ITO, CHENNAI V. M/s. K-ites (P) Ltd., CHENNAI

ITA 1448/CHNY/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90395 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-04-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 16-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MAHADEVAN
• Assessee Lawyers: T VASUDEVAN
• Keywords: Depreciation; Rectification of order; Search and seizure; Reasonable cause; Condonation of delay
• Section: 143(3); 153A; 32; 144; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ , % ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 1448/MDS/2011 ( / ASSESSMENT YEAR: 2001-02) INCOME TAX OFFICER, COMPANY WARD-II(1), 515, 5 TH FLOOR, NEW BLOCK, 121, M.G.ROAD, CHENNAI-600 034. VS M/S. K-ITES (P) LTD., 6/1, NAHAR DRIVE, MAHARANI CHINNAMMA ROAD, ALWARPET, CHENNAI-600 018. PAN:AABCK3723G ( /APPELLANT) ( /RESPONDENT) & ./ I.T.A.NOS . 1456 & 1457/MDS/2011 ( / ASSESSMENT YEAR: 2002-03 & 2003-04) M/S. K-ITES (P) LTD., 6/1, NAHAR DRIVE, MAHARANI CHINNAMMA ROAD, ALWARPET, CHENNAI-600 018. VS INCOME TAX OFFICER, COMPANY WARD-II(1), 515, 5 TH FLOOR, NEW BLOCK, 121, M.G.ROAD, CHENNAI-600 034. PAN:AABCK3723G ( /APPELLANT) ( /RESPONDENT) REVENUE BY : MR. N.MAHADEVAN, JCIT ASSESSEE BY : MR . T.VASUDEVAN, ADVOCATE /DATE OF HEARING : 15 TH APRIL, 2015 /DATE OF PRONOUNCEMENT : 22 ND MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THESE THREE APPEALS ARE FILED BY THE REVENUE AND ASSESSEE FOR THE ASSESSMENT YEAR 2001-02 AND 2002- 03 & 2003-04 RESPECTIVELY AGAINST THE SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENNAI D ATED 11.05.2011. 2 ITA NOS.1448, 1456 & 1457/MDS/2011 2. BOTH THE APPEALS OF THE ASSESSEE WERE FILED WIT H DELAY OF 13 DAYS. PETITION FOR CONDONATION OF DELAY ALONG WITH AFFIDAVIT WAS FILED BY THE ASSESSEE SEPARATELY EXPL AINING THE REASONS AS TO WHY APPEALS COULD NOT BE FILED IN TIM E. HAVING GONE THROUGH THE PETITION FILED BY THE ASSESSEE, W E FIND THAT ASSESSEE WAS PREVENTED WITH REASONABLE CAUSE IN NOT FILING THE APPEALS IN TIME AND IN THESE CIRCUMSTANCES, IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY OF 13 DAY S AND ADMIT THE APPEALS FOR HEARING. 3. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS T HAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOW ING THE ASSESSEES CLAIM UNDER SECTION 10A OF THE ACT. 4. BRIEF FACTS ARE THAT ASSESSEE IS A PRIVATE LIMIT ED COMPANY ENGAGED IN THE BUSINESS OF EXPORT OF SOFTWA RE. THERE WAS A SEARCH AND SEIZURE OPERATION IN THE CAS E OF MR. SUBASH CHAND NAHAR, DIRECTOR OF THE ASSESSEE COMPA NY ON 26.10.2005 . IN THE COURSE OF SEARCH TRIAL BALANCE AND PROFIT AND LOSS ACCOUNT DATED 12.3.2002 RELATING TO THE AS SESSEE WAS FOUND. THEREFORE, NOTICE UNDER SECTION 153C RE AD WITH 3 ITA NOS.1448, 1456 & 1457/MDS/2011 SECTION 153A WAS ISSUED ON 27.11.2008 CALLING FOR R ETURN OF INCOME. IN RESPONSE TO THE SAID LETTER, ASSESSEE FI LED LETTER STATING THAT IT HAD ALREADY FILED RETURN FOR THE ASSESSMENT YEAR 2001-02 ON 28.03.2002 AND A COPY WAS FURNISH ED. THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 1 53C WAS COMPLETED ON 24.12.2008 AND WHILE COMPLETING THE ASSESSMENT EXEMPTION UNDER SECTION 10A WAS NOT ALLO WED STATING THAT CERTIFICATE IN FORM 10A WAS NOT FILED ALONG WITH THE RETURN. ON VERIFICATION OF SCHEDULE, IT WAS FOU ND THAT THERE WAS NO NEW PLANT AND MACHINERY AND ALL THE PLANT & MACHINERY WERE OLD. IT WAS THE OBSERVATION OF THE A SSESSING OFFICER THAT NO EVIDENCE / DETAILS WERE FILED AT TH E TIME OF REGULAR ASSESSMENT OR AT THE TIME OF COMPLETION OF ASSESSMENT ON 24.12.2008 TO SHOW THAT MACHINERY PURCHASED IN 1999 WAS AFTER STPI APPROVAL, THEREFOR E HE DENIED EXEMPTION UNDER SECTION 10A OF THE ACT. ASS ESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) CONTENDING THAT CLAIM OF EXEMPTION MADE U NDER SECTION 10A IS PROPER. THE ASSESSEE HAS FURNISHED V ARIOUS DETAILS IN SUPPORT OF ITS CONTENTION THAT CLAIM UND ER SECTION 10A IS IN ORDER. ON EXAMINING THE DETAILS FURNISHE D BY THE 4 ITA NOS.1448, 1456 & 1457/MDS/2011 ASSESSEE AND THE REMAND REPORT SUBMITTED BY THE ASS ESSING OFFICER, THE COMMISSIONER OF INCOME TAX (APPEALS) A LLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 10A AGAINST WHICH REVENUE IS IN APPEAL BEFORE US. 5. IN THE GROUNDS OF APPEAL, REVENUE CONTENDED THAT ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM SINCE THE ASSESSEE DID NOT FURNISH DETAILS ABOUT NEW MACHINER Y PURCHASED AND USED IN 10A UNIT. THE ASSESSEE HAS NO T FURNISHED ANY DETAILS TO SUBSTANTIATE ITS CLAIM THA T NEW MACHINERY WAS USED IN 10A UNIT AND THE VALUE OF OLD MACHINERY DID NOT EXCEED THE PRESCRIBED PERCENTAGE AS PER SECTION 10A OF THE ACT. DEPARTMENTAL REPRESENTATIV E VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFI CER IN REJECTING EXEMPTION UNDER SECTION 10A OF THE ACT. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSEE HAS NOT FURNISHED FORM 56F ALONG WITH THE RETURN. 6. COUNSEL FOR THE ASSESSEE SUBMITS THAT REVENUE HA S NOT RAISED ANY GROUND CHALLENGING THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) REGARDING NON- 5 ITA NOS.1448, 1456 & 1457/MDS/2011 FURNISHING OF FORM 56F ALONG WITH THE RETURN FOR DI SALLOWING CLAIM UNDER SECTION 10A. THE GROUNDS RAISED BY THE REVENUE ARE ONLY WHETHER NEW MACHINERY OR OLD MACHI NERY WHICH WAS USED IN 10A UNIT . HE VEHEMENTLY SUPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND SUBMITS THAT REMAND REPORT WAS CALLED FOR BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE ASSESS ING OFFICER HAS NOT GIVEN ANY ADVERSE COMMENTS ON THE EVIDENCES PRODUCED AND CONTENTIONS RAISED BY THE AS SESSEE THAT THE EXEMPTION IS IN ORDER. 7. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ISSUE HAS BEEN ELABORATELY CONSIDERED BY THE COMMISSIONER OF INCOME TAX (APPEALS) WITH REGARD TO SUBMISSIONS MADE BY THE ASSESSEE AND THE REMAND RE PORT RECEIVED FROM THE ASSESSING OFFICER AND REJOINDER O F THE ASSESSEE AND CONCLUDED THAT ASSESSEE IS ELIGIBLE FO R EXEMPTION UNDER SECTION 10A OF THE ACT OBSERVING AS UNDER:- 4.1 THE ID. AR HAS STRONGLY ARGUED AGAINST THE DISALLOWANCE MADE BY THE AO AS ABOVE. HE HAS FILED WRITTEN SUBMISSION AND VARIOUS DETAILS IN SUPPORT O F HIS CONTENTION THAT THE CLAIM OF DEDUCTION U/S L0A IS P ROPER. HE STATED THAT THE AO HAS GIVEN A FINDING THAT THE 6 ITA NOS.1448, 1456 & 1457/MDS/2011 DEDUCTION U/S L0A IS LIABLE TO BE DISALLOWED IN VIE W OF THE PROVISIONS CONTAINED IN EXPLANATION TO S.10A(2) SIN CE ALL THE ITEMS OF PLANT AND MACHINERY USED IN THE NEW BUSINESS WERE OLD. HE FILED COPY OF GREEN CARD BEAR ING NO. 1317 ISSUED BY THE DIRECTOR, SOFTWARE TECHNOLOG Y PARK OF INDIA, CHENNAI AND ALSO APPROVAL LETTER DAT ED 05.10.1999. HE ALSO FILED COPY OF CUSTOM BOND REGIS TER BY WAY OF EVIDENCE TO THE EFFECT THAT THE VARIOUS COMPUTER SYSTEMS AND OTHER MACHINERY WERE IMPORTED. IT CLEARLY PROVED THAT ALL THE COMPUTERS AND STENTURA MACHINES WERE ACQUIRED / IMPORTED ONLY AFTER APPROV AL FROM STPI. THUS, THE AO'S FINDING THAT THE MACHINER IES WERE PURCHASED BEFORE STPI APPROVAL IS CONTRARY TO THE FACTS. HE RELIED ON THE DECISION OF PUNJAB AND HARY ANA HIGH COURT IN THE CASE OF CIT V. EXCEL SOFTECH LT ( 2008) 13 DTR (P&H) 201 THAT EXEMPTION U/S 10 B IS ADMISSI BLE, EVEN WHEN DEVELOPMENT OF COMPUTER SOFTWARE WAS STARTED PRIOR TO AY 2001-02. IN APPELLANT'S CASE, THE COMPANY ITSELF WAS INCORPORATED ON 24.09.1999 AND BUSINESS WAS CARRIED OUT ONLY THEREAFTER. EVEN VARI OUS ITEMS OF COMPUTERS AND STENTURA MACHINES WERE IMPORTED THEREAFTER. HE FURTHER ARGUED THAT THE AO HAS NOT GONE THROUGH 154 APPLICATION DATED 22.02.2002. IT IS CLEAR FROM THE ABOVE THAT 35 COMPUTERS AND 25 STENT URA MACHINES WERE PUT TO USE ONLY AFTER 31.3.2000 AND T HE DEPRECIATION FOR THE AY 2001-02 HAS BEEN CLAIMED ACCORDINGLY. THE RETURN OF INCOME FOR THE AY 2001-0 2 WAS FILED ON 28.03.2002 DULY ACCOMPANIED BY AUDIT REPORT AND REPORT U/S L0A OF THE ACT IN FORM NO. 56 F AND ACCORDINGLY DEDUCTION U/S L0A OF RS. 18,78,912/- WA S CLAIMED AS PER LAW. 4.2 THE WRITTEN SUBMISSION OF THE APPELLANT WAS FORWARDED TO THE AO ON 08.09.2010 FOR HIS COMMENTS. THE I.T.O. COMPANY WARD 11(1) VIDE LETTER DATED 02.06.2010 REQUESTED FOR FURTHER TIME BECAUSE ALL T HE ISSUES NEEDED TO BE VERIFIED AND INVESTIGATED. SUBSEQUENTLY) HE HAS SUBMITTED HIS REPORT VIDE LETT ER NO.F.NO.AABCK3723G/00-01 TO 0304 DATED 14.2.201L. IN THIS LETTER, THE AO STATED THAT THE TRIAL BALANC E AND PROFIT & LOSS ACCOUNT OF M/S. K-ITES (P) LTD. SEEMS TO HAVE BEEN FOUND AND SEIZED AND THE DCIT, CENTRAL CI RCLE 11(1) HAD REQUESTED HIM TO TAKE ACTION U/S 153C IN RESPECT OF THE APPELLANT AS HE WAS HAVING JURISDICT ION OVER THE ASSESSEE. HE HAD FURTHER CALLED FOR THE SE IZED MATERIAL. THE DCIT, CENTRAL CIRCLE ACCORDINGLY HAND ED OVER COPY OF THE TRIAL BALANCE AND PROFIT & LOSS ACCOUNT 7 ITA NOS.1448, 1456 & 1457/MDS/2011 FOR THE PERIOD ENDED 12.03.2002. AS REGARDS THE SUBMISSION OF THE APPELLANT VIDE PARA 4 TO 7 ON VAR IOUS ADDITIONS MADE IN THE ASSESSMENT ORDER, THE AO HAS REPLIED AS UNDER: 'AT THE TIME OF ASSESSMENT PROCEEDINGS , THE RETURNS CALLED FOR ULS 153C R.W.S. 153A FOR THE ASSESSMENT YEARS 2000-01 TO 2005 -06 WERE NOT FILED BY THE ASSESSEE AND HENCE, ONLY ON THE BASIS OF INFORMATION AVAILABLE ON RECORDS, THE ASSESSMENT WERE COMPLETED EX-PARTE U/S 144 R.W.S. 153C. THERE WAS NO CO-OPERATION FROM THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. A FURTHER COMMENTS ARE OFFERED ON THE GROUNDS PREFERRED BY THE ASSESSEE BEFORE THE CIT(A)-I CHENNAI.' 4.3 THE REPORT OF THE AO WAS FORWARDED TO THE APPELLANT FOR ITS REJOINDER. THE APPELLANT VIDE LET TER DATED 21.02.2011 HAS STATED THAT THE RETURN FOR A.Y. 2001 -02 WAS DULY FILED BY THE APPELLANT WITHIN TIME ALONG W ITH AUDITOR'S REPORT AND AUDITED BALANCE SHEET. THE AO HAS NOT BEEN ABLE TO LAY HIS HANDS ON THE RETURN. THE N OTICE FOR THE A.Y. 2001-02 WAS ISSUED FOR THE FIRST TIME ON 27.11.2008 AND THE TIME GIVEN TO FILE THE RETURN WA S 15 DAYS. THE ASSESSMENT WAS REQUIRED TO BE COMPLETED BEFORE 3L.12.2008 AND ACCORDINGLY IT WAS COMPLETED ON 24.12.2008. HE FURTHER STATED THAT EVEN THE AR OF T HE APPELLANT HAD ALSO ATTENDED BEFORE THE AO. HE ALSO STATED THAT THE AO HAS NOT GIVEN ANY COMMENT IN RES PECT OF PARA 3.1 (E), (F), (G) AND (B) OF THE WRITTEN SU BMISSION AND AS SUCH THE AO WAS NOT AT ALL JUSTIFIED IN REJE CTING THE CLAIM U/S L0A AND TAXING THE INCOME AS NOT EXEMPT. THE.AO WAS NOT JUSTIFIED IN IGNORING THE CERTIFICAT E IN FORM NO.10A ISSUED BY THE CHARTERED ACCOUNTANT AND IGNOR ING THE LETTER OF THE APPELLANT DATED 22.02.2002 ASKING FOR RECTIFICATION OF MISTAKE APPARENT FROM RECORDS BASE D ON NOTE GIVEN IN THE AUDITED STATEMENTS OF ACCOUNT. TH E AO SHOULD HAVE APPRECIATED THAT THE REVISED WDVS AS PE R RECTIFICATION WERE ADOPTED FOR THE A.Y. 2001-02 FOR THE PURPOSE OF WORKING OUT ELIGIBLE DEPRECIATION. HENCE , THE ADDITIONS MADE IN THE EX-PARTE ORDER NEEDS TO BE DE LETED. 4.4 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, SUBMISSION OF THE APPELLANT, REMAND REPORT OF THE A O AND 8 ITA NOS.1448, 1456 & 1457/MDS/2011 THE REJOINDER OF THE APPELLANT. I HAVE ALSO PERUSED VARIOUS DETAILS INCLUDING COPIES OF THE GREEN CARD ISSUED BY THE DIRECTOR OF STPI, CUSTOMS BOND REGISTER, FOR M NO.56F ETC. THE ID. AR HAS ALSO STATED THAT THE ENT IRE PROCEEDS WERE RECEIVED IN FOREIGN EXCHANGE AND THOU GH THE APPELLANT WAS ALSO ENTITLED FOR DEDUCTION U/S. 80HHC, THE SAME WAS NOT CLAIMED SINCE THE APPELLANT WAS ENTITLED FOR DEDUCTION U/S L0A. THE AO HAS ALSO NOT CONTESTED THE CLAIM OF THE APPELLANT IN THE REMAND REPORT. HENCE, THE DISALLOWANCE OF CLAIM U/S L0A IS DELETED. ACCORDINGLY, THE GROUND IS ALLOWED. 8. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS) WE FIND THAT ASSESSEE HAS PUR CHASED MACHINES AFTER APPROVAL OF STPI. COMPUTERS AND STEN TURA MACHINES WERE IMPORTED THEREAFTER. THE RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2001-02 WAS FILED ON 28.3.2002 DULY ACCOMPANIED BY AUDIT REPORT AND REPORT IN FORM NO.5 6F AND DEDUCTION UNDER SECTION 10A WAS CLAIMED AS PER LAW. THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS EXCEPT STATING THAT ASSESSEE HAS NOT CO-OPERATED IN THE ASSESSMEN T PROCEEDINGS HAS NOT OFFERED ANY COMMENTS ON THE GRO UNDS PREFERRED BY THE ASSESSEE BEFORE THE COMMISSIONER O F INCOME TAX (APPEALS). NONE OF THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE BEEN REBU TTED BY THE REVENUE WITH EVIDENCES. IN SUCH CIRCUMSTANC ES, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX 9 ITA NOS.1448, 1456 & 1457/MDS/2011 (APPEALS) IN ALLOWING THE CLAIM OF EXEMPTION UNDER SECTION 10A OF THE ACT. THE GROUNDS RAISED BY THE REVENUE A RE REJECTED. 9. COMING TO THE APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04, THE ONLY ISSU E IN BOTH THESE APPEALS IS THAT COMMISSIONER OF INCOME T AX (APPEALS) IS NOT JUSTIFIED IN DENYING DEPRECIATION ON PLANT AND MACHINERY. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENTS DID NOT ALLOW DEPRECIATION ON PLANT AND MACHINERY NOR HE HAS GIVEN ANY REASON FOR NOT ALLO WING SUCH DEPRECIATION. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DENIED DEPRECIATION ON PLANT & MACHINERY ON THE GROUND THAT NO BUSINESS WAS CARRIED ON DURING THE Y EAR BY THE ASSESSEE AND THE ASSETS WERE NOT USED FOR THE P URPOSE OF BUSINESS. COMMISSIONER OF INCOME TAX (APPEALS) P LACING RELIANCE ON THE DECISION OF BOMBAY HIGH COURT IN TH E CASE OF DINESH KUMAR GULABCHAND AGARWAL VS. CIT 267 ITR HEL D THAT ASSESSEE IS NOT ENTITLED FOR DEPRECIATION ON P LANT AND MACHINERY. 10 ITA NOS.1448, 1456 & 1457/MDS/2011 10. COUNSEL FOR THE ASSESSEE SUBMITS THAT PLANT AND MACHINERY WERE PUT TO USE IN ASSESSMENT YEAR 2001-0 2 AND DURING THE ASSESSMENT YEARS 2002-03 AND 2003-04 THE ASSESSEE COULD NOT GET ORDERS FROM CUSTOMERS THEREF ORE MACHINERY COULD NOT BE USED. COUNSEL FOR THE ASSES SEE SUBMITS THAT ASSESSEE WAS ENTITLED FOR DEPRECIATION OF ` 8,22,497/- AS PER DEPRECIATION CHART ENCLOSED WITH COMPUTATION OF INCOME BASED ON BLOCK-WISE WRITTEN D OWN VALUE ADOPTED FOR INCOME-TAX PURPOSES. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE USED THESE ASSETS FO R BUSINESS PURPOSES, ALL THE ITEMS OF MACHINERY WERE READY FOR USE AND THE ASSESSEE COMPANY WAS AWAITING ORDERS FO R MEDICAL TRANSCRIPTION BUSINESS. THEREFORE, HE SUBM ITS THAT THERE IS NO REASON FOR NOT CONSIDERING THE CLAIM FO R DEPRECIATION. COUNSEL FOR THE ASSESSEE SUBMITS THAT DURING THE FINANCIAL YEAR 2001-02 RELEVANT TO THE ASSESSME NT YEAR 2002-03 AND 2003-04 THE ASSESSEE DID NOT GET ANY B USINESS OF MEDICAL TRANSCRIPTION BUT THE PLANT AND MACHINER Y WERE KEPT READY TO USE. COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE DECISION OF THIRD MEMBER DECISION OF CHENNAI BENCH IN THE CASE OF ACIT VS. CHENNAI PETROLEUM CORPORATI ON LTD. 11 ITA NOS.1448, 1456 & 1457/MDS/2011 (125 ITD 396) SUBMITS THAT IN ORDER TO CLAIM DEPREC IATION UNDER SECTION 32 IT IS NOT NECESSARY THAT MACHINERY IN QUESTION SHOULD HAVE BEEN ACTUALLY USED IN THE REL EVANT PREVIOUS YEAR FOR THE PURPOSE OF BUSINESS AND IT IS SUFFICIENT IF THE SAME IS KEPT READY FOR USE DURING THE RELEVANT PREVIOUS YEAR, THOUGH NOT ACTUALLY USED DUE TO CIRCUMSTANCES BEYOND CONTROL. COUNSEL FOR THE ASSESSEE SUBMITS THAT DEC ISION OF THE BOMBAY HIGH COURT WHICH THE COMMISSIONER OF INC OME TAX (APPEALS) RELIED ON WAS ALSO CONSIDERED BY THE THIRD MEMBER. 11. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 12. HEARD BOTH THE SIDES. PERUSED ORDERS OF LOWER AUTHORITIES AND THE DECISIONS RELIED ON. COMMISSION ER OF INCOME TAX (APPEALS) DENIED DEPRECIATION FOR THE RE ASON THAT ASSESSEE HAS NOT CARRIED ON ANY BUSINESS DURING THE YEAR AND THE ASSETS WERE NOT PUT TO USE. IT WAS THE SUBM ISSION OF THE ASSESSEE THAT PLANT & MACHINERY WAS READY FOR U SE AND FAILED TO GET ORDERS FROM CUSTOMERS, IN OTHER WORDS , PLANT & MACHINERY WAS KEPT READY FOR USE. THE THIRD MEMBER OF 12 ITA NOS.1448, 1456 & 1457/MDS/2011 CHENNAI BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS. CHENNAI PETROLEUM CORPORATION LTD. (SUPRA) CONSIDER ED THE SITUATION WHERE DEPRECIATION WAS NOT ALLOWED BY THE ASSESSING OFFICER ON THE MACHINERY KEPT READY FOR U SE, THE ASSESSEE COULD NOT USE THE MACHINERY FOR WANT OF RA W MATERIALS. IN SUCH CIRCUMSTANCES, THIRD MEMBER OF C HENNAI BENCH HELD THAT ASSESSEE IS ENTITLED FOR DEPRECIATI ON AS THE MACHINERY WAS KEPT READY FOR USE DURING THE ENTIRE PREVIOUS YEAR. THE RELEVANT PORTION OF THE ORDER IS AS UNDER :- EVEN AFTER THE INTRODUCTION OF BLOCK OF ASSETS CON CEPT, THERE IS NO CHANGE IN THE LEGAL POSITION TO THE EF FECT THAT THE ASSESSEE WOULD BE ENTITLED TO DEPRECIATION EVEN THOUGH THE ASSETS IN QUESTION WERE NOT ACTUALLY PUT TO USE IN THE RELEVANT PREVIOUS YEAR, BUT WERE KEPT READY FOR BEING PUT TO USE FOR THE PURPOSE OF THE BUSINESS. T HUS, IN ORDER TO CLAIM DEPRECIATION UNDER S. 32 IT IS NOT N ECESSARY THAT THE MACHINERY IN QUESTION SHOULD HAVE BEEN ACT UALLY USED IN THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF BUSINESS AND IT IS SUFFICIENT IF THE SAME IS KEPT R EADY FOR USE DURING THE RELEVANT PREVIOUS YEAR, THOUGH NOT A CTUALLY USED DUE TO CIRCUMSTANCES BEYOND THE ASSESSEE'S CONTROL. SEE. 32 HAS RECEIVED SEVERAL AMENDMENTS BU T THERE IS NO AMENDMENT WHICH HAS CLARIFIED THAT DEPRECIATION WOULD BE ALLOWED ONLY IF THE ASSET IN QUESTION WAS ACTUALLY USED DURING THE RELEVANT PREV IOUS YEAR AND MERELY KEEPING READY FOR BEING USED IN THE BUSINESS WAS NOT SUFFICIENT. WHEN THE INTERPRET ATION OF S. 32, ESPECIALLY OF THE WORD 'USED' APPEARING I N THAT SECTION WAS THE SUBJECT-MATTER OF A JUDGMENT OF THE BOMBAY HIGH COURT AS LONG BACK IN 1937 IN THE OLD I T ACT, THE SAME WORD WHICH IS USED IN S. 32 OF THE 19 61 ACT MUST RECEIVE THE SAME CONSTRUCTION. THEREFORE, THE 13 ITA NOS.1448, 1456 & 1457/MDS/2011 ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION O N THE GAS SWEETENING PLANT WHICH WAS KEPT READY FOR USE DURING THE ENTIRE PREVIOUS YEAR, THOUGH NOT ACTUALL Y USED DUE TO LACK OF RAW MATERIAL. 13. RESPECTFULLY FOLLOWING THE SAID THIRD MEMBER D ECISION OF THIS TRIBUNAL, WE ALLOW THE CLAIM OF THE ASSESSE E FOR DEPRECIATION AS PLANT AND MACHINERY WAS KEPT READY FOR USE AND THE ASSESSEE COULD NOT GET ORDERS. 14. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D AND APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MAY, 2015. SD/- SD/- ( ! ) ( $ '! ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) ) / ACCOUNTANT MEMBER ' ) / JUDICIAL MEMBER ' /CHENNAI, + /DATED 22 ND MAY, 2015 SOMU -. /. /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 0 () /CIT(A) 4. 0 /CIT 5. . 4 /DR 6. /GF .