Saptasatij Metatech Pvt. Ltd., (Formerly known as - Harshal Pressing Pvt. Ltd.), Pune V. Asst. CIT, Circle-9, Pune

ITA 1077/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88838 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1077/PN/2013 (ASSESSMENT YEAR : 2009-10) SAPTASATIJ METATECH PVT. LTD. (FORMERLY KNOWN AS HARSHAL PRESSING PVT. LTD.) , SIDDHIVINAYAK INDUSTRIAL ESTATE, S.NO.879, CHIKHALI, PUNE 412 114. PAN : AAACH8223R . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE. . RESPONDENT ASSESSEE BY : MR. PRAMOD SHINGTE DEPARTMENT BY : MR. RAJESH DAMOR DATE OF HEARING : 04-12-2014 DATE OF PRONOUNCEMENT : 29-01-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DA TED 12.03.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 16.12.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE SUBSTANTIVE DISPUTE IS WITH REGARD TO THE ACTION OF THE INCOME-TAX AUTHORITIES IN RESTRICTING ASSESSEES CL AIM FOR DEPRECIATION BY A SUM OF RS.1,66,08,886/-. 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE APP ELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER- ALIA, ENGAGED IN THE BUSINESS OF MANUFACTURE OF DIE S, PRESS TOOLS AND PRESS COMPONENTS. IN THE COURSE OF ASSESSMENT PROCEEDING S, ASSESSING OFFICER NOTED THAT ASSESSEE HAD STARTED A NEW MANUFACTURING UNIT DURING THE YEAR UNDER CONSIDERATION AT B-10, MAHALUNGE, MIDC, CHAKA N, PUNE. WITH RESPECT ITA NO.1077/PN/2013 TO THE DEPRECIATION CLAIMED RELATING TO THE ASSETS OF THE NEW UNIT, IT WAS FOUND THAT ASSESSEE CLAIMED DEPRECIATION OF RS.3,32,17,77 2/- WHICH WAS RELATABLE TO THE PLANT & MACHINERY OF RS.9,55,99,021/- WHICH WAS CLAIMED TO BE ACQUIRED AND PUT TO USE UPTO 30.09.2008. THE ASSESSING OFFI CER CARRIED OUT A VERIFICATION EXERCISE TO SATISFY HIMSELF AS TO WHET HER SUCH PLANT & MACHINERY WAS PUT TO USE UPTO 30.09.2008 IN ORDER TO JUSTIFY DEPRECIATION AT FULL RATES. THE ASSESSING OFFICER REQUIRED TO THE ASSESSEE TO P RODUCE THE DETAILS OF ELECTRICITY CONSUMPTION OF CHAKAN UNIT FOR THE MONT HS OF APRIL 2008 TO MARCH 2009 AS WELL AS THE SALE INVOICES ISSUED BY THE SAI D UNIT FOR THE MONTH OF SEPTEMBER 2008. THE ASSESSING OFFICER ALSO REQUIRE D THE ASSESSEE TO PROVIDE COPY OF INVITATION CARD, ETC. EVIDENCING IN AUGURAL FUNCTION OF THE CHAKAN UNIT. 4. THE ASSESSING OFFICER HAS NOTED THAT INITIALLY S ALE INVOICES OF CHAKAN UNIT FOR THE MONTH OF SEPTEMBER 2008 WERE NOT PRODU CED BUT LATER ON SOME JOB WORK INVOICES WERE PRODUCED TO SHOW THAT THE PLANT & MACHINERY WAS INDEED PUT TO USE BEFORE SEPTEMBER 2008. THE ASSESSING OF FICER ALSO NOTED THAT THE DATE COMPILED BY THE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY IN THE SIA STATISTICS, ANNUAL ISSUE, 2010-11, CHAPT ER 4.5 ABOUT INDIAN ENTREPRENEURS MEMORANDUM (IEM) SHOWED THAT THE CHAK AN UNIT BELONGING TO THE ASSESSEE COMMENCED PRODUCTION ON 01.10.2008. F URTHER, THE ASSESSING OFFICER NOTED THAT THE FINANCIAL EXPENDITURE INCURR ED ON ELECTRICAL INSTALLATION, MACHINE FOUNDATION AND PLANT & MACHINERY WAS MAJORL Y INCURRED BETWEEN 01.10.2008 TO 31.08.2009. THE INVOICES PERTAINING TO JOB WORK CARRIED OUT IN UNIT-II PRIOR TO 30.09.2008 WAS ALSO NOT ACCEPTED A S A CREDIBLE EVIDENCE BY THE ASSESSING OFFICER AS ACCORDING TO HIM, IT WAS AN AF TERTHOUGHT. THE ASSESSING OFFICER WAS ALSO NOT SATISFIED WITH REGARD TO ASSES SEES REPLY ON THE INAUGURAL INVITATION OF THE UNIT. ON THE BASIS OF THE AFORES AID, THE ASSESSING OFFICER PROCEEDED TO HOLD THAT THE PLANT & MACHINERY AMOUNT ING TO RS.9,55,99,021/- WAS NOT PUT TO USE BY THE ASSESSEE PRIOR TO 30.09.2 008 AND THEREFORE HE ITA NO.1077/PN/2013 RESTRICTED ASSESSEES CLAIM FOR DEPRECIATION TO 50% OF THE NORMAL CLAIM. ACCORDINGLY, AGAINST ASSESSEES CLAIM FOR DEPRECIAT ION OF RS.3,32,17,772/-, THE ASSESSING OFFICER ALLOWED DEPRECIATION TO THE EXTEN T OF RS.1,66,08,886/-. SUCH ACTION OF THE ASSESSING OFFICER WAS CARRIED IN APPEAL BEFORE THE CIT(A) WHO HAS ALSO AFFIRMED THE STAND OF THE ASSESSING OF FICER. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A), ASSESSEE IS IN FURTHE R APPEAL BEFORE US. 5. SECTION 32(1) OF THE ACT PERMITS AN ASSESSEE TO CLAIM DEPRECIATION WITH RESPECT TO THE ASSETS SPECIFIED THEREIN WHICH ARE W HOLLY AND PARTLY OWNED BY THE ASSESSEE AND USED FOR THE PURPOSE OF BUSINESS. FURTHER, SECOND PROVISO TO SECTION 32(1) OF THE ACT PRESCRIBES THAT WHERE A N ASSET IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN 18 0 DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION FOR DEPRECIATION IN RESPECT OF SUCH A SSET SHALL BE RESTRICTED TO FIFTY PERCENT OF THE AMOUNT OTHERWISE ALLOWABLE. I N THE PRESENT CASE, THE DISPUTE REVOLVES AROUND THE SECOND PROVISO TO SECTI ON 32(1) OF THE ACT. AS PER THE ASSESSING OFFICER, THE ASSETS IN QUESTION OF RS .9,55,99,021/- RELATING TO THE CHAKAN UNIT OF THE ASSESSEE HAVE BEEN PUT TO USE FO R THE PURPOSES OF BUSINESS OR PROFESSION OF THE ASSESSEE FOR A PERIOD LESS THAN 180 DAYS DURING THE PREVIOUS YEAR UNDER CONSIDERATION AND THEREFORE THE DEPRECIATION CLAIM HAS BEEN RESTRICTED TO FIFTY PERCENT OF THE NORMAL CLAIM. 6. AT THE TIME OF HEARING, LD. REPRESENTATIVE FOR T HE ASSESSEE POINTED OUT THAT ASSESSEE HAD DEMONSTRATED BEFORE THE LOWER AUT HORITIES THAT PLANT & MACHINERY WAS COMMISSIONED BEFORE 30.09.2008 AS EVI DENCED BY CERTIFICATE ISSUED BY SRI SAI BABA ENGINEERING SERVICES, WHO HA D UNDERTAKEN THE COMMISSIONING SERVICES. IT HAS BEEN POINTED OUT ON THE BASIS OF SUCH CERTIFICATE, WHICH HAS BEEN PLACED IN THE PAPER BOO K AT PAGES 8 TO 38, THAT VARIOUS MACHINERIES HAVE BEEN ERECTED AND COMMISSIO NED IN AUGUST 2008 ITSELF. SECONDLY, ASSESSEE HAD FURNISHED A COPY OF THE CENTRAL EXCISE ITA NO.1077/PN/2013 REGISTRATION DATED 23.09.2008 AS A PROOF THAT ASSES SEES CHAKAN UNIT WAS REGISTERED WITH EXCISE AUTHORITIES PRIOR TO 30.09.2 008 AND ONLY THEREAFTER THE PRODUCTION WAS STARTED. THE LD. REPRESENTATIVE POI NTED OUT THAT THE CHAKAN UNIT OF THE ASSESSEE CARRIED OUT JOB WORK FOR VARIO US PARTIES AND COPIES OF SUCH INVOICES ALONG WITH THE CUSTOMER LEDGER ACCOUNTS HA VE BEEN PLACED AT PAGES 39 TO 76 OF THE PAPER BOOK. ACCORDING TO THE LD. R EPRESENTATIVE, THE SAID EVIDENCE DEMONSTRATES THAT THE PLANT & MACHINERY IN QUESTION WAS PUT TO USE PRIOR TO 30.09.2008. A REFERENCE HAS ALSO BEEN MAD E TO THE MONTHLY ELECTRICITY CHARGES FOR THE CHAKAN UNIT FOR THE PERIOD APRIL 20 08 TO DECEMBER 2008 WHEREBY IT IS SHOWN THAT THE TOTAL UNITS OF ELECTRI CITY CONSUMPTION IN SEPTEMBER 2008 IS 25780 UNITS AS AGAINST 13940 UNITS AND 1311 0 UNITS IN THE EARLIER MONTHS OF AUGUST AND JULY 2008 RESPECTIVELY. FOR A LL THE ABOVE REASONS, IT IS SOUGHT TO BE POINTED OUT THAT THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT THE PLANT & MACHINERY IN QUESTION WAS NOT PUT TO US E PRIOR TO 30.09.2009. THE LD. REPRESENTATIVE SUBMITTED THAT THE EVIDENCE BY W AY OF INVOICES RAISED FOR JOB WORK HAVE BEEN REJECTED BY THE LOWER AUTHORITIE S ON MERE SURMISES. IT WAS POINTED OUT THAT IN RESPONSE TO THE ASSESSING OFFIC ERS ENQUIRY ON 30.11.2011, ASSESSEE MADE A REPLY TO ON 09.12.2011 WHEREIN THE COPIES OF JOB WORK INVOICES WERE NOT FURNISHED. HOWEVER, SUBSEQUENTLY ON 13.12.2011 ASSESSEE FURNISHED THE JOB WORK INVOICE BILLS, THE SAME HAVE BEEN REJECTED ON THE GROUND THAT THE SAME WERE FURNISHED AFTER A LAPSE O F TIME AND THEREFORE IT COULD NOT BE ADMITTED AS A CREDIBLE EVIDENCE. THE LD. REPRESENTATIVE VEHEMENTLY POINTED OUT THAT SUCH A PIECE OF EVIDENC E HAS BEEN ARBITRARILY REJECTED BY THE ASSESSING OFFICER. 7. IN THE ALTERNATIVE, IT IS SUBMITTED THAT EVEN IF THE EVIDENCE REFERRED TO BY THE ASSESSING OFFICER, NAMELY, SIA STATISTICS, ANNU AL ISSUE, 2010-11 COMPILED BY THE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AN D INDUSTRY IS CONCERNED, IT STATES THAT THE ASSESSEE COMMENCED PRODUCTION ON 01.10.2008. EVEN IF THE SAID DATE OF COMMENCEMENT OF PRODUCTION IS TAKEN, T HE LD. REPRESENTATIVE ITA NO.1077/PN/2013 EXPLAINED THAT UPTO 31.03.2009 IT CAN BE SEEN THAT THE PLANT & MACHINERY WAS PUT TO USE FOR A PERIOD MORE THAN 180 DAYS DURING T HE PREVIOUS YEAR UNDER CONSIDERATION. THEREFORE, ON THIS POINT ALSO THE D EPRECIATION IS FULLY ALLOWABLE TO THE ASSESSEE AT THE FULL RATES. 8. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE APPEARING FOR THE REVENUE POINTED OUT THAT ASSESSEE COULD NOT EST ABLISH THAT THE PRODUCTION HAD ACTUALLY COMMENCED BEFORE 30.09.2008 AS THE ASS ESSEE DID NOT FURNISH ANY SALE INVOICES OR DELIVERY CHALLANS ISSUED BY TH E CHAKAN UNIT AS REQUIRED BY THE ASSESSING OFFICER. IT WAS ALSO POINTED OUT THAT THE ASSESSEE DID NOT FURNISH THE DETAILS OF LABOUR CHARGES, ETC. INCURRE D FOR SEVERAL WORKS RELATING TO FOUNDATION OF MACHINERY IN ORDER TO PROVE THAT THE MACHINERY WAS ACTUALLY INSTALLED BEFORE 30.09.2008. THE LD. DEPARTMENTAL REPRESENTATIVE HAS ALSO OPPOSED ASSESSEES PLEA BASED ON THE DATE OF PRODUC TION OF 01.10.2008 BECAUSE ACCORDING TO HIM, IT IS NOT PROVED BY THE A SSESSEE ON THE BASIS OF HIS OWN RECORD THAT EVEN ON 01.10.2008 THE PRODUCTION W AS STARTED WITH REFERENCE TO SALE INVOICES, DELIVERY CHALLANS, ETC.. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE CONTROVERSY IN THE PRESENT CASE REVOLVES AROUND THE SECOND PROVISO U/S 32(1) OF THE ACT, AS NOTED BY US IN THE EARLIER PART OF THIS ORDER. THE CLAIM OF THE ASSESSEE IS THAT THE PLANT & MACHINERY OF RS.9,55,99,021/- PERTAININ G TO THE CHAKAN UNIT HAVE BEEN PUT TO USE BY 30.09.2008 AND THEREFORE IT IS E NTITLED FOR THE FULL RATE OF DEPRECIATION. THE CLAIM OF THE ASSESSEE IS THAT IN ITIALLY AFTER THE COMPLETION OF COMMISSIONING AND ERECTION OF THE PLANT & MACHINERY , IT CARRIED OUT JOB WORK ACTIVITY IN THE SAID UNIT. IN SUPPORT, INVOICES ON VARIOUS CUSTOMERS WERE RAISED, COPIES OF WHICH HAVE BEEN PLACED IN THE PAPER BOOK AT PAGES 77 TO 86. WE FIND THAT THE AFORESAID PIECE OF EVIDENCE WAS VERY MUCH BEFORE THE ASSESSING OFFICER BUT THE SAME HAS BEEN DISREGARDED. THE PRI MARY REASON FOR REJECTING THE AFORESAID EVIDENCE BY THE ASSESSING OFFICER WAS THAT THE SAID EVIDENCE ITA NO.1077/PN/2013 WAS NOT FURNISHED BY THE ASSESSEE INITIALLY IN HIS REPLY DATED 09.12.2011 BUT WAS SUBMITTED SUBSEQUENTLY VIDE REPLY DATED 13.12.2 011. THE ASSESSING OFFICER OBSERVES THAT SINCE THE SAID INVOICES FOR J OB WORKS WERE SUBMITTED AFTER A LAPSE OF TIME THEY DO NOT REMAIN A CREDIBLE PIECE OF EVIDENCE. IN OUR CONSIDERED OPINION, THE AFORESAID APPROACH OF THE A SSESSING OFFICER IS QUITE ARBITRARILY AND IS UNSUSTAINABLE. IF AT ALL THE AS SESSING OFFICER HAD ANY DOUBT WITH REGARD TO THE VERACITY OF SUCH EVIDENCE, IT WA S ALWAYS OPEN FOR HIM TO HAVE CARRIED OUT THE NECESSARY VERIFICATION EXERCIS E. IT IS SEEN FROM THE PERUSAL OF SUCH INVOICES THAT THE NAME AND ADDRESSE S OF THE PARTIES ARE AVAILABLE AND THE ASSESSING OFFICER COULD HAVE VERI FIED THE EXPLANATION FURNISHED BY THE ASSESSEE INDEPENDENTLY FROM SUCH P ARTIES. NO SUCH EFFORT HAS BEEN MADE, BUT THE EVIDENCE SOUGHT TO BE PRODUC ED HAS BEEN DISBELIEVED WITHOUT ANY ADVERSE MATERIAL ON RECORD. 10. THE OTHER ASPECT HIGHLIGHTED BY THE ASSESSING O FFICER IS THAT THE EXPENDITURE ON ELECTRICAL INSTALLATION, MACHINE FOU NDATION, ETC. IS BEING FOUND TO BE INCURRED AFTER 30.09.2008. IN THIS CONTEXT, THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE EXPENSES IN THE FINAN CIAL BOOKS WERE ENTERED ON THE BASIS OF THE RESPECTIVE BILLS RAISED WHICH WERE ON A SUBSEQUENT DATE. IN THIS CONTEXT, A COPY OF THE LEDGER ACCOUNT OF ELECT RICAL INSTALLATION EXPENSE HAS BEEN REFERRED, TO POINT OUT THAT THE SAID ACCOUNT C ONTAINS CUMULATIVE EXPENDITURE BEING DEBITED ON ACCOUNT OF THE EXPENDI TURE INCURRED ON ELECTRICAL INSTALLATIONS. THE SAID ACCOUNT CONTAINS AN OPENIN G BALANCE ALSO FOR THE EXPENDITURE INCURRED IN THE EARLIER YEARS AS THE FA CTORY WAS UNDER THE IMPLEMENTATION STAGE. IT IS SOUGHT TO BE POINTED O UT THAT THE FINANCIAL ENTRIES ARE ON THE SUBSEQUENT DATE BUT THE DETAILS CLEARLY POINTED OUT THAT THE EXPENDITURE RELATES TO A PERIOD OF ACTIVITY WHICH W AS PRIOR TO 30.09.2008. THE AFORESAID PLEA OF THE ASSESSEE, IN OUR VIEW, IS CLE ARLY BORNE OUT OF THE RECORD AND THEREFORE WE FIND NO REASONS TO DOUBT THE CLAIM OF THE ASSESSEE THAT THE PLANT & MACHINERY IN QUESTION WAS PUT TO USE PRIOR TO 30.09.2008. IN-FACT, IF ITA NO.1077/PN/2013 THE THIRD PARTY EVIDENCE, NOTABLY, THE SIA STATISTI CS, ANNUAL ISSUE ON 2010-11 COMPILED BY GOVERNMENT OF INDIA, MINISTRY OF COMMER CE AND INDUSTRY IS TO BE TAKEN AS A GUIDE, EVEN THEN THE DATE OF COMMENCEMEN T OF PRODUCTION HAS TO BE TAKEN AS 01.10.2008. IF ONE GOES BY THIS DATE, THEN UPTO 31.03.2009, THE SUBJECT PLANT & MACHINERY WOULD HAVE BEEN PUT TO US E FOR A PERIOD NOT LESS THAN 180 DAYS. ON THIS COUNT ALSO, THE CLAIM OF TH E ASSESSEE IS JUSTIFIED FOR FULL RATE OF DEPRECIATION. 11. ON THE BASIS OF THE AFORESAID DISCUSSION AND HA VING REGARD TO THE MATERIAL AND EVIDENCE ON RECORD, WE FIND THAT THE L OWER AUTHORITIES WERE NOT JUSTIFIED IN RESTRICTING ASSESSEES CLAIM FOR DEPRE CIATION ON THE SUBJECT PLANT & MACHINERY TO RS.1,66,08,886/- INSTEAD OF RS.3,32,17 ,772/- CLAIMED BY THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET-ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW ASSESSEES CLAIM FOR D EPRECIATION AS CLAIMED IN THE RETURN OF INCOME. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 29 TH JANUARY, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 29 TH JANUARY, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE