V. M. Salgaocar & Bro. Pvt. Ltd., Goa V. Addl. Commissioner of Income tax, Margao

ITA 63/PAN/2013

• Counselvise Citation: 6324114 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 26-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHA DESAI
• Assessee Lawyers: P J PARDIWALLA
• Keywords: Depreciation; Opportunity of being heard; Additional depreciation; Difference of opinion; Assessment record; Change of opinion
• Section: 143(3); 263

Judgement Text

- 1 - ITA NO 63/PNJ/2013 IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 63 /PNJ/20 13 (ASST. YEAR: 2008 - 09) V. M. SALGAONKAR & BRO. PVT. LTD, APPELLANT SALGAONKAR HOUSE, VASCO DA GAMA, GOA. PAN: AAACV5950B VS COMMISSIONER OF INCOME TAX RESPONDENT PANAJI. APPELLANT BY : SHRI P. J. PARDIWALLA (ADV ) RESPONDE NT BY : SMT ASHA DESAI (DR ) DATE OF HEARING: 24/07/2013 DATE OF ORDER : 08 / 08 /201 3 O R D E R PER D. T. GARASIA JM THIS APPEAL IS FILED AGAINST ORDER OF CIT, PANAJI DT. 31 /01/2013. THE GROUNDS RAISED IN THIS APPEAL ARE READS AS UNDER: - 1. THE ORDER PASSED BY THE LEARNED CIT IS ULTRA VIRES, BAD IN LAW AND CONTRARY TO THE PROVISIONS OF THE ITA AND FACTS OF THE CASE AND HENCE OUGHT TO BE QUASHED. 2. THE LEARNED CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ITA WITHOUT SPECIFICALLY HOLDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THE LEARNED CIT ERRED IN HOLDING THAT THE APPELLANT CANNOT BE SAID TO BE ENGAGED IN THE PRODUCTION OR MANUFACTURING OF AN ARTICLE OR THING, AND HENCE NOT ELIG IBLE FOR ADDITIONAL DEPRECIATION AS ENVISAGED IN SECTION 32(L)(IIA) OF THE ITA. 4. THE LEARNED CIT ERRED IN HOLDING THAT THE ACTUAL ACTIVITY CARRIED ON BY THE APPELLANT IN ITS MINING DIVISION AND WINDMILL DIVISION HAS TO BE EXAMINED AND ASCERTAINED WHETH ER THEY CAN FIT INTO THE CATEGORY OF 'PRODUCTION'. - 2 - ITA NO 63/PNJ/2013 5. THE LEARNED CIT ERRED IN HOLDING THAT THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER IN A ROUTINE MANNER WITHOUT PROPER APPRAISAL AND WITHOUT VERIFYING THE RELEVANT FACTS AND HENCE THE ASSESSME NT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS. THE LEARNED CIT ERRED IN NOT APPRECIATING THE FACT THAT DETAILED SUBMISSIONS WERE MADE IN THIS REGARD BEFORE THE ASSESSING OFFICER IN RESPONSE THE QUERY RAISED DURING THE COURSE OF REGULAR ASSESSMENT P ROCEEDINGS. 6. THE LEARNED CIT ERRED IN DIRECTING THE ASSESSING OFFICER TO EXAMINE AND ANALYZE IN DETAIL WHETHER THE ACTIVITIES IN THE MINING DIVISION AND WINDMILL DIVISION FIT INTO THE CATEGORIES OF PRODUCTION. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: - FROM A PERUSAL OF THE ASSESSMENT RECORDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09, IT WAS FOUND THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION ON PLANT AND MACHINERY UTILIZED IN ITS MINING OPERATIONS, WINDMILL OPERATIONS AND COMPUTERS USED IN THOSE OPERATIONS. THE ASSESSEE COMPANY HAS MADE A VALUE ADDITION TO THE PLANT AND MACHINERY DURING THE FINANCIAL YEAR RELEVANT TO A.Y. 2008 - 09 IN ITS MINING DIVISION AND WINDMILL OPERATIONS AND HAS CLAIMED ADDITIONAL DEPRECIATION OF RS, 6,99,54,875 IN ADDITION TO THE NORMAL DEPRECIATION. ADDITIONAL DEPRECIATION AS ENVISAGED U/S 32(L)(IIA) OF THE IT ACT IS AVAILABLE IN CASE OF ANY NEW PLANT AND MACHINERY WHICH HAS BEEN ACQ UIRED AND INSTALLED AFTER 31/03/2005 BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OF PRODUCTION OF ANY ARTICLE ARE THING. SINCE THE ASSESSEE CANNOT BE SAID TO BE ENGAGED IN THE PRODUCTION OR MANUFACTURING OF AN ARTICLE OR THING, IT IS PRIMA FACIE, NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION AS ENVISAGED IN SECTION 32(L)(IIA) OF THE IT ACT. HENCE THE ASSESSEE COMPANY SHOULD NOT HAVE BEEN ALLOWED ADDITIONAL DEPRECIATION ON THE PLANT AND MACHINERY ADDED TO ITS MINING DIVISION AND WINDMILL DIVISION. IN VIEW OF THE ABOVE FACTS AND REASONS, IT WAS THEREFORE PROPOSED TO PASS AN APPROPRIATE ORDER U/S 263 OF THE IT ACT AS THE CIRCUMSTANCES OF THE PRESENT CASE JUSTIFY. THE ASSESSEE WAS THEREFORE PROVIDED AN OPPORTUNITY OF BEING HEARD IN TERMS OF THE - 3 - ITA NO 63/PNJ/2013 PROVISIONS OF SUB SECTION (1) OF SECTION 263 OF THE IT ACT, 1961 VIDE THIS OFFICE LETTER IN F. NO.CIT - PNJ/263/2011 - 12 DATED 8/2/2012. 3. IN REPLY TO SHOW CAUSE NOTICE THE ASSESSEE REPLIED AS UNDER: - MERITS OF THE CASE: - ADDITIONAL DEPRE CIATION CLAIMED UNDER SECTION 32(1)(IIA) ON NEW PLANT & MACHINERY USED IN IRON ORE PROCESSING AND WINDMILL OPERATION 4. AS CAN BE SEEN FROM THE DETAILS OF DEPRECIATION ALONG WITH STATEMENT OF ADDITION TO FIXED ASSETS DURING THE YEAR ON WHICH ADDITIONAL DEP RECIATION HAS BEEN CLAIMED, AS ANNEXED IN ANNEXURE A, THE COMPANY HAS CLAIMED ADDITIONAL DEPRECIATION IN RESPECT OF NEW PLANT AND MACHINERY USED IN THE BUSINESS OF IRON - ORE PROCESSING CARRIED ON IN ITS MINING DIVISION AS WELL AS IN GENERATION OF ELECTRICITY CARRIED ON IN ITS WINDMILL DIVISION. 5. IN THIS CONNECTION, WE INVITE YOUR HONOUR'S ATTENTION TO THE PROVISIONS OF SECTION 32(L)(IIA) OF THE ITA, WHICH DEALS WITH ADDITIONAL DEPRECIATION. IN TERMS THEREOF, ADDITIONAL DEPRECIATION IS ALLOWED IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31 ST DAY OF MARCH, 2005, BY AN ASSESSES ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, SUBJECT TO THE SATISFACTION OF PRESCRIBED CONDITIONS. 6. THUS FROM THE ABOVE YOUR HONOUR WILL APPRECIATE THAT THE ASSESSEE, TO BE ELIGIBLE FOR ADDITIONAL DEPRECIATION, SHOULD BE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE. 7. THE COMPANY IS IN THE BUSINESS OF MINING OF IRON ORE, PROCESSING AND EXPORTING THE SAME. THE COMPANY SUBMITS THAT THE ACTIVITY CARRIED ON BY THE COMPANY IN ITS MINING DIVISION VIZ., IRON - ORE PROCESSING AMOUNTS TO PRODUCTION OF AN ARTICLE. 8. FROM SCHEDULE 14 TO THE AUDITED ANNUAL ACCOUNTS FOR THE YEAR UNDER REFERENCE, IT WOULD BE OBSERVED THAT THE COMPANY HAS SOLD 'PROCESSED' IRON ORE DURING THE YEAR. IT WOULD ALSO BE OBSERVED FROM SCHEDULE 20 TO THE AUDITED ANNUAL ACCOUNTS THAT THE COMPANY HAS INCURRED SUBSTANTIAL PRODUCTION AND OPERATIONAL EXPENSES IN RELATION TO AFORESAID PROCESSING ACTIVITY VIZ. CONSUMPTION OF STORES & SPARES, WATER AND ELECTRICITY, REPAIR AND MAINTENANCE TO PLANT & MACHINERY ETC. COPY OF RELEVANT PAGES OF SCHEDULES AS ANNEXED IN ANNEXURE B. 9. IT WOULD BE PERTINENT TO DRAW YOUR KIND ATTENTION TO CLAUSE 22(A) TO SCHEDULE 23 OF THE AUDITED ANNUAL ACCOUNTS FOR THE YEAR (AS ANNEXED IN ANNEXURE C) WHICH ESTABLISHES THE F ACT THAT THE COMPANY IS ENGAGED MAINLY IN MINING/PROCESSING OF ORES. IT WOULD ALSO BE OBSERVED FROM THE DISCLOSURE MADE IN THE SAID CLAUSE THAT THE COMPANY HAS PRODUCED IRON ORE DURING THE YEAR TONS 4,752,055. THESE GO TO PROVE THE COMPANY HAS PRODUCED IRO N ORE DURING THE YEAR BY PROCESSING RAW IRON ORE. THE VERY SAME PROCESS HAS BEEN HELD TO BE 'PRODUCTION' BY THE APEX COURT IN THE CASE OF CIT V. SESA GOA LTD. (271ITR 331). 10. AS YOUR HONOUR AWARE, ONLY PROCESSED IRON ORE IS BEING EXPORTED. RAW IRON ORE H AS TO UNDERGO SCREENING /BENEFICATION PROCESSING. THE COMPANY OWNS BENEFICIA.TION PLANTS AS WELL AS SCREENING PLANT IN ORDER TO CARRY OUT AFORESAID PROCESSING ACTIVITY. IN THIS CONNECTION, - 4 - ITA NO 63/PNJ/2013 THE COMPANY FURNISHES THE EXTRACT OF FIXED ASSETS REGISTER COMPRISI NG BENEFICIATION PLANT MACHINERIES WHICH ARE USED TO CARRY OUT BENEFICIATION PROCESSING AS ANNEXED IN ANNEXURE D. 11. IT IS, THEREFORE, SUBMITTED THAT THE PROCESSING ACTIVITY CARRIED OUT BY THE COMPANY TO CONVERT RAW IRON ORE TO SALEABLE PROCESSED IRON ORE AMOUNTS TO 'PRODUCTION'. IT IS FURTHER SUBMITTED THAT THE ASSESSEE COMPANY'S CASE IS NOT OF 'MANUFACTURE' BUT OF 'PRODUCTION OF IRON ORE WHICH HAS WIDER MEANING AS COMPARED TO THE WORD 'MANUFACTURE'. AS HELD BY APEX COURT PROCESSING ACTIVITY CARRIED OUT BY THE COMPANY FALLS UNDER 'PRODUCTION'. 12. IN THIS CONNECTION, RELIANCE IS ALSO PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT V. N.C. BUDHARAJA AND CO. (204 ITR 412) WHEREIN IT HAS BEEN HELD THAI THE - WORD 'PRODUCTION' IS MUCH WIDER THAN THE WORD 'MANUFACTURE'. 13. IT IS SUBMITTED THAT THE ACTIVITY CARRIED ON BY THE COMPANY IN ITS MINING DIVISION VIZ., IRON - ORE PROCESSING, AMOUNTS TO PRODUCTION OF AN ARTICLE. 14. IN THIS REGARD, SPECIFIC ATTENTION IS ALSO INVITED TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. SESA GOO LTD. (271 ITR 331) WHICH HAS HELD THAT EXTRACTION AND PROCESSING OF IRON ORE AMOUNTS TO 'PRODUCTION' OF ARTICLE. IT IS PERTIN ENT TO NOTE HERE THAT THE APPELLANT IN THE AFORESAID DECISION IS CARRYING OUT THE SIMILAR ACTIVITY AS IS CARRIED OUR BY THE COMPANY. THE RELEVANT OBSERVATIONS OF THE HON'BLE SUPREME COURT ARE REPRODUCED AS UNDER: ... 'THE WORD 'PRODUCTION'HAS A WIDER CON NOTATION THAN THE WORD 'MANUFACTURE'. WHILE EVERY MANUFACTURE CAN BE CHARACTERIZED AS PRODUCTION, EVERY PRODUCTION NEED NOT AMOUNT TO MANUFACTURE. ... THE WORD 'PRODUCTION' OR 'PRODUCE' WHEN USED IN JUXTAPOSITION WITH THE WORD 'MANUFACTURE' TAKES IN BRINGING INTO EXISTENCE NEW GOODS BY A PROCESS WHICH MAY OR MAY NOT AMOUNT TO MANUFACTURE. IT ALSO TAKES IN ALL THE BY - PRODUCTS, INTERMEDIATE PRODUCTS AND RESIDUAL PRODUCTS WHICH EMERGE IN THE COURSE OF MANUFACTURE OF GOODS.' IT IS, THEREFORE, NOT NECESSARY, AS HAS BEEN SOUGHT TO BE CONTENDED BY LEARNED COUNSEL FOR THE REVENUE, THAT THE MINED ORE MUST BE A COMMERCIALLY NEW PRODUCT. THE DECISIONS AND OTHER AUTHORITIES ON THE DEFINITION OF THE WORD 'ORE', AS CITED BY THE APPELLANT, ARE IRRELEVANT..... WE ARE, THEREFORE, OF THE OPINION THAT EXTRACTION AND PROCESSING OF IRON ORE AMOUNTS TO 'PRODUCTION' WITHIN THE MEANING OF THE WORD IN SECTION 32A(2)(B)(III) OF THE ACT AND, CONSEQUENTLY, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF SECTION 32A(J) OF THE ACT. 15. SIMILARLY, AS REGARDS THE ACTIVITY CARRIED ON BY THE COMPANY IN ITS WINDMILL DIVISION VIZ., GENERATION OF ELECTRICITY, THE COMPANY SUBMITS THAT THE SAME ALSO AMOUNTS TO PRODUCTION OF AN ARTICLE OR THING. - 5 - ITA NO 63/PNJ/2013 16. IN THIS CONNECTION, WE MAY REFER TO THE DEFINITION OF THE TERMS 'ELECTRICITY' AND 'GENERATE' IN THE ELECTRICITY ACT, 2003, WHICH ARE REPRODUCED BELOW: '2(23) 'ELECTRICITY' MEANS ELECTRICAL ENERGY - FA) GENERATED, TRANSMITTED, SUPPLIED OR TRADED FOR ANY P URPOSE; OR (B) USED FOR ANY PURPOSE EXCEPT THE TRANSMISSION OF A MESSAGE; 2(29) 'GENERATE 'MEANS TO PRODUCE ELECTRICITY FROM A GENERATING STATION FOR THE PURPOSE OF GIVING SUPPLY TO ANY PREMISES OR ENABLING A SUPPLY TO BE SO GIVEN;' 17. ON A PERUSAL OF THE ABOVE DEFINITIONS, IT CAN BE SAID THAT GENERATION OF ELECTRICITY CAN BE 'PRODUCTION' OF ELECTRICITY. 18. IN THE FOLLOWING CASES, IT HAS BEEN HELD BY THE SUPREME COURT THAT ELECTRICITY IS 'GOODS' FOR SALES TAX PURPOSES: COMMISSIONER OF SALES TAX, MADHYA PRADESH, INDORE V. MADHYA. PRADESH ELECTRICITY BOARD, JABALPUR (1969) 1 SCO 200 (SC) STATE OF A.P. U. NATIONAL THERMAL POWER CORPN. LTD. AND OTHER (2002) 5 SCC 203 (SC) 19. AS ALREADY EXPLAINED ABOVE, ANY AS SESSEE ENGAGED IN THE BUSINESS OF PRODUCTION OF ARTICLE OR THINS, IS ELIGIBLE FOR ADDITIONAL DEPRECIATION AT THE PRESCRIBED RATE U/S 32(L)(IIA) OF THE INCOME TAX ACT, 1961. 20. THOUGH NOT FOR THE PURPOSE OF SECTION 32(L)(IIA), LIST OF ARTICLE OR THING HAS BEEN LISTED OUT IN THE PART A TO FOURTEENTH SCHEDULE FOR THE PURPOSE OF SECTION 80 - IC(2). IN THE SAID SCHEDULE, YOUR HONOUR'S ATTENTION IS DRAWN TO ITEM NO. 13(III) WHICH DE SCRIBES POWER GENERATION AS 'PRODUCTION'. THOUGH THIS IS UNDER SECTION 80 - IC, THIS ESTABLISHES THE INTENTION OF LEGISLATURE TO CONSIDER 'POWER GENERATION' AS 'PRODUCTION'. COPY OF PART A TO FOURTEENTH SCHEDULE AS ANNEXED IN ANNEXURE E. 21. ON THE BASIS OF THE ABOVE, THE COMPANY SUBMITS THAT GENERATION OF ELECTRICITY AMOUNTS TO PRODUCTION OF ANY ARTICLE OR THING AND HENCE ELIGIBLE FOR ADDITIONAL DEPRECIATION. 22. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT ONCE THE COMPANY IS IN THE MANUFACTURE OR P RODUCTION OF ARTICLE OR THING (IN THE PRESENT CASE BY VIRTUE OF CARRYING BEING IRON - ORE PROCESSING ACTIVITY), ANY NEW MACHINERY OR PLANT PURCHASED WOULD QUALIFY FOR ADDITIONAL DEPRECIATION, IRRESPECTIVE OF THE FACT THAT THE SAME IS DIRECTLY OR INDIRECTLY U SED IN THE MANUFACTURING OR PRODUCTION ACTIVITY. 23. IN OTHER WORDS, AS FAR AS APPLICATION OF SECTION 32(L)(IIA) OF THE ACT IS CONCERNED, THE COMPANY SUBMITS THAT WHAT IS REQUIRED TO BE SATISFIED IN ORDER TO CLAIM THE ADDITIONAL DEPRECIATION IS THAT A, NEW MACHINERY OR PLANT SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31ST MARCH, 2002, BY AN ASSESSEE, WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE SAID PROVISION DOES NOT STATE THAT THE SETTING UP OF A NEW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INSTALLED UP TO MARCH 31, 2002, SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO THE ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. - 6 - ITA NO 63/PNJ/2013 24. IN THIS CONNECTION, WE INVITE YOUR HONOUR'S ATTENTION TO THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. VTM LTD. (319 ITR 336), THE RELEVANT OBSERVATIONS OF WHICH ARE REPRODUCED AS UNDER: IN THE CASE ON HAND, THE ASSESSEE IS STATED TO HAVE SET UP A WIND MILL AT A COST OF RS. 5,85,60,000 IT IS TRUE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF TEXTILE GOODS. AS FAR AS APPLICATION OF SECTION 32(L)(IIA) OF THE ACT, IS CONCERNED, WHAT IS REQUIRED TO BE SATISFIED IN OR DER TO CLAIM THE ADDITIONAL DEPRECIATION IS THAT THE SETTING UP OF A NEW MACHINERY OR PLANT SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31ST MARCH 2002 BY AN ASSESSEE, WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE SAID PROVISION DOES NOT STATE THAT THE SETTING UP OF A NEW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INSTALLED UPTO 31.03.2002 SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO THE ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. THEREFORE, THE CONTENTION THAT THE SETTING UP OF A WIND MILL HAS NOTHING TO DO WITH THE POWER INDUSTRY, NAMELY, MANUFACTURE OF OIL. SEEDS ETC. IS TOTALLY NOT GERMANE TO THE SPECIFIC PROVISION CONTAINED IN SECTION 32(L)(IIA) OF THE ACT. IN SUCH CIRCUMSTANCES, WE ARE NOT ABLE TO APPRECIATE THE CONTENTION OF THE LEARNED STANDING COUNSEL FOR THE APPELLANT ON THE GROUND THAT THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) AS CONFIRMED BY THE TRIBUNAL SHOULD BE IN TERFERED WITH. IT CANNOT ALSO BE SAID THAT SETTING UP OF A WIND MILL WILL NOT FALL WITHIN THE EXPRESSION SETTING UP OF A NEW MACHINERY OR PLANT. 25. SIMILAR VIEW HAS BEEN TAKEN BY THE CHENNAI HIGH COURT IN THE CASE OF CIT V. HI TECH ARAI LTD. (321ITR 477) AND CIT V. TEXMO PRECISION CASTINGS (321ITR 481). 26. IN VIEW OF THE ABOVE, YOUR HONOUR WOULD APPRECIATE THAT THE COMPANY IS ELIGIBLE FOR CLAIMING ADDITIONAL DEPRECIATION IN RESPECT OF NEW PLANT AND MACHINERY USED IN THE MINING DIVISION AS WELL AS WINDMILL DIVISION AND HENCE HAS RIGHTLY BEEN ALLOWED BY THE LEARNED ADDL CIT. REVISION UNDER SECTION 263 (A) ORDER PASSED BY THE LEARNED ADDL. CIT IS NOT ERRONEOUS 27. WITHOUT PREJUDICE, IT IS SUBMITTED THAT TO INVOKE PROCEEDING U/S 263, FOLLOWING TWO CONDITIONS ARE TO BE SATISFIED: - (A) ORDER IS ERRONEOUS AND (B) IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 28. EVEN IF ONE CONDITION FAILS, PROCEEDING U/S 263 OF THE ACT, 1961 CANNOT BE INVOKED. 29. IT IS RESPECTFULLY SUBMITTED THAT THE CASE UNDER REFERENCE DOES NOT SATISFY BOTH THE CONDITIONS. - 7 - ITA NO 63/PNJ/2013 30. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SPECIFIC QUERY WAS RAISED ON THE 'ALLOWANCE OF ADDITIONAL DEPRECIATION ON THE PLANT & MACHINERY USED IN PROCESSING ACTIVITY AS WELL AS PLANT & MACHINERY USED IN WINDMILL OPERATION. 31. AFTER THOROUGH ANALYSIS OF THE ASSESSEE COMPANY'S SUBMISSION AS PER OUR LETTER DATED 18.10.2010 BY RELYING ON SUPRE ME COURT JUDGMENTS, THE AO ALLOWED ADDITIONAL DEPRECIATION ON PLANT & MACHINERY USED IN IRON ORE PROCESSING AS WELL AS PLANT & MACHINERY USED IN WINDMILL OPERATION. COPY OF LETTER DATED 18.10.2010 AS ANNEXED IN ANNEXURE F. 32. IN VIEW OF THE ABOVE, ORDER PASSED U/S 143(3) CANNOT BE HELD TO BE ERRONEOUS. IN THIS REGARD, RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENT: - CIT VS. GABRIAL INDIA LIMITED (203ITR 108) - BOMBAY HIGH COURT THE HON'BLE HIGH COURT HAS HELD THAT IT IS BECAUSE THE ITO HAS EXERCISED THE QUASI - JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A, CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEE SATISFIED WITH THE CONCLUSION. CIT VS. DEVELOPMENT CREDIT BANK LTD. (323 ITR 206) - BOMBAY HIGH COURT THE HON'BLE HIGH COURT HAS HELD THAT WHERE AND ENQUIRY WAS SPECIFICALLY HELD WITH REFERENCE TO WHICH DISCLOSURE OF DETAILS WAS CALLED FOR BY THE AO AND MADE BY THE ASSE SSEE, THE OBSERVATION OF THE CIT THAT THE AO HAS ARRIVED AT HIS FINDINGS WITHOUT CONDUCTING AN ENQUIRY WAS ERRONEOUS AND THEREFORE THE CIT HAS WRONGLY EXERCISED THE POWERS BY RECOURSE TO SECTION 263. CIT VS. DESIGN & AUTOMATION ENGINEERS (BOMBAY) (P) LTD. (323 ITR 632) - BOMBAY HIGH COURT THE HON'BLE HIGH COURT HAS HELD THAT THE AO HAVING CONSIDERED ALL DETAILED PARTICULARS FILED BY THE ASSESSEE IN RESPONSE TO HIS NOTICE AND ALLOWED DEDUCTION UNDER SECTION 80HHC, IT CANNOT BE SAID THAT THE AO HAS NOT A PPLIED HIS MIND, AND THE VIEW TAKEN BY THE ASSESSEE WAS A, POSSIBLE VIEW AND THEREFORE THE ORDER PASSED BY THE CIT WAS SET ASIDE. (B) WHERE TWO VIEW ARE POSSIBLE 33. WITHOUT PREJUDICE, IT IS FURTHER SUBMITTED THAT WHEN TWO VIEWS ARE POSSIBLE AND ONE OF TH E VIEWS HAS BEEN ADOPTED BY THE ASSESSING OFFICER, THE POWER OF REVISION UNDER SECTION 263 CANNOT BE EXERCISED. IN THE INSTANT CASE, THE COMPANY'S VIEW IS DEFINITELY A PLAUSIBLE VIEW AS INDICATED ABOVE. 34. IN THIS REGARD, RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: MAX INDIA LTD. (268 ITR 128) (P&H) THE HON'BLE HIGH COURT HELD THAT THE VIEW TAKEN BY THE ASSESSING OFFICER WAS IN CONFORMITY WITH THE VIEW SUBSEQUENTLY EXPRESSED BY THE VARIOUS BENCHES OF THE - 8 - ITA NO 63/PNJ/2013 TRIBUNAL. THE VIEW EXPRESSED BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW AND SINCE THE ASSESSING OFFICER HAD TAKEN A POSSIBLE VIEW, THE COMMISSIONER HAD, NO JURISDICTION TO INTERFERE BY EXERCISING HIS POWERS WIDER SECTION 263. THE APPEAL FILED BY THE DEPARTMENT AGAINST THE ABOVE HIGH COURT ORDER HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT (295ITR 282) PATEL COTTON CO. LTD. VS. ASSTT. CIT (64ITD 273) (MUMBAI) WHERE TWO VIEWS ARE POSSIBLE IN A CASE, MERE FACT THAT THE ASSESSING OFFICER ADOPTED ONE VIEW WOULD NOT RENDER HIS VIEWS ERRONEOUS THOUGH IT MIGHT BE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. JHULELAL LAND DEVELOPMENT CORVN. VS. DV. CIT (56 ITD 345) (MUMBAI) WHERE VIEW TAKEN BY ASSESSING OFFICER CAN ALSO BE A POSSIBLE VIEW, IT CANNOT BE HELD TO BE ERRONEOUS MERELY BECAUSE COMMISSIONER HOLDS A, DIFFERENT, VIEW MANNESMANN DEMAE A.G. VS. DV. CIT. (53 ITD 533) (DELHI) MERELY BECAUSE OF THERE BEING A POSSIBILITY OF CONTRARY VIEW, ORDER OF THE ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS. THE ASSESSING OFFICER IS A QUASI - JUDICIAL AUTHORITY VESTED WITH THE POWERS OF MAKING FAIR A SSESSMENT. IF TWO VIEWS ARE POSSIBLE, HE WOULD BE JUSTIFIED TO ADOPT A. VIEW THAT FAVOUR THE ASSESSES. SUPER CASSETTES INDUSTRIES (P) LTD, VS. CIT (41 ITD 530) (DELHI) SECTION 263 IS NOT INTENDED FOR CHANGE OF OPINION AND, CANNOT BE INVOKED ONLY TO TAKE A VIEW DIFFERENT FROM SUBORDINATE OFFICER'S VIEW' CF. S. S. MUDDANA VS. STATE OF KARNATAKA (KAR) (89 STC 90) BY RESORT TO A DIFFERENT METHOD, A LARGER TAX CAN BE LEVIED AND COLLECTED CANNOT BE THE SOLE CONSIDERATION TO ATTRACT SECTION 263, AS PR EJUDICIAL TO THE INTEREST OF THE REVENUE, UNLESS THE SAID METHOD IS THE ONLY MODE LEGALLY APPLICABLE. MOOL RAI SINEH & ORS. VS. ITO (63 TTJ 211) (DELHI) SIMPLY BECAUSE THE CIT IS OF A DIFFERENT OPINION, POWERS GIVEN UNDER SECTION 263 CANNOT BE INVOKED SIMPLY BECAUSE A DIFFERENT CONCLUSION CAN BE - ARRIVED AT IN THE GIVEN FACTS AND CIRCUMSTANCES OF A PARTICULAR CASE. SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID THAT IN SUCH A CASE IN THE OPINION OF THE CIT THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF REVENUE, BUT THAT ITSELF WOULD NOT BE ENOUGH TO VEST THE CIT WITH POWERS FOR SUO MOTO REVISION. THEREFORE THE CIT HAS WRONGLY EXERCISED JURISDICTION UND ER SECTION 263. CIT VS. RAJASTHAN FINANCIAL CORPORATION (229 ITR 246) (RAI) ...SINCE THE ASSESSES HAD CONTINUED WITH THE HYBRID SYSTEM OF ACCOUNTANCY WHICH WAS A RECOGNIZED ONE AND HAD CONSISTENTLY BEEN FOLLOWED AND EVEN ACCEPTED BY THE REVENUE AND HAD NOT BEEN LACKING IN BONA FIDES, THE POWER UNDER SECTION 263 COULD NOT. BE EXERCISED. - 9 - ITA NO 63/PNJ/2013 THEREFORE, THE T RIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ORDER OF ASSESSMENT WAS NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE FOR THE COMMISSIONER OF INVOKE HIS POWERS UNDER SECTION 263 OF THE ACT FLEXTRONICS SOFTWARE SYSTEM LTD. VS. CIT FLTA NO. 2070/DEL/20081 .. ..WHEN TWO OPINIONS ARE POSSIBLE IN A PARTICULAR MATTER AND THE ASSESSING OFFICER FOLLOWS ONE VIEW;, THE ORDER CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE PROVIDED THAT LIE FOLLOWS A POSSIBLE VIEW... 35. IN LIGHT OF THE FOREG OING, IT SHALL BE APPRECIATED THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED WHERE TWO VIEWS ARE POSSIBLE AND ONE OF THE VIEWS IS ADOPTED BY THE ASSESSMG OFFICER. 36. ACCORDINGLY, YOUR HONOUR WILL APPRECIATE THAT THE INSTANT CASE IS OUTSIDE THE PURVIEW OF SECTION 263. 37. FURTHER, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 263, ONLY THE ORDERS 'WHICH ARE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE CAN BE REVISED. THE EXPRESSION 'ERRONEOUS' REFERS TO AN ORDER, WHICH HAS AN ERROR OR IS CONTRARY TO THE LAW. THUS, IF THE ORDER PASSED BY THE ASSESSING OFFICER IS IN ACCORDANCE WITH THE LAW, THE ORD ER IS NOT ERRONEOUS. 38. SIMILARLY, THE WORDS 'PREJUDICIAL TO THE INTEREST OF REVENUE' HAS NOT BEEN DEFINED IN THE ACT. HOWEVER, GIVING ORDINARY MEANING FOR THE WORDS USED IN THE STATUTE, THEY MUST MEAN THAT THE ORDERS UNDER CONSIDERATION ARE SUCH AS ARE N OT IN ACCORDANCE WITH THE LAW, AND IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO STATE HAS NOT BEEN REALISED. 39. THE EXPRESSIONS 'ERRONEOUS' AND 'PREJUDICIAL TO THE INTEREST OF REVENUE' HAVE BEEN RECENTLY CONSIDERED BY THE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COM. LTD. (243 ITR 83). THE HON'BLE SUPREME COURT HAS HELD AS UNDER (RELEVANT PORTION FROM HEAD NOTES): '..... THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED I S ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOU RSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. ..... EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME - TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED I N LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME - TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME - TAX OFFICER IS UNSUSTAINABLE IN LAW. ' 40. RELIANCE IS PLACED ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. (203 ITR 108) WHEREIN THE EXERCISE OF THE POWER OF THE CIT TO MAKE REVISION SUO - MOTO WAS DISCUSSED AT LENGTH. THE HON 'BLE HIGH COURT HAS HELD AS UNDER: - 10 - ITA NO 63/PNJ/2013 ' THE POWER OF SUO - MOTO REVISION UNDER SUB - SECTION (1) OF SECTION 263 OF THE INCOME - TAX ACT, 1961, IS IN THE NATURE OF SUPERVISORY JURISDICTION AND CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE THE POWER OF REVISION UNDER THIS SUB - SECTION VIZ., (I) THE ORDER SHOULD BE ERRONEOUS; AND (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE MUST HAVE BEEN CAUSED TO THE INTEREST OF THE REVENUE. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME - TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BE CAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD T O BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME - TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCE OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATE THE INCOME AT A HIGHER FIGURE T HAN THE ONE DETERMINED BY THE INCOME - TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO REEXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A, HIGHER FIGURE. THIS IS BECAUSE THE INCOME - TAX OFFICER HAS EXERCISED THE QUASI - JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A. CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE C OMMISSIONER THE ORDER IN QUESTIONS PREJUDICIAL TO THE INTEREST OF THE REVENUE. BUT THAT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO - MOTO REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, THAT THE ORDER IS ERRONEOUS IS ABSENT. ' 41. WITHOUT PREJUDICE TO OUR CONTENTION THAT THERE IS NO UNDER - ASSESSMENT OF INCOME, IT IS ABUNDANTLY CLEAR THAT WHEN TWO VIEWS ARE POSSIBLE AND ONE OF THE VIEWS HAS BEEN ADOPTED BY THE ASSESSING OFFICER, THE POWER OF REVISION UNDER SECTION 263 CANNOT BE EXERCISED. 42. ACCORDINGLY, YOUR HONOUR WILL APPRECIATE THAT ALL THE ISSUES DISCUSSED ABOVE ARE OUTSIDE THE PURVIEW OF SECTION 263. 43. IN VIEW OF THE ABOVE, IT IS RESPECTFULLY SUBMITTED THAT THE ORDER PASSED BY THE ADDL. CIT IS NOT ERRONE OUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND THEREFORE PROCEEDINGS UNDER SECTION 263, INITIATED BY YOUR HONOUR, BE DWPPED,. 44. WITHOUT PREJUDICE, IT IS SUBMITTED THAT - 11 - ITA NO 63/PNJ/2013 FOR THE ASSESSMENT YEAR 2006/07, AN ORDER GIVING EFFECT HAS BEEN PASSED BY THE AO U/S 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961 ON SIMILAR ISSUE BY NOT ALLOWING ADDITIONAL DEPRECIATION U/S 32(IIA) OF THE INCOME TAX ACT, 1961. FOR THE ASSESSMENT YEAR 2006/07, AN ORDER GIVING EFFECT HAS BEEN PASSED BY THE AO U /S 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961 ON SIMILAR ISSUE BY NOT ALLOWING ADDITIONAL DEPRECIATION U/S 32(IIA) OF THE INCOME TAX ACT, 1961. FOR THE ASSESSMENT YEAR 2007/08, REVISION PROCEEDING WAS INITIATED BY YOUR HONOUR ON SIMILAR ISSUE. THE SAME IS PENDING FOR DISPOSAL. IF AT ALL YOUR HONOUR DIRECTS THE AO TO REVISE HIS ORDER U/S 143(3) OF THE ACT DESPITE THE ABOVE SUBMISSIONS EITHER IN ASSESSMENT YEAR 2007/08 OR IN THE ASSESSMENT YEAR UNDER THE CURRENT PROCEEDING, WE REQUEST YOUR HONOUR TO KINDLY GIVE SUITABLE DIRECTIONS TO ADOPT CLOSING WDV OF THE FIXED ASSETS OF MINING MACHINERY AND WINDMILLS AS ARRIVED IN ORDER GIVING EFFECT TO ORDER U/S 263 IN THE RESPECTIVE ASSESSMENT YEAR AS OPENING WDV FOR THE YEAR UNDER CONSIDERATION.' 4. LD. AR SUBMITTED THAT THE ASSESSING OFFICER IN A.Y. 2006 - 07 & 2007 - 08 NO INQUIRIES WERE MADE REGARDING ADDITIONAL DEPRECI ATION CLAIMED ON NEW PLANT AND MACHINERY USED IN IRON ORE PROCESSING AND WINDMILL OPERATION BUT IN THE YEAR UNDER CONSIDERATION THE AO HAS CALLED FOR THE ADDITIONAL INFORMATION FROM THE ASSESSEE AND ASSESSEE HAS SUPPLIED ALL THIS INFORMATION TO THE AO VIDE LETTER DT. 18/10/2010. THE LD. AR SUBMITTED THAT DURING THE COURSE OF HEARING THE AO ASKED THE ASSESSEE TO JUSTIFY THE CLAIM OF ADDITIONAL DEPRECIATION ON PLANT AND MACHINERY USED IN MINING DIVISION AS WELL AS WINDMILL DIVISION AND IN REPLY TO SHOW CAUSE THE ASSESSEE HAS REPLIED AS UNDER: - AS CAN BE SEEN FROM THE DETAILS OF DEPRECIATION, AS ANNEXED, THE COMPANY HAS CLAIMED ADDITIONAL DEPRECIATION IN RESPECT OF NEW PLANT AND MACHINERY USED IN THE BUSINESS OF IRON ORE PROCESSING CARRIED ON ITS MINING DI VISIONS AS WELL AS IN GENERATION OF ELECTRICITY CARRIED ON IN ITS WINDMILL DIVISION. IN THIS CONNECTION, WE INVITE YOUR GOODSELFS ATTENTION TO THE PROVISIONS OF SECTION 32(1)9IIA) OF THE INCOME TAX ACT (THE ACT) WHICH DEALS WITH ADDITIONAL DEPRECIATION. IN TERMS THEREOF, ADDITIONAL DEPRECIATION IS ALLOWED IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31 ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, SUBJECT TO THE SATISFACTION OF PRESCRIBED CONDITIONS. THUS FORM THE ABOVE YOUR GOODSELF WILL APPRECIATE THAT AN ASSESSEE, TO BE ELIGIBLE FOR ADDITIONAL DEPRECIATION, SHOULD BE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE. 5. THE LD. AR SUBMITTED THAT WHEN AO HAS MADE THE INQUIRY AND ALLOWED THE ADDITIONAL DEPRECIATION ON MACHINERY AND WINDMILL. A SSESSEE IS ENTITLE TO ADDITIONAL DEPRECIATION ON MACHINERY AS PER THE DECISION OF HONBLE SUPREME - 12 - ITA NO 63/PNJ/2013 COU RT IN THE CASE OF CIT VS SESA GOA LTD, 271 ITR 331 . ASSESSEE IS ENTITLE D FOR ADDITIONAL DEPRECIATION ON WINDMILL OPERATION AS PER THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS V T M LIMITED, 319 ITR 336 . W HEN AO HAS TAKEN ONE OF THE POSSIBLE VIEW THE POWER OF REVISION U/S 263 CANNOT BE EXERCISED. THIS VIEW IS SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE MAX INDIA LTD, 295 ITR 282. 6. ON THE OTHER HAND LD. DR RELIED UPON THE ORDER OF COMMISSIONER OF INCOME TAX. 7. WE HAVE HEARD T HE RIVAL CONTENTION OF BOTH THE PARTIES LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT THE CLAIM OF ASSESSEE REGARDING ADDITIONAL DEPRECIATION ON MACHINERY U/S 32(1)(IIA) AND WINDMILL HAS BEEN NOT ALLOWED IN A.Y. 2006 - 07 AND 2007 - 08 WITHOUT MAKING PROPER INQUIRY BY AO. THE COMMISSIONER OF INCOME TAX U/S 263 HAS REVISED THE ORDER OF AO AND AO WAS DIRECTED TO CONSIDER THE ISSUE A FRESH AFTER CONSIDERING THE SUBMISSION MADE BY THE ASSESSEE AND DIRECTED TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS ACTION OF THE CIT HAS BEEN CONFIRMED BY TRIBUNAL IN RESPECTIVE ASSESSMENT YEAR IN A.Y. 2006 - 07 & 2007 - 08, ITA NO 139/PNJ/2011 AND ITA NO. 44/PNJ/2012 RESPECTIVELY . WE FIND IN ASSESSMENT YEAR UNDER CONSIDERATION FOR A.Y 2008 - 09 THE AO HAS MADE INQUIRY REGARDING THE CLAIM OF ASSESSEE OF ADDITIONAL DEPRECIATION ON MACHINERY AND WINDMILL. THE ASSESSEE HAS REPLIED TO THIS QUERY BY THIS LETTER DT. 18/10/2010 WHICH READS AS UNDER: - AS CAN BE SEEN FROM THE DETAILS OF DEPRECIATION, AS ANNEXED, THE COMPANY HAS CLAIMED ADDITIONAL DEPRECIATION IN RESPECT OF NEW PLANT AND MACHINERY USED IN THE BUSINESS OF IRON ORE PROCESSING CARRIED ON ITS MINING DIVISIONS AS WELL AS IN GENER ATION OF ELECTRICITY CARRIED ON IN ITS WINDMILL DIVISION. IN THIS CONNECTION, WE INVITE YOUR GOODSELFS ATTENTION TO THE PROVISIONS OF SECTION 32(1)9IIA) OF THE INCOME TAX ACT (THE ACT) WHICH DEALS WITH ADDITIONAL DEPRECIATION. IN TERMS THEREOF, ADDITION AL DEPRECIATION IS ALLOWED IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31 ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICL E OR THING, SUBJECT TO THE SATISFACTION OF PRESCRIBED CONDITIONS. THUS FORM THE ABOVE YOUR GOODSELF WILL APPRECIATE THAT AN ASSESSEE, TO BE ELIGIBLE FOR ADDITIONAL DEPRECIATION, SHOULD BE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE. 8. WE ARE OF THE OPINION THAT THE AO HAS EXAMINED THE CLAIM OF ASSESSEE REGARDING ADDITIONAL DEPRECIATION ON MACHINERY AND WINDMILL AND ALLOWED THE CLAIM IN THE YEAR UNDER CONSIDERATION . WE ARE OF THE OPINION THAT THE ITO ACTED IN ACCORDANCE WITH THE LAW AND MAKES AN ASSESSMENT THE SAME CANNOT BE BRANDED AS ERRONEOUS BY CIT SIMPLY BECAUSE ACCORDING TO HIM THE ORDER HAVE BEEN NOT WRITTEN ELABORATELY. THIS VIEW IS ALSO SUPPORTED BY THE DECISION OF - 13 - ITA NO 63/PNJ/2013 BOMBAY HIGH COURT IN CASE OF GABRIEL INDIA LIMITED 203 ITR 1 08. WE ARE ALSO OF A VIEW THAT WHEN AO HAS MADE THE INQUIRY AND ALLOWED THE ADDITIONAL DEPRECIATION ON MACHINERY AND WINDMILL. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH THE LAW. WE FIND THAT ASSESSEE IS ENTITLE TO ADDITIONA L DEPRECIATION ON MACHINERY AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS SESA GOA LTD, 271 ITR 331 AS WELL AS SSESSEE IS ENTITLE ADDITIONAL DEPRECIATION ON WINDMILL OPERATION AS PER THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS V T M LIMITED, 319 ITR 336. WHEN AO HAS TAKEN ONE OF THE POSSIBLE VIEW THE POWER OF REVISION U/S 263 CANNOT BE EXERCISED. THIS VIEW IS SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE MAX INDIA LTD, 295 ITR 282. IN VIEW OF THE S E DECISIONS WE ALLOW THE APPEAL OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED JUDGMENT PRONOUNCED IN OPEN COURT ON 08 / 08 /2013. SD/ - SD/ - (P. K. BANSAL) (D. T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PANAJI / GOA DATED: - 08.08.2013 *NANU * COPY TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT, PANAJI 4 . D.R 5 . GUARD FILE BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI, GOA