ACIT, Rewari V. M/s Sheeldhan Industries, Rewari

ITA 242/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2079 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 10-11-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 21-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA RAJESH K GUPTA
• Assessee Lawyers: R K MEHRAC A
• Keywords: Depreciation; Opportunity of being heard; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI K.D.RANJAN AND SHRI GEORGE MATHAN ITA NO.242/DEL/2009 ASSESSMENT YEAR : 2003-04 ASSTT.COMMISSIONER OF INCOME-TAX, REWARI CIRCLE, REWARI. VS. M/S SHEELDHAN INDUSTRIES, L-18, MODEL TOWN, REWARI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K.MEHRA,C.A. DEPARTMENT BY : MS.ANUSHA KHURANA, RAJESH K.GUPTA, D.R. ORDER PER RANJAN, AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2005 -06 ARISES OUT OF ORDER OF THE LD. CIT(A), ROHTAK. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.12,34,232/- MADE ON ACCOUNT OF DEPRECIATION ON M ACHINERY. THE FACTS OF THE CASE, STATED IN BRIEF, ARE THAT THE ASSESSEE IS A SMALL SCALE MANUFACTURING PARTNERSHIP FIRM WHICH CAME INTO EXISTENCE VIDE PAR TNERSHIP DEED DATED 18/10/2004. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIMED DEDUCTI ON OF RS.15,14,365/- ON ACCOUNT OF DEPRECIATION. ON A QUERY RAISED BY THE A SSESSING OFFICER, IT WAS INFORMED THAT THE ASSESSEE HAD PURCHASED MACHINERY VALUING AT RS.33,65,451/- IN THE MONTH OF MARCH, 2005 I.E. FRO M 11/3/2005 TO 28/3/2005. THE ASSESSEE WAS ASKED TO PRODUCE THE D ETAILS OF PRODUCTION OF 2 THE JOB WORK UNDERTAKEN BY THE ASSESSEE WITH THE HE LP OF THE MACHINERY PURCHASED. IT WAS SUBMITTED THAT INSTALLATION CERTI FICATE DATED 28/3/2005 ISSUED BY INDIAN AGENT M/S HASS TECHNICAL CENTRE PV T. LTD. EVIDENCED THE INSTALLATION OF HASS VMC MACHINE. IT WAS ALSO SUBMI TTED THAT THE ASSESSEE HAD INSTALLED MACHINERY AND WAS PUT TO USE BEFORE 3 1/3/2005. THIS SUBMISSION OF THE ASSESSEE WAS REJECTED BY THE ASSE SSING OFFICER ON THE GROUND THAT THE ASSESSEE HAD NOT PRODUCED ANY DOCUM ENTARY EVIDENCE WHICH PROVED THE CONTENTION OF THE ASSESSEE THAT THE MACH INERY WAS READY FOR/ PUT TO USE AND THE JOB WORK/PRODUCTION WAS UNDERTAKEN W ITH THE HELP OF SAID MACHINERY. THE ASSESSEE HAS ALSO NOT PRODUCED THE D ETAILS OF PARTIES WHOSE JOB WORK WAS UNDERTAKEN. FROM THE BILLS AND CHALLAN S PRODUCED BY THE ASSESSEE, THE ASSESSING OFFICER NOTED THAT JOB WORK /PRODUCTION WAS DONE BY IT DURING THE MONTH OF FEBRUARY, 2005 I.E. FROM 15/ 2/2005 TO 25/2/2005 ONLY AND AFTER THIS DATE NO BILL/CHALLAN HAD BEEN ISSUED BY THE ASSESSEE WHICH PROVED THAT NO JOB WORK WAS UNDERTAKEN BY THE ASSES SEE AFTER THIS PERIOD. HE ALSO NOTED THAT THE IMPUGNED MACHINERY WAS PURCHASE D BY THE ASSESSEE FROM 11/3/2005 TO 28/3/2005. THEREFORE, THE MACHINERY WA S NOT READY FOR/PUT TO USE NOR JOB WORK WAS UNDERTAKEN BY THE ASSESSEE WIT H THE MACHINERY PURCHASED BY IT. HE ACCORDINGLY DISALLOWED THE CLAI M OF DEPRECIATION @12.5% ON THE VALUE OF MACHINERY OF RS. 33,63,451/- AMOUNTING TO RS.4,20,431/-. HE ALSO DISALLOWED ADDITIONAL DEPREC IATION OF RS. 7,92,801/-. A TOTAL DISALLOWANCE OF DEPRECIATION WAS MADE AT RS .12,14,233/-. 3. ON APPEAL, IT WAS SUBMITTED BY THE ASSESSEE THAT INSTALLATION CERTIFICATE DATED 28/3/2005 WAS ISSUED BY M/S HASS TECHNICAL CE NTRE PVT. LTD. BUT THE ASSESSING OFFICER HAD REJECTED THIS EVIDENCE. IT WA S ALSO SUBMITTED THAT IT WAS NOT CLEAR AS TO WHAT PROOF THE ASSESSING OFFICE R WANTED TO HAVE IN RESPECT OF INSTALLATION OF SAID MACHINERY. BEFORE T HE LD. CIT(A), THE ASSESSEE 3 FILED COPIES OF PRODUCTION CHART SHOWING PRODUCTION OF CERTAIN ITEMS INDICATING THE USE OF MACHINERY. THE ASSESSEE PLACE D RELIANCE ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT V. GEO TECH. CONSTRUCTION CORPN. 244 ITR 452 FOR THE PROPOSITION THAT DEPRECIATION WILL BE ALLOWABLE EVEN IF THE ASSESSEE PRODUCES A PROOF OF MACHINERY BEING READY FOR USE. THE LD. CIT(A) AFTER CONSIDERING THE EVIDE NCE AND SUBMISSION MADE BY THE ASSESSEE HELD THAT THE ASSESSEE HAD PRODUCED PROOF OF INSTALLATION AND ALSO USE OF MACHINERY AND, THEREFORE, THE ASSESSEE WAS ENTITLED FOR DEPRECIATION. ACCORDINGLY, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. BEFORE US, THE LD. SR. D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. A.R. OF THE ASS ESSEE PRODUCED THE PRODUCTION CHART IN RESPECT OF JOB WORK CARRIED OUT BY THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE HAD RECEIVED MATERIAL F ROM SUNRISE TOOLING ON 23/3/2005. THE JOB WORK WAS DONE AND THE BILL WAS R AISED ON 4 TH APRIL, 2005. THE ASSESSEE ALSO FILED A COPY OF CERTIFICATE ISSU ED BY M/S HASS TECH. CENTRE PVT. LTD. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. ACCORDING TO THE ASSESSEE, THE VMC MACHINE WAS IMPORTED FROM M/S HASS AUTOMATION INC, USA. THE MAC HINERY WAS CLEARED THROUGH CUSTOMS, MUMBAI WHICH ARRIVED AT ASSESSEES PLACE ON 28/3/2005. IT HAS ALSO BEEN STATED THAT THE ASSESSEE WAS HAVING R EQUISITE POWER CONNECTION. THE ASSESSEE GOT THE ELECTRIFICATION DONE AS REQUIR ED FOR MACHINE BEFORE ARRIVAL. THE MACHINERIES WERE INSTALLED BY THE SUPP LIERS, NAMELY, M/S MICROMATIC MACHINES TOOLS PVT. LTD. AND M/S HASS TE CHNICAL CENTRE PVT. LTD.. IT WAS ALSO STATED THAT MACHINERIES PROCURED WERE OF PLUG AND USE IN 4 NATURE AND NEEDED NO FOUNDATION ETC. FOR WHICH ELEC TRICAL INSTALLATION WERE IN PLACES AND WERE GENERAL IN NATURE. THE MACHINE WAS VERY WELL INSTALLED AND PUT TO USE ON 28/3/2005 AND COPY OF INSTALLATION CE RTIFICATE ISSUED BY M/S HASS CENTRE PVT. LTD. WAS SUBMITTED BEFORE THE ASSE SSING OFFICER. IT HAS ALSO BEEN STATED THAT PRODUCTION CARRIED OUT WITH THE HE LP OF MACHINE WAS DISPATCHED BY THE FIRM ON 4/4/2005. THE ASSESSEE HA S PRODUCED THE COPY OF PRODUCTION CHART BEFORE THE ASSESSING OFFICER. WE H AVE GONE THROUGH THE SUBMISSIONS MADE BY THE ASSESSEE. WE HAVE PERUSED T HE INSTALLATION CERTIFICATE ISSUED BY M/S HASS TECHNICAL CENTRE PVT . LTD. THE NAME OF SERVICE ENGINEER IS SHRI V.S.TANWAR. HOWEVER, SHRI V.S.TANWAR HAS NOT SIGNED THE SAID CERTIFICATE. ANOTHER CONTENTION OF THE ASSESSEE IS THAT 500 PIECES OF BUSH WERE DISPATCHED ON 4/4/2005 TO SUNRI SE TRADING FROM WHOM MATERIAL/ORDER WAS RECEIVED. NO OTHER EVIDENCE HAS BEEN FILED SO AS TO SUGGEST THAT THE ASSESSEE HAS CARRIED OUT THE PRODU CTION WORK FROM 28/3/2005 ONWARDS. WE ARE ALSO NOT AWARE OF THE PRODUCTION CA PACITY OF THE MACHINE SO AS TO FIND OUT THE TIME TAKEN FOR PRODUCTION OF 500 PIECES OF BUSH. THE ASSESSEE HAD NOT PRODUCED PRODUCTION REGISTER. SINC E THE INSTALLATION CERTIFICATE HAS NOT BEEN SIGNED BY SHRI V.S.TANWAR, THE SERVICE ENGINEER AND IN THE ABSENCE OF PRODUCTION CAPACITY, WE FEEL IT P ROPER TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIREC TION TO EXAMINE THE CASE OF ASSESSEE WITH REGARD TO PRODUCTION REGISTER. THE AS SESSING OFFICER WILL CARRY OUT ENQUIRIES FROM M/S HASS TECHNICAL CENTRE PVT. L TD. AS TO WHEN THE MACHINERY WAS INSTALLED. THE ASSESSING OFFICER WILL ALSO EXAMINE THE INSTALLATION OF MACHINERY BY ANOTHER PARTY, NAMELY, M/S MICROMATIC MACHINE TOOLS PVT. LTD. WHO HAD INSTALLED THE MACHI NERY ON 14/3/2005. THE ASSESSING OFFICER WILL PROVIDE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE COMPLETION OF ASSESSEE AS DIRECTED. 5 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 11TH DECE MBER, 2009. SD/- SD/- (GEORGE MATHAN) (K.D.RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.12.2009. PSP COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR