M.J. LABS P.LTD, MUMBAI V. ITO 9(2)-3, MUMBAI

ITA 157/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2052 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPH
• Assessee Lawyers: RASHMIKANT C MOD I
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, J UDICIAL M EMBER , A ND SHR I N.K. PRADHAN , A CCOUNTANT M EMBER ITA N OS . 157 & 8312 /MUM/20 11 ASSESSMENT YEAR S : 200 7 - 08 & 2008 - 09 M/S. M.J. LABS PVT. LTD., 7A, 702, ALICIA NAGAR, LOKHANDWALA COMPLEX, KANDIVALI (EAST), MUMBAI 23 / VS. ITO 9(2) - 3 , AAYAKAR BHAVAN, M.K. MARG, MUM BAI - 02 ( / REVENUE) ( /ASSESSEE) P.A. NO. AAACM 5735 F / REVENUE BY SHRI NEIL PHILIPH - DR / ASSESSEE BY SHRI RASHMIKANT C. MODI CA / DATE OF HEARING : 1 0 /1 1 /201 6 / DATE OF ORDER : 1 0 /1 1 /2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER S DATED 25 / 1 0 /201 0 & 09/09/2011 FOR THE ASSESSMENT YEARS 2007 - 08 & 2008 - 09 OF THE LD. FIRST APPE LLATE AUTHORITY, MUMBAI . M/S. M.J. LABS P. LTD. ITA NO S . 157 & 8312 /MUM/2011 2 2. THE COMMON GROUND RAISED BY THE ASSESSEE PERTAINS TO UPHOLDING THE ADDITION OF EXCESS DEPRECIATION OF RS. 27,31,316/ - ( ASSESSMENT YEAR 2007 - 08) AND RS. 21,10,907/ - ( ASSESSMENT YEAR 2008 - 09) ON ACCOUNT OF DENIAL OF DEPRECIATION CLAIMED TOWARDS PLANT & MACHINERY. THE CRUX OF ARGUMENT ADVANCED BY SHRI RASHMIKANT C. MODI , LD. COUNSEL FOR THE ASSESSEE IS THAT THE MACHINERY IN QUESTION IS A ENERGY SAVING DEVICE, THEREFORE THE ASSESSEE IS ENTITLED FOR DEPRECIATION @ 80%. ALTERNATIVELY, IT WAS ARGUED THAT IF THE CLAIM IS NOT GRANTED AT THE RATE OF 80%, THEN SUCH PLANT & MACHINERY MAY BE I N THE CATEGORY OF COMPUTE RS ON WHICH THE CLAIM IS ALLOWABLE AT 60% . OUR ATTENTION WAS INVITED TO THE LETTER DATED NIL , OBTAIN ED FROM DR. PRAKASH K. BHANSALI, M.SC., PH.D., DCP, AYURVED RATN A , HAVING EXPERIENCE OF 2 6 YEARS IN R & D & ANALYTICAL FIELD AS TECHNICAL MANAGER (APPROVED BY FDA IN CHEMICAL INSTRUMENTS, MICRO, STERILITY , PYROGEN & TOXICITY TESTING) ATTACHED IN THE PAPER BOOK FILED BY THE ASSESSEE . THE CRUX OF ARGUMENT ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE FALLS UNDER THE CATEGORY OF ENERGY SAVING DEVICES AND THUS, ENTITLED FOR HIGHER RATE OF DEPRECIATION I.E. 80% . 2.1. ON THE OTHER HAND, LD. DR SHRI NEIL PHILIPH DEFENDED THE ADDITION BY CONTENDING THAT THE STAND TAKEN IN THE ASSESSMENT ORDER / IMPUGNED ORDER IS QUITE JUSTIFIABLE AS THE CLAIMED MACHINERY IS NOT ENERGY SAVING DEVICE . THIS STAND OF THE LD. DR IS THAT THE ASSESSEE I S ENTITLED FOR DEPRECIATION @ M/S. M.J. LABS P. LTD. ITA NO S . 157 & 8312 /MUM/2011 3 10% ON GENERAL ELECTRICAL INSTALLATION AND 15% ON CLAIMED ELECTRICAL ENERGY SAVING DEVICES . 2 .2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN BUSINESS ACTIVITY OF CONDUCTING LAB TEST IN THE FIELD OF PHARMACEUTICALS , DECLARING INCOME OF RS. 17,78,157/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SECURITY AND THEREFORE, WHILE FRAM ING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 11/12/2009, THE TOTAL INCOME WAS ASSESSED AT RS. 45,21,880/ - . WHILE DOING SO, THE LD. ASSES SING OFFICER DISALLOWED THE CLAIMED DEPRECIATION @ 80% ON PLANT AND MACHINERY . THE PLANT AND MACHINERY , HELD BY THE ASSESSEE WAS CLAIMED TO FALSE UNDER THE CATEGORY OF ENERGY SAVING DEVIC ES , ENTITLED FOR HIGHER RATE OF DEPRECIATION AT 80% . THE LD. ASSESSING O FFICER MERELY ALLOWED THE DEPRECIATION @15% AND DISALLOWED TO THE EXTENT OF RS. 27,31,316/ - OUT OF CLAIMED RS. 47,16,95 7/ - . IT IS NOTED THAT ON GENERAL ELECTRICAL INSTALLATION, THE ASSESSEE CLAIMED DEPRECIATION @15% WHEREAS ON THE ELECTRICAL INSTALLATION ( ENERGY SAVING DEVICES ) THE CLAIMED DEPRECIATION IS @ 80%. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , THE STAND TAKEN IN THE ASSESSMENT ORDER WAS AFFIRMED. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.3 IT IS WORTH MENTIONING THAT THIS APPEAL WAS HEARD ON 03/11/2016 WHEREIN THE BENCH DIRECTED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM THAT THE PLANT & MACHINERY IS IN FACT AN M/S. M.J. LABS P. LTD. ITA NO S . 157 & 8312 /MUM/2011 4 ENERGY SAVING DEVICE . TODAY I.E. 10/11/2016 THE ASSESSEE PRODUCED A CERTIFICATE FROM AN EXPERT NAMELY DR. PRAKASH K. BHANSALI . THE LETTER IS REPRODUCE D HEREUNDER FOR READY REFERENCE AND ANALYSIS: - M/S. M.J. LABS P. LTD. ITA NO S . 157 & 8312 /MUM/2011 5 2.4 WE HAVE PERUSED THE LETTER OF THE EXPERT NAMELY DR. PRAKASH K. BHANSALI , WHO VERIFIED THE INSTRUMENT BROACHERS OF THE ASSESSEE AND CERTIFIED THAT THE INSTRUMENT NAMELY M ICRO - PROCESSOR / M ICRO - CONTROLLER IS A N EN ERGY SAVING DEVICE/INSTRUMENT WITH SUPPORT OF SOFTWARE AND COMPUTER WITH UPS. TH E AUTHENTICITY OF THIS CERTIFICATE WAS NOT CHALLENGED BY THE REVENUE . IT IS ALSO NOTED THAT ANOTHER LETTER DATED 10/06/2013 (PAGE NO. 37 OF THE PAPER BOOK ) HAS BEEN ANNEX ED BY THE ASSESSEE , WHE REIN DR. NITIN R. NIMKAR HAS IDENTICALLY CERTIFIED . THE SAID LETTER IS ALSO REPRODUCED HERE UNDER : - M/S. M.J. LABS P. LTD. ITA NO S . 157 & 8312 /MUM/2011 6 2.5 CONSIDERING THE ARGUMENTS AND THE AFOREMENTIONED LETTERS FR OM THE EXPERT/TECHNICAL PERSONS , WHEREIN IT HAS BEEN CERTIFIED THAT THE CLAIMED INSTRUMENTS ARE MICRO PROCESSOR / MICRO CONTROLLER ARE ENERGY SAVING INSTRUMENTS WORKING WITH THE SUPPORT OF S OFTWARE AND COMPUTER. NO CONTRARY EVIDENCE , CONTRADICTING THE CLAIM OF THE ASSESSEE , WAS PRODUCED BEFORE US BY THE R EVENUE , THEREFORE, WE FIND MERIT IN THE CLAIM OF THE ASSESSEE AND ALLOW THE SAME. HOWEVER, IT IS NOTICED FROM PAGE NO. 29 OF THE LIST OF LAB EQUIPMENTS THERE ARE WHIRLPOOL REFRIGERATOR AND SAMSUNG REFRIGERATOR (ITEM NO. 11 & 12) WHICH CANNOT BE SAID TO BE ENERGY SAVING DEVICE , CONSEQUENTLY ON BOTH THESE ITEMS / REFR IGERATOR S , THE DEPRECIATION IS ALLOWABLE ONLY TO THE EXTENT OF 15% AND ON THE REMAINING EQUIPMENTS WHICH ARE HELD TO BE ENERGY SAVING DEVICES (AS MENTIONED IN THE AFOREMENTIONED LETTER S ISSUED BY TECHNICAL PERSONS ) THE DEPRECIATION IS ALLOWABLE @ 80% WHICH IS OTHERWISE ALLOWABLE ON SUCH ITEM AS IS EVIDENCED FROM THE TABLE AV AILABLE AT PAGES 45 TO 48 OF THE PAPER BOOK MENTI ONING THE RATES OF DEPRECIATION FOR ASSESSMENT YEAR S 2003 - 04 AND ONWARDS , DETAILED IN APPENDIX - I WHEREIN AT PAGE NO. 47 [ CLAUSE IX - B (C) ] THE ENERGY SAVING DEVICES BASED ON MICRO - P R O CESSOR BASED CONTROL SYSTEMS. THUS, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. THIS CONCLUSION OF OURS WILL BE IDENTICALLY APPLICABLE TO THE ASSESSMENT YEAR 2008 - 09 (ITA NO.8312/MUM/2011) ALSO . M/S. M.J. LABS P. LTD. ITA NO S . 157 & 8312 /MUM/2011 7 FINALLY, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLO WED. T HIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FRO M BOTH SIDES AT T H E CONCLUSION OF THE HEARING ON 1 0 /1 1 /2016 . SD/ - SD/ - ( N.K. PRADHAN ) (JOGINDER SINGH) / ACCOUNTAN T MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 1 0 / 1 1 /201 6 VR/ - . . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A) - , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBA I,