Addl.CIT, Special Range-4, New Delhi V. Gillettee Diversified Operations Pvt. Ltd., New Delhi

ITA 1141/DEL/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2245 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 16-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K KAPOOR
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.1141/DEL/2018 (ASSESSMENT YEAR 2014-15) ADDL. CIT, SPECIAL RANGE-4, NEW DELHI. VS. M/S GILLETTE DIVERSIFIED OPERATIONS PVT. LTD., P&G PLAZA, GARDINAL GRACIOUS ROAD, CHAKALA, ANDHERY (EAST) MUMBAI-400 099 PAN AAACG 2469C (APPELLANT) (RESPONDENT) APPELLANT BY MS. SUNITA SINGH, CIT-DR RESPONDENT BY SH. R. K. KAPOOR, CA DATE OF HEARING 06.04.2021 DATE OF PRONOUNCEMENT 30.06.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE DEPARTMENT AGAINST ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-35, NEW DELHI {CIT(A)} FOR ASSESSMENT YEAR 2014-15, WHERE IN VIDE ORDER 2 ITA NO.1141/DEL/2018 ADDL. CIT VS. M/S GILLETTEE DIVERSIFIED OPERATIONS PVT. LTD. DATED 01.11.2017, THE LD. CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE IN RESPECT OF DISALLOWANCE ON DEPRECIATION ON PLANT AND MACHINERY AND TOOLS AND MOULDS AMOUNTING TO RS.21,27,83,175/- AND ALSO ALLOWED RELIEF IN RESPECT OF INSURANCE EXPENSES INC URRED ON MACHINERY AND MOULDS AMOUNTING TO RS.14,52,323/- AN D FURTHER RELIEF IN RESPECT OF REPAIR AND MAINTENANCE EXPENSE S ON PLANT AND MACHINERY AMOUNTING TO RS.23,83,146/-. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY IS ENGAGED IN TRADING OF WIDE RANGE OF PERSONAL CARE PRODUCTS. THE ASSESSEE IS ALSO ENGAGED IN THE DISTRIBUTION OF ORA L-B CARE AND OTHER ORAL CARE PRODUCTS PRIMARILY FALLING UNDER THE HEAL TH CARE SEGMENT. THE RETURN OF INCOME WAS FILED DECLARING AN INCOME O F RS.5,19,14,780/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.26,98,47 ,910/- AFTER MAKING DISALLOWANCE ON ACCOUNT OF DEPRECIATION ON P LANT AND MACHINERY TO THE TUNE OF RS.21,27,83,175/-, AN ADDI TION ON ACCOUNT OF INSURANCE EXPENSES OF RS.14,52,323/- ON MACHINE AND MOULDS AND A FURTHER ADDITION ON ACCOUNT OF REPAIR AND 3 ITA NO.1141/DEL/2018 ADDL. CIT VS. M/S GILLETTEE DIVERSIFIED OPERATIONS PVT. LTD. MAINTENANCE EXPENSES OF RS.23,83,146/- ON MACHINERY AND MOULDS. 2.1 THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. FIRST APPELLATE AUTHORITY, WHICH WAS ALLOWED AND NOW THE DEP ARTMENT IS IN APPEAL BEFORE THIS TRIBUNAL CHALLENGING THE DELE TION. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED IN THIS REGARD: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) ERRED IN LAW IN DELETING THE DISALLOWANCE IN RESPECT OF DEPRECIATION ON PLANT AND MACHINERY AND TOOLS AND M OULDS OF RS.21,27,83,175/- MADE BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW IN DELETING THE DISALLOWANCE IN RESPECT OF INSURANCE EXPENSES INCURRED ON MACHINERY AND MOULDS OF RS.14,52,323/- AND IN RESPECT OF REPAIR AND MAINTEN ANCE EXPENSES ON PLANT AND MACHINERY EXPENSES AMOUNTING TO RS.23,83,146/- MADE BY THE ASSESSING OFFICER. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL A T ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 4 ITA NO.1141/DEL/2018 ADDL. CIT VS. M/S GILLETTEE DIVERSIFIED OPERATIONS PVT. LTD. 3.0 AT THE OUTSET, THE LD. AUTHORIZED REPRESENTATI VE (AR) SUBMITTED THAT THE APPEAL OF THE DEPARTMENT WAS COVE RED AGAINST THE DEPARTMENT BY THE ORDER OF THIS TRIBUNAL IN ASS ESSEES OWN CASE FOR ASSESSMENT YEARS 2008-09 TO 2010-11 IN ITA NOS. 5736/DEL/2016, 5675, 5676 & 5677/DEL/2015 VIDE ORDE R DATED 23.08.2018 WHICH WAS SUBSEQUENTLY ALSO FOLLOWED BY TH E TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 I N ITA NO.1287/DEL/2017 AND 1160/DEL/2017 VIDE ORDER DATED 12.11.2020. THE LD. AUTHORIZED REPRESENTATIVE PLACE D A COPY OF THE SAID ORDERS ON RECORD. 4.0 PER CONTRA, THE LD. SR. DEPARTMENTAL REPRESEN TATIVE (DR) PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BE LOW. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. WE AGREE WITH THE CO NTENTION OF THE LD. AR THAT BOTH THE GROUNDS RAISED BY THE DEPARTME NT ARE COVERED AGAINST THE DEPARTMENT BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE AS AFORESAID. THE RELEVANT OBSERVATION OF T HE CO-ORDINATE BENCH OF THE TRIBUNAL ARE CONTAINED IN PARAGRAPH-8 OF THE ORDER OF THE ITAT IN ASSESSMENT YEAR 2010-11 WHEREIN THE CO-O RDINATE 5 ITA NO.1141/DEL/2018 ADDL. CIT VS. M/S GILLETTEE DIVERSIFIED OPERATIONS PVT. LTD. BENCH HAS PLACED RELIANCE ON THE JUDGMENT OF THE HO NBLE APEX COURT IN THE CASE OF ICDS LTD. VS. CIT REPORTED IN [2013] 29 TAXMANN.COM 129(SC). THE RELEVANT OBSERVATIONS OF T HE BENCH ARE BEING REPRODUCED HEREIN UNDER FOR A READY REFERENCE : 8.0 COMING TO THE DEPARTMENTS APPEAL CHALL ENGING THE ACTION OF THE LD. CIT (A) IN DELETING THE DISALLOWA NCE OF DEPRECIATION, WE FIND THAT THE ISSUE IS SQUARELY CO VERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONB LE APEX COURT IN THE CASE OF ICDS LTD. VS. CIT REPORTED IN (2013) 29 TAXMANN.COM 129 (SC) WHEREIN THE HONBLE APEX COURT , WHILE EXAMINING PROVISION OF SECTION 32 OF THE ACT, HELD AS UNDER: 'SECTION REQUIRES THAT THE ASSESSEE MUST USE THE ASSET FOR THE 'PURPOSES OF BUSINESS'. IT DOES NOT MANDATE USAGE OF THE ASSET BY THE ASSESSEE ITSELF. AS LONG AS THE ASSET IS UTILIZED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE, THE REQUIREMENT OF SECTIO N 32 WILL STAND SATISFIED, NOTWITHSTANDING NON-USAGE OF THE ASSET ITSELF BY THE ASSESSEE. 8.1 THE HONBLE SUPREME COURT CONSIDERED TH E PHRASE 'USE FOR THE PURPOSE OF BUSINESS' IN THE CASE OF LIQUIDA TORS OF PURSA LTD. V. CIT (1954) 25 ITR 265 (SC). THE HONBLE APE X COURT POINTED OUT THAT THE CRITICAL WORDS WHICH ARE ESSEN TIALLY CONSTITUENT FOR THE PURPOSE OF CONSIDERING THE CLAI M OF THE 6 ITA NO.1141/DEL/2018 ADDL. CIT VS. M/S GILLETTEE DIVERSIFIED OPERATIONS PVT. LTD. ASSESSEE WAS MACHINERY OR PLANT 'USED FOR THE PURPO SES OF BUSINESS, PROFESSION OR VOCATION'. THE WORDS 'USED FOR THE PURPOSES OF BUSINESS' OBVIOUSLY MEANS USED FOR THE PURPOSE OF ENABLING THE OWNER TO CARRY ON THE BUSINESS AND EAR N PROFITS IN THE BUSINESS. 8.2 IN VIEW OF THE BINDING PRECEDENT OF THE HO NBLE APEX COURT, RESPECTFULLY FOLLOWING THE SAME, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) ON T HE ISSUE AND DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. 9. IN THE RESULT, THE APPEAL OF THE DEPART MENT STANDS DISMISSED. 5.1 THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT NEGATE THE BINDING PRECEDENT OF THE ORDER OF THE HONBLE APEX COURT AS AFORESAID AND, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE DE PARTMENT STANDS DISMISSED. ORDER PRONOUNCED ON 30 TH JUNE, 2021. SD/- SD/- (N.K. BILLAIYA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/06/2021 PK/PS 7 ITA NO.1141/DEL/2018 ADDL. CIT VS. M/S GILLETTEE DIVERSIFIED OPERATIONS PVT. LTD. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI