M/s. Dia Aluminium India Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 1374/PUN/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9573 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 22-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Assessee Lawyers: KRISHNA V GUJARATHI
• Keywords: Depreciation; Rectification of order; Additional depreciation; Question of law
• Section: 143(3); 115JB; 154

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! ' , $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1374/PUN/2016 ' ' / ASSESSMENT YEAR : 2006-07 M/S. DIA ALUMINIUM INDIA PVT. LTD. PLOT NO.A-6/2, MIDC, RANJANGAON, TALUKA SHIRUR, PUNE 412 220. PAN : AACCD0091R. . / APPELLANT V/S THE DY.COMMISSIONER OF INCOME TAX, CIRCLE (1)2, PMT BUILDING, SWARGATE, PUNE 411 037. ` . / RESPONDENT / APPELLANT BY : SHRI KRISHNA V. GUJARATHI. / RESPONDENT BY : SHRI ANIL CHAWARE. ( / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 1, PUNE DT.03.03.2016 FOR THE ASSESSMENT YEAR 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- / DATE OF HEARING : 04.04.2017 / DATE OF PRONOUNCEMENT: 21.04.2017 2 2.1 ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF HEAT EXCHANGER COILS. ASSES SEE FILED ITS ORIGINAL RETURN OF INCOME DECLARING INCOME OF RS.29,30,078/-. SUBSEQUENTLY, ASSESSEE ON 29.11.2006 REV ISED ITS RETURN OF INCOME AND REVISED THE NET LOSS AT RS.1,08,73,096/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER ASSE SSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.14.11.2008 A ND THE TOTAL LOSS WAS DETERMINED AT RS.1,08,73,096/- AND THE TAXABLE INCOME U/S 115JB WAS COMPUTED AT RS.48,13,919/- . SUBSEQUENTLY, AO PASSED ORDER U/S 154 OF THE ACT VIDE ORDER DT.02.03.2011 WHEREIN HE REVISED THE TOTAL LOSS AT RS.21,60,747/- BY WITHDRAWING THE CLAIM OF ADDITIONAL DEPRECIATION OF RS.87,12,349/- AGGRIEVED BY THE ORDER OF A O, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.03.03.2016 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE HONORABLE CIT (APPEAL) ERRED IN CONFIRMING THE LEGALITY OF RECTIFICATION ORDER PASSED BY THE LEARN ED AO UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 WITHO UT APPRECIATING THE FACT THAT THERE WAS NO MISTAKE APP ARENT FROM RECORD WHICH NEEDS TO BE RECTIFIED AND THE ORD ER IS WITHOUT JURISDICTION AND LEGALLY UNTENABLE. THE APP ELLANT HEREBY PRAYS THAT THE ORDER U/S 154 MAY PLEASE BE VACATED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HONOURABLE CIT (APPEAL) ERRED IN CONFIRMIN G THE LEGALITY OF RECTIFICATION ORDER U/S 154 PASSED BY T HE LEARNED AO U/S 154 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE LEARNED AO DID NOT G IVE REASONABLE OPPORTUNITY TO THE APPELLANT COMPANY AND THE SAID ORDER WAS PASSED ABSOLUTELY IN DISREGARD OF TH E SUBMISSIONS MADE BY THE APPELLANT COMPANY. THE APPELLANT HEREBY PRAYS THAT THE ORDER U/S 154 MAY P LEASE BE VACATED. 3 3. WITHOUT PREJUDICE TO THE GROUND OF APPEAL 1 AND 2, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE HONORABLE CIT (APPEAL) ERRED IN LIMITING THE ALLOWAN CE OF ADDITIONAL DEPRECIATION AT 15% INSTEAD OF ADDITIONA L DEPRECIATION AT 20% OF THE ACTUAL COST OF MACHINERY AS PROVIDED U/S 32(1)(IIA) OF THE I.T. ACT, 1961. THE APPELLANT HEREBY PRAYS THAT THE ADDITIONAL DEPRECIATION AT 20 % OF THE ACTUAL COST OF MACHINERY MAY PLEASE BE ALLOWED. 3. BEFORE US, THE LD.A.R. SUBMITTED THAT HE WOULD FIRST LIKE TO ARGUE GROUND NO.3 WHICH IS WITH RESPECT TO THE CLAIM OF ADDITIONAL DEPRECIATION. 4. AO IN THE ORDER PASSED U/S 154 OF THE ACT NOTICED T HAT ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION ON PLANT AND MACHINERY OF RS.87,12,349/-. HE WAS OF THE VIEW THAT THE ADDITIONAL DEPRECIATION WAS NOT ALLOWABLE IN VIEW OF THE PROVISIONS OF SEC.32(1)(IIA) OF THE ACT. HE ACCORDINGLY HELD T HAT ALLOWING THE CLAIM OF DEPRECIATION WHILE FRAMING THE ASSESSMENT ORDER WAS A MISTAKE APPARENT FROM THE RECORD AND ACC ORDINGLY PASSED ORDER U/S 154 OF THE ACT BY DISALLOWING THE CLAIM O F ADDITIONAL DEPRECIATION. AGGRIEVED BY THE ORDER OF AO, ASS ESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO UPHELD THE ORDER OF AO BY HOLDING AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, IT IS SEE N THAT THE APPELLANT HAD CLAIMED ADDITIONAL DEPRECIATION IN RE SPECT OF OPENING WDV IN A.Y. 2006-07 WHICH WAS ALREADY NOT ADMISSIBLE. THE LANGUAGE OF SECTION 32(1)(IIA) IS QUITE CLEAR I.E., ANY NEW MACHINERY ACQUIRED AND INSTALLED AFTE R 31 ST MARCH IS ELIGIBLE FOR ADDITIONAL DEPRECIATION. THI S BEING SO, MACHINERY ACQUIRED BEFORE 31 ST MARCH, 2005, THOUGH INSTALLED AFTER 31 ST MARCH, 2005, WAS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION AND THERE CANNOT BE TWO VIE WS ON THIS ISSUE. THEREFORE, IT IS HELD THAT THE VERY ME NTION OF OPENING WDV WAS CLEAR TO SHOW THE MISTAKE AND I DO NOT 4 FIND ANY MERIT IN THE GROUND TAKEN BY THE APPELLANT . ACCORDINGLY, THE GROUND IS DISMISSED. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A). HE FURTHER SUBMITTED THAT ASSESSEE IS ENTITLED TO CLAIM OF ADDITIONAL DEPRECIATION AS PER PROVISIONS OF SEC.32(1)(IIA) OF THE ACT. HE SUBMITTED THAT AS PER THE REQUIREMENT OF THE PROVISIONS, THE ASSESSEE SHOULD ACQUIRE NEW PLANT AND MACHINERY AND THE PLANT AND MACHINERY SHOULD B E INSTALLED AFTER 31.03.2005. HE SUBMITTED THAT THE DATE (TIME LIMIT) SPECIFIED IN THE SECTION HAS A DIRECT RELATION WITH THE D ATE OF INSTALLATION OF PLANT AND MACHINERY AND HAS NOTHING TO DO WITH THE ACQUISITION OF PLANT AND MACHINERY. HE FURTHER SUBM ITTED THAT SINCE THE ASSESSEE HAS ACQUIRED THE NEW PLANT AND MACHINERY AND HAS INSTALLED IT AFTER 31.03.2015, ASSESSEE HAS FULFILLED THE REQUIRED CONDITIONS OF THE SECTIONS, SO AS TO QUA LIFY FOR CLAIM OF ADDITIONAL DEPRECIATION. HE FURTHER SUBMITTED THA T THERE WAS A TYPOGRAPHICAL ERROR IN THE DEPRECIATION SCHE DULE THAT WAS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. HE SUBMITTED THAT INSTEAD OF SHOWING THE FIGURE OF OPENING CAP ITAL INVESTMENT IN PLANT AND MACHINERY IN THE COLUMN OF ADDITION MADE DURING THE FINANCIAL YEAR, IT WAS WRONGLY SHOWN UNDE R THE COLUMN OF OPENING RETURN ON VALUE ON PLANT AND MACHINERY. HE THEREFORE SUBMITTED THAT IT WAS NOT THE CASE OF OPENING RETURN ON VALUE ON PLANT AND MACHINERY BUT IT WAS OPENING CAPITAL INVESTMENT IN PLANT AND MACHINERY ON WHICH NO DEPRECIATION 5 WAS CLAIMED IN THE PREVIOUS YEAR AND WAS ALSO NOT IN USE BEFORE 31.03.2005. HE FURTHER SUBMITTED THAT PROVISIONS OF SEC.32(1)(IIA) IS TO ENCOURAGE NEW INVESTMENT IN PLANT AND MACHINERY AN D IS AN INCENTIVE PROVISION TO ENCOURAGE NEW INVESTMENTS. IN S UPPORT OF HIS CLAIM FOR DEPRECIATION PLACED RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER O F INCOME TAX VS. IDMC LIMITED IN TAX APPEAL NO.824/2016 ORD ER DT.25.01.2017. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION. HE THEREFORE SUBMITTED THAT THE ISSUE IS DIRECTLY COVERED BY THE AFORESAID DECISION OF THE HONBLE GUJARAT HIGH COURT. HE THEREFORE SUBMITTED THAT THE GROUND BE DECIDED ACCORDINGLY. WITH RESPECT TO GROUND NOS.1 AND 2, HE SUBM ITTED THAT IN CASE THE GROUND NO.3 WHICH IS WITH RESPECT TO GR ANT OF ADDITIONAL DEPRECIATION IS DECIDED IN HIS FAVOUR, HE DOES NOT WISH TO PRESS GROUND NOS.1 AND 2. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO GRANT OF ADDITIONAL DEPRECIATION. THE CLAIM OF ADDITIONAL DEPRECIATION WAS DENIED TO THE ASSESSEE FOR THE REASON THAT ASSESS EE APART FROM ACQUIRING SHOULD HAVE ALSO INSTALLED THE PLANT AND MACHINERY AFTER 31.03.2015 BUT IN THE CASE OF ASSESSEE S INCE THE PLANT AND MACHINERY WAS ACQUIRED BEFORE 31.03.2015 ASSES SEE WAS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION. WE FIND THAT LD.CIT(A) WHILE DENYING THE CLAIM OF ADDITIONAL DEPRECIATION U/S.32(1)(IIA) HAS HELD THAT FOR CLAIMING ADDITIONAL DEPRECIATION, 6 ASSESSEE HAS TO FULFILL THE TWIN CONDITIONS OF ACQUISITION OF P LANT AND MACHINERY AND ITS INSTALLATION AFTER 31.03.2005 AND SINCE IN THE ASSESSEES CASE THESE CONDITIONS WERE NOT SATISFIED, THE CLAIM OF DEPRECIATION WAS DENIED TO ASSESSEE. WE FIND THAT AN ID ENTICAL ISSUE OF CLAIM OF ADDITIONAL DEPRECIATION WAS BEFORE THE HONB LE GUJARAT HIGH COURT IN THE CASE OF PR.COMMISSIONER OF INC OME TAX VS. M/S. IDMC LIMITED (SUPRA). THE QUESTION OF LAW BEFO RE THE HONBLE HIGH COURT WAS AS UNDER : WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN LAW IN ALLOWING ADDITIONAL DEPRECIATION CLAIM OF 2,18,50,976/- @ 20% UNDER SEC TION 32[1](IIA) OF THE INCOME-TAX ACT, 1961 ON THE MACHI NERY PURCHASED BEFORE 31 ST MARCH, 2005, BUT INSTALLED AFTER 31 ST MARCH, 2005 ? THEREAFTER THE HONBLE GUJARAT HIGH COURT DECIDED THE ISSUE BY OBSERVING AS UNDER [5.0]. THE PURPOSE AND OBJECT OF SECTION 32( 1 )(IIA) OF T HE IT ACT SEEMS TO BE TO GIVE A BOOST TO THE MANUFACTURING SE CTOR BY ALLOWING THE DEDUCTION OF A FURTHER SUM EQUAL TO 20 % (PRIOR TO AMENDMENT - 15%) OF THE ACTUAL COST OF SUCH MACH INERY OR PLANT ACQUIRED AND INSTALLED. THEREFORE, UNDERLY ING OBJECT AND PURPOSE IS TO ENCOURAGE THE INDUSTRIES BY PERMI TTING THE ASSESSEE SETTING UP THE NEW UNDERTAKING INSTAL LATION OF NEW PLANT AND MACHINERY TO CLAIM THE BENEFIT OF ADD ITIONAL DEPRECIATION. KEEPING IN MIND THE ABOVE OBJECT AND PURPOSE THE QUESTION POSED FOR CONSIDERATION OF THIS COURT IS REQUIRED TO BE CONSIDERED. [5.1] IT IS THE CASE ON BEHALF OF THE REVENUE THAT THE LANGUAGE USED IN SECTION 32(1)(IIA) OF THE IT ACT IS THAT A FURTHER SUM EQUAL TO 20% OF ACTUAL COST OF A NY NEW MACHINERY OR PLANT ACQUIRED AND INSTALLED AFTER 31ST DAY OF MARCH 2005 BY THE ASSESSEE ENGAGED IN T HE BUSINESS OF MANUFACTURING OR PRODUCTION OF ANY ARTI CLE OR THING, IS ALLOWED AS DEDUCTION AS FURTHER DEPRECIAT ION. THEREFORE, IT IS THE CASE ON BEHALF OF THE REVENUE THAT ON LITERAL INTERPRETATION OF THE PROVISION OF SECTION 32(1)(IIA) OF THE IT ACT, WHILE FRAMING THE DEDUCTION AS FURTHER 7 DEPRECIATION UNDER SECTION 32(1)(IIA) OF THE IT ACT, THE ASSESSEE MUST HAVE ACQUIRED AND INSTALLED NEW PLANT AND MACHINERY ON WHICH THE ADDITIONAL DEPRECIATION IS C LAIMED AFTER 31.03.2005. IT IS THE CASE ON BEHALF OF THE R EVENUE THAT IN THE PRESENT CASE AS THE PLANT AND MACHINERY WAS ACQUIRED / PURCHASED BEFORE 31.03.2005, THE ASSESSE E IS NOT ENTITLED TO THE ADDITIONAL DEPRECIATION UNDER S ECTION 32(1)(IIA) OF THE I.T. ACT. ON THE OTHER HAND IT I S THE CASE ON BEHALF OF THE ASSESSEE THAT THE PROVISION OF SECTIO N 32(1)(IIA) OF THE IT ACT IS REQUIRED TO BE CONSTRUED PURPOSEFU LLY AND LITERALLY SO AS TO ACHIEVE THE OBJECT AND PURPOSE O F THE ADDITIONAL DEPRECIATION ALLOWABLE UNDER SECTION 32( 1) (IIA) OF THE IT ACT. .. THEREAFTER AFTER RELYING ON THE VARIOUS DECISIONS OF SUPRE ME COURT CITED IN THE ORDER IT OBSERVED AS UNDER : [7.0] APPLYING LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE AFORESAID DECISIONS TO THE FACTS OF THE CASE ON HAND, IF THE SUBMISSION ON BEHALF OF THE RE VENUE IS ACCEPTED, IN THAT CASE IT WILL LEAD TO AN ABSURD AN D UNJUST RESULT AND THE PURPOSE AND OBJECT OF GRANTING THE A DDITIONAL DEPRECIATION WILL BE FRUSTRATED. IF THE CONTENTION ON BEHALF OF THE REVENUE IS ACCEPTED, IN THAT CASE, THE ASSESSEE SHALL NEVER GET THE ADDITIONAL DEPRECIATION AS PROVIDED U NDER SECTION 32(1)(IIA) OF THE IT ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TWIN CONDITIONS OF T HE ACQUIRED AND INSTALLED SHALL NEVER BE SATISFIED IN A YEAR AND THEREFORE, THE ASSESSEE SHALL NEVER GET ANY DEPRECIATION. THE PURPOSE AND OBJECT OF GRANTING ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(IIA) OF THE IT ACT IS STATED HEREINABOVE I.E. TO ENCOURAGE THE INDUSTRIES BY PERMITTING THE ASSESSEE SETTING UP TH E NEW UNDERTAKING / INSTALLATION OF NEW PLANT AND MACHINERY AND TO GIVE A BOOST TO THE MANUFACTURING SECTOR BY ALLOWING ADDITIONAL DEPRECIATION DEDUCTION. THUS , AS RIGHTLY HELD BY THE LEARNED ITAT THE PROVISION OF S ECTION 32(1)(IIA) OF THE IT ACT IS REQUIRED TO BE INTERPRE TED REASONABLY AND PURPOSIVELY AS THE STRICT AND LITERA L READING OF SECTION 32(1)(IIA) OF THE IT ACT WILL LEAD TO AN ABSURD RESULT DENYING THE ADDITIONAL DEPRECIATION TO THE A SSESSEE THOUGH ADMITTEDLY THE ASSESSEE HAS INSTALLED NEW PL ANT AND MACHINERY. UNDER THE CIRCUMSTANCES, NO ERROR HA S BEEN COMMITTED BY THE LEARNED ITAT IN ALLOWING THE ADDIT IONAL DEPRECIATION AT THE RATE OF 20% ON THE PLANT AND MA CHINERY INSTALLED BY THE ASSESSEE AFTER 31 ST DAY OF MARCH 2005 I.E. THE YEAR UNDER CONSIDERATION. NO SUBSTANTIAL QUESTI ON OF LAW ARISE. 8 [8.0] IN VIEW OF THE ABOVE AND FOR THE REASONS STA TED ABOVE, PRESENT TAX APPEAL DESERVES TO BE DISMISSED AND IS, ACCORDINGLY, DISMISSED. THE QUESTION OF LAW IS ANSW ERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 7. WE FIND THAT THE RATIO OF ABOVE CITED DECISION OF HONBLE GUJARAT HIGH COURT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. BEFORE US, REVENUE HAS NOT PLACED ANY CO NTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE RELYING ON TH E DECISION OF HONBLE GUJARAT HIGH COURT HOLD THAT ASSESSE E IS ELIGIBLE FOR ADDITIONAL DEPRECIATION. ACCORDINGLY, GROUND NO.3 IS ALLOWED. 8. IN VIEW OF THE SUBMISSION OF THE LD.A.R. THAT IN CASE THE GROUND NO.3 IS DECIDED IN FAVOUR OF THE ASSESSEE, HE DOES NOT WISH TO PRESS GROUND NOS.1 AND 2, THE GROUND NOS.1 AND 2 ARE DISMISSED AS NOT PRESSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 21 ST DAY OF APRIL, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE; ! DATED : 21 ST APRIL, 2017. YAMINI 9 ( ) *!+, -,! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT CENTRAL, PUNE. CIT(A)-11, PUNE. #$% &&'(, * '(, / DR, ITAT, A PUNE; %+, - / GUARD FILE. ( / BY ORDER, //// // TRUE COPY // T // // TRUE COPY // // . /012 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.