Asst. CIT, Circle-2, Sangli V. M/s. Chaphalkar Brothers, Pune, Sangli

ITA 559/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6784 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Assessee Lawyers: S V DESHPANDE
• Keywords: Capital asset; Depreciation; Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 559/PN/2013 (ASSESSMENT YEAR: 2009-10) ACIT, CIRCLE-2, SANGLI APPELLANT VS. M/S. CHAPHALKAR BROTHERS, C/O. PRATAP TALKIES, 33, MAHAVEER NAGAR, SANGLI PAN NO.AABFC8307R RESPONDENT ASSESSEE BY : SHRI S.V. DESHPANDE REVENUE BY : SM T. S. PRAVEENA ORDER PER G.S. PANNU, A.M . : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), KOLHAPUR DATE D 17-12-2012 WHICH, IN TURN, HAS ARISEN FROM ORDER DATED 08-11-2011 PA SSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME-TAX ACT , 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN HOLDI NG THAT THE SUBSIDY OF ENTERTAINMENT DUTY AMOUNTS RECEIVED BY T HE ASSESSEE FIRM ARE CAPITAL RECEIPTS AND NOT REVENUE RECEIPTS AS HELD BY THE ASSESSING OFFICER. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN HOLDI NG THAT THE SUBSIDY OF ENTERTAINMENT DUTY AMOUNTS RECEIVED BY T HE ASSESSEE FIRM AMOUNTS TO CAPITAL NATURE AND NOT ON A REVENUE EVEN THOUGH IT IS NOT LINKED WITH CAPITAL OR TO ANY ASSET OR CA PITAL OUTLAY OR FOR BRINGING INTO EXISTENCE ANY NEW CAPITAL ASSET. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN ALLOW ING DEPRECIATION ON THE WIND MILL INSTALLED IN THE PREV IOUS YEAR RELEVANT TO A.Y. 2008-09 ON PRO-RATA BASIS AND IN N OT APPRECIATING THE FACT THAT THE EARTH WORK AND FOUNDATION IS NOTH ING BUT CIVIL WORK ITA NO 559/PN/2013 CHAP HALKAR BROTHERS ON WHICH DEPRECIATION IS ALLOWABLE @10%, WHEREAS, I NSTALLATION AND COMMISSIONING WORK CONSTITUTES BLOCK PLANT AND MACHINERY ON WHICH DEPRECIATION IS ALLOWABLE @15%. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN NOT A PPRECIATING THE RATIO LAID DOWN BY THE HON'BLE ITAT, PUNE, 'A' BENC H, PUNE IN THE CASE OF PUNAWALA FINEST AND AGRO PVT. LTD. VS. ACIT (2008) 118 TTJ (PUNE) 68, 12 DTR 211. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. IN SO FAR AS GROUND OF APPEAL NO. 1 & 2 ARE CONC ERNED THEY RELATE TO THE ISSUE AS TO WHETHER THE ENTERTAINMENT DUTY SUBS IDY RECEIVED BY THE ASSESSEE FROM THE STATE GOVERNMENT FOR CONSTRUCTION OF A MULTIPLEX IS IN THE NATURE OF A REVENUE RECEIPT OR CAPITAL RECEIPT. THE ASSESSING OFFICER BY FOLLOWING HIS STAND IN THE EARLIER ASSESSMENT YEARS , HELD THE RECEIPT OF SAID SUBSIDY AS A REVENUE INCOME CHARGEABLE TO TAX. THE CIT(A) HELD THE SUBSIDY AS A CAPITAL RECEIPT NOT CHARGEABLE TO TAX. THE REVENUE IS IN APPEAL BEFORE US AGGRIEVED BY THE AFORESAID DECISIO N OF THE CIT(A) 4. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT THE VIEW TAKEN BY THE CIT(A) IS IN CONSONANCE WITH THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE ASSESSEES OWN CASE VIDE ITA NO.1036/2010 AND 1147/2010 ORDER DATED 08-06-2011, A COPY OF THE SAID ORDER HAS ALSO BEEN PLACED ON RECORD BEFORE US. T HE REVENUE HAS NOT BROUGHT ANY MATERIAL TO SHOW ANY DEVIATION IN THE A BOVE FACTUAL MATRIX TILL NOW. THEREFORE, FOLLOWING THE AFORESAID JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE ASSESSEES OWN CASE, WE FIND NO E RROR IN THE ORDER OF THE CIT(A), WHICH IS HEREBY AFFIRMED. AS A CONSEQUENCE THE GROUNDS OF APPEAL NO.1 & 2 ARE DISMISSED. 5. THE ISSUE RAISED IN GROUNDS OF APPEAL NO. 3 & 4 RELATE TO ASSESSEES CLAIM FOR DEPRECIATION ON THE WINDMILL INSTALLED IN THE PREVIOUS YEAR RELEVANT TO THE PRECEDING ASSESSMENT YEAR 2008-09. THE CONT ROVERSY IN THE SAID GROUND CAN BE SUMMARIZED AS FOLLOWS. ITA NO 559/PN/2013 CHAP HALKAR BROTHERS 5.1 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER DISALLOWED A PORTION OF THE DEPRECIATION CLAIMED BY THE ASSESSEE ON WINDMILL TURBINE. THE ASSESSEE HAD CLAIMED DEPRECI ATION @80% ON THE ENTIRE COST OF WINDMILL TURBINE WHEREAS AS PER THE ASSESSING OFFICER DEPRECIATION @80% WAS NOT TO BE ALLOWED IN RESPECT OF THE COMPONENT OF COST OF CIVIL WORK IN RESPECT OF WINDMILL INSTALLAT ION AND ONLY ON THE BALANCE COST OF WINDMILL TURBINE THE DEPRECIATION WAS ALLOW ABLE @80%. THE ASSESSING OFFICER, THUS DISALLOWED DEPRECIATION TO THE EXTENT OF RS.37,15,597/-. IN MAKING SUCH DISALLOWANCE, THE A SSESSING OFFICER CONSIDERED THE DEPRECIATION ON THE WINDMILL INSTALL ED DURING THE PREVIOUS YEAR RELEVANT TO THE EARLIER ASSESSMENT YEAR 2006-0 7 AS WELL AS ANOTHER WINDMILL INSTALLED DURING THE PREVIOUS YEAR RELEVAN T TO THE ASSESSMENT YEAR 2008-09. THE ENTIRE DISPUTE WAS CARRIED IN APPEAL BEFORE THE CIT(A). 6. THE CIT(A) HAS DEALT WITH THE ISSUE AS UNDER : 7. THE ISSUE RAISED AT GROUNDS NO. 5 AND 6 PERTAIN S TO DISALLOWANCE OF DEPRECIATION ON WIND TURBINE OF ` 37,15,579/-. THIS ISSUE WAS A SUBJECT MATTER IN APPEAL FOR EARLI ER YEARS AS WELL I.E. IN 2007-08 AND 2008-09 WHEREIN CLAIM MADE FOR DEPRECIATION ON WINDMILL INSTALLED IN FINANCIAL YEA R 2006-07 WAS DISALLOWED. THE APPELLANT HAD FILED APPEAL BEFO RE THE ITAT, PUNE, WHICH WAS DISPOSED OF VIDE THEIR ORDER NO. 735/PN/11 AND 1336/PN/11 DATED 22/06/2012. FROM PERUSAL OF THIS ORDER IT APPEARS THAT MY DECISION I N ALLOWING THE CLAIM OF DEPRECATION ON COST OF FOUNDATION OF WIND TURBINE WHICH WAS COMMISSIONED IN FINANCIAL YEAR RELEVANT T O THE ASSESSMENT YEAR 2008-09 WAS NOT AGITATED IN APPEAL BY THE DEPARTMENT. THE APPELLANT HAD DISPUTED THE DISALLOW ANCE OF DEPRECIATION ON THE COST OF FOUNDATION OF WIND TURB INE WHICH WAS COMMISSIONED IN THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2006-07. THE HONOURABLE TRIBUNAL, I N THE AFOREMENTIONED JUDGMENT, HAS SET ASIDE THE ISSUE OF REWORKING OF DEPRECIATION ALLOWABLE ON THE COST OF FOUNDATION OF WIND TURBINE COMMISSIONED IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07 TO THE FILES OF THE ASSESSI NG OFFICER FOR RE-ADJUDICATION ON THE BASIS OF THE JUDGMENT GI VEN IN THE CASE OF CIT-III, PANE U/S COOPER FOUNDRY PVT. LTD. IN ITA NO. 1326 0/2010 DATED 14/06/2011 GIVEN BY THE HONOURABL E BOMBAY HIGH COURT. IN VIEW OF THE ABOVE, I HOLD, FO LLOWING MY OWN ORDER IN SLI/330/10-11 DATED 12/09/2011 FOR THE ASSESSMENT YEAR 2008-09 THAT THE SAME METHODOLOGY S HALL BE FOLLOWED IN COMPUTING THE ALLOWABLE DEPRECIATION AS I HAVE DIRECTED IN RESPECT OF THE WIND TURBINE INSTALLED A ND COMMISSIONED FROM OR AFTER THE FINANCIAL YEAR 2006- 07. THE DEPRECIATION ON THE WIND TURBINE INSTALLED DURING T HE FINANCIAL YEAR 2006-07 SHALL BE COMPUTED IN THE MAN NER IN WHICH DEPRECIATION IS COMPUTED FOLLOWING THE ORDER OF THE ITA NO 559/PN/2013 CHAP HALKAR BROTHERS HONOURABLE PUNE TRIBUNAL IN NO. ITA/735/PN/11 AND 1376/PN/11 DATED 22/06/2012. 7. PERTINENTLY AS THE GROUNDS OF APPEAL RAISED BY T HE REVENUE MANIFEST, THE ONLY ISSUE RAISED BEFORE US IS WITH R EGARD TO THE DEPRECIATION ON THE WINDMILL INSTALLED IN THE PREVIOUS YEAR RELE VANT TO THE ASSESSMENT YEAR 2008-09. IN THIS CONTEXT, THE CIT(A) DIRECTED THAT THE DEPRECIATION BE ALLOWED BY THE ASSESSING OFFICER IN THE SAME METHOD OLOGY AS DIRECTED BY HIM IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YE AR 2008-09. THE REVENUE IS AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A). 8. WE FIND THAT THE CIT(A) ALSO RECORDS A FINDING T HAT THE DECISION IN ALLOWING THE CLAIM OF DEPRECIATION ON COST OF FOUN DATION OF WIND TURBINE COMMISSIONED IN THE PREVIOUS YEAR RELEVANT TO THE A SSESSMENT YEAR 2008- 09 WAS NOT AGITATED BY THE DEPARTMENT FURTHER ON AP PEAL BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2008-09. NOTABLY, FOR ASSESSMENT YEAR 2008-09 THE DEPARTMENT HAD COME IN APPEAL BEFORE TH E TRIBUNAL VIDE ITA NO.1432/PN/2011 AGAINST THE ORDER OF THE CIT(A). T HE AFORESAID FINDING OF THE CIT(A) HAS NOT BEEN ASSAILED BY THE REVENUE BEF ORE US. FURTHER, A COPY OF COMMON ORDER OF THE TRIBUNAL VIDE ITA NOS.7 35/PN/2011, 1376/PN/2011, 816/PN/2011 AND 1432/PN/2011 PERTAINI NG TO ASSESSMENT YEARS 2007-08 AND 2008-09 DATED 22-06-2012 HAS ALSO BEEN PLACED BEFORE US, WHICH OSTENSIBLY SUPPORTS THE AFORESAID ASSERTI ON OF THE CIT(A). THEREFORE, THE GRIEVANCE RAISED BY THE REVENUE IN T ERMS OF THE AFORESAID GROUNDS OF APPEAL IS UNJUSTIFIED AS THE SIMILAR DIR ECTION OF THE CIT(A) HAS NOT BEEN CHALLENGED IN THE PRECEDING ASSESSMENT YEA R 2008-09 ON IDENTICAL FACTS. THEREFORE, IN VIEW OF THE PRINCIP LE OF CONSISTENCY, WE FIND NO REASONS TO INTERFERE WITH THE DIRECTION OF THE CIT( A) WHICH IS GIVEN IN CONTEXT OF SIMILAR FACTS, AS MADE BY HIM FOR ASSESS MENT YEAR 2008-09, WHICH HAS SINCE BEEN ACCEPTED BY THE DEPARTMENT. O N THIS ASPECT ITSELF, THE AFORESAID GROUND OF THE REVENUE DESERVES TO BE DISMISSED. WE HOLD SO. ITA NO 559/PN/2013 CHAP HALKAR BROTHERS 9. EVEN OTHERWISE, WE FIND THAT THE ISSUE RELATING TO THE ALLOWANCE OF DEPRECIATION ON THE COST OF FOUNDATION OF WINDMILL TURBINE IS LIABLE TO BE DECIDED IN FAVOUR OF THE ASSESSEE FOLLOWING THE JUD GEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT-III, PUNE VS. COOPER FOUNDARY PVT. LTD. IN ITA NO.1326/2010 DATED 14-06-2011. ON THIS ASPECT ALSO, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTE D THE FACTUAL POSITION. 10. CONSIDERED IN THE AFORESAID LIGHT, WE THEREFORE FIND NO MERIT IN THE GROUNDS OF APPEAL NO.3 & 4 RAISED BY THE REVENUE BE FORE US. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 25-07-2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 25 TH JULY 2014 SATISH COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT (A), KOLHAPUR 4) THE CIT, KOLHAPUR 5) THE DR, B BENCH, I.T.A.T., PUNE. BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY I.T.A.T., PUNE