Asstt. Commissioner of Income Tax-1, Kanpur V. M/S Ruksh International, Kanpur

ITA 576/LKW/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92142 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR PUNEET KUMAR
• Assessee Lawyers: SWARN SINGH
• Keywords: Depreciation; Additional depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 576 /LKW/201 3 ASSESSMENT YEAR: 2006 07 ACIT 1, KANPUR VS. M/S RUKSH INTERNATIONAL, 88/74, PLOT NO. 24, JAJMAU, KANPUR PAN:AABFR3706P (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SWARN SINGH, C.A. DEPARTMENT BY DR. PUNEET KUMAR, SR. DR DATE OF HEARING 30/04/2015 DATE OF PRONOUNCEMENT 1 1 /06/2015 O R D E R PER A. K. GARODIA, A.M. T HIS IS REVENUE S APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT I I KANPUR DATED 22 .0 3 .201 3 FOR A.Y. 2006 07 . 2. GROUND NO. 1 IS AS UNDER: - THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS. 149,804/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIVERSION OF INTEREST BEARING FUNDS FOR NON BUSINESS PURPOSES WITHOUT APPRECIATI NG THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 3. GROUND NO. 2 IS AS UNDER: - THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF 2 RS. 637,468/ - BEING INTEREST CAPITALISED BY THE ASSESSING OFFICER ON ACCOUNT OF USE OF JAJMAU UNIT FUNDS IN BANTHER UNIT WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 3 . LEARNED DR OF T HE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT (A). 4 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT LEARNED CIT (A) HAS GIVEN A CATEGORICAL FINDING IN PARA 2 OF HIS ORDER THAT UNSECURED LOAN GIVEN TO M/S REP INTERNATIONAL WERE FULLY COVERED BY THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. HE HAS ALSO GIVEN A FINDING THAT THE FUNDS OF JAJMAU UNIT RS. 127,49,180/ - WHICH WERE UTILIZED IN BANTHER UNIT WERE ALSO COVERED BY THE AFORESAID INTEREST FREE FUNDS. UNDER THESE FACTS, HE FOLLOWED THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. RELIANCE UTILITY AND POWER LTD. 178 TAXMAN 135 AND THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. RADICO KHAITAN LTD. 274 ITR 354 AND DELETED BOTH THESE DISALLOWANCES . LEARNED DR OF THE REVENUE COULD NOT CONTROVERT THESE FINDINGS OF CIT (A). HENCE WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A). BOTH THESE GROUNDS ARE REJECTED. 5. GROUND NO. 3 IS AS UNDER: - THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS. 187,720/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION AND ADDITIONAL DEPRECIATION ON EFFLUENT PLANT WITHO UT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 6. GROUND NO. 4 IS AS UNDER: - 3 THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEPRECIATION AND ADDITIONAL DEPRECIATION OF RS. 153,750/ - ON CHROME RECOVERY PLANT INSTEAD OF RS. 44,843.75, WHICH WAS CLAIMED BY THE ASSESSEE ITSELF IN ITS RETURN OF INCOME WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 7 . LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT (A). 8 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT LEARNED CIT (A) HAS GIVEN A CATEGORICAL FINDING IN PARA 3.7 OF HIS ORDER THAT COST OF CONSTRUCTION OF TANK ETC. FORMS AN INTEGRAL PART OF EFFLUENT TREATMENT PLANT AND THEREFORE, DEPRECIATION ON THE SAME IS ALLOWABLE AT THE RATE APPLICABLE FOR PLANT & MACHINERY AS AGAINST RATE OF BUILDING ALLOWED BY THE A.O. REGARDING CHRO ME RECOVERY PLANT ALSO, HE HAS GIVEN A CATEGORICAL FINDING IN PARA 3.7 OF HIS ORDER THAT IN RULE 5 OF THE INCOME TAX RULES, 1962, 100% DEPRECIATION IS ALLOWABLE AND SINCE THE PLANT IS USED FOR LESS THAN 180 DAYS IN THE PRESENT YEAR, IT IS ALLOWABLE @ 50% I N THE PRESENT YEAR. LEARNED DR OF THE REVENUE COULD NOT CONTROVERT THESE FINDINGS OF CIT (A). HENCE WE DECLINE TO INTERFERE IN THE ORDER OF CIT ( A ) ON THESE ISSUES ALSO BECAUSE EVEN IF A CLAIM WAS NOT MADE IN THE RETURN OF INCOME, IT CAN BE MADE BEFORE LEA RNED CIT (A) IF IT IS A LEGAL CLAIM AND ALL FACTS ARE AVAILABLE ON RECORD AS IN THE PRESENT CASE IN RESPECT OF THE ISSUE RAISED IN GROUND NO. 4 . HENCE, BOTH THESE GROUNDS ARE ALSO REJECTED. 9. GROUND NO. 5 IS AS UNDER: - THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS. 545,394/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS CLAIM OF ADDITIONAL DEPRECIATION ON RECONDITIONED IMPORTED MACHINERY WITH OUT APPRECIATING THE FACTS BROUGHT 4 ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 10. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT (A). 11. W E HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT LEARNED CIT (A) HAS RELIED UPON A JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS. HINDUSTAN MILK FOOD MANUFACTURER LIMITED AS REPORTED IN 96 ITR 278 AND BY HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. COCHIN COMPANY AS REPORTED IN 67 ITR 199 WHERE IT WAS HELD THAT THE MACHINES WHICH WERE RECONDITIONED WITH SUBSTANTIALLY NEW PARTS ARE TO BE TREATED AS NEW MACHINES. LEARNED CIT A) HAS REPRODUCED A CHART CONTAINING ANA LYSIS OF PERCENTAGE OF THE COST OF NEW PARTS TO TOTAL COST INDICATING SUCH PERCENTAGE AT 62.50% & 66.67% N TWO CASES, 75.89% & 77.32% IN TWO CASES AND MORE THAN 87% IN REMAINING THREE CASES. HENCE UNDER THESE FACTS, THE DECISION OF LEARNED CIT (A) IS IN LI NE WITH THESE JUDGMENTS FOLLOWED BY HIM. NO CONTRARY JUDGMENT IS CITED BY LEARNED DR OF THE REVENUE. HENCE WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON TH IS ISSUE ALSO. THIS GROUND IS ALSO REJECTED. 12. GROUND NO. 6 IS AS UNDER: - THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS. 280,323/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITIONAL DEPRECIATION ON VIBRATOR STAKING MACH INE WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 1 3 . LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT (A). 5 1 4 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT LEARNED CIT (A) HAS RELIED UPON A JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS. HINDUSTAN MILK FOOD MANUFACTURER LIMITED AS REPORTED IN 96 ITR 278 AND BY HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. COCHIN COMPANY AS REPORTED IN 67 ITR 199 WHERE IT WAS HELD THAT THE MACHINES WHICH WERE RECONDITIONED WITH SUBSTANTIALLY NEW PARTS ARE TO BE TREATED AS NEW MACHINES. LEARNED CIT A) HAS GIVEN A CATEGORICAL FINDING THAT IN THE FACTS OF THE PRESENT CASE, THESE JUDGMENTS ARE SQUARELY APPLICABLE. LEARNED DR OF THE REVENUE COULD NOT POINT OUT ANY MISTAKE IN THIS FINDING OF CIT (A). HENCE WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE ALSO. THIS GROUND IS A LSO REJECTED. 15. GROUND NO. 7 IS AS UNDER: - THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS. 80,494/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITIONAL DEPRECIATION ON DRUM AN D PADDLE, RS. 80,494/ - WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 16. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT (A). 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT LEARNED CIT (A) HAS RELIED UPON A JUDGMENT OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. SURANA TUBES LIMITED AS REPORTED IN 201 ITR 124 AND ON A JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF JANTA SUGAR INDUSTRIES VS. CIT AS REPORTED IN 295 ITR 448 WHERE IT WAS HELD THAT FOR CLAIMING DEPRECIATION AND INVESTMENT ALLOWANCE, MATERIAL DATE IS DATE OF INSTALLATION AND NOT DATE OF ACQUISITION. THE DISALLOWANCE WAS 6 MADE BY THE A.O. ON THIS BASIS THAT THE DRUMS OF RS. 898,835 AND PADDLES OF RS. 294,438 WERE PURCHASED AT THE END OF F.Y. 2004 05 BUT INSTALLED IN THE F.Y. 2005 06. SINCE AS PER THESE JUDGMENTS, THE MA TERIAL DATE IS DATE OF INSTALLATION AND NOT DATE OF ACQUISITION WE FIND NO INFIRMITY IN THE ORDER OF CIT (A). HENCE WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE ALSO. THIS GROUND IS ALSO REJECTED. 1 8 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KU MAR YADAV) ( A. K. GARODIA ) JUDI CIAL MEMBER ACCOUNTANT MEMBER DATED: 1 1 /0 6 /201 5 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR