ACIT 27(3), NAVI MUMBAI V. VIJAYEE INDUSTRIAL MANUFACTURING CO, MUMBAI

ITA 3823/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8462 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 22-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: JITENDRA SINGH; NEHA PARANJAPE
• Keywords: Depreciation; Wrong claim
• Section: 143(3); 142(1); 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. 3823 / MUM/201 5 ( / ASSESSMENT YEAR: 20 1 0 - 11 ) ASST. COMMISSION ER OF INCOME TAX - 2 7(3), 4 TH FLOOR, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI - 400703 / VS. M/S VIJAYEE INDUSTRIAL MANUFACTURING CO.11, SATYAM 318, LINKING ROAD , KHAR (W), MUMBAI - 400052 ./ ./ PAN : AAAFV0701F ( / APP LICANT ) : ( / RESPONDENT ) / APP LICANT BY : SHRI T A KHAN /RESPONDENT BY : SHRI JITENDRA SINGH AND MS.NEHA PARANJAPE / DATE OF HEARING : 2 5 .1 . 2017 / DATE OF PRO NOUNCEMENT : 2 . 2 .2017 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE REVENUE CHALLENGING THE ORDER DATED 31.3.2015 PASSED BY THE LD.CIT(A) - 25 , MUMBAI AGAINST DELETION OF DISALLOWANCE OF DEPRECIATION MADE BY THE AO IN RESPE CT OF PURCHASE AND COMMISSIONED OF THE WIN D MILL IN THE ASSESSMENT FRAMED VIDE ORDER DATED 11.03.2013 . 2 ITA NO. 3823 /MUM201 5 2. THE ONLY GROUND RAISED BY THE REVENUE IN THE GROUND IS AGAINST THE DELETION OF DISALLOWANCE ON ACCOUNT OF DEPRECIATION BY LD.CIT(A) AS MADE BY THE AO OF RS.45,40,769/ - . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL LOSS OF RS.21,35,037/ - . THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES UNDER SECTION 14 3(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS PURCHASED A WIND MILL FOR A CONSIDERATION OF RS.1,13,51,923/ - AT SATARA, MAHARASHTRA AND CLAIMED DEPRECIATION OF RS.90,81,538/ - AT THE RATE OF 20%. ACCORDING TO THE ASSESSEE PUT THE WIND MILL WAS PUT TO COMMISSIONING AND USE ON 30.9.2009 , WHEREAS AS PER THE AO WIND MILL WAS COMMISSIONED AFTER 30.9.2009. IN ORDER TO VERI F Y THE FACT , THE AO ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO THE DIRECTOR OPERATION OF MAHARASHTRA STATE DISTRIBUTION COMPANY LIMITED (MSEDCL) BUT NO REPLY WAS RECEIVED . HOWEVER, THE SUPERINTENDING ENGINEER, O&M, CIRCLE, MSEDCL, SATARA SUBMITTED INFORMATION VIDE LETTER DARED 28.2.2013 . THE AO RECORDED HIS OBSERVATIONS IN PARA 3.4 OF THE ASSESSMENT ORDER AND CAME TO THE CONCLUSION THAT THE WIND MILL WAS COMMISSIONED AFTER 30.9.2009 AND THEREFORE THE ASSESSEE WAS NOT ENTITLED FOR FULL DEPRECIATION AND ACCORDINGLY RESTRICTED THE SAME TO 40% OF THE COST OF PURCHASE. FINALLY, THE AO PASSED ASSESSMENT ORDER UNDER SECTION 143(3) DATED 11.3.2013 BY MAKING VARIOUS ADDITIONS INCLUDING ADDITION ON ACCOUNT OF THE 3 ITA NO. 3823 /MUM201 5 WRONG CLAIM ON DEPRECIATION OF RS.45,40,769/ - BY ASSESSING THE INCOME OF THE ASSE SSEE AT RS.26,90,200/ - . AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE PREFERRED AND APPEAL BEFORE THE LD.CIT(A) WHO ALSO AFTER CONSIDERING TH E S UBMI SS IONS OF THE ASSESSEE DISMISSED THE APPEAL OF THE ASSESSEE AS UNDER : 2.3 I HAVE CONSIDERED THE FAC TS IN THE INSTANT CASE, ASSESSMENT ORDER AND T HE SUBMISSIONS MADE BY APPELLANT CAREFULLY. THE POINT IN DISPUTE IS WHEN THE IMPUGNE D WIND MILL IS SAID TO BE PUT TO USE BY THE APPELLANT. AS PER THE AO THE SAID WIND MILL HAS COMMENCED PRODUCTION ONLY IN OCTO BER 2009 WHEREAS APPELLANT STATED THAT IT STARTED ON 30.09.2009. IT IS TO BE NOTED THAT MSEDCL VIDE ITS CERTIFICATE DATED 08.1 10 .2009 H AD CONFIRMED COMMISSIONING OF THE MACHINE ON 30.09.2009 IN THE PRESENCE OF E XECUTI VE ENGINEER, TESTING DIVISION, SATARA A ND EXECUTIVE ENGINEER, VALUJ. THE SAID CERTIFICATE IS ISSUED BY GOVERNMENT AGENCY AND THERE CANNOT BE ANY GROUND TO DOUBT THE CORRECTNE SS AND COMPLETENESS OF THE SAID CERTIFICATE IN THE ABSENCE OF ANY COGENT MATERIAL BROUGHT ON RECORD BY AO PROVING OTHERWI SE. EVEN THE FIRST CREDIT REPORT CERTIFIED BY THE .JUNI OR MANAGER, WIND MILL, STRC COVERS THE PERIOD FROM 30.09.2009 TO 03.11.2009. FURTHE R CLEARANCE FOR COMMISSIONING WAS ALSO GRANTED BY MEDA, YET ANOTHER GOVERNMENT AGENC Y ON 29.09.2009 ITSELF. 2.4 ON T HE BASIS OF FACTUAL CERTIFICATIONS BY VARIOUS INDEPENDENT GOVERNMENT AGENCIES AS STATED ABOVE, I INCLINE TO AGREE WITH THE DATE OF COMMENCEMENT OF PRODUCTION OF ELECTRICITY AS 30.09.2009. AS THE IMPUGNED WIND MILL WAS PUT TO USE FOR MORE THAN 1 80 DAYS IN G IVEN FINANCIAL YEAR, ASSESSEE IS ENTITLED TO CLAIM FULL DEPRECIATION @ 80% OF ITS ORIGINAL COST AS AGAINST RESTRICTED DEPRECIATION @ 40% ALLOWED BY AO. THIS GROUND OF APPEALS IS ALLOWED. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL PLACED BEFORE THIS TRIBUNAL INCLUDING THE ORDERS OF AUTHORITIES BELOW. THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT BOTH THE AUTHORITIES BELOW HAVE NOT APPRECIATED THE FACTS AVAILABLE ON RECORD WHICH CORROBORATE D THE FACT OF WIND MILL HAVIN G BEEN COMMISSIONED ON 4 ITA NO. 3823 /MUM201 5 30.9.2009. THE LD.COUNSEL FOR THE ASSESSEE WHILE REFERRING TO LETTER NO.SE/STRC/TWM/NO 12444 DATED 8.10.2009 ISSUED BY MSEDCL CIRCLE, SATARA SUBMITTED THAT THE DATE OF COMMISSION WAS 30.9.2009 . THE LD. COUNSEL ALSO DREW OUR ATTENTI ON TO LETTER NO.SE/STRC/ACCTT/ WM/03866 DATED 28.2.2013 ISSUED BY MSEDCL CIRCLE - SATARA ADDRESS TO DCIT IN RESPONSE TO NOTICE ISSUED UNDER SECTION 133(6), WHEREIN THE DA T E OF COMMISSION ING WAS CLEARLY MENTIONED AS 30.9.2009 WHICH FOR THE SAKE OF READY RE FERENCE IS EXTRACTED BELOW: MAHARASHTRA STATE ELECT. DIST.CO.LTD. SATARA CIRCLE ADMINISTRATIVE BLDG.KRISHNA - NAGAR,SATARA - 415003 MAHAVITARAN 244640(0) 2460 15(P) FAX [phone] E - MAIL - SESATARA@ MAHADISCOM.IN WEBSITE WWW.MAHADISCOM.IN ----------------------------------------------------------------------------------- REF. SE/STRC/ACCTT/WM/ 03866 DATE: 28 FEB 2013 TO, THE DEPUTY COMMISSIONER OF INCOME TAX - 22(2), 4TH FLO OR, TOWER NO.6, WASHI RAILWAY STATION BLDG. COMPLEX, VASHI, NEW MUMBAI - 400703. TEI.NO.022 - 27812229 SUB: - INFORMATION IN R/O M/S VIJAY INDUSTRIAL MANUFACTURING COMPANY UNDER IT ACT 1961. REF: - CHIEF ENGINEER (COMM) MUMBAI'S L.NO. COMM/CP/ WIND/05077, DT. 15.02.2013. SIR, THE INFORMATION AS DESIRED U/S 133(6) OF INCOME TAX ACT, 1961 IN R/O MLS VIJAYEE INDUSTRIAL MANUFACTURING COMPANY, 11, SATYAM, 318, LINKING ROAD, KHAR (W), MUMBAI AS UNDER. S.NO. S.NO.OF THE MACHINE LOCATION GAT NO. VILLAGE CAPACITY OF THE MACHINE DATE OF THE COMMISSIONING OF MACHINE 1 19535 J 30 209 BHOSARE, TAL.KHATAV, DIST.SATARA 1 X 225 KW 30.9.2009 5 ITA NO. 3823 /MUM201 5 THE ABOVE MAC H INE WAS COMMISSIONED ON 30.09.2009 AS PER THE CLEARANCE FOR COMMISSIONING FROM MEDA VIDE L.NO.5119 DT.29.9.2009 AND PERMISSION FROM ELECTRICAL INS PECTOR DT. 30.09.2009. THE LETTERS IN THIS RESPECT IS ENCLOSED. ENERGY PURCHASE AGREEMENT WAS CARRIED OUT AT COR P ORATE OFFICE FOR ABOVE MACHINE ON 25.11.2009 IN THE PRESENCE OF DIRECTOR (OPE RATION) AND REPRESENTATIVE FROM VIJAYEE INDUSTRIAL MANUFACTURING CO FOR THE SPAN OF 13 YEARS FROM THE DATE OF COMMISSIONING. THE FIRST CREDIT REPORT WAS PREPARED FOR THE PERIO D OF 30 . 09 . 2009 TO 03.11,2009 AND REGULARLY THE DEVELOPERS REPRESENTATIVE COL LECTS THE CREDIT REPORTS AND SUBMITS THE INVOICE FOR SALE OF HIS ENERGY TO MSEDCL. ACCORDINGLY, AMOUNT IS RELEASED, THE XEROX COPY OF AMOUNT PAID AGAINST INVOICES AND CREDIT REPORTS IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE, THANKING YOU, YOURS FAI THFULLY, SD (PRABHAKAR S.NIRMALE) S UPERINTENDING ENGINEER (STRC) , SATARA COPY S.W.RS.TO : - 1) THE DIRECTOR (OPERATIONS) MSEDCL. CORPORATE OFFICE, MUMBAI 2) THE EXECUTIVE DIRECTOR (COMM) MSEDCL. CORPORATE OFFICE, MUMBAI 3) THE CHIEF ENGINEER ( COMM) MSEDCL. CORPORATE OFFICE.MUMBAI COPY TO : - THE ASSTT,MANAGER (F&A) MSEDCL. CIRCLE OFFICE, SA T ARA FINALLY, THE LD.AR DREW OUR ATTENTION TO THE DETAILS OF BILLING WHICH STARTED FROM SEPTEMBER, 1999. FINALLY THE LD.AR FILED BEFORE THE TRIBUNAL CO PIES JOINT METER READING ((ENERGY INJECTION REPORT) DULY SIGNED BY THE AE , MSEDCL , SUB - DIVISION AUNDH AND T S WIND POWER DEVELOPER WHICH IS EXTRACTED BELOW: - 6 ITA NO. 3823 /MUM201 5 BILLING DETAILS METER TYPE ACCOUNT METER READ BILLING PERI OD 00049341 07 S+ SIG N ET 30.9.200918:08:13 CURRENT KYA Q1 KYA Q3 MAXIM UM DEMAND TIME STAMP CUMULATIVE DEMAND MAXIM UM DEMAND TIME STAMP CUMULATIVE DEMAND A 0.0300 23/09/2009 00:26 0.4800 0.0100 24/09/2009 0 5 : 57 0.0 5 00 B 0.0400 24/09/2009 16:25 0.7000 0.0100 23/09/2009 15 : 10 0.0 7 00 C 0.0200 29/09/2009 09:27 0.5400 0.0100 24/09/2009 11:55 0. 10 00 D 0.0400 27/09/2009 20:28 0.5200 0.0 0 00 00 / 00 / 0000 00: 00 0.0 0 00 0.0400 24/09/2009 16:25 0.0100 24/09/2009 0 5 : 57 RATE A RATE B RATE C RATE D TOTAL KWH DELIVERED 29.338480 33.958735 10.523400 20.306420 94.127035 KVAH Q1 29.492885 34.179135 10.587470 20.347230 94.606720 KVARHQ4 3.586030 3.475400 0.931985 2.128945 10.122360 KVARHQ4 0.714330 0.891035 0.313535 0.251510 2.170410 AVGPF 0.998 0.994 0.994 0.998 0.997 RATE A RATE B RA TE C RATE D TOTAL KWH RECEIVED 0.111590 0.222900 0.160350 0.039445 0.534285 KVAH Q3 0.202880 0.340000 0.200455 0.062640 0.805975 KVARHQ3 0.139575 0.205790 0.081540 0.038910 0.465815 KVARHQ2 0.078165 0.168510 0.090330 0.02 8355 0.365360 AVGPF 0.375 0.436 0.395 0.556 0.424 RATE A RATE B RATE C RATE D TOTAL KWH DEL+REC 29.450070 34.181635 10.683750 20.345865 94.661320 ON PERUSAL OF THE SAME, IT IS APPARENT THAT THE WIND MILL HAS BEEN COMMISS IONED ON 30.9.2009 AND THEREFORE THE OBSERVATIONS OF THE AO THAT WIND MILL WAS NOT COMMISSIONED/INSTALLED ON 30.9.2009 WAS CONTRARY 7 ITA NO. 3823 /MUM201 5 TO THE FACT ON RECORD S . SIMILARLY, THE FAA HAS ALSO FAILED TO APPRECIATE THE FACTS IN CORRECT PERSPECTIVE. UNDER THESE CI RCUMSTANCES, WE ARE NOT IN AGREE MENT WITH FINDINGS OF LD.CIT(A) AS FACTS ON RECORDS SPEAK CONTRARY. WE ARE , THER EFORE, INCLINED TO SET ASIDE THE ORDER OF LD.CIT(A) AND DIRECT THE AO TO ALLOW 80% DEPRECIATION ON WIND MILL . 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 2.2 .2017 . S D SD ( MAHAVIR SINGH ) ( RAJESH KUMAR) / J UD ICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 2.2 . 201 7 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI