M/s Hero Cycles Ltd., Ludhiana V. DCIT, C-5, Ludhiana

ITA 1559/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1497 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDER KANTA
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Depreciation
• Section: 143(3); 147; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A CHANDIGARH , . '.. . # $, %& BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R.KUMAR, ACCOUNTANT MEMBER ITA NO. 1559/CHD/2018 ASSESSMENT YEAR : 2005-06 M.S HERO CYCLES LTD., HERO NAGAR, G.T.ROAD, LUDHIANA. THE DCIT, CIRCLE-V, LUDHIANA. PAN NO: AAACH4073P APPELLANT RESPONDENT ! ASSESSEE BY : SHRI SUBHASH AGGARWAL ' ! REVENUE BY : SMT. CHANDERKANTA, SR.DR # $ % DATE OF HEARING : 01.05.2019 &'() % DATE OF PRONOUNCEMENT : 14.06.2019 %'/ ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 22.10.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS)-2, [HEREINAFTER REFERRED TO AS CIT(A) ], LUDHIANA REJECTING THE APPLICATION OF THE ASSESSEE MOVED U/S 154 OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) THEREBY REJECTING THE CLAIM OF THE ASSESSEE OF DEPRECIATION @ 25%, AS AGAINST 15% UPHELD BY THE LD. CIT(A) VIDE HIS IMPUGNED ORDER ON ELECTRIC INSTALLA TIONS BEING INTEGRAL PART OF THE PLANT & MACHINERY. ITA-1559/CHD/2018 A.Y. 2005-06 PAGE 2 OF 4 2. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT T HE ASSESSEE CLAIMED DEPRECIATION @ 25% ON THE ELECTRIC INSTALLATIONS CL AIMING THE SAME AS TO BE INTEGRAL PART OF THE PLANT & MACHINERY ON WHI CH THE DEPRECIATION AS PER RULES IS ALLOWABLE @ 25%. THE AO COMPLETED T HE ASSESSMENT ALLOWING THE DEPRECIATION AS CLAIMED BY THE ASSESSE E. HOWEVER, LATER ON THE AO REOPENED THE ASSESSMENT PROCEEDINGS U/S 1 47 OF THE ACT AND REJECTED THE CLAIM OF THE ASSESSEE AND ALLOWED THE DEPRECIATION @ 15% AS ADMISSIBLE ON ELECTRIC INSTALLATIONS SEPARAT ELY. AGGRIEVED BY THE SAID ORDER OF THE AO, THE ASSESSEE PREFERRED TH E APPEAL BEFORE THE CIT(A). 3. THE LD. CIT(A) VIDE HIS ORDER DATED 01.04.2016 U PHELD THE ORDER OF THE AO OBSERVING AS UNDER : I HAVE CONSIDERED RIVAL SUBMISSION. I AM INCLINED TO AGREE WITH THE CONTENTION OF ID. AO. THE APPELLANT HAD CLAIMED THESE ELECTRICAL INSTALLATION S AS A PART OF PLANT AND MACHINERY. THE ISSUER WHETHER IN A PARTICULAR CASE, THE ELECTRICAL INSTAL LATIONS ARE A PART OF PLANT AND MACHINERY OR NOT, I S A DEBATABLE ISSUE. IT IS ONLY WHERE THE ELECTRICAL INSTALLATIONS ARE NOT AN INTEGRAL PART OF PLANT AND MACHINERY THAT THE RATE OF DEPRECIATION IS LOWER. H OWEVER, WHERE THE ELECTRICAL INSTALLATIONS ARE AN INTEGRAL PART OF PLANT AND MACHINERY, DEPRECIATION IS ALLOWABLE ON THESE ASSETS AT THE RATE APPLICABLE TO PLANT AND MACHINERY. IN THE APPELLANT'S CASE, TH E ELECTRICAL INSTALLATION WAS CLAIMED TO BE A PART OF PLANT & MACHINERY. DEPRECIATION WAS ORIGINALLY ALLO WED VIDE ORDER U/S 143(3) DATED 31.12.2008 @ 25%. THIS BEING AN INCORRECT RATE FOR THE YEAR UNDE R CONSIDERATION WITH REGARD TO PLANT & MACHINERY THE SAME SHOULD BE @ 15% ONLY I.E. CORREC T RATE FOR PLANT & MACHINERY. 4. THE ASSESSEE, THEREAFTER, MOVED AN APPLICATION U /S 154 OF THE ACT BEFORE THE LD. CIT(A) PLEADING THEREIN THAT MISTAKE APPARENT ON RECORD HAS OCCURRED IN THE ORDER DATED 01.04.2016 OF THE C IT(A) (SUPRA) AND SUBMITTED THAT THE LD. CIT(A) HIMSELF HAD OBSERVED THAT SINCE THE ASSESSEE HAD CLAIMED THE ELECTRIC INSTALLATIONS AS INTEGRAL PART OF THE PLANT & MACHINERY HENCE DEPRECIATION @ 25% WAS ALLO WABLE. HOWEVER, ITA-1559/CHD/2018 A.Y. 2005-06 PAGE 3 OF 4 IT HAS BEEN WRONGLY MENTIONED THAT THE RATE OF DEPR ECIATION SHOULD BE @ 15%. FURTHER THAT EVEN IN THE EARLIER YEARS ALSO , ASSESSEE HAS BEEN CONSISTENTLY BEEN ALLOWED DEPRECIATION @ 25%. THE LD. CIT(A) HOWEVER, DISMISSED THE APPLICATION OF THE ASSESSEE OBSERVING THAT THE APPLICATION REQUIRED RE-CONSIDERATION OF FACTS HENC E, THE SAME WAS NOT MAINTAINABLE AND FURTHER THAT THE ISSUE WAS A DEBAT ABLE ISSUE. 5. BEING AGGRIEVED BY THE SAID ORDER OF THE CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORD. A PERUSAL OF THE ABOVE REPRODUCED PART OF THE ORDER DATED 01.04.2016 OF THE CIT(A) REVEALS THAT THOUGH THE LD . CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED THE ELECTRIC INSTALLATIONS AS INTEGRAL PART OF THE PLANT & MACHINERY AND HAS FURT HER HELD THAT WHERE THE ELECTRIC INSTALLATIONS ARE INTEGRAL PART OF THE PLANT & MACHINERY, DEPRECIATION IS ALLOWABLE ON THESE ASSETS AT THE RA TE APPLICABLE TO PLANT & MACHINERY, HOWEVER HE HELD THAT THE AO RIGH TLY ALLOWED THE RATE OF DEPRECIATION @ 15%. 7. A PERUSAL OF THE ABOVE PARA ITSELF REVEALS THAT THE LD. CIT(A) WHILE CONCLUDING HELD THAT THE DEPRECIATION WAS ALLOWABLE @ 15%, WHEREAS, HE HIMSELF HAS NOTED THAT WHERE THE ELECTRIC INSTAL LATIONS ARE INTEGRAL PART OF THE PLANT & MACHINERY, DEPRECIATION WAS ALL OWABLE @ 25%. THERE IS NO FINDING EITHER OF THE AO IN THE ASSESSM ENT ORDER OR IN THE ITA-1559/CHD/2018 A.Y. 2005-06 PAGE 4 OF 4 ORDER OF THE CIT(A) DATED 01.04.2016 THAT THE ELECT RIC INSTALLATIONS WERE NOT INTEGRAL PART OF THE PLANT & MACHINERY. 8. IN VIEW OF THIS, WE FIND THAT A MISTAKE APPARENT ON RECORD HAS OCCURRED IN THE ORDER OF THE CIT(A) WHILE ALLOWING THE RATE OF DEPRECIATION @ 15% WHEREAS FROM THE FINDINGS IT APP EARS THAT THE LD. CIT(A) HAS HELD THAT THE ASSESSEE IS ENTITLED TO RA TE OF DEPRECIATION AS ADMISSIBLE ON PLANT & MACHINERY WHICH ADMITTEDLY WA S 25% FOR THE YEAR UNDER CONSIDERATION. 9. IN VIEW OF THIS, WE ALLOW THE APPEAL OF THE ASSE SSEE AND DIRECT THE AO TO ALLOW DEPRECIATION @ 25% TO THE ASSESSEE ON E LECTRIC INSTALLATIONS. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 14.06.201 9. SD/- SD/- (. '... # $) ( ) (DR. B.R.R.KUMAR) (SANJAY GARG) %& / ACCOUNTANT MEMBER / JUDICIAL MEMBER POONAM '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR