DCIT, Virudhunagar V. Energy Spinners (P) Ltd., Virudhunagar

ITA 2833/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90411 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 17-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: V SRIKRISHNAN
• Keywords: Depreciation; Opportunity of being heard
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , ! ' , # $% & [BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] ./ I.T.A.NO.2833/MDS/2014 / ASSESSMENT YEAR : 2007-08 THE DY. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE-I MADURAI VS. M/S ENERGY SPINNERS (P) LTD. NO.482/A/1, SANKARANKOVIL ROAD RAJAPALAYAM VIRUDHUNAGAR DISTRICT 626 117 [PAN AAACE 4957 H] ( '( / APPELLANT) ( ')'( /RESPONDENT) / APPELLANT BY : DR. B. NISCHAL, JCIT /RESPONDENT BY : SHRI V. SRIKRISHNAN, CA / DATE OF HEARING : 26-05-2015 ! / DATE OF PRONOUNCEMENT : 29-05-2015 * / O R D E R PER D. KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS IS THE APPEAL FILED BY THE REVENUE AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, MADURA I, DATED 08.08.2014, FOR ASSESSMENT YEAR 2007-08. 2. IN THE GROUNDS, THE REVENUE IS AGGRIEVED BY THE REL IEF GRANTED BY THE CIT(A) ON THE ISSUE OF GRANTING DEPR ECIATION FOR FULL ITA NO.2833/14 :- 2 -: YEAR IN RESPECT OF THE WINDMILL COMMISSIONED DURING THE YEAR. THE ASSESSEE CLAIMED DEPRECIATION U/S 32 OF THE ACT FO R FULL YEAR ON THE GROUND THAT THE SAME WAS USED FOR THE PERIOD MORE T HAN 180 DAYS IN THE ASSESSMENT YEAR UNDER CONSIDERATION WHEREAS THE SAME WAS RESTRICTED BY THE ASSESSING OFFICER @ 50% OF THE CL AIM. THE ASSESSING OFFICER CONCLUDES THAT THE WINDMILL WAS NOT COMMISS IONED ON 29.9.2006 AS CLAIMED BY THE ASSESSEE. 3. BRIEFLY STATED, THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF YARN SPINNERS AND ALSO GENERATION OF ELECTRICITY USING THE WINDMILL. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED DEPRECIATION ON THE WINDMILL TO TH E TUNE OF ` 74,24,710/- I.E 80% OF ` 92,80,876/- CLAIMING THAT THE WINDMILL WAS PUT TO USE FOR MORE THAN 180 DAYS IN THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTED THAT THE SAID WINDMILL WAS PURCHASED FROM M/S SOUTHERN WIND FARMS LTD., PONDICHERRY. THE ASSESSING OFFICER NOTE D THAT THE PURCHASE INVOICE WAS DATED 30.9.2006. THE WINDMILL WAS SAID TO BE COMMISSIONED ON 29.9.2006. CONSIDERING THE DISCREPA NCY IN DATES, THE ASSESSING OFFICER DOUBTED THE DATE OF COMMISSIONING OF THE WINDMILL AND MENTIONED THAT IN A DAYS TIME THE WINDMILL COU LD NOT HAVE BEEN INSTALLED AND THEN COMMISSIONED. HE ALSO REASONED T HAT THE INVOICE DATE CANNOT BE SUBSEQUENT TO THE DATE OF COMMISSION ING OF WINDMILL. ITA NO.2833/14 :- 3 -: PER CONTRA, THE ASSESSEE HEAVILY RELIED ON THE CER TIFICATE ISSUED BY THE SUPERINTENDING ENGINEER, TNEB, WHERE THE DATE OF CO MMISSIONING WAS MENTIONED AS 29.9.2006 AND IN THAT CASE, THE ASSES SEE IS ENTITLED TO THE CLAIM @ 80% OF THE DEPRECIATION CLAIMED IN THE RETURN OF INCOME. ON HEARING THE ASSESSEE, THE ASSESSING OFFICER RE JECTED THE SAME AND WAS OF THE OPINION THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION OF ONLY 50% OF CLAIM OF ` 74,24,700/-. HE, ACCORDINGLY, DISALLOWED 50% OF THE CLAIM AMOUNTING TO ` 37,12,350/- AND ADDED TO THE INCOME OF THE ASSESSEE . 4. IN THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE FI LED WRITTEN SUBMISSIONS WHICH ARE EXTRACTED IN PARA 7.1 OF THE IMPUGNED ORDER. THE SUMMARY OF THE SAID SUBMISSIONS INCLUDES THAT E VEN IF 30.9.2006 IS CONSIDERED, THE ASSESSEE HAS USED THE WINDMILL FOR MORE THAN 180 DAYS, CONSEQUENTLY, IT IS ENTITLED TO THE DEPRECIAT ION @ 80% AS CLAIMED IN THE RETURN OF INCOME. ON HEARING THE ASSESSEE, THE CIT(A) HEAVILY RELIED ON THE COPIES OF THE ELECTRICITY GENERATION FOR THE PERIOD FROM 27.9.2006 TO 13.10.2006 AND HELD THAT THE CLAIM OF THE ASSESSEE IS PROPER. ACCORDINGLY, HE GRANTED RELIEF TO THE ASS ESSEE AND ALLOWED THE APPEAL. AGGRIEVED WITH THE SAME, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE NARRATED THE ABOVE FACTS OF THE CASE AND BROUGHT OU R ATTENTION TO ITA NO.2833/14 :- 4 -: VARIOUS DOCUMENTS OF THE PAPER BOOK AND SUBMITTED T HAT THE CIT(A) HAS NOT APPRECIATED THE FACTS OF THE CASE AS TO HOW THE WINDMILL WAS TRANSPORTED FROM PONDICHERRY TO THE ASSESSEES PRE MISES, HOW THE SAID WINDMILL WAS PASSED THE CHECK POST WITHOUT PRO PER INVOICES, HOW THE SUPPLIER OF THE MACHINERY NAMELY, M/S SOUTHERN WIND FARMS LTD, PONDICHERRY, SUPPLIED THE SAME WITHOUT HAVING PROPE R LICENCES ETC. BRINGING OUR ATTENTION TO PAGE 5 OF THE PAPER BOOK, THE LD. DR SUBMITTED THAT THE LICENCES ARE DATED 14.11.2006 AN D 30.11.2006 WHICH ARE NOT VALID AT THE RELEVANT POINT OF TIME O F SUPPLY OF THE WINDMILL TO THE ASSESSEE. FURTHER BRINGING OUR AT TENTION TO THE COPY OF THE POWER GENERATION CHART PLACED AT PAGE 26 OF THE PAPER BOOK, THE LD. DR SUBMITTED THAT IN INITIAL PERIOD THE IMP ORT OF ELECTRICITY FOR CAPTIVE CONSUMPTION IS OFTEN MORE WHEN COMPARED T O THE OUTPUT, BUT THE FIGURES SUGGEST DIFFERENT. CONSIDERING THE SAM E, THE LD. DR SUBMITTED THAT THE ISSUE MAY BE REMANDED TO THE FIL E OF THE ASSESSING OFFICER FOR ATTENDING TO THE ABOVEMENTIONED ISSUES. HE ALSO DEMONSTRATED THAT THE CIT(A) HAS NOT PASSED SPEAKIN G ORDER ON THE ISSUES DISCUSSED ABOVE. 6. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE HEAVIL Y RELIED ON THE ORDER OF THE CIT(A). ITA NO.2833/14 :- 5 -: 7. REGARDING THE LD. DRS REQUEST FOR REMANDING, THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAS NO O BJECTION IF THE GROUNDS ARE REMANDED TO THE ASSESSING OFFICER. 8. WE HEARD BOTH THE PARTIES ON THE ISSUE RAISED BEFO RE US AND FIND THAT THE POINTS MADE BY THE LD. DR REQUIRE ATT ENTION OF THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS. THE A SSESSING OFFICER IS DIRECTED TO GIVE AN OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE AND ADMIT THE DOCUMENTS, IF ANY, SUBMITTED DURING REMAN D PROCEEDINGS IN THE INTEREST OF JUSTICE. WE ORDER ACCORDINGLY. TH E GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 29 TH OF MAY, 2015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHALLA NAGENDRA PRASAD) # / JUDICIAL MEMBER ( . ) (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 29 TH MAY, 2015 RD %& '()( / COPY TO: 1 . / APPELLANT 4. * / CIT 2. / RESPONDENT 5. (+, - / DR 3. *./ / CIT(A) 6. ,01 / GF