Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 9627 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-04-2016
Appeal Filed By
Department
Bench Allotted
A
Next Hearing Date
03-02-2016
Assessment Year
2011-2012
Appeal Filed On
01-09-2015
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! . ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1932 /MDS./2015 ( / ASSESSMENT YEAR :2011-12) DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2), AAYAKAR BHAVAN, NEW BLOCK, 7 TH FLOOR, CHENNAI -34. VS. M/S.SREE JAYAJOTHI CEMENT S LTD ., III FLOOR, NEW NO.80, 7 TH AVENUE, ASHOK NAGAR, CHENNAI 600 083. PAN AAKCS 4185 M ( %& / APPELLANT ) ( '(%& / RESPONDENT ) / APPELLANT BY : MR.R.MOHAN, CIT, D.R / RESPONDENT BY : MR.T.S.AJAI,C.A ! / DATE OF HEARING : 03.02.2016 '# ! /DATE OF PRONOUNCEMENT : 06.04.2016 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-15, CH ENNAI DATED 11.06.2015 PERTAINING TO THE ASSESSMENT YEAR 2011- 12. ITA NO.1932/MDS/2015 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF LD.CIT(A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.1. THE LD CIT(A) ERRED AND DIRECTED THE ASSESSING OFFICER TO ALLOW ADDITIONAL DEPRECIATION AS CLAIMED BY THE ASSESSEE ON THE BASIS NORMAL DEPRECIATION. 2.2 THE LEARNED CIT(A) ERRED AND HAS FAILED TO KNOW THE ASSESSEE FILED THE REVISED RETURN FOR THE ASSESSMENT YEAR 15/08/20 13(BEYOND DUE DATE). THE REVISED RETURN OF INCOME SHOULD HAVE BEE N FILED BEFORE 31/03/2013 FOR THE SAME SHOULD BE VALID. - 2.3 THE LEARNED CIT(A) ERRED AND THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION IN THE CASE OF ANY NEW PLA NT AND MACHINERY (OTHER THAN SHIPS AND AIRCRAFTS) BEEN ACQUIRED AND INSTALLED AFTER 31ST MARCH 2005 PRODUCTION OF ANY ARTICLE OR THING, THE SAME SHOULD BE ACQUIRED AND INSTALLED DURING THE SAME YEAR. 2.4 THE LEARNED CIT(A) ERRED THE ADDITIONAL DEPRECI ATION CLAIMED ASSETS ALREADY EXISTED A BLOCK OF ASSETS. 2.5 THE LEARNED CIT(A) ERRED THE ASSESSEE CLAIMS AD DITIONAL DEPRECIATION FILED IN THE REVISED RETURN (ALTHOUGH INVALID). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-COMPANY IS ENGAGED IN THE BUSINESS OF CEMENT MANUFACTURING AND ITS CEMENT ITA NO.1932/MDS/2015 3 MANUFACTURING PLANT IS LOCATED AT YANAKONDLA VILLAG E, KURNOOL DISTRICT, ANDHRA PRADESH. THE ASSESSEE HAD COMMENCED BUSINESS ONLY DURING FINANCIAL YEAR 2010-11. IN ITS RETURN OF INC OME FILED DATED 28.09.2011, THE ASSESSEE HAD DECLARED A CURRENT YEA R LOSS OF ` 225,73,97,518/-. SUBSEQUENTLY, THE ASSESSEE REVISE D ITS RETURN OF INCOME ON 15.08.2013 WHEREIN THE ASSESSEE CLAIMED A DDITIONAL DEPRECIATION AND INCREASED ITS CURRENT YEAR LOSS OF ` 458,18,27,943/- SUBSEQUENTLY, THE RETURN WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 29.03.2014, WHEREIN THE LD. ASSESSING OFFICER ALLOWED NORMAL DE PRECIATION AND DISALLOWED THE ADDITIONAL DEPRECIATION AS THE REVIS ED RETURN WAS FILED BELATEDLY ON 15.08.2013 INSTEAD OF THE DUE DATE OF FILING ON 31.03.2013. HENCE, THE LD. ASSESSING OFFICER OPINED THAT THE CLAIM OF ADDITIONAL DEPRECIATION IN REVISED RETURN FILED ON 31.03.2013 IS NOT ALLOWABLE AS RETURN FILED WAS INVALID RETURN. THE AO ALSO OBSERVED THAT THE MACHINERIES WERE NOT ACQUIRED AND INSTALLE D IN SAME FINANCIAL YEAR 2010-11 RELEVANT TO ASSESSMENT YEAR 2011-12 AND THERE ALREADY EXISTED IN BLOCK OF PLANT AND MACHINE RY OF ` 671,46,33,632/- AS ON 31.03.2010 AND AT BEST THE AD DITIONAL ITA NO.1932/MDS/2015 4 DEPRECIATION FOR THE FINANCIAL YEAR 2010-11 CAN AT BEST BE RESTRICTED TO THE PLANT AND MACHINERY HIRED AFTER 31.03.2010. ACCORDING TO THE AO, THE MACHINERIES WERE ACQUIRED AND INSTALLED DUR ING THE FINANCIAL YEAR 2009-10 WAS READY TO USE AND THE ASSESSEE WAS ELIGIBLE FOR NORMAL ADDITIONAL DEPRECIATION ONLY DURING THE FINA NCIAL YEAR 2009-10. AGAINST THIS, THE ASSESSEE WAS IN APPEAL BEFORE THE LD.CIT(A). 4. ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE ASS ESSEE HAD CLAIMED DEPRECIATION ON PLANT AND MACHINERY FIRST T IME DURING THE ASSESSMENT YEAR 2011-12 AND THE ASSESSEE, THOUGH CO MMENCEMENT OF PRODUCTION WAS FROM 27.06.2012, DID NOT CLAIM AN Y DEPRECIATION ON PLANT AND MACHINERY IN THE EARLIER YEARS. FURTHER, LD.CIT(A) OBSERVED THAT THE AO GRANTED HE NORMAL DEPRECIATION ON PLANT AND MACHINERY WHICH WERE PURCHASED IN THE EARLIER ALSO. BUT ONLY FOR THE PURPOSE OF GRANTING ADDITIONAL DEPRECIATION, THE AO TREATED HE ENTIRE PURCHASE OF PLANT AND MACHINERY AS NOT NEW ONE. THE LD.CIT(A) FURTHER OBSERVED THAT THE ACTION OF THE AO IS CONTRARY TO HIS OWN FI NDING BY GRANTING NORMAL DEPRECIATION ON THE ENTIRE VALUE OF PLANT AN D MACHINERY RATHER THAN THE DEPRECIATED VALUE AS ALLEGED BY AO. LD.CI T(A) OBSERVED ITA NO.1932/MDS/2015 5 THAT THE ACQUISITION AND INSTALLATION OF THE PLANT AND MACHINERIES WERE ALSO HAPPENED AFTER 01.04.2015. THE FIRST REQUIREME NT OF THE CLAIM OF ADDITIONAL DEPRECIATION IS THAT A NEW MACHINERY AND PLANT SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31.03.2015 SUBJEC T TO FULFILLMENT OF OTHER CONDITIONS AS PER PROVISO TO SEC.32(1)(IIA) O F THE ACT. HENCE, LD.CIT(A) CAME TO CONCLUSION THAT THE ASSESSEE FULF ILLED ALL THE CONDITIONS AS PER PROVISO TO SEC.32(1)(IIA) OF THE ACT. LD. CIT(A) FOLLOWING THE TRIBUNAL DECISIONS IN THE CASE OF K.L .CONCAST PVT LTD. VS. DCIT FOR ASSESSMENT YEAR 2009-10 REPORTED IN 52 TAXMANN.COM 445 AND ALSO IN THE CASE OF CRI PUMPS PVT. LTD. VS. ACIT FOR ASSESSMENT YEAR 2007-08 REPORTED IN [2013] 34 TAXMA NN.COM 123 AND CIRCULAR NO.3/2006 DATED 27.02.2006 OBSERVED TH AT THE ASSESSEE IS ELIGIBLE FOR THE CLAIM OF ADDITIONAL DE PRECIATION ON THE PLANT AND MACHINERY INSTALLED TILL THE DATE OF COMM ENCEMENT OF PRODUCTION. AGGRIEVED WITH THE ORDER OF THE LD.CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 5. THE PRIMARY CONTENTION OF THE LD.D.R IS THAT TH E REVISED RETURN FILED BELATEDLY ON 15.08.2013 CANNOT BE CONSIDERED AS THE LAST DATE ITA NO.1932/MDS/2015 6 FOR FILING THE REVISED RETURN WAS LAPSED BY 31.03.2 013. ACCORDING TO THE LD.D.R, THE ADDITIONAL DEPRECIATION CLAIMED ON PLANT AND MACHINERY IN THE ASSESSMENT YEAR UNDER CONSIDERATIO N WERE NOT NEW PLANT AND MACHINERY AND IT WAS ALREADY ACQUIRED BY THE ASSESSEE IN EARLIER ASSESSMENT YEAR AS SUCH CANNOT BE CONSIDERE D FOR ADDITIONAL DEPRECIATION IN THE ASSESSMENT YEAR 2011-12. ON TH E OTHER HAND, LD.A.R RELIED ON THE ORDER OF CIT(A) AND ALSO THE F OLLOWING DECISIONS WITH ELABORATE SUBMISSIONS. A) GOETZE (INDIA) LTD., V. CIT IN [2006] 157 TAXMA N 1 (SC) B) ITO VS. SRI BALAJI SAGO & STARCH PRODUCTS IN [ 2012] 19 TAXMANN.COM 313(CHENNAI) C) M/S.REFEX REFRIGERANTS LTD. V. ITO IN IA NO.967 /MDS./2012 DATED 31.07.2012 D) CIT V. PRUTHVI BROKERS & SHAREHOLDERS IN [2012] 23 TAXMAN.CO,23(BOM.) E) RAMCO CEMENTS LTD. V. DCIT IN [2015] 55 TAXMAN. COM 79(MDS.) F) INTERNATIONAL CARS & MOTOS LTD. V. ITO IN ITA NO .860/DEL.2012 DATED 21.12.2012. ITA NO.1932/MDS/2015 7 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE PRIMARY CONTENTION OF THE LD.D.R IS T HAT THE REVISED RETURN IS BELATED AND THE CLAIM MADE IN THAT RETURN CANNOT BE ENTERTAINED BY THE AO. IN OUR OPINION, IF THE CLAI M OF ASSESSEE IS IN ACCORDANCE WITH LAW, IT SHOULD BE ALLOWED BY AO, TH OUGH THERE IS NO CLAIM BY THE ASSESSEE ALSO IN RESPECT OF DEPRECIATI ON OR ADDITIONAL DEPRECIATION. THIS WAS MADE CLEARLY BY CBDT CIRCUL AR NO.14(X4-35) DATED 11.04.1955. THE SAME VIEW WAS TAKEN BY THE C O-ORDIANTE BENCH CHENNAI IN THE CASE OF M/S.REFEX REFRIGERANT S LTD. V. ITO IN IA NO.967/MDS./2012 DATED 31.07.2012 WHEREIN HELD T HAT FILING THE REVISED RETURN BELATEDLY CANNOT GO IN A WAY TO DENY THE DEDUCTION U/S.32(I)(II) OF THE ACT. BEING SO, IN OUR OPINION TO THAT EXTENT WE ARE NOT IN AGREEMENT WITH THE LD.D.R. 7. COMING TO THE MAIN ISSUE OF GRANTING DEDUCTION U/S.32(1)(II) OF THE ACT, THE ADMITTED FACT IS THAT THE MACHINERY ON WHICH ADDITIONAL DEPRECIATION CLAIMED WAS NOT ACQUIRED BY THE ASSESS EE IN THE FINANCIAL YEAR 2010-11 RELEVANT TO THE ASSESSMENT Y EAR 2011-12. IT WAS ACQUIRED EARLIER TO THE FINANCIAL YEAR 2010-11. THE PROVISIONS OF ITA NO.1932/MDS/2015 8 THE SECTION 32(1)(IIA) STIPULATES THE GRANTING OF A DDITIONAL DEPRECIATION ON NEW PLANT AND MACHINERY WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER 31 ST DAY OF MARCH, 2005 BY ASSESSEE ENGAGED IN THE BUSI NESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE FACTS BROUGHT ON RECORD SHOWS THAT THE PLANT AND MACHINERY DOES N OT A NEW PLANT AND MACHINERY ACQUIRED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE FIRST REQUIREMENT FOR CLAIMING ADDITIONAL DEPRE CIATION IS THAT IT SHOULD BE A NEW PLANT AND MACHINERY. THE MACHINERY WAS NEW ONLY WHEN IT IS FIRST PUT TO USE. WHEN IT IS ALREADY IN STALLED IN EARLIER ASSESSMENT YEAR, IT WAS NO MORE NEW MACHINERY OR PL ANT. ONCE IT WAS NOT A NEW MACHINERY OR PLANT, THE ADDITIONAL DE PRECIATION U/S.32(1)(IIA) CANNOT BE ALLOWED. THE ADDITIONAL D EPRECIATION ITSELF IS ONLY FOR A NEW MACHINERY OR PLANT. THE INTENTION O F THE LEGISLATURE WAS TO GIVE SUCH ADDITIONAL DEPRECIATION IN THE YEA R IN WHICH ASSETS WERE PUT TO USE AND NOT FOR ANY SUCCEEDING ASSESSME NT YEAR. THERE IS NOTHING IN THE STATUTE, WHICH ALLOWS SUCH CLAIM OF ADDITIONAL DEPRECIATION IN SUCCEEDING YEAR ON MACHINERY, THOUG H IT WAS ACQUIRED IN EARLIER YEAR. THAT CANNOT BE ANY PRESU MPTION THAT UNLESS A CLAIM IS SPECIFICALLY DENIED, IT HAS TO BE ALLOWE D. IN OUR OPINION, ITA NO.1932/MDS/2015 9 EACH ASSESSMENT YEAR IS SEPARATE AND INDEPENDENT AS SESSMENT YEAR. THE PROVISIONS OF THE SECTION 32 OF THE ACT DO NOT PROVIDE FOR POSTPONEMENT OR CARRY FORWARD OF THE RESIDUAL ADDIT IONAL DEPRECIATION, IF ANY, IN SUBSEQUENT ASSESSMENT YEARS. FURTHER, I T IS TO BE NOTED THAT WHEN AN ALLOWANCE, WHICH IS ORDINARILY NOT AVAILABL E UNDER NORMAL COMMERCIAL PRINCIPLES OF ACCOUNTING, IS MADE SPECIF ICALLY ALLOWABLE, THROUGH ENACTMENT FOR CERTAIN SPECIFIC PROVISIONS O F THE ACT, IT IS ALSO A REQUIREMENT THAT THERE SHOULD BE SIMILAR SPECIFIC PROVISIONS, WHICH SHOWS ITS APPLICABILITY EVERY YEAR, UNLESS THE CONT EXT STRONGLY CALLS FOR SUCH AN INTERPRETATION. BEING SO, WE ARE NOT IN AGR EEMENT WITH THE ORDER OF THE LD.CIT(A) IN GRANTING ADDITIONAL DEPRE CIATION, THOUGH THE PLANT AND MACHINERY WAS NOT NEW IN THE ASSESSMENT Y EAR UNDER CONSIDERATION. THE SAME ISSUE WAS TAKEN BY THIS TR IBUNAL IN THE CASE OF CRI PUMPS PVT. LTD. VS. ACIT REPORTED IN 58 SOT 154(CHENNAI) AND BRAKES INDIA LTD. VS. DCIT IN ITA NO.1069/MDS./ 2010 DATED 06.01.2012. THE LD.CIT(A) RELIED ON THE ORDER OF T HE TRIBUNAL OF DELHI BENCH IN THE CASE OF K.L.CONCAST PVT. LTD. VS . DCIT REPORTED IN 52 TAXMANN.COM 445(DEL.) WHEREIN HELD THAT THE MACH INERY WAS PURCHASED IN THE INSTANT ASSESSMENT YEAR AND ALSO C APITALIZED IN THE ITA NO.1932/MDS/2015 10 INSTANT YEAR. HOWEVER, IN THE PRESENT CASE, THIS P LANT AND MACHINERY ALREADY CAPITALIZED IN THE EARLIER ASSESSMENT YEARS AND ALSO APPEARED IN THE BLOCK OF ASSETS. IN OUR OPINION, T HE ASSESSEE IS NOT ENTITLED TO ADDITIONAL DEPRECIATION U/S.32(1)(IIA) OF THE ACT ON THE MACHINERIES ACQUIRED NOT IN THE FINANCIAL YEAR 2010 -11 RELEVANT TO THE ASSESSMENT YEAR 2011-12. 8. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY A LLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 6 TH OF APRIL,2016 AT CHENNAI. SD/- SD/- ( . ) (G.PAVAN KUMAR) ( ( $% & ) ) ' CHANDRA POOJARI () JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 6 TH APRIL,2016. K S SUNDARAM. *+)),-).- /COPY TO: ) 1. /APPELLANT 2. /RESPONDENT 3. ) /)'( /CIT(A) 4. ) / /CIT 5. -01 )2 /DR 6. 13)4 /GF
