Assistant Commissioner of Income-tax, V. Arvind Dyeing & Bleaching Mills Pvt. Ltd., Kolhapur

ITA 1221/PUN/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2836 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 03-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.945/PN/2015 #& & / ASSESSMENT YEAR : 2011-12 ACIT, ICHALKARANJI CIRCLE, ICHALKARANJI . / APPELLANT V/S ARVIND COTSYN (INDIA) LTD., 30, ARVIND HOUSE, OLD INDUSTRIAL ESTATE, ICHALKARANJI, KOLHAPUR 416115 PAN NO. AABCA5540R . / RESPONDENT . / ITA NO.1221/PN/2015 #& & / ASSESSMENT YEAR : 2012-13 ACIT, ICHALKARANJI CIRCLE, ICHALKARANJI . / APPELLANT V/S ARVIND DYEING & BLEACHING MILLS PVT. LTD., ARVIND HOUSE, OLD INDUSTRIAL ESTATE, ICHALKARANJI, KOLHAPUR 416115 PAN NO. AABCA5543N . / RESPONDENT / ASSESSEE BY : NONE / REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING :03.02.2016 / DATE OF PRONOUNCEMENT:10.02.2016 2 ITA NOS.945 AND 1221/PN/2015 / ORDER PER VIKAS AWASTHY, JM : THESE TWO APPEALS ARE FILED BY THE REVENUE. IN ITA NO.945/PN/2015 THE REVENUE HAS ASSAILED THE ORDER OF C IT(A)-1 & 2, KOLHAPUR DATED 09-03-2015 FOR THE ASSESSMENT YEAR 2011-12 AND IN ITA NO.1221/PN/2015 THE REVENUE HAS CHALLENGED T HE ORDER OF CIT(A)-I & II, KOLHAPUR DATED 12-06-2015 FOR TH E ASSESSMENT YEAR 2012-13. IN BOTH THE APPEALS, THE COM MON GROUND RAISED BY THE REVENUE IS AGAINST GRANT OF HIGHER RATE OF DEPRECIATION @80% ON CIVIL WORK AND PORTION OF INSTALLATION AN D COMMISSIONING WORK INCLUDED IN THE BLOCK OF ASSETS OF WINDMILL. SINCE THE FACTS IN BOTH THE CASES ARE SIMILAR AND THE RE VENUE HAS RAISED IDENTICAL DISPUTE, THESE APPEALS ARE TAKEN UP TOGET HER FOR ADJUDICATION. 2. THE BRIEF FACTS IN THE APPEALS ARE; THE ASSESSEES HAV E INSTALLED WINDMILL AND HAVE CLAIMED DEPRECIATION ON THE WINDMILL IN RESPECT OF CIVIL WORK, ERECTION, COMMISSION AND ELECTRICAL INSTALLATIONS @80%. THE AO DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS IN THE CASE OF RESPECTIVE ASSES SEES HAVE RESTRICTED THE CLAIM OF DEPRECIATION ON CIVIL WORKS TO 10% A ND ON INSTALLATION AND COMMISSIONING WORK @15% BY PLACING RELIANCE ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALLA FINVEST AND AGRO PVT. LTD. REPORTED AS 118 TTJ 68. 3. AGGRIEVED BY THE ASSESSMENT ORDERS THE ASSESSEES PREFERRED APPEALS IN THEIR RESPECTIVE CASES BEFORE CIT(A). THE CIT(A) VIDE IMPUGNED ORDERS ALLOWED DEPRECIATION @80% ON CIVIL WORK AS WELL 3 ITA NOS.945 AND 1221/PN/2015 AS ON INSTALLATION AND COMMISSIONING WORK. THE CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEES PLACED RELIANCE ON THE DE CISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. EASTMAN IMPEX IN ITA NO.350/2013 DATED 18-12-2014 AND THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. AMINITY DEVELOPERS AND BUILDERS IN ITA NO.1505/PN/2011 FOR A.Y. 2008-09 DECIDED ON 12-12-2012. AGAINST THE FINDINGS OF CIT(A) IN BOTH THE CASES THE DEPARTMENT IS IN APPEAL. 4. THE ONLY EFFECTIVE GROUND OF APPEAL RAISED BY THE DEPARTMENT IN BOTH THE APPEALS READ AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS NOT JUSTIFIED IN ALLOWING DEPRECIATION AND NOT DEPRECIATION THE FACT THAT THE EARTH WORK AND FOUNDATION IS NOTH ING BUT CIVIL WORK ON WHICH DEPRECIATION IS ALLOWABLE @10%, WHEREAS INSTA LLATION AND COMMISSIONING WORK CONSTITUTES BLOCK OF PLANT AND MACHI NERY ON WHICH DEPRECIATION IS ALLOWABLE @15%. 5. A PERUSAL OF CASE FILES SHOW THAT THE NOTICES OF THE AP PEALS HAVE BEEN ISSUED TO THE RESPECTIVE ASSESSEES THROUGH RPAD ON 20-01-2016. HOWEVER, NONE HAS APPEARED ON BEHALF OF THE ASSESSEES. THEREFORE, THESE APPEALS ARE TAKEN UP FOR AD JUDICATION ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND THE SUBMIS SIONS MADE BY LD. DEPARTMENTAL REPRESENTATIVE. 6. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDING OF THE AO AND PRAYED T HAT THE ASSESSEES ARE ELIGIBLE TO CLAIM DEPRECIATION @10% ON CIVIL WOR K AND 15% ON THE PORTION OF INSTALLATION AND COMMISSIONING WOR K OF WINDMILL. THE CIT(A) HAS ERRED IN GRANTING HIGHER RATE OF DEPRECIATION @80% ON BOTH THE COMPONENTS OF THE WINDMILL. IN SUPPORT OF HIS SUBMISSIONS THE LD. DEPARTMENTAL REPRESENT ATIVE 4 ITA NOS.945 AND 1221/PN/2015 PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIB UNAL IN THE CASE OF POONAWALLA FINVEST AND AGRO PVT. LTD., (SUPRA). 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DEPARTMENTAL REPRESENTATIVE AND HAVE PERUSED THE ORDE RS OF THE AUTHORITIES BELOW. THE CIT(A) GRANTED DEPRECIATION @80% ON CIVIL WORK AS WELL AS PORTION OF INSTALLATION AND COMMISSIONING OF WINDMILL BY PLACING RELIANCE ON THE DECISION OF THE COORDINATION BENCH OF THE TRIBUNAL IN THE CASE OF AMINITY DEVELOPERS AN D BUILDERS (SUPRA) AND THE DECISION OF HONBLE PUNJAB & HARYA NA HIGH COURT IN THE CASE OF EASTMAN IMPEX (SUPRA). WE FIND T HAT IN THE CASE OF AMINITY DEVELOPERS AND BUILDERS (SUPRA), THE COORDINATE BENCH HAS CONSIDERED THE DECISION RENDERED IN THE CASE OF POONAWALLA FINVEST AND AGRO PVT. LTD., (SUPRA) AND H AS DISTINGUISHED THE SAME. THE TRIBUNAL AFTER DETAILED DISCUSS ION ON THE ISSUE FINALLY CONCLUDED THAT CIVIL WORK COMPRISING OF FOUNDATION OF THE WINDMILL IS AN INTEGRAL PART OF WINDMILL ERECT ION. THEREFORE, THE SAME IS ELIGIBLE FOR DEPRECIATION AT THE SAME RATE AS IS APPLICABLE IN THE CASE OF WINDMILL. SIMILARLY, THE COST OF COMMISSIONING AND ERECTING WINDMILL CANNOT BE SAID TO BE SEPARATE FROM THE WINDMILL AS IT IS DIRECTLY RELATED TO THE FUNCTIONING OF THE WINDMILL. THEREFORE, THE SAME RATE OF DEPRECIATION WILL APPLY ON THE COST OF COMMISSIONING OF THE WINDMILL. THE RELEVANT EXTRACT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF DCIT VS. AMINITY DEVELOPERS AND BUILDERS (SUPRA) IS REPRODUCED HEREIN BELOW : 4. IN THE PRESENT CASE, THE FUNCTIONAL TEST OF THE FO UNDATION HAS BEEN EXPLAINED BY THE LD CIT(A). THE LD CIT(A) HAS ALSO EX PLAINED, MORE PARTICULARLY, IN THE CASE OF M/S. CHAPHALKAR BROTHERS (SUPRA) HOW THE 5 ITA NOS.945 AND 1221/PN/2015 FOUNDATION IS THE INTEGRATED PART OF THE WIND MILL A S THE SAME IS TO BE ERECTED HAVING TECHNICAL EXPERTISE TO SUSTAIN THE LOAD OF THE TURBINE. IN THE CASE OF POONAWALA FINVEST & AGRO (P) LTD. (SUP RA), THE TRIBUNAL EMPHASIZED ON THE FUNCTIONAL TEST. SO FAR AS THE FOUNDATION IS CONCERNED, AS DISCUSSED BY THE LD CIT(A), THE FUNCTI ONAL TEST IS FULFILLED. THERE SHOULD NOT BE QUARREL THAT CIVIL W ORK IS INVOLVED IN THE ERECTION OF THE FOUNDATION, BUT EVERY CIVIL WOR K CANNOT BE TREATED AS CIVIL WORK AS REQUIRED FOR BRINGING CONSTRUCTION. I N OUR OPINION, COST ON THE FOUNDATION OF THE WIND MILL IS ELIGIBLE F OR THE DEPRECIATION AT THE RATE 180% OR THE RATE WHICH IS APPLICABLE TO THE WIND MILL AS IT IS INTEGRAL PART OF COST OF WIND MILL ERECTION. SAME WAY, THE COST FOR COMMISSION AND ERECTION CANNOT BE SAID TO BE SEPARATE FROM THE WIND MILL AS IT IS DIRECTLY RELATED TO THE FUNCTIONING OF WIND MILL. THE LD CIT(A) HAS RIGHTLY ALLOWED THE DEPRECIATION ON THE P RO RATA BASIS ON THE COST OF FOUNDATION TO THE EXTENT OF THE CIVIL WO RK. WE MAY REFER TO HERE THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF ACIT VS. PARRY ENGINEERING & ELECTRONICS, ITA NO. 3317/AHD /2011 DATED 2ND MARCH 2012, IN WHICH IT IS HELD THAT THE FOUNDAT ION IS A PART OF THE TURBINE AND IS ELIGIBLE FOR THE RATE OF DEPRECIA TION WHICH IS APPLICABLE TO THE WIND MILL. WE FIND NO REASON TO IN TERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, THE SAM E IS CONFIRMED. 8. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. EASTMAN IMPEX (SUPRA) AFTER CONSIDERING THE JUDGM ENTS RENDERED IN THE CASE OF CIT VS. K.K. ENTERPRISES REPORTED AS 108 DTR 109 BY HONBLE RAJASTHAN HIGH COURT AND THE HONB LE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PARRY ENGINEER ING AND ELECTRONICS PVT. LTD. REPORTED AS 49 TAXMANN.COM 252 HA S HELD THAT CIVIL WORK AND INSTALLATION AND COMMISSIONING WORK OF WINDMILL ARE ELIGIBLE FOR DEPRECIATION @80%. 9. SIMILAR VIEW HAS BEEN TAKEN BY VARIOUS COORDINATE BENC HES OF THE TRIBUNAL GRANTING HIGHER RATE OF DEPRECIATION ON THE CIVIL WORK AS WELL AS COST OF COMMISSIONING AND INSTALLATION OF WINDMILL. THUS IN VIEW OF THE FACTS OF THE CASE AND THE DECISI ONS OF HONBLE HIGH COURTS AND THE COORDINATE BENCH OF THE TRIB UNAL, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFIRMITY I N THE ORDERS PASSED BY THE CIT(A). THE IMPUGNED ORDERS PASSE D BY THE 6 ITA NOS.945 AND 1221/PN/2015 CIT(A) IN THE RESPECTIVE APPEALS ARE UPHELD AND THE APPE ALS OF THE REVENUE ARE DISMISSED BEING DEVOID OF ANY MERIT. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY THE,10 TH DAY OF FEBRUARY, 2016. SD/- SD/- ( R.K. PANDA ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE ; DATED : 10 TH FEBRUARY, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - I & II, KOLHAPUR 4. 5. 6. THE CIT-I & II, KOLHAPUR $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , $ ' //TRUE COPY// // TRUE COPY // // $ ' //TRUE C // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE