The ACIT, Circle-1, RAJKOT-GUJARAT V. M/s. Atul Auto Ltd., RAJKOT-GUJARAT

ITA 364/RJT/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67304 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR D R REO
• Assessee Lawyers: P M MAHARISHI CA O Y
• Keywords: Depreciation; Additional depreciation

Judgement Text

Y I , IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. 2 . . R 2 . . 2 BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTAVA AM ITA NO. 364/RJT/2012 R R / ASSESSMENT YEAR 200 6 - 07 THE ASSISTANT COMMISSIONER OF INCOME - TAX , CIRCLE - 1 , RAJKOT. ( . / APPELLANT) M/S. ATUL AUTO LTD., PLOT NO.1 40 4 SURVEY NO.86, NR. MICROWAVE TOWER, NH 8 - B, SHAPAR VERAVAL , RAJKOT. PAN : A A CCA3018M 2/. / RESPONDENT O / REVENUE BY SHRI AVINASH KUMAR, D R. REO / ASSESSEE BY SHRI P. M. MAHARISHI , CA. O Y / DATE OF HEARING 11 - 0 7 - 2013 O Y / DATE OF PRONOUNCEMENT 12 - 0 7 - 2013 / ORDER . . , R / T. K. SHARMA, J. M. : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 2 3 - 0 3 - 201 2 OF CIT (A) - I, RAJKOT FOR THE ASSESSMENT YEAR 200 6 - 07. 2. T HE FACTS , IN BRIEF , ARE THAT THE ASSESSEE IS A COMPANY, MANUFACTURER OF THREE WHEELERS AUTO RICKSHAW (PASSENGER/LOADING) AND ITS SPARE PARTS. FOR THE ASSESSMENT YEAR UN DER APPEAL, IT FILED THE RETURN OF IN COME ON 3 0 - 0 6 - 2006 DECLARING TOTAL INCOME OF RS. 2,32,67,920/ - . AO FRAMED THE ASSESSMENT U/S.143(3) OF THE I.T. ACT, 1961 ON 11 - 10 - 2011 WHEREIN HE DISALLOWED RS.34,14,075/ - BEING ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE U/S.32(1)(IIA) OF THE I.T. ACT. 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT (A) ALLOWED THE SAME FOR THE DETAILED REASON GIVEN IN PARA - 5 .2, WHICH READS AS UNDER: - 5 .2 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION. ACCORDING TO THE PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT WHICH IS AS UNDER: - [(IIA) IN THE CASE OF NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31 ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM ITA 364 - 201 2 2 EQUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE AL LOWED AS 31.3.2005 DEDUCTION UNDER CLAUSE(II): ( A ) ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALLATION BY THE ASSESSEE , WAS USED EITHER WITHIN OR OUTSIDE INDIA BY ANY OTHER PERSON; OR ( B ) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREMISES OR ANY RESIDE NTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST - HOUSE; OR ( C ) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; OR ACCORDINGLY, ADDITION DEPRECIATION OF 20% OF THE COST OF MACHINERY IS ALLOWED SUBJECT TO THE CONDITION THAT APPELLANT HA S ACQUIRED NEW MACHINERY AND PLANT (OTHER THAN SHIP AND AIRCRAFT). IT IS ACQUIRED ON OR AFTER 31.3.2005 AND MACHINERY OR PLANT IS NOT INSTALLED IN ANY OFFICE PREMISES OR RESIDENTIAL ACCOMMODATION AND IS A NOT ROAD TRANSPORT VEHICLES. HERE APPELLANT HAS PUR CHASED A NEW WINDMILL AT THE COST OF RS.3,41,40,750/ - ON 13 - 01 - 2006, WHICH IS INSTALLED AT VILLAGE LAMBA AND IS USED FOR THE CAPTIVE POWER CONSUMPTION OF APPELLANT, WHICH IS BEING USED IN MANUFACTURING OF THREE WHEELERS. IT IS ALSO A FACT THAT NEW MACHINER Y INSTALLED IS NOT USED IN ANY RESIDENTIAL PREMISES OR OFFICE PREMISES AND IS NEITHER OFFICE APPLIANCE NOR ROAD TRANSPORT VEHICLES. ITS WHOLE COST IS ALSO NOT ALLOWED AS DEDUCTION. THEREFORE ALL THE BASIC CONDITIONS MENTIONED IN 32(1)(IIA) HAS BEEN SATISFI ED FOR CLAIMING DEDUCTION OF ADDITIONAL DEPRECIATION. FURTHER APPELLANT HAS RELIED UPON THE VARIOUS DECISIONS OF MADRAS HIGH COURT NAMELY CIT V. HI TECH ARAI LTD. IN HC OF MADRAS (2010) 321 ITR 477, CIT V. TEXMO PRECISION CASTINGS IN HC OF MADRAS (2010) 32 1 ITR 421 AND CIT V. VTM LTD. IN HC OF MADRAS (2010) 34 DTR 134 WHEREIN ON THE SAME FACTS AND CIRCUMSTANCES ADDITIONAL DEPRECIATION CLAIMED ON WINDMILL IS ALLOWED. REASONS GIVEN FOR THE AO FOR DISALLOWANCE OF ADDITIONAL DEPRECIATION DOES NOT FIND PLACE IN THE INCOME TAX ACT. THERE IS NO CONDITION THAT THERE SHOULD BE INCREASE IN THE CAPACITY OF THE UNIT OR IT IS NOT ALLOWABLE ON CAPTIVE CONSUMPTION OF ELECTRICITY GENERATED. THE CRUX OF PRECONDITIONS SET IN SAID DECISION CAN BE DEFINED AS UNDER: - AS FAR AS APPLICATION OF S. 32(1)(IIA) OF THE ACT IS CONCERNED , WHAT IS REQUIRED TO BE SATISFIED IN ORDER TO CLAIM THE ADDITIONAL DEPRECIATION IS THAT THE SETTING UP OF A NEW MACHINERY OR PLANT SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31 ST MARCH, 2002 BY AN A SSESSEE, WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE SAID PROVISION DOES NOT STATE THAT THE SETTING UP OF A NEW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INSTALLED UPTO 31ST MARCH, 2002 SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO THE ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. THEREFORE, THE CONTENTION THAT THE SETTING UP OF A WINDMILL HAS NOTHING TO DO WITH THE POWER INDUSTRY, NAMELY, MANUFACTURE OF OIL SEEDS ETC. IS TOTALLY N OT GERMANE TO THE SPECIFIC PROVISION CONTAINED IN S.32(1)(IIA) OF THE ACT. IN FACT IN ALL THE THREE DECISION CITED BY AR OF THE APPELLANT CLEARLY SHOWS THAT IN ALL THE THREE CASES WINDMILLS HAVE BEEN INSTALLED FOR CAPTIVE CONSUMPTION. APPELLANT HAS ALSO SATISFIED ALL THE CONDITION OF SECTION 32(1)(IIA). THEREFORE RESPECTFULLY FOLLOWING THE VARIOUS DECISION OF MADRAS HIGH COURT (SUPRA), I HOLD THAT APPELLANT IS ENTITLED FOR ADDITIONAL DEPRECIATION CLAIMED ON WINDMILL U/S.32(1)(IIA). HENCE, DISALLOWANCE OF ADDITION DEPRECIATION ON NEW WINDMILL OF RS.34,14,075/ - IS HEREBY ORDERED TO BE DELETED. AGGRIEVED WITH THE ORDER OF LD. CIT (A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS: - ITA 364 - 201 2 3 1 ) THE LEARNED CIT (A) - I, RAJKOT, ERRED IN LAW AND ON FACTS IN DELETING THE ADDITIONAL DEPRECIATION CLAIM OF RS.34,14,075/ - U/S.32(1)(IIA) OF THE ACT ON WINDMILL MADE BY THE AO. 4. AT THE TIME OF HEARING, THE LD. DR POINTED OUT THAT ASSESSEE IS PRODUCING AN ELECTRICITY WHICH IS NOT AN ARTICLE OR THING. AS A GAINST THIS, COUNSEL OF THE ASSESSEE POINTED OUT THAT IN THE IMPUGNED ORDER, THE LD. CIT (A) RELIED ON THREE DECISIONS WHEREIN ON SAME FACTS AND CIRCUMSTANCES, ADDITIONAL DEPRECIATION CLAIM ON WINDMILL IS ALLOWED THEREFORE, VIEW TAKEN BY LD. CIT (A) BE UPH ELD. HE FURTHER SUBMITTED THAT IN RESPECT OF EXPENSES IN STORE CAPACITY ALSO THE ADDITIONAL DEPRECIATION IS ALLOWABLE AS PER CIRCULAR NO.3/2006, DATED 27 - 2 - 2006 . 5. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. I T IS PERTINENT TO NOTE THAT VIEW TAKEN BY LD. CIT (A) IN THE IMPUGNED ORDER ALLOWING ADDITIONAL DEPRECIATION U/S.32(1)(IIA) IS AS PER RATIO LAID DOWN BY VARIOUS DECISIONS OF HONBLE MADRAS HIGH COURT. IN ALL THESE JUDGMENTS, THE FACTS AND CIRCUMSTANCES A RE SAME AND IT WAS HELD THAT ADDITIONAL DEPRECATION CLAIM ON WINDMILL IS ALLOWABLE. NO CONTRARY JUDGMENT IS CITED BEFORE US BY LD. DR. WE THEREFORE, INCLINED TO UPHELD THE VIEW TAKEN BY THE LD. CIT (A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. 7. THIS O RDER PRONOUNCED IN O PEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( . . D. K. SRIVASTAVA ) ( Y . . R / T. K. SHARMA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / ORDER DATE 12 - 0 7 - 2013. /RAJKOT NVA/ - RJO O / COPY OF ORDER FORWARDED TO: - 1 . . / APPELLANT - THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 1, RAJKOT. 2 . 2/. / RESPONDENT - M/S. ATUL AUTO LTD.,PLOT NO.1 40 4 SURVEY NO.86,NR. MICROWAVE TOWER, NH 8 - B, SHAPAR V ERAVAL, RAJKOT. 3 . I / CONCERNED CIT - I , RAJKOT. 4 . - / CIT (A) - I, RAJKOT. 5 . 2I , Y I , / DR, ITAT, RAJKOT 6 . R / GUARD FILE. / BY ORDER TRUE COPY. PRIVATE SECRETARY, I TAT, RAJKOT