ACIT, New Delhi V. M/s. Indo European Bareweries Ltd., Aurangabad

ITA 3932/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6598 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA; SOMIL AGARWA
• Keywords: Depreciation; Wrong claim
• Section: 143(3); 142(1); 133(6); 143(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A. NO. 3932/DEL/2016 A.Y. : 2008-09 ACIT, CIRCLE 12(1), NEW DELHI VS. M/S INDO EUROPEAN BAREWERIES LTD., B-74/2, WALUJ, MIDC, AURANGABAD-431136 (PAN: AAACI5228H) (ASSESSEE) (RESPONDENT) REVENUE BY : SH. AMIT KATOCH, SR. DR. ASSESSEE BY : SH. SOMIL AGARWA;. ADV. & DR. RAKESH GUPTA, ADV. ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMPU GNED ORDER DATED 05.4.2016 OF THE LD. CIT(A)-4, NEW DELHI R ELEVANT TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED IN THE APPEAL READ AS UNDER:- I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION 2 MADE OF RS. 81,67,860/- ON ACCOUNT OF BOGUS CLAIM OF DEPRECIATION. II) THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME OR DURING THE HEARING OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE E- FILED A DIGITALLY SIGNED RETURN OF INCOME ON 26.9.2008 RETUR NING INCOME OF RS. 81,29,459/-. THE RETURN OF THE ASSESSE E WAS PROCESSED UNDER THE PROVISIONS OF SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) ON 06.8.2009 WHEREIN, THE RETURNED INCOME WAS ACCEPTED. FROM THE DETAILS FIL ED DURING ASSESSMENT PROCEEDINGS AO OBSERVED THAT THE ASSESSE E IS THE AUTHORIZED BOTTLER OF SOFT DRINKS FOR M/S COCA COLA INDIA PRIVATE LIMITED. THE ASSESSING OFFICER ISSUED NOTICE U/S. 1 43(2) OF THE ACT ON 6.8.2009 WHICH WAS DULY SERVED UPON THE ASSES SEE ON 12.8.2009. FURTHER, NOTICE U/S. 142(1) OF THE ACT WERE ISSUED ON 1.9.2010, 11.10.2010 AND 8.12.2010 AND WERE ALSO SERV ED ON THE ASSESSEE BY SPEED POST. IN RESPONSE TO THE SAME THE AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS ALONGWI TH 3 MANAGER (FINANCE) OF THE ASSESSEE COMPANY AND FILED SUBMISSION CALLED FOR. THE AO OBSERVED THAT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ASSESSEE COMPAN Y CLAIMED DEPRECIATION TO THE TUNE OF RS. 81,67,860/- @ 100% OF THE COST OF ASSET DESCRIBED AS ETP SYSTEM STATED TO BE SUPPLIED TO THE ASSESSEE BY M/S PRANEET ENVIROQUIPS PRIVATE LIMITED HAVING ADDRESS AT D-169, INDUSTRIAL AREA, PH ASE-7, MOHALI (PB) 160055. THE AO CONDUCTED ENQUIRIES VI DE LETTER ISSUED U/S. 133(6) OF THE ACT FROM THE SAID M/S PRAN EET ENVIROQUIPS PRIVATE LIMITED AND ASKED THE SAID COMP ANY TO SUBMIT DETAILS IN RESPECT OF THE SAID TRANSACTION. IN REPLY THEREOF, THE SAID COMPANY DENIED THE TRANSACTION OF SUPPLYING ANY EFFLUENT TREATMENT PLANT TO THE ASSESSEE. ON BEI NG CONFRONTED THE ASSESSEE EXPLAINED TO THE AO THAT TH E SAID EQUIPMENT WAS PURCHASED FROM ONE SH. NARENDER MAHIND RA OF DELHI AND WAS RECEIVED IN AURANGABAD ON 22.08.2007 W HO PROVIDED THE BILL OF M/S PRANEET ENVIROQUIPS PRIVAT E LIMITED. HOWEVER, ASSESSEE COULD NOT CONFIRM AS TO FROM WHERE THE SAID SHRI NARENDER MAHINDRA HAD PROCURED THE MATERIAL I. E. FROM M/S PRANEET ENVIROQUIPS PRIVATE LIMITED OR FROM SOM EWHERE ELSE. ASSESSEE ALSO EXPLAINED TO THE AO THAT IT HAD NO DIRECT 4 DEALING WITH M/S PRANEET ENVIROQUIPS PRIVATE LIMITE D, AND AS SUCH ASSESSEE WAS NOT IN A POSITION TO COMMENT ON T HE INVOICE SUPPLIED BY SAID SHRI NARENDER MAHINDRA. HOWEVER, T HE AO DID NOT ACCEPT THE SUBMISSIONS MADE BEFORE HIM. ACCORDIN G TO THE AO AS THE ASSESSEE FAILED TO SUBMIT ANY EVIDENCES I N THE FORM OF ANY PAYMENT HAVING BEEN MADE TO THE VENDOR TOWAR DS THIS PURCHASE AND HE DISALLOWED THE CLAIM OF DEPRECIATIO N OF THE ASSESSEE ON ETP SYSTEM OF RS. 81,67,860/- VIDE HIS ASSESSMENT ORDER DATED 15.12.2010 PASSED U/S. 143(3) OF THE ACT BY ASSESSING THE TOTAL INCOME AT RS. 162,97,320 /-. AGGRIEVED BY THE AFORESAID ASSESSMENT ORDER, ASSESS EE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNE D ORDER DATED 05.4.2016 HAS ALLOWED THE APPEAL OF THE ASSES SEE. AGAINST THE IMPUGNED ORDER DATED 05.4.2016 OF THE L D. CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, LD. SR. DR RELIED UPON TH E ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. HE SUBMITTED THAT ASSESSEE COMPANY CLAIMED DEPRECIATION TO THE TUNE OF RS. 81,67,860/- @ 100% OF THE COST OF ASSET DESCRIBED AS ETP SYSTEM STATED TO BE SU PPLIED TO THE 5 ASSESSEE BY M/S PRANEET ENVIROQUIPS PRIVATE LIMITED HAVING ADDRESS AT D-169, INDUSTRIAL AREA, PHASE-7, MOHALI ( PB) 160055. THE AO CONDUCTED ENQUIRIES VIDE LETTER ISS UED U/S. 133(6) FROM THE SAID M/S PRANEET ENVIROQUIPS PRIVAT E LIMITED AND ASKED THE SAID COMPANY TO SUBMIT DETAILS IN RE SPECT OF THE SAID TRANSACTION. IN REPLY THE SAID COMPANY DENIED THE TRANSACTION OF SUPPLYING ANY EFFLUENT TREATMENT PLA NT TO THE ASSESSEE. ON BEING CONFRONTED THE ASSESSEE EXPLAINE D TO THE AO THAT THE SAID EQUIPMENT WAS PURCHASED FROM ONE S H. NARENDER MAHINDRA OF DELHI AND WAS RECEIVED IN AURA NGABAD ON 22.08.2007 WHO PROVIDED THE BILL OF M/S PRANEET ENVIR OQUIPS PRIVATE LIMITED. HOWEVER, ASSESSEE COULD NOT CONFIR M AS TO FROM WHERE THE SAID SHRI NARENDER MAHINDRA HAD PROC URED THE MATERIAL I.E. FROM M/S PRANEET ENVIROQUIPS PRIVATE L IMITED OR FROM SOMEWHERE ELSE. HE FURTHER SUBMITTED THAT ASSES SEE ALSO EXPLAINED TO THE AO THAT IT HAD NO DIRECT DEALING W ITH M/S PRANEET ENVIROQUIPS PRIVATE LIMITED, AND AS SUCH AS SESSEE WAS NOT IN A POSITION TO COMMENT ON THE INVOICE SUPPLIE D BY THE SAID SHRI NARENDER MAHINDRA. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS MADE BEFORE HIM AND THEREFO RE, AO HAS OBSERVED THAT AS THE ASSESSEE FAILED TO SUBMIT ANY 6 EVIDENCES IN THE FORM OF ANY PAYMENT HAVING BEEN MA DE TO THE VENDOR TOWARDS THIS PURCHASE AND RIGHTLY DISALLOWED THE CLAIM OF DEPRECIATION OF THE ASSESSEE ON ETP SYSTEM OF RS. 81,67,860/-, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. THEREFORE, HE REQUESTED THAT THE APPEAL FILED BY THE REVENUE MAY BE ALLOWED BY CANCELLING THE ORDER PASSED BY TH E LD. CIT(A) AND RESTORE THE ASSESSMENT ORDER PASSED BY T HE ASSESSING OFFICER. 5. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE REL IED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS FILED THE WRITTEN SUBMISSIONS BEFORE THE LD. CIT(A) AND THE S AME MAY BE TREATED AS HIS ARGUMENTS BEFORE THIS BENCH. HE DRAW OUR ATTENTION TOWARDS THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHICH ARE AT PAGES 1-36D OF T HE PAPER BOOK FILED BEFORE THE BENCH WHICH CONTAINS TOTAL PA GES 1-77 IN WHICH HE HAS ATTACHED THE VARIOUS DOCUMENTARY EVIDE NCES SUPPORTING THE IMPUGNED ORDER AND REQUESTED TO UPHO LD THE ORDER OF THE LD. CIT(A) AND APPEAL OF THE REVENUE MA Y BE DISMISSED. 7 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHO RITIES AS WELL AS THE PAPER BOOK FILED BY THE ASSESSEE. WE FIND TH AT ASSESSEE CLAIMED 100% DEPRECIATION OF THE COST OF ASSET DESC RIBED AS EFFLUENT TREATMENT PLANT SYSTEM (IN SHORT 'ETP') PU RCHASED DURING THE ASSESSMENT YEAR UNDER CONSIDERATION WHIC H AMOUNTS TO RS. 81,67,860/-. THE AO DISALLOWED THE CLA IM OF THE ASSESSEE ON THE GROUND THAT ON QUERY MADE U/S 1 33(6) OF THE ACT M/S. PRANEET ENVIROQUIPS PVT. LTD. DID NOT CO NFIRM THE SUPPLY OF EFFLUENT TREATMENT PLANT TO THE APPELLANT . WHEN CONFRONTED THESE FACTS, ASSESSEE FILED VARIOUS EVIDE NCES WHICH WERE PLACED BY THE ASSESSEE DURING THE COURSE OF AS SESSMENT PROCEEDINGS BEFORE THE AO AND ALSO VARIOUS EVIDENCE S WHICH WERE NOT CONSIDERED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE EVIDENCES HAVE ALSO BEE N EXAMINED BY THE LD. CIT(A). ON BEING CONFRONTED BY THE ASSESSEE CONFIRMED TO THE AO THAT THE SAID EQUIPMEN T WAS PURCHASED FROM ONE SHRI NARENDER MAHINDRA OF DELHI, AND THE GOODS WERE RECEIVED ON 22.8.2007 IN AURANGABAD. WE FURTHER NOTE FROM THE ASSESSMENT ORDER THAT ASSESSEE STATED THAT IT WAS CONCERNED WITH THE MATERIAL RECEIVED ALONGWITH THE BILL OF 8 M/S PRANEET ENVIROQUIPS PRIVATE LIMITED. ASSESSEE ST ATED THAT SINCE THE BILL WAS OF M/S PRANEET ENVIROQUIPS PRIVA TE LIMITED AND WAS SUPPLIED BY MR. NARENDER MAHINDRA, AND THE MA TERIAL WAS RECEIVED IN GOOD CONDITION, THE ASSESSEE HAS NO REASON TO DOUBT THE VERACITY OF THE INVOICE. ON THE CONTRARY T HE AO ALSO STATED IN THE IMPUGNED ORDER THAT ASSESSEE FAILED T O SUBMIT ANY EVIDENCE TO SUBSTANTIATE THE FACT THAT ANY EQUI PMENT HAS REACHED THE ASSESSEE AT ALL ON THE DATE SO CLAIMED. WE FIND THAT LD. CIT(A) HAS EXAMINED THE BILL OF M/S PRANEET ENVIROQUIPS PRIVATE LIMITED WHICH DESCRIBES THE GOO DS AS A PART OF EFFLUENT TREATMENT PLANT. WE FURTHER NOTE THAT L D. CIT(A) ALSO EXAMINED AGREEMENT TO PURCHASE AND SALE ENTERE D INTO BETWEEN THE ASSESSEE AND MR. NARENDER MAHINDRA PROPR IETOR OF M/S MAHINDRA ENGINEERING CORPORATION, X-37, LOHAN MAN DI, NARAINA, NEW DELHI-LL0028, WHICH IS FOR PURCHASE OF PARTS OF EFFLUENT TREATMENT PLANT. THE COPY OF ANNEXURE A FOR MING PART OF THE AGREEMENT CONFIRMS THE AMOUNT OF RS.87,61,859/ - FOR VARIOUS PARTS TO BE PURCHASED WHICH SHOWS THAT THE SAID PARTY WAS REQUIRED TO SUPPLY THE MOST OF THE MATERIAL OF 'PRANEET MAKE'. THE PURCHASE ORDER ALSO DESCRIBES THE MATERIA L AND THE VALUE. PLANT'S PARTS WERE SENT FROM DELHI TO AURANG ABAD AS PER 9 LORRY RECEIPT NO-015282 DATED 18.08.2007 OF M/S DELH I M.P. FREIGHT CARRIERS WHICH WAS AGAIN GOT CONFIRMED BY T HE ASSESSEE ON 11.06.2011 FROM ONE MR. TANUJ JAIN PROPRIETOR OF D ELHI M.P FREIGHT CARRIERS I.E THE TRANSPORTERS, WHO CARRIED T HE MATERIAL FROM DELHI TO AURNGABAD PREMISES OF THE ASSESSEE CO MPANY. WE FURTHER NOTE THAT LD. CIT(A) HAS ALSO EXAMINED T HE RELEVANT PAGES OF MATERIAL INWARD REGISTER MAINTAINED BY THE ASSESSEE WHICH CONFIRMS THE RECEIPT OF INVOICE OF M/S PRANEE T ENVIROQUIPS PRIVATE LIMITED. IT IS SEEN FROM THE DE TAILS PLACED ON RECORD THAT ALL PAYMENT WERE MADE TO M/S MAHINDR A ENGINEERING CORPORATION THROUGH BANKING CHANNEL EXC EPT AN AMOUNT OF RS. 5,565/- IN CASH. ASSESSEE HAS ALSO PLAC ED A COPY OF THE DEATH CERTIFICATE OF MR. NARENDER MAHIN DRA WHO EXPIRED ON 07.10.2009 BEFORE THE LD. CIT(A). THUS, PAY MENT MADE TO M/S. MAHINDRA ENGINEERING CORPORATION FOR P URCHASE OF THE EQUIPMENTS CANNOT BE BRUSHED ASIDE. THIS FACT I S NOT DENIED THAT ASSESSEE'S COMPANY WAS ENGAGED IN THE B USINESS OF SOFT DRINK BOTTLING AND WAS USING THE EFFLUENT T REATMENT PLANT, FOR TREATMENT OF EFFLUENT GENERATED DURING TH E BOTTLING WORK OF M/S. COCA COLA INDIA PRIVATE LIMITED. IT WAS NOTED THAT BOTTLING PLANT OF THE ASSESSEE COMPANY WAS REQUIRED TO MEET 10 THE PARAMETERS OF THE POLLUTION CONTROL BOARD. A TE AM OF THE COCA COLA INDIA PVT. LTD. VISITED THE UNIT OF THE A SSESSEE AT AURANGABAD ON 18.12.2006 AND FOUND SOME DEFICIENCY I N THE PLANT INCLUDING ETP. IN ORDER TO MEET OUT THE DEFIC IENCY FIND OUT BY THE TECHNICAL TEAM OF COCA COLA, ASSESSEE WAS REQ UIRED TO RENOVATE ITS PLANT ON URGENT BASIS AND THEREFORE, T HE QUOTATIONS WERE CALLED. M/S MAHINDRA ENGINEERING CORPORATION W ERE THE LOWEST ONE AS SUCH THE ORDER WAS PLACED ON THEM BY THE ASSESSEE FOR SUPPLY OF SAID EQUIPMENTS. M/S MAHINDRA ENGINEERING CORPORATION SUPPLIED THE MATERIAL STATE D TO BE MANUFACTURED BY M/S PRANEET ENVIROQUIPS PRIVATE LIM ITED AS SUCH NO DOUBT AROSE TO THE ASSESSEE ON RECEIPT OF T HE BILL OF M/S PRANEET ENVIROQUIPS PRIVATE LIMITED. WE FURTHER NOTE THAT LD. CIT(A) HAS CAREFULLY CONSIDERED THE INSPECTION R EPORT OF MAHARASHTRA POLLUTION CONTROL BOARD DATED 05.10.2007 WHO VISITED THE FACTORY OF THE ASSESSEE COMPANY AT AURA NGABAD FROM TIME TO TIME AND THEIR REPORTS WHICH ARE RELAT ED TO INSPECTION OF EFFLUENT TREATMENT PLANT WHICH CONFIR MS THE OPERATION OF ETP(PLANT), AND OTHER OBSERVATION MADE ABOUT ETP PLANT. THIS CONFIRMS THE REPAIRS CARRIED OUT BY THE ASSESSEE IN ITS ETP PLANT. IT IS ALSO NOT OUT OF PLACE, TO MENT ION HERE THAT 11 ON 21.05.2007 WHEN THE PLANT WAS INSPECTED BY THE OFFICIALS OF THE MAHARASHTRA POLLUTION CONTROL BOARD THEY FOUND LEAKAGES IN PIPE LINES CARRYING EFFLUENT FROM ETP TO DISPOSAL S ITE. THEY HAVE SPECIFICALLY MENTIONED IN THEIR REPORT THAT ALL RES ULTED PIPES ARE REQUIRED TO BE CHANGED AND TO MEET THE OTHER ADVERS E OBSERVATIONS MENTIONED AND ASSESSEE COMPANY WAS DIR ECTED TO REMOVE THE SAME WITH IN A PERIOD OF 30 DAYS. THIS AL L CONFIRMED THAT ASSESSEE WAS TO GET REPAIRED ITS EFFLUENT TREA TMENT PLANT AS PER DIRECTIONS OF THE MAHARASHTRA POLLUTION CONT ROL BOARD. MERELY BECAUSE A BILL SUBMITTED BY THE ASSESSEE WAS BOGUS OR FABRICATED CANNOT NEGATE THE OTHER EVIDENCES SUCH A S THE INSPECTION CARRIED OUT AFTER REPAIR OF THE ETP PLAN T BY THE OFFICIALS OF THE MAHARASHTRA POLLUTION CONTROL BOAR D, CARRIAGE OF THE VARIOUS PARTS OF THE PLANT THROUGH TRANSPORTERS FROM DELHI TO AURANGABAD, PAYMENTS MADE BY THE ASSESSEE THROUG H BANKING CHANNEL TO M/S MAHINDRA ENGINEERING CORPORA TION ETC. THUS, LD. CIT(A) HAS RIGHTLY OBSERVED THAT REPAIRS W ERE CARRIED OUT IN THE ETP PLANT BY THE ASSESSEE AND THE SAME D ESERVES TO BE ALLOWED. HENCE, THE AO WAS RIGHTLY DIRECTED TO AL LOW THE DEPRECIATION AS CLAIMED BY THE ASSESSEE BY THE LD. C IT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, T HEREFORE, 12 WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUND NO. 1 RAISED BY THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL STANDS DISMI SSED ORDER PRONOUNCED ON 02/08/2019. SD/- SD/- [DR. B.R.R. KUMAR] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 02/08/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES