ACIT, Salem V. Narasu's Roller Flour Mills, Salem

ITA 1650/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4685 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 22-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 1650/MDS/2013 (ASSESSMENT YEAR: 2009-10) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-I(2), SALEM. VS. M/S. NARASUS ROLLER FLOUR MILLS, 16A COURT ROAD, JOHNSONPET, SALEM-636 007. PAN: AABFN8476G (APPELLANT) (RESPONDENT) APPELLANT BY : MR. GURU BASHYAM, JC IT RESPONDENT BY : MR. G.BASKAR, ADVOCATE DATE OF HEARING : 29 TH OCTOBER, 2013 DATE OF PRONOUNCEMENT : 19 TH NOVEMBER, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM DAT ED 18.06.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE REVENUE RAISED THE FOLLOWING GROUND IN ITS A PPEAL:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THAT THE EXPENDITURE ON CIVIL WORKS IS DISTINCTLY AND CATEGORICALLY SEPARATE FROM THE MACHINERY. THE CIVIL WORKS DO NOT HAVE A DIRECT NEXUS TO THE WIND POWER GENERATION. BESIDES, THE CIVIL ITA NO.1650/MDS//2013 2 WORK RELATING TO THE WINDMILL DO NOT REQUIRE ANY SPECIFIC AND SPECIALIZED DESIGN WHICH OTHERWISE, HAVE AN IMPACT ON POWER GENERATION. 3. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON WINDMILL AND T HE ASSESSEE INCLUDED THE COST OF CIVIL WORKS AMOUNTING TO ` 14,00,000/- IN THE WINDMILL AND CLAIMED DEPRECIATIO N ON CIVIL WORKS ALSO. THE DEPARTMENTAL REPRESENTATIVE SUBMIT S THAT THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION ON CI VIL WORKS, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY RESTRI CTED THE DEPRECIATION TO WINDMILL ONLY AND NOT THE CIVIL WO RKS. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE ASSESS ING OFFICER HOWEVER ALLOWED DEPRECIATION ON CIVIL WORKS TREATING IT AS BUILDINGS. 4. ON THE OTHER HAND, THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS TRIBUNAL IN THE CASE OF M/S. VELA THAL SPINNING MILLS P.LTD., IN ITA NOS.2082 & 2083/MDS/ 2010 DATED 30.06.2011, FOLLOWING ITS OWN DECISION IN THE CASE OF BRITISH WEAVING COMPANY VS. DICT IN ITA NO.511/MDS/ 2009 ITA NO.1650/MDS//2013 3 DATED 12.03.2010, ALLOWED DEPRECIATION TO THE ASSES SEE ON WINDMILL FOUNDATION AS PART OF WINDMILL FOR THE PUR POSE OF DEPRECIATION. HE FURTHER SUBMITS THAT THE TRIBUNAL HAS CONSIDERED WHETHER THE ASSESSEE IS ELIGIBLE FOR DEP RECIATION ON ROAD PLATFORM, CONTROL ROOM ETC. THE TRIBUNAL AL LOWED DEPRECIATION ON SUCH CIVIL WORKS AS PART OF WINDMIL L AND THEREFORE PLEADED THAT DEPRECIATION BE GRANTED ON C IVIL WORKS AFFIRMING THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS). 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE DECISION RELIED ON BY THE COUNS EL FOR THE ASSESSEE. WE FIND THAT THIS ISSUE HAS BEEN ADDRESS ED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M /S. VELATHAL SPINNING MILLS P.LTD. IN ITA NOS.2082 & 2083/MDS/2 010 DATED 30.06.2011, WHEREIN IT WAS HELD THAT WINDMILL FOUNDATION IS ELIGIBLE FOR DEPRECIATION ON PAR WITH WINDMILL. WHILE HOLDING SO, THE TRIBUNAL OBSERVED AS UNDER:- 3. GROUND NOS . 2 AND 3 OF THE APPEAL FOR BOTH THE YEARS UNDER CONSIDERATION ARE DIRECTED AGAINST THE ORDER ITA NO.1650/MDS//2013 4 OF THE LD. CIT(A) CONCLUDING THAT THE WINDMILL FOU NDATION IS ELIGIBLE FOR DEPRECIATION ON PAR WITH WINDMILL IN THE ABSENCE OF ANY CATEGORICAL EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF THE CLAIM THAT IT IS INTEGRA L PART OF 'WINDMILL'. THE RATIO OF POONAWALA FINVEST & AGRO [P] LTD. REPORTED IN [2008] 118 IT J [PUNE] 68 CLEARLY BRINGS OUT THIS AND SUPPORTS THE CASE OF THE REVENUE. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED DEPRECIATION @ 40% ON TOTAL COST OF WIND MILL INSTALLED OF RS. 6,73,30,3661 -. THIS AMOUNT INCLUDED RS. 36,17,8101 - FOR THE COST OF CIVIL WORKS INCURRED FOR ROAD PLATF ORM, CONTROL ROOM, ETC . THE ASSESSING OFFICER ALLOWED DEPRECIATION @ 5% ON THIS AMOUNT INSTEAD OF 40% CLAIMED BY THE ASSESSEE. 5. ON APPEAL THE LD. CIT(A) FOLLOWING THE ORDER OF CHENNAI 'D' BENCH OF THE TRIBUNAL IN THE CASE OF M/S BRITISH WEAVING COMPANY VS. DCLT, CIRCLE 2, TRICHY DATED 12.3.2010 PASSED IN ITA NO. 511/MDS/2009 IN ASSESSMENT YEAR 2005-06 DIRECTED THE ASSESSING OFFICER TO TREAT THE CONSTRUCTION OF WIND MILL FOUN DATION AS PART OF WIND MILL FOR THE PURPOSE OF DEPRECIATION. 6. BEING AGGRIEVED BY THE SAID ORDER OF THE LD. CI T(A), THE REVENUE IS IN APPEAL BEFORE US . 7. THE LD. D.R. VERY FAIRLY CONCEDED THAT THIS ISSU E IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN MLS BRITISH WEAVING COMPANY [SUPRA]. 8. THE LD. A.R. SUPPORTED THE ORDER OF THE LD. CIT(A). 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE CLAIMED DEPRECIATION @ 40 % ON TOTAL COST OF WIND MILL FOUNDATION. THE ASSESSIN G OFFICER ALLOWED DEPRECIATION @ 5% ON WINDMILL FOUNDATION INSTEAD OF 40 % CLAIMED BY THE ASSESSEE. IN APPEAL , THE LD . CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL IN THE C ASE OF MLS BRITISH WEAVING COMPANY [SUPRA] DIRECTED THE ASSESSING OFFICER TO TREAT THE CONSTRUCTION OF WIND MILL FOUNDATION AS A PART OF W I NDMILL AND ALLOW DEPRECIATION @ 40% ON THE SAME. NO CONTRARY DECISION WAS CITED BEFORE US BY THE LD. D. R. HENCE WE DO NOT FIND AN Y ERROR IN THE ORDER OF THE LD. CIT(A) , WHICH IS CONFIRMED ITA NO.1650/MDS//2013 5 AND GROUND OF APPEAL OF THE REVENUE IS DISMISSED IN BOTH THE YEARS UNDER CONSIDERATION. 6. ON READING OF THE ASSESSMENT ORDER, WE FIND THAT THE NATURE OF COST OF CIVIL CONSTRUCTION OF ` 14,00,000/- IS NOT EXAMINED BY THE ASSESSING OFFICER. THEREFORE, WE DI RECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON SUCH CIV IL WORKS, SUBJECT TO VERIFICATION IN THE LINES OF THE DECISIO N OF THIS TRIBUNAL IN THE CASE OF M/S. VELATHAL SPINNING MILL S P.LTD. IN ITA NOS.2082 & 2083/MDS/2010 DATED 30.06.2011. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY, THE 19 TH DAY OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI. DATED THE 19 TH NOVEMBER, 2013. SOMU COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.