ACIT, CHENNAI V. M/s. P.ORR & Sons, CHENNAI

ITA 2166/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4644 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: R MEENAKSHISUNDARAM
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI (BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER) .. I.T.A. NO. 2166/MDS/2010 ASSESSMENT YEAR : 2005-06 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(2), CHENNAI 600 034. (APPELLANT) V. M/S P. ORR & SONS, 22, ANNA SALAI, CHENNAI 600 002. PAN : AAACP3504B (RESPONDENT) APPELLANT BY : SHRI P.B. SEKARAN, CIT - DR RESPONDENT BY : SHRI R. ME ENAKSHISUNDARAM O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL OF THE REVENUE, ITS GRIEVANCE IS TH AT THE CIT(APPEALS) ALLOWED DEPRECIATION CLAIMED BY THE AS SESSEE ON WINDMILLS DESPITE THE FACT THAT THE LETTER OF TAMIL NADU ELECTRICITY BOARD DATED 31.3.2005 CONSIDERED BY THE CIT(APPEALS ) WAS NEVER PUT TO THE ASSESSING OFFICER NOR PRODUCED BEFORE HI M DURING THE COURSE OF ASSESSMENT PROCEEDINGS. I.T.A. NO. 2166/MDS/10 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE, ENGAGED I N THE BUSINESS OF SALE AND SERVICE OF WATCHES, HAD SET OFF FROM IT S INCOME THEREFROM, LOSS ON WINDMILLS ON ACCOUNT OF DEPRECIATION ON PLA NT AND MACHINERY ` 61,35,181/-. THOUGH ASSESSEE WAS REQUIRED TO FURN ISH DETAILS OF THE INCOME FROM WINDMILLS DIVISION, IT SEEMS NO SUC H DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER. ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE HAVING NOT OFFERED ANY INCOME FROM WINDMILLS, DEPRECIATION COULD NOT ALLOWED. HE, THEREFORE, DIS ALLOWED THE CLAIM OF DEPRECIATION. 3. BEFORE LD. CIT(APPEALS), ASSESSEE ARGUED THAT IT HAD COMPLIED WITH REQUIREMENTS OF SECTION 32 OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THEREFORE, DEPRECIATION OUGHT HAVE BEEN ALL OWED. AS PER THE ASSESSEE, THE ASSET WAS PHYSICALLY PRESENT AND IT W AS USED FOR THE PURPOSE OF BUSINESS. ASSESSEE ALSO SUBMITTED THAT TRIAL RUN WAS DONE AND TEN UNITS OF POWER WAS PURCHASED. IN SUPP ORT OF THIS, IT PRODUCED LETTER DATED 31.3.2005 ISSUED BY TAMIL NAD U ELECTRICITY BOARD. CONSIDERING THE LETTER OF TAMIL NADU ELECTR ICITY BOARD, LD. CIT(APPEALS) HELD THAT DEPRECIATION CLAIM COULD BE ALLOWED. HE, THEREFORE, DELETED THE ADDITION MADE BY THE A.O. I.T.A. NO. 2166/MDS/10 3 4. NOW BEFORE US, LEARNED D.R. SUBMITTED THAT THE L ETTER OF TAMIL NADU ELECTRICITY BOARD ON WHICH RELIANCE WAS PLACED BY LD. CIT(APPEALS) FOR DELETION OF ADDITION WAS NEVER PUT BEFORE THE ASSESSING OFFICER NOR PRODUCED BY THE ASSESSEE DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, ACCORDING TO HI M, THERE WAS A CLEAR VIOLATION OF RULE 46A OF INCOME-TAX RULES, 19 62. 5. PER CONTRA, LEARNED A.R. SUBMITTED THAT THE LETT ER WAS VERY CLEAR AND CATEGORICALLY PROVING THE USE OF WINDMILLS DURI NG RELEVANT PREVIOUS YEAR AND NO PURPOSE WOULD BE SERVED BY REM ITTING THE ISSUE BACK TO A.O. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF DEPRE CIATION SINCE ASSESSEE FAILED TO PRODUCE ANY DETAILS BEFORE HIM. LD. CIT(APPEALS) WAS OF THE OPINION THAT ASSESSEE HAD, INDEED, MADE A TRIAL RUN AND FOR THIS PURPOSE, HE RELIED ON THE LETTER NO.EE/PDM /DM/F.W.F./ HTSC.NO. 409/2005 DATED 31.03.2005 OF TNEB. NO DOU BT, IT HAS BEEN MENTIONED IN THIS LETTER THAT THE WINDMILL INS TALLED WAS COMMISSIONED BY THE ASSESSEE AND METER READINGS WER E ALSO MENTIONED. NEVERTHELESS, THIS CRITICAL EVIDENCE WA S NEVER PRODUCED I.T.A. NO. 2166/MDS/10 4 BEFORE THE ASSESSING OFFICER NOR PUT BY THE LD. CIT (APPEALS) TO HIM FOR HIS OPINION. THEREFORE, THERE WAS A CLEAR VIOL ATION OF RULE 46A OF INCOME-TAX RULES, 1962. WE, THEREFORE, SET ASIDE THE ORDERS OF LD. CIT(APPEALS) AND A.O. AND REMIT THE ISSUE TO THE FI LE OF A.O. FOR FRESH CONSIDERATION. ASSESSEE SHALL BE GIVEN AN OPPORTUN ITY TO EXPLAIN ITS CASE AND PRODUCE NECESSARY RECORDS IN SUPPORT AND T HE A.O. SHALL PROCEED IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE TWENTY FIRST DAY OF JULY, 2011. SD/- SD/- (U.B.S. BEDI) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 21 ST JULY, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-V, CHENNAI-34 (4) CIT, CHENNAI-III, CHENNAI (5) D.R. (6) GUARD FILE