Jai Kamakhya Alloys Private Limited, Yrnihat V. Deputy Commissioner of Income tax, Circle-Shillong, Shillong

ITA 331/GTY/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3118 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 18-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation
• Section: 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA , SMC GAUHATI , GAUHATI BEFORE SHRI S ANJAY GARG , JUDICIAL MEMBER . / ITA NO. 331/GAU/2019 ASSESSMENT YEAR: 20 1 6 - 17 JAI KAMAKHYA ALLOYS PRIVATE LIMITED, UNIQUE PLAZA, 3 RD FL., NH 37, NEAR: TRIPURA, ASSAM, PIN 781029, ASSAM PAN:AABCJ3014H / V/S . O/O THE D.C.I.T, CIRCLE - SHILLONG, AAYKAR BHAWAN, M.G ROAD, SHILLONG, MEGHALAYA, PIN 793001 / APPELLANT .. / RESPONDENT HEARING THROUGH VIDEO CONFERENCING / BY APPELLANT SHRI J.P GUPTA, AR / BY RESPONDENT S HRI SUBHRAJYOTI BHATTACHARYA, ADDL. CIT, SR. DR / DATE OF HEARING 19 - 03 - 20 2 1 / DATE OF PRONOUNCEMENT 30 - 04 - 20 2 1 / O R D E R THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 15 - 05 - 2019 OF THE COMMISSIONER OF INCOME - TAX (APPEALS), SHILLONG [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT THE LEARNED CIT (APPEALS) ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN DISMISSING THE APPEAL BY NOT ALLOWING THE GENUINE DEPRECIATION LOSS OF RS. 12,25,087/ - DISALLOWED BY THE LEARNED ASSESSING OFFICER. 2. THAT THE APPELLANT CRAVES LEAVE TO SUBMIT ANY OTHER GROUND/S ON OR BEFORE THE HEARING OF THE APPEAL. 4. THE SOLE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS RELATING TO THE DISALLOWANCE FOR DEPRECIATION CLAIM OF RS. 12,25,087/ - . THE SAID CLAIM HAS BEEN DISALLOWED BY THE ITA NO. 331/GAU/2019 A.Y 2016 - 17 JAI KAMAKHYA ALLOYS P.LTD PAGE 2 LOWER AUTHORITIES ON THE GROUND THAT THE ASSESSEE HAD NOT SHOWN ANY PROOF THAT THE FAC TORY OF THE ASSESSEE WAS CLOSED DOWN. THEREFORE, THE MACHINERY IN QUESTION WAS NOT USED FOR BUSINESS PURPOSES. THEREFORE, THE CLAIM OF DEPRECIATION ON PLANT & MACHINERY WAS DISALLOWED BY THE LEARNED ASSESSING OFFICER ( IN SHORT, THE LD. AO) . THE SAID DISAL LOWANCE WAS FURTHER CONFIRMED BY THE LD. CIT(A). THE ASSESSEE, THUS, HAS COME UP IN APPEAL BEFORE THIS TRIBUNAL. 5. BEFORE THIS TRIBUNAL, LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT DUE TO CERTAIN REASONS , THOUGH , THE MANUFACTURING ACTIVITY OF THE ASSESSEE WAS DISCONTINUED. H OWEVER, THE PLANT & MACHINERY WAS A PART OF BLOCK OF ASSETS. THE ASSESSEE COMPANY HAD BEEN MA KING EFFORTS TO RE - START THE MANUFACTURING ACTIVITY. TH ERE WAS NO INTEN S ION OF THE ASSESSEE TO STOP THE BUSINESS. HE, THEREFORE, HAS SUBMITTED THAT THE CLAIM OF DEPRECIATION ON PLANT & MACHINERY HAS BEEN WRONGLY DISALLOWED BY THE LOWER AUTHORITIES . 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE ( IN SHORT, THE LD. DR) HAS RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES AND SUBMITTED THAT SINCE THE ASSET WAS NOT PUT TO USE , THEREFORE, THE DISALLOWANCE HAS RIGHTLY BEEN MADE BY THE LD. AO. 7. I HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORDS. THE PURPOSE OF DEPRECIATION IS TO GIVE SET OFF OF THE LOSS OF INVESTMENT S MADE BY THE ASSESSEE ON CAPITAL ASSETS USED FOR BUSINESS PURPOSES. THE ASSESSEE, IN THIS CASE HAD INSTALLED PLANT & MACHINERY SOLELY FOR THE PURPOSE OF BUSINESS. THERE WAS NO CASE O F THE REVENUE THAT THE SAID PLANT & MACHINERY WAS USED FOR OTHER PURPOSE. EVEN THE ASSET WAS NOT PUT TO USE IN THE PARTICULAR YEAR BECAUSE OF DIS CONTINUANCE OF MANUFACTURING ACTIVITY, BUT THE ASSET WAS FORMING PART OF B LOCK OF ASSETS AND IT CONTINUED TO DEPR ECIATE, WHICH ADMITTEDLY WAS PURCHASED AND INSTALLED BY THE ASSESSEE SOLELY FOR THE BUSINESS PURPOSES. THE CASE OF THE ASSESSEE IS THAT HE WAS MAKING EFFORTS TO RESUME ITS MANUFACTURING ACTIVITIES. IN VIEW OF THIS,, THE DISALLOWANCE OF DEPRECIATION MADE BY THE LOWER AUTHORITIES , IN MY VIEW IS NOT JUSTIFIED. ACCORDINGLY, THE SAID DISALLOWANCE IS ORDERED TO BE DELETED. ITA NO. 331/GAU/2019 A.Y 2016 - 17 JAI KAMAKHYA ALLOYS P.LTD PAGE 3 IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSEE STAND S ALLOWED . ORDER PRONOUNCED ON 30 TH APRIL, 2021 SD/ - (S ANJAY GAR G ) JUDICIAL MEM BER - 30 - 04 - 2021 /KOLKATA * *PP/SR.PS / COPY OF ORDER FORWARDED TO: - 1. /APPELLANT /ASSESSEE: M/S. JAI KAMAKHYA ALLOYS PRIVATE LIMITED, UNIQUE PLAZA, 3 RD FLOOR, NH 37, NEAR TRIPURA ROAD, ASSAM, PIN 781029. 2. /RESPONDENT - O/O THE DCIT, CIR - SHILLONG, AAYKAR BHAWAN, M.G ROAD, SHILLONG, MEGHALAYA, PIN 793001. 3. / CONCERNED CIT 4. - / CIT (A) 5. , / DR, ITAT, GUWAHATI 6. / GUARD FILE. BY ORDER/ , /TRUE COPY/ FOR, SENIOR PRIVATE SECRETARY