M/s Agrawal Indotex Ltd, Indore V. The Addl. CIT, Indore

ITA 363/IND/2010

• Counselvise Citation: 36322714 RSA 2010
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 03-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: GOVIND AGRAWAL
• Keywords: Depreciation; Additional depreciation; Additional evidence; Wrong claim; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. I.T.A.NO.363/IND/2010 A.Y. : 2006-07 AGRAWAL INDOTEX PVT. LTD., ADDL. CIT, RANGE 2, G-I, EVEREST APARTMENT, VS INDORE. SAKET NAGAR, INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI GOVIND AGRAWAL, C.A. RESPONDENT BY : SHRI KESHAVE SAXENA, CIT DR O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 25.3.2010 FOR THE ASSESSMENT YEAR 2 006-07, WHEREIN FOLLOWING TWO GROUNDS HAVE BEEN TAKEN BY TH E ASSESSEE :- I. DEPRECIATION ON PLANT AND MACHINERY INSTALLED IN SEPTEMBER, 2005. -: 2: - 2 UNDER THE FACTS AND CIRCUMSTANCES, THE HON'BLE CIT(A) ERRED IN CONFIRMING THE DEPRECIATION @ 7.5 % ONLY AGAINST DEPRECIATION @ 15% CLAIMED ON COST OF MACHINE PURCHASED & PUT TO USE IN SEPTEMBER, 05 I.E. USED FOR NOT LESS THAN 180 DAYS. II. ADDITIONAL DEPRECIATION U/S 32(1)(IIA) ON NEW PLANT AND MACHINERY INSTALLED DURING FINANCIAL YEAR 2005-06: UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF ADDITIONAL DEPRECIATION ON NEW PLANT AND MACHINERY INSTALLED DURING FINANCIAL YEAR 2005-06 & WAS USED BY THE APPELLANT IN THE BUSINESS OF MANUFACTURING OR PRODUCTION OF ARTICLE OR THING. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 3. WITH REGARD TO DISALLOWING PART CLAIM OF DEPRECIAT ION IN RESPECT OF PLANT AND MACHINERY UNDER TUFS, WE FO UND THAT THESE MACHINERIES WERE PURCHASED BY THE ASSESSEE ON 26 TH & 27 TH SEPTEMBER, 2007. THESE PLANT AND MACHINERY CLAIMED TO -: 3: - 3 BE RECEIVED AT KHANDWA ON 28 TH & 29 TH SEPT., 2005, VIA ROAD AND CLAIMED THAT PRODUCTION WERE STARTED BY BOTH TH ESE MACHINES BY 30 TH SEPTEMBER,2005. THE ASSESSEE ACCORDINGLY CLAIMED DEPRECIATION ON THESE MACHINES FOR THE ENTI RE YEAR AND THATS TOO @ 50% AS WAS ALLOWED ON THE MACHINES PUR CHASED UNDER TUFS BETWEEN 1 ST DAY OF APRIL, 2001 TO 31.03.2004. 4. BEFORE THE AO, THE ASSESSEE COULD NOT EXPLAIN AND PROVE THAT THESE MACHINES WERE PUT TO USE BY 30 TH SEPTEMBER, 2005, ACCORDINGLY, THE AO ALLOWED DEPRECIATION BY T AKING THE USE OF MACHINERY FOR LESS THAN 180 DAYS. BY THE IMP UGNED ORDER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF DEPRECIATION. THE ASSESSEE IS IN FURTHER APPEAL BEF ORE US. 5. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATI VE THAT THE MACHINERIES WERE REACHED TO KHANDWA ON 28. 9.2005 AND THE SAME WERE INSTALLED IMMEDIATELY. A CERTIFIC ATE BY THE TECHNICAL TEAM OF THE ASSESSEE WAS ALSO FURNISHED W ITH REGARD TO INSTALLATION OF MACHINERY. HE FURTHER SUBMITTED THAT PRODUCTION REPORT IN RESPECT OF THIS CLAIM OF INSTA LLATION OF MACHINERY BEFORE 1.10.2005 WAS ALSO SUBMITTED AS AN ADDITIONAL EVIDENCE BEFORE THE CIT(A) UNDER RULE 46 A. -: 4: - 4 HOWEVER, THE CIT(A) DID NOT ACCEPT THE ASSESSEES C ONTENTION AND HELD THAT THE ASSESSEE COULD NOT PROVE USE OF M ACHINERY FOR MORE THAN 180 DAYS. 6. ON THE OTHER HAND, THE LD. CIT DR SUBMITTED THAT A CLEAR FINDING HAS BEEN RECORDED BY THE LD. CIT(A) T O THE EFFECT THAT EVEN AFTER ASKING REPEATEDLY, THE ASSESSEE COU LD NOT FURNISH THIRD PARTY CERTIFICATE TO SUBSTANTIATE ITS CLAIM OF INSTALLATION OF PLANT AND MACHINERY AND ITS COMING INTO PRODUCTION ON 1 ST OCTOBER, 2005. HE SUBMITTED THAT ONUS IS ON THE ASSESSEE TO PRIMA FACIE PROVE WITH THE DOCUMENT ARY EVIDENCE THAT MACHINES HAVE BEEN INSTALLED AND ACTU ALLY USED FOR PRODUCTION FOR MORE THAN 180 DAYS FOR CLAIMING DEPRECIATION THEREON FOR THE ENTIRE YEAR. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D MATERIAL PLACED BEFORE US BY THE LD. AUTHORIZED REPRESENTATI VE. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAS FURNISHE D ALL THE RELEVANT CERTIFICATES FOR PURCHASE AND IMPORT OF MA CHINES AT THE FACTORY LEVEL, HOWEVER, NO COGENT EVIDENCE WAS PRODUCED REGARDING INSTALLATION OF PLANT AND MACHINERY BY TH E SUPPLIER. -: 5: - 5 AS THE MACHINERY SO IMPORTED WERE OF HUGE CAPACITY AND COST, INSTALLATION AND FINAL INSPECTION OF SUCH MACHINERY IS NORMALLY CARRIED OUT BY THE MANUFACTURER/SUPPLIER OF THE MAC HINERY AFTER SATISFACTORY INSTALLATION AND OPERATION. EVEN AFTER ASKING BY THE LOWER AUTHORITIES, THE ASSESSEE COULD NOT PR ODUCE SUCH CERTIFICATE, NOR BEFORE THE TRIBUNAL TO SUBSTANTIAT E ITS CLAIM OF INSTALLATION OF SUCH HEAVY MACHINERY WITHIN A DAY A ND STARTING THEREOF FOR PRODUCTION PURPOSE ON 1 ST OCTOBER, 2005. THUS, THE ASSESSEE COULD NOT PROVE THAT MACHINES WERE PUT TO USE BEFORE 1 ST OCTOBER, 2005. DETAILED FINDING RECORDED BY THE LO WER AUTHORITIES COULD NOT BE DISLODGED WITH ANY EVIENCE . 8. IN VIEW OF THE ABOVE DISCUSSION, WE ARE INCLINED T O AGREE WITH THE LD. CIT DR THAT THE ASSESSEE WAS NOT ENTITLED FOR CLAIM OF DEPRECIATION FOR MORE THAN 180 DAYS. 9. IN THE RESULT, THE FIRST GROUND OF ASSESSEES APPEA L IS DISMISSED. 10. NEXT GROUND RELATES TO ASSESSEES CLAIM FOR ADDITIO NAL DEPRECIATION U/S 32(1)(IIA) IN RESPECT OF NEW PLANT AND MACHINERY INSTALLED DURING THE FINANCIAL YEAR 2005- 06 -: 6: - 6 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE ASSESSEES CLAIM FOR ADDITIONAL DEPR ECIATION WAS DECLINED BY THE ASSESSING OFFICER ON THE PLEA THAT THE ASSESSEE HAS FILED WRONG CLAIM FOR SUCH ADDITIONAL DEPRECIAT ION :- IN RESPONSE TO QUERY OF THE AO IN THIS REGARD, THE ASSESSEE SUBMITTED AS UNDER :- REVISED COMPUTATION OF INCOME ALONGWITH REVISED DEPRECIATION CHART DUE TO RECTIFICATION OF CLAIM OF DEPRECIATION OF PLANT AND MACHINERY UNDER TUFS FROM 50% TO 15% WHICH WAS DUE TO INADVERTENT MISTAKE AND ALSO DUE TO CLAIM OF ADDITIONAL DEPRECIATION ON PLANT AND MACHINERY INSTALLED DURING FINANCIAL YEAR 2005- 06 & USED IN MANUFACTURING OF YARN ARE ENCLOSED HEREWITH. 12. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF ADDITIONAL DEPRECIATION BY OBSERVIN G THAT IN THE SCHEDULE OF DEPRECIATION ENCLOSED WITH THE RETU RN OF INCOME AS ON 31 ST MARCH, 2006, AS PER ANNEXURE I OF THE AUDITORS REPORT, THERE WAS NO REFERENCE OF ANY CLA IM OF ADDITIONAL DEPRECIATION. AGAINST THIS ORDER OF CIT( A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 13. IT WAS CONTENDED BY THE LD. CIT DR THAT SINCE THE ORIGINAL RETURN FILED WAS BEYOND TIME, THE ASSESSEE HAD GOT NO -: 7: - 7 AUTHORITY TO FILE REVISED RETURN, THEREFORE, MERE F ILING OF CLAIM BEFORE THE AO IS NOT ENTERTAINABLE AND THE LOWER AU THORITIES WERE JUSTIFIED IN RELYING ON THE DECISION OF HON'BL E SUPREME COURT IN THE CASE OF GOETZ INDIA LIMITED, 284 ITR 323, FOR DECLINING ASSESSEES CLAIM FOR DEPRECIATION. ON THE OTHER HAND, IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATI VE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD FILED REVISED COMPUTATION OF INCOME ALONGWITH R EVISED DEPRECIATION CHART DUE TO RECTIFICATION OF CLAIM OF DEPRECIATION, WHICH DUE TO INADVERTENT MISTAKE COULD NOT BE INCOR PORATED IN THE ORIGINAL SCHEDULE OF DEPRECIATION FILED ALONGWI TH THE RETURN OF INCOME. 14. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT THE CLAIM OF ADDITIONAL DEPRECIATI ON WAS FILED BY THE ASSESSEE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS.THE REVENUE AUTHORITIES DECLINED TO ENT ERTAIN THE CLAIM MERELY BECAUSE THE SAME WAS NOT FILED IN THE ORIGINAL RETURN. THE LD. CIT(A) ALSO DECLINED TO ENTERTAIN T HE CLAIM IN -: 8: - 8 VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF GOETZE INDIA LIMITED (SUPRA). 15. WE HAVE CAREFULLY GONE THROUGH THE DECISION IN THE CASE OF HON'BLE SUPREME COURT IN THE CASE OF GOETZE INDIA LIMITED, WHICH CLEARLY PROVIDES THAT THE TRIBUNAL H AD GOT POWER U/S 254 TO ENTERTAIN FOR THE FIRST TIME ON TH E POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH ISSUE O F LAW CAN BE RAISED IS BEFORE THE TRIBUNAL. IT FURTHER SAYS THAT THE AO CANNOT ENTERTAIN A REVISED CLAIM OTHERWISE THAN BY WAY OF REVISED RETURN, HOWEVER, POWER OF THE TRIBUNAL U/S 254 IS NOT BEING IMPINGED. THE CRUX OF THE DECISION OF THE HON 'BLE SUPREME COURT IS THAT THE CLAIM OF DEDUCTION NOT MA DE IN THE RETURN CANNOT BE ENTERTAINED BY THE ASSESSING OFFIC ER OTHERWISE THAN BY FILING A REVISED RETURN. HOWEVER, THE TRIBUNAL HAS POWER U/S 254 TO ENTERTAIN SUCH A LEGA L CLAIM IF THE FACTS ARE ALREADY IN THE RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS FILED REVISED CLAIM ON ADDITIONAL DEPR ECIATION BEFORE THE AO, BUT HE HAS NOT GONE ON MERITS OF THE CLAIM BUT DECLINED TO ENTERTAIN THE SAME. EVEN EXPLANATION 5 TO SECTION 32(1) CLEARLY PROVIDES THAT THE PROVISIONS OF THIS SUB SECTION -: 9: - 9 SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTING H IS TOTAL INCOME. 16. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THIS GR OUND BACK TO THE FILE OF THE AO FOR DECIDING ASSESSEES ELIGIBILITY FOR CLAIM OF ADDITIONAL DEPRECATION U/S 32(1)(IIA), IN RESPECT OF NEW PLANT AND MACHINERY INSTALLED DURING THE RELEVANT A SSESSMENT YEAR UNDER CONSIDERATION. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST MAY, 2011. CPU* 31.5