DCIT, Pondicherry V. General Optics (Asia) Ltd., Pondicherry

ITA 1247/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8078 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KOTEESWARA RAO
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1247/MDS/2014 ( / ASSESSMENT YEAR: 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I, D.P.THORRAM, MUTHIALPET, PUDUCHERRY - 605 003. VS M/S.GENERAL OPTICS (ASIA) LTD. R.S.NO.84/1, NALLAVADU ROAD, THAVALAKUPPAM, PONDICHERRY. PAN:AAACG3012B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. KOTEESWARA RAO, CIT DR /RESPONDENT BY : MR. S.SRIDHAR, ADVOCATE /DATE OF HEARING : 26 TH NOVEMBER, 2015 /DATE OF PRONOUNCEMENT : 29 TH JANUARY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY T HE ORDER OF THE LD.CIT(A)-VI, CHENNAI DATED 27.02.201 4 IN ITA NO.703/13-14/A-VI PASSED UNDER SECTION 143(3) READ WITH SECTION 147 AND 250 OF THE ACT. 2. THE REVENUE HAS CHALLENGED THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) ON THE FOLLOWI NG TWO COUNTS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE CLAIM OF 2 ITA NO.1247/MDS/2014 DEPRECIATION @100% UNDER SECTION 35(1)(IV) OF THE ACT IN REGARD TO PURCHASE OF MACHINERY FOR R & D PURPOSES (SYRUS PRO R & D COOLING PLANT) IN THE ABSENCE OF APPROVAL FROM THE PRESCRIBED AUTHORITY. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE OF EXPENDITURE CLAIMED U/S. 35(1)(I) OF THE ACT IN TH E ABSENCE OF VALID CERTIFICATE FROM THE PRESCRIBED AUTHORITY. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF OPTICA L COMPONENTS, INSTRUMENTS ASSEMBLIES AND COMPONENTS F OR SENSORS FILED ITS RETURN OF INCOME FOR THE ASSESSME NT YEAR 2006-07 ON 28.11.2006 DECLARING LOSS OF ` 99,73,573/-. THEREAFTER ASSESSMENT WAS COMPLETED ON 19.11.2008 U NDER SECTION 143(3) OF THE ACT DETERMINING LOSS AT ` 70,74,462/-. SUBSEQUENTLY, THE ASSESSING OFFICER NOTICED THAT CE RTIFICATE OF THE PRESCRIBED AUTHORITY HAS NOT BEEN FILED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM, WHICH WARRANTS DISALLOWANCE O F 3 ITA NO.1247/MDS/2014 DEPRECIATION OF 100% AND ALSO R & D EXPENDITURE CL AIMED UNDER SECTION 35(1)(V) OF THE ACT. SINCE INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT TO THE TUNE OF ` 3,15,81,659/- FOR THE ABOVE STATED REASONS, NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE ON 28.03.2012. THEREAFTER, THE LEARNED ASSESSING OFFICER DISALLOWED DEPRECIATION O F RS. 2,80,86,659/- CLAIMED AT 100% TOWARDS SYRUS PRO R & D COOLING PLANT SINCE THE ASSESSEE COULD NOT PRODUCE CERTIFICATE FROM THE PRESCRIBED AUTHORITY I.E. DEPA RTMENT OF SCIENTIFIC RESEARCH, GOVT. OF INDIA. FURTHER AND FO R THE SAME REASON, THE LEARNED ASSESSING OFFICER DISALLOWED RS.34,95,000/- BEING THE DEDUCTION CLAIMED UNDER SE CTION 35(1)(I) OF THE ACT IN RESPECT OF RESEARCH & DEVELO PMENT EXPENSES. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) ALLOWED THE APPEAL OF THE ASSESSEE IN REG ARD TO THE CLAIM OF 100% DEPRECIATION ON R & D COOLING PLANT O F RS.2,80,86,657/- AND R & D EXPENSES OF RS.34,95,000 /-, BECAUSE BOTH THE CLAIMS OF THE ASSESSEE WERE ALLOWA BLE UNDER SECTION 35(1)(IV) & 35(1)(I) OF THE ACT RESP ECTIVELY, 4 ITA NO.1247/MDS/2014 WHEREIN SUCH APPROVAL FROM THE PRESCRIBED AUTHORITY WAS NOT WARRANTED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED O N THE ORDER OF THE ASSESSING OFFICER WHILE AS THE LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. ON EXAMINING THE PROVISIONS OF SECTION 35(1)(IV) AND 35(1)(I) OF THE ACT, WE DO NOT FIND ANY SUCH PROVISION WHICH MANDATES THE ASSE SSEE TO PRODUCE ANY CERTIFICATE FROM THE PRESCRIBED AUTHORI TY VIS--VIS THE DEPARTMENT OF SCIENTIFIC RESEARCH, GOVT. OF IND IA. SECTION 35(1)(I) OF THE ACT ONLY SPECIFIES SUCH CERTIFICATE TO BE PRODUCED IN THE CASE WHERE THE ASSESSEE HAS INCURRE D EXPENDITURE ON SCIENTIFIC RESEARCH WITHIN THREE YEA RS IMMEDIATELY PRECEDING THE COMMENCEMENT OF BUSINESS. IN THE CASE OF THE ASSESSEE, BUSINESS HAS ALREADY BEEN COMMENCED AND THEREFORE EXPLANATION TO SECTION 35(1 )(I) IS NOT APPLICABLE. SIMILARLY THERE IS NO PROVISION IN SECTION 5 ITA NO.1247/MDS/2014 35(1)(IV) OF THE ACT ALSO TO OBTAIN CERTIFICATE FRO M THE PRESCRIBED AUTHORITY. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO COULD NOT POINT OUT ANY PROVISI ONS OF THE ACT WHEREIN SUCH RESTRICTIONS ARE IMPOSED ON THE AS SESSEE. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) ON THESE ISSUES. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 29 TH JANUARY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .