The DCIT, Circle-4, Ahmedabad V. Gujchem Distillers India Ltd., Ahmedabad

ITA 616/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6923 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-12-2014
• Assessment Year: misc
• Appeal Filed On: 28-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KULSHRESTHA
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A. NO.616/AHD/2011 A.Y. 1985-86 2. ./ I.T.A. NO.617/AHD/2011 A.Y. 1986-87 THE DCIT CIRCLE-4 AHMEDABAD / VS. GUJCHEM DISTILLERS INDIA LTD. 6, NATIONAL CHAMERS 2 ND FLOOR, ASHRAM ROAD AHMEDABAD ./ ./ PAN/GIR NO. : AAACG 5586 G ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI B.KULSHRESTHA, SR.DR $% #'& / RESPONDENT BY : SHRI M.K. PATEL, A.R. ()'* / DATE OF HEARING 10/12/2014 +,-.'* / DATE OF PRONOUNCEMENT 19/12/2014 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGA INST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS )-VIII, AHMEDABAD (CIT(A) IN SHORT) BOTH IDENTICALLY DATED 16/12/20 10 PERTAINING TO ASSESSMENT YEARS (AYS) 1985-96 & 1986 -87. SINCE THE FACTS AND GROUNDS ARE IDENTICAL, BOTH THE APPEALS W ERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FO R THE SAKE OF CONVENIENCE. ITA NOS.616 & 617/AHD/20 11 DCIT VS. GUJCHEM DISTILLERS INDIA LTD. ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 2 - 2. FIRST, WE TAKE UP THE APPEAL IN ITA NO.616/AHD/2 011 FOR AY 1985-86. THE REVENUE HAS RAISED THE FOLLOWING COMMO N GROUNDS OF APPEAL, EXCEPT QUANTUM IN APPEALS (EXTRACTED FROM I TA NO.616/AHD/2011): 1. THE LD.CIT(A)-VIII, AHMEDABAD, HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF DEPRECIATION AND EX TRA SHIFT ALLOWANCE AMOUNTING TO RS.6,47,920/- (RS.9,53,365/- FOR AY 1986-87) MADE BY THE A.O. WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE MATERIALS BROUGHT ON RECORD BY THE ASS ESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF THE ASSESSING OFFICER. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LE ARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 3. BRIEFLY STATED FACTS ARE THAT THIS IS SEC OND ROUND OF LITIGATION. IN THE EARLIER ROUND, THE COORDINATE BENCH OF THIS TRI BUNAL HAD RESTORED THE MATTER TO THE FILE OF AO FOR DECIDING THE ISSUE IN THE LIGHT OF THE JUDGEMENT OF HONBLE HIGH COURT OF GUJARAT RENDERED IN THE CASE OF ACIT VS. ASHIMA SYNTEX LTD. REPORTED AT (2001) 251 ITR 133(GUJ.). THE AO YET AGAIN CONFIRMED THE ADDITION ON THE GROU ND THAT THE RATIO LAID DOWN IN THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF ACIT VS. ASHIMA SYNTEX LTD. IS NOT APPLICAB LE TO THE FACTS OF THE PRESENT CASE. THE AO NOTED THAT THE DISALLOWANCE W AS MADE PRIMARILY ON THE GROUND THAT THE DIRECTORS OF THE ASSESSEE-COMPA NY IN THEIR REPORTS HAVE STATED THAT SINCE 05 TH MAY, 1983, THE PLANT AT BILLIMORA WAS CLOSED DUE TO PENDING LITIGATIONS IN THE COURT REGARDING D ISPOSAL OF EFFLUENT. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), ITA NOS.616 & 617/AHD/20 11 DCIT VS. GUJCHEM DISTILLERS INDIA LTD. ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 3 - WHO AFTER CONSIDERING THE CASE OF THE ASSESSEE PART LY ALLOWED THE APPEAL, THEREBY THE LD.CIT(A) DELETED THE DISALLOWANCE OF D EPRECIATION AND EXTRA- SHIFT ALLOWANCE AMOUNTING TO RS.6,47,920/-. 4. THE LD.SR.DR, SHRI B.KULSHRESTHA SUPPORTED THE ORDER OF THE AO SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN A LLOWING THE CLAIM OF THE ASSESSEE IN RESPECT OF DEPRECIATION AND EXTRA-S HIFT ALLOWANCE, WHEN ADMITTEDLY THE DIRECTORS OF THE ASSESSEE-COMPANY HA VE CATEGORICALLY STATED THAT THE PLANT WAS CLOSED. 5. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE CLAIM REGARDING DEPRECIATION AND EX TRA SHIFT ALLOWANCE. HE SUBMITTED THAT ALL THE DETAILS WITH REGARD TO OP ERATING THE PLANT FOR BUSINESS WAS PLACED BEFORE THE AO. HE FURTHER SUBM ITTED THAT THE CONTROVERSY BEFORE THE HONBLE GUJARAT HIGH COURT W ITH REGARD TO RELEASE OF POLLUTANTS. HE SUBMITTED THAT THE ASSESSEE CARR IED OUT PRODUCTION ACTIVITY WITHIN THE PRESCRIBED NORMS. HE FURTHER S UBMITTED THAT IT WAS DEMONSTRATED BEFORE THE AO THAT PLANT HAS BEEN USED FOR BUSINESS PURPOSE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN FINDINGS ON FA CT IN PARAS-3.5 & 3.6 OF HIS ORDER, BY OBSERVING AS UNDER:- 3.5 FROM THE FACTS DISCUSSED ABOVE, IT IS OBSERVED THAT PRODUCTION ACTIVITY AT BILLIMORA SITE HAS BEEN DONE SINCE 1950 -51. THE PRODUCTION ITA NOS.616 & 617/AHD/20 11 DCIT VS. GUJCHEM DISTILLERS INDIA LTD. ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 4 - OF ALCOHOL FROM THE DISTILLERIES IS CLOSELY SUPERVI SED BY PROHIBITION AND EXCISE DEPARTMENT OF GOVT. OF GUJARAT. THE APPELLA NT FILED THE PRODUCTION REPORTS TO PROHIBITION AND EXCISE DEPART MENT OF THE STATE GOVERNMENT. THE REAL CONTENTION OF THE MATTER IS T HAT THE TRIAL WAS WITH RESPECT TO THE TREATMENT OF EFFLUENT KEEPING IN TAG , THE COURT ORDER AND NOT WITH THE RUNNING OF DISTILLERY. AS PER THE FIN DINGS OF THE GUJARAT HIGH COURT IN THE CASE OF ASHIMA SYNTEX LTD, THE TR IAL RUNNING IS ALSO ENTITLED FOR CLAIMING DEPRECIATION AND INVESTMENT A LLOWANCES. THE APPELLANT CATEGORICALLY ESTABLISHED WITH FACTS AND FIGURES AND EVIDENCES IN THE FORM OF DAILY PRODUCTION REPORTS, MONTHLY PR ODUCTION CHARTS ETC. THAT IMPUGNED ASSETS ON WHICH DEPRECIATION IS DENIE D WERE USED FOR PRODUCTION, MAY BE AT LESSER CAPACITY UTILIZATION. 3.6. IN VIEW OF THE FACTS MENTIONED ABOVE AND PARTI CULAR WITH REFERENCE TO THE PRODUCTION DETAILS FILED BY THE AS SESSEE BEFORE PROHIBITION AND EXCISE DEPARTMENT AND OTHER EVIDENC ES PRODUCED ON RECORD, I AM OF THE CONSIDERED OPINION THAT THE PLA NT AND MACHINERY OF THE ASSESSEE WERE USED FOR THE BUSINESS PURPOSE DUR ING THE YEAR UNDER CONSIDERATION. IT IS IMMATERIAL WHETHER THE PRODUC TION ACHIEVED BY THE ASSESSEE IS SUBSTANTIALLY LOW OR OTHERWISE. IT IS ALSO IMMATERIAL WHETHER THE PLANT AND MACHINERY WAS USED FOR THE BUSINESS F OR VERY SHORT PERIOD. I THEREFORE, DIRECT THE A.O. TO ALLOW THE DEPRECIAT ION TO THE ASSESSEE. AS SUCH, THIS GROUND OF APPEAL IS ALLOWED. THE APPELL ANT GETS RELIEF OF RS.647920/-. THE LD. A.R. HAS NOT PRESSED THE GROU ND RELATING TO INVESTMENT ALLOWANCE, THEREFORE THE SAME IS REJECTE D. 6.1. THE ABOVE FINDINGS OF THE LD.CIT(A) THAT THE P LANT WAS USED FOR BUSINESS PURPOSE IS NOT REBUTTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD, THEREFORE WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUND RAISED BY THE REVENUE IS REJECTED. 7. AS A RESULT, REVENUES APPEAL IN ITA NO.616/AHD/ 2011 FOR AY 1985-86 IS DISMISSED. 8. NOW , WE TAKE UP THE APPEAL IN ITA NO.617/AHD/2011 FOR AY 1986-87 (GROUNDS OF APPEAL REPRODUCED AS ABOVE). ITA NOS.616 & 617/AHD/20 11 DCIT VS. GUJCHEM DISTILLERS INDIA LTD. ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 5 - 8.1. THE FACTS IN THE PRESENT YEAR OF APPEAL ARE ID ENTICAL TO THE FACTS OF THE REVENUES APPEAL IN ITA NO.616/AHD/2011 FOR AY 1985-86(SUPRA). THE RESPECTIVE REPRESENTATIVES OF THE PARTIES HAVE ADOPTED THE SAME ARGUMENT AS WERE ADVANCED IN REVENUES APPEAL IN IT A NO.616/AHD/2011(SUPRA). SINCE WE HAVE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE FOR AY 1985-86(SUP RA), THEREFORE WE DECIDE THE REVENUES APPEAL FOR AY 1986-87 IN FAVO UR OF THE ASSESSEE AND AGAINST THE REVENUE. 9. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 19 TH DAY OF DECEMBER, 2014 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 19/ 12 /2014 2*..,(.../ T.C. NAIR, SR. PS !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-VII, AHMEDABAD 5. 7(8$45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD