DCIT 14(2), MUMBAI V. POLYCOT KNITTERS, MUMBAI

ITA 3314/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83474 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Keywords: Depreciation

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ./I.T.A. NO. 3314/M/2013 ( AY: 200 9 - 20 10 ) DCIT - 14(2), 3 RD FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400 021. / VS. M/S. POLYCOT KNITTERS, 306, KAKAD MARKET, 306, KALBADEVI ROAD, MUMBAI 400 002. ./ PAN : AADFP 6044 N ( / APPELLANT) .. ( / RESPONDENT ) / A PPELLANT BY : SHRI A.K. KARDA M, DR / RESPONDENT BY : SHRI DEEPAK SHAH / DATE OF HEARING :4.8 .2014 / DATE OF PRONOUNCEMENT :4.8 .2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 29.4.2013 IS AGAINST THE ORDER OF THE CIT (A)25, MUMBAI DATED 26.2.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) HAS ERRED IN LAW AS WELL ON THE FACTS IN ALLOWING DEPRECIATION WITHOUT CONSIDERING THE BILLS OF M/S. GRISHI LOGISTICS (P) LTD, ASSESSEES CUSTOM HOUSE AGENT (CHA) DATED 18.3.2009 TO 25.3.2009 FOR ONE MACHINE AND DATED 31.3.2009 FOR OTHER MA CHINE AND FACTUALLY NO QUESTION ARISES REGARDING SUCH MACHINE TO PUT IN USE DURING THE PREVIOUS YEAR RELEVANT AY 2009 - 2010. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD CIT (A) HAS FAILED TO CONSIDER THE FIGURE FOR MONTHLY PRODUCTION / SALES AND STOCK CONSUMP TION THAT THERE WAS BEEN NO CONSUMPTION OF RAW MATERIALS IN THE LAST TWO WEEKS OR EVEN IN THE MONTH OF MARCH, 2009. ALSO, THE POWER AND FUEL EXPENSES AND PACKING MATERIAL EXPENSES HAVE DECLINED AS COMPARED TO THE LAST YEAR. 3. DURING THE PROCEEDINGS BEFO RE US, A T THE OUTSET, SHRI DEEPAK SHAH, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE COPY OF THE BILL OF ENTRY AND MENTIONED THAT 16.3.2009 IS THE DATE OF RECEIPT OF THE CONCERNED MACHINERY BY THE ASSESSEE. THEREFORE, THE ASSESSEE HAS TI ME TO MAKE USE OF THE RECEIVED MACHINERY 2 AND BROUGHT OUR ATTENTION TO THE DETAILS OF THE PRODUCTION USING THE SAID MACHINERY BEFORE THE END OF THE FINANCIAL YEAR. BRINGING OUR ATTENTION TO THE DEBIT NOTE DATED 31.3.2009 RAISED BY KRISHI LOGISTICS PVT LTD, A CUSTOMS CLEARANCE FOR THE ASSESSEE, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THIS IS A DATE OF RAISING OF THE DEBIT NOTE AND THE SAME IS CONSIDERED BY THE ASSESSING OFFICER AS DATE OF THE RECEIPT OF THE MACHINERY BY THE ASSESSEE. THE FACTS ARE THAT T HE ASSESSEE RECEIVED THE MACHINERY ON 16.3.2009 AND THE FACTS WERE PUT TO USE, THE FACT WHICH WAS APPRECIATED BY THE CIT (A) AS EVIDENT FROM THE CONTENTS OF PARA 3 OF HIS ORDER. RELEVANT PORTIONS OF THE SAID PARA 3 ARE REPRODUCED HERE UNDER: 3ON CAREFUL CONSIDERATION OF FACTS STATED IN ASSESSMENT ORDER AND ARGUMENTS AND PARTICULARS SUBMITTED BY THE LD AR, IT IMMENSELY TRANSPIRES THAT THERE IS MERIT IN THE GRIEVANCE OF THE ASSESSEE. THERE IS NO DISPUTE AS TO GENUINENESS OF PURCHASE AND IMP ORT OF MACHINERIES IN MARCH, 2009. THE ONLY DISPUTE IS IN RESPECT OF UTILIZATION OF MACHINERIES MARCH, 2009 ITSELF. THE ASSESSEE IS MAINTAINING PRODUCTION RECORDS FOR EACH MACHINE. ON PERUSAL OF THE PRODUCTION RECORDS, IT IS SEEN THAT RESPECTIVE MACHINES HAD SHOWN PRODUCTION FROM RESPECTIVE DATES. AS AN EXAMPLE, ONE MACHINE HAD STARTED PRODUCTION ON 21 ST MARCH AND ANOTHER MACHINE HAD STARTED PRODUCTION FROM 22 ND MARCH AND SO ON. PRIOR TO THESE DATES THERE WAS NO PRODUCTION AGAINST RESPECTIVE MACHINE AS PER PRODUCTION REGISTER. THE BILL OF ENTRY AND BILLS OF LOGISTIC COMPANY AS WELL AS CHA, DISCLOSES / HANDING OVER OF MACHINERIES FROM 21 ST TO 26 TH MARCH, 2009. IT IS SEEN THAT RAW MATERIAL CONSUMPTION AND PRODUCTION OF FINISHED GOODS IS INCREASED IN MARC H 2009 IN COMPARISON OF FEBRUARY, 2009. SIMILARLY, ELECTRIC EXPENSES OF MARCH 2009 HAD BEEN INCREASED IN COMPARISON OF FEBRUARY 2009. IN LIGHT OF SUCH FACTS IT CANNOT BE SAID THAT MACHINERIES WERE NOT UTILIZED BY THE ASSESSEE . THE FINDINGS OF THE AO HAD NO CONCRETE BASIS . IN LIGHT OF FACTS AS AVAILABLE ON RECORDS, THE ASSESSEE IS ENTITLED FOR DEPRECIATION AS PER LAW IN THE INSTANT YEAR. ACCORDINGLY, RELEVANT GROUNDS OF APPEAL ARE ALLOWED. 4. FURTHER, REFERRING TO GROUND NO.2 RAISED WITHOUT PREJUDICE, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ARGUMENT S RAISED BY THE REVENUE WERE ALREADY EXPLAINED TO THE CIT (A) VIDE THE CONTENTS OF ASSESSEES REPLY IN PARA 3.5 ONWARDS AND THE CIT (A) CONSIDERED THE SAME BEFORE GRANTING RELIEF TO THE ASSESSEE. THERE FORE, THE ARGUMENTATIVE GROUNDS RAISED BY THE REVENUE ARE NOT SUSTAINABLE. 5. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVA NT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES ON THE ISSUES RAISED BEFORE US AND ON PERUSAL OF THE ASSESSEES EXPLANATION, WHICH IS REPRODUCED IN PARA 3 OF THE CIT (A)S ORDER AS WELL AS THE DISCUSSION THE CIT (A) WHILE GRANTING RELIEF TO THE ASSESSEE, WE FIND THE CIT (A) HAS RIGHTLY 3 ADJUDICATED THE ISSUES UNDER CONSIDERATION AND THERE IS NO INFIRMITY. THEREFORE, THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVEN UE ARE DISMISSED . 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH AUGUST, 2014. S D / - S D / - (AMIT SHUKLA ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 4/08/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI