DCIT Corporate Circle 1(1), CHENNAI V. Agile Electric Sub Assembly Pvt Ltd., CHENNAI

ITA 1203/CHNY/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6034 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-04-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 09-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Assessee Lawyers: T BANUSEKAR
• Keywords: Depreciation; Earning of tax free income; Reasonable cause; Condonation of delay; Rule 8D; Set aside
• Section: 14A; 43; 13; 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, CHENNAI . , . , # BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.1203/CHNY/2018 & C.O.NO.122/CHNY/2018 ( / ASSESSMENT YEAR: 2013-14) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(1) CHENNAI-34. VS M/S. AGILE ELECTRIC SUB ASSEMBLY PVT.LTD. A-33, 34 & 36 PHASE I, MEPZ-SEZ TAMBARAM, CHENNAI-600 045. PAN: AABCI 3929C ( $ /APPELLANT) ( &'$ /RESPONDENT /CROSS OBJECTOR) $( / APPELLANT BY : MR. G.JOHNSON, ADDL.CIT &'$( /RESPONDENT BY : MR. T.BANUSEKAR, C.A ( /DATE OF HEARING : 08.04.2021 ( /DATE OF PRONOUNCEMENT : 21.04.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORD ER OF THE LEARNED CIT(A)-1, CHENNAI DATED 31.01.2018 AND PER TAINS TO ASSESSMENT YEAR 2013-14. SINCE, FACTS ARE IDENTICA L AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY T HE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PR OVISIONS OF SECTION 14A ARE NOT APPLICABLE, SINCE THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME DURING THE RELEVANT ASSESS MENT YEAR, WITHOUT APPRECIATING THE FACT THAT EXEMPT INC OME BEARING INVESTMENTS ARE HELD BY THE ASSESSEE, AND THEREFORE THE PROVISIONS OF SECTION 14A READ WITH RULE 8D WILL GE T TRIGGERED. 2.2 THE LEARNED CIT(A) ERRED IN FOLLOWING THE DECIS ION OF THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF M /S. REDINGTON (INDIA) LIMITED, WITHOUT APPRECIATING THE FACT THAT THE DECISION OF THE HONBLE HIGH COURT PERTAINS TO A.Y. 2007-08 , WHICH IS PRIOR TO INTRODUCTION OF RULE 8D, AND THE CASE IN H AND RELATES TO THE A.Y. 2013-14, THEREBY A DECISION OF THE HIGH CO URT IN THE PRE 8D ERA CANNOT BE APPLIED TO A CASE IN THE 8D ER A. 2.3 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH E CIRCULAR IN 5/2014 DATED, WHICH CLEARLY EXPLAINS THAT THE PR OVISIONS OF SECTION 14A READ WITH RULE 8D ARE APPLICABLE EVEN IN A SITUATION, WHEN THE ASSESSEE DOES NOT EARN ANY EXEM PT INCOME BUT EXEMPT INCOME BEARING INVESTMENTS ARE H ELD BY THE ASSESSEE, AND THE BOARDS CIRCULAR IS BINDING. 3.1 THE LEARNED CIT(A) ERRED IN DELETING DISALLOWA NCE OF DEPRECIATION CLAIMED OF RS.1.61 CRORES THOUGH IT W AS NOT ESTABLISHED THAT PLANT AND MACHINERY WAS PUT TO USE DURING THE RELEVANT PREVIOUS YEAR. 3.2 THE LEARNED CIT(A) WHILE AGREEING THAT THE ASSE SSEE COULD NOT HAVE PRODUCED SUCH VOLUMES THEREBY AGREEING WIT H THE AO THAT THE MACHINERY COULD NOT HAVE BEEN PUT TO US E ON THE LAST DAY OF THE RELEVANT YEAR, ERRED IN HOLDING THA T DEPRECIATION WAS ALLOWABLE ON PLANT AND MACHINERY IF IT WAS READ Y FOR USE RELYING ON THE JURISDICTION HONBLE HCS DECISION I N THE CASE OF 3 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 CHENNAI PETROLEUM CORPORATION V CIT (1971) ITR 790 ITR 613. 3.3 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E RELIED UPON DECISION IN THE CASE OF CHENNAI PETROLEUM CORP ORATION V CIT (1971) ITR 790 ITR 613 HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND THE SLP PREFERRED AGAINST THE SAID D ECISION IS PENDING ADJUDICATION BEFORE THE APEX COURT. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. 3. AT THE OUTSET, LEARNED AR FOR THE ASSESSEE SUB MITTED THAT THE CROSS OBJECTION FILED BY THE ASSESSEE IS TIME BARRED BY 66 DAYS FOR WHICH NECESSARY PETITION FOR CONDONA TION OF DELAY ALONG WITH AFFIDAVIT EXPLAINING THE REASONS FOR THE DELAY HAS BEEN FILED. THE AR FURTHER SUBMITTED THAT THE AS SESSEE COULD NOT FILE CROSS OBJECTION WITHIN THE TIME ALLOWED U NDER THE ACT, DUE TO THE FACT THE AUTHORIZED REPRESENTATIVE WAS OUT OF TOWN. THE DELAY IN FILING CROSS OBJECTION IS NEITHER INT ENTIONAL NOR WILLFUL BUT FOR THE UNAVOIDABLE REASONS, THEREFORE, DELAY MAY BE CONDONED IN THE INTEREST OF ADVANCEMENT OF SUBS TANTIAL JUSTICE. 4 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 4. THE LEARNED DR, ON THE OTHER HAND, STRONGLY OPPO SING CONDONATION OF DELAY PETITION FILED BY THE ASSESSE E SUBMITTED THAT THE REASONS GIVEN BY THE ASSESSEE DO NOT COME WITHIN THE AMBIT OF REASONABLE AND BONAFIDE REASONS, WHICH CA N BE CONSIDERED FOR CONDONATION OF DELAY AND HENCE, A PPEAL FILED BY THE ASSESSEE MAY BE DISMISSED AS NOT MAINTAIN ABLE. 5. HAVING HEARD BOTH SIDES AND CONSIDERED THE PETIT ION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY, WE ARE O F THE CONSIDERED VIEW THAT REASONS GIVEN BY THE ASSESSEE FOR NOT FILING THE CROSS OBJECTION WITHIN THE TIME ALLOW ED UNDER THE ACT COMES UNDER REASONABLE CAUSE AS PROVIDED UNDER THE ACT FOR CONDONATION OF DELAY AND HENCE, DELAY IN FILI NG OF CROSS OBJECTION IS CONDONED AND THE CROSS OBJECTION F ILED BY THE ASSESSEE IS ADMITTED FOR ADJUDICATION. 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF COMPONEN TS, SUBASSEMBLY FOR MOTORS AND TOOLS ETC. FILED ITS R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 29.11.2013 ADMI TTING TOTAL INCOME OF RS. 3,58,42,730/-. THE CASE WAS SELECTED FOR 5 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S. 1 43(3) OF THE ACT ON 30.03.2016 AND DETERMINED TOTAL INCOME A T RS.7,14,81,039/- BY MAKING ADDITIONS TOWARDS DISAL LOWANCE OF EXPENSES RELATABLE TO EXEMPT INCOME U/S.14A OF THE ACT AND DISALLOWANCE OF DEPRECIATION CLAIMED ON PLANT AND M ACHINERY ON THE GROUND THAT ASSETS WERE NOT PUT TO USE IN T HE BUSINESS OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FI RST APPELLATE AUTHORITY. THE LEARNED CIT(A) FOR THE DETAILED REA SONS STATED IN HIS APPELLATE ORDER DATED 31.01.2018 DELETED ADDIT IONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE U/S. 14A AND DISALLOWANCE OF DEPRECIATION U/S. 32 OF THE INCOME TAX ACT, 1961. AGGRIEVED BY THE LEARNED CIT(A) ORDER, THE RE VENUE IS IN APPEAL BEFORE US. 7. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.2 OF REVENUE APPEAL IS DISALLOWANCE OF EX PENSES RELATABLE TO SECTION 14A OF THE INCOME TAX ACT, 19 61. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER NOTICED THAT ASSESSEE HAS MADE HUGE INVESTMENTS IN SHARES 6 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 AND SECURITIES, BUT DID NOT MAKE SUO MOTO DISALL OWANCE OF ANY EXPENSES RELATABLE TO EXEMPT INCOME AND HENCE, INVOKED RULE 8D OF INCOME TAX RULES, 1962 AND COMPUTED DISALLOWANCE OF RS.1,95,18,258/- U/S.14A OF THE ACT . ON FIRST APPEAL, THE LEARNED CIT(A) BY FOLLOWING THE DECIS ION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF MADRAS IN THE CASE OF M/S. REDINGTON INDIA LTD. VS.ADDL.CIT (2016) 97 CCH 219 (MAD), DELETED ADDITIONS MADE TOWARDS DISALLOWANCE U/S.14A BY HOLDING THAT WHEN THERE IS NO EXEMPT INCOME EARNED FOR THE RELEVANT ASSESSMENT YEAR, THEN THERE CANNOT BE ANY DISALLOWANCE RELATABLE TO SUCH EXEMPT INCOME. 8. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 14 A ARE NOT APPLICABLE, WHEN THE ASSESSEE HAD NOT EARNED ANY EX EMPT INCOME DURING THE RELEVANT ASSESSMENT YEAR WITHOUT APPRECIATING FACT THAT PROVISIONS OF SECTION 14A W ILL COME INTO OPERATION, EVEN THOUGH THERE IS NO EXEMPT INCOME FO R THE YEAR UNDER CONSIDERATION. THE DR FURTHER SUBMITTED THA T THE LEARNED CIT(A) HAS ERRED IN FOLLOWING THE DECISION OF THE 7 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 HON'BLE JURISDICTIONAL HIGH COURT OF MADRAS IN THE CASE OF M/S. REDINGTON INDIA LTD. VS. ADDL.CIT (SUPRA) WITHOUT APPRECIATING FACT THAT SAID DECISION PERTAINS TO ASSESSMENT YEAR 2007-08, WHICH IS PRIOR TO INSERTION OF RULE 8D, WHEREAS THE CASE IN HAND RELATES TO ASSESSMENT YEAR 2013-14, WHERE IT IS MAN DATORY TO COMPUTE DISALLOWANCE U/S.14A AS PER RULE 8D OF INCO ME TAX RULES, 1962. THE DR FURTHER REFERRING TO CBDT CIRCU LAR NO.5/2014 SUBMITTED THAT CIRCULAR ISSUED BY THE BO ARD CLEARLY EXPLAINS THAT PROVISIONS OF SECTION 14A IS APPLIC ABLE EVEN IN A SITUATION, WHERE THE ASSESSEE DOES NOT EARN ANY EXE MPT INCOME. THEREFORE, HE SUBMITTED THAT THE LEARNED CI T(A) HAS COMPLETELY ERRED IN DELETING ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OF EXPENSES U/S.14A O F THE ACT. 9. THE LEARNED A.R FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. CHETTINAD LOGISTICS PVT.LTD.(2018) 95 TAXMANN.COM 250(SC), WHERE THE HON'BLE SUPREME COUR T HAS DISMISSED SLP FILED BY THE REVENUE AGAINST HIGH CO URT RULING 8 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 THAT SECTION 14A CANNOT BE INVOKED, WHERE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE IN RELEVANT ASSESSMENT Y EAR . 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATER IALS AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE ISSUE OF DISALLOWANCE OF EXPENSES RELA TABLE TO EXEMPT INCOME U/S.14A, IN A SITUATION WHERE THERE IS NO EXEMPT INCOME EARNED FOR THE RELEVANT ASSESSMENT Y EAR HAS BEEN SUBJECT MATTER OF DELIBERATIONS BY VARIOUS HIG H COURTS, INCLUDING THE HON'BLE JURISDICTIONAL HIGH COURT OF MADRAS IN THE CASE OF M/S. REDINGTON INDIA LTD. VS. ADDL.CIT (SU PRA), IN THE LIGHT OF THE PROVISIONS OF SECTION 14A OF THE ACT, WHERE IT WAS CLEARLY HELD THAT PROVISIONS OF SECTION 14A R.W.R 8 D CANNOT BE MADE APPLICABLE IN A VACUUM I.E., IN THE ABSENCE OF EXEMPT INCOME. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. CHETTINAD LOGISTICS PVT.LTD. (SUPRA) HAS UPHELD THE FINDINGS OF THE HONBLE MADRAS HIGH COURT THAT SECTION 14A CAN NOT BE INVOKED, WHERE NO EXEMPT INCOME WAS EARNED BY THE A SSESSEE IN THE RELEVANT ASSESSMENT YEAR . IN THIS CASE, THE LEARNED CIT(A) HAS RECORDED CATEGORICAL FINDING THAT THE AS SESSEE HAS 9 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 NOT EARNED ANY EXEMPT INCOME FOR THE RELEVANT ASSE SSMENT YEAR. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT FINDINGS RECORDED BY THE LEARNED CIT(A) IN LIGHT OF THE DECI SION OF HONBLE JURISDICTIONAL MADRAS HIGH COURT IN THE CA SE OF M/S. REDINGTON INDIA LTD. VS.ADDL.CIT (SUPRA) IS IN ACCO RDANCE WITH LAW AND DOES NOT CALL FOR ANY INTERFERENCE FROM OUR END AND HENCE, THE FINDINGS OF THE LEARNED CIT(A) IS UPHELD AND GROUND RAISED BY THE REVENUE IS REJECTED. 11. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.3 OF REVENUE APPEAL IS DELETION OF DISALL OWANCE OF DEPRECIATION MADE BY THE ASSESSING OFFICER ON THE ADDITION OF PLANT AND MACHINERY. THE FACTS RELATING TO THE IMPU GNED DISPUTE ARE THAT DURING THE YEAR THE ASSESSEE HAS MADE VAR IOUS ADDITIONS TO PLANT AND MACHINERY AND SUCH PLANT A ND MACHINERY WAS ACQUIRED AND INSTALLED BEFORE 30.03.2 013. THE ASSESSEE HAS CLAIMED DEPRECIATION AS PER THE PROVIS IONS OF SECTION 32 OF THE ACT AND FURTHER, WHEREVER ASSETS WERE PUT TO USE FOR LESS THAN 182 DAYS, THE ASSESSEE HAS CLAIME D HALF OF ACTUAL DEPRECIATION ALLOWABLE AS PER THE ACT. THE A SSESSING 10 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 OFFICER HAS DISALLOWED DEPRECIATION CLAIMED ON PL ANT AND MACHINERY ON THE GROUND THAT ALTHOUGH PLANT AND M ACHINERY WAS INSTALLED AND COMMISSIONED BEFORE 30.03.2013, BUT THE SAME HAS NOT BEEN PUT TO USE IN THE BUSINESS OF THE ASSESSEE. THEREFORE, CLAIM OF DEPRECIATION CANNOT BE ALLOWED UNLESS THE ASSETS ARE PUT TO USE IN THE BUSINESS OF THE ASSESS EE FOR THE RELEVANT ASSESSMENT YEAR . TO COME TO SAID CONCLUS ION, THE ASSESSING OFFICER HAS RELIED UPON PRODUCTION OF FI NISHED GOODS FURNISHED BY THE ASSESSEE AND ARGUED THAT IN ONE D AY SUCH A HUGE QUANTITY OF FINISHED GOODS CANNOT BE PRODUCED. HE HAS ALSO HELD THAT ASSETS WERE NOT IN FACT, PUT TO USE IN THE BUSINESS AND HENCE REJECTED THE DEPRECIATION CLAIM ON SAID PLANT AND MACHINERY. 12. THE LEARNED CIT(A), ON APPEAL DELETED ADDITION S MADE BY THE ASSESSING OFFICER BY FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHENNAI PE TROLEUM CORPORATION (2013) 358 ITR 314(MAD) AND ALSO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF WHITTL E ANDERSON LTD. VS. CIT (1971) 79 ITR 613(BOM) ON THE GROUND THAT 11 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 WHERE MACHINERY IS READY FOR USE THOUGH ACTUALLY NO T USED, DEPRECIATION IS ADMISSIBLE. 13. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A ) HAS ERRED IN DELETING DISALLOWANCE OF DEPRECIATION, THO UGH IT WAS NOT ESTABLISHED THAT PLANT AND MACHINERY WAS PUT TO US E DURING THE RELEVANT PREVIOUS YEAR . THE DR FURTHER SUBMITTED T HAT ALTHOUGH THE LEARNED CIT(A) WHILE AGREEING THAT THE ASSESSEE COULD NOT HAVE PRODUCED SUCH VOLUMES OF FINISHED GOODS IN ONE DAY THEREBY IN AGREEMENT WITH THE FINDINGS OF THE ASSES SING OFFICER THAT PLANT AND MACHINERY COULD NOT HAVE BEEN PUT T O USE ON THE LAST DAY OF THE RELEVANT ASSESSMENT YEAR, BUT ERRED IN HOLDING THAT DEPRECIATION WAS ALLOWABLE ON PLANT AND MACHIN ERY, EVEN THOUGH THE SAME IS READY FOR USE BY RELYING ON THE DECISION OF JURISDICTIONAL MADRAS HIGH COURT IN THE CASE OF CIT VS. CHENNAI PETROLEUM CORPORATION (SUPRA). 14. THE LEARNED A.R., ON THE OTHER HAND, SUPPORTIN G THE ORDER OF THE LEARNED CIT(A) SUBMITTED THAT ASSESSEE HAS P LACED ALL EVIDENCES TO PROVE THAT PLANT AND MACHINERY WAS PUT TO USE IN THE BUSINESS OF THE ASSESSEE AND BASED ON THE EVID ENCES 12 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 PLACED BY THE ASSESSEE, THE LEARNED CIT(A) HAS RIGH TLY HELD THAT THE ASSESSEE HAS PUT TO USE THE PLANT AND MACHINERY IN THE BUSINESS FOR THE RELEVANT ASSESSMENT YEAR TO DELETE THE ADDITIONS MADE TOWARDS DISALLOWANCE OF DEPRECIATION . THE A.R FURTHER REFERRING TO THE PAPER BOOK FILED BY THE AS SESSEE SUBMITTED THAT THE ASSESSEE HAS PLACED ON RECORD PL ANT AND MACHINERY INSTALLATION REPORT, AS PER WHICH PLANT A ND MACHINERY WAS INSTALLED ON 30.03.2013 AND THE SAME WAS PUT T O USE FOR PRODUCTION OF FINISHED GOODS . THE ASSESSEE HAS ALS O PLACED ON RECORD FINISHED GOODS PRODUCED FROM PLANT AND MACHI NERY INSTALLED AND COMMENCED. THEREFORE, IT IS INCORRECT ON THE PART OF THE ASSESSING OFFICER TO COME TO THE CONCLUSIO N THAT ALTHOUGH PLANT AND MACHINERY WAS INSTALLED, BUT THE SAME WAS NOT PUT TO USE IN THE BUSINESS OF THE ASSESSEE, WIT HOUT BRINGING ON ANY EVIDENCE TO PROVE THAT SAID PLANT AND MACHI NERY WAS NOT PUT TO USE IN THE BUSINESS OF THE ASSESSEE. HE FURTHER SUBMITTED THAT FINDINGS OF THE ASSESSING OFFICER W AS PURELY ON SUSPICIOUS AND CONJECTURES AND WITHOUT THERE BEING ANY EVIDENCE TO PROVE THAT PLANT AND MACHINERY WAS NOT INSTALLED IN BUSINESS OF THE ASSESSEE. 13 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 15. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIA LS AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, THE ASSESSEE HAS FILED A TABUL AR CHART EXPLAINING DATE OF PURCHASE OF MACHINERY AND COMPLE TION OF COMMISSIONING OF SUCH MACHINERY, AS PER WHICH ALL T HE PLANT AND MACHINERY WAS COMMISSIONED BEFORE 30.03.2013. THE ASSESSEE HAD ALSO PLACED ON RECORD COMMISSIONING RE PORT FOR INSTALLATION AND COMMISSIONING OF PLANT AND MACHINE RY . IT IS ALSO AN ADMITTED FACT THAT BEFORE ASSESSING OFFICE R, THE ASSESSEE HAS PLACED ON RECORD DETAILS OF FINISHED GOODS PRODUCED FROM THE NEW PLANT AND MACHINERY INSTALLE D AND PUT TO USE FOR THE RELEVANT ASSESSMENT YEAR. THE LEARNE D CIT(A), AFTER CONSIDERING THE RELEVANT SUBMISSIONS OF THE A SSESSEE HAS RECORDED CATEGORICAL FINDING THAT ASSESSEE HAS COM PLETED INSTALLATION AND COMMISSIONING OF PLANT AND MACHINE RY ON OR BEFORE 30.03.2013. HOWEVER, CONCURRED WITH THE FIND INGS OF THE ASSESSING OFFICER THAT IN ONE DAY SO MANY UNITS O F FINISHED GOODS CANNOT BE PRODUCED. WE FIND THAT REASONS GIVE N BY THE ASSESSING OFFICER TO DISALLOW DEPRECIATION ON PLAN T AND MACHINERY IS NOT ON SOUND FOOTING, BECAUSE IT IS A WELL SETTLED 14 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 PRINCIPLES OF LAW BY THE DECISION OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF WHITTLE ANDERSON LTD. VS. CIT (SUPRA) THAT WHEN MACHINERY KEPT READY FOR USE AT ANY MOMENT F ROM WHICH TAXABLE PROFITS ARE EARNED, MACHINERY CAN BE SAID T O BE USED FOR BUSINESS PURPOSE OF SECTION 10(2)(VII), THE SECOND PROVISO AND DEPRECIATION ON SUCH PLANT AND MACHINERY CAN BE ALL OWED. THE JURISDICTIONAL HIGH COURT OF MADRAS IN THE CASE OF CIT VS. CHENNAI PETROLEUM LTD.(SUPRA) HAS CONSIDERED AN I DENTICAL ISSUE AND HELD THAT WHERE ASSESSEES BUSINESS WAS A GOING CONCERN AND MACHINERY COULD NOT BE PUT TO USE DUE T O RAW MATERIAL PAUCITY BEYOND ASSESSEES CONTROL, DEPREC IATION CLAIMED U/S.32 OF THE ACT COULD NOT BE DENIED. THE SUM AND SUBSTANCE OF RATIO LAID DOWN BY THE ABOVE TWO DECIS IONS OF HONBLE HIGH COURTS ARE THAT EVEN IF PLANT AND MACH INERY IS NOT PUT TO USE FOR THE RELEVANT ASSESSMENT YEAR, BUT WA S INSTALLED AND READY FOR USE, THEN DEPRECIATION CLAIM CAN BE ALLOWED ON SUCH PLANT AND MACHINERY . 16. IN THIS CASE, ON PERUSAL OF VARIOUS DETAILS FI LED BY THE ASSESSEE INCLUDING COMMISSIONING REPORT OF PLANT A ND 15 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 MACHINERY, WE FIND THAT ALL PLANT AND MACHINERY WER E ACQUIRED AND INSTALLED BEFORE THE END OF THE FINANCIAL YEAR. IN FACT, THE ASSESSEE HAS PLACED ON RECORD PRODUCTION DETAILS OF FINISHED GOODS FROM NEWLY INSTALLED PLANT AND MACHINERY. T HEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING O FFICER HAS ERRED IN DISALLOWING DEPRECIATION ON PLANT AND MACH INERY ON ASSUMPTION AND SURMISES THAT IN ONE DAY SO MUCH UNI TS OF FINISHED GOODS CANNOT BE PRODUCED WITHOUT UNDERSTAN DING FACT THAT IN ONE DAY SO MANY LAKHS OF UNITS CAN BE PRODU CED DEPENDING UPON INSTALLED CAPACITY OF THE PLANT AND MACHINERY. IN THIS CASE, THE OBSERVATIONS OF THE ASSESSING OF FICER THAT SO MUCH UNITS CANNOT BE PRODUCED IN ONE DAY WAS NOTHIN G BUT ASSUMPTION OR SURMISES, BUT NOT BASED ON ANY FACTS AND FIGURES. THEREFORE, WE ARE OF THE CONSIDERED VIEW T HAT ON THIS GROUND DEPRECIATION CLAIMED ON PLANT AND MACHINERY WHICH WERE INSTALLED AND PUT TO USE IN THE BUSINESS OF T HE ASSESSEE CANNOT BE DENIED. BE THAT AS IT MAY, EVEN ASSUMING FOR A MOMENT, THE ASSET WAS NOT PUT TO USE IN THE BUSINE SS OF THE ASSESSEE, BUT WHEN THE PLANT AND MACHINERY IS INST ALLED AND READY FOR USE IN THE BUSINESS FOR THE RELEVANT ASS ESSMENT YEAR, 16 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 THEN CLAIM OF DEPRECIATION CAN BE ALLOWED. THEREFOR E, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN THE F INDINGS RECORDED BY THE LEARNED CIT(A) TO DELETE DISALLOWAN CE OF DEPRECIATION ON PLANT AND MACHINERY. HENCE, WE AR E INCLINED TO UPHOLD FINDINGS OF THE LEARNED CIT(A) AND REJECT THE GROUND TAKEN BY THE REVENUE. 16. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMI SSED. 17. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE ORDER OF THE LEARNED CIT(A) AND RAISED VARIOUS GROUNDS. S INCE THE APPEAL FILED BY THE REVENUE ON BOTH ISSUES WERE DI SMISSED, THE CROSS OBJECTION RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS AND HENCE, THE SAME IS DISMISSED AS NO T MAINTAINABLE. 18. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) (G.MANJUNATHA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 17 ITA NO.1203/CHNY/2018 & C.O. NO.122/CHNY/2018 /CHENNAI, 0 /DATED 21 ST APRIL, 2021 DS ( &23 43 /COPY TO: APPELLANT 2. RESPONDENT 3. 5 () /CIT(A) 4. 5 /CIT 5. 3 & /DR 6. /GF .