Bhutada Weaving Mills P Ltd, Solapur V. ACIT Cir - I Solapur, Solapur

ITA 1764/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76295 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: S M VAIDYA
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1764/PN/2012 (ASSESSMENT YEAR 2008-09) BHUTADA WEAVING MILLS PVT. LTD., 40/8, BUDHWAR PETH, RAJALAXMI COMMERCIAL COMPLEX, BASANT, SOLAPUR. .. APPELLANT PAN NO.AACCB2684B VS. ACIT, CIRCLE-1, SOLAPUR .. RESPONDENT ASSESSEE BY : SHRI S.M. VAIDYA REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 20-03-2014 DATE OF PRONOUNCEMENT : 24-03-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 29-02-2012 OF THE CIT(A)-III, PUNE RELATING TO ASSE SSMENT YEAR 2008- 09. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY THE ASSESSEE THEY ALL RELATE TO DENIAL OF DEPRECIATION FOR THE F ULL YEAR IN RESPECT OF BUILDING AND MACHINERY OF UNIT-II OF THE ASSESSEE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN MANUFACTURING AND EXPORTING OF TERRY TOW ELS. THE ASSESSEE HAD TWO OPERATIONAL UNITS DURING THE YEAR UNDER CON SIDERATION, ONE AT MIDC, AKKALKOT ROAD, SOLAPUR AND THE OTHER ONE AT M IDC, CHINCHOLI PUNE ROAD, SOLAPUR, THE LATTER HAVING COMMENCED THE PRODUCTION DURING 2 THE CURRENT YEAR. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30-09-2008 DECLARING TOTAL INCOME AT RS.4,46,110/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED FROM THE DIRECTORS REPORT ENCLOSED ALONG WITH THE RETURN OF INCOME THAT NEW P LANT ATE4-MIDC, CHINCHOLI, COMMENCED ITS FUNCTIONING IN THE MONTH O F FEBRUARY, 2008. THIS DECLARATION OF THE DIRECTOR IS ALSO SUPPORTED BY THE CUSTOMS DUTY WHICH HAS BEEN PAID BY THE ASSESSEE AFTER 01-10-200 7 AND THE SAME HAS BEEN CAPITALISED BY THE ASSESSEE. HE, THEREFORE, W AS OF THE OPINION THAT UNIT NO.II OF THE FACTORY WAS COMMENCED ONLY AFTER JANUARY 2008 AND THEREFORE DEPRECIATION IN RESPECT OF THE UNIT NO.II HAS TO BE ALLOWED ONLY UPTO 50% OF THE CLAIM WHEREAS THE ASSESSEE HAS ALLO WED FULL DEPRECIATION. HE THEREFORE PROPOSED THE FOLLOWING ADDITIONS : 1. DEPRECIATION ON MACHINERY CLAIMED IN RESPECT OF MACHINERY OF UNIT-II RS.1,86,88,959/ - LESS :DEPRECIATION ALLOWABLE UPTO 7.50% RS.1,09,98,8 50/- ------------------- PROPOSED ADDITION RS.76,90,109/- 2. DEPRECIATION ON BUILDING CLAIMED RS.35,27,466/- LESS : DEPRECIATION ALLOWABLE @5% (FOR 6 MONTHS) RS.12,51,759/- PROPOSED ADDITION RS.22,75,687/- 3.1 THE ASSESSING OFFICER ACCORDINGLY ASKED THE ASS ESSEE TO FILE ITS OBJECTION IF ANY. THE ASSESSEE IN ITS REPLY VIDE L ETTER DATED 27-12-2010 OBJECTED TO THE SAME BY SUBMITTING AS UNDER WHICH H AS BEEN INCORPORATED BY THE ASSESSING OFFICER AT PARA 8 OF HIS ORDER : 'YOU HAVE PROPOSED TO ALLOW DEPRECIATION FOR PART OF THE YEAR ONLY. THIS DECISION IS TAKEN AFTER CONCLUDING THAT PRODUCTION HAS STARTED FROM FEB. 2008 AND OUR DIRECTOR'S REPORT IS BASE THEREOF. WE APPRECIATE THE CLOSED SUPERVISION YOUR HONOUR HAS OVER OUR CASE RECORD. PRIMARILY YOUR OBSERVATION IS NOT WRONG. BUT WE RESPECTFULLY SUBMIT THAT THE PRODUCTION HAS ALREADY BEEN STARTED FROM SEPTEMBER ONLY. W E HAVE EXPORTED FIRST BATCH PRODUCTION FROM UNIT II. TO SUPPOR T THIS NAKED TRUTH AND FACT OF THE CASE, WE PLACE ON RECORD FOLLOWING EVIDENCES :- 3 - MACHINERY INSTALLATION CERTIFICATE FROM ENGINEER SHRI A.T. KULKARNI, WHICH MAKES IT AMPLE CLEAR THAT MACHINERY IS INSTALLED AND COMMISSIONED PRIOR TO OCTOBER 2007. - ERECTION AND COMMISSIONING REPORT OF PRASHANT GAMATEX PVT. LTD. - COMMISSIONING OF HUMIDIFICATION PLANT IN AUGUST ITSELF CERTIFICATE FROM DAYSUN INDIA, DATED 29-08- 2007. - INSTALLATION COMPLETION CERTIFICATE FROM ASSISTANT COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, SOLAPUR. TH IS CERTIFICATE MAKES IT AMPLE CLEAR THAT THOSE MACHINERIES WERE INSTALLED AND PUT TO USE PRIOR TO OCTOBER 2007. - MONTHWISE TOWEL SALES ACCOUNT OF UNIT II, WHICH M AKES IT AMPLE CLEAR THAT SALE TOOK PLACE IN SEPTEMBER 2007 ITSELF. - COPY OF FIRST SALE BILL ALONG WITH BANK CERTIFICATE O F EXPORT AND REALIZATION WHICH GIVES INFORMATION OF SALE THAT HAS TAK EN PLACE - COPY OF MSEB CONNECTION, UNIT CONSUMPTION AND ELECTRICITY BILLS IN RESPECT THEREOF. ALL THE ABOVE STATED DOCUMENTS MAKE IT AMPLE CLEAR THAT PRODUCTION HAS STARTED WELL BEFORE 30-09-2007 AND HENCE, R ATE DEPRECIATION FOR A PERIOD OF LESS THAN 180 DAYS IS NOT REQUIRED TO BE ADOPTED. NOW THE ISSUE THAT REMAINS IS AS TO WHY PR ODUCTION WAS SAID TO HAVE BEEN STARTED IN FEBRUARY 2008 IN DIRE CTOR'S REPORT WHICH IS ONE OF THE MOST RESPECTABLE AND RELIA BLE DOCUMENT. SIR, THIS IS A PRINTING MISTAKE AND WE REALIZED THE SAME ONLY AFTER YOUR HONOUR HAS BROUGHT THE SAME TO OUR NOTICE. WE EXTEND OUR SINCERE THANKS FOR THE SAME. 3.2 HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE EXPLANATION GIVEN BY THE ASSESSEE STATING THE FOLLO WING REASONS : I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSES SEE COMPANY AND THIS OFFICE RECORDS. THE SUBMISSION MADE BY ASSESSEE CA NNOT BE ACCEPTED FOR THE FOLLOWING REASONS : (I) THE LETTER OF SUPERINTENDENT, CENTRAL EXCISE, RAN GE-1, SOLAPUR DATED 29 TH DEC. 2010 CLEARLY STATES THAT UNIT TWO SITUATED AT E-4, MIDC, PUNE ROAD, SOLAPUR HAVE REGISTERED WITH THE DEPARTMENT ON 20-06-2007 UNDER REGN. NO. AACCB 2684 CXM002 AND THERE IS NO PRODUCTION SHOWN DURING THE PERIOD FROM 20-06- 07 TO SEPT. 2007. COPY OF THIS LETTER ATTACHED HEREWITH AS ANNEXURE A FORMS THE PART AND PARCEL OF THIS ORDER. (II) ON COMPARISON OF MONTHLY SALES, IT IS CRYSTAL CLE AR THAT IF UNIT II HAD BEEN INSTALLED AND RUN FOR ONE YEAR, THE MONTHLY SALES WOULD HAVE BEEN INCREASED TWO-FOLD, WHEREAS THE SALE S HAVE BEEN INCREASED MARGINALLY NOT EVEN MORE THAN ONE MONTH'S S ALES. 4 (III) IN THE DIRECTORS' REPORT DTD. 31-08-2008, IT HAS BEEN CLEARLY MENTIONED THAT THE NEW PLANT AT E-4, MIDC, CHINCHOLI, SOLAPUR COMMENCED ITS FUNCTIONING IN PART IN THE MONTH OF FEBRUARY 2008. ASSESSEE'S SAY THAT THIS IS A TYPING MISTAKE IS MERELY AN EYE-WASH. (IV) THE BURNING ISSUE IN THIS CASE IS THAT WHETHER TH E MACHINERY ATTACHED TO UNIT II WAS ACTUALLY PUT TO USE PRIOR TO 30-09-07. IT WAS THE ASSESSEE'S CASE THAT THE SAID MACHINERY WAS A CTUALLY PUT TO USE BEFORE 30-09- 2007. HOWEVER, ASSESSEE FAILED TO ADDUCE CORROBORATIVE EVIDENCE. ON THE OTHER HAND, IT WAS THE DEPARTMENT'S CASE THAT THE BUILDING AND MACHINERY PERTAINI NG TO UNIT II WAS NEVER PUT TO USE BEFORE 30-09-2007. THE DEPARTMENT HAS COLLECTED EVIDENCE FROM THE EXCISE DEPARTMENT WHICH IS A GOVT. OFFICE. THEREFORE, THIS EVIDENCE IS A CONCRETE EVIDENCE SUFFICIENT TO REJECT ASSESSEE'S CLAIM THAT THE BUILDING AND MACHINERY WERE PUT TO USE AND ACCORDINGLY, QUALIFY FOR FULL DEPRECIATION. SECONDLY, THE ASSESSEE'S OWN DIRECTORS' REPORT MAKES IT ABUNDANTLY CLEAR THAT UNIT II WAS COMMENCING ITS PRODUCTION FROM FEBRUARY 2008 ONWARDS. WHAT CAN BE T HE MORE CONCRETE EVIDENCE THAN THE ASSESSEE'S OWN DIRECTORS' DECLARATION REGARDING THE UNIT II COMMENCING PRODUCTION AFTER 30-09-2007. HE ACCORDINGLY DISALLOWED DEPRECIATION OF RS.22,75, 814/- ON ACCOUNT OF BUILDING AND AN AMOUNT OF RS.76,89,976/- OUT OF MAC HINERY. 4. IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. WHILE DOING SO, HE OBSERVED THA T THE ASSESSEE WAS UNABLE TO SATISFY WITH CREDIBLE EVIDENCE THAT UNIT NO.II OF THE ASSESSEE HAS STARTED PRODUCTION IN THE MONTH OF SEPTEMBER 20 07. HE NOTED THAT IN SUPPORT OF ITS CLAIM THAT THE UNIT -II STARTED PROD UCTION IN SEPTEMBER 2007, THE ASSESSEE FURNISHED OTHER DOCUMENTS LIKE A COPY OF THE LEDGER ACCOUNT OF SALES, ELECTRICITY BILLS FOR ELECTRICITY CONSUMPTION IN THE NEW UNIT AND ALSO A COPY OF THE BANK CERTIFICATE OF EXP ORTS AND REALIZATION DATED 25/08/2008 AND COMMISSIONING CERTIFICATES IN CASE OF HUMIDIFICATION PLANT, WARPER MACHINES. HE OBSERVED FROM THE LEDGER ACCOUNT OF TOWEL SALES FILED BY THE ASSESSEE THAT T HERE WERE SALES OF THE VALUE OF RS.6,83,252/- IN SEPTEMBER 2007. HOWEVER, THE OLD UNIT I.E. UNIT-I HAD STARTED PRODUCTION OF TOWELS MUCH EARLIE R WHICH WAS ALSO 5 PRODUCING THE SAME QUALITY OF TOWELS. THEREFORE, T HE ASSESSEE FAILED TO CONCLUSIVELY PROVE THAT THE PRODUCTION SHOWN IN THE LEDGER ACCOUNT EXTRACT FOR SEPTEMBER 2007 WAS ACTUALLY PRODUCED BY THE SECOND UNIT WHEN THE FIRST UNIT WAS ALSO PRODUCING THE SAME KIN D OF TOWELS, ESPECIALLY IN THE LIGHT OF THE FACT THAT ONE OF THE ESSENTIAL ACCESSORIES FOR THE SECOND UNIT I.E. WARPING BEAMS WERE INSTALLED O NLY IN THE MONTH OF OCTOBER, 2007. FROM THE EXPORT INVOICE DATED 23/09 /2007, HE NOTED THAT THE SHIPPING BILL WAS AUTHENTICATED BY THE CUSTOMS ON 24/10/2007 AND THE BILL OF LADING WAS ON 01/11/2007, THOUGH THE EX PORT INVOICE IS DATED 23/09/2007. HE FURTHER OBSERVED FROM THE INVOICE TH AT THE GOODS SUPPLIED WERE DES. SOLID TOWEL WHEREAS THE TOWELS WITH DESIGNS WERE MANUFACTURED FROM JACQUARD LOOMS ONLY IN OCTOB ER 2007 AND THEREFORE IT WAS NOT KNOWN HOW THE EXPORT INVOICE F OR THE DESIGN TOWELS WAS RAISED ON 23/09/2007. THE BILL OF LADING AND TH E DATE OF AUTHENTICATION OF INVOICE BY THE CUSTOMS DEPARTMENT CLEARLY SHOWED THAT THE FIRST BATCH OF THE PRODUCTION COMMENCED ON LY IN THE SECOND OR THIRD WEEK OF OCTOBER 2007, THOUGH THE INVOICE WAS DATED 23/09/2007. WITH REGARD TO THE ELECTRICITY BILLS FILED BY THE A SSESSEE FOR THE CONSUMPTION OF ELECTRICITY IN THE NEW UNIT FOR THE MONTH OF AUGUST, SEPTEMBER & OCTOBER 2007, HE NOTED FROM THE BILLS T HAT THE ELECTRICITY CONNECTION WAS TAKEN ON 14/08/2007 AND IN THE FIRST MONTH (15 DAYS), ONLY 2234 UNITS OF ELECTRICITY WAS CONSUMED AND IN THE SECOND MONTH I.E. SEPTEMBER 2007, ONLY 5810 UNITS OF ELECTRICITY WERE CONSUMED. BUT IN THE-MONTH OF OCTOBER 2007, THE ELECTRICITY CONSUMPT ION HAS SHOT UP TO 12994 UNITS WHICH ACCORDING TO CIT(A) INDICATE THAT THE TRIAL PRODUCTION HAD ACTUALLY BEGUN IN SECOND HALF OF OCTOBER 2007. ACCORDING TO HIM, 6 THE POWER COULD HAVE-BEEN CONSUMED FOR CARRYING OUT VARIOUS PREPARATORY WORKS OR INITIATION OF PRELIMINARY STEP S PRIOR TO ACTUAL INSTALLATION AND COMMISSIONING OF PLANTS & MACHINER Y AND FOR OTHER GENERAL PURPOSES IN THE FIRST 2 MONTHS. HE WAS OF THE OPINION THAT IF THE CLAIM OF THE ASSESSEE IS TO BE ACCEPTED, THERE SHOU LD HAVE BEEN PRODUCTION EVEN IN THE MONTH OF AUGUST I.E. SOON AF TER THE NEW SERVICE CONNECTION WAS TAKEN BY THE APPELLANT FOR UNIT-II. HOWEVER, ADMITTEDLY THERE WAS NO PRODUCTION IN THE MONTH OF AUGUST 2007 . THEREFORE, HE WAS OF THE OPINION THAT FROM THE CONSUMPTION OF A FEW U NITS OF ELECTRICITY IN THE FIRST TWO MONTHS, IT CANNOT BE CONCLUSIVELY SAI D THAT THERE WAS ACTUAL PRODUCTION OF TOWELS IN THE NEW UNIT IN AUG. AND SE P. 2007. HE ALSO NOTED THAT THE ERECTION & COMMISSIONING REPORT OF E -27 WARPER MACHINE AND THE COMMISSIONING OF THE HUMIDIFICATION PLANT I N AUGUST 2007 DO NOT ESTABLISH THAT THE ENTIRE UNIT WAS READY FOR PR ODUCTION IN SEPTEMBER 2007 ITSELF. THE SAID ITEMS ARE ONLY A PART OF THE WHOLE UNIT AND BY INSTALLATION AND COMMISSIONING OF THESE COMPONENTS OF THE UNIT IN SEPTEMBER, 2007, IT CANNOT BE SAID THAT THE ENTIRE UNIT, EVEN IN THE ABSENCE OF WARPER BEAMS, STARTED PRODUCTION IN THE MONTH OF SEPTEMBER 2007. HE ACCORDINGLY WAS OF THE OPINION THAT THE INSTALLATION OF WARPER BEAMS IN OCTOBER 2007, FURNISHING OF EXCISE RETURN ONLY FROM OCTOBER 2007, BILL OF LADING DATED 01.11.2007 OF THE FIRST EXPORT CONSIGNMENT COUPLED WITH THE NOTE IN THE DIRECTOR'S REPORT CLEA RLY PROVE THAT THE ASSETS IN QUESTION OF UNIT-II WERE NOT PUT TO USE B EFORE THE THIRD WEEK OF OCTOBER 2007. DISTINGUISHING THE VARIOUS DECISIONS RELIED ON BY T HE ASSESSEE BEFORE HIM HE HELD THAT THE PLANT AND MACH INERY AND BUILDING OF UNIT NO.II WERE PUT TO USE FOR A PERIOD OF LESS THA N 180 DAYS DURING THE 7 YEAR AND THEREFORE THE ASSESSING OFFICER WAS JUSTIF IED UNDER PROVISO TO SECTION 32 IN RESTRICTING THE ALLOWANCE OF DEPRECIA TION TO 50% OF THE NORMAL DEPRECIATION AS APPLICABLE TO SUCH ASSETS. 4.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUT E TO BE DECIDED AS PER THE GROUNDS RAISED BY THE ASSESSEE RELATE TO THE AL LOWABILITY OF FULL DEPRECIATION OR 50% DEPRECIATION OF NORMAL DEPRECIA TION. ACCORDING TO THE ASSESSEE SINCE IT HAS PUT TO USE THE MACHINERIE S FOR MORE THAN 180 DAYS, THEREFORE, IT IS ENTITLED TO FULL DEPRECIATIO N ON THE FACTORY BUILDING AND PLANT AND MACHINERY OF THE UNIT-II. ACCORDING TO THE REVENUE THE ASSESSEE HAS PUT TO USE THE MACHINERIES ONLY AFTER 30-09-2007 AND THEREBY HAS PUT TO USE THE MACHINERIES FOR A PERIOD OF LESS THAN 180 DAYS. FROM THE ORDER OF THE LD.CIT(A) WE FIND HE REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT ALTHOUGH THE ASSESSEE H AS SHOWN TO HAVE SOLD TOWELS VALUED AT RS.6,83,252/- IN THE MONTH OF SEPT EMBER 2007 THE ASSESSEE WAS PRODUCING SIMILAR TYPE OF TOWELS MUCH EARLIER IN UNIT-I AND THE ASSESSEE FAILED TO CONCLUSIVELY PROVE BEFORE HI M THAT THE PRODUCTION SHOWN IN THE LEDGER ACCOUNT EXTRACT FOR SEPTEMBER 2 007 WAS ACTUALLY PRODUCED BY THE SECOND UNIT. HE FURTHER GAVE A FIN DING THAT ALTHOUGH THE EXPORT INVOICE IS DATED 23-09-2007, HOWEVER, THE SH IPPING BILL WAS AUTHENTICATED BY THE CUSTOMS ON 24-10-2007 AND THE BILL OF LADING WAS 8 ON 01-11-2007. HE HAD ALSO GIVEN A FINDING THAT AS PER THE ELECTRICITY BILLS OF THE NEW UNIT FOR THE MONTH OF AUGUST, SEPT EMBER AND OCTOBER 2007 THE ELECTRICITY CONNECTION WAS TAKEN ON 14-08- 2007 AND IN THE FIRST MONTH, I.E. FOR 15 DAYS ONLY 2234 UNITS OF ELECTRIC ITY WAS CONSUMED AND IN THE SECOND MONTH, I.E. SEPTEMBER 2007 ONLY 5810 UNITS OF ELECTRICITY WERE CONSUMED BUT IN THE MONTH OF OCTOBER 2007 THE ELECTRICITY CONSUMED HAD SHOT UPTO 12994 UNITS. HE, THEREFORE, CAME TO THE CONCLUSION THAT THAT THE ELECTRICITY CONSUMED FOR T HE FIRST 1 MONTHS COULD HAVE BEEN FOR CARRYING OUT VARIOUS PREPARATOR Y WORKS FOR INITIATION OF PRELIMINARY STEPS PRIOR TO ACTUAL INSTALLATION A ND COMMISSIONING OF PLANT AND MACHINERY AND FOR OTHER GENERAL PURPOSES. ACCORDING TO HIM THE TRIAL PRODUCTION HAD ACTUALLY BEGUN IN THE SECO ND HALF OF OCTOBER 2007. HE WAS OF THE OPINION THAT THE ERECTION AND COMMISSIONING REPORT OF E-27 WARPER MACHINE AND THE COMMISSIONING OF HUM IDIFICATION PLANT IN AUGUST 2007 DO NOT ESTABLISH THAT ENTIRE UNIT WA S READY FOR PRODUCTION IN SEPTEMBER 2007 ITSELF. 5.1 IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PRODUCTION IN THE UNIT-II HAS INFACT STARTED PRIOR TO 30-09-2007 AND PLANT AND MACHINERY OF UNIT-II WERE PUT TO USE FOR A PERI OD OF MORE THAN 180 DAYS, THEREFORE, THE ASSESSEE IS ENTITLED TO FULL D EPRECIATION AS PER LAW. ON A POINTED QUERY BY THE BENCH TO BOTH THE SIDES A S TO WHETHER THE ASSESSEE HAS COMPLIED TO THE PROVISIONS OF INDIAN F ACTORIES ACT, 1948 BEFORE STARTING THE PRODUCTION PROCESS, BOTH SIDES STATED THAT THIS VITAL ASPECT HAS NOT BEEN VERIFIED BY THE ASSESSING OFFIC ER OR THE CIT(A). THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASS ESSEE HAS FULFILLED ALL THE CONDITIONS AND SINCE THE LOWER AUTHORITIES HAVE NOT VERIFIED THE SAME, 9 THEREFORE, GIVEN AN OPPORTUNITY HE WILL PROVE THAT THE COMPLIANCE AS PER THE INDIAN FACTORIES ACT, 1948 HAVE BEEN FULFILLED WHICH CAN CONCLUSIVELY PROVE THAT THE PLANT AND MACHINERY WER E PUT TO USE BEFORE 30-09-2007. 5.2 SINCE THE VITAL ASPECT REGARDING THE FULFILMENT OF THE CONDITIONS OF INDIAN FACTORIES ACT, 1948 WHEN THE NEW UNIT IS SET UP AND STARTS PRODUCTION HAS NOT BEEN VERIFIED BY THE LOWER AUTHO RITIES, THEREFORE, WE, IN THE INTEREST OF JUSTICE, DEEM IT PROPER TO RESTO RE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO D ECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSING OFFICER SHALL VERIF Y THE FULFILMENT OF CONDITIONS LAID DOWN IN THE FACTORIES ACT SO AS TO ASCERTAIN THAT THE NEW UNIT INFACT STARTED PRODUCTION BEFORE 30-09-2007. ONCE THE ASSESSEE IS ABLE TO SATISFY THE ASSESSING OFFICER THAT THE COND ITIONS WERE FULFILLED PRIOR TO 30-09-2007 AND THE ASSESSEE HAS INFACT STA RTED THE PRODUCTION BEFORE 30-09-2007 BY GIVING CREDIBLE EVIDENCE TO TH E SATISFACTION OF THE ASSESSING OFFICER, THE ASSESSING OFFICER SHALL ALLO W DEPRECIATION AS PER LAW. WE HOLD AND DIRECT ACCORDINGLY. GROUNDS RAIS ED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24-03-2014. SD/- SD/- (R.S. PADVEKAR) (R.K. PAN DA) JUDICIAL MEMBER ACCOUN TANT MEMBER PUNE DATED: 24 TH MARCH, 2014 SATISH 10 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-III, PUNE 4 CIT-III, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE