CTR Manufacturing IndustriesLtd., Pune V. Dy. CIT, Pune

ITA 2456/PUN/2012

• Counselvise Citation: 245624514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Depreciation; Opportunity of being heard; Additional depreciation; Question of law
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2456/PN/2012 A.Y. 2008-09 CTR MANUFACTURING INDUSTRIES LTD., NAGAR ROAD, PUNE - 411014 PAN: AAACC7256R APPELLANT VS. DCIT, CIRCLE 1(1), PUNE RESPONDENT APPELLANT BY : SHRI RAJEND RA AGIWAL RESPONDENT BY : SHRI P.L . PATHADE DATE OF HEARING: 16.01.2014 DATE OF ORDER : 27.01.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-I, [SHORT CI T(A)-I] PUNE, DATED 23.07.2012 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A): 1. GROUND 1: (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING ELIGIBLE HIGHER RATE OF DEPRECIATION OF 80% ON PART COST INCURRED IN ORDER TO BRING WINDMIL L INTO EXISTENCE AND WORKING CONDITION; (B) SHOULD HAVE APPRECIATED THAT THE AO HAS ERRED IN MAKING THE SEPARATE BLOCKS OF 'WINDMILL' WHICH IS I N FACT A SINGLE BLOCK ENTITLED FOR UNIFORM RATE OF DEPRECIATION @ 80% ON ENTIRE COST OF WINDMILL GENERATION AND DISTRIBUTION OF POWER; (C) ERRED IN IGNORING THE PRINCIPAL OF' FUNCTIONAL USE OF ASSET. 2 ANY CONSEQUENTIAL RELIEF, TO WHICH THE APPELLANT MA Y BE ENTITLED UNDER THE LAW IN PURSUANCE OF THE AFORESAI D GROUNDS OF APPEAL, OR OTHERWISE, MAY THUS BE GRANTE D. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMI T, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT, THE TIME OF HEARING OF THE APPEA L, SO AS TO ENABLE THE HON'BLE TRIBUNAL TO DECIDE THIS APPEAL A CCORDING TO LAW. 2. THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF ON-LOAD TAP CHANGERS, RA DIATORS FOR TRANSFORMERS, FLANGE TYPE TAP CHANGERS ETC. THE AS SESSEE HAD INSTALLED WINDMILL DURING F.Y. 2006-07 RELEVANT TO A.Y. 2007-08. THE APPELLANT CLAIMED ACCELERATED DEPRECIATION @ IN A.Y. 2007-08 ON WHOLE OF WINDMILLS INCLUDING RELATED ASSETS. TH E ASSESSING OFFICER ONLY ALLOWED THIS RATE OF DEPRECIATION OF S PECIFIED ITEMS AND ON OTHER ASSETS, NORMAL DEPRECIATION HAS ALLOWE D. A SIMILAR ISSUE AROSE IN A.Y.2007-08 AND FOLLOWING THE SAME, THE CIT(A) HELD THAT THE DEPRECIATION ON POWER EVACUATION INFR ASTRUCTURE, ERECTION AND COMMISSIONING, LINE WORK, ELECTRICAL I TEMS WILL QUALIFY FOR DEPRECIATION @ 80% WHEREAS, MEDA CHARGE S, CIVIL WORK, APPLICATION CHARGES, PROFESSIONAL FEES, AND B ANK CHARGES WILL NOT QUALIFY FOR HIGHER RATE OF DEPRECIATION. ACCORDINGLY, THE APPEAL WAS PARTLY ALLOWED. 3. THE LEARNED AUTHORIZED REPRESENTATIVE HAS POINTE D OUT THAT THE MATTER WAS CARRIED BEFORE ITAT, WHEREIN THIS IS SUE OF DEPRECIATION ON MEDA CHARGES, CIVIL WORK, APPLICATI ON CHARGES, PROFESSIONAL FEES, AND BANK CHARGES, THE TRIBUNAL H AS BEEN DEALT AS UNDER: 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. IN SO FAR AS THE ASSESSEES CLAIM THAT DEPRECIATION @ 80% ON THE FOUNDATION OF THE WINDMILL IS CONCERNED, THE SA ME IS IN LINE WITH THE JUDGMENT OF THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF COOPER FOUNDRY PVT. LTD. (SUPRA) AND TH EREFORE, ALLOWABLE. EVEN WITH REGARD TO THE MEDA CHARGES, APPLICATION CHARGES, PROFESSIONAL CHARGES AND BANK CHARGES 3 TO THE EXTENT SUCH EXPENDITURE RELATE TO THE ITEMS OF WINDMILL ELIGIBLE FOR 80% RATE OF DEPRECIATION, THE SAME BE ALLOWED. IN ORDER TO ALLOCATE THE PORTION OF SUCH EXPENDITURE ON 80% ELIGIBLE ASSETS AND OTHERS, THE ASSESSING OF FICER IS DIRECTED TO CONSIDER THE SUBMISSIONS OF THE ASSESSE E AND THEREAFTER ALLOCATE THE COSTS AND RE-COMPUTE THE DEPRECIATION ACCORDINGLY. THUS, ON THIS GROUND, AS SESSEE SUCCEEDS. 12. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RAISED AN ADDITIONAL GROUNDS OF APPEAL WHICH WERE H ITHERTO NOT RAISED BEFORE THE LOWER AUTHORITIES. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, 3. GROUND 3 WITHOUT PREJUDICE TO THE GROUND 1, THE EXPENDITURE VIZ. MEDA CHARGES, APPLICATION CHARGES, PROFESSIONAL CHARGES AND BANK CHARGES AMOUNTING TO RS. 22,99,482/- BEING REVENUE IN NATURE NEED TO BE ALLOWED FULLY UNDER SECTION 37 OF THE ACT IF CAPITALIZATION OF THESE EXPENDITURES ALONG WITH WINDMILL IS NOT ACCEPTED. 4. GROUND 4 THE APPELLANT IS ENTITLED FOR ADDITIONAL DEPRECIATI ON OF 20% UNDER SECTION 32(1)(IIA) OF THE ACT ON THE WIND MILL ACQUIRED AND INSTALLED DURING FY 2006-07. 13. FIRSTLY, IT IS CANVASSED THAT THE ASSESSEE WAS ELIGIBLE FOR ADDITIONAL DEPRECIATION U/S 32((1)(IIA) OF THE ACT ON THE COST OF WINDMILL FOLLOWING THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. VTM LTD (2009) 31 9 ITR 336 (MAD). IT IS SUBMITTED THAT THE SAID CLAIM WAS HITHERTO NOT RAISED BEFORE THE LOWER AUTHORITIES BUT THE SAM E BEING A PURE QUESTION OF LAW CAN BE RAISED BY THE ASSESSEE PRESENTLY, FOLLOWING THE RATIO OF FOLLOWING JUDGMEN TS:- A) NATIONAL THERMAL POWER CO. LTD. VS. CIT 229 ITR 383 (SC); B) JUTE CORPORATION OF INDIA LTD. 187 ITR 688 (SC); C) AHMEDABAD ELECTRICITY CO. LTD. 199 ITR 351 (BOM) (FB); D) ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT ITAT SPECIAL BENCH ITA NO. 518/MUM/2010 ORDER DT. 21-5-2012. 4 14. ON THE OTHER HAND, THE LEARNED DR APPEARING FOR THE REVENUE HAS CONTENDED THAT RAISING OF ADDITIONAL GR OUNDS IS UNJUSTIFIED IN THE PRESENT CASE. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE CLAIM OF THE ASSESSEE FOR ADDITIONAL DEPRECIATI ON OF 20% IN TERMS OF SECTION 32(1)(IIA) OF THE ACT ON THE CO ST OF WINDMILL IS IN LINE WITH THE JUDGMENT OF HONBLE MA DRAS HIGH COURT IN THE CASE OF VTM LTD (SUPRA). SO HOWE VER, SUCH A CLAIM WAS NOT PREFERRED BEFORE THE LOWER AUT HORITIES AND THE SAME HAS BEEN RAISED AS ADDITIONAL GROUNDS BEFORE US. PERTINENTLY, THE CLAIM OF THE ASSESSEE INVOLVE S PURE POINT OF LAW WHICH DOES NOT REQUIRE FRESH INVESTIGA TION OF FACTS. BEING A POINT OF LAW AND ALSO IT HAS A BEAR ING ON THE DETERMINATION OF TAX LIABILITY, WE DEEM IT FIT AND PROPER TO ADMIT SUCH CLAIM FOR ADJUDICATION, FOLLOWING THE RA TIO OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF NA TIONAL THERMAL POWER CO. LTD. (SUPRA). SINCE SUCH A CLAIM WAS NOT OPEN FOR VERIFICATION BEFORE THE LOWER AUTHORITIES, WE THEREFORE, DEEM IT FIT AND PROPER TO RESTORE THE MA TTER TO THE FILE OF THE ASSESSING OFFICER, WHO SHALL CONSIDER A ND ALLOW THE CLAIM OF ASSESSEE FOR ADDITIONAL DEPRECIATION U /S 32(1)(IIA) OF THE ACT ON THE COST OF WINDMILL AS PE R LAW. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL GIVE R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ON THI S GROUND, ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 16. IN SO FAR AS THE OTHER ADDITIONAL GROUND RELATI NG TO THE ELIGIBILITY OF MEDA CHARGES, APPLICATION CHARGES, PROFESSIONAL CHARGES AND BANK CHARGES, AMOUNTING TO RS.22,99,482/- AS REVENUE IN NATURE ALLOWABLE U/S.3 7 OF THE ACT IS CONCERNED, THE SAME ALSO DESERVES TO BE ADMI TTED FOLLOWING THE RATIO OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC LTD. (SUPRA). ON THIS ASPECT ALSO, THE MAT TER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL CONSIDER THE SAID ALTERNATIVE ADDITIONAL GROUND RAI SED BY THE ASSESSEE ON ITS MERITS AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. THUS ON THI S ASPECT, ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 4. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. IN VIEW OF ABOVE, WE FIND THAT THE ASSESSEE IN A.Y. 2007-08, T HE ASSESSEE HAS CLAIMED THE DEPRECIATION @ 80% ON FOUNDATION ON WINDMILL IS CONCERNED, THE SAME WAS FOUND IN THE LINE OF JUDGME NT OF HONBLE HIGH COURT IN THE CASE OF COOPER FOUNDARY PVT. LTD. , THEREFORE, IT 5 WAS HELD ALLOWABLE WITH REGARD TO MEDA CHARGES, CIV IL WORK, APPLICATION CHARGES, PROFESSIONAL FEES, AND BANK CH ARGES TO THE EXTENT OF SUCH EXPENDITURE REFERRED TO THE ITEM OF WINDMILL ELIGIBLE TO 80% OF DEPRECIATION AND THE SAME SHOULD BE ALLOWED IN ORDER TO ALLOCATE OCEAN OF SUCH EXPENDITURE OF 80% ON ELIGIBLE ASSETS AND OTHERS. THE ASSESSING OFFICER WAS DIREC TED TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE AND THEREAFTER ALLO CATE THE COST AND RE-COMPUTE THE DEPRECIATION ACCORDINGLY. SO FA R AS OTHER ADDITIONAL GROUND RELATING TO ALLOWABILITY OF MEDA CHARGES, CIVIL WORK, APPLICATION CHARGES, PROFESSIONAL FEES, AND B ANK CHARGES AS REVENUE IN NATURE ALLOWABLE U/S.37 OF I.T. ACT, IS CONCERNED, THE SAME WAS HELD TO BE DISALLOWED TO BE ADMITTED FOLLO WING THE RATIO OF HONBLE SUPREME COURT IN THE CASE OF NTPC. ON T HIS ASPECT ALSO, THE MATTER WAS REMITTED TO THE FILE OF THE AS SESSING OFFICER WHO HAS DIRECTED TO CONSIDER THE SAID ADDITIONAL GR OUND RAISED BY THE ASSESSEE ON ITS MERITS AFTER PROVIDING THE REAS ONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS ALTERNATIVE GROUND WAS ALLOWED FOR STATISTICAL PURPOSES. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, FOR A.Y. 2007-08, THE MATTER IS RESTORED TO THE ASSESSING OFFICER WITH A SIMILAR DI RECTION ON MAIN AND ALTERNATIVE CONTENTION AS DISCUSSED ABOVE. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 27 TH OF JANUARY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH JANUARY, 2014 GCVSR 6 COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-I, PUNE 4) THE CIT-I, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE