DCIT, Circle-3(2), Hyd, Hyderabad V. SPR Publications Pvt.Ltd., Hyd, Hyderabad

ITA 338/HYD/2015

• Counselvise Citation: 33822514 RSA 2015
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Capital asset; Depreciation; Initiation of penalty proceedings; Assessment record
• Section: 143(3); 147; 148; 144

Judgement Text

1 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.351/HYD/2015 ASSESSMENT YEAR 2008-2009 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. PAN AAKCS2889Q VS. ACIT, CIRCLE 3(2) HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.338/HYD/2015 ASSESSMENT YEAR 2008-2009 THE DCIT, CIRCLE 3(2) HYDERABAD. VS. M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. PAN AAKCS2889Q (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. P. MURALI MOHAN RAO FOR REVENUE : SMT. AMISHA S. GUPT DATE OF HEARING : 16.06.2015 DATE OF PRONOUNCEMENT : 24.06.2015 ORDER PER SAKTIJIT DEY, J.M. THESE CROSS-APPEALS BY THE REVENUE AND ASSESSEE ARE AGAINST THE ORDER OF THE LD. CIT(A)-II I, HYDERABAD DATED 02.04.2015 FOR THE A.Y. 2008-2009. FIRST WE WILL DEAL WITH THE REVENUES APPEAL BEING ITA.NO.338/HYD/2015. THE ONLY EFFECTIVE GROUND RAIS ED BY THE DEPARTMENT READS AS UNDER : 2. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANCE MADE U/S.40(A)(IA) AS THE TDS 2 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. REMITTANCE MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME WAS NOT IN CONFORMITY WITH THE PROVISIONS OF SECTION 40(A)(IA). 2. BRIEFLY THE FACTS RELATING TO THIS ISSUE ARE, T HE ASSESSEE A COMPANY IS ENGAGED IN THE BUSINESS OF PUBLISHING OF NEWS PAPERS. FOR THE A.Y. UNDER DISPU TE, ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2008 DECLARING LOSS OF RS.2,88,64,295. ASSESSMENT IN THE CASE OF ASSESSEE WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) BY ORDER DATED 06.12.2010 DETERMINING LOSS AT RS.1,47,12,817. SUBSEQUENTLY, THE A.O. REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT VIDE NOTICE ISSUED UNDER SECTION 148 DATED 29.08.2011. DURING T HE ASSESSMENT PROCEEDINGS, A.O. NOTICED THAT ASSESSEE HAS MADE THE FOLLOWING PAYMENTS WITHOUT DEDUCTING TAX A T SOURCE. RENT RS. 11,02,000 TRANSPORT CHARGES RS. 36,47,987 RENT ON EDUCATION CENTRE & DISTRICT OFFICES. RS. 33,79,135 TOTAL RS. 1,07,14,603 3. SINCE THE ASSESSEE HAD FAILED TO DEDUCT TAX WHILE MAKING THE AFORESAID PAYMENTS, THE A.O. DISAL LOWED THE EXPENDITURE CLAIMED BY APPLYING THE PROVISIONS OF SECTION 40(A)(IA) AND ADDED BACK THE AMOUNT OF RS.1,07,14,603 TO ASSESSEES INCOME FOR THE IMPUGNE D ASSESSMENT YEAR. BEING AGGRIEVED OF SUCH DISALLOWAN CE, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). BE FORE THE FIRST APPELLATE AUTHORITY, IT WAS SUBMITTED BY THE ASSESSEE 3 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. THAT A.O. HAS NOT PASSED ANY ORDER UNDER SECTION 20 1 TREATING THE ASSESSEE AS ASSESSEE-IN-DEFAULT AND AS SUCH, NO DISALLOWANCE UNDER SECTION 40(A)(IA) COULD BE MA DE. FURTHER, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ENTIRE EXPENDITURE HAVING BEEN ACTUALLY PAID TO THE CONCER NED PARTIES BEFORE THE END OF THE RELEVANT PREVIOUS YEA R, DISALLOWANCE UNDER SECTION 40(A)(IA) CANNOT BE MADE IN VIEW OF THE DECISION OF ITAT, VIZAG SPECIAL BENCH I N THE CASE OF MERLYN SHIPPING AND TRANSPORT 146 TTJ (1) A ND THE DECISION OF HONBLE A.P. HIGH COURT IN ITTA.NO. 352 OF 2014 DATED 24.06.2014 IN CASE OF CIT VS. JANAPRIYA ENGINEERS SYNDICATE. THE LEARNED CIT(A) FINDING MER IT IN THE SUBMISSIONS OF THE ASSESSEE AND FOLLOWING THE DECISION OF ITAT SPECIAL BENCH IN THE CASE OF MERLY N SHIPPING AND TRANSPORT (SUPRA), DELETED THE ADDITIO N MADE BY THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND ALSO PERUSED THE MATERIALS ON RECORD. T HE DEPARTMENT HAS NOT DISPUTED THE FACT THAT THE EXPEN DITURE CLAIMED BY THE ASSESSEE WHICH IS THE SUBJECT MATTER OF DISALLOWANCE UNDER SECTION 40(A)(IA) WAS ENTIRELY P AID DURING THE RELEVANT PREVIOUS YEAR AND NOTHING REMAI NED PAYABLE ON THE LAST DAY OF THE PREVIOUS YEAR. THERE FORE, IN VIEW OF THE PRINCIPLES LAID DOWN BY THE ITAT, VIZAG SPECIAL BENCH IN THE CASE OF MERLYN SHIPPING AND TRANSPORT (SUPRA), THE DISALLOWANCE UNDER SECTION 40(A)(IA) I S NOT SUSTAINABLE. THE LD. CIT(A) HAVING DELETED THE ADDI TION BY FOLLOWING THE DECISION OF THE ITAT, VIZAG SPECIAL B ENCH AS 4 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. AFORESAID, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD. CIT(A), WHICH IS ACCORDINGLY UPHELD. GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA.NO.351/HYD/2015 A.Y. 2008-09 : 6. IN THIS APPEAL, ASSESSEE HAS RAISED IN TOTAL 9 GROUNDS. GROUND NOS. 1 AND 9 BEING GENERAL IN NATUR E DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. GROUND NO.8 IS CHALLENGING THE INITIATION OF PENALTY PROCEEDINGS U NDER SECTION 271(1)(C) OF THE ACT. THIS GROUND RAISED BE ING PREMATURE AT THIS STAGE OF THE PROCEEDINGS, IS NOT REQUIRED TO BE ADJUDICATED. HENCE, GROUND NO.8 IS DISMISSED. AS FAR AS GROUND NOS. 2, 3, 4 AND 5 ARE CONCERNED, THEY AR E ON THE LEGALITY/VALIDITY OF THE PROCEEDING INITIATED U NDER SECTION 147 OF THE ACT, WHEREAS, GROUND NOS. 6 AND 7 ARE ON THE MERITS OF DISALLOWANCE OF DEPRECIATION CLAIM ED BY THE ASSESSEE AMOUNTING TO RS.38,43,674. 7. AT THE OUTSET, WE PROPOSE TO DEAL WITH THE GROUNDS RAISED BY THE ASSESSEE ON MERITS. BRIEFLY T HE FACTS RELATING TO THE ISSUE IN DISPUTE ARE, ASSESSEE, AS STATED EARLIER, IS ENGAGED IN THE BUSINESS OF NEWSPAPER PUBLICATION. ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY VIRTUE OF THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT ON 06.12.2010 DETERMINING THE LOSS AT RS.1,47,12,817. SUBSEQUENTLY, AS OBSERVED BY THE A.O. IN THE REASON S 5 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. RECORDED, DURING THE AUDIT SCRUTINY IT WAS FOUND TH AT AS PER THE DIRECTORS REPORT THE COMPANY HAS COMMENCED ITS BUSINESS ON 27.10.2007. WHEREAS, THE ASSESSEE HAS CLAIMED DEPRECIATION FOR AN AMOUNT OF RS.3,45,43,79 4 WHICH INCLUDES DEPRECIATION AT THE RATE OF 15% AMOU NTING TO RS.76,87,348 ON OPENING WDV OF PLANT AND MACHINE RY VALUED AT RS.5,12,48,988 AND DEPRECIATION @ 15% AMOUNTING TO RS.1,51,015 ON OPENING WDV ON ELECTRIC AL EQUIPMENT OF RS.10,06,768. IT WAS FURTHER OBSERVED THAT ON ALL OTHER ASSETS, THE ASSESSEE HAS CLAIMED DEPRE CIATION @ 50% OF NORMAL RATE OF DEPRECIATION AS IT IS USED FOR LESS THAN 180 DAYS. FROM THE AFORESAID FACTS, THE A.O. W AS OF THE OPINION THAT THE ASSESSEE HAVING COMMENCED ITS BUSINESS ONLY ON 22.10.2007, IT COULD NOT HAVE USED ITS ASSETS BEFORE THAT DATE. HENCE, ASSESSEES CLAIM OF DEPRECIATION @ 15% ON OPENING WDV OF PLANT AND MACHINERY AND ELECTRICAL EQUIPMENT IS NOT CORRECT. SINCE ASSESSEES CLAIM OF FULL DEPRECIATION @ 15% WAS ALL OWED IN THE ORIGINAL ASSESSMENT RESULTING IN ESCAPEMENT OF INCOME, THE A.O. REOPENED THE ASSESSMENT UNDER SECT ION 147 BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 29.08.2011 WHICH WAS SERVED ON THE ASSESSEE ON 20.09.2011. AS OBSERVED BY THE A.O., IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148, THERE WAS NO COMPL IANCE FROM THE ASSESSEE. IT IS ALSO OBSERVED BY THE A.O. THAT SHOW CAUSE LETTER DATED 14.08.2012 PROPOSING TO COM PLETE THE ASSESSMENT EXPARTE UNDER SECTION 147 AS WELL AS ANOTHER LETTER DATED 14.09.2012 DIRECTING THE ASSES SEE TO 6 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. FILE ITS OBJECTIONS ON OR BEFORE 26.06.2012 ALSO FA ILED TO EVOKE ANY RESPONSE FROM THE ASSESSEE. THEREFORE, TH E A.O. FINDING NO OTHER OPTION, PROCEEDED TO COMPLETE THE ASSESSMENT EXPARTE UNDER SECTION 144 OF THE ACT. TH E A.O. NOTICED THAT THE DEPRECIATION CLAIMED BY THE A SSESSEE AT RS.3,45,43,794 COMPRISES OF DEPRECIATION CLAIMED AT 15% AMOUNTING TO RS.76,87,348 ON OPENING WDV OF PLA NT AND MACHINERY WORTH RS.5,12,48,988 AND DEPRECIATION @ 15% AMOUNTING TO RS.1,51,015 ON OPENING WDV OF ELECTRICAL EQUIPMENT WORTH RS.10,06,768. HOWEVER, A S PER THE DIRECTORS REPORT, NEWSPAPER PUBLICATION WAS INAUGURATED BY THE GOVERNMENT OF A.P. AND CHIEF MIN ISTER ON 22.10.2007. TAKING A CLUE FROM THIS FACT, THE A. O. OPINED THAT AS ASSESSEES BUSINESS OPERATION STARTE D ONLY ON 22.10.2007, IT CANNOT BE SAID THAT THE ASSESSEE HAD USED THE ASSETS FOR THE PURPOSE OF BUSINESS BEFORE THAT DATE. ACCORDINGLY, HE HELD THAT ASSESSEE IS NOT ELI GIBLE FOR DEPRECIATION @ 15% ON OPENING WDV OF PLANT AND MACHINERY, ELECTRICAL EQUIPMENT, BUT IS ELIGIBLE FO R 50% OF THE DEPRECIATION. THEREFORE, HE RESTRICTED THE DEPR ECIATION AT 7.5%. ACCORDINGLY, HE DISALLOWED THE EXCESS DEPRECIATION OF RS.38,43,674 AND THE LOSS DETERMINE D WAS REDUCED BY THAT AMOUNT. BEING AGGRIEVED OF DISALLOW ANCE OF DEPRECIATION, ASSESSEE PREFERRED APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY. 8. IN THE COURSE OF HEARING OF APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTED BY ASSESSEE THAT THE D ATE OF INAUGURATION OF NEWSPAPER ON 22.10.2007 HAS NO RELA TION 7 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. WITH THE ACTUAL DATE OF COMMENCEMENT OF ASSESSEES BUSINESS. IT WAS SUBMITTED THAT THE BUSINESS OF THE ASSESSEE HAD ACTUALLY COMMENCED DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2007-2008 AND THE ASSETS ON WHICH THE DEPRECIATION HAS BEEN CLAIMED, FORM PART OF THE OPENING BALANCE OF ASSETS AND THEREFORE, DISALLOWAN CE OF DEPRECIATION ON THE OPENING WDV WAS NOT CORRECT. TH E LEARNED A.R. SUBMITTED, THOUGH, ASSESSEE HAS NOT CL AIMED ANY DEPRECIATION IN THE INITIAL YEAR OF PURCHASE, B UT IT CANNOT PREVENT THE ASSESSEE FROM CLAIMING DEPRECIAT ION AT THE APPROPRIATE RATE IN THE SUBSEQUENT ASSESSMENT Y EAR. IT WAS ALSO SUBMITTED THAT WITHOUT DISTURBING THE W DV OF THE ASSETS OF THE EARLIER YEARS, IT WILL NOT BE POS SIBLE TO CHANGE THE WDV OF ITS ASSETS FOR THE SUBSEQUENT ASSESSMENT YEAR. IN SUPPORT OF SUCH CONTENTION, ASS ESSEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF CIT-LTU VS. SILVASA INDUSTRIES LTD., (ITA.NO.2583 OF 2011 AND OTHERS, BOMBAY HIGH COURT) . 9. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HOWEVER DID NOT FIND ME RIT IN THE SAME. SHE OBSERVED THAT WHEN THE FORMAL INAUGURATION OF NEWSPAPER TOOK PLACE ON 22.10.2007, THE LOGICAL CONCLUSION WOULD BE THAT ASSESSEES BUSINES S COMMENCED WITH THE FORMAL INAUGURATION. THE LD. CIT (A) ALSO OBSERVED THAT ASSESSEE HAS NOT BROUGHT ANY EVI DENCE ON RECORD TO ESTABLISH ITS CLAIM THAT THE BUSINESS ACTUALLY COMMENCED IN THE PREVIOUS ASSESSMENT YEAR. AS FAR A S ASSESSEES SUBMISSION THAT OPENING WDV CANNOT BE 8 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. DISTURBED, LD. CIT(A) STATED THAT SINCE THE WDV FOR THE CURRENT YEAR WAS THE SAME AS THE ACTUAL COST OF THE ASSET AND SINCE ASSESSEE HAS NOT CLAIMED ANY DEPRECIATION TILL 01.04.2007, THE ASSESSEES CONTENTION CANNOT BE ACCEPTED. BEING AGGRIEVED, ASSESSEE IS IN APPEAL BE FORE US. 10. THE LD. COUNSEL FOR THE ASSESSEE MORE OR LESS REITERATING THE SUBMISSIONS MADE BEFORE THE DEPARTM ENTAL AUTHORITIES SUBMITTED THAT ONLY BECAUSE IN THE DIRE CTORS REPORT, IT HAS BEEN MENTIONED THAT THE INAUGURATION OF THE NEWSPAPER TOOK PLACE ON 22.10.2007, IT WILL NOT BE REASONABLE TO CONCLUDE THAT ASSESSEES BUSINESS HAD NOT COMMENCED TILL THAT DATE. LEARNED A.R. REFERRING TO THE BALANCE SHEET FOR THE A.Y. 2007-08 SUBMITTED THAT T HE ASSETS ON WHICH DEPRECIATION WAS CLAIMED AT 15%, WE RE PURCHASED/ACQUIRED DURING THE PREVIOUS YEAR RELEVAN T TO THE A.Y. 2007-2008 AND HAS BEEN BROUGHT AS OPENING WDV AS ON 01.04.2007. MOREOVER, THERE BEING NO MATE RIAL BEFORE THE DEPARTMENT THAT ASSESSEE HAS NOT PUT TO USE THE ASSETS FOR THE PURPOSE OF ITS BUSINESS, DISALLO WANCE OF DEPRECIATION ONLY RELYING UPON THE FACT THAT INAUGU RATION OF NEWSPAPER TOOK PLACE ON 22.10.2007 IS WITHOUT BA SIS. 11. LEARNED D.R. ON THE OTHER HAND, REFERRING TO LETTERS OF THE ASSESSEE SUBMITTED BEFORE THE A.O., WHICH FORMS PART OF THE ASSESSMENT RECORD, SUBMITTED THAT ASSESSEE IN THE SAID LETTERS HAVE CATEGORICALLY STA TED THAT BUSINESS OF THE ASSESSEE HAS NOT COMMENCED PRIOR TO THE DATE OF INAUGURATION. THEREFORE, SINCE THE PLANT AN D 9 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. MACHINERY AS WELL AS OTHER ASSETS, ON WHICH DEPRECI ATION WAS CLAIMED AT THE FULL RATE, COULD NOT HAVE BEEN P UT TO USE PRIOR TO THE COMMENCEMENT OF BUSINESS AND RESTRICTION OF DEPRECIATION TO 50% OF THE AMOUNT CL AIMED IS JUSTIFIED. 12. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE. AS COULD BE SEEN FROM THE REASONS RECORDED AS WELL AS THE DISCUSSIONS MADE IN THE ASSESSMENT ORDER, ONLY ON T HE BASIS OF THE FACT THAT THE NEWSPAPER PUBLICATION WA S INAUGURATED BY THE GOVERNOR AND CHIEF MINISTER OF A .P. ON 22.10.2007, THE A.O. HAS FORMED AN OPINION THAT THE BUSINESS OF THE ASSESSEE HAS COMMENCED FROM THAT DA TE. HENCE, DEPRECIATION @ 15% WILL NOT BE ALLOWED AS TH E ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED IS PU T TO USE FOR LESS THAN 180 DAYS. LD. CIT(A) HAS ALSO CON FIRMED THE VIEW EXPRESSED BY THE ASSESSING OFFICER. AT THI S STAGE, IT WILL BE APPROPRIATE TO LOOK INTO THE RELEVANT ST ATUTORY PROVISIONS. AS PER SECTION 32(1) OF THE ACT, DEPREC IATION IS ALLOWABLE IN RESPECT OF THE CAPITAL ASSET OWNED WHO LLY OR PARTLY BY THE ASSESSEE AND USED FOR THE PURPOSE OF HIS BUSINESS OR PROFESSION. HOWEVER, THE SECOND PROVISO TO SECTION 32(1) PRESCRIBES THAT IF AN ASSET IS ACQUIR ED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSE OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN 180 DAYS IN THAT PREVIOUS YEAR, DEDUCTION UNDE R SECTION 32(1) IN RESPECT OF SUCH ASSET SHALL BE RES TRICTED TO 10 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. 50% OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET. THUS, TO QUALIFY FOR FULL AMOUNT OF DEPRECIATION, TWO CONDITIONS HAVE TO BE SATISFIED A S PER SECOND PROVISO TO SECTION 32(1). FIRSTLY, THE ASSET ON WHICH DEPRECIATION IS CLAIMED, MUST HAVE BEEN ACQUI RED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND SECOND LY, IT MUST HAVE BEEN PUT TO USE FOR THE PURPOSE OF BUSINE SS OR PROFESSION FOR A PERIOD OF MORE THAN 180 DAYS. IF W E APPLY THE AFORESAID STATUTORY PROVISIONS TO THE FACTS OF THE PRESENT CASE, IT IS TO BE SEEN THAT THE ASSETS ON W HICH THE ASSESSEE HAS CLAIMED DEPRECIATION AT THE FULL RATE I.E., 15% WERE ACQUIRED DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2007-2008 AND HAVE BEEN SHOWN AS OPENING WDV A S ON 01.04.2007. THERE IS NO DISPUTE TO THE AFORESAID FACTUAL POSITION AS THE DEPARTMENT ALSO HAS ACCEPTE D THE OPENING WDV SHOWN BY THE ASSESSEE. THEREFORE, THE O THER CONDITION WHICH REMAINS TO BE SATISFIED BY THE ASSE SSEE FOR CLAIMING FULL DEPRECIATION IS, WHETHER THE ASSE SSEE HAS PUT TO USE SUCH ASSETS FOR THE PURPOSE OF HIS BUSIN ESS OR PROFESSION FOR MORE THAN 180 DAYS IN THE RELEVANT PREVIOUS YEAR. ONLY RELYING UPON THE DIRECTORS REP ORT WHEREIN IT IS MENTIONED THAT INAUGURATION OF NEWSPA PER HAPPENED ON 22.10.2007, THE A.O. HAS HELD THAT BUSI NESS OF ASSESSEE HAD COMMENCED ON 22.10.2007. THE ASSESS EE ON THE OTHER HAND, HAS PLEADED THAT THE DATE 22.10. 2007 HAS NO RELEVANCE AS FAR AS THE COMMENCEMENT OF BUSI NESS BY THE ASSESSEE IS CONCERNED. ON A PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE FIRST APPELLATE 11 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. AUTHORITY, IT IS PATENT AND OBVIOUS THAT APART FROM RELYING UPON THE FACT THAT INAUGURATION OF THE NEWSPAPER PUBLISHED BY THE ASSESSEE TOOK PLACE ON 22.10.2007, THERE IS NO OTHER MATERIAL BROUGHT ON RECORD BY THE A.O. TO CONCLUSIVELY PROVE THE FACT THAT THE PLANT AND MACHINERY AS WELL AS ELECTRICAL EQUIPMENTS WERE NOT PUT TO USE FOR THE PURPOSE OF ASSESSEES BUSINESS PRIOR TO 22.10.2007. IN THIS REGARD, IT IS NECESSARY TO OBS ERVE THAT THE WORDS USED IN SECTION 32(1) ARE USED FOR THE PU RPOSE OF BUSINESS OR PUT TO USE FOR THE PURPOSE OF BUSINE SS. THE PROVISION DOES NOT USE THE EXPRESSION COMMENCEMENT OF BUSINESS. 13. THE EXPRESSION USED FOR THE PURPOSE OF BUSINESS OR PUT TO USE FOR THE PURPOSE OF BUSINES S AS EMPLOYED IN SECTION 32(1) OF THE ACT HAS COME UP FO R INTERPRETATION TIME AND AGAIN BEFORE DIFFERENT HIGH COURTS IN A NUMBER OF DECISIONS. THE HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. INDIA TEA AND TIMBER TRADING CO. (1996) 221 ITR 857 (GAU.) HAS HELD THAT THE EXPRESS ION USED SHOULD HAVE A WIDER MEANING SO AS TO INCLUDE NOT ONLY ACTUAL BUT ALSO PASSIVE USER. THEREFORE, IF TH E MACHINERY WAS KEPT READY BY THE OWNER FOR ITS USE I N THE BUSINESS THEN IT WILL BE ELIGIBLE FOR DEPRECIATION EVEN IF IT IS NOT ACTUALLY USED IN THE BUSINESS DURING THE REL EVANT ASSESSMENT YEAR. THE HONBLE KERALA HIGH COURT IN T HE CASE OF CIT VS. GEO TECH CONSTRUCTION CORPORATION ( 2000) 244 ITR 452 HELD THAT IF THE ASSET ON WHICH DEPRECI ATION IS CLAIMED IS READY FOR USE, THEN DEPRECIATION IS A LLOWABLE. 12 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. WHILE COMING TO SUCH CONCLUSION, THE HONBLE HIGH C OURT OBSERVED THAT THE WORD USED IN SECTION 32(1) IS TO BE GIVEN A WIDER MEANING. THE HONBLE MADHYA PRADESH H IGH COURT IN THE CASE OF CIT VS. PREMIER INDUSTRIES (IN DIA) LIMITED (2010) 323 ITR 672 (M.P.) HELD THAT EVEN IF A MACHINE IS KEPT IDLE BUT IS IN A READY TO USE CONDI TION, THEN DEPRECIATION IS ALLOWABLE. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHENNAI PETROLEUM CORPORATION LIMITED 358 ITR 314 HELD THAT IF THE MACHINERY IS READY FOR USE BUT HAS NOT BEEN ACTUALL Y USED, STILL THEN ASSESSEE WOULD BE ELIGIBLE FOR DEP RECIATION. SIMILAR VIEW HAS ALSO BEEN EXPRESSED IN THE FOLLOWI NG DECISIONS I.E., (1) CIT VS. OSWAL AGRO MILLS LTD., 238 CTR 113 (2) CIT VS. OSWAL WOOLLEN MILLS LTD., 206 CTR 1 41 (P & H). THEREFORE, THE PRINCIPLE OF LAW WHICH EMERGES FROM THE AFORESAID JUDICIAL PRECEDENTS IS TO THE EFFECT THAT THE TERM USED AS EMPLOYED IN SECTION 32(1) HAS TO BE GIVEN A WIDER MEANING AND WILL ALSO INCLUDE PASSIVE USER OF THE ASSET. IT HAS BEEN HELD THAT IF THE MACHINERY OR PL ANT IS READY FOR USE BUT IT IS NOT ACTUALLY USED, STILL TH EN ASSESSEE WILL BE ELIGIBLE FOR DEPRECIATION. IF WE A PPLY THE AFORECITED PRINCIPLE TO THE FACTS OF THE PRESENT CA SE, IT IS TO BE SEEN THAT THE PLANT AND MACHINERY AND ELECTRICAL INSTALLATION ON WHICH ASSESSEE HAS CLAIMED FULL DEPRECIATION WERE ACQUIRED IN THE PRECEDING ASSESSM ENT YEAR. THEREFORE, IT CAN BE SAFELY CONCLUDED THAT TH E PLANT AND MACHINERY AS WELL AS ELECTRICAL INSTALLATION WE RE READY FOR USE IN THE IMPUGNED ASSESSMENT YEAR. ONLY BECAU SE 13 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. THE INAUGURATION TOOK PLACE IN OCTOBER, 2007 THAT C ANNOT BE A SOLE CRITERIA TO DENY ASSESSEES CLAIM OF DEPR ECIATION AT THE FULL VALUE WHEN THERE IS NO MATERIAL BROUGHT ON RECORD BY THE DEPARTMENT TO SHOW THAT THE PLANT AND MACHINERY AND ELECTRICAL INSTALLATIONS WERE NOT REA DY FOR USE PRIOR TO 22.10.2007. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE HOLD THAT DISALLOWANCE OF 50% OUT OF THE TOTAL DEPR ECIATION CLAIMED BY THE ASSESSEE ON THE OPENING WDV IS WITHO UT ANY REASONABLE BASIS. HENCE, WE DELETE THE ADDITION MADE ON THAT ACCOUNT. 14. IN VIEW OF OUR DECISION ON MERIT AS IN THE FOREGOING PARAGRAPHS, THE LEGAL ISSUE AS RAISED IN GROUND NOS. 2, 3, 4 AND 5 BEING OF MERE ACADEMIC INTEREST DO NOT REQUIRE TO BE ADJUDICATED UPON. ACCORDINGLY, GROUND NOS. 2, 3, 4 AND 5 ARE DISMISSED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. 16. TO SUM-UP, ITA.NO.338/HYD/2015 OF THE REVENUE IS DISMISSED AND ITA.NO.351/HYD/2015 OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.06.2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH JUNE, 2015 VBP/- 14 ITA.NO.351 & 338/HYD/2015 M/S. SPR PUBLICATIONS P. LTD., HYDERABAD. COPY TO : 1. M/S. SPR PUBLICATIONS P. LTD., 317/A/A, MLA COLONY, BANJARA HILLS, HYDERABAD 500 033. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 3(2), 7 TH FLOOR, B BLOCK, I. T. TOWERS, A.C. GUARDS, HYDERABAD. 3. CIT(A) - III, HYDERABAD. 4. CIT - III, HYDERABAD 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE