M/s Sri Sai Krishna Agro Cold Storage Pvt. Ltd., Visakhapatnam V. The ACIT, Circle-4(1), Visakhapatnam

ITA 409/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0750 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 12-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Keywords: Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.409/VIZAG/2009 ASSESSMENT YEAR : 2006-07 M/S. SRI SAI KRISHNA AGRO COLD STORAGE PVT. LTD. VISAKHAPATNAM VS. ACIT, CIRCLE-4(1) VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AAECS 2805A APPELLANT BY : SHRI G.V.N. HARI, CA RESPONDENT BY : SHRI G.S.S. GOPINATH, DR O R D E R PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : 1. THE APPEAL OF THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 30-6-2009 PASSED BY LD CIT(A), VISAKHAPATNAM AND IT RELATES T O THE ASSESSMENT YEAR 2006- 07. 2. THE SOLITARY ISSUE URGED FOR ADJUDICATION I S WHETHER THE TAX AUTHORITIES ARE RIGHT IN LAW IN NOT GRANTING DEPRECIATION OF RS.1,8 0,977/- ON THE TRAWLER. 3. THE FACTS RELATING TO THE ISSUE ARE STATED I N BRIEF. THE ASSESSEE CLAIMED DEPRECIATION ON A TRAWLER NAMED GOPALAKRISHNA-III. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DID NOT OFFER ANY INCOM E FROM THE TRAWLER. THE ASSESSEE EXPLAINED THAT THE TRAWLER WAS UNDER REPAI R AND HENCE NO INCOME COULD BE GENERATED. THE AO DECLINED TO ALLOW THE DEPRECI ATION CLAIM OF RS.1,80,977/- PERTAINING TO THE SAID TRAWLER. LD CIT(A) ALSO CO NFIRMED THE DISALLOWANCE ON THE 2 REASONING THAT THE TRAWLER WAS NOT PUT TO USE DURIN G THE YEAR UNDER CONSIDERATION. AGGRIEVED, THE ASSESSEE IS IN APPEA L BEFORE US. 4. WE HAVE HEARD THE PARTIES AND ALSO PERUSED T HE RECORD. THE LD AR PLACED RELIANCE ON THE DECISION DATED 17-07-2008 OF THE IT AT, MUMBAI BENCH DECISION IN THE CASE OF G.R.SHIPPING LTD., IN ITA NO.822/MUM/05 . IN THAT CASE, A BARGE BELONGING TO THAT ASSESSEE MET WITH AN ACCIDENT ON 6.3.2000 AND SINCE THE ASSESSEE FELT IT UNECONOMICAL TO GET IT REPAIRED, T HE SAME WAS SOLD IN MAY/JUNE 2001. THE AO THEREIN WAS OF THE VIEW THAT ASSESSEE IS NOT ENTITLED TO CLAIM DEPRECIATION ON THE SAID BARGE SINCE IT WAS NOT PUT TO USE FOR WHOLE YEAR. THE ITAT HAS TAKEN THE VIEW THAT ANY ASSET SHALL LOOSE ITS IDENTITY ONCE IT ENTERS INTO THE BLOCK AND THEREFORE THE TEST OF USER HAS TO BE APPLIED UPON THE BLOCK AS A WHOLE AND NOT UPON AN INDIVIDUAL ASSET. IN OUR OPI NION, THE FACTS OF THE INSTANT CASE BEING DIFFERENT, THE ABOVE SAID DECISION SHALL NOT APPLY TO THE INSTANT CASE. 5. IN THE INSTANT CASE, THERE IS NO DISPUTE WIT H REGARD TO THE FACT THAT IN THE EARLIER YEARS, THE ASSESSEE HAD OFFERED INCOME FROM THE SAID TRAWLER AND ALSO CLAIMED DEPRECIATION THEREON. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE HAD ABANDONED THE SAID LINE OF BUSINESS. IT IS ALSO KNOWN FACT THAT ANY MACHINERY UNDERGOES REGULAR WEAR AND TEAR AND CONSE QUENTLY ONE HAS TO CARRY OUT REGULAR REPAIRS TO MAINTAIN THE WORKING CONDITI ON OF ANY MACHINERY. IN THE INSTANT CASE, THE TRAWLER WAS SENT FOR REPAIRS DURI NG THE YEAR UNDER CONSIDERATION AND HENCE THE ASSESSEE COULD NOT GENERATE ANY INCOM E. IT CANNOT BE DENIED THAT ONLY IF THE TRAWLER IS RESTORED BACK TO ITS NO RMAL WORKING CONDITION, THE ASSESSEE COULD GENERATE INCOME. IN THESE CIRCUMSTA NCES, IN OUR OPINION, IT CANNOT BE SAID THAT THE TRAWLER WAS NOT PUT TO USE DURING THE YEAR UNDER CONSIDERATION FOR THE PURPOSE OF ALLOWING THE DEPRE CIATION CLAIM, SINCE THE ASSESSEE HAD NOT ABANDONED THE SAID LINE OF BUSINES S AND THE VERY PURPOSE OF CARRYING OUT THE REPAIR IS TO SET THE BUSINESS GOIN G. HENCE, WE ARE OF THE VIEW THAT THE TRAWLER SHOULD BE TREATED AS USED FOR THE PURPOSES OF BUSINESS DURING 3 THE REPAIR PERIOD ALSO. IN VIEW OF THE ABOVE, WE R EVERSE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE DEPREC IATION ON THE TRAWLER. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 13.5.2010 SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE : 13 TH MAY, 2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 M/S. SRI SAI KRISHNA COLD STORAGE PRIVATE LIMITE D, D.NO.48-18-66, TULASIPETA RAMA TALKIES JUNCTION, VISAKHAPATNAM-530 003. 02 THE ACIT, CIRCLE-4(1), VISAKHAPATNAM 03 THE CIT (A), VISAKHAPATNAM 04 THE CIT, VISAKHAPATNAM 05 THE DR, ITAT, VISAKHAPAATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT, VISAKHAPATNAM BENCH