DCIT 2(2)(1), MUMBAI V. KISHCO LTD, MUMBAI

ITA 387/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5642 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL LD DR
• Assessee Lawyers: PARESH SHAPARIA LD
• Keywords: Depreciation; Additional depreciation
• Section: 32; 263; 154

Judgement Text

ITA NO.387/MUM/2017 KISHCO LIMITED ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.387/MUM/2017 ( ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2(2)(1) ROOM NO.545 AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 VS. KISHCO LIMITED PLOT NO.54EFGH BEHIND 53/54 GOVERNMENT INDUSTRIAL ESTATE CHARKOP, KANDIVAL (E) MUMBAI-400 067 ! PAN/GIR NO. AAACK-2894-K ( ' APPELLANT ) : ( #$ ' RESPONDENT ) A SSESSEE BY : PARESH SHAPARIA, LD.AR RE VENUE BY : RAJAT MITTAL, LD. DR %& DATE OF HEARING : 20/06/2018 '() & / DATE OF PRONOUNCEMENT : 04/07/2018 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-5 [CIT(A)], MUMBAI, APPEAL NO. IT-212/15-16/141/16-17 DATED 29/09/2016 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE ON ACCOUNT OF ASSESSEES ITA NO.387/MUM/2017 KISHCO LIMITED ASSESSMENT YEAR-2009-10 2 ADDITIONAL DEPRECIATION CLAIM AGAINST WINDMILL . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ADDL. COMMISSIONER OF INCOME TAX- RANGE 2(2), MUMBAI [AO] ON 27/12/2011 DETERMINING THE LOSS AT RS.69.76 LACS. THE SAID ASSESSMENT ORDER HAS SUBSEQ UENTLY BEEN RECTIFIED U/S 154 VIDE ORDER DATED 13/03/2015 WHEREIN, INTER-ALIA, ADDITIONAL DEPRECIATION OF RS.170.15 LACS AS CLAIME D BY THE ASSESSEE AGAINST WINDMILL HAS BEEN DISALLOWED AND THE SAME HAS CONVERTED THE DETERMINED LOSS TO PROFIT OF RS. 118.21 LACS. THE A DDITION HAS BEEN MADE KEEPING IN VIEW THE FACT THAT ADDITIONAL DEPRE CIATION AGAINST WINDMILL WAS AVAILABLE ONLY FROM AY 2013-14 IN TERMS OF FINA NCE ACT, 2012. THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE A SSESSEE BY FOLLOWING THE DECISION OF THIS TRIBUNAL RENDERED IN VINOD KUMAR JAIN VS. ACIT [ITA NO. 916/MUM/2015 DATED 29/06/2016] WHICH , IN TURN HAS PLACED RELIANCE ON THE JUDGMENTS OF HONBLE MADRAS HIGH COURT RENDE RED IN ATLAS EXPORT ENTERPRISE [373 ITR 414] & THE DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN DIAMINES AND CHEMICALS LIMITED [42 TAXMANN.COM 193] . AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. DURING THE IMPUGNED AY, THE ASSESSEE WAS ENGAGED IN THE BUSINE SS OF MANUFACTURING OF CUTLERY & KITCHENWARE ITEMS. 2. THE LD. DEPARTMENTAL REPRESENTATIVE [DR], SH. RAJAT MITTAL SUBMITTED THAT THE ADDITIONAL DEPRECIATION WAS AVAI LABLE TO THE ASSESSEE ONLY WITH EFFECT FROM AY 2013-14 IN TERMS OF AMENDM ENT MADE BY FINANCE ACT, 2012. PER CONTRA, LD. AUTHORIZED REPRE SENTATIVE FOR ASSESSEE [AR], SH. PARESH SHAPARIA, SUPPORTED THE VIEW TAKEN BY LD. FIRST APPELLATE AUTHORITY BY DRAWING OUR ATTENTION TO THE SUBSEQUENT ITA NO.387/MUM/2017 KISHCO LIMITED ASSESSMENT YEAR-2009-10 3 JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN CIT VS. R.B.SETH, SHRIRAM NARSINGDAS [ITA NO. 21 & 22 OF 2011 DATED 1 8/07/2017]. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY LD. AR, WE FIN D THAT AS OF NOW THE ISSUE STOOD SQUARELY COVERED IN ASSESSEES FAVOR BY THE SUBSEQUENT CITED JUDGMENT OF HONBLE BOMBAY HIGH COURT WHEREIN HONBLE COURT, AFTER CONSIDERING THE CATENA OF JUDGMENT, CONCLUDED THE MATTER IN THE FOLLOWING MANNER:- 8. FOR PROPER APPRECIATION OF THE CONTROVERSY, IT W OULD BE USEFUL TO REPRODUCE SECTION 32(1)(IIA) OF THE ACT WHICH AT THE RELEVANT TIME READS AS UNDER:- 'SECTION 32 (1) IN RESPECT OF DEPRECIATION OF- (I) BUILDINGS, MACHINERY, PLANT OR.............. (II) ....................... OWNED, WHOLLY OR PARTLY BY THE ASSESSEE AND USED FO R THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SH ALL BE ALLOWED:- (I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTA GE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED; (II) IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PERCE NTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED; PROVIDED ................ (IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OT HER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31S T DAY OF MARCH, 2002, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM EQUAL TO FIFTEEN PE R CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTI ON UNDER CLAUSE(II): PROVIDED........................................... ..............' 9. AT THE VERY OUT SET MR. DEWANI, LEARNED COUNSEL FOR THE RESPONDENT- ASSESSEE POINTS OUT THAT THE S.L.P. CC NOS. 17111-17112/2010 FROM THE ORDER DATED 01.09.2009 FILED BY THE REVENUE AGAINST THE DECISIO N OF THE MADRAS HIGH COURT IN HI TECH ARAI LTD. (SUPRA) HAD BEEN DISMISSED BY THE APEX COURT ON 16. 12.2010. THUS HE SUBMITS THAT THE ISSUE NOW ON MERITS STANDS CONC LUDED IN FAVOUR OF THE RESPONDENT- ASSESSEE AS THE ENTIRE EXERCISE BY THE COMMISSIONER OF INCOME TAX IN PASSING THE ORDER DATED 9.7.2010 IN EXERCISE OF HIS POWERS UNDER SECTION 263 OF THE ACT WAS ONLY BECAUSE THE ORDER OF MADRAS HIGH COURT IN HI TECH ARAI LTD. (SUPRA) IS PENDING BEFORE SUPREME COURT. 10. MR. PARCHURE, LEARNED COUNSEL APPEARING FOR THE REVENUE IN SUPPORT OF THE APPEAL SUBMITS THAT ON PLAIN READING OF SECTION 32( 1)(IIA) OF THE ACT AS IN FORCE AT THE RELEVANT TIME, THE RESPONDENT- ASSESSEE IS NOT ENTI TLED TO ADDITIONAL DEPRECIATION AS THE WORDS 'IN THE BUSINESS OF GENERATION OR GENERAT ION AND DISTRIBUTION' CAME TO BE ADDED ONLY SUBSEQUENTLY WITH EFFECT FROM 2012. THIS ITSELF WOULD INDICATE THAT PRIOR TO ITA NO.387/MUM/2017 KISHCO LIMITED ASSESSMENT YEAR-2009-10 4 2012, THE RESPONDENT- ASSESSEE WOULD NOT BE ENTITLE D TO ADDITIONAL DEPRECIATION ON THE ACQUISITION AND INSTALLATION OF WINDMILLS. 11. WE NOTE THAT THE VIEW OF THE MADRAS HIGH COURT IN HI TECH ARAI LTD. (SUPRA), HAS BEEN CONCURRD WITH BY KARNATAKA HIGH COURT IN CIT .VS. THE HUTTI GOLD MINES CO. LTD. (INCOME TAX APPEAL NO.8 OF 2014 DECIDED ON 16.09.20 14) AND THE GUJARAT HIGH COURT IN COMMISSIONER OF INCOME TAX .VS. DIAMINES AND CHEMIC ALS LTD. - (2014) 109 DTR 0062 . WE NOTE THAT THE MADRAS HIGH COURT IN HI TECH ARAI LIMITED (SUPRA) ON AN ANALYSIS OF SECTION 32(1)(IIA) OF THE ACT AS EXISTING BEFORE 2012 HAS HELD THAT WHERE THE PLANT AND MACHINERY (INCLUDING A WINDMILL) HAS BEEN ACQUIRED AND INSTALLED AFTER THE CUT OFF DATE 31.03.2002, WO ULD SATISFY THE REQUIREMENT OF SECTION 32(1)(IIA) OF THE ACT OF SETTING UP A NEW M ACHINERY OR PLANT BY AN ASSESSEE WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACT URE OR PRODUCTION OF ANY ARTICLE OR THING. IT IS NOT NECESSARY THAT THE SETT ING UP OF WINDMILLS ACQUIRED OR INSTALLED ON OR BEFORE 31.03.2002 SHOULD HAVE ANY O PERATIONAL CONNECTIVITY TO THE ARTICLE OR THING WHICH HAS ALREADY BEEN MANUFACTURE D BY THE ASSESSEE. 12. IN THE PRESENT CASE, IT IS NOT DISPUTED BY THE REVENUE THAT THE RESPONDENT- ASSESSEE WAS ENGAGED IN THE MANUFACTURE/PROCESSING OF IRON ORE. THUS THE REQUIREMENTS OF THE SECTION 32(1)(IIA) OF THE ACT A RE COMPLIED WITH BY THE RESPONDENT- ASSESSEE. IN SPITE OF BEING SPECIFICALL Y ASKED, MR. PARCHURE, LEARNED COUNSEL APPEARING FOR THE REVENUE WAS NOT ABLE TO D ISTINGUISH OR POINT OUT AS TO WHY THE DECISIONS RENDERED BY THE MADRAS HIGH COURT IN HI TECH ARAI LTD. (SUPRA), KARNATAKA HIGH COURT IN THE HUTTI GOLD MINES CO.LTD. (SUPRA) AND GUJARAT HIGH COURT IN DIAMINES AND CHEMICALS LTD. (SUPRA) SHOULD BE DEPARTED FROM BY US. HOWEVER, ALL THAT MR. PARCHURE STATES IS THAT PRIOR TO 2012 THE ACQUISITION AND INSTALLATION OF A PLANT FOR GENERATION OF POWER WOU LD NOT BE ENTITLED TO THE BENEFIT OF WINDMILLS. THIS DOES NOT APPEAL TO US. IN FACT THE BARE READING OF THE PROVISIONS AS HELD BY THE MADRAS HIGH COURT THE ONLY REQUIREMENT UNDER SECTION 32(1)(IIA) OF THE ACT IS THAT THE ASSESSEE SHOULD BE ENGAGED IN THE B USINESS OF MANUFACTURE OR PRODUCTION OF ARTICLE OR THING, TO CLAIM ADDITIONAL DEPRECIATION ON INSTALLING OF PLANT OR MACHINERY ON OR AFTER THE CUT OFF DATE I.E. 31.03.2 002. THE SETTING UP OF NEW PLANT AND OR MACHINERY NEED NOT HAVE THE OPERATIONAL CONN ECTIVITY TO THE ARTICLE OR THING WHICH HAS BEEN MANUFACTURED BY THE ASSESSEE. THE FU RTHER CONTENTION ON BEHALF OF THE APPELLANT-REVENUE IS THAT THE RESPONDENT ASSE SSEE IS NOT IN THE BUSINESS OF GENERATION OF POWER AND, THEREFORE, NOT ENTITLED TO THE BENEFIT OF ADDITIONAL DEPRECIATION. THIS SUBMISSION COMPLETELY OVERLOOKS THE ORDER OF THE ASSESSING OFFICER WHICH CLEARLY RECORDS THAT THE ASSESSEE IS IN THE BUSINESS OF WIND POWER ENERGY. THIS FACT IS NOT DISPUTED EITHER BY THE COM MISSIONER OF INCOME TAX OR THE TRIBUNAL. THEREFORE, THE QUESTION AS FRAMED THAT TH E WINDMILLS HAVE NO CONNECTION WITH THE BUSINESS ACTIVITY OF THE ASSESSEE IS FACTU ALLY INCORRECT. IN VIEW OF THE FACT THAT MADRAS, GUJARAT AND KARNATAKA HIGH COURTS HAVE TAKEN A VIEW THAT ADDITIONAL DEPRECIATION ON WINDMILLS ACQUIRED AND INSTALLED PR IOR TO 31.03.2002 IS AVAILABLE UNDER SECTION 32(1)(IIA) OF THE ACT. ALL THAT IS RE QUIRED FOR ALLOWING ADDITIONAL DEPRECIATION IS THAT THE ASSESSEE MUST BE ENGAGED I N THE MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, AND SUCH AN ASSESSEE WOULD ON THE SETTING UP OF A NEW MACHINERY OR PLANT WOULD BE ENTITLED TO ADDITIONAL DEPRECIATION ON THE NEW PLANT AND OR MACHINERY UNDER SECTION 32(1)(IIA) OF THE ACT. T HERE IS NO REQUIREMENT IN SECTION 32(1)(IIA) OF THE ACT THAT ADDITIONAL DEPRECIATION ON THE NEW PLANT OR MACHINERY WOULD BE AVAILABLE ONLY IF THE PLANT OR MACHINERY HAS SOM E NEXUS/CONNECTION WITH THE ITA NO.387/MUM/2017 KISHCO LIMITED ASSESSMENT YEAR-2009-10 5 ARTICLE OR THING BEING MANUFACTURED BY THE RESPONDE NT-ASSESSEE. TO ACCEPT THE REVENUE'S CONTENTION WOULD REQUIRE READING WORDS IN TO SECTION 32(1)(IIA) OF THE ACT WHICH IS NOT PERMISSIBLE. 13. THEREFORE, QUESTION NO.(I) IS ANSWERED IN THE A FFIRMATIVE I.E. IN FAVOUR OF THE RESPONDENT-ASSESSEE AND AGAINST THE APPELLANT- REVE NUE. THE REVENUE HAS NOT DISPUTED THE FACT THAT THE WINDMILL HAS BEEN INSTALLED BY THE ASSESSEE DURING IMPUGNED AY. FURTH ER, NO CONTRARY JUDGMENT HAS BEEN BROUGHT ON RECORD. EVIDENTLY, THE ASSESSEE HAS FULFILLED THE CONDITIONS AS PRESCRIBED U/S 32(1)(II A) TO CLAIM ADDITIONAL DEPRECIATION IN TERMS OF THE ABOVE OBSERVATION OF H ONBLE COURT. HENCE, RESPECTFULLY FOLLOWING THE BINDING JUDICIAL PRECEDE NT OF OUR JURISDICTIONAL HIGH COURT, WE DISMISS REVENUES APPEAL. 4. RESULTANTLY, THE REVENUES APPEAL STAND DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH JULY , 2018. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER *% MUMBAI; DATED : 04.07.2018. SR.PS:-THIRUMALESH ! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. + / THE CIT(A) 4. + / CIT CONCERNED 5. , #&- -) *% / DR, ITAT, MUMBAI 6. ./0 % GUARD FILE ' / BY ORDER, # '$% (DY./ASSTT.REGISTRAR) *% / ITAT, MUMBAI