ITO, Ward-1(4), Ahmedabad V. M/s. Deepkiran Foods Pvt .Ltd., Ahmedabad

ITA 2645/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8402 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 26-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A C SHAH
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 2645/AHD/2014 (ASSESSMENT YEAR: 2010-11) ITO, WARD-1(4), AHMEDABAD APPELLANT VS. M/S. DEEPKIRAN FOODS PVT. LTD., 101, ASTRON TECH PARK, OPP. FUN REPUBLIC, SATELLITE, AHMEDABAD-51 RESPONDENT PAN: AABCD2018R /BY REVENUE : SHRI PRASOON KABRA, SR. D.R. /BY ASSESSEE : SHRI A. C. SHAH, A.R. /DATE OF HEARING : 06.09.2017 /DATE OF PRONOUNCEMENT : 27.09.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 AR ISES AGAINST THE CIT(A)-VI, AHMEDABADS ORDER DATED 30.07.2014, IN CA SE NO. CIT(A)- VI/ACIT(OSD)-R.1/266/13-14, IN PROCEEDINGS U/S. 143( 3) R.W.S. 144C OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 2645/AHD/14 (ITO VS. M/S. DEEPKIRAN FOODS P. LTD.) A.Y. 2010-11 - 2 - HEARD BOTH SIDES. CASE FILE PERUSED. 2. THE REVENUE RAISES TWO SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL. THE FIRST ONE SEEKS TO REVIVE EXCESS STOCK ADDITION OF RS.65,72,677/- IN RESPECT OF FINISHED/SEMI FINISHED GOODS AS PER STOCK STATEMENT GIVEN TO BANK AUTHORITIES VIS--VIS THE CORRESPONDING FIGURES SHOWN IN THE BO OKS OF ACCOUNTS. THE ASSESSING OFFICER MADE THE IMPUGNED ADDITION INTER ALIA NOTICING THAT ASSESSEES BANK STOCK WAS OF RS.3,22,49,023/- AS AGAINST ITS B OOKS STOCK OF RS.3,59,88,888/-. HE THEREFORE ARRIVED AT DIFFERENC E IN FINISHED GOODS OF RS.64,70,021/- AND RS.93,656/- IN RESPECT OF SEMI F INISHED GOODS TO MAKE IMPUGNED ADDITION OF ALLEGED ASSESSEES FAILURE IN FILING COGENT EVIDENCE JUSTIFYING THE ABOVE DIFFERENCE. 3. THE CIT(A) REVERSES ASSESSMENT FINDINGS MAKING THE IMPUGNED ADDITION MAINLY AFTER PLACING RELIANCE UPON HIS ORDER DATED 22.07.2013 IN PRECEDING ASSESSMENT YEAR ON THE VERY ISSUE. HE FURTHER QUOT ES HONBEL JURISDICTIONAL HIGH COURTS DECISION IN CIT VS. ARROW EXIM P. LTD. (2010) 230 CTR 293 (GUJ) THAT SUCH AN STOCK STATEMENT SUBMITTED TO THE BANK WITHO UT BEING SUPPORTED BY PHYSICAL VERIFICATION OF BOOKS STOCK DOES NOT FORM A VALID GROUND TO INVOKE THE ADDITION IN QUESTION. THIS LEAVES THE REVENUE AGGRI EVED. 4. HEARD BOTH PARTIES. CASE FILE PERUSED. IT IS N O MORE IN DISPUTE THAT THE CIT(A) HAD FOLLOWED HIS PRECEDING ASSESSMENT YEARS F INDINGS IN DELETING THE IMPUGNED ADDITION ARISING FROM ALLEGED DIFFERENCE I N STOCK STATEMENT GIVEN TO THE BANK THAN IN ASSESSEES BOOKS ACCOUNTS. LEARNED COUNSEL REPRESENTING ASSESSEE AT THIS STAGE FILES A COPY OF CO-ORDINATE BENCH DECISION IN IT NO. 2381/AHD.2013 DECIDED ON 14.12.2016 UPHOLDING CIT(A) S IDENTICAL ACTION DELETING THE IMPUGNED ADDITION IN PRECEDING ASSESSM ENT YEAR 2009-10. THE REVENUE FAILS TO REBUT THIS CRUCIAL DEVELOPMENT. W E THEREFORE AFFIRM CIT(A)S ITA NO. 2645/AHD/14 (ITO VS. M/S. DEEPKIRAN FOODS P. LTD.) A.Y. 2010-11 - 3 - FINDINGS IN THE IMPUGNED ASSESSMENT YEAR AS WELL BY ADOPTING JUDICIAL CONSISTENCY. THE REVENUE FAILS IN ITS FORMER SUBST ANTIVE GROUND. 5. THE REVENUES LATTER SUBSTANTIVE GROUND SEEK TO R ESTORE ALLEGED EXCESS DEPRECIATION DISALLOWANCE OF RS.11,98,646/- BY QUOT ING APPENDIX-1 OF IT RULES PRESCRIBING DEPRECIATION ALLOWABLE @10% IN CASE OF ELECTRICAL FITTINGS. THE ASSESSEE HAD CLAIMED DEPRECIATION @50% QUA THE ELEC TRICAL FITTINGS. THE ASSESSING OFFICER RESTRICTED THE ABOVE CLAIM TO THA T @10% AFTER HOLDING THAT THE ELECTRICAL FITTINGS STATED TO HAVE BEEN INSTALLED I N OFFICE OR FACTORY BUILDING MADE NO BUSINESS TO ENHANCE THE DEPRECIATION RATE TO 15% . ALL THIS RESULTED IN THE IMPUGNED DEPRECIATION DISALLOWANCE. 6. WE NOW ADVERT TO THE CIT(A)S FINDINGS UNDER CHAL LENGE. THE ASSESSEE CONTENDED IN COURSE OF LOWER APPELLATE PROCEEDINGS THAT IT IS INSTALLED THE IMPUGNED ELECTRICAL FITTINGS IN THE MACHINERY TO BE RUN WITH THE HELP OF ELECTRICAL MOTORS AND HEAVY DUTY FITTINGS, THE RELEVANT ITEMS FORMED PLANT AND MACHINERY BLOCK TO ASSETS HAVING PRESCRIBED DEPRECIATION RATE @ 15%. THE CIT(A) ACCEPTS THE SAME ON THE GROUND THAT THE IMPUGNED ELECTRICAL FITTINGS BECOME PART OF PLANT/MACHINERY ELIGIBLE FOR THE ABOVE HIGHER RATE OF DEPRECIATION. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. RELEVANT F INDINGS PERUSED. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY ARGUES THAT THE ASSESSEES ELECTRICAL ITEMS CAN IN NO WAY BE TERMED AS PLANT A ND MACHINERY SINCE FORMING A SEPARATE BLOCK OF ASSETS IN APPENDIX-1 IN INCOME TAX RULES ELIGIBLE FOR DEPRECIATION RATE @ 10%. THIS ARGUMENT FAILS TO CO NVINCE US. HONBLE JURISDICTIONAL HIGH COURTS DECISION IN CIT VS. EXPR ESS RESORTS & HOTELS LTD. (2015) 56 TAXMANN.COM 171 (GUJ) REJECTS REVENUES I DENTICAL PLEA. THEIR LORDSHIPS CONCLUDE THAT THE SUCH ELECTRICAL INSTALL ATION AND SANITARY FITTINGS ARE TO BE RECORDED AS PLANT/MACHINERY FOR THE PURPOSE OF D EPRECIATION CLAIM U/S.32 OF ITA NO. 2645/AHD/14 (ITO VS. M/S. DEEPKIRAN FOODS P. LTD.) A.Y. 2010-11 - 4 - THE ACT. WE THEREFORE PLACE RELIANCE UPON THE SAID CASE LAW TO UPHOLD THE CIT(A)S FINDINGS UNDER CHALLENGE. THIS LATTER SUBST ANTIVE GROUND IS ALSO DECLINED. 8. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF SEPTEMBER, 2017.] SD/- SD/- ( AMARJIT SINGH ) ( S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL M EMBER AHMEDABAD: DATED 27/09/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . / .