Appeal details
Counselvise Citation
[2021] 108 COUNSELVISE.COM (IT) 2779 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 6 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-04-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
H
Assessment Year
2006-2007
Appeal Filed On
24-09-2018
Judgement Text
IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, AM & SHRI RAVISH SOOD , JM ./ I.T.A. NO . 5443 /MUM/2018 ( / ASSESSMENT YEAR: 20 06 - 07 ) KOKUYO CAMLIN LTD. 48/2, HILTON HOUSE, CENTRAL ROAD, MIDC, ANDHERI (EAST), MUMBAI - 400 093 / VS. A CIT 1 0 (1)(2) , AAYAKAR BHAVA, MUMBAI ./ ./ PAN NO. A A A CC1647E ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RA JESH AATHAVALE , AR / RESPONDENTBY : SHRI GURBINDER SINGH , DR / DATE OF HEARING : 11.02 .202 1 / DATE OF PRONOUNCEMENT : 22.04.2021 / O R D E R PER S. RIFAUR RAHMAN (ACCOUNTANT MEMBER) : THE PRESENT A PPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) - 17 , IN SHORT LD. CIT(A), MUMBAI, D ATED 06.07.18 FOR AY 20 06 - 07 . 2 I.T.A. NO. 5443 /MUM/201 8 KOKUYO CAMLIN LTD. 2 . THE BRIEF FACTS OF THE CASE ARE , THE ORIGIN AL ASSESSMENT UNDER SECTION 143 (3) OF THE INCOME TAX ACT (IN SHORT ACT) WAS PASSED BY DISALLOW ING THE CLAIM OF ADDITIONAL DEPRECIATION AMOUNTING TO 59,10, 918/ ON THE BASIS THAT THE ASSESSEE DOES NOT FULFILL THE CONDITIONS UNDER SECTION 32 (1) (IIA) OF THE ACT. IN THE SECOND APPELLATE PROCEEDINGS BEFORE ITAT, ITAT AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, SET ASIDE AND RESTORED THE ISSUE BACK TO THE FILE OF AO F OR CONSIDERATION OF DEPRECIATION AS PER LAW AND TAKING INTO ACCOUNT THE DETAILS SUBMITTED BY THE ASSESSEE. THE AO PASSED ORDER GIVING EFFECT TO THE ORDER OF ITAT, WHICH WAS FURTHER RECTIFIED VIDE ORDER DATED 23.3.2017. IN THE RECTIFICATION ORDER UNDER SECTION 143(3)/254/147 OF THE ACT, ON THE ISSUE OF ADDITIONAL DEPRECIATION THE AO GRANTED RELIEF OF 37,48, 136/ AND SUST AINED THE DISALLOWANCE OF 21,62, 782/ WITH THE FI NDING THAT THE TWIN CONDITIONS I.E., THE ASSETS SHOULD BE ACQUIRED AND INSTALLED AFTER 31.03.2005 , WAS NOT SATISFIED . IN THE PRESENT CASE , THE ASSET WAS ACQUIRED BEFORE 31.03.2003 BUT INSTALLED AFTER 31.03.2005. AS PER THE OPINION OF AO, ASSESSEE IS ENTITL ED TO CLAIM NORMAL DEPRECIATION BUT NOT ADDITIONAL DEPRECIATION. ACCORDINGLY THE 3 I.T.A. NO. 5443 /MUM/201 8 KOKUYO CAMLIN LTD. ADDITIONAL DEPRECIATION WAS DISALLOWED. IN RESPONSE TO RELIANCE ON THE DECISION OF COORDINATE BENCH IN THE CASE OF M/S EURO PRATIK ISPAT PRIVATE LIMITED (ITA NO. 1682/M/2011 D ATED 02.04.2014), ASSESSING OFFICER OBSERVED THAT THE ABOVE SAID DECISION IS CHALLENGED BEFORE HONBLE HIGH COURT. 3. AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD CIT(A), LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US RAISING FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF ADDITIONAL DEPRECI ATION OF INR 21,62,782 MADE BY THE LEARNED ASSESSING OFFICER OUT OF THE TOTAL CLAIM OF INR 59,10,918 OF THE APPELLANT AS PER SECTION 32(1) (IIA) OF THE INCOME TAX ACT, 1961 ('THE ACT'). ' 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE MATERIAL DATE FOR CLAIMING ADDITIONAL DEPRECIATION IS THE DATE OF INSTALLATION AND NOT THE YEAR OF ACQUISITION. 4 I.T.A. NO. 5443 /MUM/201 8 KOKUYO CAMLIN LTD. 3. THE APPELLANT RESERVES THE RIGHT TO ADD, ALTER OR DELETE TO THE GROUND OF APPEAL OF THE TIME OF OR BEFORE HEARING. 4. BEFORE U S , LD AR BROUGHT TO OU R NOTICE FINDINGS OF LD CIT(A) IN PARA NO. 2, 4, 5 AND HE BROUGHT TO OUR NOTICE THE PURPOSE OF INTRODUCTION OF ADDITIONAL DEPR ECI ATION WITH EFFECT FROM 1 APRIL 2006. HE BROUGHT TO NOTICE THE REASONS FOR ENHANCEMENT OF THE ADDITIONAL DEP RE C IATION FROM 10% TO 20% AND SUBMITTED THAT THE MAIN PURPOSE IS TO ENCOURAGE NEW INVESTMENT IN THE MANUFACTURING SECTOR AND IN ORDER TO INCREASE THE INSTALLED CAPACITY FOR AVAILING THE INITIAL DEPR EC IATION. HE STRESSED THE POINT THAT THE RELEVANCE IS FOR INSTALLATION. FURTHER HE BROUGHT TO OUR NOTICE FOLLOWING CASE LAW : - I) PCIT VRS. IDMC LTD. (2017) 78 TAXMANN.COM 285 (GUJ) II) JCIT VRS. LOTUS ENERGY (INDIA) LTD (2016) TAXAMNN.COM 364 (MUM - TRIB) III) EURO PRATIK ISPAT PVT. LTD. VRS. ACIT (ITA NO. 1682/MUM/2011) 5 I.T.A. NO. 5443 /MUM/201 8 KOKUYO CAMLIN LTD. 5. ON THE OTHER HAND, LD D R RELIED ON THE FINDINGS OF LOWER AUTHORITIES AND SUBMITTED THAT ALL THE CASE LAW RELIED BY THE AR ARE ALREADY CONSIDERED BY LD CIT(A) AND DISTINGUISHABLE. 6. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. WE NOTICE THAT ASSESSEE HAS PURCHASED THE MACHINERY BEFORE 31 3 2003 WHICH WAS PART OF CAPITAL WORK IN PROGRESS, WHICH WAS NOT INSTALLED. EVEN THOUGH ASSESSEE HAS PURCHASED THE ABOVE SAID MACHINERY BUT INSTALLED THE SAME AFTER 1.4.2005. THE ISSUE BEFORE US IS WHETHER THE ASSESSEE IS ELIGIBLE T O CLAIM THE ADDITIONAL DEPRECIATION ON THE MACHINERY WHICH WAS INSTALLED DURING THE YEAR BUT PURCHASED BEFORE 1.4.2005. WE NOTICE THAT SIMILAR ISSUE WAS CONSIDERED BY THE COORDINATE BENCH IN THE CASE OF EURO PRATIK ISPAT PRIVATE LIMITED (SUPRA) AND HELD AS BELOW: - 2.3.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. EARLIER THE ADDITIONAL DEPRECIATION WAS ALLOWED IN THE CASE OF A NEW INDUSTRIAL UNDERTAKING DURING ANY PREVIOUS YEAR IN WHICH IT WOULD START MANUFACTURING OR PRODUCING ANY ARTICLE OR THING ON OR AFTER THE 01.04.2002 OR TO ANY INDUSTRIAL UNDERTAKING EXISTING BEFORE THAT DATE IF IT ACHIEVED SUBSTANTIAL EXPANSION DURING THE PREVIOUS 6 I.T.A. NO. 5443 /MUM/201 8 KOKUYO CAMLIN LTD. YEAR BY WAY OF INCREASE IN ITS INSTALLED CAPACITY BY NOT LESS THAN TEN PER CENT. HOWEVER,IN ORDER TO ENC OURAGE INVESTMENT,BY INSERTING A NEW SECTION,AD WAS ALLOWED TO THE INDUSTRY ON THE CONDITION THAT THE ASSETS SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31.3.2005. IN OUR OPINION,PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT,DO NOT REQUIRES THAT THE P&M HA S TO BE PUT INTO USE IN THE YEAR IN WHICH IT IS ACQUIRED FOR THE PURPOSE OF CLAIMING AD.FROM THE READING THE EXPLANATORY NOTES;WITH REGARD TO INTRODUCTION OF THE SECTION IN THE RELEVANT YEAR;IT IS EVIDENT THAT WHAT IS IMPORTANT AND MATERIAL IS THE YEAR OF ACQUISITION IN THE CASE OF SHIPS OR AIRCRAFT AND THE YEAR OF INSTALLATION IN THE CASE OF MACHINERY OR PLANT.IF THE INSTALLATION OF A PLANT IS SPREAD OVER MORE THAN A YEAR,THE RELEVANT YEAR FOR THE GRANT OF ALLOWANCE WOULD BE THE YEAR IN WHICH THE INSTALLAT ION IS COMPLETED.AS IN THE CASE OF INVESTMENT ALLOWANCE, SO ALSO IN THE CASE OF AD,THE MATERIAL DATE IS THE DATE OF INSTALLATION AND NOT THE YEAR OF ACQUISITION.OUR VIEWS ARE BASED ON THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT,DELIVERED IN THE CASE OF SURAMA TUBES(P.)LTD. (201ITR124).IN THE CASE UNDER CONSIDERATION,AD HAS BEEN DISALLOWED BY THE FAA ON THE GROUND THAT P&M WERE ACQUIRED BEFORE 31.03.2008.IN OUR OPINION MACHINERY WAS INSTALLED IN THE AY.UNDER APPEAL, THOUGH ACQUISITION OF THE P&M HAD STAR TED IN THE EARLIER AY.TILL A MACHINE IS NOT 7 I.T.A. NO. 5443 /MUM/201 8 KOKUYO CAMLIN LTD. ASSEMBLED IN A MANNER THAT IT COULD BE USED TO MANUFACTURE, IT CANNOT BE HELD THAT IT HAD BEEN INSTALLED. MERE PURCHASING OR SHIFTING IT TO FACTORY PREMISES IS NOT ENOUGH. ASSESSEE HAD CLAIMED AD @10%,AS THE P &M HAD WORKED FOR A PERIOD LESS THAN ONE YEAR. IT IS A COMMON PHENOMENON THAT IN BIG PROJECTS, INSTALLATION OF MACHINERY TAKES VERY LONG TIME BECAUSE OF THE SHEER VOLUME OF THE WORK TO BE CARRIED OUT.IF AN ASSESSEE IS NOT SUCCESSFUL IN INSTALLING P&M IN ONE YEAR AND CARRIES FORWARD THE INSTALLATION WORK IN SUBSEQUENT YEAR/YEARS IT CANNOT BE DENIED ANY BENEFIT ON THE GROUND THAT IT HAD ACQUIRED THE P &M IN EARLIER YEAR. THE INTENT OF THE LEGISLATURE WAS TO ATTRACT INVESTMENT, SO IN OUR OPINION THE SECTION CAN BE TERMED AS BENEVOLENT PROVISION. IN THE CASE UNDER CONSIDERATION PRODUCTION STARTED FROM 01.01.2006.BEFORE THAT FABRICATION AND COMPLETION OF P&M WAS GOING ON.TREATMENT GIVEN BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS TO THE P&M WAS IN ACCORDANCE WITH THE ACCOUNTING STANDARDS (AS)AND THE AO/FAA HAS NOT DENIED THE FACT THAT THE ASSESSEE WAS FOLLOWING AS.THEREFORE,IN OUR OPINION,ASSESSEE WAS ENTITLED TO CLAIM AD @OF 10%.REVERSING THE ORDER OF THE FAA,WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE A SSESSEE. 8 I.T.A. NO. 5443 /MUM/201 8 KOKUYO CAMLIN LTD. 7. W E FURTHER NOTICE THAT SIMILAR VIEW WAS ALSO EXPRESSED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF IDMC LTD (SUPRA). THEREFORE, R ESPECTIVELY FOLLOWING THE ABOVE DECISIONS WHICH ARE APPLICABLE MUTATIS MUTANDIS TO THE PRESENT CASE, WE ARE I NCLINED TO ACCEPT THE SUBMISSION OF LD. AR. A CCORDINGLY GROUND S RAISED BY THE ASSESSEE ARE ALLOWED. 8 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.04. 2021 . SD/ - SD/ (RAVISH SOOD ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 22.04.2021 SR.PS. DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE ASSESSEE 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI
