M/s Happy Forgings Ltd., Ludhiana V. JCIT, Ludhiana

ITA 346/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80941 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 28-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Depreciation; Opportunity of being heard; Difference of opinion; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 263; 63; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 346/CHD/2013 ASSESSMENT YEAR: 2008-09 M/S HAPPY FORGINGS LTD., V THE JCIT, B-XXIX-2254/1, RANGE V, KANGANWAL ROAD, LUDHIANA. PO JUGIANA, LUDHIANA. PAN: AAACH4369J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMA R RESPONDENT BY : DR.AMARVEER SINGH, DR DATE OF HEARING : 13.10.2014 DATE OF PRONOUNCEMENT : 17.10.2014 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX, LUDHIANA DATED 18.03.20 13 FOR ASSESSMENT YEAR 2008-09, CHALLENGING THE IMPUGNED O RDER UNDER SECTION 263 OF THE INCOME TAX ACT. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL ON RECORD. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT IN THIS CASE, THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 21.12.201 0 ( LD. CIT MENTIONED 27.12.2010) AT INCOME OF RS. 4,53,55, 887/-. THE LD. COMMISSIONER OF INCOME TAX EXAMINED THE REC ORD AND FOUND THE ASSESSMENT ORDER TO BE ERRONEOUS IN SO FA R AS THE 2 SAME WAS PREJUDICIAL TO THE INTEREST OF REVENUE. T HE LD. COMMISSIONER OF INCOME TAX ISSUED A SHOW CAUSE NOTI CE DATED 17.09.2012 UNDER SECTION 263 OF THE INCOME TAX ACT SEEKING EXPLANATION OF THE ASSESSEE ON VARIOUS ITEMS. THE SHOW CAUSE NOTICE IS REPRODUCED IN THE IMPUGNED ORDER. HOWEVE R, THE LD. COMMISSIONER OF INCOME TAX SET ASIDE THE IMPUGNED ASSESSMENT ORDER ON ONE POINT/ISSUE WITH REGARD TO GRANT OF DEPRECIATION ON FORGING PRESS. THEREFORE, FOR THE PURPOSE OF DISPOSAL OF THIS APPEAL, THE ISSUE OF DEPRECIATION ON THE SAME ITEM IS CONSIDERED. THE LD. COMMISSIONER OF INCOME TAX IN THE SHOW CAUSE NOTICE MENTIONED THAT ASSESSEE HAS COMMI SSIONED 8000 MT FORGING PRESS ON 29.03.2008. DEPRECIATION @ 50% OF THE NORMAL RATE WAS CLAIMED ON THE SAME AND WAS ALL OWED. THE ASSESSEE HAS HOWEVER, SHOWN BUILDING UNDER CONSTRUC TION AS ON 31.03.2008 WHICH WAS NOT PUT TO USE ON OR BEFORE 31 .03.2008. THE ASSESSING OFFICER WAS, THEREFORE, REQUIRED TO E NQUIRE INTO THESE FACTS IN DETAIL AND TO ASCERTAIN AS TO WHETHE R THE SAID BUILDING WAS FOR THE PURPOSE OF INSTALLATION OF THE NEW FORGING PRESS. IF SO, THEN APPARENTLY THE PRESS ALSO HAD NO T BEEN PUT TO USE AS THE BUILDING WAS STILL UNDER CONSTRUCTION. THE ASSESSING OFFICER WAS, THEREFORE, REQUIRED TO EXAMI NE THIS ISSUE CRITICALLY AS THE FORGING PRESS WAS COMMISSIONED AT THE FAG END OF THE YEAR. SIMILAR EXERCISE WAS ALSO TO BE CONDU CTED IN RESPECT OF OTHER MACHINERIES AS WELL. HOWEVER, IN THIS REGARD, THE ASSESSING OFFICER FAILED TO MAKE NECESSARY ENQU IRIES AND FAILED TO CARRY OUT THE IMPORTANT VERIFICATION. 4. THE ASSESSEE SUBMITTED A REPLY CONTAINING THE DE TAILS AND INFORMATION ON THE ISSUE. THE ASSESSEE CLAIMED TO HAVE 3 COMMISSIONED 8000 MT FORGING PRESS ON 29.03.2008 AN D CLAIMED DEPRECIATION AT NORMAL RATE OF 50%. THE AS SESSEE, HOWEVER EXPLAINED BEFORE LD. COMMISSIONER OF INCOME TAX THAT ASSESSING OFFICER HAS ALLOWED THE DEPRECIATION AFTE R GOING THROUGH DETAILS SUBMITTED BEFORE HIM. THEREFORE, T HERE IS NO BASIS FOR THE LD. COMMISSIONER OF INCOME TAX TO INV OKE THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT. T HE LD. COMMISSIONER OF INCOME TAX, HOWEVER DID NOT ACCEPT CONTENTION OF THE ASSESSEE. LD. COMMISSIONER OF INC OME TAX NOTED IN THE IMPUGNED ORDER THAT ASSESSEE FILED COP IES OF VARIOUS DOCUMENTS BEFORE HIM WHICH INCLUDES CERTIFI CATE DATED 29.03.2008 FROM M/S ATO SPA OF ITALY CERTIFYING TH AT FORGING PRESS HAD BEEN SUCCESSFULLY INSTALLED AT THE PLANT OF THE ASSESSEE, COPIES OF THE POWER BILL WHICH SANCTIONED EXCESS LOAD W.E.F. 28.03.2008, COPY OF THE BILLS OF HOTEL FOR S TAY OF ENGINEERS OF M/S ATO SPA OF ITALY FOR INSTALLATION OF THE PRE SS, COPY OF THE INSURANCE POLICY FROM 28.03.2008 AND COPY OF THE LE TTER OF CREDIT OPENED BY THE ASSESSEE IN FAVOUR OF SUPPLIER I.E. M/S ATO SPA OF ITALY BEARING THE CLAUSE OF WARRANTY/GUA RANTEE FOR A PERIOD OF 12 MONTHS FROM THE DATE OF INSTALLATION. THE ASSESSEE, THEREFORE, PLEADED BEFORE LD. COMMISSIONE R OF INCOME TAX THAT PRESS WAS ACTUALLY PUT TO USE ON 29.03.200 8 AND THE DEPRECIATION ON THE SAME WAS RIGHTLY CLAIMED. THE LD. COMMISSIONER OF INCOME TAX, HOWEVER DID NOT ACCEPT ANY OF THE CONTENTION OF THE ASSESSEE. THE LD. COMMISSIONER O F INCOME TAX ALSO NOTED THAT MACHINE IS VERY COSTLY AND SINC E WARRANTY/GUARANTEE IS APPLICABLE FOR A PERIOD OF 12 MONTHS FROM THE DATE OF INSTALLATION, THEREFORE, THE ASSES SEE AS WELL AS 4 SUPPLIER MUST HAVE PUT IT IN WRITING THAT MACHINE W AS INSTALLED AND PUT TO USE ON A PARTICULAR DAY, BUT ASSESSEE HA S NOT PROVIDED ANY SUCH DOCUMENT. LD. COMMISSIONER OF IN COME TAX ALSO NOTED THAT SINCE MACHINE HAS BEEN CLAIMED TO B E PUT TO USE FOR THREE DAYS AND IN THE ABSENCE OF DETAILS, T HE ASSESSING OFFICER HAS NOT EXAMINED THE CLAIM OF ASSESSEE, THE REFORE THE IMPUGNED ASSESSMENT ORDER DATED 21.12.2010 WAS SET ASIDE AND ASSESSING OFFICER WAS DIRECTED TO RE-ASSESS INC OME OF THE ASSESSEE AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT LD . COMMISSIONER OF INCOME TAX HAS ISSUED SHOW CAUSE NO TICE ON VARIOUS GROUNDS/REASONS BUT ULTIMATELY ASSESSMENT O RDER WAS SET ASIDE ONLY ON ONE REASON OF GRANT OF DEPRECIATI ON ON FORGING PRESS. HE HAS SUBMITTED THAT ASSESSEE FILED A DETA ILED REPLY BEFORE LD. COMMISSIONER OF INCOME TAX (PB-3) WHICH IS SUPPORTED BY ALL THE DOCUMENTS IN WHICH IT WAS EXPL AINED THAT THE DEPRECIATION WAS ALLOWED BY ASSESSING OFFICER A FTER EXAMINING THE ISSUE IN DETAIL AND CONSIDERING THE D OCUMENTS PRODUCED BEFORE HIM. IT WAS ALSO SUBMITTED THAT 80 00 MT FORGING PRESS WAS PURCHASED AND INSTALLED IN THE OL D BUSINESS PREMISES OF THE ASSESSEE WHICH HAS NOTHING TO DO WI TH THE NEW BUILDING WHICH IS AT DISTANCE FROM THE OLD BUILDING . THE ASSESSEE CLAIMED DEPRECIATION ON NEW BUILDING AFTER IT WAS PUT TO USE IN MARCH,2010 AND CLAIMED DEPRECIATION IN TH E ASSESSMENT YEAR 2010-11. IN THE OLD BUILDING ONLY FORGING PRESS WAS INSTALLED. HE HAS REFERRED TO PB-80 WHIC H IS QUERY 5 LETTER ISSUED BY ASSESSING OFFICER DATED 30.06.2010 IN WHICH THE ASSESSING OFFICER CALLED FOR DETAILED REPLY FRO M THE ASSESSEE WITH REGARD TO ACQUISITION OF VARIOUS FIXED ASSETS AND COMPLETE INFORMATION WHICH WAS REPLIED BY ASSESSEE THROUGH R EPLY DATED 25.10.2010 (PB-87) IN WHICH IN RESPONSE TO QUESTION NO. 13, THE ASSESSEE SUBMITTED DETAILS OF ADDITIONS TO FIXE D ASSETS SUPPORTED BY MAJOR BILLS. THE REPLY OF THE ASSESSE E WITH REGARD TO RATE OF DEPRECIATION AND DEPRECIATION CLAIMED ON FIXED ASSETS WERE EXPLAINED. THE DETAILS OF DEPRECIABLE ASSETS IN FORMAT WERE SUPPLIED TO THE ASSESSING OFFICER. PB-90 ONWA RDS ARE THE DETAILS OF ADDITION TO 8000 MT PRESS IN THE YEAR UN DER CONSIDERATION IN WHICH COMPLETE DETAILS OF ITEM-WIS E WERE FURNISHED TO THE ASSESSING OFFICER AND THE LD. COMM ISSIONER OF INCOME TAX AND AT THE END (PB-95) ADDITIONS AFTER 3 0.09.2007 WERE EXPLAINED AND IT WAS ALSO CERTIFIED THAT THE F ORGING PRESS WAS PUT TO USE ON 29.03.2008. PB-39 IS FURTHER REPL Y OF THE ASSESSEE TO EXPLAIN BEFORE ASSESSING OFFICER REGARD ING ADDITION TO THE PLANT & MACHINERY AND DEPRECIATION CLAIMED B Y ASSESSEE. PB-96 IS PURCHASE INVOICE DATED 11.07.2006 ISSUED B Y THE SUPPLIER OF FORGING PRESS AND PAPER BOOK-97 IS PURC HASE BILL DATED 13.04.2007 AND OTHER ITEMS OF PLANT & MACHINE RY. HE HAS, THEREFORE SUBMITTED THAT THE FORGING PRESS WAS AVAILABLE TO THE ASSESSEE LONG BACK. PB-25 IS ELECTRICITY BILL S ANCTIONING ENHANCED LOAD OF ELECTRICITY W.E.F. 28.03.2008 FOR USE OF THE FORGING PRESS. PB-57 IS INSURANCE OF THE FORGING PR ESS STARTING FROM 28.03.2008 AND PB-7 IS INSTALLATION CERTIFICAT E DATED 29.03.2008 BY SUPPLIER M/S ATO SPA OF ITALY CERTIFY ING THAT FORGING PRESS HAS BEEN SUCCESSFULLY INSTALLED AT TH E PLANT OF THE 6 ASSESSEE. LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE ASSESSING OFFICER EXAMINED THE ISSUE IN DE TAIL AFTER RAISING QUERIES. THEREFORE, THE VIEW OF THE ASSESS ING OFFICER SHOULD NOT HAVE BEEN SUBSTITUTED BY LD. COMMISSIONE R OF INCOME TAX. HE HAS SUBMITTED THAT ONCE ASSESSING O FFICER EXAMINED THE ISSUE AND GRANTED DEPRECIATION TO THE ASSESSEE AS PER LAW, LD. COMMISSIONER OF INCOME TAX CANNOT REVI SE ORDER MERELY BECAUSE HE DISAGREES WITH THE CONCLUSION ARR IVED AT BY THE ASSESSING OFFICER. HE HAS RELIED UPON DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS GABRIEL IND IA LTD. 203 ITR 108. HE HAS ALSO RELIED UPON DECISION OF THE H ON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS S HAHABAD COOPERATIVE SUGAR MILLS LTD. 201 TAXMAN 66 IN WHICH IT WAS HELD THAT ASSESSEE WOULD BE ENTITLED TO DEPRECIATIO N ON PLANT & MACHINERY WHICH WAS NOT ACTUALLY USED BUT WAS KEPT READY FOR USE. HE HAS ALSO RELIED UPON UNREPORTED DECISION O F THE ITAT CHANDIGARH BENCH IN THE CASE OF LAKSHMI ENERGY AND PRODUCE V ACIT DATED 26.02.2014 COPY OF THE SAME IS FILED I N THE PAPER BOOK. LD. COUNSEL FOR THE ASSESSEE THEREFORE, SUBM ITTED THAT LD. COMMISSIONER OF INCOME TAX SHOULD NOT HAVE INVO KED THE JURISDICTION UNDER SECTION 263 OF THE INCOME TAX AC T IN THE MATTER. 6. ON THE OTHER HAND, LD. DR RELIED UPON IMPUGNED O RDER UNDER SECTION 263 OF THE INCOME TAX ACT AND SUBMITT ED THAT ASSESSING OFFICER DID NOT ENQUIRE INTO THE USE OF P LANT & MACHINERY AND NO DETAILS HAVE BEEN FURNISHED. SINC E, THE ASSESSEE DID NOT PRODUCE DOCUMENT BETWEEN THE ASSES SEE AND THE SUPPLIER OF THE MACHINE OF PUT TO USE ON A PART ICULAR DAY, 7 THEREFORE, LD. COMMISSIONER OF INCOME TAX CORRECTLY SET ASIDE THE IMPUGNED ORDER UNDER SECTION 263 OF THE INCOME TAX ACT. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. THE ASSESSEE IN PAPER BOOK HA S FILED COPY OF THE SHOW CAUSE NOTICE AND REPLY FILED BEFORE LD. COMMISSIONER OF INCOME TAX. THE LD. COMMISSIONER O F INCOME TAX ISSUED SHOW CAUSE NOTICE UNDER SECTION 263 OF T HE INCOME TAX ACT ON VARIOUS ITEMS BUT ULTIMATELY FOUND THE A SSESSMENT ORDER TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO T HE INTEREST OF REVENUE ON GRANT OF DEPRECIATION ON 8000 MT FORGING PRESS BY THE ASSESSING OFFICER BECAUSE ASSESSING OFFICER FAI LED TO MAKE NECESSARY ENQUIRY AND CARRY OUT IMPORTANT VERIFICAT ION OF THE SAME. THE LD. COMMISSIONER OF INCOME TAX IN THE SH OW CAUSE NOTICE NOTED THE ABOVE REASON BECAUSE THE ASSESSEE HAS SHOWN BUILDING UNDER CONSTRUCTION AS ON 31.03.2008 THEREF ORE, FORGING PRESS COULD NOT HAVE BEEN INSTALLED IN THE BUILDING UNDER CONSTRUCTION AS ON 31.03.2008 AND COULD NOT HAVE BE EN PUT TO USE BEFORE THAT DATE. THE ASSESSEE, HOWEVER, SUBMI TTED BEFORE LD. COMMISSIONER OF INCOME TAX IN ITS REPLY THAT TH E 8000 MT FORGING PRESS WAS PURCHASED AND INSTALLED IN THE OL D BUILDING PREMISES WHICH HAS NOTHING TO DO WITH THE NEW BUILD ING UNDER CONSTRUCTION. THE NEW BUILDING WAS CONSTRUCTED AND USED IN MARCH,2010 AND DEPRECIATION WAS CLAIMED IN ASSESSME NT YEAR 2010-11. THIS SUBMISSION OF THE ASSESSEE HAS NOT B EEN EXAMINED BY THE LD. COMMISSIONER OF INCOME TAX IN T HE IMPUGNED ORDER AND NO FINDINGS HAVE BEEN GIVEN ON T HE SAME. THIS WAS A MAJOR REASON FOR SETTING ASIDE THE ASSES SMENT UNDER SECTION 263 OF THE ACT. THE ASSESSEE FURNISHED COP Y OF THE 8 SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER A T THE ASSESSMENT STAGE DATED 30.06.2010 IN WHICH THE ASSE SSING OFFICER CALLED FOR EVERY DETAILS FROM THE ASSESSEE INCLUDING THE ACQUISITION OF FIXED ASSETS AND ADDITIONS THERETO. THE ASSESSEE APART FROM SUBMITTING COMPLETE REPLY, ALSO SUBMITTE D THE ADDITIONS TO THE FIXED ASSETS AND THE DEPRECIATION ETC. CLAIMED THEREON AS PER FORMAT SUPPLIED BY THE ASSESSING OFF ICER. THEREFORE, SUCH DETAILS WOULD HAVE BEEN SUFFICIENT TO PROVE THAT THE NEW BUILDING SO CONSTRUCTED BY THE ASSESSEE WAS COMPLETED IN MARCH,2010 AND PUT TO USE ON WHICH DEPRECIATION HAS BEEN CLAIMED IN ASSESSMENT YEAR 2010-11. THIS REPLY WOU LD HAVE BEARING ON THE ISSUE BECAUSE THE ASSESSEE CLAIMED T HAT DEPRECIATION WAS CLAIMED ON THE FORGING PRESS WHICH WAS INSTALLED IN THE OLD BUSINESS PREMISES OF THE ASSES SEE. IT IS, THEREFORE, A CLEAR CASE WHERE THE LD. COMMISSIONER OF INCOME TAX, IN THE PROCEEDINGS UNDER SECTION 263 OF THE AC T HAS NOT CONSIDERED EXPLANATION OF THE ASSESSEE IN PROPER PE RSPECTIVE. THE ORDER OF REVISION WITHOUT CONSIDERING EXPLANATI ON WAS HELD TO BE NOT VALID BY HON'BLE GAUHATI HIGH COURT IN TH E CASE OF SMT. LILA CHOUDHURY V CIT 289 ITR 226 IN WHICH HON' BLE GAUHATI HIGH COURT HELD AS UNDER : HELD, THAT IN THE ORDER THE COMMISSIONER HAD NOT RECO RDED ANY OPINION THAT THE ORDER OF ASSESSMENT OF THE PETIT IONER FOR THE ASSESSMENT YEAR 1992-93 WAS ERRONEOUS AND PREJU DICIAL TO THE INTERESTS OF THE REVENUE. THAT WAS THE OPINION RECORDED IN THE NOTICE DATED AUGUST 14/19,1996, BUT T HE OPINION BEING RECORDED IN A NOTICE ISSUED TO THE PETI TIONER ASKING TO SHOW CAUSE, MUST BE UNDERSTOOD TO BE REBU TTABLE. SUCH OPINION WAS REQUIRED TO BE REITERATED AFTER HE ARING THE PETITIONER AND AFTER HOLDING THE NECESSARY ENQUIRY. ON RECEIPT OF THE SHOW-CAUSE NOTICE, THE PETITIONER SUBMITTED AN ELABORATE REPLY. THE COMMISSIONER ON RECEIPT OF THE REPLY OF THE PETITIONER COULD NOT HAVE IGNORED THE SAME. RATHER , IT WAS INCUMBENT ON THE COMMISSIONER TO CONSIDER THE 9 EXPLANATIONS OFFERED AND ON THAT BASIS TO RECORD HI S OPINION/CONCLUSION. MOREOVER, THE COMPETENT CRIMINA L COURT HAD SON-IN-LAW OF THE PETITIONER FROM ANY LIABILITY ON ACCOUNT OF THE HOUSE PROPERTY IN QUESTION HOLDING IT TO BELONG TO THE PETITIONER. THE FINDINGS RECORDED BY THE CRIMINAL COURT IN THIS REGARD COULD NOT BE BRUSHED ASIDE. HENCE, ANY DE NOVO PROCEEDINGS AT THIS STAGE WOULD BE FUTILE. THE ORDER O F REVISION HAD TO BE QUASHED. THE ASSESSMENT OF THE PETITIONER FOR THE ASSESSMENT YEAR 1992-93 MADE BY ORDER DATED MAY 16,19 94, HAD TO BE CONSIDERED COMPLETE AND FINAL. 8. THUS, THERE WERE NO BASIS FOR THE LD. COMMISSION ER OF INCOME TAX IN THE SHOW CAUSE NOTICE TO SAY THAT FOR GING PRESS WOULD NOT BE PUT TO USE IN THE NEW BUILDING AS WAS UNDER CONSIDERATION AS ON 31.03.2008. WE MAY ALSO NOTE H ERE THAT THE ASSESSEE HAS SUBMITTED SEVERAL DOCUMENTS BEFORE ASSESSING OFFICER ALONGWITH ITS REPLY THAT ELECTRICITY DEPART MENT ENHANCED THE SANCTIONED LOAD FOR USE OF FORGING PRESS W.E.F. 28.03.2008, DETAILS OF ADDITION TO THE PLANT & MACHINERY AND CL AIM OF DEPRECIATION WAS EXPLAINED, THE FORGING PRESS, WAS SUBJECTED TO INSURANCE W.E.F. 28.03.2008, DETAILS OF ADDITION TO FIXED ASSETS AND PLANT & MACHINERY WERE FURNISHED SPECIFICALLY W ITH REGARD TO FORGING PRESS IN QUESTION IN WHICH CERTIFICATE W AS ALSO GIVEN THAT THE SAME WAS PUT TO USE ON 29.03.2008. THESE DOCUMENTS WERE SUPPORTED BY PURCHASE BILL DATED 11.07.2006 AN D 13.04.2007. THEREFORE, THE FORGING PRESS WAS AVAILA BLE TO THE ASSESSEE AND WAS READY FOR USE OF THE ASSESSEE PRIO R TO THE ACTUAL PUT TO USE ON 29.03.2008. THE LD. COMMISSION ER OF INCOME TAX HAS GIVEN ANOTHER REASON FOR SETTING ASI DE THE IMPUGNED ASSESSMENT ORDER BECAUSE ONE OF THE IMPORT ANT CONDITION OF PURCHASE AGREEMENT OF THE PRESS WAS TH E CLAUSE OF WARRANTEE/GUARANTEE FOR A PERIOD OF 12 MONTHS FROM THE DATE OF INSTALLATION. THE MACHINE WAS FOUND TO BE COSTLY A ND VALUABLE, 10 THEREFORE ACCORDING TO LD. COMMISSIONER OF INCOME T AX, THE ASSESSEE AS WELL AS SUPPLIER MUST HAVE PUT IT IN WR ITING THAT MACHINE WAS INSTALLED AND PUT TO USE ON A PARTICULA R DAY AND STARTING OF THE WARRANTEE/GUARANTEE. LD. COMMISSIO NER OF INCOME TAX NOTED THAT SINCE NO SUCH DOCUMENTS HAVE BEEN PRODUCED BEFORE HIM, THEREFORE, ASSESSMENT ORDER WA S ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. LD. COMMISSIONER OF INCOME TAX, HOWEVER FORGOT TO N OTE THAT IN PARA 2.1 OF THE IMPUGNED ORDER, LD. COMMISSIONER OF INCOME TAX NOTED THAT THE CERTIFICATE DATED 29.03.2008 FRO M M/S ATO SPA OF ITALY HAS BEEN FILED BY ASSESSEE CERTIFYING THAT FORGING PRESS HAD BEEN SUCCESSFULLY INSTALLED AT THE PLANT OF THE ASSESSEE. COPY OF SUCH INSTALLATION CERTIFICATE DAT ED 29.03.2008 IS FILED IN THE PAPER BOOK AT PAGE 7. THIS HAS BEE N ISSUED BY THE SUPPLIER AND THE SUPPLIER HAS CERTIFIED THAT FO RGING PRESS HAS BEEN SUCCESSFULLY INSTALLED AT THE PLANT OF THE ASSESSEE. THEREFORE, THERE IS NO REASON FOR LD. COMMISSIONER OF INCOME TAX TO HOLD THAT NO SUCH COPIES OF SUCH DOCUMENTS H AVE BEEN FILED BEFORE HIM FOR STARTING OF THE WARRANTY/GUARA NTEE OF THE FORGING PRESS IN QUESTION. 9. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V GABRIEL INDIA LTD. 203 ITR 108 HELD AS UNDER : HELD, THAT THE INCOME-TAX OFFICER IN THIS CASE HAD MA DE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE IN CURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN A DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THE SE WERE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAI M WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION ASSESSEE. THIS DECISION OF THE INCOME-TAX OFFICER COULD NOT BE HELD TO BE ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. MOREOVER, IN THE INSTANT CASE, THE COM MISSIONER HIMSELF, EVEN AFTER INITIATING PROCEEDINGS FOR REVIS ION AND 11 HEARING ASSESSEE, COULD NOT SAY THAT THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOUS AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL NATURE. HE SIMPLY ASKED THE INCOME- TAX OFFICER TO RE-EXAMINE THE MATTER. THAT WAS NOT PERMISSIBLE. THE TRIBUNAL WAS JUSTIFIED IN SETTING ASI DE THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX IT SE CTION 263. 10. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V DEEPAK MITTAL 324 ITR 411 HELD AS UNDER : CHANGE OF OPINION BY REAPPRAISING THE EVIDENCE IS NOT WITHIN THE PARAMETERS OF REVISIONAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 263 OF THE INCOME TAX ACT,1961. HELD, DISMISSING THE APPEAL THAT THE TRIBUNAL HAD F OUND THAT THE ASSESSING OFFICER HAD GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE WAS ENGAGED IN THE PROCESS OF MANUFACTURING OF PRODUCTS AND ACCORDINGLY HE HAD GRANTED CONCESSION UNDER SECTION 80IB. THE CLAIM OF THE ASSESSEE HAD BEEN FOUND TO BE GENUINE. THE ASSESSIN G OFFICER HAD ALSO EXAMINED THE VARIOUS WORKERS OF TH E ASSESSEE AND THEN RECORDED THE FINDING. THE ASSESS ING OFFICER WAS JUSTIFIED IN GRANTING THE SPECIAL DEDUC TION UNDER SECTION 80IB. THE ORDER OF REVISION DISALLOWI NG THE SPECIAL DEDUCTION WAS NOT VALID. 11. THE HON'BLE SUPREME COURT IN THE CASE OF MALABA R INDUSTRIAL CO. LTD. V CIT 243 ITR 83 HELD AS UNDER : EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMI SSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR W HERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER H AS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINAB LE IN LAW. 12. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS AND DISCUSSION ABOVE, IT IS CLEAR THAT TH E ASSESSING OFFICER HAS GRANTED DEPRECIATION TO ASSESSEE ON BEI NG SATISFIED 12 WITH THE EXPLANATION OF THE ASSESSEE, SUPPORTED BY DOCUMENTS THAT FORGING PRESS WAS INSTALLED AND PUT TO USE ON 29.03.2008 AFTER CONDUCTING PROPER ENQUIRY INTO MATTER. THE A SSESSING OFFICER, AFTER CONSIDERING EXPLANATION OF THE ASSES SEE, PARTLY DISALLOWED DEPRECIATION AS WELL, WILL PROVE THAT IS SUE OF DEPRECIATION WAS CORRECTLY EXAMINED BY THE ASSESSIN G OFFICER AT ASSESSMENT STAGE. THEREFORE, WHEN THE ASSESSING OF FICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND T HE VIEW TAKEN BY THE ASSESSING OFFICER WAS PERMISSIBLE AS P ER LAW TO WHICH THE LD. COMMISSIONER OF INCOME TAX MAY NOT AG REE, WOULD NOT TREAT THE ASSESSMENT ORDER TO BE ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD. COMMIS SIONER OF INCOME TAX HAS NOT HELD THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IT, THEREFORE, AP PEARS THAT THE LD. COMMISSIONER OF INCOME TAX CHANGED THE OPINION BY RE- APPRAISING THE EVIDENCE ALREADY ON RECORD, THUS IT WOULD NOT GIVE REVISIONAL JURISDICTION TO HIM UNDER SECTION 2 63 OF THE ACT TO SET ASIDE THE ASSESSMENT ORDER. 13. IN VIEW OF THE ABOVE DISCUSSION, WE ARE SATISFI ED THAT ASSESSING OFFICER HAS PROPERLY ENQUIRED INTO THE CL AIM OF DEPRECIATION OF THE ASSESSEE ON FORGING PRESS AT TH E ASSESSMENT STAGE AND HAS CARRIED OUT PROPER VERIFICATION. THE REFORE, THE LD. COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN INV OKING JURISDICTION UNDER SECTION 263 OF THE ACT. WE MAY A LSO NOTE HERE THAT THOUGH LD. COMMISSIONER OF INCOME TAX ISS UED SHOW CAUSE NOTICE ON VARIOUS ITEMS/REASONS, BUT CONSIDER ED THE GRANT OF DEPRECIATION ON FORGING PRESS FOR THE PURP OSE OF PASSING IMPUGNED ORDER UNDER SECTION 263 OF THE INC OME TAX 13 ACT, BUT HE HAS SET ASIDE THE ENTIRE ASSESSMENT ORD ER AND DIRECTED THE ASSESSING OFFICER TO RE-ASSESS THE INC OME OF THE ASSESSEE WHICH WAS BEYOND HIS POWERS BECAUSE UNLESS THE LD. COMMISSIONER OF INCOME TAX GAVE FINDING AGAINST THE ASSESSEE THAT ON OTHER ITEMS ALSO THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, HE COUL D NOT HAVE SET ASIDE THE ENTIRE ASSESSMENT ORDER UNDER SECTION 263 OF THE ACT. THIS REASON IS ALSO SUFFICIENT TO QUASH THE ORDER U NDER SECTION 263 OF THE ACT. IN VIEW OF THE ABOVE DISCUSSION, W E SET ASIDE THE IMPUGNED ORDER UNDER SECTION 263 OF THE INCOME TAX ACT AND QUASH THE SAME. RESULTANTLY, THE ORIGINAL ASSE SSMENT ORDER DATED 21.12.2010 UNDER SECTION 143(3) OF THE INCOME TAX ACT FOR ASSESSMENT YEAR 2008-09 IS RESTORED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH OCTOBER,2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH OCTOBER,2014. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH