ASIAN PAINTS INDUSTRIAL COATINGS LTD, MUMBAI V. ASST CIT 10(1), MUMBAI

ITA 6622/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3577 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Depreciation; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI .. , ! , '# ' $ BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 6622/MUM/2011 ( & ' (' & ' (' & ' (' & ' (' / / / / ASSESSMENT YEAR: 2008-09) ASIAN PAINTS INDUSTRIAL COATINGS LIMITED 6A, SHANTI NAGAR, SANTACRUZ (E), MUMBAI-400 055 & & & & / VS. ASST. CIT 10(1), 461, AAYAKAR BHAVAN, MUMBAI-400 020 ) '# ./ * ./ PAN/GIR NO. AADCA 1832 E ( )+ / APPELLANT ) : ( ,-)+ / RESPONDENT ) )+ . ' / APPELLANT BY : DR. K. SHIVARAM ,-)+ / . ' / RESPONDENT BY : SHRI MANOJ KUMAR & / 01# / // / DATE OF HEARING : 11.06.2013 2 ( / 01# / DATE OF PRONOUNCEMENT : 21.06.2013 '3 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-21, MUMBAI (CIT(A) FOR SH ORT) DATED 14.07.2011, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2008-09 VIDE ORDER DATED 10.11.2010. 2 ITA NO. 6622/MUM/2011 (A.Y. 2008-09) ASIAN PAINTS INDUSTRIAL COATINGS LIMITED VS. ASST. CIT 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE MANUFAC TURING OF POWDER COATINGS FOR INDUSTRIAL APPLICATIONS. THE PRINCIPAL ISSUE ARISING IN THE INSTANT APPEAL I S IN RESPECT OF THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEPRECIATI ON (TO THE EXTENT OF RS.31,27,825/-) ON THE BASIS THAT THE ADDITIONS TO THE RELEVANT BLOCKS OF ASSETS, WHICH HAS ADMITTEDLY BEEN MADE AT THE END OF THE FINANCIAL YEAR, HAD NOT BEEN SHOWN TO BE PUT TO USE, SO THAT THE ESSENTIAL CONDITION FOR THE ALLOWANCE OF DEDUCTION U/S.32(1) STOOD NOT MET. THE ADDITION TO THE DIFFERENT BLOCKS OF ASSETS DURING THE YEAR, WHICH IS IN THE SUM OF RS.490.48 LACS (REFER PAGE 2 OF THE ASSESSMENT ORDER), BEING MADE ON 29.03.2008 AND 31.03.2008, THE ASSESSING OFFICER (A.O.) DENIED THE ASSESSEES CLAI M FOR DEPRECIATION, AS IT WAS NOT POSSIBLE THAT ASSETS WORTH RS.5 CRORES WERE PURCHAS ED, COMMISSIONED AND THEN PUT TO USE WITHIN A PERIOD OF TWO DAYS. IN APPEAL, THE ASSESSE E SUBMITTED COMMISSIONING CERTIFICATES IN RESPECT OF THE MACHINES SUPPLIED TO IT BY A CHIN ESE VENDOR, AS PER WHICH THE TRIAL RUN ON THESE MACHINES WAS CARRIED OUT ON 19.02.2008, 21 .02.2008, 25.02.2008, 22.03.2008 AND 23.03.2008. HOWEVER, THE APPELLANT COULD NOT EX PLAIN AS TO HOW, WHEN THE TRIAL RUN WAS CARRIED OUT IN THE MONTH OF FEBRUARY, 2008, COU LD THE ASSESSEE CLAIM THE ASSETS TO HAVE BEEN PUT TO USE ON THE LAST TWO DATES, I.E., 2 9.03.2008 AND 31.03.2008. FURTHER, EVEN IF THE ASSESSEES CLAIMS WERE TO BE CORRECT, AND TH E MACHINERIES ACTUALLY PUT TO USE; THE ASSESSEES PRODUCTION BEING EXCISABLE, THE SAME WOU LD YIELD PAYMENTS BY WAY OF EXCISE DUTY AND OTHER LEVIES, I.E., ON THE GOODS PRODUCED USING THE SAID PLANT AND MACHINERY. NO MATERIAL TO SUBSTANTIATE THE SAME HAD BEEN BROUGHT ON RECORD. THE DISALLOWANCE OF DEPRECIATION WAS, THEREFORE, CONFIRMED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE FIND THE FACTS OF THE CASE TO BE LARGELY INDETERMINATE. IF THE TRIAL RUNS OF THE MACHINERY WERE CONDUCTED AS FAR AS BACK IN FEBRUARY, 2008, HOW IS IT THAT THE M ACHINERY STANDS ACTUALLY PURCHASED ON THE LAST TWO DAYS OF THE YEAR, AS STATED BY THE A.O ., AND WHICH WOULD ONLY BE ON THE BASIS OF THE PURCHASE BILLS OF THE MACHINERY PRODUCED BEF ORE HIM AS WELL AS THE ASSESSEES ACCOUNTS. THEIR DATE OF DELIVERY WOULD ALSO BE BORN E OUT BY THE ASSESSEES RECORDS. IN FACT, ANOTHER ASPECT OF THE MATTER WHICH IS QUIZZIC AL IS THAT SEVERAL DATES HAVE BEEN GIVEN 3 ITA NO. 6622/MUM/2011 (A.Y. 2008-09) ASIAN PAINTS INDUSTRIAL COATINGS LIMITED VS. ASST. CIT FOR THE TRIAL RUNS. THE TRIAL PRODUCTION IS USUALLY FOR THE ENTIRE UNIT, AS IT IS ONLY WHEN THE ENTIRE MACHINERY IS SET UP, THAT THE PRODUCTION OR TRIAL PRODUCTION COULD BE MADE. THE RUNNING OF A SINGLE MACHINE, AS IT IS PERHAPS THIS THAT HAS BEEN CONSTRUED AS A TRIAL RUN, IS ONLY A PART OF ITS COMMISSIONING, AS VENDORS ARE US UALLY REQUIRED TO DEMONSTRATE THE WORKING OF THE MACHINE AS A PART OF ITS COMMISSIONI NG. AGAIN, WE FIND FROM THE LIST OF THE ADDITIONS TO THE FIXED ASSETS (PB PGS. 45-46), THAT THERE ARE ADDITIONS DATING AS FAR AS BACK TO MAY, 2007. THE ASSESSEE HAS ALSO SOUGHT TO PLACE ON RECORD THE COPY OF THE INVOICE DATED 28.02.2008 (PB-II PGS.67 TO 76), WITH A REQUE ST THAT THE SAME BE ADMITTED ON RECORD, PERHAPS TO MEET THE OBJECTION BY THE FIRST APPELLATE AUTHORITY THAT THE PRODUCTION WOULD ONLY BE ACCOMPANIED BY PAYMENT OF EXCISE DUTY . IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE, ADM ITTING THE SAME, RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR A DE NOVO EXAMINATION OF THE MATTER, ADJUDICATING THE SAME AFRESH PER A SPEAKING ORDER I N ACCORDANCE WITH LAW AND AFTER AFFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF STATING ITS CASE BEFORE HIM. HIS FINDINGS OF FACT IN THE MATTER SHOULD BE QUA SEPARATE ASSETS/MACHINERIES, INCLUDING WITH REGARD TO THEIR BEING CAPABLE OF BEING RUN EITHER I NDEPENDENTLY OR ONLY IN UNISON, I.E., AS A UNIT. THE ASSESSEES CONTENTIONS WITH REGARD TO THE PAYMENT OF THE EXCISE DUTY ON THE GOODS PRODUCED, WOULD ALSO BE CONSIDERED BY HIM. IN THIS REGARD, WE ARE ACUTELY AWARE THAT THE ASSESSEE HAS NOT MADE OUT ANY CASE FOR ADM ISSION OF ADDITIONAL EVIDENCE. HOWEVER, AS CLARIFIED EARLIER, IN OUR CLEAR VIEW, T HE ISSUE, WHICH IS ESSENTIALLY FACTUAL, IS INDETERMINATE, ALSO OBSERVING INCONSISTENCIES, SO T HAT IT WOULD WARRANT A SET ASIDE TO THE FILE OF THE ASSESSING AUTHORITY FOR PROPER EXAMINAT ION AND VERIFICATION. THE SAME WOULD ONLY BE ENABLED BY THE SAID EVIDENCE, SO THAT THE S AME IS ADMITTED. WE MAY FURTHER CLARIFY THAT OUR OBSERVATIONS IN THE MATTER ARE ONLY PRELIM INARY AND LIMITED TO OUR FINDING THE FACTS BEING INDETERMINATE, WITH THE MATTER BEING PU RELY FACTUAL, I.E., WHETHER THE RELEVANT ASSETS ACQUIRED DURING THE YEAR HAVE BEEN ACTUALLY PUT TO USE DURING THE YEAR, ALONG WITH THE RELEVANT DATES, SO AS TO FORM PART OF THE RELEV ANT BLOCK OF ASSETS AND, THUS, BE EXIGIBLE TO DEPRECIATION ALLOWANCE U/S.32. WE DECIDE ACCORDI NGLY. 4 ITA NO. 6622/MUM/2011 (A.Y. 2008-09) ASIAN PAINTS INDUSTRIAL COATINGS LIMITED VS. ASST. CIT 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 4 05 & '40 / 6/ 78'9 ' :0 / 0 ;< ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 21, 2013 '3 / 2 ( #' =&5 >& 21, 2013 / C SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER '# / ACCOUNTANT MEMBER MUMBAI; =& DATED : 21.06.2013 .&../ ROSHANI , SR. PS '3 / ,0D E'D(0 '3 / ,0D E'D(0 '3 / ,0D E'D(0 '3 / ,0D E'D(0/ COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT 3. F ( ) / THE CIT(A) 4. F / CIT - CONCERNED 5. DIC ,0& , , / DR, ITAT, MUMBAI 6. CJ' K / GUARD FILE '3& '3& '3& '3& / BY ORDER, 7 77 7/ // /; ; ; ; (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI