Futura Ceramics Private Limited, Ahmedabad V. The Deputy Commissioner of Income Tax, Circle-2(1)(1), Ahmedabad

ITA 419/AHD/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5628 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 21-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 32(1)(iia); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 419/AHD/2018 (ASSESSMENT YEAR : 2013-14) FUTURA CERAMICS PVT. LTD., A-501, SHAPATH IV, OPP: KARNAVATI CLUB, S. G. HIGHWAY, AHMEDABAD 380 051. VS. THE DY. CIT, CIRCLE 2(1)(1), AHMEDABAD. [PAN NO. AAACF 7962 P] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI ASEEM L. THAKKAR, A.R. RESPONDENT BY : SHRI SATISH SOLANKI, SR. D.R. DATE OF HEARING 30/09/2019 DATE OF PRONOUNCEMENT 01/10/2019 O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE PERTAINING TO THE ASSES SMENT YEAR (AY) 2013-14 IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS) - 2, AHMEDABAD (CIT(A) FOR SHORT) DATED 19.12.2017. THE ASSESSE E HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN DISMISSING THE GROUND OF APPEAL RAISED BEFORE HIM AGAINST THE COMP UTATION OF THE TOTAL INCOME OF RS.92,14,530/- WHICH HAS BEEN RECTIFIED BY THE ASSE SSING OFFICER AT RS.63,37,790/- VIDE ORDER DTD. 18/01/2016 PASSED U/S.154 OF THE I. T. ACT, 1961 AS AGAINST TOTAL INCOME OF RS.55,59,050/-DECLARED BY THE APPELLANT I N THE RETURN OF INCOME FILED ON 19/09/2013 HOLDING THAT THE SAME IS GENERAL DOES NO T REQUIRE ADJUDICATION. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN DISMISSING THE GROUND OF APPEAL RAISED BEFORE HIM AGAINST THE DISA LLOWANCE OF RS.35,95,933/- MADE BY THE ASSESSING OFFICER FOR THE ALLEGED EXCES S CLAIM OF ADDITIONAL - 2 - ITA NO.419/AHD/2018 FUTURA CERAMICS PVT. LTD. VS. DCIT ASST.YEAR 2013-14 DEPRECIATION, WHICH HAS BEEN SUBSEQUENTLY RECTIFIED BY HIM AT RS.7,19,187/- VIDE ORDER DTD. 18/01/2016 PASSED U/S.154 OF THE I.T. AC T, 1961. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 2. THE ONLY EFFECTIVE GROUND OF THIS APPEAL IS AGAI NST DECLINING THE CLAIM OF THE ASSESSEE FOR ADDITIONAL DEPRECIATION. 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE CASE OF THE ASSESSEE IS PICKED FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U /S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) WAS FRA MED BY ORDER DATED 31.12.2015. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER DISAL LOWED ADDITIONAL DEPRECIATION AMOUNTING TO RS.35,95,933/-. THE BASIS FOR DISALLOW ING THE ADDITIONAL DEPRECIATION WAS THAT THE ITEMS ARE NEITHER PLANT & MACHINERY NOR PA RTS THEREOF ON WHICH ADDITIONAL DEPRECIATION COULD BE GRANTED. SUBSEQUENTLY, THE AS SESSING OFFICER RECTIFIED MISTAKE U/S 154 AND RESTRICTED ADDITION TO THE EXTENT OF RS.7,1 9,187/- AGAINST THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) DISMISSED THE GROUND OF APPEAL ON THE GROUND THAT SOME OF THE ITE MS LIKE; PAYMENT FOR FACTORY VISIT, PAYMENT FOR VEHICLE CHARGES, PAYMENT FOR INSPECTION ARE NOT RELATING TO PLANT AND MACHINERY, AND THEREFORE, COULD BE CONSIDERED FOR A DDITIONAL DEPRECIATION. 4. AGGRIEVED BY THIS THE ASSESSEE IS IN FURTHER APP EAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI ASEEM L. THAKKAR VEHEMENTLY A RGUED THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN DISALLOWING THE CLAIM. HE SUBMITTE D THAT LAW IS VERY CLEAR THAT ADDITIONAL DEPRECIATION IS ALLOWABLE. HE DREW OUR ATTENTION TO SECTION 32(1)(IIA) OF THE ACT. HE FURTHER SUBMITTED THAT AS PER THIS PROVISION ACTUAL COST DEFINED U/S 43(1) IS TO BE ADOPTED. HE CONTENDED THAT ALL EXPENDITURE RELATES TO THE EX PENDITURE INCURRED ON INSTALLATION OF THE ASSET. THE LEARNED COUNSEL RELIED ON THE JUDGMENT O F HONBLE HIGH COURT OF MADRAS IN THE CASE OF TRICHY DISTILLERIES & CHEMICALS LTD. VS . CIT REPORTED IN (1999) 235 ITR 194 - 3 - ITA NO.419/AHD/2018 FUTURA CERAMICS PVT. LTD. VS. DCIT ASST.YEAR 2013-14 (MADRAS). ON THE CONTRARY, THE LEARNED DR OPPOSE TH E SUBMISSION AND SUBMITTED THAT THE ASSESSEE OUGHT TO PROVE THE NEXUS BETWEEN THE EXPEN DITURE INCURRED AND THE INSTALLATION OF THE ASSET. HE FURTHER CONTENDED THAT THE ASSESSE E HAS TO PROVE INCURRING OF THE EXPENDITURE WHICH WOULD FORM PART OF THE ACTUAL COS T OF THE ASSET. IN THE ABSENCE OF SUCH CLAIM OF THE ASSESSEE IT CANNOT BE ALLOWED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT WHICH HAS BEEN I NCURRED FOR PURCHASE AND INSTALLATION IS REPRODUCED IN THE IMPUGNED ORDER THAT INCLUDES I NTEREST ON BANK TERM LOAN WHICH HAS BEEN CAPITALIZED FROM THE MONTH OF APRIL TO MONTH O F OCTOBER. FURTHER EXPENDITURE HAVE BEEN INCURRED ON THE INSURANCE. WE FIND THAT SO FAR AS THE INTEREST AND INSURANCE IS CONCERNED SAME IS VERIFIABLE FROM RECORDS HENCE THE ASSESSING OFFICER WOULD DELETE THIS ADDITION HOWEVER, IN RESPECT OF THE OTHER EXPENDITU RE THE ASSESSING OFFICER WOULD VERIFY WHETHER THIS EXPENDITURE IS RELATED TO INSTALLATION OF THE PLANT AND MACHINERY AND WOULD DELETE IF IT IS FOUND TO BE INCURRED FOR THE SAID P URPOSE. THE GROUND RAISED IN APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.419/AHD/2018 FOR THE A.Y. 2013-14 IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/10/2019 SD/- SD/- ( WASEEM AHMED ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 01/10/2019 PRITI YADAV, SR.PS - 4 - ITA NO.419/AHD/2018 FUTURA CERAMICS PVT. LTD. VS. DCIT ASST.YEAR 2013-14 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-2, AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 30.09.2019 (COVERED CASE 3) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.09.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 01.10.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER