ACIT, Pune V. M/s Kirloskar Corrocoat P.Ltd, Pune

ITA 1532/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84955 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 01-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Depreciation
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.1532/PN/2013 (ASSESSMENT YEAR : 2008-09) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 11(1), PUNE. . APPELLANT VS. M/S KIRLOSKAR CORROCOAT PVT. LTD., UDYOG BHAVAN, TILAK ROAD, PUNE 411 002. PAN : AACCK7947D . RESPONDENT DEPARTMENT BY : MR. P. S. NAIK ASSESSEE BY : MR. C. H. NANIWADEKAR DATE OF HEARING : 19-08-2014 DATE OF PRONOUNCEMENT : 27-08-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DA TED 01.05.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 22.12.2010 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. ALTHOUGH, THE REVENUE HAS RAISED MULTIPLE GROUND S OF APPEAL BUT ESSENTIALLY THE GRIEVANCE IS ON TWO ISSUES, NAMELY, DISALLOWANCES MADE BY THE ASSESSING OFFICER ON ACCOUNT OF (I) PROVISION FOR W ARRANTY RS.12,70,000/-; AND, (II) PARTIAL DENIAL OF DEPRECIATION IN RELATIO N TO THE NEW FACTORY BUILDING, WHICH HAVE SINCE BEEN DELETED BY THE CIT(A) BY WAY OF THE IMPUGNED ORDER. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 3. IN SO FAR AS THE FIRST ISSUE RELATING TO THE DIS ALLOWANCE OF PROVISION FOR WARRANTY AMOUNTING TO RS.12,70,000/- IS CONCERNED, THE RELEVANT FACTS ARE AS FOLLOWS. THE RESPONDENT-ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE, ITA NO.1532/PN/2013 A.Y. : 2008-09 SALE AND APPLICATION OF ANTI CORROSIVE COATING MATE RIALS. THE ASSESSEE COMPANY PROVIDES WARRANTY FOR A PERIOD OF 3 YEARS T O ALL ITS CUSTOMERS AGAINST ANY DAMAGE FOR THE ANTI CORROSIVE COAT ON ITS PRODU CTS. ASSESSEE HAD STARTED ITS MANUFACTURING ACTIVITY IN THE PRECEDING ASSESSM ENT YEAR OF 2007-08, WHEREIN ASSESSEE MADE A PROVISION FOR WARRANTY @ 0. 50% OF ITS TURNOVER. EVEN IN THE YEAR UNDER CONSIDERATION, ASSESSEE MADE A PROVISION OF 0.50%, WHICH AMOUNTED TO RS.12,70,000/-. THE ASSESSING OF FICER DISALLOWED THE SAME ON THE GROUND THAT IT WAS A CONTINGENT LIABILI TY AND THAT THE PROVISION HAS BEEN MADE ON AN ESTIMATE BASIS. 4. IN APPEAL BEFORE THE CIT(A), ASSESSEE ASSAILED T HE ACTION OF THE ASSESSING OFFICER IN LAW AND ON FACTS. THE ASSESSE E RELIED UPON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROL INDIA P. LTD. VS. CIT, 314 ITR 62 (SC) FOR THE PROPOSITION T HAT PROVISION FOR WARRANTIES WAS NOT A CONTINGENT LIABILITY. APART THEREFROM, A SSESSEE ALSO JUSTIFIED THE WORKING OF THE PROVISION BY ENUMERATING DETAIL FOR VARIOUS FINANCIAL YEAR STARTING FROM 2006-07 TO 2012-13 BEFORE THE CIT(A). THE CIT(A) HAS SINCE ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROL INDIA P . LTD. (SUPRA), AND AFTER DULY ANALYZING THE FACTS OF THE CASE IN THE CONTEXT OF THE TESTS LAID DOWN BY THE HONBLE SUPREME COURT. THE FOLLOWING DISCUSSION IN THE ORDER OF THE CIT(A) IS RELEVANT :- 3.3. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LEARNED A.R. VERY CAREFULLY. THE SUPREME COURT IN ROTORK CONTROL S INDIA P. LTD. REPORTED IN 341 ITR 62 HAS HELD THAT PRINCIPLE OF ESTIMATION OF CONTINGENT LIABILITY IS NOT THE NORMAL RULE. A PROVISION FOR WARRANTY CAN B E AN ITEM OF DEDUCTION U/S 37 ONLY IF THE PRESENT VALUE OF THE SAME IS PRO PERTY ASCERTAINED AND DISCOUNTED ON ACCRUAL. THE ISSUE BEFORE THE HON'BLE SUPREME COURT RELATED TO STANDARD WARRANTY WHICH FORMED PART OF T HE SALE AGREEMENT IN RESPECT OF VALVE ACTUATORS. AS PER THE WARRANTY THE ASSESSEE UNDERTOOK, WITHIN 12 MONTHS FROM THE DATE OF COMMISSIONING OR 18 MONTHS FROM THE DATE OF DISPATCH GOODS WHICHEVER WAS EARLIER, TO RE PLACE OR RECTIFY THE DEFECTIVE PART FREE OF CHARGE. IT WAS HELD BY THE H ON'BLE SUPREME COURT THE VALVE ACTUATORS MANUFACTURED BY THE ASSESSEE WERE S OPHISTICATED GOODS AND NO CUSTOMER WAS PREPARED TO BUY THE SAME WITHOU T WARRANTY. THUS ITA NO.1532/PN/2013 A.Y. : 2008-09 WARRANTY BECAME THE INTEGRAL PART OF THE SALE PRICE , SINCE EVERY ITEM SOLD HAD A CORRESPONDING OBLIGATION UNDER THE WARRANTY C LAUSE(S) ATTACHED TO SUCH SALES. FURTHER THE DEPARTMENT AS WELL AS THE T RIBUNAL HAD BEEN CONSISTENTLY ALLOWING THE DEDUCTION RIGHT FROM A.Y. 1983-84 UPTO A.Y. 1991-92. IN THE CASE BEFORE IT, THE FACTS WERE THAT THE ASSESSEE WAS MANUFACTURING VALVE ACTUATORS WHICH WERE SOPHISTICA TED GOODS, IN LARGE QUANTITIES. STATISTICAL DATA INDICATED THAT EVERY Y EAR, SOME OF THESE WERE FOUND DEFECTIVE. SINCE VALVE ACTUATORS WERE SOPHIST ICATED ITEMS, NO CUSTOMER WAS PREPARED TO BUY A VALVE ACTUATOR WITHO UT A WARRANTY. IN THE OTHER APPEALS BEFORE THE HON'BLE SUPREME COURT, FIL ED BY REVENUE, THE RESPONDENTS WERE WIPRO G E MEDICAL SYSTEMS AND HEWL ETT PACKARD & COMPAQ COMPUTERS, WHICH WERE ALSO ENGAGED IN THE BU SINESS OF MANUFACTURING OF SOPHISTICATED MEDICAL EQUIPMENT OR COMPUTERS, IN BULK. A CAREFUL PERUSAL OF THE RATIO LAID DOWN IN THIS DE CISION REVEALS THAT ONLY UNDER THE FOLLOWING CIRCUMSTANCES, THE 'PRESENT VAL UE OF A CONTINGENT LIABILITY' SUCH AS PROVISION FOR WARRANTY COULD BE ALLOWED AS DEDUCTION U/S 37 : A) NATURE OF BUSINESS & SALE : WHEN THERE IS MANUFACTURE AND SALE OF AN ARMY (LARGE) ITEMS RUNNING INTO THOUSANDS OF UNITS OF SOPHISTICATED GOODS, THE PAST EVENT OF DEFECTS BEIN G DETECTED IN SOME OF SUCH ITEMS LEADS TO A PRESENT OBLIGATION, L EAVING NO CHOICE BUT TO SETTLE THAT OBLIGATION. THE COURT NOTED THAT IN THE CASE OF MANUFACTURE AND SALE OF ONE SINGLE ITEM, THE PROVIS ION FOR WARRANTY COULD CONSTITUTE A CONTINGENT LIABILITY NOT LIABLE FOR DEDUCTION U/S 37. B) NATURE OF GOODS MANUFACTURED : THE GOODS MANUFACTURED ARE SOPHISTICATED ITEMS AND IN LARGE NUMBERS. THEREFORE , WARRANTY PROVIDED BECAME A PART OF THE SALE SINCE CUSTOMERS COULD NOT PURCHASE AN ITEM WITHOUT WARRANTY. C) HISTORICAL TREND/ PAST EXPERIENCE : THE DECISION ON WARRANTY PROVISION SHOULD BE BASED ON PAST EXPERIENCE. IN O THER WORDS, IF THE HISTORICAL TREND INDICATES THAT IN THE PAST LAR GE NUMBERS OF SOPHISTICATED GOODS WERE BEING MANUFACTURE AND DEFE CTS EXISTED IN SOME OF THE ITEMS MANUFACTURED AND SOLD, THEN PROVI SION MADE FOR WARRANTY IN RESPECT OF SUCH LARGE NUMBER OF SOPHIST ICATED GOODS WOULD BE ENTITLED TO DEDUCTION FROM GROSS RECEIPTS, PROVIDED DATA IS SYSTEMATICALLY MAINTAINED BY THE ASSESSEE. D) SCIENTIFIC METHOD OF ACCOUNTING : IF AT THE END OF THE YEAR, THE ACTUAL EXPENDITURE IS LESS THAN PROVISION MADE TOWA RDS WARRANTY, THE EXCESS WARRANTY PROVISION SHOULD BE CREDITED TO PROFIT & LOSS ACCOUNT AND OFFERED AS INCOME. UNDER SUCH CIRCUMSTA NCES, THERE WOULD BE NO ESCAPEMENT OF INCOME FROM ASSESSMENT AN D THE ENTIRE EXERCISE WOULD BE REVENUE NEUTRAL. 3.4. TO EXAMINE WHETHER THE APPELLANT SATISFIED THE ABOVE TESTS, CERTAIN FURTHER INFORMATION WAS CALLED FOR FROM THE APPELLANT NAMELY (A) CALCULATION OF WARRANTY PROVISION (B) PROVISION MAD E FOR SUBSEQUENT YEARS & REVERSAL (IF ANY) AND (C) BREAK UP OF EXPENDITURE INCURRED ON ACCOUNT OF WARRANTY EXPENSES IN SUBSEQUENT YEARS. THIS DATA HA S BEEN SUBSEQUENTLY SUBMITTED BY THE APPELLANT ON 25.4.2013. 3.5. BASED ON THE TESTS LAID DOWN BY THE HON'BLE SU PREME COURT AS DISCUSSED IN PARA 3.3 SUPRA, THE FACTS OF THE PR ESENT CASE WERE ANALYSED. THE APPELLANT PROVIDES A WARRANTY FOR A P ERIOD OF THREE YEARS FROM THE DATE OF SALE OF ITS PRODUCTS TO ITS CUSTOM ERS. THE APPELLANT IS IN THE BUSINESS OF MANUFACTURING VARIOUS CORROSIVE MATERIA LS WHICH ARE BASICALLY ITA NO.1532/PN/2013 A.Y. : 2008-09 ANTIRUST CHEMICALS AND ARE USED BY VARIOUS INDUSTRI ES. SINCE IT STARTED MANUFACTURING ACTIVITY FOR THE FIRST TIME IN THE A. Y. 2007-08, THE APPELLANT MADE A PROVISION FOR WARRANTY ON AN ESTIMATE OF 0.5 % OF TURNOVER ON THE SALES OF RS.15,07,04,678/- AMOUNTING TO RS.8,81,000 /- FOR THAT YEAR. FOR THE CURRENT YEAR ALSO, WHICH IS THE SECOND YEAR OF THE BUSINESS OPERATIONS, THE APPELLANT MADE A PROVISION FOR WARRANTY AT THE RATE OF 0.5% OF TURNOVER ON THE SALES. IT IS SEEN THAT THE ASSESSING OFFI CER'S CONTENTION THAT THE APPELLANT HAD NOT INCURRED ANY EXPENDITURE DURING T HE IMPUGNED ASSESSMENT YEAR IS NOT A VALID CONTENTION SINCE THE PERIOD COVERED BY THE WARRANTY FOR PRODUCTS SOLD IN AY 2007-08 HAD NOT EL APSED SINCE THE PERIOD FOR WARRANTY PROVISION WAS FOR THREE YEARS. AT THE END OF THE THIRD YEAR, WHEN THE APPELLANT REALIZED THAT THE CLAIMS AGAINST WARRANTY AMOUNTED TO ONLY RS.4,25,142/- THE APPELLANT REDUCED THE PROVIS ION FOR WARRANTY TO 0.25% OF THE TURNOVER FOR THE YEAR. THUS AGAINST T HE TURNOVER OF RS.30,26,40,371/- FOR THE AY 2009-10, THE APPELLANT CREATED PROVISION FOR WARRANTY AMOUNTING TO RS.7,55,500/- @ OF THE TURNOV ER. IT IS FURTHER SEEN THAT THE APPELLANT HAS WITH EFFECT FROM AY 2013-14 HAS REDUCED WARRANTY PROVISION TO 0.10% OF THE TOTAL TURNOVER FOR THE FY 2012-13. THUS OUT OF TOTAL WARRANTY PROVISION CREATED IN THE SEVEN YEARS FROM AY 2007-08 TO AY 2013-14 AMOUNTING TO RS.55,06,473/- THE APPELLANT H AS SETTLED CLAIMS AGAINST WARRANTY PROVISION AMOUNTING TO RS.15,35,96 3/- AND HAS REVERSED WARRANTY PROVISIONS AMOUNTING TO RS.25,62,071/- FOR THE AY 2011-12 TO 2013-14. THE BALANCE WARRANTY PROVISION STANDING AT THE END OF 31/3/2013 AMOUNTS TO RS.14,08,438/-. 3.6. A PERUSAL OF THE ACCOUNTING TREATMENT AFFORDED BY THE APPELLANT VIS-A-VIS A WARRANTY PROVISION SHOWS THAT THE APPELLANT HAD MADE SINCERE EFFORTS TO PROVIDE A CONSERVATIVE ESTIMATE FOR WARRANTY PROVISION IN THE FIRST YEAR I.E. AY 2007-08 @ 0.5% OF THE TURNOV ER. IT IS APPRECIATED THAT SINCE IT WAS THE FIRST YEAR OF BUSINESS, THERE WAS BOUND TO BE SOME INHERENT ELEMENT OF UNCERTAINLY AND ADHOCISM IN THE CALCULATION OF WARRANTY PROVISION. HOWEVER, IT IS SEEN FROM THE RECORD THAT THESE DEFICIENCIES HAVE BEEN SUO MOTO CORRECTED BY THE APPELLANT FROM THE T HIRD YEAR ITSELF I.E. AY 2009-10 WHEN THE WARRANTY PROVISION HAS BEEN REDUCE D TO 0.25% OF THE TOTAL SALES. THE APPELLANT HAS ALSO OFFERED FOR TAX THE EXCESS PROVISION AMOUNTING TO RS.10,15,878/- FOR THE A.Y. 2011-12, R S.11,66,187/- FOR A.Y. 2012-13 AND RS.3,77,005/- FOR A.Y. 2013-14, TOTALIN G TO RS.25,62,071/-. FURTHER THE APPELLANT HAS ALSO REDUCED THE PROVISIO N FOR WARRANTY TO 0.10% OF THE TURNOVER FOR AND FROM THE A.Y.2013-14. IT CA N THEREFORE BE SAID, THAT LOOKING AT THE FACTS AND CIRCUMSTANCES OF THE APPEL LANT'S CASE THAT THE REDUCTION IN THE WARRANTY PROVISION AS WELL AS THE REVERSAL OF THE WARRANTY PROVISION IN THE SUBSEQUENT YEARS SATISFIES THE TES TS LAID DOWN BY THE SUPREME COURT IN ROTORK CONTROLS CASE THAT THE APPE LLANT SHOULD MAINTAIN SYSTEMATIC AND SCIENTIFIC DATA IN RESPECT OF WARRAN TY PROVISION IN ORDER THAT THE SAID PROVISION MAY BE ALLOWED AS A REVENUE, EXP ENDITURE. SINCE THE APPELLANT SATISFIES ALL THE TESTS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE CITED SUPRA, IT IS HELD THAT GROUND OF APP EAL NO.1 IS ALLOWED. 5. IN THE ABOVE BACKGROUND, WE HAVE HEARD THE LEARN ED DEPARTMENTAL REPRESENTATIVE. ACCORDING TO THE LEARNED DEPARTMEN TAL REPRESENTATIVE, THE CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE BECAUSE THERE WAS NO ITA NO.1532/PN/2013 A.Y. : 2008-09 JUSTIFICATION FOR THE IMPUGNED PROVISION AS THE PAS T RESULTS DID NOT JUSTIFY SUCH ESTIMATION OF LIABILITY. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE R ESPONDENT-ASSESSEE RELIED UPON THE DISCUSSION OF THE CIT(A) CONTAINED IN PARAS 3.5 TO 3.6 OF THE ORDER OF THE CIT(A), WHICH ACCORDING TO HIM CLEARLY BRING OUT THAT THE TESTS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RO TORK CONTROL INDIA P. LTD. (SUPRA) COVERS THE CASE OF THE ASSESSEE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN-PR INCIPLE, THERE IS NO DISPUTE THAT THE PRODUCTS SOLD BY THE ASSESSEE CARR Y A STIPULATION OF WARRANTY AGAINST DEFECTS FOR A PERIOD OF 3 YEARS FROM THE DA TE OF SALE. IT IS ALSO ABUNDANTLY CLEAR THAT THE ISSUE OF ALLOWABILITY OF A PROVISION MADE FOR WARRANTIES ATTACHED TO SALE, HAS BEEN HELD TO BE AN ALLOWABLE EXPENDITURE BY THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CON TROL INDIA P. LTD. (SUPRA). THE DISCUSSION MADE BY THE CIT(A) IN ORDER TO EXAMI NE THE REASONABLENESS AND THE METHODOLOGY ADOPTED BY THE ASSESSEE TO COMP UTE THE PROVISION FOR WARRANTIES ALSO BRING OUT THAT THE SAME STAND THE T ESTS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROL INDIA P. LTD. (SUPRA). THE CONCLUSION OF THE CIT(A) IS THAT THE ASSESSEE H AS MAINTAINED SYSTEMATIC AND SCIENTIFIC DATA IN RESPECT OF WARRANTY PROVISIO N AND THEREFORE ACCORDING TO HIM THE IMPUGNED PROVISION WAS ALLOWABLE AS A REVEN UE EXPENDITURE. WE FIND NO REASONS TO DISTRACT FROM THE CONCLUSION DRAWN BY THE CIT(A) BECAUSE THERE IS NO MATERIAL LEAD BY THE REVENUE WHICH WOULD ENAB LE US TO DIFFER WITH THE FINDINGS OF THE CIT(A). ACCORDINGLY, ON THIS ASPEC T THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED AND REVENUE FAILS ON THIS GROUND. 8. THE SECOND ISSUE RELATES TO A DEPRECIATION CLAIM ED OF RS.34,16,471/- ON THE COST OF NEW FACTORY BUILDING CONSTRUCTED AT KIRLOSKARWADI. THE ITA NO.1532/PN/2013 A.Y. : 2008-09 ASSESSEE CLAIMED DEPRECIATION @ 10% ON THE GROUND T HAT THE SAME WAS PUT TO USE BEFORE 30 TH SEPTEMBER, 2007. THE ASSESSING OFFICER REQUIRED T HE ASSESSEE TO FURNISH EVIDENCE OF COMPLETION OF SAID BUILDING BEFORE 30.09.2007 IN ORDER TO EXAMINE WHETHER THE BUILDING WAS PUT TO USE BEFORE OR AFTER 30 TH SEPTEMBER, 2007. THE ASSESSING OFFICER VERIFIED TH E RELEVANT MATERIAL AND NOTED THAT ASSESSEE HAD INCURRED AN EXPENDITURE OF RS.12.64 LACS ON FURNITURE AND FITTINGS ON THE SAME BUILDING IN THE POST-30.09 .2007 PERIOD AND THEREFORE, ACCORDING TO HIM, THE DEPRECIATION WAS ONLY ALLOWAB LE AT 50% OF THE NORMAL RATE. AS PER THE ASSESSING OFFICER, INCURRENCE OF EXPENDITURE ON FURNITURE DURING POST-30.09.2007 PERIOD SHOWED THAT THE BUILD ING WAS NOT PUT TO USE BEFORE 30.09.2007. THEREFORE, HE DISALLOWED EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE OF RS.17,35,734/-. 9. IN APPEAL BEFORE THE CIT(A), ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER WRONGLY DISALLOWED PARTIAL DEPRECIATION. I T WAS CONTENDED THAT CONSTRUCTION OF THE FACTORY BUILDING WAS INDEED COM PLETED AND IT IS OCCUPIED BY THE STAFF ON 20.09.2007 ITSELF, THOUGH SOME FURNITU RE WORK WAS CARRIED OUT SUBSEQUENTLY. THE ASSESSEE ALSO REFERRED TO VARIOU S OTHER EVIDENCES ON RECORD, WHICH WERE DISREGARDED BY THE ASSESSING OFF ICER. IN THIS CONTEXT, ASSESSEE REFERRED TO A COMPLETION CERTIFICATE ISSUE D BY THE GRAMPANCHAYAT EVIDENCING THAT THE BUILDING WAS COMPLETED ON 20.09 .2007 ITSELF AND WAS PUT TO USE BEFORE 30 TH SEPTEMBER, 2007. THE CIT(A) HAS FOUND MERIT IN TH E CLAIM OF THE ASSESSEE AND ALLOWED THE SAME BY MAKING THE FOLLOWING DISCUSSION :- 4.2 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A PPELLANT. FUNDAMENTALLY THE ASSESSING OFFICER HAS DISALLOWED PART OF THE DEPRECIATION WHICH SHOWS THAT HE IS IN AGREEMENT THAT THE FACTOR Y BUILDING WAS ACTUALLY PUT TO USE DURING THE IMPUGNED ASSESSMENT YEAR. HIS MA IN OBJECTION APPEARS TO BE THAT THE CONCLUSIVE EVIDENCE IN THE FORM OF COMP LETION CERTIFICATE FROM PMC WAS NOT MADE AVAILABLE. ON THIS ISSUE IT IS CLAIME D THAT THE FACTORY BUILDING WAS LOCATED IN THE KIRLOSKAR WADI, DIST. SANGLI, WH ICH IS NOT WITHIN THE CORPORATION LIMIT. HOWEVER, A CERTIFICATE OF THE G RAMPANCHAYAT KUNDAL DATED 20.09.2007 HAS BEEN FILED DURING APPELLATE PROCEEDI NGS WHICH INDICATES THAT THE FACTORY BUILDING IS COMPLETE AND CAN BE PUT TO USE WITH EFFECT FROM 27.09.2007. THE OTHER OBJECTION OF THE ASSESSING O FFICER IS THAT THE FURNITURE ITA NO.1532/PN/2013 A.Y. : 2008-09 WORK WAS BEING UNDERTAKEN TILL ABOUT FEB.2008 WHICH SHOWS THAT THE BUILDING WAS NOT COMPLETE AND PUT TO USE. THE APPELLANT HAS SUBMITTED THAT THIS IN FACT SUPPORTS ITS CASE THAT THE BUILDING WAS ACTUALLY BE ING PUT TO USE, SINCE THE FURNITURE WORK WAS BEING CARRIED OUT. IT IS SEEN T HAT THE APPELLANT HAD FILED ALL THE EVIDENCES AVAILABLE WITH IT DURING ASSESSMENT P ROCEEDINGS, SUCH AS CERTIFICATE OF ARCHITECT AND PLANT HEAD AS ALSO ALL THE VOUCHERS RELATING TO THE FURNITURE WORK. THESE EVIDENCES CLEARLY SHOW THAT THE FACTORY BUILDING WAS PUT TO USE WITH EFFECT FROM 20.09.2007 AND THAT THE APP ELLANT HAS CORRECTLY CLAIMED DEPRECIATION @ 10%. ACCORDINGLY IT IS HELD THAT TH E DEPRECIATION CLAIMED BY THE APPELLANT WAS CORRECT. GROUND NO.2 IS ALLOWED. 10. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTAT IVE REITERATED THE INCURRENCE OF EXPENDITURE ON FURNITURE AND FITTINGS DURING THE POST-30.09.2007 PERIOD TO JUSTIFY ALLOWANCE OF DEPRECIATION ONLY AT 50% OF THE NORMAL RATES. HOWEVER, THE LEARNED DEPARTMENTAL REPRESENTATIVE HA S NOT REBUTTED THE EVIDENCE RELIED UPON BY THE CIT(A) IN HOLDING THAT FACTORY BUILDING IN QUESTION WAS COMPLETED AND PUT TO USE BEFORE 30.09.2007 AND THEREFORE IT WAS ELIGIBLE FOR FULL RATE OF DEPRECIATION. THE CIT(A) HAS REFE RRED TO AN EXTERNAL EVIDENCE IN THE SHAPE OF CERTIFICATE OF THE GRAMPANCHAYAT WHICH SUPPORTS THE PLEA OF THE ASSESSEE THAT THE FACTORY BUILDING WAS COMPLETED AN D PUT TO USE BEFORE 30.09.2007. THE ISSUE RELATING TO EXPENDITURE INCU RRED ON FURNITURE AND FITTINGS POST-30.09.2007 HAS ALSO BEEN DEALT WITH BY THE CIT (A). ACCORDING TO HER, SUCH EXPENDITURE RELATED TO FURNITURE WORK AND THE SAME DID NOT IMPLY THAT THE BUILDING WAS NOT COMPLETED BEFORE 30.09.2007. ALL THE AFORESAID POINTS MADE OUT BY THE CIT(A) HAVE NOT BEEN REBUTTED BY THE REV ENUE BEFORE US ON THE BASIS OF ANY CREDIBLE MATERIAL OR EVIDENCE. AS A C ONSEQUENCE, WE HEREBY AFFIRM THE ORDER OF THE CIT(A) ON THIS ASPECT ALSO. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 27 TH AUGUST, 2014. SUJEET ITA NO.1532/PN/2013 A.Y. : 2008-09 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE