M/s. Banaskantha Dist. Co.Operative Milk Producer's Union Ltd., Banaskantha V. The Pr.CIT- 4, Ahmedabad

ITA 1193/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94672 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 06-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA NO: 1193/AHD/2015 (ASSESSMENT YEAR: 2010-11) M/S. BANASKANTHA DIST. CO. OPEATIVE MILK PRODUCERS UNION LTD. BANAS DAIRY, PALANPUR, BANASKANTHA V/S PR. COMMISSIONER OF INCOME TAX-4, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAAAB0575E APPELLANT BY : SHRI SUNIL H. TALATI, AR RESPONDENT BY : SHRI JAGDISH, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 08-10-2015 DATE OF PRONOUNCEMENT : 28 -10-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF LD. CIT DATED 18.03.2015 FOR A.Y. 2005-06 U/S.263 OF THE INCOME-T AX ACT, 1961. ITA NO 1193 /AHD/2015 . A.Y. 2010-11 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A CO-OPERATIVE SOCIETY STATED TO BE ENG AGED IN THE BUSINESS OF PROCURING AND PROCESSING MILK, MANUFACTURING OF MIL K AND MILK PRODUCTS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2010-1 1 ON 15.10.2010 DECLARING TOTAL INCOME OF RS. 1,65,37,470/- AND AGR ICULTURAL INCOME OF RS. 3,41,661/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 25 .02.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS. 9,26,54,900/- AND AGRI CULTURAL INCOME OF RS. 3,41,661/-. SUBSEQUENTLY ON EXAMINATION OF THE RECO RDS OF ASSESSMENT, LD. CIT NOTICED THAT INTEREST EARNED FROM FIXED DEPOSIT S WAS CLAIMED BY ASSESSEE AS DEDUCTION U/S. 80P(2) AND IT HAD ALSO C LAIMED ADDITIONAL DEPRECIATION OF RS. 2,89,000/- ON EFFLUENT TREATMEN T PLANT (ETP) WHICH ACCORDING TO HIM WAS NOT ALLOWABLE U/S. 32(A) (IIA) BECAUSE ETP WAS USED FOR PURIFICATION WHICH WAS NEITHER MANUFACTURING OR PRODUCING ANY ARTICLE OR THING. HE ACCORDINGLY ISSUED NOTICE U/S. 263 AND AF TER CONSIDERING THE REPLY OF ASSESSEE BY ORDER DATED 18.03.2015 DROPPED THE P ROCEEDINGS WITH RESPECT TO CLAIM OF DEDUCTION U/S. 80P(2) BUT HOWEVER WITH RESPECT TO ACT OF ALLOWING ADDITIONAL DEPRECIATION OF RS. 2,89,000/-, HE HELD THAT THE ORDER OF THE A.O TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY DIRECTED THE A.O TO DISALLOW THE CLAIM OF ADDITIONA L DEPRECIATION. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT, ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED PR. C.I.T. HAS ERRED IN PASSING ORDER U /S. 263 WITHOUT JURISDICTION AND APPROPRIATE POWERS AVAILABLE UNDER THE ACT. IT IS S UBMITTED THAT THE ORDER PASSED U/S. 263 IS BAD IN LAW, VOID AB INITIO AND THE SAME BE D ELETED. ITA NO 1193 /AHD/2015 . A.Y. 2010-11 3 2. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THA T THE ORDER PASSED U/S. 263 OF THE IT. ACT IS NOT CORRECT ON FACTS AND IN LAW INASMUCH AS THE ORIGINAL ORDER PASSED U/S. 143(3) WAS NEITHER PREJUDICED TO THE INTEREST OF RE VENUE NOR IT WAS ERRONEOUS. IT IS SUBMITTED THAT THE FINDING GIVEN BY THE LEARNED C.I .T. IS NOT CORRECT ON THE FACTS AND FAR FROM TRUTH. IT BE SO HELD NOW. 3. THE LEARNED PR. C.I.T. HAS ERRED IN HOLDING THAT YO UR APPELLANT IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION ON EFFLUENT TREATMENT PLANT AMOUNTING TO RS. 2,89,000/- AS PER PROVISO (D) TO SECTION 32(1)(IIA). YOU APPELLANT HAS RIGHTLY CLAIMED THE LEGITIMATE CL AIM OF ADDITIONAL DEPRECIATION ON EFFLUENT TREATMENT PLANT.LT BE SO HELD NOW. 4. AT THE OUTSET, LD. A.R. SUBMITTED THAT THOUGH ASSES SEE HAS RAISED VARIOUS GROUNDS BUT THE ONLY ISSUE IS WITH RESPECT TO THE O RDER PASSED U/S. 263. 5. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT FURTHER SUBMITTED THAT IN THE PRESENT CASE, THE PRE-REQUISI TE CONDITIONS SPECIFIED U/S. 263 ARE NOT SATISFIED AND THAT THE ORDER OF A.O SHO ULD BE ERRONEOUS AND FURTHER IT SHOULD BE PREJUDICIAL TO THE INTEREST OF REVENUE AND EVEN IF ONE OF THEM IS ABSENT, PROCEEDINGS U/S. 263 CANNOT BE INIT IATED. HE FURTHER SUBMITTED THAT THE ERROR ENVISAGED IN SECTION 263 I S NOT ONE WHICH DEPENDS ON POSSIBILITY OR GUESS WORK BUT IT SHOULD BE ACTUA LLY AN ERROR EITHER ON FACT OR ON LAW. ON MERITS OF ALLOWING ADDITIONAL DEPRECI ATION, LD. A.R. SUBMITTED THAT ASSESSEE HAS NOT CLAIMED DEPRECIATION IN EXCES S OF THE COST OF MACHINERY INSTALLED. HE SUBMITTED THAT THE ETP PLAN T WHICH HAS BEEN INSTALLED AT DHANERA UNIT IS USED FOR THE PURPOSE O F PRODUCTION OF MILK AND OTHER MILK PRODUCTS AND THAT SINCE IT WAS INSTALLED AFTER 30.09.2009, ASSESSEE HAD ONLY CLAIMED 50% OF THE NORMAL DEPRECIATION AND 10% OF ADDITIONAL DEPRECIATION AND THUS IN AGGREGATE ASSESSEE HAS ONL Y CLAIMED 60% OF ITA NO 1193 /AHD/2015 . A.Y. 2010-11 4 DEPRECIATION IN THE YEAR UNDER CONSIDERATION AND IN SUBSEQUENT YEARS, ASSESSEE HAS CLAIMED ONLY BALANCE 30% OF THE DEPREC IATION. HE POINTED TO PAGE 18 OF THE PAPER BOOK WHICH SHOWN THE CALCULATI ON OF DEPRECIATION WHICH WAS CLAIMED BY THE ASSESSEE. HE FURTHER SUBM ITTED THAT ON THE ETP PLANT WHICH HAVE BEEN INSTALLED AT OTHER PLACE, NO ADDITIONAL DEPRECIATION WAS CLAIMED BY THE ASSESSEE. FURTHER, IN SUPPORT OF HIS CONTENTION THAT THE ACTIVITY OF THE ASSESSEE IS MANUFACTURING AND IS TH EREFORE ELIGIBLE FOR ADDITIONAL DEPRECIATION, HE SUBMITTED THAT THE TRIB UNAL HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY THE TRIBUNAL ORDER PASSED IN ITA NO. 2630/A/2011 & 182/A/13 FOR A.Y. 2008-09 WHEREIN IT HAS HELD THAT THE ACTIVITY OF ASSESSEE WAS A MANUFACTURING ACTIVITY. HE ALSO PLACED ON REC ORD THE COPY OF THE AFORESAID ORDER. HE THEREFORE SUBMITTED THAT THE OR DER OF CIT NEEDS TO BE QUASHED BOTH ON MERITS AND LEGALLY. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LD. CIT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, WE FIND THAT LD. CIT HAS INVOKED REVISIONARY POWERS U/S. 263 OF THE ACT AS HE WAS OF THE VIEW THAT ASSESSEE WAS NOT ELIGIBLE TO CLAIM ADDITIONAL DEPRECIATION ON EFFLUENT TREATMENT PLANT AND SINCE THE A.O HAD ALLOWED THE DEDUCTION, THE ORDER OF THE A.O WAS ERR ONEOUS AND PRE-JUDICIAL TO THE INTEREST OF REVENUE. ON THE BASIS OF THE SUB MISSION MADE BY A.R. AND THE DEPRECIATION SCHEDULE PLACED ON RECORD WHICH IS PLACED AT PAGE 18, IT IS SEEN THAT ASSESSEE HAS CLAIMED DEPRECIATION ON ETP PLANT AT DHANERA UNIT @ ONLY 60% SINCE THE SAME WAS INSTALLED AFTER 30.09 .2009 AND THUS FOR THE YEAR UNDER CONSIDERATION IT IS NOT THE CASE WHERE A SSESSEE HAS CLAIMED 100% DEPRECIATION. AS FAR AS THE ELIGIBILITY OF THE ASSE SSEE TO CLAIM ADDITIONAL DEPRECIATION ON ETP PLANT IS CONCERNED, WE FIND THA T THE CO-ORDINATE BENCH ITA NO 1193 /AHD/2015 . A.Y. 2010-11 5 OF TRIBUNAL AS FAR AS THE ACTIVITY OF THE ASSESSEE IS CONCERNED HAS, VIDE ITS ORDER DATED 30.08.2013 IN ITA NO. 2630/A/2013 (SUPR A) HAS HELD THE ACTIVITY OF ASSESSEE TO BE MANUFACTURING ACTIVITY. BEFORE US , REVENUE HAS NOT PLACED ANY CONTRARY MATERIAL ON RECORD TO DEMONSTRATE THAT THE AFORESAID ORDER OF TRIBUNAL HAS BEEN OVER TURNED BY HIGHER AUTHORITIES . BEFORE US, IT IS ASSESSEES FURTHER CONTENTION THAT IN SUBSEQUENT YE ARS THOUGH IT HAS CLAIMED DEPRECIATION ON ETP PLANT AT DHANERA UNIT BUT THE T OTAL DEPRECIATION CLAIMED IS NOT IN EXCESS OF THE COST OF MACHINERY. HOWEVER, THERE IS NO FINDING TO THIS EFFECT ON RECORD. WE THEREFORE CONSIDERING THE ISSU E IN TOTALITY ARE OF THE VIEW THAT THE ORDER PASSED BY LD. CIT U/S. 263 CANN OT BE UPHELD AND WE THEREFORE QUASH THE SAME. HOWEVER, ON THE ISSUE THA T THE ASSESSEE HAS NOT CLAIMED DEPRECIATION IN EXCESS OF THE COST OF MACHI NERY AND IN THE ABSENCE OF ANY FINDING BY THE A.O, REMIT THE ISSUE TO THE F ILE OF A.O FOR THE LIMITED PURPOSE OF EXAMINING THE CLAIM OF LD. A.R. AND ENSU RING THAT THE TOTAL DEPRECIATION CLAIMED BY THE ASSESSEE ON ETP PLANT I N AGGREGATE DOES NOT EXCEED ITS COST. WE THUS ALLOW THE GROUND OF ASSESS EE. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28 - 10 - 2015. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)