Arjun Moras, V. DCIT, Bangalore

ITA 260/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80803 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 01-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR
• Assessee Lawyers: V SRINIVASAN
• Keywords: Depreciation; Search and seizure

Judgement Text

ITA NO.260 & 261& 1376 TO 1379/BANG/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P.GEORGE, ACCOUNTANT MEMBER I.T.A NO.260 & 261/BANG/2013 & ITA 1376 TO 1379/BAN G/2013 (ASSESSMENT YEAR : 2006-07 TO 2010-11) AND S.P.NOS.60 & 61/BANG/2013 IN ITA NOS. 260 & 261/BANG/2013 SRI.ARJUN MORAES, 1-13/821, ASHOKBAGH, ASHOKNAGAR, URWA STORES, MANGALORE-575 006 .. APPELLANT PAN : ACMPM8215D V. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, MANGALORE .. RESPONDENT APPELLANT BY : SHRI. V.SRINIVASAN CA RESPONDENT BY : SHRI.BIJOYKUMAR PANDA, ADDL.CIT HEARD ON : 17.12.2014 PRONOUNCED ON : 30.12.2014 O R D E R PER N. V. VASUDEVAN, JUDICIAL MEMBER : ALL THE ABOVE APPEALS ARE DIRECTED AGAINST ORDER DATED 15.1.2013 OF CIT(A)-VI, BANGALORE, RELATING TO AYS 06-07 TO 2010 -11. 2. A SEARCH U/S.132 OF THE INCOME TAX ACT, 1961 (A CT) WAS CARRIED OUT ON 5.3.2010 BY THE INCOME TAX AUTHORITIES UNDER THE AC T IN THE CASE OF THE ASSESSEE WHO IS AN INDIVIDUAL AND WHO CARRIES ON TH E BUSINESS OF MANUFACTURE ITA NO.260 & 261& 1376 TO 1379/BANG/2013 2 AND EXPORT OF DIMENSIONAL SQUARED DRESSED GRANITE B LOCKS UNDER THE NAME AND STYLE MR.ARJUN MORAES, PROP. SONAR IMPEX WHICH IS A 100% EXPORT ORIENTED UNIT (EOU) LOCATED AT COCHIN SEZ. BESIDES THE ABOV E BUSINESS, THE ASSESSEE ALSO UPTO AY 04-05 CARRIED ON THE BUSINESS OF GRANI TE BLOCKS UNDER THE NAME AND STYLE MR.ARJUN MORAES PROP. M/S.MANGALORE OVERS EAS TRADERS. 3. SINCE A SEARCH U/S.132 OF THE ACT WAS CARRIED O UT IN THE CASE OF THE ASSESSEE, AS PER PROVISIONS OF SEC.153A OF THE ACT, THE AO HA S TO ASSESS OR REASSESS THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF THE 6 AY S IMMEDIATELY PRECEDING THE AY RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEAR CH IS CONDUCTED. PROCEEDINGS U/S.153A OF THE ACT WAS ACCORDINGLY INI TIATED AGAINST THE ASSESSEE. IN SO FAR A.Y.06-07 TO 09-10 ARE CONCERNED AN ORDER S OF ASSESSMENT WERE PASSED U/S.153A R.W. SEC.143(3) OF THE ACT ON 29.12.2011 I N WHICH THE ASSESSEES CLAIM FOR DEDUCTION U/S.10B OF THE ACT WAS DENIED. IN SO FAR AS AY 10-11 IS CONCERNED PROCEEDING U/S.143(3) OF THE ACT WAS CONC LUDED AND AN ORDER OF ASSESSMENT DATED 29.12.2011 U/S.143(3) OF THE ACT W AS PASSED IN WHICH THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.10B OF THE ACT WAS DENIED. 4. AGAINST THE AFORESAID ORDERS OF THE AO, THE ASS ESSEE PREFERRED APPEALS BEFORE THE CIT(A) WHO BY THE IMPUGNED COMMON ORDER CONFIRMED THE ACTION OF THE AO. ITA NO.260 & 261& 1376 TO 1379/BANG/2013 3 5. AGGRIEVED BY THE SAID COMMON ORDER OF THE CIT(A ), THE ASSESSEE ORIGINALLY FILED ONLY TWO APPEALS VIZ., ITA NO.260 & 261/BANG/ 2013. ITA NO.260/BANG/2013 WAS FILED IN RESPECT OF AY 06-07 T O 09-10 WHICH WERE ALL ASSESSMENTS WHICH WERE MADE U/S.153A OF THE ACT. I TA NO.261/BANG/2013 WAS FILED IN RESPECT OF AY 10-11 WHICH WAS AN ASSES SMENT MADE U/S.143(3) OF THE ACT. BOTH THE APPEALS HAD BEEN FILED IN TIME. 6. THE REGISTRY ISSUED A DEFECT MEMO TO THE ASSESS EE IN ITA NO.260/BANG/2013 POINTING OUT THAT ONE APPEAL FOR 4 AYS CANNOT BE FI LED AND THAT 4 SEPARATE APPEALS ONE EACH FOR EACH AY 06-07 TO 09-10 HAD TO BE FILED. THE DEFECT MEMO WAS ISSUED ON 5.8.2013. ON 30.9.2013, THE ASSESSEE FILED ITA NO.1376 TO 1379/BANG/2013 BEING 4 SEPARATE APPEALS FOR AY 06-0 7 TO 09-10 RESPECTIVELY IN COMPLIANCE WITH THE DEFECT MEMO ISSUED BY THE REGIS TRY. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.260/BANG/2013 AND ITA NO. 1376 TO 1379/BANG/2013 ARE IDENTICAL. HENCE ITA NO.260/BAN G/2013 IS SUPERFLUOUS, IN VIEW OF THE APPEALS ITA NO.1376 TO 1379/BANG/2013 F ILED BY THE ASSESSEE. THEREFORE ITA NO.260/BANG/2013 IS DISMISSED AS SUPE RFLUOUS AND NOT REQUIRING ANY SEPARATE ADJUDICATION IN VIEW OF THE CIRCUMSTAN CES SET OUT ABOVE. 7. AS FAR AS ITA NO.1376 TO 1379/BANG/2013 ARE CO NCERNED, THERE IS A DELAY OF 200 DAYS IN FILING THESE APPEALS. THE DELAY IN FIL ING THESE APPEALS BELATEDLY IS DUE TO THE REASONS SET OUT IN THE EARLIER PARAGRAPH S. THE CHARTERED ACCOUNTANT ITA NO.260 & 261& 1376 TO 1379/BANG/2013 4 AND AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WHO O RIGINALLY FILED THE APPEALS ITA NO.260/BANG/2013 AND 261/BANG/2013 FILED ONE AP PEAL I.E., ITA NO.260/BANG/2013 FOR AY 06-07 TO 09-10 UNDER THE BO NAFIDE BELIEF THAT SINCE THESE APPEALS ARISE OUT OF PROCEEDINGS U/S.153A OF THE ACT, A SINGLE APPEAL CAN BE FILED FOR THE AFORESAID 4 AYS. AFTER THE DEFECT MEMO WAS ISSUED, THE MISTAKE CAME TO LIGHT AND IMMEDIATELY REMEDIAL ACTION WAS T AKEN. THE ASSESSEE HAS FILED AFFIDAVIT AFFIRMING THE ABOVE CIRCUMSTANCES W HICH RESULTED IN A DELAY OF 200 DAYS IN FILING APPEALS BEING ITA NO.1376 TO 137 9/BANG/2013. 8. WE HAVE PERUSED THE RECORDS AND ARE OF THE VIEW THAT THE DELAY IN FILING APPEALS BEING ITA NO.1376 TO 1379/BANG/2013 WAS OCC ASIONED DUE TO REASONABLE AND SUFFICIENT CAUSE AS SET OUT ABOVE. WE THEREFORE CONDONE THE DELAY IN FILING THESE APPEALS. 9. ITA NO. 1376 TO 1379/BANG/2013 (AY 06-07 TO 09-10) AND ITA NO.261/BANG/2013 (AY 2010-11) : THE ONLY COMMON ISSUE THAT ARISES FOR CONSIDERATIO N IN THESE APPEALS IS AS TO WHETHER THE REVENUE AUTHORITIES WERE JUSTIFIED IN D ENYING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.10B OF THE ACT IN RESPEC T OF THE PROFITS DERIVED FROM THE BUSINESS OF SONAR IMPEX FOR AYS 06-07 TO 10-1 1. THE FACTS AND CIRCUMSTANCES UNDER WHICH THE DEDUCTION U/S.10B OF THE ACT WAS DENIED TO THE ITA NO.260 & 261& 1376 TO 1379/BANG/2013 5 ASSESSEE ARE THE SAME IN ALL THE AYS. WE THEREFORE DEEM IT CONVENIENT TO PASS A COMMON ORDER. 10. THE ASSESSEE, AS WE HAVE ALREADY MENTIONED, IS AN INDIVIDUAL. UP TO AY 04-05, THE ASSESSEE WAS CARRYING ON THE BUSINESS OF EXTRACTING RAW GRANITE BLOCKS AND EXPORTING THEM UNDER THE NAME AND STYLE M/S.MANGALORE OVERSEAS TRADERS (MOT). ON THE PROFITS DERIVED FROM THE SA ID BUSINESS THE ASSESSEE WAS CLAIMING DEDUCTION U/S.80-HHC OF THE ACT. BY V IRTUE OF SEC.80-HHC(1B) INSERTED BY THE FINANCE ACT, 2000, DEDUCTION U/S.80 HHC OF THE ACT WAS NOT AVAILABLE FROM AY 05-06. FROM FY 05-06 RELEVANT TO AY 06-07, THE ASSESSEE STARTED THE BUSINESS OF EXPORT OF DIMENSIONAL SQUAR ED DRESSED GRANITE BLOCKS UNDER THE NAME AND STYLE M/S.SONAR IMPEX (SI). S I WAS A 100% EXPORT ORIENTED UNIT (EOU) LOCATED AT COCHIN SEZ. THE ASS ESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S.10B OF THE ACT IN RESPECT OF PROFITS DERIVED BY 100% EOU FROM THE EXPORT OF ARTICLES OR THINGS FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICL ES OR THINGS. THE REVENUE DOES NOT DISPUTE THAT THE ASSESSEE SATISFIES THE AB OVE CONDITION AND ALL OTHER CONDITIONS SPECIFIED BY SEC.10B OF THE ACT, IN SO F AR AS PROFITS OF SI ARE CONCERNED EXCEPT THE SATISFACTION OF THE CONDITION LAID DOWN BY SEC.10B(2)(III) OF THE ACT. THE RELEVANT PROVISIONS OF SEC.10B(2) READ THUS: ITA NO.260 & 261& 1376 TO 1379/BANG/2013 6 SEC.10B(2) THIS SECTION APPLIES TO ANY UNDERTAKING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : (I) IT MANUFACTURES OR PRODUCES ANY ARTICLES OR THI NGS OR COMPUTER SOFTWARE; (II) IT IS NOT FORMED BY THE SPLITTING UP, OR THE R ECONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF ANY UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-ESTABLISHMENT , RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH UNDERTAKING AS IS REFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AN D WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (III) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUS INESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. EXPLANATION : THE PROVISIONS OF EXPLANATION 1 AND EXPLANATION 2 OF SUB- SECTION (2) OF SECTION 80-I SHALL APPLY FOR THE PUR POSES OF CLAUSE (III) OF THIS SUB-SECTION AS THEY APPLY FOR THE PURPOSES OF CLAUSE (II) OF THAT SUB- SECTION. 11. IT CAN BE SEEN FROM EXPLANATION TO SEC.10B(2) THAT IT REFERS TO EXPLANATION 1 & 2 OF SUB-SECTION (2) OF SEC.80-I OF THE ACT FOR THE PURPOSE OF CLAUSE(III) OF SUB-SECTION (2) OF SEC.10B OF THE ACT. THE PROVISI ONS OF EXPLANATION 1 & 2 OF SUB-SECTION (2) OF SEC.80-I OF THE ACT READS THUS: SEC.80-I: .. EXPLANATION 1 : FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-SECTI ON, ANY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OTHER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINER Y OR PLANT PREVIOUSLY USED FOR ANY PURPOSE, IF THE FOLLOWING CONDITIONS A RE FULFILLED, NAMELY : (A) SUCH MACHINERY OR PLANT WAS NOT, AT ANY TIME PR EVIOUS TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, USED IN INDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND ITA NO.260 & 261& 1376 TO 1379/BANG/2013 7 (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESP ECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOME OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DATE OF THE INSTALLATION OF THE MACHINERY OR PLANT BY THE ASSESSEE. EXPLANATION 2 : WHERE IN THE CASE OF AN INDUSTRIAL UNDERTAKING, A NY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY U SED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TOTAL VALUE O F THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER C ENT OF THE TOTAL VALUE OF THE MACHINERY OR PLANT USED IN THE BUSINESS, THEN, FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-SECTION, THE CONDITION SPEC IFIED THEREIN SHALL BE DEEMED TO HAVE BEEN COMPLIED WITH. 12. THE DISPUTE IN THE PRESENT APPEALS IS WITH REG ARD TO EXPLANATION 2 TO SEC.80-I OF THE ACT READ WITH EXPLANATION TO SEC.10 (B)(2) OF THE ACT. THE PROVISIONS OF EXPLANATION 2 ABOVE LAYS DOWN THAT TH E VALUE OF PLANT AND MACHINERY PREVIOUSLY USED BY THE ASSESSEE FOR ANY P URPOSE (BUSINESS OF MOT) WHICH IS TRANSFERRED TO THE NEW BUSINESS THE PROFIT OF WHICH ARE CLAIMED AS DEDUCTION U/S.10B OF THE ACT, SHOULD NOT EXCEED 20% OF THE TOTAL VALUE OF MACHINERY OR PLANT USED IN THE NEW BUSINESS THE PRO FITS OF WHICH ARE CLAIMED AS DEDUCTION U/S.10B OF THE ACT. FOR EXAMPLE, IF THE TOTAL VALUE OF THE PLANT AND MACHINERY IN THE BUSINESS OF SI THE PROFITS OF WHIC H ARE CLAIMED AS DEDUCTION U/S.10B OF THE ACT IS RS.100, THE VALUE OF THE PLAN T AND MACHINERY WHICH WAS USED IN THE BUSINESS OF MOT, WHICH IS TRANSFERRED A ND USED IN THE NEW BUSINESS OF SI, SHOULD NOT EXCEED RS.20. 13. THERE IS NO DISPUTE THAT THE ASSESSEE USED THE FOLLOWING ITEMS OF PLANT AND MACHINERY IN THE BUSINESS OF MOT. ITA NO.260 & 261& 1376 TO 1379/BANG/2013 8 DATE OF PURCHASE PLANT & MACHINERY ORIGINAL VALUE ( RS.) 29-02-2000 MOBILE CRANE RS.12,50,000 21-09-2000 COMPRESSOR RS.5,50,000 21-09-2000 COMPRESSOR RS.5,50,000 30-09-2000 EXCAVATOR RS.39,37,554 22-03-2003 VERTICAL STARTER MACHINE RS.1,92,400 21-01-2002 BOTTOM STARTER MACHINE RS.1,29,729 14-02-2004 DIAMOND WIRE SAW MACHINE RS.3,12,645 14. THERE IS ALSO FAIRLY NO DISPUTE THAT THE ABOVE ITEMS OF PLANT AND MACHINERY WHICH WERE PREVIOUSLY USED BY THE ASSESSEE IN THE BUSINESS OF MOT WAS TRANSFERRED TO THE NEW BUSINESS OF SI, EXCEPT THE I TEM OF PLANT AND MACHINERY EXCAVATOR WHICH IS LISTED AS ITEM NO.4 IN THE TABLE GIVEN ABOVE. IF FACTUALLY IT IS HELD THAT THE AFORESAID MACHINERY WAS NOT TRANSFERR ED AND USED IN THE NEW BUSINESS (SI) THAN THE VALUE OF PLANT AND MACHINERY PREVIOUS USED BY THE ASSESSEE IN THE BUSINESS OF MOT AND WHICH IS TRANSF ERRED TO THE NEW BUSINESS (SI) WILL NOT EXCEED 20% OF THE TOTAL VALUE OF PLAN T AND MACHINERY OF NEW BUSINESS (SI). THE ISSUE TO BE DECIDED IN THESE AP PEALS THEREFORE BOILS DOWN TO THE QUESTION AS TO WHETHER THE EXCAVATOR LISTED AS SL.NO.4 IN THE TABLE ABOVE WAS TRANSFERRED AND USED IN THE NEW BUSINESS (SI) BY TH E ASSESSEE. 15. THE GRANITE QUARRY FROM WHICH THE GRANITE BLOC KS ARE EXTRACTED WAS TAKEN ON LEASE BY THE ASSESSEE AND IS LOCATED AT SHINGINK OPPA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA. THE GRANITE BL OCKS WERE EXTRACTED FROM THIS QUARRY AND SOLD BY THE ASSESSEE IN THE COURSE OF BUSINESS OF MOT. THE SAME QUARRY WAS USED FOR EXTRACTING GRANITE BLOCKS, WHICH WERE LATER CONVERTED ITA NO.260 & 261& 1376 TO 1379/BANG/2013 9 AFTER MANUFACTURE INTO DIMENSIONAL SQUARED DRESSED GRANITE BLOCKS, IN THE BUSINESS OF SI. 16. AS WE HAVE ALREADY MENTIONED ON 5.3.2010 THERE WAS A SEARCH AND SEIZURE OPERATION CARRIED OUT BY THE REVENUE ON U/S.132 OF THE ACT AT THE QUARRY AT SHINGINKOPPA VILLAGE AS WELL AS AT THE BUSINESS PRE MISES OF THE ASSESSEE AT 1 ST FLOOR, BATHERY ROAD, BOLOOR, MANGALORE. ON 17.3.20 10 THE STATEMENT OF THE ASSESSEE WAS RECORDED U/S.132(4) OF THE ACT, WHICH MEANS THAT THE SEARCH CONTINUED EVEN AS ON 17.3.2010. THE ASSESSEE WAS Q UESTIONED WITH REGARD TO THE BUSINESS OF MOT AS WELL AS SI. THE RELEVANT QU ESTIONS AND ANSWERS WITH REGARD TO TRANSFER AND USE OF THE MACHINERY OF MOT IN THE BUSINESS OF SI, IN THE STATEMENT SO RECORDED WERE AS FOLLOWS: Q.21: WHEN WAS THE BUSINESS OF M/S.MANGALORE OVER SEAS TRADERS STARTED? ANS. M/S.MANGALORE OVERSEAS TRADERS WAS STARTED DUR ING 1992 AS A PARTNERSHIP CONCERN WITH TWO PARTNERS, NAMELY MYSEL F AND ONE, MR.LOKESH OF THIRTHAHALLI, BUT SETTLED IN MANGALORE . THE PARTNERSHIP WAS DISSOLVED DURING 1997-98 AND I TOOK OVER THE BUSINE SS AS PROPRIETARY CONCERN. Q.NO.22: WHAT ARE THE MACHINERIES OWNED BY M/S.MANG ALORE OVERSEAS TRADERS AS ON 1.4.2003 AND WHAT ARE THE MA CHINERIES PURCHASED BY THIS CONCERN ON OR AFTER 1.4.2003? ANS: I DO NOT READILY REMEMBER THE DETAILS OF THE M ACHINERIES OWNED BY M/S.MANGALORE OVERSEAS TRADERS AS ON 31.3.2003 AND PURCHASED AFTERWARDS. I WILL VERIFY MY RECORDS AND FURNISH T HE DETAILS. Q.NO.23: HAVE YOU SOLD AWAY ANY MACHINERY BELONGING TO M/S.MANGALORE OVERSEAS TRADERS ON OR AFTER 1.4.2003 ? ITA NO.260 & 261& 1376 TO 1379/BANG/2013 10 ANS: AS FAR AS I REMEMBER, WE HAVE NOT SOLD ANY MAC HINERY BELONGING TO M/S.MANGALORE OVERSEAS TRADERS. HOWEVER, I WILL VERIFY MY RECORDS AND LET YOU KNOW THE CORRECT POSITION. Q.24: YOU HAVE STATED THAT M/S.MANGALORE OVERSEAS TRADERS HAS STOPPED ITS BUSINESS SINCE JUNE/JULY, 2005. PLEASE TELL ME WHAT HAPPENED TO THE PLANT AND MACHINERIES BELONGING TO M/S.MANGALORE OV ERSEAS TRADERS? ANS: ONE EXCAVATOR IS USED BY MR. MAHESH, SRI RAGHA VENDRA GRANITES OF RAYADURGA QUARRY, WHO IS SUPPLYING GRANITE BLOC KS TO M/S.MANGALORE EXPORTS. OTHER MACHINERIES ARE USED IN OUR OWN QUA RRY. Q.25: WHO IS USING THE OTHER MACHINERIES BELONG TO M/S.MANGALORE OVERSEAS TRADERS? ANS: THE OTHER MACHINERIES ARE USED BY M/S.SONAR I MPEX. GENERATOR BELONGING TO M/S.MANGALORE OVERSEAS TRADERS IS NOT IN WORKING CONDITION NOW. Q.NO.26: M/S.MANGALORE OVERSEAS TRADERS HAS STOPPED ITS BUSINESS SINCE, JUNE/JULY 2005. HOWEVER, YOU HAVE CLAIMED D EPRECIATION ON THE PLANT AND MACHINERIES BELONGING TO M/S.MANGALORE O VERSEAS TRADERS EVEN AFTER THE CLOSURE OF ITS BUSINESS. PLEASE CLA RIFY ANS: M/S.MANGALORE OVERSEAS TRADERS HAS HIRED OUT I TS PLANT AND MACHINERY AND IS RECEIVING HIRE CHARGES. THE DEPRE CIATION IS CLAIMED AGAINST THIS INCOME. Q.NO.27: PLEASE TELL ME TO WHOM, THE PLANT & MACHIN ERIES BELONGING TO M/S.MANGALORE OVERSEAS TRADERS HIRED OUT? ANS: THE PLANT AND MACHINERY BELONGING TO M/S.MANG ALORE OVERSEAS TRADERS IS HIRED OUT TO M/S.SONAR IMPEX AND RECEIVI NG HIRE CHARGES. 17. ON 18.3.2010, THE STATEMENT OF THE ASSESSEE WA S RECORDED AND THE FOLLOWING QUESTIONS WITH REGARD TO PLANT AND MACHIN ERY OWNED BY MOT AND SI WERE PUT TO THE ASSESSEE: ITA NO.260 & 261& 1376 TO 1379/BANG/2013 11 Q.NO.1: A SWORN STATEMENT U/S.132(4) OF THE I.T.A CT, WAS RECORDED FROM SRI LAXMAN SALIAN, ON 5.3.2010, DURING THE COU RSE OF THE SEARCH IN YOUR OFFICE PREMISES AT NO.6, VGS BUILDING, LADY HI LL, MANGALORE. HE IN HIS ANSWER TO Q.NO.3, HAS FURNISHED A LIST OF PL ANT AND MACHINERY OWNED BY M/S.MANGALORE OVERSEAS TRADERS AND M/S.SON AR IMPEX AS GIVEN BELOW: MANGALORE OVERSEAS TRADERS: DATE OF PURCHASE PLANT & MACHINERY ORIGINAL VALUE ( RS.) 29-02-2000 MOBILE CRANE RS.12,50,000 21-09-2000 COMPRESSOR RS.5,50,000 21-09-2000 COMPRESSOR RS.5,50,000 30-09-2000 EXCAVATOR RS.39,37,554 22-03-2003 VERTICAL STARTER MACHINE RS.1,92,400 21-01-2002 BOTTOM STARTER MACHINE RS.1,29,729 14-02-2004 DIAMOND WIRE SAW MACHINE RS.3,12,645 M/S.SONAR IMPEX DATE PLANT & MACHINERY ORIGINAL VALUE (RS.) 8-11-2005 CUTTING EDGE 2,32,765 8-11-2005 DIAMOND WIRE SAW MACHINE 3,28,907 28-02-2006 GENERATOR 4,42,000 03-03-2006 DRILLING MACHINE 3,42,337 10-03-2006 COMPRESSOR 7,02,000 04-12-2006 DERRIC CRANE 19,76,000+19,76,000 22-02-2007 GENERATOR 4,29,920 27-12-2007 LD MACHINE VERTICAL MACHINE 2,05,920 06-10-2008 COMPRESSOR 8,05,800 06-10-2008 DIAMOND WIRE SAW MACHINE 4,25,049 I AM SHOWING YOU THE RELEVANT PORTION OF THE SWORN STATEMENT OF SRI LAXMAN SALIAN. PLEASE GO THROUGH THE SAME AND CONF IRM THE CORRECTNESS OF THE DETAILS OF PLANT AND MACHINERY FURNISHED BY HIM? ANS.: ONE HITACHI HYDRAULIC EXCAVATOR PURCHASED FOR M/S.SONAR IMPEX DURING THE FINANCIAL YEAR 2005-06 IS NOT SEEN INCLUDED IN THE ABOVE LIST FURNISHED BY MY ACCOUNTANT. IT WAS PURCHASED DURING ITA NO.260 & 261& 1376 TO 1379/BANG/2013 12 OCTOBER 2005, FOR A TOTAL COST OF ABOUT RS.60,00,00 0/-. THIS MACHINERY IS ALSO REQUIRED TO BE INCLUDED IN THE LI ST OF PLANT & MACHINERY OF M/S.SONAR IMPEX. I HAVE FURNISHED A COPY OF THE RELEVANT PURCHASE BILL TO THE ASSISTANT COMMISSIONE R OF INCOME TAX, CIRCLE-1(1), MANGALORE, DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS FOR THE A.Y 2006-07. 18. IT CAN BE SEEN FROM THE CHART GIVEN IN QUESTIO N NO.1 ABOVE THAT AS ON 31.3.2006 THE TOTAL VALUE OF PLANT AND MACHINERY OW NED BY SI WAS RS.83,26,419 WHILE THE WRITTEN DOWN VALUE OF THE PL ANT AND MACHINERIES BELONGING TO MOT WAS RS.33,33,785. IT SHOULD BE CL ARIFIED HERE THAT THE EXCAVATOR WHICH WAS PURCHASED ON 30.9.2000 BY MOT A ND SHOWN IN THE CHART OF PLANT AND MACHINERY OWNED BY MOT IN PARA-13 OF T HIS ORDER, IS OF THE VALUE OF RS.39,37,554. THE WRITTEN DOWN VALUE OF THE SAI D EXCAVATOR AS ON 31.3.2006 WAS RS.10.93.133. THIS FIGURE AS REDUCED BY DEPREC IATION IN EACH YEAR FROM AY 06-07 TILL 10-11 HAS TO BE CONSIDERED WHILE ARRIVIN G AT THE VALUE OF PLANT AND MACHINERY BELONGING TO MOT TRANSFERRED FOR USE BY S I. 19. ACCORDING TO THE AO THE VALUE OF THE PLANT AND MACHINERY PREVIOUSLY USED BY MOT WHICH WAS TRANSFERRED TO SI AND USED BY SI I N THE NEW BUSINESS EXCEEDED 20% OF THE TOTAL VALUE OF PLANT AND MACHIN ERY USED IN THE BUSINESS OF SI AND THEREFORE THE CONDITION LAID DOWN IN SEC.10B (2)(III) OF THE ACT WAS VIOLATED BY THE ASSESSEE AND THEREFORE THE DEDUCTIO N U/S.10B OF THE ACT COULD NOT BE ALLOWED TO THE ASSESSEE. ITA NO.260 & 261& 1376 TO 1379/BANG/2013 13 20. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE PLANT AND MACHINERY USED IN THE BUSINESS OF MOT AND THAT WERE USED IN THE BU SINESS OF SI DOES NOT INCLUDE AN EXCAVATOR WHICH WAS PURCHASED BY THE ASS ESSEE ON 30.9.2000 FOR A SUM OF RS.39,37,554 AND WHOSE W.D.V. ON 31-3-2005 W AS RS.10,90,133/-. THE ASSESSEE SUBMITTED THAT THE AFORESAID EXCAVATOR WAS TRANSFERRED TO HIS FRIENDS QUARRY ONE MR.MAHESH OF SREE RAGHAVENDRA GRANITES A T GOLLAPALLI VILLAGE, GUMMGOTTA MANDAL, RAYADURGA, ANATHAPUR DISTRICT, AN DHRAPRADESH ON 26.5.2005 BEFORE COMMENCEMENT OF PRODUCTION IN THE NEW BUSINESS I.E., SI. THE ASSESSEE ENCLOSED A DELIVERY NOTE IN FORM NO.39 BEARING NO.9705948 ISSUED TO THE ASSESSEE BY ASST.COMMISSIONER OF COMM ERCIAL TAXES LLLRD CIRCLE, MANGALORE, USED FOR TRANSPORTATION OF THE EXCAVATOR TO RAYADURGA, ANANTHAPUR DISTRICT, ANDHRA PRADHESH. THE ASSESSEE THUS CLAIM ED THAT THE VALUE OF PLANT AND MACHINERY USED BY MOT WHICH WERE USED BY SI SHO ULD BE REDUCED TO THAT EXTENT AND IF SO DONE THEN THE VALUE OF PLANT AND M ACHINERY PREVIOUS USED BY THE ASSESSEE IN THE BUSINESS OF MOT AND WHICH IS US ED IN THE NEW BUSINESS (SI) WILL NOT EXCEED 20% OF THE TOTAL VALUE OF PLANT AND MACHINERY OF NEW BUSINESS (SI). THE ASSESSEE ALSO ENCLOSED A COPY OF FORM NO .39A (REGISTER OF DELIVERY NOTES MAINTAINED UNDER RULE 23-B(1A) OF THE KARNATA KA SALES TAX ACT, SUBMITTED TO THE COMMERCIAL TAX OFFICER, VAT TAX OF FICE-270, MANGALORE. ITA NO.260 & 261& 1376 TO 1379/BANG/2013 14 21. THE ASSESSEE ALSO POINTED OUT THAT THE FOLLOWI NG PLANT AND MACHINERY INCLUDED IN THE BLOCK OF ASSETS WAS NOT AT ALL USED IN PRODUCTION AS THEY ARE OFFICE EQUIPMENT AND VEHICLES: AY 31.3.05 31.3.06 31.3.07 31.3.08 31.3.09 31.3.10 1.OFFICE EQUIPMENT 29,916 22,437 16,828 12,621 9,466 7,099 BIKEK- 19A-2313 6,618 4,963 3,722 2,791 2,093 1,570 TIPPER KA-19A- 720 2,20,414 1,65,310 1,23,982 92,986 96,739 52,304 MOTORBI KA22Q 4986 9,194 6,895 5,171 3,878 2,908 2,181 OFFICE EQUIPMT 32,100 24,075 18,056 13,056 10,156 7,617 WATER PUMP 7,967 5,975 4,481 3,361 2,521 1,891 (A) TOTAL 3,06,209 2,29,655 1,72,240 1,29,179 96,883 72,662 (B) TOTAL VALUE OF PLANT AND MACHINERY OF SOT 22,43652 16,82736 12,62049 9,46,533 7,09,896 5,32,419 ( C) VALUE OF OLD MACHINERY USED BY SOT USED BY SI (B A) 19,37443 14,53081 10,89809 8,17,354 6,13,013 4,59,757 (D) VALUE OF MACHINERY IN SI 83,26419 77,01937 11131297 96,29128 93,23293 79,24800 ITA NO.260 & 261& 1376 TO 1379/BANG/2013 15 (E) TOTAL (C+D) 10263862 9355018 12221106 10446482 9936306 8384557 (F) 20% OF E 20,52,772 18,71003 24,44221 20,89296 19,87261 16,76911 THE ASSESSEE SUBMITTED THAT C IN THE ABOVE CHART IS LESS THAN F IN THE ABOVE CHART AND THEREFORE THERE IS NO VIOLATION OF THE CONDITION PRESCRIBED BY SEC.10B(2)(III) OF THE ACT. 22. THE AO HOWEVER REJECTED THE CLAIM OF THE ASSES SEE AS ABOVE FOR THE REASON THAT THE EXCAVATOR WAS STATED TO HAVE BEEN GIVEN TO M/S.RAGHAVENDRA GRANITES FOR THEIR USE WITHOUT ANY CONSIDERATION AND THEREFO RE CANNOT BE BELIEVED. THE AO HAS ALSO ASSUMED THAT THE USE OF EXCAVATOR BELON GING TO MOT BY SI WAS NOT DENIED BY THE ASSESSEE. THE AO ACCORDINGLY HELD TH AT THE ASSESSEE VIOLATED THE CONDITIONS PRESCRIBED BY SEC.10B(2)(III) OF THE ACT AND ACCORDINGLY DENIED THE CLAIM FOR DEDUCTION U/S.10B OF THE ACT TO THE ASSES SEE. 23. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF THE AO ON THE ABOVE ISSUE. THE CIT(A) PROCEEDED ON THE ASSUM PTION THAT THE EXCAVATOR OWNED BY MOT WAS FOUND AT THE TIME OF SEARCH AT SHI NGINKOPPA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA. THE CI T(A) HAS HELD THAT THE ASSESSEE HAS ADMITTED USE OF PLANT AND MACHINERY OF MOT BY SI. THE CIT(A) QUESTIONED THE RELIABILITY OF THE EVIDENCE PRODUCED BY THE ASSESSEE FOR TRANSPORTING EXCAVATOR BELONGING TO MOT FROM KARNAT AKA TO ANDHRA PRADESH. ITA NO.260 & 261& 1376 TO 1379/BANG/2013 16 ACCORDING TO CIT(A) IN FORM NO.39 DELIVERY NOTE THE ASSESSEE HAS NOT MENTIONED THE PURPOSE FOR WHICH THE EXCAVATOR WAS T RANSPORTED AND THAT THE NAME OF RAGHAVENDRA GRANITES DOES NOT FIGURE IN THE DECLARATION. THE CIT(A) ALSO EXPRESSED DOUBTS REGARDING THE EXCAVATOR OF MO T HAVING CROSSED EITHER THE BORDER OF KARNATAKA OR ANDHRA PRADESH. ANOTHER REASON GIVEN BY CIT(A) WAS THAT THERE WAS NO JUSTIFIABLE REASON GIVEN FOR TRAN SPORTING THE EXCAVATOR TO ANDHRA PRADHESH AND THAT THERE WAS NO USE OF THE EX CAVATOR BY THE ASSESSEE IN THE BUSINESS OF MOT BUT DEPRECIATION WAS CLAIMED BY THE ASSESSEE IN THE BOOKS OF MOT AND LATER WITHDRAWN. 24. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSE SSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE LEARNED CO UNSEL FOR THE ASSESSEE REITERATED THE STAND OF THE ASSESSEE AS WAS PUT FOR TH BEFORE THE REVENUE AUTHORITIES. OUR ATTENTION WAS DRAWN TO THE SEVERA L DOCUMENTS FILED BEFORE THE REVENUE AUTHORITIES AND IT WAS SUBMITTED THAT THE C ONCLUSIONS OF THE REVENUE AUTHORITIES ARE CONTRARY TO THE EVIDENCE ON RECORD. THE LEARNED DR REITERATED THE STAND OF THE REVENUE AS REFLECTED IN THE ORDER OF THE CIT(A). 25. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE EXCAVATOR THAT WAS USE D IN THE BUSINESS OF MOT BY THE ASSESSEE AND WHICH WAS PART OF THE PLANT AND MA CHINERY USED BY MOT WAS PURCHASED ON 30.9.2000. COPY OF THE INVOICE DATED 30.9.2000 IS AT PAGE-280 OF THE ASSESSEES PAPER BOOK. A PERUSAL OF THE SAME S HOWS THAT THE ASSESSEE AS ITA NO.260 & 261& 1376 TO 1379/BANG/2013 17 PROPRIETOR OF MOT PURCHASED A TATA HITACHI HYDRAUL IC EXCAVATOR MODEL EX200 LC BH WITH HD BUCKET/6BT ENGINE, FROM TELCO CONSTRUCTION EQUIPMENT CO. LTD. ADMITTEDLY THIS EXCAVATOR WAS USED IN THE BUSINESS OF MOT AT ASSESSEES QUARRY AT SHINGINKOPPA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA. ON 25.5.2005 THIS EXC AVATOR WAS SENT BY THE ASSESSEE TO RAYADURGA, ANANTHAPUR DISTRICT, ANDHRA PRADESH BY ROAD. IN TERMS OF RULE 23-B(1A) OF THE KARNATAKA SALES TAX RULES, THE ASSESSEE HAD GIVEN A DECLARATION THAT THE EXCAVATOR IS BEING SENT NOT FO R SALE. THE FORM OF DECLARATION DOES NOT HAVE A COLUMN AS TO PURPOSE FOR WHICH IT I S BEING TRANSPORTED OUTSIDE THE STATE OF KARNATAKA, IF IT IS NOT FOR SALE. THE DELIVERY NOTE IN FORM NO.39 EVIDENCES MOVEMENT OF THE EXCAVATOR FROM SHINGINKOP PA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA TO ROYADURGA, AN ANTHAPUR, ANDHRA PRADESH AS ON 25.5.2005. THE NAME OF M/S.RAGHAVENDRA GRAN ITES DOES NOT FIGURE IN THE DELIVERY NOTE BUT THE FACT THAT THE EXCAVATOR M OVED TO ANDHRA PRADESH FROM KARNATAKA IS CLEARLY EVIDENCED BY THIS DELIVERY NOT E. THE ASST.COMMR. OF COMMERCIAL TAXES (AUDIT & RECOVERY)-8, DVO, MANGALO RE HAS CONFIRMED THE AUTHENTICITY OF THIS DELIVERY NOTE. M/S.RAGHAVENDR A GRANITES OF ROYADURGA, ANANTHAPUR DISTRICT, ANDHRA PRADESH HAVE CONFIRMED THAT THE EXCAVATOR WAS USED BY THEM. IN THE STATEMENT OF THE ASSESSEE REC ORDED U/S.132(4) OF THE ACT ON 17.3.2010, THE ASSESSEE IN REPLY TO QUESTION NO. 24 HAS STATED THAT THE PLANT AND MACHINERY OF MOT ARE USED BY THE ASSESSEE IN TH EIR QUARRY EXCEPT ONE EXCAVATOR WHICH IS USED BY MR.MAHESH SRI RAGHAVENDR A GRANITES OF RAYADURGA ITA NO.260 & 261& 1376 TO 1379/BANG/2013 18 QUARRY. THE ABOVE EVIDENCE HAS BEEN BRUSHED ASIDE BY THE AO AS WELL AS CIT(A) FOR APPARENTLY NO VALID REASONS. 26. THE QUESTION THEN ARISES AS TO HOW SI WAS EXCA VATING GRANITE BLOCKS. IN THE STATEMENT RECORDED U/S.132(4) OF THE ASSESSEE ON 18 .3.2010, THE AUTHORIZED OFFICER CONFRONTED A LIST OF PLANT AND MACHINERY OW NED BY MOT AS WELL AS SI AS WAS GIVEN ON 5.3.2010 BY SRI.LAXMAN SALIAN, AN EMPL OYEE OF THE ASSESSEE. THE ASSESSEE IN ANSWER THE ASSESSEE POINTED OUT THA T THE LIST OF PLANT AND MACHINERY OWNED BY SI AS GIVEN BY SRI.LAXMAN SALIAN DOES NOT CONTAIN ONE HITACHI HYDRAULIC EXCAVATOR PURCHASED BY SI FOR RS. 60 LACS. THIS EXCAVATOR WAS PURCHASED BY THE ASSESSEE UNDER INVOICE DATED 2 0.10.2005 FROM TELCO CONSTRUCTION EQUIPMENT COMPANY LIMITED AND ITS MODE L AS MENTIONED IN THE INVOICE IS ZX33LC WITH 600 MM TRIPLE GROUSER SHOE S 6.4M BOORN, 2.66M ARM, AIR CONDITIONER, DOUBLE FUEL FILTER, TROPICAL COVER & STANDARD TOOLS AND MANUALS. THIS WAS TRANSPORTED FROM CHENNAI TO SHIN GINKOPPA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA, THROUG H REACH CARGO MOVERS, CHENNAI. THE FACT THAT THIS EXCAVATOR PURCHASED BY SI WAS USED BY SI IS NOT DISPUTED BY THE REVENUE. THE INVENTORY PREPARED BY THE AUTHORISED OFFICER CONDUCTING THE SEARCH AT THE TIME OF SEARCH ON 5.3. 2010 AT QUARRY OF THE ASSESSEE AT SHINGINKOPPA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA, CLEARLY GIVES THE DESCRIPTION OF THIS EX CAVATOR AND IT MATCHES WITH THE DESCRIPTION AS GIVEN IN THE INVOICE DATED 20.10 .2005. THERE IS NO REFERENCE ITA NO.260 & 261& 1376 TO 1379/BANG/2013 19 TO THE PRESENCE OF THE EXCAVATOR OWNED BY MOT IN TH E INVENTORY PREPARED BY THE AUTHORIZED OFFICER CONDUCTING THE SEARCH. 27. FROM THE ABOVE TWO THINGS ARE CLEAR VIZ., (I) THE FACT THAT THE EXCAVATOR BELONGING TO MOT WAS NOT AVAILABLE AT SHINGINKOPPA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA; (II) THE EXCAVA TOR THAT WAS AVAILABLE AT THE QUARRY ON 5.3.2010 ON THE DATE OF SEARCH AT SHINGIN KOPPA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA WAS NEW EXCAVATO R PURCHASED BY SI ON 20.10.2005. 28. DESPITE THE ABOVE OVERWHELMING EVIDENCE IN SUP PORT OF THE ASSESSEES CASE, THE AO REJECTED THE THEORY OF MOVEMENT OF EXC AVATOR BELONGING TO MOT TO ANDHRA PRADESH FOR THE REASON THAT THE EXCAVATOR WAS STATED TO HAVE BEEN GIVEN TO M/S.RAGHAVENDRA GRANITES FOR THEIR USE WIT HOUT ANY CONSIDERATION AND THEREFORE CANNOT BE BELIEVED. THE AO HAS ALSO ASSU MED THAT THE USE OF EXCAVATOR BELONGING TO MOT BY SI WAS NOT DENIED BY THE ASSESSEE WHEN EVEN IN THE STATEMENT RECORDED U/S.132(4) OF THE ACT THE ASSESSEE IN ANSWER TO Q.NO.24 HAS DENIED SUCH USE. THE REASONS GIVEN BY THE AO IN OUR OPINION CANNOT BE A SOUND BASIS ON WHICH THE PLEA OF THE AS SESSEE CAN BE REJECTED. 29. THE CIT(A) FIRSTLY PROCEEDED UNDER A WRONG ASS UMPTION THAT THE EXCAVATOR OWNED BY MOT WAS FOUND AT THE TIME OF SEARCH AT SHI NGINKOPPA VILLAGE OF KHANAPUR TALUK, BELGAUM DISTRICT, KARNATAKA, WHICH IS CONTRARY TO THE ITA NO.260 & 261& 1376 TO 1379/BANG/2013 20 INVENTORY TAKEN BY THE AUTHORIZED OFFICER CONDUCTIN G SEARCH. SECONDLY THE CIT(A) HAS HELD THAT THE ASSESSEE HAS ADMITTED USE OF PLANT AND MACHINERY OF MOT BY SI, IGNORING THE STATEMENT RECORDED U/S.132( 4) OF THE ACT RECORDED ON 17.3.2010 WHEREIN THE ASSESSEE CLARIFIED THAT EXCAV ATOR BELONGING TO MOT WAS TRANSPORTED TO ANDHRA PRADESH FOR USE BY SREE RAGHA VENDRA GRANITES. THIRDLY THE CIT(A) HAS QUESTIONED THE RELIABILITY OF THE EV IDENCE PRODUCED BY THE ASSESSEE FOR TRANSPORTING EXCAVATOR BELONGING TO MO T FROM KARNATAKA TO ANDHRA PRADESH. ACCORDING TO CIT(A) IN FORM NO.39 DELIVERY NOTE THE ASSESSEE HAS NOT MENTIONED THE PURPOSE FOR WHICH TH E EXCAVATOR WAS TRANSPORTED AND THAT THE NAME OF RAGHAVENDRA GRANIT ES DOES NOT FIGURE IN THE DECLARATION. AS WE HAVE ALREADY OBSERVED THE FORM OF DECLARATION DOES NOT HAVE A COLUMN AS TO PURPOSE FOR WHICH IT IS BEING T RANSPORTED OUTSIDE THE STATE OF KARNATAKA, IF IT IS NOT FOR SALE. THE CIT(A) ALSO EXPRESSED DOUBTS REGARDING THE EXCAVATOR OF MOT HAVING CROSSED EITHER THE BORDER O F KARNATAKA OR ANDHRA PRADESH. THE CIT(A)S CONCLUSION THAT THE DELIVERY NOTE IS A SELF SERVING DOCUMENT AND THERE IS NO CONCRETE EVIDENCE THAT THE EXCAVATOR MOVED OUTSIDE THE STATE OF KARNATAKA IN OUR VIEW IS CONTRARY TO E VIDENCE ON RECORD IN THE FORM OF THE CONFIRMATION OF THE ASST.COMMR. OF COMMERCIA L TAXES (AUDIT & RECOVERY)-8, DVO, MANGALORE WHO HAD CONFIRMED THE A UTHENTICITY OF THIS DELIVERY NOTE AS WELL AS THE MOVEMENT OF EXCAVATOR FROM KARNATAKA ANDHRA PRADESH. ANOTHER REASON GIVEN IS THERE IS NO JUST IFIABLE REASON GIVEN FOR TRANSPORTING THE EXCAVATOR TO ANDHRA PRADHESH AND T HAT THERE WAS NO USE OF THE ITA NO.260 & 261& 1376 TO 1379/BANG/2013 21 EXCAVATOR BY THE ASSESSEE IN THE BUSINESS OF MOT BU T DEPRECIATION WAS CLAIMED BY THE ASSESSEE IN THE BOOKS OF MOT AND LATER WITHD RAWN. IN OUR VIEW ALL THESE REASONS GIVEN BY THE CIT(A) DOES NOT ESTABLISH THAT THE EXCAVATOR BELONGING TO MOT WAS USED BY SI. ON THE OTHER HAND THE EVIDENCE THAT IT WAS NOT AVAILABLE AT THE QUARRY AND THAT IT WENT OUT OF KARNATAKA TO ANDHRA PRADESH AND THE FACT THAT THE EXCAVATOR COULD NOT HAVE BEEN USED BY THE ASSESSEE IN THE BUSINESS OF SI, HAS TOTALLY BEEN IGNORED BY THE CIT(A). 30. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT THE ASSESSEE HAS SATISFIED THE CONDITIONS FOR ALLOWING DEDUCTION U/S.10B OF THE AC T AND THE CLAIM OF THE ASSESSEE IS DIRECTED TO BE ALLOWED IN ALL THE A.Y.S . 31. THE APPEALS BEING ITA NO. 1376 TO 1379/BANG/20 13 (AY 06-07 TO 09-10) AND ITA NO.261/BANG/2013 (AY 2010-11) ARE ACCORDING LY ALLOWED. ITA NO.260/BANG/2013 IS DISMISSED AS NOT REQUIRING ANY ADJUDICATION. 32. IN VIEW OF THE DISPOSAL OF THE APPEALS, THE ST AY PETITIONS DO NOT REQUIRE ANY ADJUDICATION AND ARE ACCORDINGLY DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF DEC. 2014. SD/- SD/- ( ABRAHAM P. GEORGE) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 30 TH DEC. 2014. ITA NO.260 & 261& 1376 TO 1379/BANG/2013 22 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.