H. M. Cement Private Limited, Guwahati V. Assistant Commissioner of Income Tax, Circle-Shillong, Shillong

ITA 283/GTY/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1091 (ITAT-GUWAHATI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 17-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 142(1); 143(2)

Judgement Text

1. ITA No. 283/GAU/2019 AY 2016-17 H.M Cement P.Ltd. आयकर अपील य अ धकरण, कोलकाता पीठ ‘GAUHATI’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCH GAUHATI, KOLKATA सम : ी मनीष बोरड, लेखा सद य एवं ी संजय शमा या यक सद य Before: Shri Manish Borad, Accountant Member, and Shri Sonjoy Sarma, Judicial Member आयकर अपील सं.य/ ITA No. 283//GAU/2019 Assessment Year:2016-17 H.M. Cement Private Limited H.M Tower, S.C Goswami Road, Panbazar, Guwahati- 781001, Assam. बनाम V/s. ACIT, Circle- Shillong,Aaykar Bhawan, M.G Road, Shillong- 793001, Meghalaya, PAN: AAACH 7348P अपीलाथ /Appellant .. यथ /Respondent Hearing through video Conferencing/ आभासी मा यम से अपीलाथ क ओर से/By Appellant None यथ क ओर से/By Respondent Shri Amit Kumar Pandey, JCIT, Ld.DR स ु नवाई क तार ख/Date of Hearing 26-07-2022 घोषणा क तार ख/ Date of Pronouncement 30-08 -2022 आदेश /O R D E R Per Sonjoy Sarma, JM : This appeal is filed by the assessee against the against the order dated 13.05.2019 passed by the ld. Commissioner of Income-tax (Appeals), [in short, the ld. CIT(A)], Shillong for the AY 2016-17. 2. ITA No. 283/GAU/2019 AY 2016-17 H.M Cement P.Ltd. 2. When the case was called for, none appeared on behalf of the assessee. On perusal of records shows that number of opportunities have been given to the assessee, but there is no compliance. It seems that the assessee is not interested to pursue this appeal. Therefore, we decided to adjudicate/dispose off the appeal filed by the assessee with the assistance of the Ld.DR and material available on record. The ld. DR vehemently argued in support of the orders of the lower authorities. 3. The assessee has raised the following grounds:- 1. For that the Hon’ble CIT(A) is not justified in upholding the view of the ld. AO on disallowing the claim of depreciation on plant and machinery amounting to Rs. 76,39,559/- and on building amounting to Rs. 23,50,981/- aggregating Rs.99,90,540/- alleging that the assessee has not shown any genuine attempt to restart it business, thereby disallowing the same by dismissing the case. 2. For that the appellant may kindly be permitted to add, alter or modify the grounds of appeal or any of the same at the time of hearing of appeal. 4. Brief facts of the case are that the assessee is a company and filed its e-return of income on 17.10.2016 for the assessment year in question. The case of assessee was selected for scrutiny by providing reasons for such scrutiny, notices u/s. 143(2) and 142(1) of the I.T Act, 1961 ( hereinafter referred to as the ‘Act’) were also duly issued and served upon the assessee. In response to said notices the assessee made its submissions before the ld. AO, which have been perused and placed on record. However, during the assessment proceedings the ld. AO found that large business loss set off against other heads of income(Part A- P & L/Part B-TI and Schedule CYLA of ITR) and the ld. AO observed as under:- 3. ITA No. 283/GAU/2019 AY 2016-17 H.M Cement P.Ltd. “It is seen that the assessee has shown business loss of Rs.72,96,768/- and set it off against other income of Rs. 52,79,954/-. The assessee has filed its written submissions wherein it has stated that it had shut down the cement manufacturing plant since Dec 2014. v It further states that since it had huge infrastructure of warehouses in its campus, the management decided to utilize it for trading in agricultural crops grown in the state of Meghalaya. Yet, it is seen that the assessee has claimed depreciation of Rs 1,35,27,6411- in its books. Since the assessee has admitted to not engaging in any manufacturing activities as evidenced 'by the absence of production, which is further reinforced by the fact that there is no change in the opening and closing stocks. In view of the above observations, depreciation (as appearing in Sch DEP of the ITR) on Plant and Machinery of Rs 76,39,559/- and on Buildings of Rs 23,50,981/- totaling Rs 99,90,540/- shall be disallowed. Addition: Rs 99,90,5401- In view of the above discussions, the income of the assessee is assessed as below: Returned Income/(Loss) Rs. 10,17,841/- Add: disallowed depreciation Rs.99,90,540/- Assessed Income Rs.79,72,699/- 5. Dissatisfied with the above order passed by the ld. AO, the assessee preferred an appeal before the ld. CIT(A), Shillong. However, the ld. CIT(A) dismissed the appeal of assessee by holding that the assessee had no business activity and in its written submissions it was claimed that assessee was trying to re-start its cement manufacturing activity and admitted that for last few years, the assessee incurred huge loss. Therefore, the assessee started trading in agricultural products of state of Meghalaya. The ld. CIT(A) further viewed that temporary stoppage of business cannot be a sole ground for disallowance of deprecation, if 4. ITA No. 283/GAU/2019 AY 2016-17 H.M Cement P.Ltd. assessee is keeping its asset for restart of business. However, in the case of assessee there was no evidence to show the fact that it was attempting to restart the cement manufacturing activity. It was found that business of manufacturing had stopped since December 2014. Further, the assessee did not able to provide any proof to show that there was manufacturing activity carried out during last four years. Accordingly, the appeal of assessee was dismissed by the ld. CIT(A). 6. We have heard the contention of the ld. DR and perused the record placed before us. The core issue for consideration before us whether the depreciation amounting to Rs.99,90,540/- ( Plant & Machinery Rs. 76,39,559 + Building Rs. 23,50,981/-) can be allowed to assessee when the assessee admittedly stated that Plant & Machinery was not put to use for manufacturing activity and assessee did not able to provide any proof before the ld.AO as well as the ld. CIT(A) to show that there was manufacturing activity carried out during last four years. In fact, the assessee company in its own admission stated that due to incurring huge losses the assessee company started trading in agricultural products in the state of Meghalaya and as such it is not correct to take a view that assessee was keeping machinery ready to restart its manufacturing activity or genuinely admitted to restart its business. Therefore, the business of the assessee no longer going concern activity. We do not find any infirmity in the impugned order passed by the ld. CIT(A). Accordingly, the order passed by the ld. CIT(A) is confirmed. Grounds raised by the assessee are dismissed. 5. ITA No. 283/GAU/2019 AY 2016-17 H.M Cement P.Ltd. प रणामत: नधा रती क अपील खा रज क जाती है। 7. In the result, the appeal of the assessee is dismissed. आदेश ख ु ले यायपीठ म दनांक 30-08-2022 को उ घो षत। The order pronounced in the open Court on 30 -08-2022 Sd/- Sd/- मनीष बोरड, लेखा सद य संजय शमा या यक सद य (MANISH BORAD ) (SONJOY SARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER दनांक /Dated : 30-08-2022 **PP/SPS आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1.अपीलाथ /Appellant/Assessee: H.M. Cement Private Limited H.M Tower, S.C Goswami Road, Panbazar, Guwahati-781001, Assam. . 2. यथ /Respondent/Revenue: ACIT, Circle-Shillong,Aaykar Bhawan, M.G Road, Shillong-793001, Meghalaya, 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त- अपील / CIT (A) 5. वभागीय त न ध, आयकर अपील य अ धकरण कोलकाता / DR, ITAT, Guwahati 6. गाड फाइल / Guard file. /True Copy By order/आदेश से, Assistant Registrar ITAT, Kolkata