Sri Vigneswara Foundry, Erode V. ACIT, Coimbatore

ITA 2010/CHNY/2014

• Counselvise Citation: 201021714 RSA 2014
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 25-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained expenditure; Depreciation; Additional depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , ! . . ' , # $ BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO.2010/MDS/2014 # % !&% / ASSESSMENT YEAR : 2010-11 M/S SRI VIGNESWARA FOUNDRY, C/O SHRI S. SRIDHAR, ADVOCATE, 112/1, PERIYAR STREET, ERODE-1. PAN : AALFS 5096 H V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE III, COIMBATORE. (()/ APPELLANT) (+,()/ RESPONDENT) () - . / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE +,() - . / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT / ! - 0 / DATE OF HEARING : 26.02.2015 1& - 0 / DATE OF PRONOUNCEMENT : 05.03.2015 / O R D E R PER S.S. GODARA, JUDICIAL MEMBER: THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010- 11ARISES FROM ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS)-I, COIMBATORE, DATED 01.07.2014 PASSED IN APPEAL - - I.T.A. NO. 2010/MDS/2014 2 NO.28/13-14 UPHOLDING THE ASSESSING OFFICERS ACTIO N OF DISALLOWING UNEXPLAINED EXPENDITURE ON EX-GRATIA PA YMENT OF ` 26,31,500/- AND ADDITIONAL DEPRECIATION OF ` 23,23,800/-, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEES PLEADINGS RAISE TWO SUBSTANTIVE G ROUNDS OF APPEAL. THE FIRST ONE PERTAINS TO DISALLOWANCE OF EX-GRATIA PAYMENT OF ` 26,31,500/-. THE ASSESSEE IS FAIR ENOUGH AT THE OUTSET TO PRODUCE A COPY OF THE TRIBUNALS ORDER IN I.T.A. NO. 1672/MDS/2014 DECIDED IN ITS OWN CASE FOR PRECEDING ASSESSMENT YEAR ON THE VERY ISSUE. THE REVENUE DOE S NOT DISPUTE CORRECTNESS THEREOF. WE APPRECIATE THIS FA IR STAND AND REJECT THIS GROUND IN FAVOUR OF THE REVENUE BY FOLL OWING ORDER OF THE CO-ORDINATE BENCH. 3. THE SECOND ISSUE THAT ARISES FOR OUR ADJUDICATIO N IS THAT OF ADDITIONAL DEPRECIATION. THE ASSESSEE-FIRM IS HAVI NG INCOME FROM BUSINESS, RENT AND CAPITAL GAINS. IT HAD FILE D ITS RETURN ON 07.10.2010 DECLARING TOTAL INCOME OF ` 38,94,152/-. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE FOUND THE ASSESSEE TO - - I.T.A. NO. 2010/MDS/2014 3 HAVE CLAIMED ADDITIONAL DEPRECIATION, I.E. 100% DEP RECIATION ON THE WINDMILLS. THE ASSESSING OFFICER REFERRED TO S ECTION 32(1)(IIA) OF THE ACT PROVIDING RELIEF OF INITIAL A DDITIONAL DEPRECIATION (OVER AND ABOVE NORMAL RATE) IS @ 20% OF THE ANNUAL COST ON NEW MACHINERY OR PLANT ENGAGED IN MANUFACTURING OF ANY ARTICLE OR THING IN THE YEAR O F ACQUISITION OR INSTALLATION. HE OBSERVED THAT THE ASSESSEE WAS NO T ENGAGED IN ANY SUCH MANUFACTURING OR PRODUCTION SO AS TO CLAIM ADDITIONAL DEPRECIATION. THIS RESULTED IN THE IMPUGNED DISALL OWANCE OF ` 23,23,800/-. 4. THE ASSESSEE PREFERRED AN APPEAL. THE CIT(APPEA LS) HAS AFFIRMED THE A.O.S FINDINGS AS UNDER:- THIS GROUND OF APPEAL IS AGAINST THE DISALLOWANCE O F ADDITIONAL DEPRECIATION CLAIM. THE APPELLANT SUBMI TTED THAT THE ASSESSEE FIRM IS INVOLVED IN THE BUSINESS OF MA NUFACTURE OR PRODUCTION OF ARTICLE OR THING. HENCE HE IS ELI GIBLE FOR ADDITIONAL DEPRECIATION. ON GOING THROUGH THE FACT S OF THE CASE, IT IS EVIDENT THAT THE ASSESSEE WAS NOT ENGAG ED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICL E OR THING. THIS IS THE 1 ST CLAIM OF ADDITIONAL DEPRECIATION ON THE WINDMILL INSTALLED AND THE ADDITIONAL DEPRECIATION CLAIMED C ANNOT BE ALLOWED SINCE THE ASSESSEE WAS NOT INVOLVED IN ANY MANUFACTURING OR PRODUCTION ACTIVITY AT THE TIME OF INSTALLATION OF THE WINDMILL. ONLY IN THE SUBSEQUENT YEARS THE ASSESSEE CAN CLAIM THAT HE IS ENGAGED IN MANUFACTURING OR PR ODUCTION ACTIVITY, SINCE HE WILL BE IN THE BUSINESS OF PRODU CTION / GENERATION OF ELECTRICITY WHEN THE PRESENT WINDMILL S WERE INSTALLED ON WHICH ADDITIONAL DEPRECIATION CAN BE C LAIMED. - - I.T.A. NO. 2010/MDS/2014 4 THE ASSESSEE IS NOT IN THE BUSINESS OF MANUFACTURIN G ACTIVITY TO CLAIM ADDITIONAL DEPRECIATION FOR THIS ASSESSMEN T YEAR. HENCE THE ASSESSING OFFICER RIGHTLY DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION. THIS GROUND OF APPEAL IS DISMISSED. 5. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FILE. THE ASSESSEE SUBMITS TO HAVE OFFERED INCOME FROM PO WER GENERATION IN ITS PROFIT & LOSS ACCOUNT OF ` 39,737/-. THE AUTHORITIES BELOW HAVE NOT CONSIDERED THIS PLEA IN EITHER OF THE ORDER UNDER CHALLENGE. THE REVENUE FAILS TO CONTRO VERT THIS FACTUAL POSITION. WE DEEM IT PROPER TO OBSERVE THA T WHETHER OR NOT THE ASSESSEE HAS PRODUCED ANY POWER OR NOT IS A MORE FACTUAL ISSUE. THEREFORE, IN THE LARGER INTEREST O F JUSTICE, THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR FRESH DECISION AS PER LAW. THE ASSESSEE SHALL BE A T LIBERTY TO PRODUCE ALL OF ITS DETAILS IN SUPPORT ITS CLAIM OF ADDITIONAL DEPRECIATION. 6. THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. - - I.T.A. NO. 2010/MDS/2014 5 ORDER PRONOUNCED ON THURSDAY, THE 5 TH OF MARCH, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (S.S. GODARA) ( . ) ( . . ') / ACCOUNTANT MEMBER # /JUDICIAL MEMBER /CHENNAI, 3 /DATED, THE 5 TH MARCH, 2015. KRI. 4 - +#056 76&0 /COPY TO: 1. () /APPELLANT 2. +,() /RESPONDENT 3. / 80 () /CIT(A)-I, COIMBATORE 4. / 80 /CIT-I, COIMBATORE 5. 6!9' +#0# /DR 6. ':% ; /GF.