M/s. Tagros Chemicals Ltd., CHENNAI V. Addl. CIT, CHENNAI

ITA 303/CHNY/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0900 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 21-01-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Revision of order; Depreciation; Additional depreciation
• Section: 43B; 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.303/MDS/2010 ASSESSMENT YEARS : 2005-06 M/S. TAGROS CHEMICALS LTD., NO. 72, RAJA ANNAMALAI BUILDING, JHAVER PLAZA, IV FLOOR, MARSHALLS ROAD, EGMORE, CHENNAI 600 008. [PAN:AAACT2952K] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY RANGE III, 121, NUNGAMBAKKAM HIGH ROAD, NUNGAMBAKKAM, CHENNAI 600 034. (APPELLANT) (RESPONDENT) A PPELLANT BY : DR. ANITA SUMANTH, ADVOCATE RESPONDENT BY : SMT. VIDISHA KALRA, CIT DR DATE OF HEARING : 21.01.2013 DATE OF PRONOUNCEMENT : 31.01.2013 ORDER PER S.S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX CHENNAI I, CHENNAI DATED 22.01.2010 IN C.NO. 218(34)/CIT-I/263/2009-10 FOR THE ASSESSMENT YEAR 2 005-06 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT 1961 [IN SHORT TH E ACT]. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN TH E INSTANT APPEAL: A) THE IMPUGNED ORDER DATED 22.1.2009 IS ERRONEOUS , ILLEGAL AND UNJUSTIFIED. THE TWIN CONDITIONS PRESCRIBED U/S 263 , ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAVE NOT BEEN SATI SFIED IN THE INSTANT CASE. B) THE COMMISSIONER OF INCOME TAX OUGHT NOT TO HAV E REVISED THE ORDER OF ASSESSMENT DATED 18.12.2007 WHICH WAS COMPLETED UNDER SCRUTINY AND I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 2 AFTER CONSIDERATION OF VARIOUS DETAILS, THE FINANCI ALS AND VARIOUS CLARIFICATIONS SOUGHT FOR BY THE ASSESSING AUTHORIT Y AND FURNISHED BY THE APPELLANT HEREIN. C) THE COMMISSIONER OF INCOME TAX ERRED IN DIRECTI NG THE ASSESSING AUTHORITY TO RECONSIDER THE NATURE OF SUBSIDY OF 15 .48 LAKHS AND ONLY THEREAFTER ALLOW THE SAME. IN THE LIGHT OF HIS ADMI SSION THAT THE AMOUNT WAS CAPITAL SUBSIDY AND DIRECTLY RELATED TO THE COST OF INVESTMENT IN PLANT AND MACHINERY, THERE IS NO JUSTIFICATION FOR THE REMISS ION OF THE MATTER TO THE FILE OF THE ASSESSING AUTHORITY. D) THE COMMISSIONER OF INCOME TAX ERRED IN SETTING ASIDE THE ISSUE RELATING TO EXCISE DUTY OF RS.148.34 LAKHS ON FINIS HED GOODS. THE REVISION IS UNCALLED FOR IN VIEW OF THE CONSISTENCY OF THE CLAI M BY THE ASSESSEE AND THE ACCEPTANCE OF THE SAME BY THE REVENUE OVER SEVERAL YEARS. EVEN ON MERITS, THE STAND TAKEN BY THE COMMISSIONER IN RESPECT OF T HE EXPENDITURE OF RS.148.34 LAKHS IS UNTENABLE, ERRONEOUS AND UNJUSTI FIED. E) THE COMMISSIONER HAS ERRED IN REJECTING THE APP ELLANT'S CLAIM FOR ADDITIONAL DEPRECIATION OF 7.5% FOR ASSESSMENT YEAR 2005-06. HAVING DROPPED THE PROCEEDINGS ON THIS ACCOUNT FOR THE PRE VIOUS YEAR THE COMMISSIONER CANNOT TAKE A DIFFERENT STAND FOR THIS YEAR WITHOUT ANY BASIS. F) THE COMMISSIONER OUGHT TO HAVE SEEN THAT THE DE PRECIATION CLAIMED BY THE APPELLANT IS ALLOWABLE IN RESPECT OF ASSESSM ENT YEAR 2005-06. G) ANY OTHER GROUND THAT MAY BE TAKEN AT THE TIME OF PERSONAL HEARING. 3. REITERATING THE ABOVE SAID PLEADINGS, THE AR HA S VEHEMENTLY ARGUED ON BEHALF OF THE ASSESSEE THAT IN THE INSTANT CASE, THE CIT HAS WRONGLY INVOKED PROCEEDINGS UNDER SECTION 263 OF THE ACT. IN SUPPORT OF HER CONTENTIONS, SHE HAS PLACED RELIANCE ON A PAPER BOO K COMPRISING FOLLOWING PARTICULARS: SL.NO. DATE DESCRIPTION 01. 21.03.1996 DEED OF AGREEMENT FOR BACKWARD AREA SUBSIDY BETWEEN APPELLANT.& STATE INDUSTRIES PROMOTION CORPORATION OF TAMIL NADU LTD. 02. 18.03.1997 STATE CAPITAL SUBSIDY FROM THE STAT E INDUSTRIES PROMOTION CORPORATION OF TAMIL NADU LTD. 03. 10.05.2005 DETAILS OF CENVAT CREDIT AVAILED AN D UTILIZED. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 3 04. 11.11.2008 LETTER FROM THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III (1) ALONG WITH QUESTIONNAIRE 05. 06.10.2009 SCN FROM THE COMMISSIONER OF INCOME TAX, CHENNAI PROPOSING TO REVISE THE ASSESSMENT U/S 263 OF THE INCOME TAX ACT. 06. 20.11.2009 REPLY TO SCN FROM THE COMMISSIONER OF INCOME TAX, CHENNAI IN THE LIGHT THEREOF, SHE PRAYED FOR ACCEPTANCE OF THE APPEAL. 4. OPPOSING THIS, THE REVENUES SUBMISSIONS REVOLV E AROUND SUPPORTING THE CITS ORDER AND REASONS CONTAINED THEREIN. THE REVENUE HAS ALSO PRODUCED ORDER OF ITAT CHENNAI DATED 06.01.2012 PAS SED IN I.T.A. NOS. 249 & 1166/MDS/2010 [M/S. BRAKES INDIA LTD.] QUA THE IS SUE OF ADDITIONAL DEPRECIATION RAISED BY THE ASSESSEE AND PRAYED FOR REJECTION OF THE APPEAL. 5. ADMITTED FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY; ENGAGED IN THE BUSINESS OF MANUFACTURING PESTICIDES AND CHEMICALS. ON 26.10.2005, IT HAD FILED ITS RETURN DECLARING INC OME OF ` .2,08,87,550/-, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. TH EREAFTER, THE ASSESSING OFFICER FINALIZED SCRUTINY PROCEEDINGS, WHEREIN, HE NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF ` .269.04 LAKHS PAID TO FOREIGN PERSONNEL AND ` .228.58 LAKHS PAID AS AGENT EXPENSES. IN SUPPORT, T HE ASSESSEE PLEADED THAT SINCE THERE WAS NO REQUIREMENT OF TDS IN VIEW OF CBDT CIRCULAR NO.788 DATED 07.02.2000, IT HAD NOT DEDUCT ED ANY AMOUNT UNDER THE SAID HEAD. THE SAID PLEA COULD NOT MAKE THE ASS ESSING OFFICER AGREE; IN WHOSE VIEW, THE ASSESSEE SHOULD HAVE AVAILED ITS RI GHT OF OBTAINING THE CERTIFICATE UNDER SECTION 197 OF THE ACT AND THER EAFTER ONLY, IT SHOULD HAVE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 4 PROCEEDED NOT TO DEDUCT THE TAX AT SOURCE. IN THIS MANNER, AN AMOUNT OF ` .497.62 LAKHS STOOD ADDED IN ASSESSEES TOTAL INCOM E THROUGH ASSESSMENT ORDER DATED 18.12.2007. SIMILARLY, THE ASSESSING OFFICER ALSO FOUND IN TH E SCRUTINY PROCEEDINGS THAT THE ASSESSEE HAD CAPITALIZED PLANT , MACHINERY AND BUILDING OUT OF THE PRIOR PERIOD EXPENSES OF 1995-96 AND ALS O THAT IT HAD BEEN CLAIMING DEPRECIATION THERE UPON. ON BEING ASKED, T HE ASSESSEE FILED A REVISED STATEMENT OF DEPRECIATION. PER ASSESSING OF FICER, SINCE IN THE EARLIER ASSESSMENT YEARS, IT HAD BEEN HELD THAT THE ASSESSE E WAS NOT ENTITLED TO THE CLAIM OF DEPRECIATION, WHICH HAD NOT BEEN CONTESTED THEREAFTER, DISALLOWANCE OF AN AMOUNT OF ` .49,909/- WAS MADE AND ADDED IT IN ASSESSEES TOTAL INCOME. IN THIS MANNER, THE ASSESSEES TOTAL INCOME STOOD COMPUTED AS ` .7,06,99,470/-. 6. AS IT IS EVIDENT FROM THE PAPER BOOK, ON 06.10. 2009 THE CIT ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE UNDER SECTION 263 OF THE ACT, FOR REVISING THE ASSESSMENT (SUPRA) BY TERMING IT AS E RRONEOUS CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE FOR THE F OLLOWING REASONS: 1. IT IS SEEN FROM THE ACCOUNTS THAT A SUM OF RS. 15.48 LAKHS BEING SUBSIDY FROM SIPCOT WHICH WAS SHOWN AS CONTINGENT L IABILITY AS ON 31.3.2004 WAS DIRECTLY TAKEN TO CAPITAL RESERVE ACCOUNT. A.O. HAS NOT VERIFIED WHETHER THE SUBSIDY IS ON REVENUE ACCOUNT OR I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 5 CAPITAL ACCOUNT AND REASONS FOR TRANSFER OF THE SAM E TO CAPITAL RESERVE ACCOUNT INSTEAD OF CREDITING PROFIT AND LOS S ACCOUNT. 2. A SUM OF RS. 148.34 LAKHS HAS BEEN PROVIDED FOR EXCISE DUTY ON FINISHED GOODS MANUFACTURED PENDING CLEARANCE. AS I T IS ONLY A PROVISION AND NOT ACTUAL PAYMENT, THIS REQUIRES TO BE DISALLOWED. A.O. HAS NOT VERIFIED THE BASIS OF THE PROVISION MA DE AND FAILED TO E:XAMINE THE APPLICATION OF SECTION 43B AND ALSO SE CTION 145A. 3. THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATIO N UNDER SECTION 32(IIA) OF ` .7.35 LAKHS IN RESPECT OF ASSETS WHICH WERE INSTALL ED DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R 2004-05. AS THE ASSETS WERE NOT INSTALLED DURING THE PREVIOUS Y EAR RELEVANT TO ASSESSMENT YEAR 2005-06, THE A.O. HAS NOT EXAMINED THE CLAIM OF ADDITIONAL DEPRECIATION UNDER SECTION 32(IIA) IN AC CORDANCE WITH LAW. IN RESPONSE, THE ASSESSEE FILED ITS REPLY DATED 20. 11.2009 AND SUPPORTED THE ASSESSMENT AS UNDER: 1. IT IS SEEN FROM THE ACCOUNTS THAT A SUM OF RS. 15.48 LAKHS BEING SUBSIDY FROM SIPCOT WHICH WAS SHOWN AS CONTINGENT L IABILITY AS ON 31.3.2004 WAS DIRECTLY TAKEN TO CAPITAL RESERVE ACC OUNT. A.O. HAS NOT VERIFIED WHETHER THE SUBSIDY IS ON REVENUE ACCOUNT OR CAPITAL ACCOUNT AND REASONS FOR TRANSFER OF THE SAME TO CAPITAL RES ERVE ACCOUNT INSTEAD OF CREDITING PROFIT AND LOSS ACCOUNT. THE AMOUNT OF RS.15.48 LAKHS WAS ADVANCED BY SIPCOT FOR THE PURPOSE OF INVESTMENT IN BACKWARD AREAS AS A CAPITA L SUBSIDY UNDER THE CAPITAL SUBSIDY SCHEME 1971. WE ENCLOSE A COPY OF T HE AGREEMENT WITH SIPCOT DATED 21.3.1996 AND LETTERS FROM SIPCOT TO T HIS EFFECT, DATED 15.3.96 AND 21.2.97. (ANNEXURES 1, 2 AND 3) THE SUB SIDY WAS RECEIVED DURING THE FINANCIAL YEAR 1995-1996 AND 1996-1997. SINCE THE SUBSIDY IS CAPITAL IN NATURE THE SAME HAS BEEN TRANSFERRED TO THE CAPITAL RESERVE ACCOUNT. THIS ISSUE HAS BEEN THE SUBJECT MATTER OF EXAMINATION BY THE ASSESSING AUTHORITY IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2006-07 AND THE ASSESSEE'S CONTENTI ONS HAVE BEEN ACCEPTED. (DEPARTMENTAL QUESTIONNAIRE ENCLOSED AS A NNEXURE 4). IN VIEW OF THE SAME THEE IS NO ERROR IN THE STAND ADOPTED B Y THE ASSESSING AUTHORITY IN THE COURSE OF THE ORIGINAL ASSESSMENT AND THE PROPOSAL MAY BE DROPPED. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 6 2. A SUM OF RS. 148.34 LAKHS HAS BEEN PROVIDED FOR EXCISE DUTY ON FINISHED GOODS MANUFACTURED PENDING CLEARANCE. AS I T IS ONLY A PROVISION AND NOT ACTUAL PAYMENT, THIS REQUIRES TO BE DISALLO WED. A.O. HAS NOT VERIFIED THE BASIS OF THE PROVISION MADE AND FAILED TO E:XAMINE THE APPLICATION OF SECTION 43B AND ALSO SECTION 145A. THE PROVISION OF RS.148.34 CRORES RELATES TO EXPEND ITURES INCURRED TOWARDS EXCISE DUTY ON FINISHED GOODS. THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING THE SAME METHOD OF ACCOUNTIN G AND THE DEPARTMENT HAS BEEN ACCEPTING THE SAME OVER THE YEA RS. THE EXPENDITURE PROVIDED FOR HAS BEEN PAID ON THE DUE DATE BY WAY O F DEBIT TO THE CENVAT REGISTER. WE ENCLOSE FORM ER-1 EVIDENCING THE SAME AS ANNEXURE 5. FURTHER, THE ISSUE HAS BEEN THE SUBJECT MATTER OF D ETAILED EXAMINATION IN THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2006 -07 WHEREIN THE ASSESSING AUTHORITY HAS ACCEPTED THE ASSESSEES STA ND. (DEPARTMENTAL QUESTIONNAIRE ENCLOSED AS ANNEXURE 4) WITH RESPECT TO THE APPLICATION OF 43 B, IT IS SUBM ITTED THAT THE EXPENDITURE HAS BEEN INCURRED AS ON 31.3.05 AND ACC ORDINGLY, S.43 B IS NOT ATTRACTED. WITH RESPECT TO ISSUES 1 AND 2 DEALT WITH ABOVE, WE SUBMIT THAT THE ISSUES HAVE BEEN SPECIFICALLY IDENTIFIED FOR EX AMINATION BY THE ASSESSING OFFICER (IN PROCEEDINGS FOR ASSESSMENT YE AR 2006-07) AND ALLOWED AS PER THE ASSESSEE'S CLAIM AFTER DETAILED APPLICATION OF MIND. THE FACTS AND LEGAL POSITION WITH REGARD TO THE TWO ISSUES ARE IDENTICAL. ACCORDINGLY, IT IS SUBMITTED THAT THE ASSESSING OFF ICER HAS TAKEN A POSSIBLE VIEW WITH REGARD TO THE SAME AND THE PRESE NT PROPOSAL TO REVISE THE ASSESSMENT IS NOT TENABLE. RELIANCE IS PLACED O N THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL (24 3 ITR 83) AND THE MADRAS HIGH COURT IN THE CASE OF SAK SOFT (298 ITR 63) FOR THIS PROPOSITION. 3. THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATIO N UNDER SECTION 32(IIA) OF ` .7.35 LAKHS IN RESPECT OF ASSETS WHICH WERE INSTALL ED DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2004- 05. AS THE ASSETS WERE NOT INSTALLED DURING THE PREVIOUS YEAR RELEVAN T TO ASSESSMENT YEAR 2005-06, THE A.O. HAS NOT EXAMINED THE CLAIM OF ADD ITIONAL DEPRECIATION UNDER SECTION 32(IIA) IN ACCORDANCE WITH LAW. ADDITIONAL DEPRECIATION HAS BEEN CLAIMED' IN' PART FOR THE PREVIOUS ASSESSMENT YEAR AND THE BALANCE OF 50% FOR THIS YEA R. THE CLAIM OF 50% IN RESPECT OF ASSESSMENT YEAR 2004-05 STANDS ACCEPT ED IN THE EARLIER I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 7 ASSESSMENT YEAR AND THE PROPOSAL TO REVISE THE SAME U/S 263 HAS BEEN DROPPED BY THE LEARNED COMMISSIONER OF INCOME TAX. IT FOLLOWS THAT A CONSISTENT METHOD/PRACTICE SHOULD BE FOLLOWING IN R EGARD TO THE SAME ISSUE AND ACCORDINGLY THE PROPOSAL MAY BE ADOPTED F OR THIS YEAR AS WELL. FURTHER, IT IS SUBMITTED THAT THE ABOVE ISSUES ARE NOT LIABLE TO BE REVISED SINCE THE ASSESSEE HAS BEEN FOLLOWING A CON SISTENT PRACTICE WITH REGARD TO THE TREATMENT OF THE SAME WHICH HAS ALSO BEEN ACCEPTED BY THE DEPARTMENT. RELIANCE IS PLACED ON THE JUDGEMENTS OF THE APEX COURT IN THE CASE OF RADHA SAOMI SATSANG (193 ITR 321) FOR T HE PROPOSITION THAT WHERE CERTAIN ISSUES HAVE BEEN THE SUBJECT MATTER O F CONSIDERATION BY THE DEPARTMENT AND THERE IS NO CHANGE IN THE METHOD OF TREATMENT ADOPTED BY THE ASSESSEE IN REGARD TO THE SAME, THE DEPARTME NT SHOULD NOT RE-VISIT THE SAME. 7. AS IT IS NOTED FROM THE ORDER UNDER CHALLENGE P ASSED BY THE CIT, THE ABOVE SAID ASSERTIONS OF THE ASSESSEE FAILED TO CON VINCE HIM, WHO HELD THAT SINCE THE ASSESSING OFFICER HAD NOT EXAMINED THE FI RST TWO ISSUES RAISED IN 263 NOTICE, THE ASSESSING OFFICER HAS BEEN DIRECTED TO CONSIDER THE SAME IN FRESH ASSESSMENT. AT THE SAME TIME, QUA THE 3 RD ISSUE OF DEPRECIATION, THE CIT HAS HELD THAT IN CASE OF MACHINERY ACQUIRED DUR ING THE FIRST PART OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, DEPR ECIATION AND ADDITIONAL DEPRECIATION HAVE TO BE ALLOWED ONLY @ 50% OF THE N ORMAL RATE. IT HAS ALSO BEEN HELD THAT NO PROVISION EXISTS IN THE ACT ALL OWING ADDITIONAL DEPRECIATION BE CARRIED FORWARD. ACCORDINGLY, THE C IT HAS RETURNED A FINDING THAT ASSESSEES CLAIM IN QUESTION IS NOT ADMISSIBLE . IN THIS BACKDROP, THE ASSESSEE IS AGGRIEVED. 8. WE HAVE HEARD BOTH PARTIES IN DETAIL, PERUSED T HE ASSESSMENT ORDER AS WELL AS CITS ORDER AND CASE LAW CITED BY THE RE VENUE. THE PAPER BOOK I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 8 IN QUESTION SUBMITTED BY THE ASSESSEE HAS ALSO BEEN GONE THROUGH. IT EMANATES FROM THE ASSESSMENT ORDER DATED 29.11.2007 THAT THE ASSESSING OFFICER HAD DISCUSSED IN DETAIL ONLY TWO ISSUES PER TAINING TO TDS AND DEPRECIATION (SUPRA). THE SAME HAS PROMPTED THE CIT TO DIRECT THE ASSESSING OFFICER TO CONSIDER THE ISSUES OF SIPCOT SUBSIDY AND EXCISE DUTY ON FINISHED GOODS IN VIEW OF APPLICATION OF SECTION 43B AND SECTION 145A OF THE ACT RESPECTIVELY. REGARDING 3 RD ISSUE OF DEPRECIATION, THE CIT HAS HELD THAT ASSESSEES CLAIM IS NOT ADMISSIBLE. ASSAILING THIS, THE ASSESSEE CONTENDS THAT THE ASSESSING OFFICER HAD APPLIED HIS MIND QUA THESE VERY ISSUES IN SCRUTINY PROCEEDINGS PERTAINING TO THE ASSESSMENT YEAR 2006-07 AND NO ADDITION HAD BEEN MADE. TO BUTTRESS HER ARGU MENTS, THE AR HAS ALSO PLACED ON RECORD ASSESSMENT ORDER OF ASSESSMENT YEA R 2006-07. WE ARE UNABLE TO AGREE TO THE SAID CONTENTIONS OF THE ASSE SSEE. WE REITERATE THAT WE ARE DEALING WITH ASSESSMENT YEAR 2005-06, WHEREI N THE ASSESSMENT ORDER WAS PASSED ON 29.11.2007. IT IS ALSO NOTICED THAT SCRUTINY ASSESSMENT OF THE SUCCEEDING ASSESSMENT YEAR 2006-0 7 WAS TAKEN UP BY THE ASSESSING OFFICER, WHO ISSUED NOTICE/QUESTIONNA IRE TO THE ASSESSEE ON 11.11.2008 AND FINALIZED THE ASSESSMENT ON 30.12.20 08. THEREFORE, EVEN IF WE ACCEPT THE ARGUMENTS THAT THE ISSUES IN HAND WER E VERY MUCH IN THE KNOWLEDGE OF THE ASSESSING OFFICER, THE SAME ALSO D OES NOT INSPIRE ACCEPTANCE AS IT PERTAINS TO SUCCEEDING ASSESSMENT YEAR AND WE REJECT ASSESSEES CONTENTION THAT ONCE THE MIND IS APPLIED BY THE ASSESSING OFFICER I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 9 IN THE SUCCEEDING ASSESSMENT YEAR, IT IS DEEMED TO HAVE BEEN APPLIED FOR THE PRECEDING ASSESSMENT YEAR AS WELL. WE FURTHER R EITERATE THAT WHILE FINALIZING ASSESSMENT, THE ASSESSING OFFICER ONLY D EALS WITH ISSUES OF THE SPECIFIC ASSESSMENT YEAR. THEREFORE, WE REJECT THE PRINCIPLE ARGUMENT OF THE ASSESSEE AND HOLD THAT SINCE THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DATED 29.11.2007 HAD NOT APPLIED HIS MIND AT ALL, Q UA THE ISSUE OF SIPCOT SUBSIDY AND CENTRAL EXCISE DUTY, WE FIND NO FAULT W ITH THE CITS ORDER DIRECTING THE ASSESSING OFFICER TO PROCEED AFRESH. 9. THIS LEAVES US WITH ISSUE OF DEPRECIATION. IT I S FOUND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAD NOW HERE DISCUSSED THE ENTITLEMENT OF ADDITIONAL DEPRECIATION IN QUESTION AS HE HAD ONLY HELD THAT THE ASSESSEE HAD WRONGLY CLAIMED DEPRECIATION OF CAPITA LIZED ITEMS (SUPRA). IN 263 ORDER, THE CITS HOLD THAT THE ASSESSEE IS NOT ENTITLED FOR ADDITIONAL DEPRECIATION ON MERITS. IN OTHER WORDS, THE ISSUE S TANDS DECIDED AGAINST THE ASSESSEE. IN THIS BACKGROUND OF THE FACTS AND MINDF UL OF THE FACTS IN HAND, SINCE THE ASSESSING OFFICER RECORDS NO FINDINGS QUA ADMISSIBILITY OF ADDITIONAL DEPRECIATION, IN OUR VIEW, IT WOULD IN T HE INTEREST OF JUSTICE THAT THE ASSESSING OFFICER DECIDE THESE ISSUES AFRESH IN ACC ORDANCE WITH LAW. HENCE, WE GRANT LIBERTY TO THE ASSESSEE TO PROVE ITS ENTIT LEMENT OF ADDITIONAL DEPRECIATION BY PLACING RELIANCE ON THE RELEVANT LA W. WE ALSO CLARIFY THAT THE ASSESSING OFFICER WOULD ALSO BE AT LIBERTY TO TAKE INTO CONSIDERATION THE CASE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.303 303303 303/M/ /M/ /M/ /M/10 1010 10 10 LAW OF M/S. BRAKES INDIA LTD. (SUPRA) WHILE DECIDIN G ASSESSEES CLAIM. 10. AS SEQUEL THE ABOVE DISCUSSION, THE ASSESSEES APPEAL STANDS PARTLY ACCEPTED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 31 ST OF JANUARY, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 31.01.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.