JSW CEMENT LTD, MUMBAI V. ITO WD 5(2)(2), MUMBAI

ITA 2873/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3732 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 28-04-2014
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI AMARJIT SINGH , J M ./ ITA NO . 2873 /MUM /20 1 4 ( / ASSESSMENT YEAR : 200 9 - 20 10 ) M/ S JSW CEMENT LTD., JSW CENTRE, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI - 400051 VS. ITO, WARD - 5(2)(2), MUMBAI ./ ./ PAN/GIR NO. : AABCJ 6731 B ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : S HRI RAKESH JOSHI /REVENUE BY : SHRI K.MOHANDAS / DATE OF HEARING : 0 8 / 02 / 201 6 / DATE OF PRONOUNCEMENT 29/04 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSE E AGAINST THE ORDER OF CIT(A), MUMBAI , FOR THE ASSESSMENT YEAR 2009 - 2010 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT ON THE FOLLOWING GROUNDS : - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS E RRED IN PARTLY CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISALLOWING THE DEPRECIATION ON PLANT & MACHINERY, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. ' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE L EAR NED CIT(A) HAS ERRED IN NOT CONSIDERING THE SUBMISSION MADE BY THE APPELLANT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES AND HAS SHOWN INCOME FROM LONG TERM C APITAL GAIN, SHORT TERM CAPITAL GAIN, DIVIDEND INCOME AND PROFIT FROM DEEMED SPECULATION TRANSACTIONS. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL LOSS AT ITA NO. 2873/14 2 RS.18,80,17,177/ - . DURING THE COURSE OF ASSESSMENT THE AO DISALLOWED ASSESSEES CLAIM OF DEPRECIATION. BY THE IMPUGNED ORDER THE CIT(A) ALLOWED PART RELIEF AND FOR THE BALANCE THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT ASSESSEE HAS SET UP A GRINDING UNIT, CONSTRUCTION OF WHICH HAS BEEN COMPLETED OVER A PERIOD OF THREE YEARS AND COMMENCED COMMERCIAL OPERATION DURING THE YEAR UNDER CONSIDERATION FOR GRINDING OF GRANULATED BLAST FUNACE SLAG AND PROUDICNG PORTLAND SLAG CEMENT. FOR LTHE SAID PURPOSE, VARIOUS PARTS AND SECTIONS OF THE SAID UNIT HAVE BEEN CONSTRUCTED/BUILT AND CAPITALIZED SEPARATELY(THIS BEING MORE OF TECHNICAL MATTER AND DONE MAINLY FOR THE ADMINISTRATIVE CONVENIENCE OF THE ASSESSEE). HENCE, IT IS NOT A CASE WHERE THE INDIVIDUAL ASSTS HAVE BEEN PURCHASED FROM OUT SIDE AND THEREFORE COULD BE RECOGNIZED FOR A SINGLE INVOICE WITH NARRATED DESCRIPTION. MOST OF THE ASSETS ARE PLANT BUILDING BLOCKS WHICH HAVE BEEN DEVELOPED AT SITE THEREFORE HAVE MULTIPLE COMPONENTS, ERECTION EXPENSES AND ALLOCABLE PRE - OPERATIVE EXPENSES , COMPLETE DETAILS OF WHICH HAS BEEN PROVIDED BEFORE THE LD. AO AND THE SAME HAS BEEN MATCHED WITH CORRESPONDING INVOICES. HOWEVER, THE AO DID NOT SATISFY WITH ASSESSEES EXPLANATION AND DECLINED ENTIRE CLAIM OF DEPRECIATION ON THE GRINDING UNIT. REASONS G IVEN BY THE AO FOR DISALLOWANCE W AS A S UNDER : - I) BILLS NOT IN ASSESSEES NAME, BUT ASSETS CAPITALIZED BY ASSESSEE - RS.1,68,62,690/ - . II) CERTAIN BILLS WHERE NAME OF THE ASSESSEE IS NOT LEGIBLE, THE AGGREGATE OF SUCH BILLS (4 IN NUMBER) IS RS.10,96,632/ - . THE ITA NO. 2873/14 3 ASSESSEE DID NOT PRODUCE ORIGINAL BILLS AND ITS NAME IS NOT LEGIBLE IN THE PHOTOCOPY PRODUCED. III) IN CERTAIN BILLS, AMOUNT OF THE BILLS IS MUCH LESS THAN THE AMOUNT CAPITALIZED BY THE ASSESSEE AND NO EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE IN RES PECT OF THIS DIFFERENCE. THE AGGREGATE OF SUCH DIFFERENCE IS RS.17,85,432/ - . IV) IN RESPECT OF SOME BILLS (5 IN NUMBER), THE ITEM DESCRIPTION ON THE BILLS DO NOT MATCH WITH THE DESCRIPTION OF THE ASSETS CAPITALIZED BY THE ASSESSEE. THE AGGREGATE AMOUNT IN SUCH BILLS IS RS.77,84,117/ - . THE ASSESSEE COULD NOT OFFER ANY PLAUSIBLE EXPLANATION. V) CERTAIN ASSETS AGGREGATING IN VALUE RS.52,77,101/ - , HAVE BEEN CAPITALIZED BY THE ASSESSEE BUT TILL DATE NO BILLS OR ANY OTHER EVIDENCE TOWARDS ADDITION TO FIXED ASSETS HAVE BEEN PRODUCED TO SUPPORT THE CLAIM THAT THE ASSETS WERE ADDED TO THE BLOCK. 4. BY THE IMPUGNED ORDER THE CIT(A) ALLOWED ASSESSEES CLAIM WITH RESPECT TO ASSETS CAPITALIZED AMOUNTING TO RS.1.68 CRORES. WITH RESPECT TO BALANCE AMOUNT FOR WHICH DEPRECI ATION WAS DECLINED, WE FOUND THAT ASSESSEE HAS FILED FULL DETAILS OF ADDITION TO FIXED ASSETS WHERE THE AO ALLEGED THAT ITEM DESCRIPTION ON THE BILLS DO NOT MATCH WITH THE DESCRIPTION OF THE ASSETS AMOUNTING TO RS.77,84,117/ - . WE HAD VERIFIED EVERY BILLS A S PLACED ON RECORD, WHICH ARE AS UNDER : - M/S JSW CEMENT LTD. A.Y.2009 - 10 DETAILS OF ADDITION TO FIXED ASSETS WHERE AO ALLEGED THAT ITEM DESCRIPTION ON THE BILLS DO NOT MATCH WITH THE DESCRIPTION OF THE ASSETS SL. N O ASSETS NO. SUPPLIER NAME ASSETS DESCR IPTION DESCRIPTION ON THE BILL AMOUNT 1 47 QUANTUM POWER SOLUTIONS MAIN RECEIVING SUBSTATION 110 V 25 AMPS FCBC CHARGER SUITABLE FOR VRLA BATTERIES ALONG WITH A BATTERY 5,42,694 2 47 MULTICOLOR PROJECTS (INDIA) LIMITED MAIN RECEIVING SUBSTATION SUPPLY & FIXING OF COLOR COATED SHEETS 19,99,430 3 46 SSE ENTERPRISES UTILITY LIGHTING/MISC CEMULIM077 VARIOUS ELECTRICAL ITEM PURCHASES FOR UTILITY SECTION 7,14,900 4 70 THERMAX BAG HOUSE, BAG FILTERS BAG FILTER FOR VRM 39,61,000 5 - JSPL FEED GROUP BIN VIBRAT OR CEMFGBV011 STEEL PURCHASED FOR STRUCTURE 5,66,093 TOTAL 77,84,117 ITA NO. 2873/14 4 5 . WE HAD ALSO VERIFIED THE RESPECTIVE BILLS PLACED ON RECORD. ACCORDINGLY, THERE IS NO JUSTIFICATION FOR DECLINE OF CLAIM OF DEPRECIATION IN RESPECT OF BILLS OF RS.77,84,117/ - . 6 . LOOKING TO THE NATURE OF THE ASSETS BEING PUT IN I.E. GRINDING UNIT, WHICH HAD ALREADY BEEN COMMENCED COMMERCIAL PRODUCTION, MEANING THEREBY THE ENTIRE INVESTMENT HAS BEEN MADE BY THE ASSESSEE AND WHICH HAS BEEN PUT TO USE DURING THE YEAR UNDER CONSIDERA TION. IN THE INTEREST OF JUSTICE, WE RESTORE BALANCE DISALLOWANCE TO THE FILE OF AO FOR DECIDING AFRESH AFTER GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 29/04 / 201 6 . SD/ - SD/ - ( AMARJIT SINGH ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 29/04 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE R ESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//