Regan Powertech Pvt Ltd, Chennai V. DCIT,CC-5(1), Chennai

ITA 569/CHNY/2021

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9624 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 12-10-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 06-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Condonation of delay; Set aside
• Section: 32; 143(3); 250

Judgement Text

आयकर अपीलीय अिधकरण, ’बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी वी दुगाŊ राव Ɋाियक सद˟ एवं ŵी जी. मंजुनाथा, लेखा सद˟ के समƗ Before Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member आयकर अपील सं./I.T.A. Nos.568 & 569/Chny/2021 िनधाŊरण वषŊ/Assessment Years: 2009-10 & 2010-11 M/s. Regen Powertech Pvt. Ltd., Sivanandam,, No. 1, Pulla Avenue, Shenoy Nagar, Chennai 600 030. [PAN:AADCR5531M] Vs. The Deputy Commissioner of Income Tax, Corporate Circle 5(1), Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri B. Ramakrishnan, F.C.A. ŮȑथŎ की ओर से/Respondent by : Shri Clement Ramesh Kumar, CIT सुनवाई की तारीख/ Date of hearing : 13.10.2022 घोषणा की तारीख /Date of Pronouncement : 28.10.2022 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: Both the appeals filed by the assessee are directed against common order of the ld. Commissioner of Income Tax (Appeals) 3, Chennai dated 28.10.2016 relevant to the assessment years 2009-10 and 2010-11. 2. Both the appeals filed by the assessee are delayed by 687 days in filing the appeal. The assessee filed petition for condonation of delay in the form of an affidavit, wherein, it was stated as under: I.T.A. Nos. 568 & 569/Chny/21 2 1. That the order of the Commissioner of Income Tax (Appeals)-3, Chennai passed under section 250 of the Income Tax Act dated 21.11.2019 for the A Y 2009-10, was served on the deponent on 21.11.2019. 2. The Deponent had filed an appeal against the above Appellate Order before the Income Tax Appellate Tribunal, Chennai on 07.12.2021 with a delay of 687 days. 3. In this regard, the Deponent submits that the delay in filing of appeal before this Hon'ble Authority is attributable due to the following reasons: a. The Corporate Insolvency Resolution Process (CIRP) was initiated under Insolvency and Bankruptcy Code, 2016, wherein the National Company Law Tribunal ('NCL T') has admitted the application of Operational Creditor was admitted by passing on order in IBA No 1099/2019 dated 13-12-2019, appointing Interim Resolution Professional. b. Accordingly, w.e.f 13-12-2019 the IRP took charge of all pending proceedings/ claims/ suits against the company, and hence there was delay with respect to filing of subject appeal against the subject order of CIT(A). c. Subsequently in the month of March 2020, Nation-wide Lockdown was announced due to the Outbreak of the COVID- 19 Pandemic. Further, in the month of May 2021, State wise Lockdown was announced in the state of Tamil Nadu due to the Outbreak of second wave of COVID-19 Pandemic. d. Therefore, due to lack of follow-up on account of frequent lockdowns and restrictions due to COVID-19, the deponent had missed to file an appeal before the Hon'ble Income Tax Appellate Tribunal. The deponent had revisited the issue and decided to now file the appeal with a delay, due to the unavoidable reasons as mentioned above. Subsequently, the order of CIT(A) was forwarded to M/s CNGSN & Associates LLP, Chartered Accountants to file appeal before the Hon'ble ITAT and the same is now being filed on 07.12.2021 with a delay of 687 days. 4. It is most humbly and respectfully submitted that the delay in filing appeal was not wilful and was due to circumstances was not in control of the deponent as stated above. I.T.A. Nos. 568 & 569/Chny/21 3 5. The Deponent relies on the decision of Supreme Court in Collector, Land Acquisition V. Mst. Katiji in [1987] 1987 taxmann.com 1072 (SC) wherein it was held that "Ordinarily, a litigant does not stand to benefit by lodging an appeal late. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated as against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties." 6. Considering the above, the Deponent most respectfully and humbly prays before this Hon'ble Tribunal to kindly admit the appeal and condone the delay in filing the appeal. 7. It is further affirmed that the above stated facts are true and correct to the best of my knowledge and belief. 2.1 From the above, it is very clear that the appeals have been belatedly filed mainly on two counts, viz., (i) Corporate Insolvency Resolution Process (CIRP) was initiated under Insolvency and Bankruptcy Code, 2016, wherein the National Company Law Tribunal has admitted the application of operational creditor was admitted by passing an order dated 13.12.2019 appointing Interim Resolution Professional. Therefore, there was nobody to take care of the activities of the company upto 13.12.2019. (ii) Subsequently, in the month of March, 2020, nationwide lock down was announced due to outbreak of Covid-10 pandemic. Under these circumstances, the assessee was unable to file the appeals in time. The ld. DR has not raised any objection. Accordingly, we condone the delay in filing the appeals and I.T.A. Nos. 568 & 569/Chny/21 4 admit the appeals for adjudication. 3. The only common issue involved in both the appeals is relating to higher depreciation claimed by the assessee. According to the Assessing Officer, the assessee is entitled to claim the depreciation only 15%. According to the assessee, it is entitled to claim the depreciation at 80%. In the first round of litigation for the assessment years 2009-10 and 2010-11, the issue has been travelled to ITAT and the ITAT in I.T.A. Nos.60 & 61/Chny/2017 dated 06.04.2017 remitted the issue back to the file of the Assessing Officer to consider higher claim made by the assessee in accordance with law and the appeals were allowed for statistical purposes. Consequently, the order under section 254 of the Income Tax Act, 1961 [“Act” in short] dated 18.12.2018, the Assessing Officer denied the higher claim of depreciation on the ground that the assessee has not appeared for hearing and not substantiated with bills in support of claim of depreciation even on 17.12.2018. The depreciation of ₹.3,99,24,622/- was already disallowed in the order under section 143(3) r.w.s. 147 of the Act dated 30.11.2015 and assessed the income of the assessee. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer. I.T.A. Nos. 568 & 569/Chny/21 5 4. Before us, the ld. Counsel for the assessee has submitted that the NCLT has appointed Interim Resolution Professional on 13.12.2019 and before that nobody was there to represent the assessee, because, proceedings are pending before the NCLT and submitted that one more opportunity should be given to the assessee to substantiate the case. He also submitted that under similar facts and circumstances for the assessment year 2014-15 in I.T.A. No. 570/Chny/2021 dated 15.07.2022 in assessee’s own case, the Tribunal has considered the issue and remitted the matter back to the file of the Assessing Officer to decide afresh in accordance with law and prayed that the same may be followed. 5. On the other hand, the ld. DR strongly supported the orders of authorities below. 6. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. We find that with regard to the claim of higher depreciation, in the first round of litigation, the Assessing Officer was directed to consider the issue afresh and pass order in accordance with law. However, the assessee I.T.A. Nos. 568 & 569/Chny/21 6 has not appeared before the Assessing Officer and not filed the details as called for. Therefore, the Assessing Officer vide his order under section 254 of the Act dated 18.12.2018 stick to his original order under section 143(3) r.w.s. 147 of the Act dated 30.11.2015 and denied the claim of the assessee. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer. The ld. Counsel for the assessee has explained that there was nobody from the company to appear before the Assessing Officer due to insolvency proceedings were carried before the NCLT and only on 13.12.2019 Interim Resolution Professional was appointed and therefore, he has submitted that one more opportunity may be granted to the assessee to file all the details before the Assessing Officer. We find that the request made by the ld. Counsel for the assessee is genuine. Similar issue was subject matter in appeal before the Tribunal in assessee’s own case for the assessment year 2014-15, wherein, the Tribunal has observed and held as under: “7. The first effective ground raised in the appeal of the assessee relates to confirmation of disallowance of depreciation claimed under section 32 of the Act amounting to ₹.20,48,31,501/-. In the assessment order, the Assessing Officer has noted that the assessee has claimed ₹.42,73,79,644/- as depreciation in the return of income. The assessee has claimed depreciation at the rate of 80% and additional depreciation on certain plant and machinery. The Assessing Officer asked the assessee as to why the depreciation claimed at the rate of 80% should not be restricted to 15% since I.T.A. Nos. 568 & 569/Chny/21 7 it will come under the category “(xii) Renewable Energy devices being windmills and any specially designed device which run on windmills”. The assessee has stated before the Assessing Officer that the said Plant & Machinery will come under the category of “Machinery and Plant used in the manufacture of any of the above sub-items”. After considering the submissions of the assessee, the Assessing Officer has opined that since the assessee’s business is manufacturing, supply, erection, commission and operation & maintenance of the windmills and moreover, the assessee has not given any breakup of assets based on the above said categories, the eligible depreciation of the newly added plant & machinery has been restricted to 15% as per section 32 of the Act and the balance excess depreciation claimed of ₹.20,48,31,501/- was brought to tax. On appeal, since the assessee failed to furnish any material evidence so as to substantiate the claim of depreciation at 80% on the newly added plant and machinery, the ld. CIT(A) confirmed the disallowance of excess depreciation claimed by the assessee. 7.1 We have heard the rival contentions. The assessee has claimed depreciation at the rate of 80% on the newly added plant & machinery. However, the Assessing Officer restricted the claim of depreciation at 15% on the ground that the same will come under the category “(xii) Renewable Energy devices being windmills and any specially designed device which run on windmills”, which was confirmed by the ld. CIT(A). The stand of the assessee is that as per the Appendix-I of Rule 5 of the IT Rules, 1962, in Sl. No. Part A, III 8(xiii) Clause (L) “wind mills and any specially designed devices which run on wind mills” and Clause (R) “Machinery and Plant used in the manufacture of any of the above sub” are allowed depreciation at 80%. 7.2 The rates for claiming depreciation under the Income Tax Act for various block of assets is specified under Rule 5 of Income Tax Rules, 1962, read with New Appendix-I of the Rules. As per said New Appendix-I, rate of depreciation for windmill are specifically given in Part A, as per which windmills and any specially designed devices which run on windmills are eligible for depreciation @ 80%. This was further clarified by CBDT vide its Notification No.15/2012 dated 30.03.2012, as per which, windmills installed on or before 31.03.2012 are eligible for 80% depreciation. However, in the present case, on perusal of the assessment order or appellate order, it is not clear as to whether the said windmills and any specially designed devices which run on windmills are installed on or before 31.03.2012 or on or after 01.04.2012. Accordingly, we direct the Assessing Officer to verify as to whether the windmills are installed on or before 31.03.2012 or on or after 01.04.2012 and decide the issue afresh in accordance with law after affording an opportunity of being heard to the assessee. We make it clear that if the said windmills and any specially designed devices which run on I.T.A. Nos. 568 & 569/Chny/21 8 windmills are installed on or before 31.03.2012 then the assessee would be eligible for depreciation at 80% and if the same was installed on or after 01.04.2012 then the assessee would be eligible for claiming depreciation at 15% only.” 7. Under the above facts and circumstances, we are of the considered opinion that one more opportunity should be given to the assessee to substantiate its case before the Assessing Officer. In view of the above, we set aside the order passed by the ld. CIT(A) and direct the assessee to file all the details before the Assessing Officer and thereafter, the Assessing Officer is directed to decide the issue afresh in accordance with law after verification of details as may be filed by the assessee keeping in view of the decision of the Tribunal in assessee’s own case in I.T.A. No. 570/Chny/2021 dated 15.07.2022. Accordingly, the ground raised by the assessee is allowed for statistical purposes. 8. For the assessment year 2010-11 also, the facts are similar. Therefore, we direct the Assessing Officer to decide the issue in accordance with law as decided hereinabove for the assessment year 2009-10. I.T.A. Nos. 568 & 569/Chny/21 9 9. In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced on 28 th October, 2022 at Chennai. Sd/- Sd/- (G. MANJUNATHA) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 28.10.2022 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ (अपील)/CIT(A), 4. आयकर आयुƅ/CIT, 5. िवभागीय Ůितिनिध/DR & 6. गाडŊ फाईल/GF.