HEMANT KUMAR GODARA, V. ASST CIT 15(1),

ITA 4185/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2402 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 19-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: VIJAY C KOTHARI
• Keywords: Depreciation; Additional evidence
• Section: 142(1); 80IB; 68; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND PAWAN SINGH, JM ./ I.T.A. NO . 4185 / MUM/ 2013 ( / ASSESSMENT YEA R : 2004 - 05 ) SHRI HEMANT KUMAR GODARA, E - 1, OIDC RINGANWADA, DAMAN (UT) - PIN - 396210 / VS. ASSTT. COMMISSIONER OF INCOME TAX 15(1), MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AEEPG4083M / APPELLANT BY SHR I VIJAY C KOTHARI / RESPONDENT BY SHRI K MOHANDAS / DATE OF HEARING : 7.10 . 201 5 / DATE OF PRONOUNCEMENT: 24. 11. 201 5 / O R D E R P ER B R BASKARAN, AM : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26.03.2013 PASSED BY LD CIT(A) - 26, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2004 - 05. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN RESPECT OF FOLLOWING THREE ISSUES: - ( A ) DEDUCTION U/S 80IB OF THE ACT. ( B ) DISALLOWANCE OF INTEREST PAID ON UNSECURED LOANS. ( C ) DISALLOWANCE OF DEPRECIATION ON PLANT AND MACHINERY. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THIS IS SECOND ROUND OF PROCEEDINGS. THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF MANUFACTURE AND SALE OF STAINLESS STEEL UTENSILS. THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE AO BY REJECTING THE CLAIM FOR DEDUCTION U/S 80IB OF THE ITA NO. 4185 / MUM/ 2013 2 ACT AND ALSO DISALLOWING THE INTEREST EXPENDITURE ON LOAN AND DEPRECIATION ON MACHINERY. IN RESPECT OF ALL THESE ADDITIONS, THE ASSESSING OFFICER FOLLOWED THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2003 - 04, WHEREIN IDENTICAL DISALLOWANCES HAD BEEN MADE. 3. THE ASSESSEE PREFERRED APPEAL FOR AY 2003 - 04 BEFORE LD CIT(A) AND THEN TO THE ITAT. THE TRIBUNAL, VIDE IS ORDER DATED 25 - 11 - 2008 PASSED IN ITA NO.7144/MUM/2006, RESTORED ALL THE MATTERS TO THE FILE OF THE ASSESSING OFFICER ON THE REASONING THAT THE ASSESSEE WAS NOT GIVEN PROPER OPPORTUNITY. WHEN THE APPEAL FILED BY THE ASSESSEE FOR AY 2 004 - 05 ALSO REACHED THE ITAT, THE TRIBUNAL, VIDE ITS ORDER DATED 26 - 06 - 2009 PASSED IN ITA NO.990/MUM/2008, RESTORED ALL THE MATTERS AGAIN TO THE FILE FO THE ASSESSING OFFICER BY FOLLOWING THE ORDER PASSED BY THE TRIBUNAL FOR AY 2003 - 04. HENCE THE IMPUGNED ASSESSMENT ORDER WAS PASSED BY THE AO IN THE SET ASIDE PROCEEDINGS. 4. SINCE THE ASSESSING OFFICER HAD MADE THE IMPUGNED DISALLOWANCES BY FOLLOWING THE ORDER PASSED FOR ASSESSMENT YEAR 2003 - 04, A SPECIFIC QUERY WAS POSED TO BOTH THE PARTIES AS TO THE POSITION OF THE ASSESSMENT ORDER PASSED BY THE AO IN THE SET ASIDE PROCEEDINGS. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS NOT RECEIVED ANY ASSESSMENT ORDER FOR AY 2003 - 04 SO FAR. HENCE THE LD D.R WAS DIRECTED TO ASCERTAIN THE FACTUAL POSITION IN THIS R EGARD. IN RESPONSE, THE LD D.R FILED A LETTER DATED 02 - 11 - 2015 BEFORE THE BENCH, WHEREIN HE HAS STATED THAT THE ASSESSING OFFICER HAS NOT FURNISHED A REPLY TO HIM SO FAR. HOWEVER, HE HAS FURNISHED A COPY OF NOTICE DATED 31.01.2014 ISSUED U/S 142(1) OF TH E ACT CALLING FOR DETAILS RELATING TO THE IDENTICAL DISALLOWANCES MADE IN AY 2003 - 04. THUS, WE NOTICE THAT THE ASSESSING OFFICER HAS ISSUED A NOTICE U/S 142(1) OF THE ACT FOR ASSESSMENT YEAR 2003 - 04 ONLY ON 31.01.2004 IN PURSUANCE OF THE ORDER PASSED BY T HE TRIBUNAL ON 25.11.2008. ITA NO. 4185 / MUM/ 2013 3 5. THE LD A.R, DURING THE COURSE OF HEARING, HAD SUBMITTED THAT THE TIME LIMIT FOR PASSING ASSESSMENT ORDER FOR AY 2003 - 04 SHOULD HAVE ALREADY EXPIRED, IF THE ASSESSING OFFICER HAD NOT PASSED THE ASSESSMENT ORDER IN THE SET A SIDE THE PROCEEDINGS. SINCE THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 142(1) OF THE ACT ONLY ON 31.01.2004, WE EXAMINED THE TIME LIMIT AVAILABLE TO THE AO TO PASS THE ASSESSMENT ORDER IN THE SET ASIDE PROCEEDINGS. THE TIME LIMIT IS PRESCRIBED IN SUB SE CTION (2A) OF SEC. 153 OF THE ACT AND THE SAID PROVISIONS READ AS UNDER: - (2A) NOTWITHSTANDING ANYTHING CONTAINED IN IN SUB - SECTIONS (1), (1A), (1B) AND (2), IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1971, AND ANY SUBSEQUENT ASSESSMENT YEAR, AN ORDER OF FRESH ASSESSMENT IN PURSUANCE OF AN ORDER UNDER SECTION 250 , SECTION 254 , SECTION 263 OR SECTION 264 , SETTING ASIDE OR CANCELLING AN ASSESSMENT, MAY BE MADE AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER UNDER SECTION 250 OR SECTION 254 IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER OR, AS THE CASE MAY BE, THE ORDER UNDER SECTION 263 OR SECTION 264 IS PASSED BY THE CHIEF COMMISSIONER OR COMMISSIONER: PROVIDED THAT WHERE THE ORDER UNDER SECTION 250 OR SECTION 254 IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER OR, AS THE CASE MAY BE, THE ORDER UNDER SECTION 263 OR SECTION 264 IS PASSED BY THE CHIEF COMMISSIONER OR COMMISSIONER, ON OR AFTER THE 1ST DAY OF APRIL, 1999 BUT BEFORE THE 1ST DAY OF APRIL, 2000, SUCH AN ORDER OF FRESH ASSESSMENT MAY BE MADE AT ANY TIME UP TO THE 31ST DAY OF MARCH, 2002. PR OVIDED FURTHER THAT WHERE THE ORDER UNDER SECTION 254 IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER OR, AS THE CASE MAY BE, THE ORDER UNDER SECTION 263 OR SECTION 264 IS PASSED BY THE COMMISSIONER ON OR AFTER THE 1ST DAY OF APRIL, 2005, THE PROVISI ONS OF THIS SUB - SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS 'ONE YEAR', THE WORDS 'NINE MONTHS' HAD BEEN SUBSTITUTED. PROVIDED ALSO THAT WHERE THE ORDER UNDER SECTION 254 IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER OR, AS THE CASE MAY BE, THE O RDER UNDER SECTION 263 OR SECTION 264 IS PASSED BY THE COMMISSIONER ON OR AFTER THE 1ST DAY OF APRIL, 2006, AND DURING THE COURSE OF THE PROCEEDINGS FOR THE FRESH ASSESSMENT OF TOTAL INCOME, A REFERENCE UNDER SUB - SECTION (1) OF SECTION 92CA - ITA NO. 4185 / MUM/ 2013 4 (I) WAS MADE B EFORE THE 1ST DAY OF JUNE, 2007 BUT AN ORDER UNDER SUB - SECTION (3) OF SECTION 92CA HAS NOT BEEN MADE BEFORE SUCH DATE; OR (II) IS MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF THIS SUB - SECTION SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN TH E SECOND PROVISO, HAVE EFFECT AS IF FOR THE WORDS 'ONE YEAR', THE WORDS 'TWENTY - ONE MONTHS' HAD BEEN SUBSTITUTED. SINCE THE ORDER WAS PASSED BY THE TRIBUNAL FOR AY 2003 - 04 ON 25.11.2008, THE SECOND PROVISO TO SEC. 153(2A) SHALL BE APPLICABLE AND HENCE THE ASSESSING OFFICER SHOULD HAVE PASSED THE ASSESSMENT ORDER WITHIN NINE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER UNDER SECTION 254 IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER ETC. SINCE THE NOTICE U/S 142(1) HAD BEEN ISSUED ON 31 - 01 - 2014, IT BECOMES CLEAR THAT THE ASSESSMENT ORDER HAS NOT BEEN PASSED BY THAT TIME AND FURTHER IT IS CLEAR THAT THE TIME LIMIT TO COMPLETE THE ASSESSMENT IN THE SET ASIDE ASSESSMENT PROCEEDINGS HAS EXPIRED BY THAT DATE. 6. WE HAVE EARLIER NOTICED THAT THE DISALLOWANCES THAT ARE BEING CONTESTED IN THIS APPEAL HAS BEEN MADE ON THE BASIS OF DECISION TAKEN IN AY 2003 - 04. HOWEVER, THE TRIBUNAL HAD SET ASIDE ALL THE ISSUES IN AY 2003 - 04 AS WELL AS IN A Y 2004 - 05 TO THE FILE OF THE AO. HOWEVER, THE ASSESSING OFFICER HAS FAILED TO PASS THE ASSESSMENT ORDER IN AY 2003 - 04 IN THE SET ASIDE PROCEEDINGS. HOWEVER, THE AO HAS PASSED THE ASSESSMENT ORDER IN AY 2004 - 05 INDEPENDENTLY WITHOUT ASCERTAINING THE FACTS THAT WERE FOUND TO BE DEFICIENT IN AY 2003 - 04. 7. THE ASSESSING OFFICER HAD REJECTED THE CLAIM FOR DEDUCTION U/S 80IB OF THE ACT IN AY 2003 - 04 ON THE GROUND THAT THE UNDERTAKING OF THE ASSESSEE HAS VIOLATED THE CONDITIONS PRESCRIBED IN SEC. 80IB OF THE ACT, VIZ., ITA NO. 4185 / MUM/ 2013 5 (A) IT HAS BEEN FORMED BY SPLITTING UP OR RECONSTRUCTION OF BUSINESS, SINCE THE UNDERTAKING WAS ORIGINALLY CONSTITUTED AS A PARTNERSHIP FIRM ON 23.10.2001 AND THE SAME WAS CONVERTED INTO A PROPRIETAR CONCERN OF THE ASSESSEE HEREIN ON 31.10.20 02. (B) IT IS FORMED BY TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED. IN THIS CASE, THE AO HAD STATED IN AY 2003 - 04 THAT THE MACHINERY WORTH RS.3,43,200/ - HAD NEVER BEEN PURCHASED AND INSTALLED. SINCE THE PURCHASE AND INSTALLATION OF MACHINERY ITSELF WAS DOUBTED, THE EXISTENCE OF UNDERTAKING AS SSI OR EMPLOYMENT OF SPECIFIED NUMBER OF EMPLOYEES WAS ALSO DOUBTED WITH. 8. IN ASSESSMENT YEAR 2004 - 05, THE ASSESSING OFFICER PROCEEDED TO CONFIRM THE DISALLOWANCES AGAIN ON THE REASONING THAT THE ASSESSEE DID NOT FURNISH THE DETAILS THAT WERE CALLED FOR. EVEN THOUGH, THE AO NOTICED THAT THE ASSESSMENT OF AY 2004 - 05 HAD BEEN SET ASIDE BY ITAT ON THE BASIS OF ITS ORDER PASSED FOR AY 2003 - 04, YET HE PROCEEDED TO COMPLETE THE ASSESSMENT OF AY 200 4 - 05 WITHOUT COMPLETING THE ASSESSMENT OF AY 2003 - 04. 9. IN THE APPEAL FILED BEFORE THE LD CIT(A), THE ASSESSEE HAS REQUESTED FOR ADMISSION OF ADDITIONAL EVIDENCES U/R 46A OF THE ACT. THE AO REPORTED THAT THE NOTICE COULD NOT SERVE UPON THE ASSESSEE AS THERE WAS NO SUCH PERSON IN THE GIVEN ADDRESS. ACCORDINGLY, HE REFUSED TO OFFER ANY COMMENTS. THE ASSESSEE THEREAFTER SUBMITTED HIS CORRECT ADDRESS AND HENCE THE LD CIT(A) REQUESTED THE AO TO FURNISH REMAND REPORT AGAIN, BUT THE AO DID NOT FURNISH ANY RE PORT. HENCE THE LD CIT(A) PROCEEDED TO EXAMINE THE ADDITIONAL EVIDENCES AND ADJUDICATE THE ISSUES. ITA NO. 4185 / MUM/ 2013 6 10. WITH REGARD TO THE DEDUCTION CLAIMED U/S 80IB OF THE ACT, THE LD CIT(A) TOOK THE VIEW THAT THE ASSESSEE HAS FAILED TO PROVE THAT HE WAS MANUFACTURING THE GOODS. THE LD CIT(A) HAS ALSO ACCEPTED THE VIEW OF THE AO THAT THE ASSESSEES UNIT HAS BEEN ESTABLISHED BY RECONSTRUCTION, SINCE THE PARTNERSHIP FIRM HAS BEEN CONVERTED INTO A PROPRIETARY CONCERN. HE ALSO ACCEPTED THE VIEW OF THE AO THAT THE ASSESSEE COULD NOT HAVE PURCHASED MACHINERY FROM M/S MAHAVIR MERCANTILE CO., SINCE THE SUPPLIER HAS DENIED THE SALE TO THE ASSESSEE. THE LD CIT(A) ALSO TOOK THE VIEW THAT THE ASSESSEE DID NOT FURNISH ANY OTHER EVIDENCE TO SUPPORT THE CLAIM OF MACHINERY. ACCORDIN GLY, HE UPHELD THE REJECTION OF CLAIM FOR DEDUCTION U/S 80IB OF THE ACT. 1 1 . IT IS NOTICED THAT THE UNDERTAKING ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT WAS INITIALLY FORMED AS A PARTNERSHIP CONCERN CONSISTING OF THE ASSESSEE HEREIN AND ANOTHER PERSO N. THAT OTHER PERSON RETIRED FROM PARTNERSHIP AND HENCE THE ELIGIBLE UNDERTAKING BECAME THE PROPRIETARY CONCERN OF THE ASSESSEE. BEFORE THE TAX AUTHORITIES, THE ASSESSEE SUBMITTED THAT THE CONVERSION OF PARTNERSHIP FIRM INTO A PROPRIETARY CONCERN CANNOT BE CONSIDERED TO A CASE OF SPLITTING UP OR RECONSTRUCTION OF EXISTING BUSINESS. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING CASE LAW: - (A) CIT VS. GAEKWAD FOAM & RUBBER CO. LTD (35 ITR 662)(BOM), WHEREIN IT WAS HE LD THAT THE TAKE OVER OF AN UNDERTAKING BY A COMPANY FROM PARTNERSHIP FIRM, BY ALLOTTING SHARES TO THE PARTNERS DID NOT AMOUNT TO RECONSTRUCTION. (B) CIT VS. HINDUSTAN GENERAL INDUSTRIES (137 ITR 851)(DEL), WHEREIN IT WAS HELD THAT THE EXPRESSION SPLITT ING UP OF THE BUSINESS ALREADY IN EXISTENCE INDICATES A CASE WHERE THE INTEGRITY OF A BUSINESS EARLIER IN EXISTENCE IS BROKEN UP AND DIFFERENT SECTION OF THE ACTIVITIES PREVIOUSLY CONDUCTED ARE CARRIED ON INDEPENDENTLY. ITA NO. 4185 / MUM/ 2013 7 (C) T. SATISH U PAI VS. CIT (1 19 ITR 877)(KAR), WHEREIN IT WAS HELD THAT THERE MUST BE SOME MATERIAL TO HOLD THAT EITHER SOME ASSET OF AN EXISTING BUSINESS IS DIVIDED AND ANOTHER BUSINESS IS SET UP FROM SUCH SPLITTING UP OF ASSETS OR THAT THE TWO BUSINESSES ARE THE SAME AND ONE FORMED WAS AN INTEGRAL PART OF THE EARLIER ONE AND IT WAS ONLY A QUESTION OF BREAKING UP OF THE SAME BUSINESS. IT IMPLIES UNITY OF CONTROL IN REGARD TO TWO BUSINESSES, I.E., EARLIER ONE IN EXISTENCE AND A NEW ONE WHICH IS BROUGHT INTO EXISTENCE. WE NOTICE THAT THE LD CIT(A) DID NOT EXAMINE THE ABOVE SAID DECISIONS, WHICH ARE IN FAVOUR OF THE ASSESSEE. THE FACTS SHOW THAT THE UNDERTAKING WAS NOT SPLIT UP OR RECONSTRUCTED, BUT ONLY THE MANAGEMENT OF THE UNDERTAKING HAS UNDERGONE A CHANGE FROM A PARTNERSHIP FIRM INTO A PROPRIETARY CONCERN. HENCE, WE FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT IT WAS NOT A CASE OF SPLITTING UP OR RECONSTRUCTION. 1 2 . THE NEXT DEFECT POINTED OUT BY THE TAX AUTHORITIES IS THAT THE PURCHASE OF MACHINERY COSTING RS.3,43,20 0/ - WAS NOT PROVED BY THE ASSESSEE. AS STATED EARLIER, THE ASSESSING OFFICER HAD ISSUED NOTICES TO THE SUPPLIER OF THE MACHINERY DURING THE COURSE OF ASSESSMENT PROCEEDINGS RELATING TO AY 2003 - 04. THE SUPPLIER, HOWEVER, REPLIED THAT HE HAS NOT SUPPLIED A NY MACHINERY TO THE ASSESSEE. WITH REGARD TO THE SAME, THE ASSESSEE SUBMITTED THAT THE AO HAD ASKED THE SUPPLIER ABOUT THE SUPPLIES MADE TO THE ASSESSEES PERSONAL NAME, WHEREAS THE MACHINERY WAS PURCHASED IN THE CONCERNS NAME M/S MASTER METALS. THIS EX PLANATION OF THE ASSESSEE WAS NOT EXAMINED BY THE LD CIT(A). 1 3 . SINCE THE MACHINERY WAS HELD AS NOT PURCHASED, THE TAX AUTHORITIES HAVE TAKEN THE VIEW THAT THE ASSESSEE HAS NOT ACTUALLY MANUFACTURED GOODS AND HENCE THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUC TION U/S 80IB OF THE ACT. HOWEVER, A PERUSAL OF THE DOCUMENTS FILED IN PAPER BOOK WOULD SHOW THAT THE ASSESSEE HAS OBTAINED PERMANENT SSI CERTIFICATE, WHICH IS NORMALLY GIVEN AFTER COMMENCEMENT OF PRODUCTION ONLY THAT TOO AFTER ITA NO. 4185 / MUM/ 2013 8 PHYSICAL INSPECTION. FURTH ER, THE ASSESSEE HAS ALSO FURNISHED COPIES OF REGISTRATION MADE UNDER CENTRAL EXCISE ACT, SALES TAX ACT, POLLUTION CONTROL COMMITTEE, IMPORT & EXPORT CODE, ELECTRICITY PAYMENT BILLS, LABOUR REGISTER ETC. FURTHER, THE BOOKS OF ACCOUNTS ALSO SUPPORT THE CLA IM OF MANUFACTURE OF GOODS. WITH REGARD TO THE PURCHASE OF MACHINERIES, THE ASSESSEE HAS FURNISHED COPIES OF RELEVANT BILLS SUPPORTING THE CLAIM OF PURCHASE OF MACHINERY AND ALSO THE PARTICULARS OF PAYMENTS MADE. WE NOTICE THAT NONE OF THESE EVIDENCES WE RE NOT EXAMINED BY THE TAX AUTHORITIES. 1 4 . THUS, WE NOTICE THAT THE TAX AUTHORITIES HAVE DRAWN ADVERSE INFERENCE ONLY ON THE BASIS OF DENIAL OF SUPPLY OF MACHINERY TO THE ASSESSEES PERSONAL NAME BY THE SUPPLIER. IN VIEW OF THE OVER WHELMING EVIDENCE S FURNISHED BY THE ASSESSEE TO SUPPORT THE CLAIM OF MANUFACTURE AND SALE OF GOODS, WE ARE OF THE VIEW THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS NOT MANUFACTURING GOODS. 1 5 . THE ASSESSEE HAS FURNISHED PERMANENT SSI CER TIFICATE AND THE LABOUR REGISTER AND HENCE THE OTHER DEFICIENCIES POINTED OUT BY THE TAX AUTHORITIES ARE LIABLE TO BE REJECTED. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM FOR DEDUCTION U/S 80IB OF THE ACT TO THE ASSESSEE. 1 6 . THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF INTEREST EXPENDITURE ON UNSECURED LOAN. THIS DISALLOWANCE WAS MADE BY FOLLOWING THE DECISION TAKEN BY THE AO FOR AY 2003 - 04. THE LD CIT(A) HAS ALSO OBSERVED THAT THERE HAS BEEN NO FRESH ASSESS MENT IN THE SET ASIDE PROCEEDINGS. HOWEVER, HE PROCEEDED TO EXAMINE THIS ISSUE OF GENUINENESS OF LAONS IN AY 2004 - 05. HOWEVER, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAD AVAILED LOANS IN THE YEAR RELEVANT TO AY 2003 - 04 AND HENCE THE DISALLOWANCE OF INTEREST EXPENDITURE WOULD DEPEND UPON THE DECISION TAKEN IN AY 2003 - 04 ON EXAMINATION OF LOANS IN TERMS OF SEC. 68 OF THE ITA NO. 4185 / MUM/ 2013 9 ACT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS NOT JUSTIFIED IN EXAMINING THE LOANS IN AY 2004 - 05, WHI CH WERE TAKEN IN AY 2003 - 04. ACCORDINGLY, WE SET ASIDE HIS ORDER ON THIS ISSUE. HOWEVER, SINCE THE ASSESSMENT ORDER FOR AY 2003 - 04 WAS NOT PASSED, WE ARE OF THE VIEW THAT NO ADVERSE DECISION COULD BE TAKEN ON THIS ISSUE IN AY 2004 - 05. ACCORDINGLY, WE D IRECT THE AO TO ALLOW THE INTEREST CLAIM. 1 7 . THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF DEPRECIATION ON THE MACHINERY PURCHASE OF RS.3,43,200/ - . WE HAVE NOTICED THAT THE CLAIM OF PURCHASE OF MACHINERY WAS REJECTED ONLY ON THE GROUND THAT THE SUPPLIE R HAS DENIED SUPPLY OF MACHINERY IN THE NAME OF ASSESSEES PERSONAL NAME. HOWEVER, THE ASSESSEE HAS FURNISHED COPIES OF BILLS, PARTICULARS OF PAYMENT, THE LIST OF MACHINERIES APPROVED UNDER SSI ACT ETC. FURTHER THE ASSESSEE HAS MANUFACTURED GOODS BY USING THE MACHINERIES AND SOLD THE SAME. THE REGISTRATION UNDER SALES TAX ACT AND CENTRAL EXCISE ACT ALSO SHOWS THAT THE ASSESSEE WAS FURNISHING NECESSARY RETURNS UNDER THOSE ACT. THE SAID IN VIEW OF THE EVIDENCES FURNISHED BY THE ASSESSEE, WE ARE OF THE VIE W THAT THERE IS NO REASON TO SUSPECT THE PURCHASE OF MACHINERY. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE DEPRECIATION. 1 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 24TH NOVEMBER , 2 015. 24TH NOV , 2 015 SD SD ( PAWAN SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 24TH NOV , 2 015. . . ./ SRL , SR. PS ITA NO. 4185 / MUM/ 2013 10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI