Farmson Pharmaceuticals Gujarat Ltd., Baroda V. The ACIT.,Circle-1(2), Baroda

ITA 663/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85675 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-01-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 03-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Keywords: Reopening of assessment; Depreciation; Reassessment proceedings
• Section: 147

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.663 AND 664/AHD/2011 / ASSTT. YEAR: 2000-01 AND 2001-02 FARMSON PHARMACEUTICALS GUJARAT PVT. LTD. 28-35, GIDC INDUSTRIAL ESTATE NANDESARI, BARODA. PAN : AAACF 3358 B VS ACIT 1(2) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE(S) BY : SHRI MILIN MEHTA, AR REVENUE BY : SHRI ROOPCHAND, SR / DATE OF HEARING : 30/01/2015 / DATE OF PRONOUNCEMENT: 19/02/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-I, BARODA DATED 10.12.2010 AND 14.12.2010 FOR ASSTT.YEARS 2000-01 A ND 2001-02 RESPECTIVELY. 2. IN BOTH THESE APPEALS, COMMON GROUND NO.1 AND 2 OF THE APPEAL READS AS UNDER: 1. THE LD.CIT(A) ERRED IN FACT AND IN LAW IN CONFI RMING THE ACTION OF THE AO IN INVOKING THE PROVISIONS OF THE SECTION 147 OF THE ACT, 1961 AND COMPLETING THE ASSESSMENT, COMMEN CED UNDER INVALID EXERCISE OF POWERS U/S.147 OF THE ACT. THE LD.CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMI NG THE ACTION OF THE AO IN CONTINUING WITH REASSESSMENT PROCEEDINGS REJECTING THE OBJECTIONS RAISED BY THE APPELLANT DURING THE COURS E OF PROCEEDINGS. ITA NO.663 AND 664/AHD/2011 2 2. THE LD.CIT(A) ERRED IN FACT AND IN LAW IN CONFI RMING THE ACTION OF THE AO IN MAKING DISALLOWANCE/ADDITIONS/A DJUSTMENTS IN ISSUES OTHER THAN THE ISSUES ON WHICH THE REOPENING OF ASSESSMENT IS MADE. 3. AT THE TIME OF HEARING, THE AR OF THE ASSESSEE S UBMITTED THAT HE IS NOT PRESSING THESE GROUNDS OF THE APPEAL. HENCE , THE GROUND NOS.1 AND 2 OF THE APPEAL ARE DISMISSED FOR WANT OF PROSE CUTION IN BOTH THE YEARS UNDER APPEAL. 4. THE COMMON GROUND NO.3 OF THE APPEAL, IN BOTH TH E YEARS, IS DIRECTED AGAINST THE ORDER OF THE CIT(A), CONFIRMIN G ACTION OF THE AO IN NOT ALLOWING 100% DEPRECIATION AND RESTRICTING THE SAME TO 25% ON POLLUTION CONTROL EQUIPMENTS. 5. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ALLOWANCE AT 100% ON POLLU TION CONTROL EQUIPMENT, WHICH WHEN VERIFIED DO NOT MATCH WITH TH E PRESCRIBED RATES OF DEPRECIATION ALLOWANCE OF THE POLLUTION CONTROL EQUIPMENTS IN THE RELEVANT APPENDIX PROVIDED IN I.T.RULES. THE AO SH OW-CAUSED ASSESSEE ON THIS ISSUE. THE ASSESSEE FAILED TO PROVIDE ANY EXPLANATION OR SUBMITTED DOCUMENTS IN SUPPORT OF ITS CLAIM. THERE FORE, THE AO RESTRICTED THE DISALLOWANCE TO 25% AS AGAINST 100% CLAIMED BY THE ASSESSEE. 6. ON APPEAL, THE CIT(A) HELD THAT EXCEPT FOR EXPEN DITURE ON ELECTRONIC MOTOR OF RS.90,672/-, AND RS.7,29,486/- ON SPIN FLASH DRYER, THE REST OF THE EXPENDITURE IS ON COMPONENTS USED I N THE EXISTING CONTROL EQUIPMENTS. THE CIT(A) FURTHER OBSERVED T HAT THE SPIN FLASH DRYER WAS NOT INDICATED IN APPENDIX-1 OF THE DEPREC IATION TABLE, AND THEREFORE, THE AO WAS JUSTIFIED IN DELETING DEPRECI ATION AT 25% ON INVESTMENT OF RS.7,29,486/- ON SPIN FLASH DRYER. HE FURTHER OBSERVED THAT THE EXPENDITURE ON ELECTRONIC MOTOR OF RS.90,6 72/- WAS ALSO ELIGIBLE FOR DEPRECIATION AT 25%. HE HELD THAT OTH ER EXPENDITURE ON BALL ITA NO.663 AND 664/AHD/2011 3 BEARING, CHANNELS, BELTS, PLATES, PUMPS, ETC ARE EL IGIBLE FOR 100% DEPRECIATION. HE, ACCORDINGLY, DIRECTED THE AO TO WORK OUT DEPRECIATION DEPENDING ON THE USAGE PERIOD. 7. SIMILARLY, FOR THE ASSTT.YEAR 2001-02, THE AO RE STRICTED THE DISALLOWANCE AT 25% FOR THE SAME REASONS AS GIVEN I N THE ASSTT.YEAR 2000-01. 8. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO. 9. BEFORE US, THE AR OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND ARGUED THAT THE ASSETS F ORMED PART OF THE POLLUTION CONTROL EQUIPMENT BEING MECHANICALLY SKIM MED OIL AND GREASE REMOVAL SYSTEM. 10. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIE S. 11. WE FIND THAT NONE OF THE LOWER AUTHORITIES HAS GIVEN ANY FINDING THAT WHETHER ELECTRIC MOTOR AND SPIN FLASH DRYER AR E PART OF MECHANICALLY SKIMMED OIL AND GREASE REMOVAL SYSTEM OR NOT. FURTHER, AR OF THE ASSESSEE HAS ALSO NOT BROUGHT ANY MATERIA L TO SUBSTANTIATE THE CONTENTION RAISED BY HIM. THE AO HAS SIMPLY ST ATED THAT THE DESCRIPTION OF THE EQUIPMENTS PURCHASED BY THE ASSE SSEE DID NOT MATCH WITH DESCRIPTION GIVEN IN RULE. HE HAS NOT BROUGHT ON RECORD EVEN THE DETAILS OF THE EQUIPMENTS PURCHASED, MUCH LESS, THE REASON FOR HIS ARRIVING AT THE CONCLUSION THAT THE SAME DOES NOT M ATCH WITH THE DESCRIPTION GIVEN IN THE RULE. THE AO HAS NOT STAT ED ANYTHING ABOUT THE FUNCTIONALITY OF THE EQUIPMENTS PURCHASED BY THE AS SESSEE. IN THE ABSENCE OF THE SAME, WE ARE NOT IN A POSITION TO AD JUDICATE THE ISSUE COMPLETELY. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND REMIT THE MATTER BACK TO THE FILE OF THE AO FOR PROPER VERIFICATION AND TO RECORD A CLEAR FINDING AS TO WH ETHER THE EQUIPMENTS PURCHASED BY THE ASSESSEE ARE PART OF MECHANICALLY SKIMMED OIL AND ITA NO.663 AND 664/AHD/2011 4 GREASE REMOVAL SYSTEM OR NOT, AND THEREAFTER, RE-AD JUDICATE THE ISSUE AS PER LAW. NEEDLESS TO MENTION THAT HE SHALL ALLO W REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUD ICATING THE ISSUE AFRESH. THUS, THIS GROUND OF APPEAL OF THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSE. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 19 TH FEBRUARY, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 19/02/2015