BEEN SE T ASIDE AND AS I FIND THAT THE EQUIPMENTS HAVE BEEN PURCHASED AND KE PT READY FOR USE AND AS PER THE DECISION OF GUJARAT HIGH COURT I N SAURASHTRA BOTTLING PVT.LTD., THE APPELLANT IS ELIGIBLE FOR DE PRECIATION @ ITA NO.1042/AHD /2009 ACIT VS. UNIPON (INDIA) LTD. ASST.YEAR 1995-96 - 5 - 100%, THE ADDITION OF RS.1,36,81,813/- BEING DIFFER ENCE OF DEPRECIATION IS DIRECTED TO BE DELETED. GROUND NO. 2 OF THE APPELLANT IS THEREFORE ALLOWED. 5. FROM THE SIDE OF THE RESPONDENT-ASSESSEE FURTHER A LIST OF JUDGEMENTS WERE CITED AS FOLLOWS:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. CIT VS. SAURASHTRA BOTTLING PVT.LTD. 232 ITR 270 [GUJ] 2. FIRST LEASING CO.OF INDIA LTD. VS. CIT 244 ITR 238 [MAD.] 3. CIT VS. FORAMER FRANCE 264 ITR 566 [S.C.] 4. VIKAS PRINTERY VS. ACIT & ANR. 190 CTR 608 [GUJ.] 5. HYNOUP FOOD & OIL INDUSTRIES LTD. VS. ACIT 219 CTR 124 [GUJ.] 6. ONCE THE FIRST APPELLATE AUTHORITY HAS GIVEN A F INDING ON FACTS THAT THE PURCHASES WERE READY FOR USE AND THAT EACH ITEM WAS AN INDEPENDENT ITEM REQUIRED TO RUN THE PLANT & MACHINERY IN THE S AID LINE OF BUSINESS, THEREFORE ENTITLED FOR CLAIM OF DEPRECATION @ 100% INSTEAD OF 25% DEPRECIATION. LD.CIT(A) HAS ALSO REVERSED THE ENHA NCEMENT WHICH WAS EARLIER MADE BY CIT(A) VIDE ORDER DATED 28/03/2003 (APPEAL NO.CIT(A)-XIV/ACIT CIR.8 13.02.03). IN ADDITION TO THOSE FINDINGS, IN THE CASE OF CIT VS. SAURASHTRA BOTTLING PVT.LTD. 2 32 ITR 270(GUJ.) A VIEW HAS BEEN TAKEN THAT BOTTLES AND WOODEN CRATES ARE TOOLS AND INSTRUMENTS AND PART OF PLANT & MACHINERY FOR CLAIM OF 100% DEPRECIATION. FOLLOWING THIS DECISION AND REST OF THE DECISIONS AS REFERRED HEREINABOVE, WE HEREBY AFFIRM THE LEGAL AS WELL AS FACTUAL ITA NO.1042/AHD /2009 ACIT VS. UNIPON (INDIA) LTD. ASST.YEAR 1995-96 - 6 - FINDINGS OF LD.CIT(A). THIS GROUND OF THE REVENUE IS THEREFORE DISMISSED. 7. APROPOS TO GROUND NO.2, SINCE WE HAVE ALREADY AP PROVED THE DECISION OF LD.CIT(A), THEREFORE THE RELIEF GRANTED IN RESPECT OF THE IMPUGNED ENHANCEMENT IS HEREBY AFFIRMED. WE FIND N O FORCE IN THIS GROUND OF THE REVENUE, HENCE DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. SD/- SD/- ( . .!'#$ ) ( ) % ( A.K. GARODIA ) ( M UKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/ 02 /2012 63..(, .(../ T.C. NAIR, SR. PS 5 1 .7 8 7) 5 1 .7 8 7) 5 1 .7 8 7) 5 1 .7 8 7)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-XIV, AHMEDABAD 5. 7 >> >/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD