The DCIT,(OSD), Range-1, Ahmedabad V. M/s. Bhagwati Spherocast Pvt. Ltd., Ahmedabad

ITA 2394/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8439 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Maximum Marginal Rate; Additional depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE, SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. 2394/AHD/2014 (ASSESSMENT YEAR: 2008-09) DCIT (OSD), RANGE-1, AHMEDABAD AP PELLANT VS. M/S. BHAGWATI SPHEROCAST PVT. LTD., 1, KRISHNA SOCIETY, ELLISBRIDGE, AHMEDABAD 380006 RES PONDENT PAN: AABCB7709G /BY REVENUE : SHRI K. MADHUSUDAN, SR. D.R. /BY ASSESSEE : SHRI S. N. SOPARKAR, A.R. /DATE OF HEARING : 20.09.2017 /DATE OF PRONOUNCEMENT : 29 .09.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 A RISES AGAINST THE CIT(A)-6, AHMEDABADS ORDER DATED 30.06.2014, IN CA SE NO. CIT(A)-VI/DCIT (OSD) R-1/187/12-13, REVERSING ASSESSING OFFICERS ACTION DISALLOWING ASSESSEES DEPRECIATION CLAIM OF RS.57,23,043/- ; IN PROCEEDIN GS U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH SIDES. CASE FILE PERUSED. 2. THE REVENUES SOLITARY SUBSTANTIVE GRIEVANCE SEE KS TO REVIVE THE ABOVE DEPRECIATION DISALLOWANCE AMOUNTING TO RS.57,23,043 /- PERTAINING TO ASSESSEES ITA NO. 2394/AHD/14 (DCIT(OSD) VS. BHAGWATI SPHEROC AST P. LTD.) A.Y. 2008-2009 - 2 - MELTING FURNACE PURCHASED DURING THE YEAR STATED TO BE IN THE NATURE OF AN ENERGY SAVING MACHINE BEING A FLAMELESS FURNACE. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY PLEADS THAT THE CIT(A) HAS NOT APPRECIAT ED THE ASSESSEE TO HAVE CLAIMED HIGHER RATE OF DEPRECIATION APPLICABLE TO PLANT AND MACHINERY IRON & STEEL INDUSTRY-ROLLING MILL ROLES @ 80% FOR MORE THAN 18 0 DAYS, 40% FOR LESS THAN THAT, 10% FOR LESS THAN 180 DAYS AGAINST ABOVE NORM AL DEPRECIATION APPLICABLE TO PLANT AND MACHINERY OF 15% OR 7.5% IN THE NATURE OF ADDITIONAL DEPRECIATION; AS THE CASE MAY BE. 3. THE ASSESSEE DERIVES STRONG SUPPORT FROM THE IMP UGNED LOWER APPELLATE FINDINGS DELETING THE DEPRECIATION DISALLOWANCE IN QUESTION AS FOLLOWS: 4.4 IN THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 THE A.O OBSERVED THAT THE APPELLANT HAD CLAIMED DEPRECIATION @ 80% AND ADDITI ONAL DEPRECIATION @ 10% ON THE PLANT & MACHINERY; THE HIGHER RATE OF DEPREC IATION AND THE ADDITIONAL DEPRECIATION WERE APPLICABLE FOR IRON AND STEEL IND USTRY ROLLING MILLS; SINCE THE APPELLANT WAS RUNNING FOUNDRY, THE SAID RATES ARE N OT APPLICABLE; APPELLANT WAS ENTITLED TO DEPRECIATION @ 15% AND WAS NOT ENTITLED TO ADDITIONAL DEPRECIATION. ACCORDINGLY, THE EXCESS DEPRECIATION CLAIMED WAS DI SALLOWED. 4.5 THE CONTENTIONS OF THE APPELLANT ARE THAT THE A PPELLANT WAS ENGAGED IN THE BUSINESS OF MANUFACTURING SG IRON, ALLOY & HIGH DUT Y CAST IRON CASTING FURNACE ; IT HAD PURCHASED MELTING FURNACE DURING YEAR; THE SAID FLAMELESS FURNACE RESULTS IN ENERGY SAVING; THE RATE OF DEPRECIATION ALLOWABLE W OULD BE 80%; OPENING WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS CANNOT BE DISTURB ED; DISALLOWING PART OF THE DEPRECIATION CLAIMED HAS NO REVENUE EFFECT OVER THE YEARS, AS THE APPELLANT HAS BEEN MAKING PROFITS IN THE SUCCEEDING YEARS; DEPREC IATION @ 80% WAS ALLOWED ON A SIMILAR FURNACE PURCHASED DURING THE PREVIOUS YEA R RELEVANT TO A.Y. 2005-06; NO DISALLOWANCE OF THE DEPRECIATION WAS MADE IN THE SC RUTINY ASSESSMENT FOR A.Y. 2006-07 AND THEREFORE IMPUGNED DISALLOWANCE MAY BE DELETED. 4.6 HAVING CONSIDERED THE FACTS OF THE MATTER. I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE APPELLANT. AS SEEN FROM SUB-PARA 8(IX) OF APPENDIX-I, UNDER THE HEAD 'MACHINERY & PLANT', ENERGY SAVING DEVICES BEI NG (B) 'FLAMELESS FURNACE AND CONTINUOUS PUSHER TYPE' FURNACE' ARE ENTITLED TO DE PRECIATION @ 80%. APPELLANT HAS FURNISHED NECESSARY EVIDENCE TO SHOW THAT THE I NDUCTION MELTING FURNACE PURCHASED DURING THE YEAR IS FLAMELESS FURNACE, WHI CH IS ENERGY SAVING DEVICE. THEREFORE, A.O IS DIRECTED TO DELETE THE DISALLOWAN CE OF DEPRECIATION. IN THIS CONNECTION, IT IS ALSO SEEN THAT IN THE PREVIOUS YE AR RELEVANT TO A.Y. 2005-06 DEPRECIATION WAS ALLOWED @ 80% ON A SIMILAR FURNACE PURCHASED DURING THAT YEAR. IT IS ALSO SEEN THAT THE APPELLANT ADMITTED INCOME FALLING UNDER THE MAXIMUM MARGINAL RATE [IN THE SUCCEEDING ASSESSMENT YEARS F ROM 2009-10 TO 2012-13], ITA NO. 2394/AHD/14 (DCIT(OSD) VS. BHAGWATI SPHEROC AST P. LTD.) A.Y. 2008-2009 - 3 - SUBSTANTIATING THE CONTENTION THAT THE DISALLOWANCE OF DEPRECIATION WOULD BE TAX NEUTRAL. IMPUGNED DISALLOWANCE IS DELETED. THIS GRO UND OF APPEAL IS ALLOWED. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL SUBMISSIONS. IT HAS COME ON RECORD THAT THE CIT(A) REFERS TO AN IDENTIC AL ISSUE BEING DECIDED IN ASSESSEES FAVOUR IN ASSESSMENT YEAR 2005-06 QUA A SIMILAR FURNACE. PAGES 13 TO 14 IN THE LOWER APPELLATE ORDER SUFFICIENTLY INDICATE RELEVANT DETAILS OF THE INDUCTION MELTING FURNACE PURCHASED AND TREATED ELIGIBLE FOR DEPRECIATION IN THE SAID ASSESSMENT YEAR. LEARNED DEPARTMENTAL REPRESENTATI VE FAILS TO DISPUTE IN THE COURSE OF HEARING THE FACT THAT ASSESSEES FURNACE BEING A FLAMELESS ONE IS AN ENERGY SAVING DEVICE AS PER APPENDIX-I OF THE INCOME TAX R ULES PRESCRIBING DEPRECIATION RATE THEREUPON @80% . WE THEREFORE FIND NO REASON TO DISTURB CIT(A)S CONCLUSION UNDER CHALLENGE. 5. THIS REVENUES APPEAL IS ACCORDINGLY DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF SEPTEMBER, 2017.] SD/- SD/- ( N. K. BILLAIYA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 29/09/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0