Pudumjee Pulp & Paper Mills Ltd., Pune V. Joint Commissioner of Income-tax,

ITA 2144/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4326 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 12-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Depreciation; Additional depreciation; Revenue expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.2142 TO 2144/PUN/2016 / ASSESSMENT YEARS : 2009-10 TO 2011-12 AMJ LAND HOLDINGS LTD., (FORMERLY KNOWN AS PUDUMJEE PULP & PAPER MILLS LTD.,), THERGAON, PUNE 411 033 PAN : AABCP0310Q . /APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-10, PUNE- 411 044 . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 23.07.2018 / DATE OF PRONOUNCEMENT: 01.08.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE THREE APPEALS FILED BY THE ASSESSEE UNDER CON SIDERATION INVOLVING ASSESSMENT YEARS 2009-10 AND 2011-12. THEY A RE FILED AGAINST THE SEPARATE ORDERS OF CIT(A)-6, PUNE, COMMONLY DATED 28-06-2016. ALL THESE APPEALS ARE TAKEN UP FOR ADJUDICATION BY THIS COMPOSITE ORDER . 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE APPEAL NO.2144/PUN/2016 FOR A.Y. 2011-12 IS NOT PRESSED. ACCORD INGLY, THE SAID APPEAL IS DISMISSED AS NOT PRESSED. THAT LEAVES TWO APP EALS ITA NOS. 2142 AND 2143/PUN/2016 FOR ADJUDICATION AND THE APPEAL WISE A DJUDICATION OF THE SAID APPEALS ARE TAKEN UP IN THE FOLLOWING PARAGRAPHS. ITA NO.2142 TO 2144/PUN/2016 AMJ LAND HOLDINGS LTD., 2 ITA NO.2142/PUN/2016 A.Y. 2009-10 3. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. DIS-ALLOWANCE OF ADDITIONAL DEPRECIATION: RS. 1 ,56,193 OUT OF CLAIM OF RS. 22,74,873. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISALLOWING THE ADDIT IONAL DEPRECIATION OF RS. 1,56,193 (OUT. OF THE TOTAL CLAIM OF RS. 22,74, 873) ON THE ADDITIONS MADE TO THE PLANT AND MACHINERY OF RS.7,80,963, CALLING THE M AS SPARE PARTS (PRESUMABLY), OUT OF THE TOTAL ADDITION TO MACHINER Y OF RS. 110.74 LAKHS. WHEREAS ON THE NEW MACHINERY, INSTALLED AT THE PLAN T, THE ASSESSING OFFICER ALLOWED NORMAL DEPRECIATION, THE CIT (APPEALS) ERRE D IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DENYING THE ADDITIONAL DEP RECIATION ON ADDITIONS OF RS. 7,80,963 . (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT (APPEALS) FURTHER ERRED IN DISMISSING THE ALTERNATIVE SUBMISS ION MADE BY THE APPELLANT THAT IN THE EVENT OF THE CLAIM OF ADDITIONAL DEPREC IATION IS DISALLOWED THE ENTIRE COST OF MACHINERY MAY BE ALLOWED AS REPAIRS AND REP LACEMENT OF MACHINERY AS A REVENUE EXPENDITURE. HE SHOULD HAVE HELD THE AMOU NT OF RS. 7,80,963 AS A REVENUE EXPENDITURE. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT( APPEALS) FURTHER ERRED IN DIS-REGARDING THE CRUX OF THE HON. TRIBUNAL'S ORDER IN THE CASE OF APPELLANT, ON THE SAME AND IDENTICAL MATTER, FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 AND RESPECTING THE SAID ORDER H E SHOULD HAVE ALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION OF RS. 22,74,8 73, IN TOTO, 2 YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND THE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF THIS APPEAL. 4. REFERRING TO GROUND NOS. 1(1) TO 1(C), LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY ISSUE FOR ADJUDICATION RELATES TO ALLOWING THE CLAIM OF ADDITIONAL DEPRECIATION ON THE SUNDRY EXPENSES OF RS.7,80,96 3/- FOR THE A.Y. 2009-10 WHICH WERE ACTUALLY CAPITALIZED TO THE ASSET ACC OUNT ON WHICH NORMAL DEPRECIATION WAS CLAIMED AND UNDISPUTEDLY ALREADY A LLOWED BY THE AO. 5. GIVING FACTS, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO PAGE 5 OF THE PAPER BOOK AND SUBMITTED THAT ASSESSEE INSTALLED PLANT AND MACHINERY PROCURED FROM (1) JYOTI LTD., (2) SERVALI ENGINEERING WORKS PVT. LTD., AND (3) PARSON MACHINERY PVT. LTD., AND CLAIMED DEPREC IATION ON THE ASSETS INCLUDING THE CAPITALIZED SUM OF RS.7,80,963/-. THIS A MOUNT IS INCURRED ON SUNDRY ACCOUNTS. BRINGING OUR ATTENTION TO PAGE 9 OF THE PAPER ITA NO.2142 TO 2144/PUN/2016 AMJ LAND HOLDINGS LTD., 3 BOOK, LD. COUNSEL FOR THE ASSESSEE LISTED OUT THE NATURE OF EXPENDITURE WHICH ARE INCURRED AS THEY ARE REQUIRED FOR INSTALLATION OF THE PLANT AND MACHINERY ABOUT WHICH THERE IS NO DISPUTE. THEREFORE, IT IS THE CASE OF LD. COUNSEL FOR THE ASSESSEE THAT SUM OF RS.7,80,963/- WAS INC URRED IN CONNECTION WITH THE INSTALLATION OF PLANT AND MACHINERY WHICH ARE DEPRECIABLE ASSETS. AO ALLOWED THE CLAIM OF NORMAL DEPRECIAT ION ON THESE CAPITALIZED EXPENDITURE AS WELL. HOWEVER, HE DENIED THE CLA IM OF ADDITIONAL DEPRECIATION GIVING FLIMSY GROUNDS OF NON-FURNISHING OF DETAILS A ND ALSO ON HOLDING THAT THE ITEMS MENTIONED AT PAGE 9 OF THE PAPER BOOK CONSTITUTE PLANT AND MACHINERY IN THEIR INDIVIDUAL CAPACITY. 6. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 7. ON HEARING BOTH THE PARTIES, WE FIND ALLOWING OF ADDITIONAL DEPRECIATION ON CAPITALIZED AMOUNT OF RS.7,80,963/- IS THE S UBJECT MATTER OF LITIGATION BEFORE US. ON PERUSAL OF THE FACTS FURNISHED BEF ORE US, WE FIND THERE IS NO DISPUTE ABOUT THE GENUINENESS OF THIS EXPEND ITURE AND INVESTMENT OF SUCH EXPENDITURE FOR INSTALLATION OF THE ELIGIBLE PLANT AND MACHINERY. AO ALSO GRANTED NORMAL DEPRECIATION ON SUCH C APITALIZED SUNDRY EXPENSES. HOWEVER, THE AO DENIED THE CLAIM OF ADDITIONAL DE PRECIATION ON THE CLAIM OF SUNDRY EXPENSES WITHOUT GIVING SUSTAINABLE REA SON FOR THE DENIAL. RS.7,80,963/- STANDS ALREADY LOADED TO THE COST OF THE ASSETS AND THE SAME IS ALLOWED BY THE AO AT THE TIME OF ALLOWING THE N ORMAL DEPRECIATION ON THE SAID ASSETS CONSISTING THE LOADED COS T OF THE ASSETS. IN OUR VIEW, THESE EXPENSES CONSTITUTE PART OF THE ELIGIBLE PLA NT AND MACHINERY FOR CLAIM OF ADDITIONAL DEPRECIATION OVER AND ABOVE THE NORM AL DEPRECIATION. THEREFORE, IN OUR VIEW, THE FINDING OF THE AO AND THE CIT(A) IS UNSUSTAINABLE. THE ISSUE RAISED BY THE ASSESSEE IS ALLOWABLE. AO IS DIREC TED TO GRANT ADDITIONAL DEPRECIATION ON THIS PART OF CAPITALIZED EXPENDITUR E ON ACCOUNT OF ITA NO.2142 TO 2144/PUN/2016 AMJ LAND HOLDINGS LTD., 4 PLANT AND MACHINERY. ACCORDINGLY, THE ISSUE RAISED BY THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.2143/PUN/2016 A.Y. 2010-11 9. THE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS ALSO IDENTICAL. THEREFORE, OUR DECISION IN GRANTING ADDITIONAL DEPRECIATION O N THE CAPITALIZED EXPENDITURE ON ACCOUNT OF PLANT AND MACHINERY SHALL APPLY TO THIS ASSESSMENT YEAR TOO. THUS, THE GROUNDS RAISED BY THE ASSESSE E ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. TO SUM UP, ITA NO.2144/PUN/2016 FILED BY THE ASSES SEE IS DISMISSED AND ITA NOS. 2142 & 2143/PUN/2016 FILED BY THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED ON 01 ST DAY OF AUGUST, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 01 ST AUGUST, 2018 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-6, PUNE 4. THE PR.CIT-5, PUNE 5. , , B BENCH PUNE; 6. / GUARD FILE.