The ACIT,(OSD)Circle-5, Ahmedabad V. Parry Enginnering & Electronics Pvt.Ltd., Ahmedabad

ITA 166/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89541 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Assessee Lawyers: G C PIPARA
• Keywords: Depreciation; Additional depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO . 166 /AHD/201 2 A. Y .200 8 - 0 9 ACIT (OSD), AHMEDABAD. VS PARRY ENGINEERING AND ELECTRONICS PVT. LTD., HARKUVER HAVELI, OPP. JAIN TEMPLE, GANDHI ROAD, AHMEDABAD, GUJARAT. PAN: AAACP 6747J (APPELLANT) (RESPONDENT) REVENUE BY : S HRI D.C. MISHRA, SR. D.R. , ASSESSEE(S) BY : SHRI G.C. PIPARA, A.R. / DATE OF HEARING : 8 / 0 5 /201 5 / DATE OF PRONOUNCEMENT: 9 / 0 6 /201 5 / O R D E R PER SHRI S.S. GODARA , JUDICIAL MEMBER TH IS REVENUE S APPEAL FOR A.Y. 200 8 - 0 9 , ARISE S FROM ORDER OF CIT(A) - XI , AHMEDABAD DATED 2.11.2011 PASSED I N CASE NO .CIT(A) - XI/99/10 - 11 REVERSING THE ASSESSING OFFICER S FINDING DISALLOWING ASSESSEE S CLAIM OF DEPRECIATION @ 80% ON THE CIVIL WORK, ELECTRIC INSTALLATION AND OTHER DEVELOPMENT EXPENSES PERTAINING TO THE INSTALLATION OF WIND MILLS AMOUNTING TO RS.29,19,323/ - , IN PROCEEDINGS U/S. 143(3 ) OF THE INCOME TAX ACT IN SHORT THE ACT . 2. FACTS OF THE CASE ARE IN A NARROW COMPASS. THE ASSESSEE - COMPANY MANUFACTURES STEEL WINDOWS, CHANNELS, TEES AND TRADES IN IRON A ND STEEL ITA NO. 166 /AHD/201 2 PARRY ENGINEERING & ELECTRONICS P. LTD. FOR A.Y. 200 8 - 0 9 - 2 - MATERIAL. IT FILED ITS RETURN ON 30.9.2008 STATING NIL INCOME ALONG WITH BOOK PROFITS OF RS.1,20,63,633/ - . THE ASSESSING OFFICER TOOK UP SCRUTINY. HE INTER ALIA DISALLOWED THE ASSESSEE S CLAIM OF DEPRECIATION @80% REGARDING ITS WIND MILL AND OTHER INTEGRAL PARTS THEREOF NAMELY CIVIL CONSTRUCTION AND OTHER WORKS BY FOLLOWING HIS REASONING ADOPTED FOR PRECEDING ASSESSMENT YEAR 2007 - 08. THE IMPUGNED DISALLOWANCE OF RS.21,19,323/ - STOOD MADE IN ASSESSMENT ORDER DATED 6.5.2010. 3. THE CIT(A) HAS ACCEP TED THE ASSESSEE S CORRESPONDING GROUNDS AS UNDER: 5. VIDE GROUND NO. 7 AND 8, THE APPELLANT HAS CONTESTED DISALLOWANCE OF DEPRECIATION OF RS. 21,19,323/ - . THE A.O. HAD DEALT WITH THIS ADDITION IN PARA NO. 3 OF THE ASSESSMENT ORDER. THE A.O. WAS OF THE OP INION THAT ONLY ON THE INTEGRAL PART OF WIND MILL, DEPRECIATION IS ALLOWABLE AT THE RATE OF 80% WHILE ON THE INVESTMENTS WHICH IS NOT INTEGRAL PART OF WIND MILL, THE DEPRECIATION SHOULD BE ALLOWED AT THE RATE OF 15% BECAUSE THEY ARE NORMAL PLANT & MACHINER Y. THE SAME DISALLOWANCES HAD ALREADY BEEN MADE BY THE A.O. IN THE IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2007 - 08. THE A.O. HAS RECOMPUTED WDV FOR THE CURRENT YEAR AND ALLOWED DEPRECIATION AS PER THE CRITERION DISCUSSED ABOVE. THE A.O. HAS WORKED OUT ALLOWAB LE DEPRECIATION ON WIND MILL AT RS. 4,89,074/ - ONLY. THE ASSESSEE CLAIMED DEPRECIATION ON WIND MILL AT RS. 26,08,397. THIS WAY, THE A.O. HAS DISALLOWED DEPRECIATION ON WIND MILL OF RS. 21,19,323 / - ( RS 26,08,397 - 4,89,074). 5.1 DURING THE APPELLATE PR OCEEDINGS, THE APPELLANT SUBMITTED AS UNDER: '1. THE IMPUGNED ADDITION ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON WINDMILL HAS BEEN MADE ON THE BASIS OF FINDINGS AND OBSERVATIONS MADE IN THE ASSESSMENT ORDER FOR A. Y.2007 - 08 IN CASE OF THE APPELLANT ITS ELF. 2. THE APPELLANT WHILE DISPUTING THE SAID DISALLOWANCE OF DEPRECIATION TO THE EXTENT OF RS.21,19,323/ - AS WORKED OUT BY THE AO ON PAGE 7 OF THE ASSESSMENT ORDER HAS TO STATE AT THE OUTSET THAT THE SAID WORKING AND THE DISALLOWANCE SUFFERS FROM THE FO LLOWING MISTAKES APART FROM THE FACT THAT THE SAID DISALLOWANCE ITSELF IS CONSEQUENTIAL TO YOUR HONOUR'S DECISION ITA NO. 166 /AHD/201 2 PARRY ENGINEERING & ELECTRONICS P. LTD. FOR A.Y. 200 8 - 0 9 - 3 - IN THE CASE OF APPELLANT'S APPEAL FOR A.Y.2007 - 08, WHICH IS ALSO PENDING FOR DISPOSAL WITH YOUR HONOUR. (A) THE AO HAS NOT ALLOWED DEPRE CIATION @ 80% ON THE INCREASED OPENING WDV OF WINDMILL AS PER THE ASSESSMENT ORDER FOR A.Y.2007 - 08 IN VIEW OF DISALLOWANCE MADE IN A.Y.2007 - 08. (B) THE AO HAS INCORRECTLY WORKED OUT THE DISALLOWABLE DEPRECIATION OF RS.21, 79,323 / - ON PART OF THE COST OF WINDMILL TREATED BY HIM AS NOT BEING PART OF WINDMILL AND ELIGIBLE FOR ONLY 15% DEPRECIATION AS AGAINST 80% CLAIMED BY THE APPELLANT. THE AO HAS MADE THE SAID WORKING WHILE TAKING THE WDV AS PER THE APPELLANT AS AGAINST THE INCREASED WDV ON ACCOUNT OF D ISALLOWANCE MADE BY HIMSELF IN ASSESSMENT ORDER FOR A.Y.2007 - 08. (C) THE AO HAS ALSO FAILED TO ALLOW ADDITIONAL DEPRECIATION WITHOUT GIVING ANY REASONS WHATSOEVER AND WITHOUT CONSIDERING OUR ELABORATE SUBMISSION ON THE SAME AS FURNISHED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. (D) THE AO WHILE WORKING OUT THE DISALLOWANCE HAS FAILED TO CONSIDER AND/OR COMPLETELY IGNORED THE DETAILED WORKING OF DEPRECIATION CLAIMED BY THE APPELLANT AND DEPRECIATION AS PER THE DISALLOWANCE MADE IN A.Y.2007 - 08 AS FURNISHED TO HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE COPY OF THE SAID LETTER IS ENCLOSED HEREWITH VIDE ANNEXURE - 1 FOR IMMEDIATE REFERENCE. 3. THAT AS EVIDENT FROM THE SAID CHART THE ALLOWABLE DEPRECIATION EVEN AS PER THE AO'S OW N WORKING AND CONSIDERING THE DISALLOWANCE MADE IN A.Y.2007 - 08 COMES TO RS.1,94,70,895/ - AS AGAINST THE CLAIM OF RS. 1,88,43,144/ - IN THE RETURN OF INCOME DUE TO INCREASED WDV IN VIEW OF DISALLOWANCE OF DEPRECIATION MADE IN A. Y.2007 - 08 . 4. IT IS NEVERTHELESS SUBM ITTED THAT SINCE THE ISSUE UNDER CONSIDERATION IS CONSEQUENTIAL TO YOUR HONOUR'S DECISION ON THE SAME ISSUE IN THE APPEAL FOR A. Y.2007 - 08, THE AO BE DIRECTED TO RECOMPUTED THE DEPRECIATION ACCORDINGLY. 5. WITHOUT PREJUDICE TO ABOVE, THE APPELLANT RELIES UPON THE ELABORATE SUBMISSION, FACTUAL AS WELL AS LEGAL AS PLACED IN THE WRITTEN SUBMISSIONS FOR A.Y. 2007 - 08 FILED BEFORE YOUR HONOUR. ITA NO. 166 /AHD/201 2 PARRY ENGINEERING & ELECTRONICS P. LTD. FOR A.Y. 200 8 - 0 9 - 4 - THE SAME ARE NOT REPRODUCED HEREUNDER IN ORDER TO AVOID REPETITION, THE ISSUE BEING IDENTICAL AND CONSEQUENTIAL TO THE I SSUE IN A. Y.2007 - 08. IN VIEW OF ABOVE FACTS AND LEGAL POSITION, THE AO BE DIRECTED TO ALLOW DEPRECIATION ON WINDMILL AS CLAIMED IN THE RETURN OF INCOME AND THE DISALLOWANCE OF RS.21,1 9,3237 - BE CANCELLED. 5.2 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMI SSION. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE ID. A.R. IT IS SEEN THAT THIS ISSUE HAS BEEN DECIDED BY ME IN THE IMMEDIATELY PRECEDING YEAR IN THE CASE OF APPELLANT. IN THE A.Y. 2007 - 08, IT WAS HELD BY ME THAT AS PER THE PR OVISIONS OF THE IT. ACT, DEPRECIATION IS TO BE ALLOWED ON RENEWABLE ENERGY DEVICES WHICH INCLUDES WIND MILLS. THE IT ACT DOES NOT ENVISAGE TO DISSECT A DEVICE INTO PART AND ALLOW DEPRECIATION ON DIFFERENT RATES. IN VIEW OF THIS, DEPRECIATION WAS HELD TO BE ALLOWABLE ON THE TOTAL INVESTMENT ON WIND MILLS. IN THE SAME APPEAL, I HAVE ALSO HELD THAT ADDITIONAL DEPRECIATION OF RS 35,66,299 / - IS ALSO ALLOWABLE TO THE APPELLANT. IN VIEW OF ABOVE FACTS, I DO NOT AGREE WITH THE METHODOLOGY OF ALLOWING DEPRECIATION O N WIND MILLS FOLLOWED BY THE A.O. THE A.O. IS DIRECTED TO ALLOW DEPRECIATION ON THE ENTIRE INVESTMENT OF WIND MILLS AS PER THE PROVISIONS OF IT. ACT. IN VIEW OF THIS, THE DISALLOWANCE MADE BY THE A.O. OF RS. 21,19,323/ - IS ORDERED TO BE DELETED. THIS GROUN D OF APPEAL IS ALLOWED. 4. WE HAVE HEARD BOTH SIDES AND PERUSED THE CASE FILE. THE SOLE ISSUE IN THE PRESENT CASE IS REGARDING DEPRECIATION @80% ON THE CIVIL WORK, ELECTRIC INSTALLATION AND OTHER DEVELOPMENT EXPENSES PERTAINING TO INSTALLATION OF ASSESSE E S WIND MILLS. THERE IS NO DISPUTE THAT FACTS OF THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO THOSE INVOLVED IN THE PRECEDING ASSESSMENT YEAR. THE CIT(A) HOLDS THE ABOVESAID HEADS TO BE INTEGRAL PARTS TO THE ASSESSEE S WIND MILLS FOR GRANTING DEPRECIATIO N RELIEF @80%. IT HAS COME ON RECORD THAT THE REVENUE CAME IN APPEAL BEFORE THE TRIBUNAL IN PRECEDING ASSESSMENT YEAR 2007 - 08. A CO - ORDINATE BENCH UPHELD THE CIT(A) ORDER IN ASSESSEE S FAVOUR. THE REVENUE FILED TAX APPEAL NO.604 OF 2012. THE HON BLE JURISD ICTIONAL HIGH COURT IN ITS ORAL ORDER DATED 29.1.2013 UPHOLDS THE TRIBUNAL S ORDER SO FAR AS THE INSTANT ITA NO. 166 /AHD/201 2 PARRY ENGINEERING & ELECTRONICS P. LTD. FOR A.Y. 200 8 - 0 9 - 5 - ISSUE IS CONCERNED. THE REVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS. THEREFORE, WE UPHOLD THE CIT(A) ORDER UNDER CHALLENGE. THE REVENUE S SOLE SUBSTANTIVE GROUND IS DISMISSED. 5. THE REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 9 TH JUNE, 201 5 AT AHMEDABAD. SD/ - SD/ - ( N.S. SAINI ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 0 9 / 0 6 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD