The ITO, Ward-6(3), Surat V. M/s. Bharti Creations, Surat

ITA 1577/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89584 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Depreciation; Additional depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO. 1577/AHD/2011 (ASSESSME NT YEAR: 2007-08) THE I.T.O., WARD-6(3), SURAT V/S M/S. BHARTI CREATIONS, PLOT - 92, S.K. NAGAR INDUSTIRAL SOCEITY, PART-2, BAMROLI ROAD, SURAT (APPELLANT) (RESPONDENT) PAN: AAHFB4552H APPELLANT BY : SMT. SONIA KUMAR, SR. D.R. RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 01-06-2015 DATE OF PRONOUNCEMENT : 05 -06-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-IV, SURAT DATED 04.02.2011 FOR A.Y. 2007-08. 2. ON THE DATE OF HEARING I.E. ON 01.06.2015 NONE APPE ARED ON BEHALF OF ASSESSEE THOUGH FROM THE RECORDS, IT IS SEEN THAT T HE NOTICE OF HEARING WAS SERVED TO THE ASSESSEE. WE THEREFORE PROCEED TO DE CIDE THE ISSUE EX PARTE QUA THE ASSESSEE AND ON THE BASIS OF MATERIAL AVAIL ABLE ON RECORD. ITA NO 1577/ AHD/2011 . A.Y. 2007-0 8 2 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF EMBROIDERY ON JOB WORK BASIS. ASSESSEE ELECTRONICALLY FILED ITS R ETURN OF INCOME FOR A.Y. 2007-08 ON 31.10.2007 DECLARING TOTAL INCOME AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 23.12.2009 AND THE TOTAL IN COME AFTER SETTING OFF OF UNABSORBED DEPRECIATION WAS DETERMINED AT RS. 59,89 0/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE L D. CIT(A) WHO VIDE ORDER DATED 04.02.2011 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN AP PEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF CLAIM OF A DDITIONAL DEPRECIATION OF RS.12,53,678/-. OF THE ACT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION OF RS. 12,53,678/- ON THE EMBROIDERY MACHINES. A.O WAS OF THE VIEW THAT ASSESSEE WAS NOT ELIGIBLE TO CLAIM ADDITIONAL DEPRECIATION FOR THE REASON THAT FOR BEI NG ELIGIBLE FOR ADDITIONAL DEPRECIATION, ASSESSEE MUST BE ENGAGED IN MANUFACTU RE/PRODUCTION OF ANY ARTICLE OR THING. ACCORDING TO THE A.O SINCE IN THE PRESENT CASE THE ASSESSEE WAS ENGAGED IN JOB WORK ACTIVITY OF THE EMBROIDERY WORK ON SAREES AND AFTER THE EMBROIDERY WORK, THE PRODUCT DOES NOT BECOME CO MMERCIALLY DIFFERENT COMMODITY AND THE EMBROIDERY ON THE SAREE JUST ADDS VALUE TO THE SAREE AND THEREFORE ACCORDING TO HIM THE ACTIVITY OF THE ASSE SSEE CANNOT BE REGARDED AS MANUFACTURING OR PRODUCTION. HE ACCORDINGLY DEN IED THE CLAIM OF ITA NO 1577/ AHD/2011 . A.Y. 2007-0 8 3 ADDITIONAL DEPRECIATION AND DISALLOWED THE CLAIM OF RS. 12,53,678/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE LD. CIT(A) WHO AFTER FOLLOWING THE DECISION OF THE AHME DABAD BENCH IN THE CASES CITED IN HIS ORDER DELETED THE ADDITION BY HO LDING AS UNDER:- 3. GROUND NO.2 IS AGAINST THE A.O. DISALLOWING CLAIM OF ADDIT IONAL DEPRECIATION ON EMBROIDERY MACHINES AMOUNTING TO RS.12,53,678/-. TH E ASSESSEE'S CONTENTION WAS THAT EMBROIDERY WORK ON SAREE WOULD FALL WITHIN THE MEAN ING OF MANUFACTURE OR PRODUCTION AND THEREFORE THE EMBROIDERY MACHINERIES WERE ELIGI BLE FOR ADDITIONAL DEPRECIATION. THE A.O. HOWEVER, HELD THAT THE ASSESSEE WAS NOT PERFOR MING ANY MANUFACTURING OR PRODUCTION AND THEREFORE NOT ELIGIBLE FOR ADDITIONA L DEPRECIATION. I FIND THIS ISSUE IS COVERED IN FAVOUR OF THE APPELLANT BY THE DECISION OF HON'BLE ITAT, AHMEDABAD BENCH IN THE CASE OF M/S. HARIPRIYA PROCEESORS PVT. LTD., SU RAT IN ITA NO. 1569 /AHD/2010 AND THE ORDER OF THE HON'BLE ITAT 'D'BENCH, AHMEDABAD IN TH E CASE OF M/S. ASWANI INDUSTRIES, SURAT IN ITA NO.2103/AHD/2010. I FIND THAT THE FACT S OF THE CASE ARE IDENTICAL TO THOSE OF THE APPELLANT. RESPECTFULLY FOLLOWING THE ORDERS OF THE HON'BLE ITAT AHMEDABAD, THE ADDITION MADE DUE TO NOT ADMITTING CLAIM OF ADDITIO NAL DEPRECIATION ON EMBROIDERY MACHINERIES IS THEREFORE DELETED. THIS GROUND IS ALLOWED. 6. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. 8. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, THE ISSUE IS WITH RESPECT TO ADDITION AL DEPRECIATION WHICH WAS DENIED BY THE A.O AS HE WAS OF THE VIEW THAT THE AC TIVITY UNDERTAKEN BY THE ASSESSEE DOES NOT AMOUNT TO PRODUCTION AND THEREF ORE ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION. WE FIND THAT LD. CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HAD RELIED ON T HE DECISION OF AHMEDABAD ITA NO 1577/ AHD/2011 . A.Y. 2007-0 8 4 BENCH IN THE CASE OF HARIPRIYA PROCESSORS PVT. LTD. ITA NO. 1569/A/2010AND THE DECISION IN THE CASE OF ASWANI I NDUSTRIES IN ITA NO. 2103/A/2010. HE HAS FURTHER GIVEN A FINDING THAT TH E FACTS OF THE CASE ARE IDENTICAL TO THE AFORESAID DECISIONS RELIED UPON BY HIM. BEFORE US, REVENUE HAS NOT POINTED OUT ANY DISTINGUISHING FEATURE IN T HE CASE OF THE ASSESSEE AND THAT OF THE DECISIONS RELIED UPON BY LD. CIT(A). IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDE R OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 05 - 06 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD