DCIT, Coimbatore V. CRI Pumps P Ltd., Coimbatore

ITA 1291/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8823 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 32; 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 12 91 /MDS/201 6 / ASSESSMENT YEAR :20 0 5 - 0 6 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2 , 63 - A, RACE COURSE ROAD, COIMBATORE . VS. M/S. CRI PUMPS P. LTD., 122 - B, ATHIPALAYAM RO AD, CHINNAVEDAMPATTI, COIMBATORE 641 006. [PAN:A A AC C 9497N ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SUPRIYO PAL, J CIT / RESPONDENT BY : DR. ANITA SUMANTH, ADVOCATE / DATE OF HEARING : 03 . 0 8 .201 6 / DATE OF P RONOUNCEMENT : 10 . 0 8 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1 , C OIMBATORE DATED 2 9 .0 2 .2016 RELEVANT TO THE ASSESSMENT YEAR 20 0 5 - 0 6 PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . 2. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL INCOME OF .4,69,89,270/ - . THE CASE OF I.T.A. NO . 1 2 91 /M/ 16 2 THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 28.12.2007. THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT AND THE REASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ON 19.03.2013 BY DISALLOWING THE CLAIM OF ADDITIONAL DEPRECIATION ON OLD PLANT AND MACHINERY AMOUNTING TO .51,58,020/ - . 3. AGAINST THE QUANTUM ADDITION, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT( A) AND THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF ADDITIONAL DEPRECIATION. WHILE PREFERRING APPEAL BEFORE THE TRIBUNAL AGAINST CONFIRMATION OF SIMILAR DISALLOWANCE OF ADDITIONAL DEPRECIATION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09 , BY UPHOLDING T HE ORDERS OF AUTHORITIES BELOW, THE TRIBUNAL VIDE ITS ORDER IN I.T.A. NO. 1825/MDS/2010 DATED 04.04.2013 HAS HELD THAT ONCE THE MACHINERY IS PUT TO USE, IT CEASES TO BE NEW MACHINERY AND HENCE, THE ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(IIA) OF THE AC T IS NOT ELIGIBLE TO THE ASSESSEE. SINCE THE CLAIM OF ADDITIONAL DEPRECIATION FOR THE ASSESSMENT YEAR 2008 - 09 ATTAINED FINALITY , ON SIMILAR LINE , THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 2005 - 06 AGAINST THE ASSESSEE U NDER SECTION 271(1)(C) OF THE ACT AND LEVIED PENALTY OF .18,87,835/ - ON THE GROUND THAT BY CLAIMING THE INELIGIBLE ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT , THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. I.T.A. NO . 1 2 91 /M/ 16 3 4. ON APPEAL, BY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 IN I.T.A. NO.2711 & 2712/MDS/2014 VIDE ORDER DATED 05.03.2015 PASSED AGAINST THE PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT, THE LD. CIT(A) DELETED THE PENALTY LEVIED FOR THE ASSESSMENT YEAR 2005 - 06. 5. ON BEIN G AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND CONTENDED THAT AGAINST THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2008 - 09 & 2009 - 10, THE DEPARTMENT HAS FILED APPEALS BEFORE THE HON BLE HIGH COURT AND PRAYED THAT THE ORDER OF THE LD. C IT(A) MAY BE REVERSED. 6. O N THE OTHER HAND, BY SUPPORT ING THE ORDER PASSED BY THE LD. CIT(A ), THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ONCE THE DEPARTMENT IS AGREEING THE ORDER OF THE TRIBUNAL PASSED AGAINST QUANTUM ADDITION, IT SHOULD ALSO AGREE TO FOLLOW THE ORDER PASSED BY THE TRIBUNAL IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT SINCE THE ISSUE AND FACTS ARE IDENTICAL IN THE ASSESSMENT YEAR 2005 - 06 UNDER APPEAL AND FOR THE ASSESSMENT YEAR 2008 - 09 AS WELL. 7 . WE HAV E HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS BY CLAIMING ADDITIONAL I.T.A. NO . 1 2 91 /M/ 16 4 DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT. AGAINST SIMILAR CLAIM OF ADDITIONAL DEPRECIATION IN THE ASSESSMENT YEAR 2008 - 09, VIDE ORDER DATED 04.04.2013 IN I.T.A. NO. 1825/MDS/2010, THE COORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM ADDITIONAL DEPRECIATION ONCE THE MACHINERY IS PUT TO USE, IT CEASES TO BE NEW MACHINERY. THEREFORE, THE ASSESSING OFFICER LEVIED PENALTY OF . 18,87,835/ - UNDER SECTION 271(1)(C) OF THE ACT. BY FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2008 - 09 & 2009 - 10 IN I.T.A. NOS. 2711 & 2712/MDS/2014 DATED 05.03.2015, THE LD. CIT(A) DELETED THE PENALTY LEVIED FOR THE ASSESSMENT YEAR 2005 - 06, WHEREIN THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION OF .1,98,26,411/ - ON THE ASSETS ACQUIRED DURING THE PERIOD FROM 2002 - 03 TO 2005 - 06. THE ASSESSING OFFICER HAS DENIED THE ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE BY OBSERVING THAT THE ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION IN SUBSEQUENT YEARS. THE PLANT AND MACHINERY LOST ITS CHARACTER OF NEW PLANT AND MACHINERY. THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION ONLY TO THE NEW PLANT AND MACHINERY ACQUIRED AND INSTALLED DURING A GIVEN YEAR AND CANNOT BE EXTENDED TO SUBSEQUENT YEARS. TH EREFORE, THE CLAIM MADE BY THE ASSESSEE IN SUBSEQUENT YEAR WILL NOT QUALIFY FOR ADDITIONAL DEPRECIATION AND THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSESSEE. AFTER CAREFUL CONSIDERATION OF THE PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT, THE ASSE SSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION FOR THE PLANT AND MACHINERY INSTALLED IN THE YEAR UNDER CONSIDERATION. THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE WAS NOT ABLE TO INSTALL THE PLANT AND MACHINERY AS PER STATUTE AND WHEN IT IS NOT ABLE TO CLAI M THE ENTIRE ADDITIONAL DEPRECIATION, THE LEFT OVER PORTION CAN BE CLAIMED IN SUBSEQUENT YEAR BEING THE PROVISIONS OF SECTION 32 OF THE ACT IS A BENEFICIAL PROVISION. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, BY CONSIDERING THE PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT, WE ARE OF THE OPINION THAT THE ASSESSEE HAS MADE A BONAFIDE CLAIM BY DISCLOSING ALL MATERIAL DETAILS BEFORE THE ASSESSING OFFICER AND THEREFORE, THE CLAIM OF THE ASSESSEE IS NEITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE I.T.A. NO . 1 2 91 /M/ 16 5 PARTICULARS. THEREFORE, IT IS NOT A FIT CASE TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 9. THE HON BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 HAS HELD THAT WHERE THERE IS NO FINDING THAT ANY DET AILS SUPPLIED BY THE ASSESSEE IN THE RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUESTION OF INVITING PENALTY UNDER SECTION 271(1)(C) ACT. A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURN ISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS . RESPECTFULLY BY FOLLOWING THE ABOVE DECISION OF THE HON BLE SUPREME COURT, WE FIND THAT IT IS NOT A FIT CASE TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ACCORDINGLY, THE PENALTY LEVIED BY THE ASSESSING OFFICER STANDS DELETED. 8 . BY FOLLOWING THE ABOVE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2008 - 09 & 2009 - 1 0, THE LD. CIT(A) DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 2005 - 06. THUS, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT , THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 10 TH AUGUST , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 10 . 0 8 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.