Vasani Polymers Pvt. Ltd., Sabarkantha V. The Income Tax Officer, S.K. Ward-1, Himatnagar

ITA 730/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4534 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-08-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 24-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Depreciation; Opportunity of being heard; Additional depreciation; Revenue expenditure; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO. 730/AHD/2017 ( / ASSESSMENT YEAR : 2013-14) VASANI POLYMERS PVT.LTD. SURVEY NO.488/P & 519/P GIDC TALOD SABARKANTHA 383 215 / VS. THE INCOME TAX OFFICER SK WARD-1 HIMMATNAGAR ./ ./ PAN/GIR NO. : AADCV 5364 N ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL TALATI, AR / RESPONDENT BY : SHRI S.K. DEV, SR.DR / DATE OF HEARING 26/08/2019 !'# / DATE OF PRONOUNCEMENT 27/08/2019 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE O RDER OF LD.COMMISSIONER OF INCOME TAX(APPEALS)-2, AHMEDABAD [CIT(A) IN SHORT] DATED 24/01/2017 PASSED FOR ASSESSMENT YEAR (AY) 2013-14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: ITA NO.730 /AHD /2017 VASANI POLYMERS PVT.LTD. VS. ITO ASST.YEAR 2013-14 - 2 - 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISAL LOWANCE OF DEPRECATION OF RS. 11,27,819/- OUT OF TOTAL DEPRECA TION ( INCLUDING ADDITIONAL DEPRECATION ) DISALLOWED BY A.O. OF RS 9 5,23,459/- CLAIMED ON PURCHASE OF PLANT AND MACHINERIES FOR THE YEAR U NDER CONSIDERATION. IT IS SUBMITTED THAT THE ENTIRE PLANT AND MACHINERI ES HAVE BEEN PUT TO USE AS WELL AS COMMERCIAL PRODUCTION WAS STARTED ON OR BEFORE 31 ST MARCH 2013 ONLY AND THUS DEPRECIATION CLAIMED BY TH E APPELLANT ON WHOLE ADDITION OF PLANT & MACHINERY OUGHT TO HAVE B EEN GRANTED. ON THE FACTS AND CIRCUMSTANCES, YOUR APPELLANT HAS COR RECTLY CLAIMED NORMAL AS WELL AS ADDITIONAL DEPRECIATION TOTAL AMO UNTING TO RS 95,23,459/- AS PER THE PROVISIONS OF THE ACT AND TH E SAME BE ALLOWED ACCORDINGLY. IT MAY HELD SO NOW AND THE ADDITION OF RS 11,27,819/- BE DELETED. 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE CO NTENTION OF A.O. THAT THE MACHINES PURCHASED IN SECOND PHASE I.E. ON 30.3 .2013 CANNOT BE INSTALLED AND USED ON 31.3.2013, WHICH IS NOT AT AL L CORRECT. IT IS SUBMITTED THAT THE MACHINERIES PURCHASED AND INSTAL LED ON 30.3.2013 WAS PUT TO USE DURING THE PREVIOUS YEAR ONLY BY THE APPELLANT COMPANY, WHICH CANNOT BE DOUBTED WITHOUT ANY ADVERSE REMARK OR OBSERVATION. THEREFORE IT IS PRAYED THAT DISALLOWANCE CONFIRMED BY LD. CIT(A) OF RS. 11,27,819/- BEING ILLEGAL AND UNLAWFUL, DESERVE S TO BE DELETED. 3. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE CONSE QUENTIAL ADDITION OF RS 50,000/- OUT OF TOTAL EXPENDITURES INCURRED OF R S. 3,46,760/- ON ACCOUNT OF ELECTRICITY, TRANSPORT, LABOUR EXPENSE T REATING THE SAME AS PREOPERATIVE IN NATURE. IT IS SUBMITTED THAT THE AS SESSEE HAS ALREADY CAPITALIZED THE EXPENDITURE OF RS 43,58,934/- TILL THE DATE THE MACHINERIES HAD BEEN PUT TO USE AND THE EXPENSES OF RS 3,46,760/- HAVE BEEN INCURRED ONLY AND ONLY AFTER THE MACHINERIES H AVE BEEN INSTALLED AND PUT TO USE DURING THE PREVIOUS YEAR AND THUS TH E SAME HAS BEEN CORRECTLY CLAIMED AS REVENUE EXPENDITURE U/S.37 OF THE ACT. THEREFORE THE SAME BE HELD NOW AND CONSEQUENTIAL ADDITION OF RS.50,000/- BE DELETED. ITA NO.730 /AHD /2017 VASANI POLYMERS PVT.LTD. VS. ITO ASST.YEAR 2013-14 - 3 - 4. THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LA W AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 5. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND/O R TO AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING. 3. GROUND NO.1 & 2 ARE INTER-CONNECTED. BRIEFL Y STATED FACTS GIVING RISE TO THE APPEAL ARE THAT THE CASE OF THE ASSESSE E WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) O F THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 17/11/2015. WHILE FRAMING THE ASSESSMENT, T HE ASSESSING OFFICER DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION AMO UNTING TO RS.95,23,459/- ON THE GROUND THAT THE MACHINES WER E NOT PUT TO USE BEFORE 31/03/2013. THE ASSESSING OFFICER ALSO MADE ADDITION ON ACCOUNT OF DISALLOWANCE OF PREOPERATIVE EXPENSES OF RS.3,46 ,760/-. HENCE, THE ASSESSING OFFICER ASSESSED INCOME AT RS.40,03,600/- AGAINST THE INCOME DISCLOSED AT NIL BY THE ASSESSEE. 4. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT O RDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE APPEAL AND CONFIRMED THE ASSESSMENT ORDER. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE AS SESSEE IS FURTHER IN APPEAL BEFORE US. ITA NO.730 /AHD /2017 VASANI POLYMERS PVT.LTD. VS. ITO ASST.YEAR 2013-14 - 4 - 5. DURING THE COURSE OF HEARING, LD.COUNSEL FOR TH E ASSESSEE FILED AN APPLICATION UNDER RULE 29 OF THE INCOME TAX (APPELL ATE TRIBUNAL) RULES, 1963 SUBMITTING THEREIN THAT THE ASSESSEE HAD FILED PAPER-BOOK AND PAGE NOS.33 TO 40 OF THE PAPER-BOOK COULD NOT BE FILED B EFORE THE AUTHORITIES BELOW. HE FURTHER SUBMITTED THAT THESE EVIDENCES GO TO ROOT OF THE ISSUE IN APPEAL. IF THESE EVIDENCES ARE CONSIDERED, IN T HAT EVENT, THE CLAIM MADE BY THE ASSESSEE FOR DEPRECIATION WOULD BECOME ALLOWABLE. 6. THE LD.DR OPPOSED THE SUBMISSIONS OF THE LD.COUN SEL FOR THE ASSESSEE AND SUPPORTED THE ORDERS OF THE AUTHORITIE S BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. BOTH THE AUTHORITIES BELOW HAVE REJECTED THE CLAIM PURELY ON THE BASIS THAT THE MACHINES WERE NOT PUT TO USE PRIOR TO 31/0 3/2013. THEREFORE, THE DEPRECIATION AND ADDITIONAL DEPRECIATION ON PLANT & MACHINERY FOR THE FINANCIAL YEAR 2012-13 RELEVANT TO ASSTT.YEAR 2013- 14 CANNOT BE RULED OUT. WE HAVE PERUSED THE EVIDENCES FILED BY THE AS SESSEE. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE DEEM IT PROPER AND IN THE INTEREST OF JUSTICE, THAT THE EVIDENCES NEED TO BE VERIFIED AT THE END OF THE ASSESSING OFFICER. THEREFORE, WE SET ASIDE TH E ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECISION AFRESH IN ACCORDANCE WITH LAW. THE ASSESSING ITA NO.730 /AHD /2017 VASANI POLYMERS PVT.LTD. VS. ITO ASST.YEAR 2013-14 - 5 - OFFICER WOULD VERIFY THE CLAIM OF THE ASSESSEE AND DECIDE THE ISSUE AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF GROUND ASSESSEES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. 8. GROUND NO.3 IS AGAINST CONFIRMATION OF CONSEQUEN TIAL ADDITION OF RS.50,000/- OUT OF TOTAL EXPENDITURE INCURRED OF RS .3,46,760/-. 9. SINCE WE HAVE SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER IN RESPECT OF CLAIM OF THE DEPRECIATION, THE ASSESSING OFFICER WOULD ALSO VERIFY THE EXPENDITURE INCURRED BY THE ASSESSEE AND ACCORDINGLY DECIDE THIS GROUND ALSO. 10. GROUND NOS.4 & 5 ARE GENERAL IN NATURE WHICH RE QUIRE NO INDEPENDENT ADJUDICATION. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 27 TH AUGUST - 2019 AT AHMEDABAD. SD/- SD/- ( WASEEM AHMED) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 27/ 08 /2019 &.., .(../ T.C. NAIR, SR. PS ITA NO.730 /AHD /2017 VASANI POLYMERS PVT.LTD. VS. ITO ASST.YEAR 2013-14 - 6 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-2, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 26.8.2019 (DICTATION-PAD 8 -PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..26.8.2019 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.27.8.2019 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.8.2019 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER