MEHRU ELECTRICALS AND, Jaipur V. CIT, Alwar

ITA 519/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5088 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 12-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MEENA CIT DHK
• Keywords: Revision of order; Depreciation; Additional depreciation
• Section: 143(3); 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.519/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S MEHRU ELECTRICALS & MECHANICAL ENGINEERS PVT. LTD. E-1247 INDUSTRIAL AREA, BHIWADI, ALWAR CUKE VS. THE PRINCIPAL CIT, ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCM 2145 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA ( CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19.09.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 23/09/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF PR. COMMISSIONER, ALWAR PASSED U/S 263 OF THE I.T. ACT, 1961 DATED 30.03.2016 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: (1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX U/S 263 IS ILLEGAL & BAD IN LAW AND THE SAME BE QUASHED. (2) THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT ASSESSEE WAS ALLOWED EXCESS DEPRECIATION OF RS. 4,49,397/- ON INSTALLATION OF WINDMILL GENERATOR AT KALUMAN KONDAM (MADURAI) BY CONSIDERI NG THE COST OF CIVIL FOUNDATION AS PART OF BUILDING ELIGIBLE FOR DEPREC IATION @10% AND COST OF ERECTION & INSTALLATION OF ELECTRICAL ITEMS AS COV ERED UNDER PLANT & MACHINERY ELIGIBLE FOR DEPRECIATION @ 15% AS AGAIN ST DEPRECIATION @ ITA NO. 519/JP/16 M/S MEHRU ELECTRICALS & MECHANICAL ENGINEERS VS. C IT, ALWAR 2 8% CLAIMED BY THE ASSESSEE BY TREATING THE CIVIL F OUNDATION AND ERECTION & INSTALLATION OF ELECTRICAL ITEMS AS A PART OF WIN DMILL. 3) THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN DIR ECTING THE AO TO ALSO CONSIDER THE ISSUE WHICH MAY SUBSEQUENTLY COME TO T HE NOTICE OF THE AO DURING THE SET ASIDE ASSESSMENT PROCEEDINGS U/S 143 (3)/263 OF THE IT ACT. SUCH DIRECTION ARE AGAINST LAW AND BE DIRECTED TO B E QUASHED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E FINANCIAL YEAR RELEVANT TO AY 2008-09, THE ASSESSEE HAD ACQUIRED AND INSTALLED A WINDMILL AT KALUMAN KONDAM(MADURAI) FOR PRODUCTION OF ELECTRICITY. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED DEPRECIATION OF RS. 1,42,29,810/- @ 8% ON WRITTEN DOWN VALUE OF WINDMILL GENERATOR, CIVIL FO UNDATION WORK AND ELECTRICAL ITEMS. THE AO WHILE COMPLETING THE ASSESSMENT U/S 143(3) DATED 16.01.2014 ALLOWED SUCH CLAIM OF DEPRECIATION. THE LD CIT IN ORDER U/S 263 HELD THAT DEPRECIATION @ 10% IS ALLOWABLE AS CIVIL FOUNDATION WORK AND @ 15% IS ALLOWABLE ON ELECTRICA L ITEMS AS AGAINST 80% CLAIMED BY THE ASSESSEE. FURTHER ON WINDMILL GENER ATOR, ADDITIONAL DEPRECIATION @ 20% WAS WRONGLY ALLOWED IN AY 2008- 09 AND THUS, THE WDV AS ON 01.04.2008 COMES TO RS. 1,60,00,800/-AS AGAI NST RS. 1,33,34,000/- CLAIMED BY THE ASSESSEE. THUS IN TOTAL EXCESS DEPR ECATION OF RS. 4,49,397/-WAS ALLOWED TO THE ASSESSEE. THE AO HAS NOT CARRIED OU T ANY ENQUIRY/VERIFICATION ON THIS ISSUE AND THEREFORE, THE ORDER PASSED BY H IM IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. THE LD AR SUBMITTED THAT IN A.Y. 2008-09 ALSO, T HE CIT IN ORDER U/S 263 HAS HELD THAT AO HAS WRONGLY ALLOWED DEPRECIATION ON CIVIL FOUNDATION AND ELECTRICAL INSTALLATION @ 80%. AGAINST THIS ORDER , THE ASSESSEE HAD FILED AN APPEAL BEFORE THE HONBLE ITAT WHO VIDE ORDER DATED 28.02.2014 IN ITA NO. ITA NO. 519/JP/16 M/S MEHRU ELECTRICALS & MECHANICAL ENGINEERS VS. C IT, ALWAR 3 414/JP/2013 HELD THAT THE DEPRECIATION ALLOWED ON T HESE ITEMS @ 80% IS IN CONSONANCE WITH THE DECISION OF ITAT AND THEREFORE CIT WAS NOT JUSTIFIED IN HOLDING THAT ASSESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS ORDER WAS BRO UGHT TO THE NOTICE OF CIT. HOWEVER, CIT WITHOUT CONSIDERING THIS ORDER PASSED THE PRESENT ORDER WHICH IS ILLEGAL AND BAD IN LAW AND BE QUASHED. 3.1 THE LD AR FURTHER SUBMITTED THAT OTHERWISE ALSO , CIVIL FOUNDATION WORK AND ELECTRICAL ITEMS ARE PART AND PARCEL OF WINDMI LL AND THUS DEPRECIATION @ 80% IS ALLOWABLE ON IT AS HELD BY THE RAJASTHAN HIG H COURT IN CASE OF CIT VS. K.K. ENTERPRISES (2014)108 DTR 109/227 TAXMAN 181 (MAGZ) WHEREIN IT HELD THAT CIVIL STRUCTURE AND ELECTRIC FITTING EQUIPMENTS ARE PART AND PARCEL OF WINDMILL AND CANNOT BE SEPARATED FROM THE SAME AND THEREFOR E, ASSESSEES CLAIM FOR DEPRECIATION FOR COST INCURRED IN CIVIL WORK, FOUND ATION , ELECTRICAL COMPONENT INSTALLATION AND COMMON POWER EVACUATION WHILE INST ALLING WINDMILL IS JUSTIFIED. 3.2 IN RESPECT OF GROUND NO.3, THE AR OF THE ASESS EE SUBMITTED THAT THE CIT HAS GIVEN THE DIRECTION TO THE AO TO CONSIDER ANY O THER ISSUE WHICH MAY COME TO HIS NOTICE DURING THE FRESH ASSESSMENT PROCEEDIN GS U/S 143(3)/263. SUCH DIRECTION IS BEYOND THE SCOPE AND POWER OF CIT U/S 263. IN AN ORDER U/S 263 CIT HAS TO POINT THE EXACT ERROR IN THE ORDER. IT CANNOT BE KEPT AT LARGE FOR THE AO TO BRING FURTHER ERROR IN THE ORDER OF HIS PRED ECESSOR WHILE FRAMING THE ORDER U/S 143(3)/263. RELIANCE IN THIS CONNECTION IS PLACED IN CASE OF CIT VS. G.K. KABRA (1995) 211 ITR 336 (HC/AP) WHERE IT IS H ELD THAT IT IS NECESSARY FOR THE CIT TO POINT OUT THE EXACT ERROR IN THE ORDER W HICH HE PROPOSES TO REVISE SO ITA NO. 519/JP/16 M/S MEHRU ELECTRICALS & MECHANICAL ENGINEERS VS. C IT, ALWAR 4 THAT THE ASSESSEE WOULD HAVE AN ADEQUATE OPPORTUNIT Y OF MEETING THAT ERROR BEFORE THE FINAL ORDER IS MADE. 4. THE LD DR IS HEARD WHO HAS RELIED ON THE ORDER OF LD CIT. 5. WE REFER TO DECISION OF THE ITAT, JAIPUR BENCH V IDE ITS ORDER IN APPEAL ITA NO. 414/JP/2013 DATED 28.02.2014 FOR ASSESSMENT YEAR 2008-09, THE OPERATIVE PART OF THE ORDER IS REPRODUCED AS UNDER: WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOT ICED THAT THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT ASKED THE ASSESSEE SPECIFICALLY ABOUT DEPRECIATION ON THE WINDMILL. O N BEING SATISFIED, ALLOWED DEPRECIATION AND ALSO ON THE ADDITIONAL DEPRECIATIO N. IT IS NOTICED THAT THE COPY OF THE QUERY LETTER ISSUED BY THE AO IS PLACED AT PAGES 10 TO 12 OF THE ASESSEES PAPER BOOK WHEREIN VIDE QUERY NO. 5 & 6 THE AO ASKED THE ASSESSEE AS UNDER: 5. IN THE DEPRECIATION CHART, IT IS OBSERVED THAT DEPRECIATION AMOUNTING TO RS.1,77,87,264/- INCLUDING THE ADDITIO NAL DEPRECIATION OF RS.3557453/- HAS BEEN CLAIMED ON WIND MILL. IN THI S REGARD YOU ARE REQUIRED TO FURNISH COMPLETE DETAILS OF EXPENDITURE OF RS. 35574528/- CLAIMED TO HAVE BEEN INCURRED ON INSTALLATION OF WI NDMILL, NUMBER OF WINDMILLS WERE PURCHASED ALONG WITH COPY OF PURCHA SE BILL FOR VERIFICATION. FURNISH THE DATE OF INSTALLATION OF WINDMILL/ MILLS AND EVIDENCE IN RELATION TO PUT TO USE THESE WIND MILLS . ITA NO. 519/JP/16 M/S MEHRU ELECTRICALS & MECHANICAL ENGINEERS VS. C IT, ALWAR 5 6. EXPLAINS THE REASONS AS TO WHY THE DEPRECIATION CLAIMED @ 40% ON ROOM WHERE WINDMILL INSTALLED SHOULD NOT BE REST RICTED TO 10% BEING NOT PART OF WINDMILL. THEREAFTER THE ASSESSEE FURNISHED THE DETAILS TO TH E AO THROUGH A LETTER, COPY OF WHICH IS PLACED AT PAGES 13 TO 15 OF THE ASSESSE ES PAPER BOOK. SO IT CANNOT BE SAID THAT THE AO DID NOT EXAMINE THE ISSUE RELAT ING TO DEPRECIATION AND ADDITIONAL DEPRECIATION ON THE WINDMILL. THE VIEW TAKEN BY THE ASSESSING OFFICER WAS IN CONSONANCE WITH THE RATIO LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. HI TECH ARAI LTD . 321 ITR 477 (MAD.) THIS FACT ALTHOUGH HAS BEEN MENTIONED BY THE LD. CIT HIMSELF AT PAGE 3 OF THE IMPUGNED ORDER, HOWEVER, HE HAS STATED THAT THE DEPARTMENT H AS NOT ACCEPTED OUTCOME OF THE SAID DECISION OF THE HONBLE MADRAS HIGH COU RT, BUT NOTHING IS BROUGHT ON RECORD THAT THE SAIS DECISION IS REVERSED BY TH E HONBLE SUPREME COURT. ON A SIMILAR ISSUE, ITAT, JODHPUR B ENCH, JODHPUR IN ITA NO.37/JODH/2012 IN THE CASE OF M/S BANSWARA SYNTEX LTD. VS. CIT (SUPRA). THEREFORE, IT CAN BE SAID THAT THE VIEW TAKEN BY TH E ASSESSING OFFICER WAS IN CONSONANCE WITH THE DECISION OF THE ITAT IN THE AFO RESAID REFERRED TO CASE. SO THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT TH E ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THAT VIEW OF THE MATTER, WE SET-ASIDE THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT PASSED BY THE LD. CIT AND TH E ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS RESTORED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE IMPUNGED DEPRECIAT ION CLAIM IS IN RESPECT OF SAME WINDMILL INSTALLED AT KALUMAN KONDAM, MADURAI WHICH WAS SUBJECT ITA NO. 519/JP/16 M/S MEHRU ELECTRICALS & MECHANICAL ENGINEERS VS. C IT, ALWAR 6 MATTER OF ASSESSMENT PROCEEDINGS FOR AY 2008-09 AND THEREAFTER, THE SUBJECT MATTER OF PROCEEDINGS U/S 263 OF THE ACT WHICH WAS SUBSEQUENTLY SET-ASIDE BY THE COORDINATE BENCH VIDE ITS ORDER DATED 28.02.201 4 REFERRED SUPRA. THE AO IS THEREFORE CONSISTENTLY TAKING THE SAME VIEW ON T HE DEPRECIATION CLAIM ON THE WINDMILLS. THE SAID VIEW IS IN CONSONANCE WITH THE DECISION OF THE HONBLE MADRAS HIGH COURT IN CASE OF CIT VS. HI TECH ARAI LTD. (SUPRA), THE DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF PARRY ENGINEE RING AND ELECTRONICS PVT LTD (APPEAL NO. 604/2012 DATED 29.1.2013) AND WHICH HAS BEEN FOLLOWED AND CONFIRMED BY HONBLE RAJASTHAN HIGH COURT IN CASE O F K.K. ENTERPRISES (SUPRA). IN LIGHT OF ABOVE, WE ARE OF THE VIEW THAT THE LD. CIT WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING O FFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THAT VIEW OF THE MATTER, WE SET- ASIDE THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT PASSED BY THE LD. CIT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OF FICER IS RESTORED. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/0 9/2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 23/ 09/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S MEHRU ELECTRICALS AND MECHANICAL ENGINEERS 2. IZR;FKHZ@ THE RESPONDENT- THE PR. CIT, ALWAR ITA NO. 519/JP/16 M/S MEHRU ELECTRICALS & MECHANICAL ENGINEERS VS. C IT, ALWAR 7 3. VK;DJ VK;QDR@ CIT ALWAR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)- 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.519/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR