Ultra Readymix Concrete Pvt. Ltd., Coimbatore V. ACIT Corporate Circle 2, Coimbatore

ITA 2799/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5047 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 27-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NETHRA PAL
• Assessee Lawyers: N VIJAY KUMAR; H YESHWANT KUMAR
• Keywords: Depreciation; Additional depreciation; Question of law; Set aside
• Section: 32(1)(iia); 32

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.2799/CHNY/2018 / ASSESSMENT YEAR: 2014-15 M/S. ULTRA READYMIX CONCRETE PVT. LTD., 36-38, ELEVENTH STREET, TATABAD, GANDHIPURAM, COIMBATORE 641 012. [PAN: AAACU7836K] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, COIMBATORE. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI H. YESHWANT KUMAR, C.A. & SHRI N. VIJAY KUMAR, C.A. / RESPONDENT BY : SHRI M.S. NETHRA PAL, JCIT / DATE OF HEARING : 13.05.2019 /DATE OF PRONOUNCEMENT : 22.05.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) 1, COIMBATORE, DATED 09.08.2018 RELEVANT TO THE ASSESSMENT YEAR 2014-15. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF THE ADDITIONAL DEPRECIATION OF .1,91,953/-. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF READY MIX CONCRETE, BLUE METAL AND I.T.A. NO. 2799/CHNY/18 2 BY-PRODUCTS. IT WAS A SUBMISSION THAT THE LD. CIT(A) HAS OBSERVED THAT THE PLANT AND MACHINERY USED FOR PRODUCTION OF READY MIX CONCRETE IS NOT ENTITLED FOR CLAIMING ADDITIONAL DEPRECIATION IN TERMS OF PROVISIONS OF SECTION 32 OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. BY FILING COPY OF THE JUDGEMENT, IT WAS FURTHER SUBMISSION THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. CHETTINAD BUILDERS P. LTD. V. DCIT IN T.C.A. NO. 261 OF 2017 DATED 08.08.2017 AND PRAYED FOR ALLOWING ADDITIONAL DEPRECIATION BY FOLLOWING THE ABOVE JUDGEMENT. 3. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW INCLUDING CASE LAW RELIED ON BY THE LD. COUNSEL. THE ASSESSEE CLAIMED ADDITIONAL DEPRECIATION OF .1,91,953/-, WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE THE BILLS FOR THE ASSET FOR WHICH ADDITIONAL DEPRECIATION WAS CLAIMED. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE PRODUCED THE BILLS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT SINCE THE ASSESSEE IS ENGAGED IN SUPPLY OF READY MIX CONCRETE, IT JUST MIXES CEMENT, I.T.A. NO. 2799/CHNY/18 3 METALS AND SAND TO CERTAIN PORTION AND SUPPLY TO THE CLIENT FOR PRODUCTION OF A NEW THING. THE LD. CIT(A) FURTHER OBSERVED THAT AS PER THE DEFINITION OF SECTION 32 OF THE ACT, THE ASSESSEE IS NOT ENTITLED FOR ADDITIONAL DEPRECIATION. ACCORDINGLY, THE LD. CIT(A) REJECTED THE CLAIM OF ADDITIONAL DEPRECIATION. 5. WE HAVE PERUSED THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF CHETTINAD BUILDERS P. LTD. V. DCIT (SUPRA), WHEREIN, THE SUBSTANTIAL QUESTION OF LAW ARISES AS TO WHETHER THE ADDITIONAL DEPRECIATION OF 20% ON PLANT AND MACHINERY USED FOR PRODUCTION OF READY MIX CONCRETE UNDER SECTION 32(1)(IIA) OF THE ACT COULD HAVE BEEN DISALLOWED WHEN THE ASSESSEE WAS MANUFACTURING READY MIX CONCRETE FOR THE PURPOSE OF SALE APART FROM USE IN CONSTRUCTION OF BUILDINGS AND WAS BEING LEVIED CENTRAL EXCISE DUTY ON SUCH MANUFACTURE? AFTER CONSIDERING VARIOUS CASE LAW, PROVISIONS OF SECTION 32 OF THE ACT AS WELL AS SECTION 2(29BA) OF THE ACT, THE HONBLE JURISDICTIONAL HIGH COURT HAS OBSERVED AND HELD AS UNDER: 23. THERE CAN BE NO DOUBT THAT PREPARATION OF READY MIX CONCRETE RESULTS IN TRANSFORMATION OF STONE CHIPS, SAND, CEMENT, FLYASH AND OTHER ARTICLES INTO A NEW AND DISTINCT OBJECT HAVING A DIFFERENT NAME, CHARACTER AND USE. ONCE THE READY MIX CONCRETE IS PREPARED, THE INGREDIENTS USED LOSE THEIR ORIGINAL CHARACTER AND CAN NEVER BE RESTORED TO THEIR ORIGINAL CHARACTER. IT IS NOT IN DISPUTE THAT THE APPELLANT-ASSESSEE IS REGISTERED UNDER THE CENTRAL EXCISE ACT AND HAS BEEN PAYING INTER ALIA EXCISE DUTY FOR MANUFACTURE OF CONCRETE READY MIX, WHICH IS SOLD BY THE APPELLANT-ASSESSEE TO OTHER CIVIL CONTRACTORS. 24. THE JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL CANNOT BE SUSTAINED TO THE EXTENT THAT THE ADDITIONAL DEPRECIATION CLAIMED BY I.T.A. NO. 2799/CHNY/18 4 THE APPELLANT-ASSESSEE ON THE MACHINERY USED FOR MANUFACTURE OF READY MIX CONCRETE HAS BEEN DISALLOWED, AND THE SAME IS SET ASIDE. WE RESTORE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 IN THIS REGARD. 25. THE APPEAL IS ACCORDINGLY ALLOWED, AND THE QUESTION FORMULATED IS ANSWERED AGAINST THE REVENUE, IN FAVOUR OF THE APPELLANT-ASSESSEE. NO COSTS. 6. THE LD. DR COULD NOT CONTROVERT THE ABOVE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT. RESPECTFULLY FOLLOWING THE ABOVE JUDGEMENT, WE DIRECT THE ASSESSING OFFICER TO ALLOW ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 22 ND MAY , 2019 IN CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 22.05.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.