James Andrew Newton Art Exports Pvt. Limited, JODHPUR V. ACIT, JODHPUR

ITA 589/JODH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54362 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Depreciation; Capital expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR (BEFORE SHRI R.K. GUPTA AND SHRI .N.L. KALRA ) ITA NO.589/JU/2009 ASSESSMENT YEAR : 2006-07 PAN: AACJ 5769 Q M/S. JAMES ANDREW NEWTON ART EXPORTS (P) LTD. VS THE ACIT 86, JAWAHAR COLONY, RATANADA CIRCLE- 1 JODHPUR JODHPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJENDRA JAIN DEPARTMENT BY: SHRI G.R. KOKANI DATE OF HEARING: 07-12-2011 DATE OF PRONOUNCEMENT: 09-12-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD.CIT(A), JODHPUR DATED 25-09-2009 FOR THE ASSESSMENT YEAR 2006-07. 2.1 DURING THE COURSE OF PROCEEDINGS BEFORE US, TH E LD. AR HAS FILED THE REVISED GROUNDS OF APPEAL AND THESE ARE REPRODUCED AS UNDER :- 1. THAT THE ORDER DATED 24-09-2009 PASSED BY THE LD.CIT(A) JODHPUR FOR THE ASSESSMENT YEAR 2006-07 CONFIRMING THE ACTION OF THE AO FOR NOT ALLOWING HI GHER RATE OF DEPRECIATION ON A PART OF HE COST INCURRED AND F OR IN CONNECTION WITH ERECTION AND COMMISSIONING OF WIND ELECTRIC GENERATOR AND THEREFORE, THE SAME IS BADE IN LAW AN D ON FACTS AND THE SAME DESERVES TO BE QUASHED 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A) ERRED IN NOT CONSIDERING THE CI VIL, ELECTRICAL AND TNEB CHARGES INCURRED IN CONNECTION WITH THE ERECTI ON AND COMMISSIONING OF WIND ELECTRIC GENERATOR (WEG) AND THE COST OF 2 ERECTION AND COMMISSIONING OF THE ABOVE WEG AGGREGA TING TO RS. 3100500/- AS PART OF THE COST OF THE WEG FOR THE PU RPOSE OF ALLOWING HIGHER RATE OF DEPRECIATION OF 80% AS PER APPENDIX I TO THE RULE 5 OF THE I.T. RULES, 1962 WHICH DESERVES T O BE FULLY ALLOWED HAVING BEEN INCURRED TO BRING THE WEG IN EX ISTENCE AND WORKING CONDITION. 2.2 THE AO WHILE ALLOWING THE DEPRECIATION HAS NOT ALLOWED DEPRECIATION @ 10% ON THE FOLLOWING ITEMS WHILE DEPRECIATION AT 80% HAS BEEN ALLOWED ON OTHER ITEMS. ITEMS AMOUNT OF INVESTMENT /BILL PRESCRIBED RATE ALLOWABLE DEPRECIATION (AT HALF OF THE PRESCRIBED RATE CLOSING WDV CIVIL, ELECTRICAL AND TNEB CHARGES INCURRED IN CONNECTIN WITH ERECTION AND COMMISSIONING OF VESTAS TYPE V39-500 KW WIND ELECTRIC GENERATOR AND COST OF ERECTION AND COMMISSIONING OF VESTAS TYPE V39-500 KW WIND ELECTRIC GENERATOR 31,00,500 10% 1,55,025 29,45,475 2.3 WE HAVE HEARD BOTH THE PARTIES. THE ABOVE REFER RED ISSUE HAS BEEN DECIDED BY JODHPUR BENCH IN THE CASE OF DCIT VS DELHI RAJASTHA N TRANSPORT CO (ITA NO. 195/JU/2010 DATED 11-02-2011). IT WILL BE USEFUL TO REPRODUCE PARA 19 AND 20 FROM THE ORDER OF THE TRIBUNAL REFERRED ABOVE AS UNDER:- 19. IT IS NOT DISPUTED THAT THE ASSESSEE HAS NOT INCURRED VARIOUS EXPENSE I.E. POWER EVACUATION CHARGES RS. 10,00,000 /- AND RS. 5,00,000/- SUB-LEASE OF LAND RS. 1,00,000/-, POWER PURCHASE AG REEMENT CHARGES OF RS. 1,00,000/-. THE ASSESSEE HAS TREATED THE ABOVE EXPE NSE AS CAPITAL EXPENDITURE AND DEPRECIATION WAS CLAIMED THEREON,. HOWEVER, THE AO AND LD.CIT(A) DENIED THE SAME ON THE GROUND NOT ELIGIBL E FOR DEPRECIATION 3 WHEN THE ASSESSEE RAISED THE ALTERNATIVE CONTENTION BEFORE THE LD.CIT(A) SIMPLY REJECTED THAT ON THE GROUND THAT THIS CONTEN TION WAS NOT RAISED BEFORE THE AO. IN ANY CASE WHEN THE ASSESSEE HAS IN CURRED CERTAIN EXPENDITURE IN RELATION TO BUSINESS OF THE ASSESSEE I.E. TO BRING THE WIND MILL IN EXISTENCE, THE AO EITHER HAS TO TREAT THE E XPENSES CAPITAL OR REVENUE IN NATURE. HE CANNOT DENY ON THE GROUND THA T THE ASSESSEE HAS NOT RAISED THE CONTENTION INITIALLY. 20. WE THEREFORE, SET ASIDE THE ORDER PASSED BY THE LD.CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO TO CONSIDER THIS ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OP PORTUNITY TO THE ASSESSEE. THE GROUND OF APPEAL RAISED BY THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSES. 2.4 FOLLOWING THAT ORDER OF THE ITAT JODHPUR BENCH , WE REMIT THE ISSUE BEFORE THE AO TO DECIDE THE SAME AS PER FINDING OF THE TRIBUNA L IN THE CASE OF DELHI RAJASTHAN TRANSPORT CO LTD. (SUPRA). HENCE, THE APPEAL OF TH E ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09-1 2-2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR DATED: 09 /12/2011 MISHRA COPY TO: 1. M/S. JAMES ANDREW NEWTON ART EXPORTS (P) LTD. JO DHPUR 2. THE ACIT, CIRCLE- 1, JODHPUR 3.THE LD. CIT (A) BY ORDER 4.THE CIT 5.THE D/R 6.THE GUARD FILE (ITA NO.589/09 AR. ITAT, JODHP UR 4