DHARMANANDAN DIAMONDS P.LTD, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 5(1)(2), MUMBAI

ITA 7478/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1492 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 19-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANT SAMAIYA
• Assessee Lawyers: R C MODI; KETKI RAJESHIRKE
• Keywords: Capital asset; Gift; Depreciation; Corroborative evidences; Valuation report; Set aside
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH , JM ITA NO.7478/MUM/2016 (ASSESSMENT YEAR: 2011-12) DHARMANANDAN DIAMONDS PRIVATE LIMITED FE 7011-12, BHARAT DIAMOND BOURSE, BKC BANDRA (EAST) MUMBAI-400 051 VS. DCIT - 5(1)(2) AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 PAN/GIR NO. AACCD6676J ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI R.C. MODI & MS. KETKI RAJESHIRKE RESPONDENT BY : NISHANT SAMAIYA DATE OF HEARING : 08.03. 2019 DATE OF PRONOUNCEMENT : 15 . 03.2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-10, MU MBAI (LD.CIT(A) FOR SHORT), DATED 19.09.2016 AND PERTAINS TO THE AS SESSMENT YEAR (A.Y.) 2011-12. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE CIT(A) ERRED IN CONFIRMING ALLOWANCE OF DEPRECIATION BY TH E ASSESSING OFFICER AT RS.5,71,92,626/- AS AGAINST CLAIMED MADE BY THE APPELLATE-COMPANY OF RS. 15,78,34,916/-. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND /OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFORE OR DURING THE CO URSE OF HEARING OF APPEAL. 2 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A C OMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF DIAMOND AND ENERGY . THE ONLY ISSUE IS RELATED TO DISALLOWANCE OF DEPRECIATION THE TUNE OF RS.5,71,92,626/- BY THE ASSESSING OFFICER BASED UPON HIS ORDER OF AY 2009-10 AND CONFIRMED BY THE LD. CIT(A) FOLLOWING HIS ORDER FOR AY 2010-11, WHICH IN TURN WAS RELIED UPON LD. CIT(A) ORDER OF AY 2009 -10. 4. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BE FORE US. 5. WE HAVE HEARD THE COUNSEL AND PERUSED RECORDS. L D. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE BY ITAT DECISION IN ASSESSEES OWN CAS E FOR THE EARLIER YEAR. 6. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE COULD NOT DISPUTE THE PROPOSITION THAT THE ISSUE IS SQUARELY COVERED BY T HE DECISION OF ITAT IN ASSESSEES OWN CASE. 7. UPON CAREFUL CONSIDERATION WE NOTE THAT ITAT VID E ORDER DATED 21.06.2017 IN ITA.NO. 3861/MUM/2014 FOR AY 2009-10 IN ASSESSEES OWN CASE HAS REVERSED THE DECISION OF LD. CIT(A) AN D DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: 7. IN THE REBUTTAL, THE AR WHILE TAKING US THROUGH THE DECISIONS AS REFERRED AND RELIED BY THE ID DR, SUBMITTED THAT TH E CASES ARE DISTINGUISHABLE ON FACTS AND THEREFORE WERE NOT APP LICABLE TO THE CASE OF THE ASSESSEE WHEREAS THE CASE SQUARELY COVERED BY T HE DECISIONS RELIED BY HIM. 3 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED INCLUDING THE IMPUGNED ORDER AND CASE LAWS C ITED BY BOTH THE UNDISPUTED FACTS ARE THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 31.8.2007 UNDER THE PROVISIONS OF COMPANIES ACT, 19 56 AND TOOK OVER ALL THE ASSETS AND LIABILITIES OF THE ERSTWHILE FIRM M/ S DHARMANANDAN DIAMONDS ON 1.9.2007. THE ASSETS WERE GOT REVALUED BY THE ERSTWHILE FIRM ON WERE REVALUED ON 30.6.2007 FROM THE INDEPENDENT GOVERNMENT APPROVED REGISTERED VALUER IN ORDER TO ASCERTAIN TH E PREVAILING MARKET VALUE OF THE ASSETS AND ACCORDINGLY ALL THE NECESSA RY ADJUSTMENT ENTRIES WERE MADE IN THE BOOKS OF ACCOUNTS OF THE ERSTWHILE FIRM. IN CONSIDERATION OF TRANSFER, THE PARTNERS OF ERSTWHILE FIRM ISSUED EQUITY SHARES IN THE ASSESSEE COMPANY IN THE RATIO OF PROFIT SHARING TO THE PARTNERS OF THE ERSTWHILE FIRM. THE ASSESSEE COMPANY TOOK OVER THE SAID ASSETS ON 31.8.2007 AND THUS FINANCIAL YEAR 2007-08 WAS SPLIT INTO TWO PARTS ONE FROM 1.4.2007 TO 31.8.2007 AND SECOND 1.09.2007 TO 31.3.2008. IN BOTH THE PERIODS THE DEPRECIATION WAS CLAIMED ON THE BAS IS OF WDV IN THE HANDS OF ERSTWHILE FIRM I.E. M/S DHARMANANDAN DIAMONDS AS WELL AS THE ASSESSEE BASED ON THE WDV IN THE BOOKS OF ACCOUNTS OF THE ERSTWHILE FIRM. THE ASSESSEE COMPANY CALCULATED ITS WDV ON 31.3.200 8 BY TAKING THE COST OF ASSETS AT REVALUED PRICE AS DONE BY THE GOVERNME NT APPROVED REGISTERED VALUER LESS DEPRECIATION CALCULATED ON THE BASIS OF WDV IN THE HANDS OF THE ERSTWHILE FIRM AND FROM THE AY-2009-10, THE DEPRECI ATION WAS CLAIMED BY THE ASSESSEE COMPANY ON BASIS OF WDV AS ASCERTAINED (SUPRA) IN THE AY 2008-09 ON 31.3.2008. THE ASSESSEE COMPANY CLAIMED DEPRECIATION IN ASSESSMENT YEAR 2008-09 FROM 1.9.2008 TO 31.3.2008 FIFTH PROVISO TO SECR_ION32(L) OF THE ACT WHICH FOR THE SAKE OF CONV ENIENCE AND BETTER UNDERSTANDING EXTRACTED AS UNDER : ''[PROVIDED ALSO THAT THE AGGREGATE DEDUCTION, IN R ESPECT OF DEPREDATION OF BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING TAN GIBLE ASSETS OR KNOW- HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENSES, FRA NCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, BE ING INTANGIBLE ASSETS ALLOWABLE TO THE PREDECESSOR AND THE SUCCESSOR IN T HE CASE OF SUCCESSION REFERRED TO IN 18[CLAUSE (XIII)), CLAUSE (XIIIB) AN D CLAUSE (XIV) OF SECTION 47 OR SECTION 170 OR TO THE AMALGAMATING COMPANY AND THE AMALGAMATED COMPANY IN THE CASE OF AMALGAMATION, OR TO THE DEME RGED COMPANY AND THE RESULTING COMPANY IN THE CASE OF DEMERGER, AS T HE CASE MAY BE, SHAFT NOT EXCEED IN ANY PREVIOUS YEAR THE DEDUCTION CALCU LATED AT THE PRESCRIBED RATES AS IF THE SUCCESSION OR THE AMALGAMATION OR T HE DEMERGER, AS THE CASE MAY BE HAD NOT TAKEN PLACE, AND SUCH DEDUCTION SHAL L BE APPORTIONED BETWEEN THE PREDECESSOR AND THE SUCCESSOR, OR THE A MALGAMATING COMPANY AND THE AMALGAMATED COMPANY, OR THE DEMERGED COMPAN Y AND THE RESULTING COMPANY, 33 THE CASE MAY BE, IN THE RATIO OF THE NUMBER OF DAYS FOR WHICH THE ASSETS WERE USED BY THEM.' AS PER THE SAID PROVISION, THE TOTAL DEPRECIATION I S REQUIRED TO BE ALLOWED TO THE ERSTWHILE FIRM AND THE ASSESSEE COMPANY ON WDV OF ASSETS IN THE 4 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. HANDS OF THE ERSTWHILE FIRM WHICH SHALL NOT EXCEED THE AMOUNT OF DEPRECIATION FOR THAT YEAR IN WHICH SUCCESSION HAS TAKEN PLACE AS IF NO SUCCESSION HAS TAKEN PLACE. THE ASSESSEE COMPANY CO MPUTED THE WDV IN ITS BOOKS OF ACCOUNTS AFTER REDUCING THE DEPRECIATI ON FROM THE COST AT WHICH THE ASSETS WERE ACQUIRED BY FT I.E. REVALUED PRICES AS PER SECTION 43(1) WHICH READS AS UNDER: 43. DEFINITION OF CERTAIN TERMS RELEVANT TO INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION. IN SECTIONS 28 TO 41 AND IN THIS SECTION UNLESS THE CONTEXT OTHERWISE REQUIRES (I) ACTUAL COST' MEANS THE ACTUAL COST OF THE ASSETS T O THE, ASSESSEE, REDUCED BY THAT PORTION OF THE COST THEREOF, IF ANY , AS HAS. 'BEEN MET DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHO RITY; THE AO HAS REJECTED THE CLAIM OF DEPRECIATION OF TH E ASSESSEE ON THE GROUND THAT NO CAPITAL GAIN TAX WAS PAID BY THE ERSTWHILE FIRM UPON REVALUATION OF ITS ASSETS BY CLAIMING EXEMPTION U/S47(XIII) OF THE ACT. THE ASSETS WERE TAKEN OVER BY THE ASSESSES COMPANY AT REVALUED AMOU NTS AND THE DEPRECIATION COULD NOT BE ALLOWED ON THE REVALUED P RICE WHICH IS MANY TIME MORE THAN THE WDV OF THE ASSETS IN THE HANDS OF ERS TWHILE FIRM. FOR THE SAKE OF BETTER UNDERSTANDING OF THE ISSUE AT HAND W E REPRODUCE THE PROVISIONS OF SECTION 47(XIII) OF THE ACT AS BELOW: [(XIII) 18[ANY TRANSFER OF A CAPITAL ASSET OR INTAN GIBLE ASSET BY A. FIRM TO A COMPANY AS A RESULT OF SUCCESSION OF THE FIRM BY A COMPANY IN THE BUSINESS CARRIED ON BY THE FIRM, OR ANY TRANSFER OF A CAPITA / ASSET TO A COMPANY IN THE COURSE OF 19[DEMUTL!3IISATION OR] CORPORATIZATI ON OF A RECOGNIZED STOCK EXCHANGE IN INDIA AS A RESULT OF WHICH AN ASSOCIATI ON OF PERSONS OR BODY OF INDIVIDUALS IS SUCCEEDED BY SUCH COMPANY:] PROVIDED THAT (A) ALL THE ASSETS AND LIABILITIES OF THE FIRM 20[O R OF THE ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS] RELATING TO THE BUSINESS IM MEDIATELY BEFORE THE SUCCESSION BECOME THE ASSETS AND LIABILITIES OF THE COMPANY; (B) ALL THE PARTNERS OF THE FIRM IMMEDIATELY BEFORE THE SUCCESSION BECOME THE SHAREHOLDERS OF THE COMPANY IN THE SAME PROPORT ION IN WHICH THEIR CAPITAL ACCOUNTS STOOD IN THE BOOKS OF THE FIRM ON THE DATE THE SUCCESS/ON; (C) THE PARTNERS OF THE FIRM DO NOT RECEIVE ANY CON SIDERATION OR BENEFIT, OR INDIRECTLY, IN ANY FORM OR MANNER, OTHER THAN BY WA Y OF ALLOTMENT OF SHARES IN THE COMPANY; AND (D) THE AGGREGATE OF THE SHAREHOLDING IN THE COMPAN Y OF THE PARTNERS OF THE FIRM IS NOT LESS THAN FIFTY PER CENT OF THE TOTAL V OTING POWER IN THE COMPANY AND THEIR SHAREHOLDING CONTINUES TO BE AS SUCH FOR A PERIOD OF FIVE YEARS FROM THE DATE OF THE SUCCESSION; (E) THE 22[ DEMUTUALIZATION OR] CORPORATIZATION OF A RECOGNIZED STOCK EXCHANGE IN INDIA IS CARRIED OUT IN ACCORDANCE WITH A SCHEME FOR 22[DEMUTUALIZATION OR] CORPORATIZATION WHICH IS APP ROVED BY THE SECURITIES AND EXCHANGE BOARD OF INDIA ESTABLISHED UNDER SECTI ON 3 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 (15 OF 1992) ;] 5 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. A CAREFUL PERUSAL OF THE ABOVE PROVISIONS SHOWS THA T CAPITAL GAIN ON TRANSFER OF ASSETS TO COMPANY AS A RESULT OF SUCCES SION OF FIRM BY THE COMPANY IS EXEMPT FROM TAX IF CERTAIN CONDITIONS AS SPECIFIED UNDER SECTION 47(XIII) ARE FULFILLED. IN THE PRESENT CASE, BEFORE US, THE COMPANY HAS SUCCEEDED THE FIRM BY FULFILLING ALL THE CONDITIONS ENVISAGED U/S 47(XIII) OF THE ACT AND THEREFORE THE ERSTWHILE FIRM WAS NOT LI ABLE FOR ANY CAPITAL GAIN TAX WHICH WAS ALSO ADMITTED BY THE AO THAT NO CAPIT AL GAIN TAX WAS LEVIABLE. THUS, MERELY BECAUSE NO CAPITAL GAIN TAX WAS PAID BY THE ERSTWHILE FIRM BY VIRTUE OF SCHEME OF SECTION 47(XI II) OF THE ACT, THE AO CANNOT BE ALLOWED TO REJECT THE DEPRECIATION CLAIM OF THE ASSESSEE SO LONG AS THE SAME IS AS PER THE PROVISIONS OF THE ACT. TH E MOMENT THE CONDITIONS AS LAID DOWN IN SECTION 47(XIII) OF THE ACT ARE VIO LATED, THE CAPITAL GAIN TAX BECOMES PAYABLE ON THE TRANSFER OF ASSETS FROM ERST WHILE FIRM TO THE ASSESSEE ON THE BASIS MARKET OF THE ASSETS. THE SEC TION DOES NOT SPEAK ANYTHING ABOUT BOOK VALUE OF OR WDV OF THE ASSERT O F THE FIRM BUT IT STATES THAT THE ASSETS AND LIABILITIES BEFORE THE SUCCESSI ON OF FIRM BECOME ASSETS AND LIABILITIES OF THE SUCCEEDING COMPANY. IN OTHER WORD, THE EXEMPTION U/S 47(XIII) OF THE ACT IS BASED UPON THE FULFILLMENT O F CERTAIN CONDITIONS AND IF THE CONDITIONS AS STIPULATED IN THE ACT ARE VIOLATE D THE CAPITAL GAINS TAX BECOME PAYABLE AND THE SAME WOULD BE COMPUTED ON THE BASIS OF MARKET PRICE OF THE TRANSFERRED ASSETS AND LIABILITY OF TH E FIRM, WHICH HAS BEEN HELD IN THE CASE OF KTC AUTOMOBILES PVT LTD (SUPRA) IT H AS BEEN HELD THAT THE CAPITAL GAIN TAX IS ATTRACTED AS THE CONDITIONS U/S 47(XIII) OF THE ACT ARE NOT FULFILLED BY TREATING THE CONSIDERATION FOR TRANSFE R AS LOAN IN THE ASSESSEE COMPANY AND THE ORDER OF CIT(A) WAS AFFIRMED. WHERE AS IN THE PRESENT CASE BEFORE US ALL THE CONDITIONS OF SECTION 43(XIII) OF THE ACT WERE SATISFIED IN THE SUCCESSION OF FIRM BY THE COMPANY IN TAKING OVER AL L THE ASSETS AND LIABILITIES AND THEREFORE EXEMPTION AS PROVIDED IN SECTION 43(XIII) IS AVAILABLE TO THE ASSESSEE. 9. THE SECOND REASON FOR DISALLOWANCE IS THAT THE A GGREGATE DEPRECIATION CANNOT EXCEED THE ACTUAL COST OF THE ASSETS IN THE HANDS OF THE ASSESSEE. IN THE PRESENT CASE, THE ACTUAL COST IS THE VALUE A T WHICH PRICE ON WHICH THE ASSETS WERE TAKEN OVER BY THE COMPANY AND THE SHARE S WERE ISSUED IN DISCHARGE THE CONSIDERATION FOR SUCH TAKEOVER OF TH E ASSETS AND THUS, COST IN THE HAND OF THE ERSTWHILE FIRM CANNOT BE TAKEN I NTO CONSIDERATION FOR DETERMINATION OF ACTUAL COST IN THE HANDS OF THE SU CCESSOR ASSESSEE FIRM BUT PRICE IT DISCHARGED FOR TAKING OVER THE ASSETS WHICH WAS PAID BY ISSUES OF EQUITY SHARES TO THE PARTNERS OF THE ERSTWHILE FIRM IN. PROFIT SHARING RATIO AND THUS THERE IS NO VIOLATION OF PROVISO TO RULE 5 OF THE IT RULES. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE ACTUAL 'COST' INCURRED BY IT FOR ACQUISITION OF ASSETS AND COST T O THE ASSESSES WAS MARKET VALUE OF THE ASSETS TRANSFERRED AS ASCERTAINED BY T HE GOVT APPROVED REGISTERED VALUER. IT IS PERTINENT TO NOTE HERE THA T ON SATISFACTION OF CONDITION ENVISAGED U/S 47(XIII) OF THE ACT, CAPITAL GAIN TAX WOULD BE EXEMPT. HAD THE CONDITIONS OF SECTION 47(XIII) NOT FULFILLED THE CA PITAL GAIN WOULD HAVE BEEN PAYABLE OR CHARGEABLE ON THE BASIS OF MARKET PRICES OF THE ASSETS 6 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. TRANSFERRED ON SUCCESSION OF THE FIRM TO THE COMPAN Y. IN VIEW OF THESE FACTS, THE ASSESSEE COMPANY IS ENTITLED TO BE ALLOWED DEPR ECIATION ON THE BASIS OF ACTUAL COST IN ITS HANDS AS PER THE PROVISIONS O F SECTION 43(1) OF THE ACT AND NOT ON THE WDV OF THE ERSTWHILE FIRM. IT IS ALS O UNDISPUTED FACT THAT THE ASSESSEE COMPANY WAS NOT IN EXISTENCE AS ON 30.6.20 07 WHEN THE ASSETS OF THE ERSTWHILE FIRM WERE REVALUED. EVEN IF THE CA SE OF SUCCESSION BY THE ASSESSEE COMPANY OF THE ERSTWHILE FIRM IS TREATED A S SALE /TRANSFER AS PER THE PROVISIONS OF ACT EVEN THEN THE EXEMPTION WOULD BE AVAILABLE TO THE ERSTWHILE FIRM UNDER THE PROVISIONS OF SECTION 47(X III) OF THE ACT. AS REGARD THE EXPLANATION 3 TO SECTION 43(1) OF THE ACT, THE AO HAS POWER TO REJECT THE CLAIM OF THE APPELLANT IF THE MAIN PURPOSE OF THE T RANSFER OF ASSETS IS TO REDUCE THE TAX LIABILITY. HOWEVER, IN THE PRESENT C ASE, WE FIND THAT THE MAIN PURPOSE OF TRANSFER/TAKEOVER OF ASSETS AND LIABILIT IES OF THE FIRM WAS TO CARRY ON BUSINESS ACTIVITIES IN THE HANDS OF THE AS SESSEE IN MORE EFFECTIVE MANNER EFFECTIVE MANNER WHICH IS EVIDENT FROM THE F ACT THAT DURING THE TURNOVER OF THE ASSESSEE COMPANY WAS RS,895 CRORES AND THE ASSESSEE HAS PAID MAT TAX ON BOOK PROFITS DURING THE YEAR. I N OTHER WORDS, THE SUCCESSION BY THE ASSESSEE COMPANY OF THE ERSTWHILE FIRM AND TAKING OVER ALL THE ASSETS AND LIABILITIES WAS SUBJECT TO THE C ONDITIONS OF SECTION 47(XIII) OF THE ACT AND ACCORDINGLY THE EXEMPTION FROM PAYIN G CAPITAL GAIN TAX WAS AVAILABLE. ANY VIOLATION OF THE CONDITIONS AS STATE D IN SECTION 47 (XIII) WOULD. HAVE RESULTED IN THE CAPITAL GAIN LIABILITY IN THE HANDS OF THE ERSTWHILE FIRM. IN THE CASE OF M/S ASHWIN VANASPATI INDUSTRY (SUPRA ), THE HON'BLE GUJARAT HIGH COURT HAS HELD THAT WHERE THE ASSESSEE HAS CLA IMED DEPRECIATION ON THE ENHANCED COST IN THE CASE OF SUCCESSION OF FIRM BY THE COMPANY WHERE THE ASSETS WERE TAKEN OVER ON ENHANCED VALUE THAN W DV OF THE FIRM, IT IS NECESSARY FOR THE AO TO PLACE SOME EVIDENCE ON RECO RD AND IT COULD NOT SUBSTITUTE ITS OPINION AND ADOPT THE BOOK VALUE WDV OF THE FIRM IN TH4E HAND OF THE ASSESSEE COMPANY. AS PER THE EXPLANATIO N 3 OF SECTION 43(1) THE AO HAS TO DETERMINE THE ACTUAL COST TO THE ASSE SSEE BY KEEPING IN MIND THE CIRCUMSTANCES AND IF IN HIS OPINION THE WDV WA S THE ACTUAL COST THEN HE SOUGHT TO HAVE SUPPORTED THE SAME WITH BY PLACIN G SUFFICIENT EVIDENCES SO AS TO DISLODGE THE VALUATION REPORT OF THE REG ISTERED VALUER OTHERWISE THE PROVISIONS CANNOT BE INVOKED AND FINALLY HELD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE ENHANCED COST. * IN THE CASE OF CHITRA PUBLICITY CO PVT LTD (SUPR A), THE THIRD MEMBER OF AHMEDABAD BENCH OF THE TRIBUNAL HELD AS UNDER : 26.1 HAVE ALSO GONE THROUGH THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CLT V, SEKAR OFFSET PRESS [1995] 214 IT R 516 [MAD}. IN THAT CASE, THE ASSETS WERE TRANSFERRED AT THE MARKET VALUE BET WEEN PARTNERS. THE COURT HELD THAT EXPLN. 3 TO S. 43(1) HAD NO APPLICA TION TO THE CASE AS THE MAIN PURPOSE OF THE TRANSFER OF ASSETS WAS NOT REDU CTION OF TAX LIABILITY. THE DECISION IS RELEVANT THE OTHER DECISION OF THE TRIBUNAL IN THE CASE OF UNIMED TECHNOLOGIES LTD. V. DY. CIT [2000] 73 ITD 1 50 (AHDI) IS ALSO 7 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. CONSIDERED RELEVANT AS IN ABOVE EASE, VALUATION REP ORT FURNISHED BY THE ASSESSEE IN SUPPORT OF COST OF THE ASSETS ACQUIRED WAS ACCEPTED BY THE TRIBUNAL, AS AO DID NOT APPOINT HIS OWN VALUER NOR THOUGHT IT NECESSARY TO EXAMINE ASSESSEE'S VALUER. IN THE ABSENCE OF ANY OT HER VALUATION REPORT AND THERE BEING NO OTHER EVIDENCE TO SHOW THAT THE REPORT WAS NOT RELIABLE, IT WAS HELD THAT VALUATION REPORT FILED BY THE ASSE SSEE COULD NOT BE IGNORED FACTUAL POSITION HERE IS SIMILAR....' > IN THE CASE OF PRAKASH CHEMICAL AGENCIES P LTD, THE AHMEDABAD BENCH OF THE TRIBUNAL HELD AS UNDER: '6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATION FILED. UNDISPUTED!/, THROUGH MOU DATED 12TH DAY OF OCTOBER -2002 THE ASSIGNER, I.E. M/S. PRAKASH CHEMICAL AGENCIES, A REGISTERED F IRM HAS TRANSFERRED ALL ITS ASSETS AND LIABILITIES TO ASSIGNEE, I.E. PRAKAS H CHEMICALS AGENCIES PVT.LTD. CO. (THE ASSESSEE-COMPANY) AND THE ASSIGNE E HAS TAKEN OVER AIL THE LIABILITIES AS WELL AND AGREED TO TRANSFER CONS IDERATION OF RS, 4 LACS , PLUS THE SHARES IN THE NAME OF THE PARTNERS THE SAID ERS TWHILE FIRM. THE CONTROVERSY WAS THAT THE 'WDV AS PER THE OF ACCOUNT S OF THE FIRM DRAWN AS ON 11.10.2002 WERE AT RS.19,84,311/-. ON THE NEXT D AY, I.E. ON 12.10.2002, WHEN, THE ASSESSEE COMPANY HAD TAKEN OV ER THE SAID FIRM, THE 'COST' IN THE BOOKS OF ACCOUNTS WERE TAKEN AT R S.82,51,157/-. THE AO HAS THEREFORE RAISED A QUESTION THAT WHY THE WDV A S SUCH WAS NOT CARRIED OVER BY THE 'ASSESSEE-COMPANY AND ALSO RAISED AN OB JECTION THAT THE ENHANCED COST WAS TAKEN UP FOR THE PURPOSE OF CLAIM OF DEPRECIATION* THE AO HAS ALLOWED THE DEPRECIATION ON THE DOSING WDV O F THE SAID FIRM AND NOT ON THE ' COST' AS RECORDED BY THE ASSESSE-COMPA NY. ONCE THE ADMITTED FACTUAL POSITION IS THAT. THIS IS NOT THE CASE OF T RANSFER OF CAPITA} ASSETS BY HOLDING COMPANY TO ITS SUBSIDIARY COMPANY (EXPLANAT ION-6 TO SECTION 43(1) OF IT ACT); OR THIS IS NOT THE CASE OF CAPITAL ASSE T BEING TRANSFERRED BY AMALGAMATION (EXPLANATION-7 TO SECTION 43(1) OF IT ACT); OR TRANSFER OF CAPITAL ASSET BY DEMERGER (EXPLANATTON-7A TO SECTIO N 43(1) OF IT ACT), THEN THE ONLY RECOURSE FOR THE REVENUE DEPARTMENT OUGHT TO BE THAT THE 'ACTUAL COST' AS DEFINED U/S.43(1) SHOULD HAVE BEEN TAKEN F OR THE CALCULATION OF DEPREDATION, MEANING THEREBY THE 'ACTUAL COST'-OF T HE ASSETS TO THE ASSESSES WHICH HAS BEEN MET DIRECTLY OR INDIRECTLY. WE HAVE RAISED A QUESTION DURING THE COURSE OF HEARING TO THE RESPON DENT-ASSESSEE THAT WHAT HAS HAPPENED IN THE CASE OF ERSTWHILE FIRM AND WHET HER ON SUCH TRANSFER ANY CAPITAL GAIN WAS CHARGED BY THE REVENUE DEPARTM ENT IN COMPLIANCE, ID.AR. HAS DRAWN OUR ATTENTION ON AN ASSESSMENT ORD ER PASSED U/S. 143(3) DATED 14.3.2006, WHEREIN THE AO WAS AWARE ABOUT THE FACT THAT THE ASSETS AND OVER ALL THE LIABILITIES AS WELL AND AGREED TO TRANSFER A CONSIDERATION OF RS. 4 LACS, PLUS THE SHARES IN THE NAME OF THE PART NERS OF THE SAID ERSTWHILE FIRM. THE CONTROVERSY WAS THAT THE WDV AS PER THE B OOKS OF ACCOUNTS OF THE FIRM DRAWN AS ON 11.10.2002 WERE AT RS. 19, 84, 311 /-. ON THE NEXT DAY, I.E. ON 12.10.2002, WHEN THE ASSESSEE-COMPANY HAD T AKEN OVER THE SAID 8 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. FIRM, THE 'COST' IN THE BOOKS OF ACCOUNTS WERE TAKE N AT RS.82,51,157/-. THE AO HAS THEREFORE RAISED A QUEST/ON THAT WHY THE WDV AS SUCH WAS NOT CARRIED OVER BY THE ASSESSEE-COMPANY AND ALSO RAISE D AN OBJECTION THAT THE ENHANCED COST WAS TAKEN UP FOR THE PURPOSE OF CLAIM OF DEPRECIATION. THE AO HAS ALLOWED THE DEPREDATION ON THE DOSING WDV OF THE SAID FIRM AND NOT ON THE ' COST' AS RECORDED BY THE ASSESSEE-COMP ANY. ONCE THE ADMITTED FACTUAL POSITION IS THAT THIS IS NOT THE CASE OF TR ANSFER OF CAPITAL ASSETS BY HOLDING COMPANY TO ITS SUBSIDIARY COMPANY (EXPLANAT ION-6 TO SECTION 43(1) OF IT ACT); OR THIS IS NOT THE CASE OF CAPITAL ASS ET BEING TRANSFERRED BY AMALGAMATION PLANATION-7 TO SECTION 43(1) OF IT ACT ); OR TRANSFER OF CAPITAL ASSET BY DEMERGER (EXPIANATION-7A TO SECTION 43(1) OF IT ACT), THEN THE ONLY RECOURSE FOR THE REVENUE DEPARTMENT OUGHT TO BE THA T THE 'ACTUAL COST' DEFINED U/S.43(L) SHOULD HAVE BEEN TAKEN FOR THE CA LCULATION OF DEPRECIATION, MEANING THEREBY THE 'ACTUAL COST' OF THE, ASSETS TO THE 'ASSESSEE WHICH HAS BEEN MET DIRECTLY OR INDIRECTLY. WE HAVE RAISED A Q UESTION DURING THE COURSE OF HEARING TO THE RESPONDENT-ASSESSEE THAT WHAT HAS HAPPENED IN THE CASE OF ERSTWHILE FIRM AND WHETHER ON SUCH TRANSFER ANY CAPITA! GAIN WAS CHARGED BY THE REVENUE DEPARTMENT. IN COMPLIANCE, I D.AR HAS DRAWN OUR ATTENTION ON AN ASSESSMENT-ORDER PASSED U/S.143(3) DATED 14.3.2006, WHEREIN THE AO WAS AWARE ABOUT THE FACT THAT THE AS SETS AND LIABILITIES OF THE FIRM HAVE BEEN ACQUIRED BY THE COMPANY W.E.F. 1 2.10.2002. NO FURTHER ACTION WAS TAKEN AS FAR AS THE TRANSFER OF THE ASSE TS WAS CONCERNED. IN THIS REGARD, ID.AR HAS GIVEN THE REASON THAT IN TERMS OF SECTION 47(XIII) OF THE ACT, AN EXCEPT HAS BEEN PRESCRIBED THAT NOTHING CON TAINED IN SECTION 45 SHALL APPLY TO THE FOLLOWING TRANSFERS VIZ. ANY TRA NSFER OF THE CAPITAL ASSET OR INTANGIBLE ASSET BY A FIRM TO A COMPANY AS A RES ULT OF SUCCESSION OF THE FIRM BY A COMPANY IN THE BUSINESS CARRIED ON BY THE FIRM PROVIDED THAT ALL THE ASSETS AND LIABILITIES OF THE FIRM RELATING TO THE BUSINESS IMMEDIATELY BEFORE THE SUCCESSION BECOME THE ASSETS AND LIABILI TIES OF THE COMPANY. IN THE PRESENT CASE, SINCE THE ASSETS AND LIABILITIES OF THE FIRM HAVE BEEN TAKEN OVER BY THE ASSESSEE-COMPANY THEREFORE THE EX CEPTION AS PRESCRIBED U/S.47(XIII) HAVE ITS APPLICATION AND THAT COULD HA VE BEEN THE REASON THAT NO ACTION WAS ASCRIBED IN THE HANDS OF THE ERSTWHIL E FIRM. 6.1. AN ANOTHER ASPECT HAS ALSO BEEN ARGUED BEFORE US THAT WHAT ARE THOSE CONDITIONS UNDER WHICH THE AO IS EMPOWERED TO SUBST ITUTE THE 'ACTUAL COST' AS DISCLOSED BY THE ASSESSES. IN THIS REGARD, EXPLA NATION-3 TO SECTION. 43(1) SAYS THAT WHERE THE AO IS SATISFIED THAT THE MAIN P URPOSE OF THE TRANSFER OF SUCH ASSETS TO THE ASSESSES WAS THE REDUCTION OF LIABILITY TO INCOME TAX BY CLAIMING DEPRECIATION WITH A REFERENCE TO AN ENH ANCED COST , THEN THE 'ACTUAL COST' TO THE ASSESSES SHALL BE SUCH AN AMOUNT AS THE AO MAY DETERMINE HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE. IN THE PRESENT CASE UNDISPUTEDLY, THE AO HAS NOT INVOKED T HE SAID EXPLANATION, WE CAN THEREFORE HOLD THAT WITHOUT THE INVOCATION OF THE SAID EXPLANATION, THE AO WAS NOT JUSTIFIED TO DISTURB THE 'ACTUAL COS T' AS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE-COMPANY ON THE DATE OF ITS ACQUISITION OF ASSETS AND LIABILITIES OF THE ERSTWHILE FIRM. REST OF THE EXPLANATION THROUGH WHICH 9 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. AO COULD HAVE DISTURBED THE 'ACTUAL COST' ARE ALSO NOT APPLICABLE AS ELABORATELY EXPLAINED BY ID.AR, BECAUSE THOSE ARE I N RESPECT - OF OTHER CIRCUMSTANCES, SUCH ASSETS RECEIVED BY GIFT OR INHE RITANCE 'EXPLANATION-2), TRANSACTION OF SALE AND LEASE-BACK (EXPLANATION 4A) ACQUISITION OF SAME ASSETS (EXPLANATION-4), OR WHERE OF PORTION OF THE IS MET BY THE GOVERNMENT BY GRANTING SUBSIDY (EXPLANATION-10 OF THE SAID SEC TION, ETC.). SINCE THE ACTION OF THE AO DID NOT COME WITHIN THE PURVIEW OF ANY SUCH ENABLING SECTIONS, THEREFORE WE ARE NOT IN AGREEMENT WITH TH E SUBSTITUTION OF 'ACTUAL COST' AS REPLACED BY THE 'AO. 6.2 IN THE CASE OF CHITRA PUBLICITY CO.(SUPRA), THE ASSESSEE-COMPANY TOOK OVER ADVERTISEMENT BUSINESS OF A FIRM. THE ASSESSEE -COMPANY HAS CLAIMED DEPRECATION ON VARIOUS ASSETS INCLUDING HOARDINGS. ASSESSING OFFICER RE- WORKED THE DEPRECIATION .BY INVOKING EXPIANTION-3 T O SECTION 43(1) OF THE ACT ON THE BASIS THAT THE BOOK VALUE OF THE HOARDIN G WAS NIL IN THE BOOKS OF THE FIRM. IT WAS HELD THAT THE MAIN PURPOSE TO I NVOKE THE SAID EXPLANATION IS TO EMPOWER THE AO TO DETERMINE 'ACTUAL COST' OF ASSETS AND THE SAME TO BE DETERMINED HAVING REGARD TO ALL THE CIRCUMSTANCE S OF THE CASE. THE AO CAN DETERMINE THE ''ACTUAL COST' AT ARM'S LENGTH VA LUE OR AT REAL VALUE OF THE ASSETS TRANSFERRED. IN THE SAID CASE, THE RESPECTED THIRD MEMBER HAS OPINED THAT AT NO STAGE THE REVENUE AUTHORITIES HAV E DOUBTED THE CORRECTNESS OF THE CONSIDERATION OF RS.8 CRORES PAI D BY THE ASSESSEE- COMPANY THROUGH ALLOTMENT OF SHARES. ACCORDING TO U S, FACTS OF THE PRESENT CASE BEING AKIN TO THE FACTS OF THE CITED DECISION, THEREFORE THE SAME CAN BE APPLIED TO DECIDE THE ISSUE INVOLVED. AS FAR AS THE DECISIONS CITED BY THE LD.AR ARE CONCERNED, IT IS CORRECT THAT THE AO IS E MPOWERED TO INVOKE THE EXPLANATION-3 AS HELD IN THE CASE OF POULOSE& MATHE N (P) LTD.(SUPRA), BUT THE FACT IS THAT NO SUCH EXPLANATION WAS AT ALL INV OKED IN THE PRESENT CASE, AN ANOTHER CASE LAW HAS BEEN CITED BY THE LD.AR I.E .. VIZ. KUNGUNDI INDUSTRIAL WORKS PRIVATE LTD, VS. CIT REPORTED AT 5 7 ITR 540 (AP), WHEREIN THE ASSESSEE-COMPANY WAS FORMED FROM THE THEN EXIST ING REGISTERED FIRM. THE QUESTION WAS THAT THE ASSETS WERE USED BY THE F IRM BEFORE THE COMPANY WAS FORMED. THE SHAREHOLDERS OF THE COMPANY WERE NO OTHER THAN THE OLD PARTNERS OF THE FIRM, THE HONBLE COURT HAS OBSERV ED THAT THERE WAS ONLY CHANGE- OVER IN THE STATUS OF THE OWNERSHIP. WHAT W AS EARLIER BELONGED TO PARTNERSHIP-FIRM WAS THEREAFTER BELONGED TO A PRIVA TE LIMITED COMPANY. SO, IT WAS NOT A CASE WHERE THE PRICE WAS ACTUALLY PAID BY ONE PERSON TO ANOTHER PERSON. IN THOSE CIRCUMSTANCES, THE VIEW WA S TAKEN IN FAVOUR OF THE REVENUE. HOWEVER, THE CASE IN HAND IS NOT THAT A COMPANY HAS BEEN FORMED FROM THE EXISTING REGISTERED FIRM. IT IS ALS O NOT A CASE THAT NO CONSIDERATION HAS ACTUALLY BEEN PAID. AS PER THE CL AUSES OF THE MOU , UNDER CONSIDERATION, THE ASSETS HAVE BEEN TRANSFERRED BY THE FIRM IN FAVOUR OF ASSESSEE-COMPANY IN LIEU OF AN AMOUNT OF CONSIDERAT ION. ON ACCOUNT OF THESE FACTS, THIS CASE LAW DO NOT APPLY ON THE ASSE SSEE. WE THEREFORE AFFIRM THE VIEW TAKEN BY THE LD. CIT(A) AND REJECT THESE G ROUNDS OF THE REVENUE.' 10 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. 9. IN THE CASE OF R B BANSILAL ABIRCHAND SPINNING AND WEAVING MILLS (SUPRA) HAS HELD, THAT THE COST OF THE ASSETS HAD TO BE ASC ERTAINED BY THE PRICE THAT COULD BE PAID IN THE PREVAILING MARKET CONDITIONS. I HE W RITTEN DOWN VALUE OF THE ASSETS IS NOT RELEVANT IS DETERMINING THE COST OF THE ASSE TS TO A PURCHASER. THERE WAS NO MATERIAL ON RECORD TO SHOW THAT THE VALUATION BY TH E EXPERTS -WAS EITHER EXAGGERATED OR INCORRECT. IN THE ABSENCE OF FRAUD, COLLUSION, INFLATION OR FALSE TRANSACTION MADE WITH ULTERIOR PURPOSES, THE INCOME -TAX AUTHORITIES WERE PRECLUDED FROM GOING BEHIND THE AGREEMENT OF PURCHA SE IN DETERMINING THE PURCHASE PRICE AND FIX THEIR OWN VALUATION. IN ALL THE ABOVE DECISIONS IT HAS BEEN HELD THAT TH E ASSESSEE IS ENTITLED TO DEPRECIATION ON THE PRICE AT WHICH THE ASSETS WERE TAKEN OVER IF THE CONDITIONS OF SECTION 47(XIII) OF THE ACT WERE FULFILLED. 10. SO FAR AS THE VARIOUS DECISIONS REFERRED BY THE ID DR, WE FOUND THEM TO BE DISTINGUISHABLE ON FACTS SOME OF WHICH ARE DISCUSSE D AS UNDER: - > IN THE CASE OF POUIOSE AND MATHEN (PVT) LTD (SUPRA), THE HON'BLE KERALA HIGH COURT HAS HELD THAT THE ASSESSEE IS NOT ENTITL ED TO DEPRECIATION ON THE REVALUED FIGURE. BUT THE FACTS OF THE CASE ARE D ISTINGUISHABLE AS THE ASSESSEE COMPANY WHICH TOOK OVER THE ASSETS WAS A PARTNER IN THE FIRM HAVING NINE PARTNERS AND OTHER EIGHT PARTNERS WERE SHAREHOLDE R IN THE > COMPANY AND THE ASSESSEE COMPANY TOOK OVER ASSETS AND LIABILITIES O F THE FIRM BY DISSOLVING THE FIRM WHEREAS IN THE PRESENT CASE THE ASSESSEE COMPA NY WAS BORN ON 31.08.2007 AND WAS NOT A PARTNER IN FIRM. THIS DECISION IS ALS O REFERRED TO BY ITAT AND IN THE CASE OF PRAKASH CHEMICAL AGENCIES AS RELIED BY THE ID AR BUT NOT FOLLOWED. THE DECISION IN THE CASE KUNGUNDI INDUSTRIAL WORKS P LT D VS CIT REPORTED IN 57 ITR540(AP) AS RELIED UPON IN THIS CASE IS ALSO DIST INGUISHED BY THE AHD ITAT. > IN THE CASE OF MAHINDRA SONS LTD (SUPRA), THE MUM BAI BENCH OF THE TRIBUNAL HAS HELD THAT SINCE A DEVICE WAS ADOPTED TO AVOID T AX, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY CALCULATED THE DEPRECIATION ON THE BASIS OF THE AVAILABLE FIGURES OF WDV AS PER THE BOOKS OF ACCOUNT BUT THIS CASE AR E DISTINGUISHABLE AS THE TERMS OF THE DEAL WERE NOT FAIR, DEAL WAS NOT AT ARM'S LE NGTH PRICE, ASSETS WERE REVALUED AT REPLACEMENT VALUE WITHOUT ANY BASIS AND THE PURP OSE WAS PURELY TO CLAIM HIGHER DEPRECIATION ONLY, AO MADE ANALYSIS OF VARIO US ITEMS OF ASSETS AND FOUND THAT OBSOLETE PLANTS WERE REVALUED AT EXORBITANTLY HIGH PRICE. > IN THE CASE OF GINNERS AND PRESSERS PVT LTD (SUPR A) THE HON'BLE BOMBAY HIGH COURT THE FACTS ARE DISTINGUISHABLE AS THERE WAS NO SUPPORTING EVIDENCE OF ACTUAL COST ADOPTED BY THE ASSESSEE COMPANY WHEREAS IN THE ASSESSEE'S CASE THE VALUATION WAS DONE BY THE GOVT APPROVED REGISTERED VALUER WHICH THE LOWER AUTHORITIES AND WAS NOT DOUBTED AT ALL. NO FALLACY OR ADVERSE FINDING BY THE AO THAT THE ASSETS TRANSFERRED ARE NOT AT MARKET PRICE . AFTER EXAMINING AND CONSIDERING THE CASES LAW AS RE LIED BY THE ID AR AND ID DR WE FIND THAT THE ASSESSEE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE CASES RELIED BY THE ID AR WHEREAS THE DECISIONS REF ERRED AND RELIED BY THE ID DR ARE DISTINGUISHABLE IN FACTS AND THEREFORE NOT APPL ICABLE IN THE INSTANT CASE OF THE ASSESSES. ACCORDINGLY, WE SET ASIDE THE ORDER OF CI T(A) AND HOLD THAT THE ASSESSEE 11 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. IS ENTITLED TO DEPRECIATION ON THE ENHANCED COST AT WHICH THE ASSESSEE HAS TAKEN OVER THE ASSETS AND DIRECT THE AO TO ALLOW THE DEPR ECIATION AS CLAIMED BY THE ASSESSEE OF RS, 35,21,38,615/-. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED 8. WE FIND THAT LD. CIT(A) FOR THE PRESENT ASSESSME NT YEAR HAS REFERRED AND FOLLOWED HIS DECISION FOR A.Y. 2010-11 , WHEREIN HE HAD REFERRED TO THIS DECISION OF LD. CIT(A) IS ASSESSEE CASE FOR AY 2009-10. 9. SINCE THE ISSUE HAS BEEN DECIDED BY THE ITAT IN EARLIER YEAR IN ASSESSEES FAVOUR THE DISALLOWANCE OF DEPRECIATION BY THE AO FOR THIS YEAR IS NOT SUSTAINABLE AS THE SAME IS CONSEQUENTIA L TO THE DEPRECIATION ALLOWED AND W.D.V OF ASSETS IN EARLIER YEAR. ALL T HE ISSUES RAISED BY THE AO HAS BEEN ELABORATELY DECIDED BY THE ITAT IS ASSESSEES FAVOUR. IT IS NOT THE CASE THAT HONBLE BOMBAY HIGH COURT H AS REVERSED THE DECISION OF ITAT AS ABOVE. 10. IN THE BACKGROUND OF AFORESAID DISCUSSION AND P RECEDENT WE SET ASIDE THE ORDER OF AUTHORITIES BELOW AND HOLD THAT DISALLOWANCE OF DEPRECIATION BY THE AO IS NOT SUSTAINABLE. 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AS ABOVE. ORDER PRONOUNCED ON 15 TH MARCH, 2019. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 15.03.2019 THIRUMALESH , SR. PS 12 ITA NO.7478/MUM/2016 DHARMANANDAN DIAMONDS PVT.LTD. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI