M/s. Faishon Suitings Pvt. Ltd., JODHPUR V. DCIT, BHILWARA

ITA 142/JODH/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54427 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R H GOHEL
• Assessee Lawyers: GAUTAM BAID
• Keywords: Depreciation; Additional depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR (BEFORE SHRI R.K. GUPTA AND SHRI .N.L. KALRA ) ITA NO.142/JODH/2011 ASSESSMENT YEAR : 2006-07 PAN: AAACF 3294 L M/S. FASHION SUITINGS (P) LTD. VS. THE DCIT B-382, SHASTRI NAGAR CIRCLE- BHILWARA BHILWARA (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI R.H. GOHEL ASSESSEE BY : SHRI GAUTAM BAID DATE OF HEARING: 08-12-2011 DATE OF PRONOUNCEMENT: 16-12-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD.CIT, AJMER DATED 15-03-2011 FOR THE ASSESSMENT YEAR 2006-07. 2.1 THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT HAS RECORDED THE FINDINGS THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE AO HAS ALLOWED THE ADDITIONAL DEPRECIATION. 2.2 ACCORDING TO THE LD. CIT, THE AO HAS ALLOWED DE PRECIATION ON WINDMILL AS WELL AS ADDITIONAL DEPRECIATION U/S 32(1)(II) (A) OF THE AC T. ACCORDING TO THE AO AND THE LD. CIT, THE ADDITIONAL DEPRECIATION U/S 32(1)(II) (A) IS A VAILABLE IN CASE THE DEPRECIATION IS BEING ALLOWED U/S U/S 32(1)(I). SINCE THE DEPRECIATION ON WINDMILL IS BEING GIVEN U/S 32(1)(I), THEREFORE, ADDITIONAL DEPRECIATION IS NOT ALLOWABLE . 2 2.3 WE HAVE HEARD BOTH THE PARTIES. THE DEPRECIATIO N U/S 32(1)(I) IS PERMISSIBLE IN CASE OF UNDERTAKING ENGAGED IN GENERATION AND DISTR IBUTION OF POWER AND DEPRECIATION IS TO BE GIVEN AS PERCENTAGE OF THE ACTUAL COST. DEPRE CIATION U/S U/S 32(1)(II) IS ALLOWED AS PERCENTAGE ON WRITTEN DOWN VALUE. THUS ONLY DIFFERE NCE BETWEEN THE DEPRECIATION TO BE ALLOWED U/S 32(1)(I) AND 32(1)(II) IS IN RESPECT OF DEPRECIATION AS PERCENTAGE OF THE ACTUAL COST OR PERCENTAGE OF THE WRITTEN DOWN VALUE. IT IS MENTIONED IN THE RULE 5(1A) THAT THE UNDERTAKING COVER U/S 32(1)(I) MAY CLAIM DEPRECIATI ON AS PERCENTAGE ON THE WRITTEN DOWN VALUE. IT IS NOT THE CASE OF THE REVENUE THAT THE A SSESSEE HAS CLAIMED DEPRECIATION ON THE ACTUAL COST IN THE SUCCEEDING YEAR SO AS TO SAY THA T ASSESSEE IS COVERED U/S 32(1)(I) OF THE ACT. IT IS TRUE THAT TOTAL DEPRECIATION ALLOWED IN SECTION 32(1)(I) CANNOT EXCEED THE ACTUAL COST. MOREOVER, THE MADRAS HIGH COURT IN THE CASE OF CIT VS HI TECH ARAI LTD., 321 ITR 477 HELD THAT ADDITIONAL DEPRECIATION IS ALLOWABLE ON WINDMILL INSTALLED BY THE OIL MANUFACTURER. THE ADDITIONAL DEPRECIATION IS ALLOWA BLE IN CASE OF ANY NEW MACHINERY OR PLANT WHICH IS ACQUIRED OR INSTALLED BY THE ASSESSE E ENGAGED IN THE BUSINESS OF MANUFACTURING OR PRODUCTION OF AN ARTICLE OR THINGS . IT IS NOWHERE MENTIONED THAT MACHINERY OR PLANT ACQUIRED BY THE ASSESSEE SHOULD BE A PLANT OR MACHINERY UTILIZED IN THE BUSINESS OF MANUFACTURING OR PRODUCTION OF ANY ARTICLE OR THINGS. THUS THE REQUIREMENT OF SECTION 32(1)(II)(A) ARE SATISFIED. MOREOVER, THE AO TOOK ONE OF THE POSSIBLE VIEW. THEREFORE, THE ORDER CANNOT BE CONSI DERED ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE RELIANCE IS PLACED ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS CIT , 2 43 ITR 83. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT IS CANCELLED. 3 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16-12-2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR DATED: 16/12/2011 MISHRA COPY TO: 1. M/S. FASHION SUITINGS (P) LTD. , BHILWARA 2. THE DCIT, CIRCLE, BHILWARA 3.THE LD. CIT (A) BY ORDER 4.THE CIT 5.THE D/R 6.THE GUARD FILE (ITA NO. 142/JODH/11) A.R.. IT AT: JODHPUR 4 5 6 7