The Jt. Commissioner of Income Tax, Circle-3(1)(2), Ahmedabad V. M/s. Rainbow Papers Ltd., Ahmedabad

ITA 133/AHD/2019

AI Insights

The case involves the Revenue's appeal against the order of the Commissioner of Income Tax (Appeals) which restored the assessee's claim of depreciation on a machine and the method of calculating the cost of steam for power generation used in the assessee's paper manufacturing unit. The Tribunal noted that similar issues had been adjudicated in favor of the assessee in earlier years, and the decisions of the CIT(A) for those years had been confirmed by the ITAT. The Revenue's appeal was primarily to keep the issues alive pending the decision of the Hon'ble High Court on similar matters.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133536 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-07-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 31-01-2019
• Other Referred Cases: ITA No.3408/A/15 & 3081/A/16
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 80IA

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MISS SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER ITA No.133/Ahd/2019 Assessment Year :2014-15 JCIT, Cir.3(1)(2) Ahmedabad. Vs. M/s.Rainbow Papers Ltd. 801, Avdhesh House Opp: Shri Govind Gurudwara S.G. Highway, Thaltej Ahmedabad 380 054. PAN : AAACR 5415 K. अपीलाथ / (Appellant) यथ /(Respondent) Assesseeby : None Revenue by : Shri Sudhendu Das, CIT-DR स ु नवाई क तार ख/Date of Hearing : 17/07/2023 घोषणा क तार ख /Date of Pronouncement: 02/08/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the Revenue against order passed by the ld.Commissioner of Income Tax(Appeals)-9, Ahmedabad [hereinafter referred to as “Ld.CIT(A)”] under section 250(6) of the Income Tax Act, 1961 ("the Act" for short) dated 30.11.2018 pertaining to the Asst.Year 2014-15. 2. Ground No.1 raised by the Revenue is as under: “1. The ld.CIT(A) has erred in law and on facts in directing to delete the depreciation Rs.7,65,647/- as allowed by the AO and not appreciating that the Masurex Quality Control Machine was installed and put to use in the FY 2009-10 and not FY 2008-09.” ITA No.133/Ahd/2019 2 3. Grievance of the Revenue in the above ground is with respect to the ld.CIT(A) restoring assesses claim of depreciation on machine, setting aside AO’s order holding eligible depreciation on the said asset as being Rs. 7,65,647/-. 4. The facts relating to the issue being that during assessment proceedings for Asst.Year 2009-10, the assessee had claimed depreciation on ‘Measurex Quality Control Machine’ at 50% of the prescribed rate of depreciation i.e. at the rate of 7.5%. The prescribed rate for depreciation for machines being 15% .The reason being that it had claimed to put the machine to use for a period of less than 180 days. The AO disalloweddepreciation finding that the machine had not been put to use at all. In subsequent years, however, on the basis of themachine being put to use subsequently, depreciation was allowed. Based on this shifting of allowance of depreciation, the WDV for the impugned year was accordingly revised resulting in revision in the amount of depreciation allowable to the assessee to Rs.7,65,647/-. The ld.CIT(A), we have noted, restored assesses claim of depreciationfinding that this issue had been adjudicated in earlier years in favour of the assessee i.e. Asst.Year 2012-13 and 2013-14 by the ld.CIT(A). 5. Before us, the ld.DR fairly admitted that the order passed by the ld.CIT(A) in the preceding year had been confirmed by the ITAT. Copy of the order in ITA No.3408/A/15 & 3081/A/16 dated 28-06- 19 was placed before us. He further stated that appeal preferred by the Revenue against the order of the ITAT is pending before the ITA No.133/Ahd/2019 3 Hon’ble High Court, and therefore, the ground as above was raised before us to keep the issue alive. In view of the admission of the ld.DR before us that the issue stands decided in favourof the assessee by the order of the ITAT in the preceding year i.e. Asst.Year 2012-13 and 2013-14, we see no reason to interfere in the order of the ld.CIT(A) restoring assesses claim of depreciation as opposed to that allowed by the AO to the tune of Rs.7,65,647/-. Ground no.1 raised by the Revenue is dismissed. 6. Ground No.2 reads as under: “2. The ld.CIT(A) has erred in law and on facts in that adopt cost of steam for power generation of Rs.42,37,82,713/- instead of Rs.69,09,67,624/-“ 7. This issue relates to the claim of deduction under section 80IA of the Act by the assessee on account of two power plants of 5MW and 10MW being run by it for the generation of power on account of sale to its paper manufacturing unit. The assessee had claimed deduction of profits earned from this power plant to the tune of Rs.11,58,34,170/-. The assessee claimed to be using 48% of the steam for power generation segment and 52% for consumption in the assesses own power plant.The AO computed the sale value of power to paper unit by treating the cost of steam used in paper unit to be 1/8 th of that used in power plant based on his reasoning that the steam used is infused for generation of electricity, only residual steam is used for drying in the paper manufacturing unit at a pressure 1/8 th that used in power generation. The AO noted that, as in the preceding year, in this also, pressure of steam got reduced ITA No.133/Ahd/2019 4 from 42 kg/ sq.cm. to 5Kg/sq.cm in the process of generation of electricity. He inferred from the same that if the assessee directly generates steam at 5 kg/sq.cm., it would be 1/8 th cost of production of steam at 42 kg per sq.cm, and therefore, the assessee is entitled to claim the cost of steam on this pressure only. The assessee stated to have claimed on the basis of actual cost involved.Adding mark up of 10% to the cost so determined by the AO, he calculated the income from sale of power to paper unit of the assessee to Rs.44,98,90,117/-and reducing therefrom the cost incurred as claimed by the assessee he assessed the profits of the power plants eligible to deduction on account of sale of power to paper unit of the assessee to be loss of 24,10,77,507/-.Thus denying assesses claim of deduction u/s 80IA(4) of Rs.11,58,34,170/- and making addition of the same to the income of the assessee. 8. The ld.CIT(A) however noted that this issue had arisen in earlier year also i.e. Asst.Year 2012-13 & 2013-14 and following the same he directed the eligible profits to be calculated in accordance with the direction and guidelines laid down in the said years. 9. Before us, the ld.DR fairly conceded that the finding of the ld.CIT(A) in Asst.Year 2012-13 ,which was followed by the ld.CIT(A) in the impugned year, have been confirmed by the ITAT in its order passed for Asst.Year 2012-13. He further stated that the Revenue is in appeal against this order of the ITATbefore the Hon’ble High Court. In view of the same, since admittedly the method followed by the ld.CIT(A) in the present year for determining the cost of generation of steam, is as that laid down by the ld.CIT(A) in the preceding Asst.Year i.e. 2012-13 which has found favour with the ITA No.133/Ahd/2019 5 ITAT also in its order passed against the department’s appeal for the said year, we see no reason to interfere in the order of the ld.CIT(A). Ground No.2 raised by the Revenue is rejected. 10. In the result, the appeal of the Revenue is dismissed. Order pronounced in the Court on 2 nd August, 2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 02/08/2023