VNMAA Madhavan Nadar (HUF), Latur V. ITO , Wd.-3(3), Latur

ITA 618/PUN/2011

• Counselvise Citation: 61824514 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUKULESH DUBE
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 263

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. 618/PN/2011 (ASSTT. YEAR : 2006-07) VNMAA MADHAVAN NADAR(HUF) ... APPELLANT MARKET YARD, LATUR-413512 PAN : AAAHV5271J V. INCOME TAX OFFICER, RESPONDENT WARD 3(3), LATUR APPELLANT BY : SHRI. M.K. KULKARNI RESPONDENT BY : SHRI MUKULESH DUBE DATE OF HEARING : 12/06/12 DATE OF PRONOUNCEMENT : -6-12 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD CIT, AURANGABAD DATED 28/02/2011 PASSED U/S . 263 OF THE ACT. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE : A. THE LEARNED CIT(A) HAS ERRED IN HIS ORDER U/S 263 I N HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IN DIRECTING THE REDUCTION OF RS.2, 76,914/- IN THE AMOUNT OF ADDITIONAL DEPRECIATION CLAIMED U/ S 32(1)(IIA) BY THE APPELLANT AT RS. 3,54,268/-. B. THE LEARNED CIT(A) IS NOT JUSTIFIED IN PUTTING TOO LETERAL INTERPRETATION OF THE PROVISIONS OF SECTION 32(1)(I IA), WHICH ARE PROVISIONS GIVING DEDUCTION TO THE ASSESSEE AND AS SUCH THEY SHOULD BE LIBERALLY INTERETED. C. THE ASSESSMENT ORDER PASSED BY THE A.O IS NOT PREJU DICIAL TO THE INTEREST OF THE REVENUE AS THE ADDITIONAL DEPRECIATION OF RS. 3,54,268/- HAS BEEN CORRECTLY A LLOWED THEREIN AS PER THE PROVISIONS OF SECTION 32(1)(IIA ). ITA . NO. 618/PN/2011 VNMAA MADHAVAN NADAR A.Y. 2006-07 PAGE OF 5 2 2. THE ORDER U/S 263 PASSED BY THE LEARNED CIT AND ANY CONSEQUENTIAL ORDER THAT MAY BE OR MAY HAVE BEEN PA SSED BY THE A O BE DECLARED AS NULL AND VOID. 2. THE FACTS WHICH REVEAL FROM THE RECORD ARE AS UN DER. THE ASSESSEE (HUF) IS IN THE MANUFACTURING OF DAL AND ALSO IN ALLIED BUSINESS. ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 20 06-07 ON 9.11.2006 DECLARING TOTAL INCOME OF RS. 1,63,420/-. ASSESSEE S CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT ORDER HAS BEEN PASSED U /S. 143(3) OF THE ACT. BY MAKING CERTAIN ADDITIONS, THE A.O DETERMIN ED ASSESSEES INCOME AT RS.1,92,174/-. SUBSEQUENTLY, THE LD CIT, AURANG ABAD EVOKED HIS POWERS U/S. 263 AND VIDE ORDER DATED 28.2.2011 DIR ECTED THE A.O TO DISALLOW THE ADDITIONAL DEPRECIATION OF RS.2,76,914 /- WHICH WAS CLAIMED ON PLANT AND MACHINERY. THE LD CIT HAS OBSERVED TH AT THE ORDER PASSED BY THE A.O U/S. 143(3) DATED 20.11.2008 IS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE REASON THAT ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE ON THE PLANT & MACHINERY TO THE EXTENT OF RS.2,76,914/-. IT IS STATED THAT UP-TO 31.3.2005, THE ASSESSEE WAS DOING ONLY THE TRADING ACTIVITIES. DURING THE F.Y. 2004-05, THE ASSESSEE STARTED ERECTING THE DALL MILL UNIT. UP-T O 31-3-2005, ASSESSEE HAD PURCHASED MACHINERIES COSTING RS.13,84,573/-. IT IS CLAIMED BY THE ASSESSEE THAT SAID MACHINERY WAS INSTALLED IN THE M ONTH OF MAY/JUNE 2005 AND PRODUCTION WAS STARTED. ASSESSEE STATED T HAT EVEN IF THE MACHINERIES WERE PURCHASED IN THE F.Y.2004-05, BUT SAME WAS ACTUALLY INSTALLED AND STARTED TO USE FOR THE PRODUCTION IN THE PREVIOUS YEAR RELATING TO A.Y. 2006-07. ASSESSEE ALSO CLAIMED TH AT ASSESSEE WAS ENTITLED FOR THE ADDITIONAL DEPRECIATION AS THE CON DITION U/S. 32(1)(IIA) IS FULFILLED. IN SUM AND SUBSTANCE, THE ASSESSEE JUST IFIED THE CLAIM OF ADDITIONAL DEPRECIATION. THE LD CIT, AURANGABAD WA S NOT CONVINCED WITH ITA . NO. 618/PN/2011 VNMAA MADHAVAN NADAR A.Y. 2006-07 PAGE OF 5 3 THE EXPLANATION OF THE ASSESSEE. HE OBSERVED THAT ASSESSEE SHOULD HAVE ACQUIRED AND INSTALLED THE MACHINERY AFTER 31 ST MARCH 2005. HE HAS OBSERVED THAT THE ASSESSEE HAD INTERPRETED THE PLAI N, SIMPLE AND CLEAR LANGUAGE OF CLAUSE (IIA) OF SECTION 32(1) AS ADDIT ION OR INTRODUCTION OF MACHINERY IN THE BLOCK OF ASSETS FOR THE PURPOSE OF DEPRECIATION, WHICH IS TOTALLY INCORRECT AND MISLEADING. IN THE OPINION O F THE A.O, BOTH THE CONDITIONS STIPULATED IN CL.(IIA) OF SEC. 32(1) MUS T BE FULFILLED I.E. MACHINERY MUST BE ACQUIRED AND INSTALLED AFTER 31. 3.2005. HE, THEREFORE, DIRECTED THE A.O TO DISALLOW THE CLAIM O F THE ADDITIONAL DEPRECIATION. NOW THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER OF THE CIT BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. IT IS NOT DISPUTED IN THIS CASE THAT ASSE SSEE ACQUIRED MACHINERY IN THE A.Y. 2005-06 (F.Y. 2004-05). IT IS BENEFICI AL TO REPRODUCE RELEVANT PROVISION WHICH NEEDS AN INTERPRETATION. 32(1) CLAUSE (IIA): IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND IN STALLED AFTER THE 31 ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THI NG, A FURTHER SUM EQUAL TO TWENTY PERCENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (I I) : PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF (A) ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALLATI ON BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA B Y ANY OTHER PERSON; OR (B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREM ISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST-HOUSE; OR (C) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; O R (D) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COS T OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPREC IATION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OF ANY ONE PREVIOUS YEAR. PLAIN READING OF CLAUSE (IIA) SUGGEST THAT THE ASS ESSEE WHO HAS ACQUIRED ITA . NO. 618/PN/2011 VNMAA MADHAVAN NADAR A.Y. 2006-07 PAGE OF 5 4 AND ALSO INSTALLED THE MACHINERY AFTER 31 ST MARCH 2005 IS ENTITLED FOR ADDITIONAL DEPRECIATION AS THE WORD AND IS USED BY THE PARLIAMENT I.E. WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER 31 ST MARCH, 2005. . ANOTHER ASPECT TO BE CONSIDERED OF THIS PROVISION I S THAT THIS CLAUSE IS SUBSTITUTED BY FINANCE (NO.2) ACT 2004 W.E.F. 1.4.2 005. PRIOR TO INSERTION OF THE PRESENT CLAUSE, THERE WAS A PROVISION FOR AD DITIONAL DEPRECIATION WITH CERTAIN CONDITIONS AND ONE OF THE CONDITIONS W AS AGAIN IDENTICAL I.E. ACQUIRED AND INSTALLED AFTER 31 ST MARCH 2002. WHILE INTERPRETING THE TAXING PROVISION, STRICT INTERPRETATION IS TO BE M ADE AS THERE IS NO SCOPE FOR ANY INTENDMENT. IN THE PRESENT CASE, IT IS NOT DISPUTED BY THE LD. COUNSEL ALSO THAT MACHINERY WAS ACQUIRED IN THE F.Y . 2004-05 BY ADDING THE SAME TO THE BLOCK OF ASSET AND ON THE W.D.V. OF THE BLOCK OF ASSET AS ON 1.4.2005, ADDITIONAL DEPRECIATION HAS BEEN CLAIM ED AT THE RATE OF 20%. ONCE THE ORDER PASSED BY THE A.O IS AGAINST THE PRO VISION OF LAW, IT IS AN ERRONEOUS ORDER AND THIS IS A WELL SETTLED PROPOSIT ION. IT IS TRUE THAT FOR EXERCISING THE POWERS U/S. 263 BY THE LD CIT TWO CONDITIONS MUST BE FULFILLED I.E. ORDER MUST BE ERRONEOUS AND ALSO PRE JUDICIAL TO THE INTEREST OF REVENUE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. VS. CIT, 243 ITR 383. IN OUR OPINIO N, IN THE PRESENT CASE, BOTH THE CONDITIONS ARE FULFILLED AND HENCE, THE LD CIT, AURANGABAD HAS RIGHTLY EXERCISED HIS POWERS U/S. 263. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD CIT, AURANGABAD AND SAME IS CONFIRM ED. 4. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE, 20 12. SD/- SD/- ( G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 22ND JUNE, 2012 ITA . NO. 618/PN/2011 VNMAA MADHAVAN NADAR A.Y. 2006-07 PAGE OF 5 5 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT, AURANGABAD 4. THE ACIT, ANGE 3, NADED 5. THE D.R. B BENCH, PUNE 5. GUARD FILE -TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE