ACIT, Jaipur V. VENKATESWARA WIRES PVT. LTD., Jaipur

ITA 762/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5590 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S L PODDAR DHK
• Keywords: Depreciation
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 762/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 THE ACIT CIRCLE- 6 JAIPUR CUKE VS. M/S. VENKATESWARA WIRES (P) LTD. 302, NAVJEEVAN CHAMBERS VINOBA MARG, C SCHEME, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAACV 5085 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SHRI R.A. VERMA, ADDL. CIT-. DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI S.L. PODDAR, ADVOCATE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/02/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 22 /02/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER O F THE LD. CIT(A)-5, JAIPUR DATED 13-06-2016 FOR THE ASSESSM ENT YEAR 2010-11 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 45,39,528/- MADE BY AO ON ACCOU NT OF EXCESS DEPRECIATION CLAIMED BY ASSESSEE ON WINDMILL PROJECTS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN TREATING THE CIVIL CONSTRUCTION (BUILDING) 7 PLANT & MACHINE RY RELATED ITA NO. 762/JP/2016 THE ACIT, CIRCLE- 6,JAIPUR VS. M/S. VENKA TESWARA WIRES (P) LTD. JAIPUR . 2 TO WINDMILL PROJECT AS A PART OF WINDMILL PROJECT A ND ACCORDINGLY ELIGIBLE FOR DEPRECIATION @ 80% AS CLAI MED BY ASSESSEE. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING ADDITION OF RS. 16,785/- MADE FOR DEPOSITING THE EM PLOYEES CONTRIBUTION TO PF BEYOND THE PRESCRIBED TIME LIMIT PROVIDE IN THE RESPECTIVE ACT. 4. WHETHER ON THE FACTS AND IN THE CIRCUSMTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT EMPLOYEES CONTRIBUTION TO PF IS GOVERNED BY T HE PROVISIONS OF SECTION 43B AND NOT BY SECTION 36(10) (VA) R.W.S. 2(24)(X) OF THE I.T. ACT. 2.1 APROPOS GROUND NO. 1 AND 2 OF THE REVENUE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ISS UE AS TO WHETHER THE CIVIL CONSTRUCTIONS PARTS AND PLANT & M ACHINERY ARE DIFFERENT UNITS AND SEPARATE FROM THE WINDMILL AND HENCE ELIGIBLE FOR LESSER RATE OF DEPRECIATION, CAME UP F OR DECISION IN THE CASE OF THE ASSESSEE BEFORE LD. CIT(A)-II, J AIPUR IN APPEAL NO. 332/10-11 DATED 23-07-2013 AND WAS DECID ED AS FOLLOWS. I HAVE CONSIDERED THE FACTS OF THE CASE THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE CASE. ASSESSING OFFICER RESTRICTED THE DEPRECIATION ON CI VIL CONSTRUCTION WORK IN WINDMILL FROM 80% TO 10%. APPELLANT SUBMITTED THAT CIVIL CONSTRUCTION WORK IS PART OF WIND MILL FOR WHICH COMPOSITE RATE OF DEPRECIATION IS 80%. APPELLANT ALSO RELIED UPON THE DECISION OF TRIBUNAL AND ALSO OF JURISDICTIONAL HI GH COURT. I HAVE GONE THROUGH THESE DECISIONS. THE DECISION OF JURISDICTIONAL TRIBUNAL IN THE CASE OF VIJAY INDUSTRIES VS. ACIT ITA NO. 745/JP/2007 DATED 18-07 - ITA NO. 762/JP/2016 THE ACIT, CIRCLE- 6,JAIPUR VS. M/S. VENKA TESWARA WIRES (P) LTD. JAIPUR . 3 2008 WHEREIN ITAT CATEGORICALLY HELD THAT THE COST OF CIVIL WORK HAS TO BE ADDED TO THE COST OF WINDMILL AND IS THUS ELIGIBLE FOR THE DEPRECIATION @ 100%. SINCE FACTS OF THE APPELLANT ARE IDENTICAL, THIS ISSUE IS COVERED IN FAVOUR OF THE APPELLANT. ACCORDINGLY, ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION ON CIVIL CONSTRUCTION WORK AT THE RATE APPLICABLE TO W IND MILL. IF ANY EFFECT OF REDUCED DEPRECIATION IS ALRE ADY GIVEN IN FUTURE YEARS, AO IS DIRECTED TO WITHDRAW T HE SAME. 2.4 FOLLOWING THE ABOVE DECISION, IT IS HELD THAT T HE CIVIL CONSTRUCTION PART AS WELL AS PLANT & MACHINERY ARE INTEGRAL PART OF WIND MILL AND ARE HENCE ELIGIBLE FOR DEPREC IATION AT THE RATE OF 80% AS APPLICABLE TO WIND MILL. THE ADD ITION OF RS. 45,39,528/- ON ACCOUNT OF DISALLOWANCE OF DEPR ECIATION IS THEREFORE, DELETED. 2.2 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER AO. 2.3 ON THE OTHER HAND, THE LD. AR OF ASSESSEE SUPPO RTED THE ORDER OF THE LD. CIT(A). 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT SUCH ISSUE HA S ALREADY BEEN DECIDED BY THE COORDINATE BENCH VIDE ORDER DATED 18-07-2008 IN THE CASE OF M/S. VIJAY INDUSTRIES VS. ITO, ALWAR IN ITA NO. 745/JP/2 007 FOR THE ASSESSMENT YEAR 2003-04 WHEREIN THE BENCH HAD ALLOW ED 80% DEPRECIATION ON THE ISSUE IN QUESTION BY OBSERVING AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. THE PROVISIONS OF ALLOWING DEPRECIATION O N THE WIND MILL IS GOVERNED BY APPENDIX I PARA (XIII) (1) WHICH READS AS UNDER: - (XIII) RENEWABLE ENERGY DEVICES BEING (A) TO (K) .. ITA NO. 762/JP/2016 THE ACIT, CIRCLE- 6,JAIPUR VS. M/S. VENKA TESWARA WIRES (P) LTD. JAIPUR . 4 (L) WIND MILLS AND ANY SPECIALLY DESIGNED DEVICES WHICH RUN ON WIND MILLS 80% IT IS EVIDENT FROM THE AFOREMENTIONED PROVISIONS TH AT THE DEPRECIATION @ 80% HAS TO BE CHARGED ON THE COMPLETE WIND MILL. THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN SEGREGATING THE COST OF THE CONSTRUCTION OF THE ROOM FROM THE SAID WIND MILL. THE SAID CONSTRUCTION OF T HE ROOM , AS ARGUED HAS BEEN SPECIALLY DESIGNED FOR THE PURPOSE OF THE WIND MILL AND THEREFORE, THE LD. CIT(A) IS DIRECTED TO ALLOW THE DEPRECIATION AS PER THE RULES APPLICABLE ON THE WIND MILLS. THUS GROUND NO. 6 OF THE ASSESSEE IS AL LOWED RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH (SUPRA), WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE L D. CIT(A). THUS GROUND NO. 1 AND 2 RAISED BY THE REVENUE ARE DISMISSED. 3.1 APROPOS GROUND NO. 3 AND 4 OF THE REVENUE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. EMPLOYEES PF OF RS. 16,785/-HAS ADMITTEDLY BEEN DE POSITED BEFORE THE DUE DATE U/S 139(1) AND IS THEREFORE, AL LOWABLE IN VIEW OF DECISIONS OF JURISDICTIONAL HIGH COURT INCL UDING THAT IN THE CASE OF CIT VS. JVVNL 98 DTR 105 (RAJ.).THE DISALLOWANCE OF RS. 16,875/- IS ACCORDINGLY DELETE D. 3.2 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER AO. 3.3 ON THE OTHER HAND, THE LD. AR OF ASSESSEE SUPPO RTED THE ORDER OF THE LD. CIT(A). 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE, THE AO NOTICED D URING ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD FAILED TO DEPOSI T EPF AMOUNTING TO RS. ITA NO. 762/JP/2016 THE ACIT, CIRCLE- 6,JAIPUR VS. M/S. VENKA TESWARA WIRES (P) LTD. JAIPUR . 5 16,785/- ON OR BEFORE THE PRESCRIBED DUE DATES. HEN CE, THE AO IN TERMS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE I.T. ACT DISALLOWED THE AMOUNT OF RS. 16,785/- AND ADDED THE SAME TO TH E TOTAL INCOME OF THE ASSESSEE WHICH HAS BEEN DELETED BY THE LD. CIT(A) I N FIRST APPEAL. THE REVENUE IN APPEAL BEFORE US PRAYED THAT THE LD. CI T(A) HAS ERRED IN DELETING THE AMOUNT OF RS. 16,765/- DISALLOWED BY T HE AO. WE FIND THAT SUCH ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF TH E ASSESSEE BY THE ITAT JAIPUR BENCH IN THE CASE OF ITO VS. M/S. S. BROTHER S FACILITIES MANAGEMENT IN ITA NO. 957/JP/2016 FOR THE ASSESSMEN T YEAR 2013-14 VIDE ORDER DATED 5 /01/2017 BY OBSERVING AS UNDER:- 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. I HAVE GONE THROUGH THE ORDER OF THE LD. CIT(A) AND THE CASE LAWS SUBMITTED BEFORE THE L D. CIT(A) WHICH FINDS FAVOUR OF THE ASSESSEE. IT MAY FURTHER BE NOTED THAT SUCH ISSUE HAS ALSO BEEN DECIDED BY THE ITAT, COOR DINATE BENCH, JAIPUR IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER DA TED 27-09-2016 IN THE CASE OF ACIT VS. SHRI SHAILENDRA GARG, C/O M/S. GARMENT CRAFT INDIA (P) LTD. (ITA NO. 804/JP/2015 FOR THE ASSESSM ENT YEAR 2010- 11). IT MAY BE FURTHER NOTED THAT THE HON'BLE HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. UDAIPUR DUGDH UTP ADAK SAHAKARI SANGH LTD. (2014) 265 CTR 59 HAD CONSIDERE D THIS ISSUE IN DETAIL AT PARA 7 TO 9 OF ITS ORDER AS UNDER:- 7. FURTHER, THE HON'BLE SUPREME COURT IN CIT V. V INAY CEMENT LTD. [2009] 313 ITR (ST.) 1 (SC) WHILE DISMISSING THE SPECIAL LEAVE PETITION PREFERRED BY THE REVENUE AGA INST THE JUDGMENT OF THE GAUHATI HIGH COURT OBSERVED AS UNDE R : IN THE PRESENT CASE, WE ARE CONCERNED WITH THE LA W AS IT STOOD PRIOR TO THE AMENDMENT OF SECTION 43B. IN THE ITA NO. 762/JP/2016 THE ACIT, CIRCLE- 6,JAIPUR VS. M/S. VENKA TESWARA WIRES (P) LTD. JAIPUR . 6 CIRCUMSTANCES THE ASSESSEE WAS ENTITLED TO CLAIM TH E BENEFIT IN SECTION 43B FOR THAT PERIOD PARTICULARLY IN VIEW OF THE FACT THAT HE HAS CONTRIBUTED TO PROVIDENT FUND BEFORE FI LING OF THE RETURN.' 8. FOLLOWING THE OBSERVATIONS OF THE HON'BLE SUPREM E COURT IN VINAY CEMENT (SUPRA), THE DELHI HIGH COURT IN CI T V. AIMIL LTD. [2010] 321 ITR 508 (DELHI) HELD AT PAGE 518 AS UNDER : 'WE MAY ONLY ADD THAT IF THE EMPLOYEES' CONTRIBUTIO N IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER T HE RELEVANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER N OT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENA LTIES ALSO, FOR WHICH SPECIFIC PROVISIONS ARE MADE IN THE PROVIDENT FUNDS ACT AS WELL AS THE EMPLOYEES' STATE INSURANCE ACT. THEREFORE, THE ACT PERMITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS, SUBJECT TO THE AFORESAID CONSEQUE NCES. IN SO FAR AS THE INCOME-TAX ACT IS CONCERNED, THE ASSE SSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFOR E THE RETURN IS FILED, AS PER THE PRINCIPLE LAID DOWN BY THE SUPREME COURT IN VINAY CEMENT [2009] 313 ITR (ST.) 1 (SC).' 9. IN VIEW OF THE SETTLED LEGAL POSITION, THE APPEA L PREFERRED BY THE REVENUE HAS NO SUBSTANCE AND THE SAME IS, TH EREFORE, DISMISSED. NO COSTS. IN VIEW OF THE ABOVE FACTS, CIRCUMSTANCES OF THE CA SE AND THE DECISIONS MENTIONED ABOVE, I FIND NO REASON TO INTE RFERE WITH THE ORDER OF THE LD. CIT(A). THUS THE APPEAL OF THE REV ENUE IS DISMISSED. IN VIEW OF THE ABOVE DELIBERATIONS AND RESPECTFULLY FOLLOWING THE ORDER OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. JVVNL 98 DTR 105 (SUPRA) AND ALSO THE ORDER OF ITAT JAIPUR BENCH (SUPRA), WE FIND NO ITA NO. 762/JP/2016 THE ACIT, CIRCLE- 6,JAIPUR VS. M/S. VENKA TESWARA WIRES (P) LTD. JAIPUR . 7 REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A ) ON THE ISSUE IN QUESTION. THUS GROUND NO. 3 AND 4 OF THE REVENUE AR E DISMISSED. 4.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 /02 /2017 SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22/02/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE- 6, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. VENKATESWARA WIRES (P) LTD. , JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.762/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR