M/s. BLA Industries Pvt. Ltd., Mumbai V. PCIT-1, KOLKATA, Kolkata

ITA 779/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1442 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI CITDT
• Assessee Lawyers: ROBIN MAHESHWARI ACA
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 142(1); 14A; 263; 63; 2

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 779 / KOL / 20 16 ASSESSMENT YEAR :2011-12 BLA INDUSTRIES PVT.LTD. 84, MAKER CHAMBERS III, NARIMAN POINT, MUMBAI- 400021 [ PAN NO.AABCB 3505 D ] V/S . PR. CIT-1, AAYAKAR BHAWAN, KOLKATA /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI ROBIN MAHESHWARI, ACA /BY RESPONDENT SHRI A.K. TIWARI, CIT-DT /DATE OF HEARING 08-02-2018 /DATE OF PRONOUNCEMENT 28-02--2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST ORD ER OF LD. PR. COMMISSIONER OF INCOME TAX-1, KOLKATA PASSED U/S 26 3 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) IN M.NO.PR. CIT-1/15- 16/U/S263/BLA INDUSTRIES/2011-12/12629-31 DATED 23/ 28.03.2016 FOR ASSESSMENT YEAR 2011-12. SHRI ROBIN MAHESHWARI, LD. AUTHORIZED REPRESENTATIV E APPEARED ON BEHALF OF THE ASSESSEE AND SHRI A.K. TIWARI, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF THE REVENUE. 2. IN THIS ASSESSEES APPEAL THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS:- 1) FOR THAT THE ORDER OF THE LD. CIT PASSED U/S. 2 63 IS BAD IN LAW AS WELL AS IN FACTS HENCE LIABLE TO BE QUASHED. ITA NO.779/KOL/2016 A.Y. 2011-12 BLA INDUSTRIES PVT. LTD. VS. PR. CIT-1, KOL. PAGE 2 2) FOR THAT UPON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT WAS NOT JUSTIFIED IN SETTING ASIDE THE ASSESSMENT T O THE AO FOR REFRAMING THE SAME. 3) FOR THAT UPON FACTS AND CIRCUMSTANCES OF THE CAS E THE LD CIT WAS NOT JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER OF THE AO WHICH WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 4) FOR THAT UPON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. AO HAD ALLOWED ADDITIONAL DEPRECIATION ON PLANT & MACH INERY AFTER PROPER VERIFICATION AND FORMING AN OPINION AS SUCH THE ORD ER OF THE AO CANNOT BE SAID TO BE ERRONEOUS. 5) FOR THAT ANY OTHER GROUND OR GROUNDS WHICH MAY B E URGED AT THE TIME OF HEARING. 3. SOLE ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. PR. CIT U/S 263 OF THE ACT ERRED IN HOLDING THE ORDER OF ASSESSING OFFICER PASSED U/S 143(3) OF THE ACT AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO TH E INTEREST OF REVENUE. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND ENGAGED IN BUSINESS OF MINING AND SALE OF COAL. THE ASSESSEE FILED ITS RETURN OF INCOME ELECTRONICALLY DATED 27.09.2011 DECLARING TOTAL INCOME OF 22,33,67,402/- ONLY. SUBSEQUENTLY, THE CASE WAS SEL ECTED UNDER SCRUTINY U/S 143(3) ON THE BASIS OF CASS MODULE. ACCORDINGLY, NO TICES U/S 143(2)/142(1) OF THE ACT WERE ISSUED UPON ASSESSEE WHICH WERE DUL Y SERVED. THE ASSESSMENT WAS COMPLETED BY AO U/S 143(3) OF THE AC T AFTER MAKING CERTAIN DISALLOWANCE OF 3,53,387/- UNDER THE PROVISION OF SEC. 14A OF THE A CT VIDE ORDER DATED 19.03.2014. SUBSEQUENTLY, THE LD. PR.CI T U/S 263 OF THE ACT OBSERVED THAT ASSESSEE HAS CLAIMED ADDITIONAL DEPRE CIATION ON PLANT AND MACHINERY FOR 12,69,860/- U/S 32 (1)(IIA) OF THE ACT WHICH WAS NO T VERIFIED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AS PER LD. PR. CIT THE ADDITIONAL DEPRECIATION IS ALLOWED TO ASSESSEE ON T HE FULFILLMENT OF CONDITION AS SPECIFIED U/S. 32(1)(IIA) OF THE ACT. THESE CONDITI ONS, INTER ALIA INCLUDE THE VERIFICATION OF THE OWNERSHIP, NATURE OF ASSET AND WHETHER THESE ASSETS WERE USED IN THE BUSINESS OF MANUFACTURING OR PRODUCTION OF ANY ARTICLE OR THING. ACCORDINGLY, LD. PR. CIT U/S 263 OF THE ACT ISSUED A SHOW CAUSE NOTICE UPON ASSESSEE FOR CLARIFICATION OF THE ISSUES AS DISCUSS ED ABOVE. IN COMPLIANCE THERETO, ASSESSEE SUBMITTED THAT IT IS IN BUSINESS OF COAL MINING WHICH IS A ITA NO.779/KOL/2016 A.Y. 2011-12 BLA INDUSTRIES PVT. LTD. VS. PR. CIT-1, KOL. PAGE 3 MANUFACTURING ACTIVITY. THEREFORE, ASSESSEE WAS ENT ITLED FOR ADDITIONAL DEPRECIATION ON THE PLANT AND MACHINERY USED IN THE BUSINESS OF MANUFACTURE / PRODUCTION OF ARTICLE OR THING. THE ASSESSEE IN SUP PORT ITS CLAIM HAS RELIED ON THE FOLLOWING JUDGMENTS:- A) CIT VS. G.S. ATWL & CO.(GUA) (2002) 254 ITR 592 (CAL) B) KHALSA BROTHERS VS. CIT (1996) 217 ITR 185 (CAL ) C) CIT VS. SINGARENI COLLIERIES CO. LTD. (11996) 2 21 ITR 48W(AP) D) CIT VS. SESA GOA LTD. (2004) 271 ITR 331 (SC) HOWEVER, LD. PR.CIT WAS OF THE VIEW THAT NO NECESSA RY ENQUIRY HAS BEEN CONDUCTED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING, WHICH RENDERED THE ORDER OF AO AS ERRONEOUS IN SO FAR A P REJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, LD. PR.CIT HELD THAT THE ORDE R OF AO IS ERRONEOUS IN SO FAR A PREJUDICIAL TO THE INTEREST OF REVENUE BY OBS ERVING AS UNDER:- 10. I AM ALSO OF THE VIEW THAT HIS ERROR LAY IN HI S DOING INADEQUATE SCRUTINY AND IN HIS MAKING THE INCORRECT APPRECIATI ON FACT. CONSEQUENTLY, HE HAD MADE INCORRECT APPLICATION OF LAW. HE DID NO T EXAMINE, FOR EXAMPLE, WHAT THE ADDITIONAL PLANTS WERE AND IF THE Y HAD BEEN ACTUALLY PURCHASED WITHIN THE STIPULATED PERIOD. THERE WAS N O EXAMINATION ALSO TO FIND OUT, IF THE SAME HAD BEEN USED FOR THE MANU FACTURE OR PRODUCTION OF THE THING, EVEN IF COAL MINING WAS TO BE CONSIDE RED AS MANUFACTURE. IN MY VIEW, SUCH PLANT & MACHINERY WOULD HAVE BEEN VERIFIED TO COME TO A VALID CONCLUSION, BEFORE ALLOWING THE ASSESSEE S CLAIM. BESIDES, THE NUMBER OF DAYS USED WAS ALSO ANOTHER ASPECT TO BE Q UESTIONED AND NEEDED TO BE FOUND OUT BY THE AO TO ACCEPT SUCH A C LAIM. IN MY CASE, THE CLAIM CERTAINLY HAD NOT MERITED FOR MECHANICAL NON-QUESTIONING. 11. MUCH AS I WOULD APPRECIATE THAT THE A/R HAS BRO UGHT TO MY NOTICE THE SETTLED POSITION OF LAW THAT MINING WOULD STAND ON THE SAME FOOTING AS MANUFACTURE, THE NON-QUESTIONING ABOUT THE CLAIM ATTRIBUTABLE TO SUCH A JUDICIAL VIEW AND THE NON-EXAMINATION OF THE SAME HAVE DEFINITELY MADE THE AO'S ORDER ERRONEOUS. 12. THE A/R IS WELL WITHIN HIS RIGHTS TO DEFEND THE ASSESSEES CLAIM (ALTHOUGH A NOTE IN THE ASSESSEES ACCOUNTS OR A NO T IN THE ASSESSMENT ORDER WOULD HAVE SAVED THE WHOLE LOT OF BOTHERATION ) BUT HE, IN MY OPINION, IS NOT ENTITLED TO CERTIFY THE CORRECTNESS OF THE ASSESSING OFFICER'S INACTION NOW, ESPECIALLY SOMETHING WHAT T HE AO HAD NOT EVIDENTLY QUESTIONED NOR EXAMINED DURING THE ASSESS MENT PROCEEDINGS. 13. IN THE INTEREST OF JUSTICE THEREFORE, I HEREBY SET ASIDE THE IMPUGNED ASSESSMENT ORDER WITH A DIRECTION TO THE PRESENT AO TO REDO THE SAME ON THIS LIMITED ISSUE. THE AO SHALL AFFORD DUE OPPO RTUNITY TO THE ASSESSEE COMPANY, SO THAT THE CLAIM OF ADDITIONAL D EPRECIATION, ITA NO.779/KOL/2016 A.Y. 2011-12 BLA INDUSTRIES PVT. LTD. VS. PR. CIT-1, KOL. PAGE 4 INCLUDING THE OWNERSHIP AND NATURE OF ASSET TO FIND OUT IF THE SAME WERE MEANT FOR MANUFACTURING: AND THEIR USER AND MORE IMPORTANTLY, THE PERIOD OF USER, ARE ALL PROPERLY EXAMINED BY HIM. BEING AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US LD AR FILED PAPER BOOK COMPRISING THRE E SETS PAGES 1 TO 79 AND SUBMITTED THAT THERE WERE ISSUED TWO NOTICES U/ S 263 OF THE ACT VIDE DATED 13.02.2015 AND 19.02.2015 RESPECTIVELY WHICH ARE PL ACED ON PAGES 1 TO 3 OF THE PAPER BOOK. IN BOTH THE NOTICES ISSUED U/S 263 OF THE ACT IT WAS ALLEGED IT THE ACTIVITY OF MINING AND EXTRACTION OF COAL CANNO T BE CONSIDERED AS MANUFACTURING ACTIVITY. AS PER THE LD. CIT THE ADDI TIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT IS AVAILABLE IN RESPECT OF PL ANT & MACHINERIES ONLY IN THE CASES WHERE PLANT AND MACHINERIES ARE USED IN THE M ANUFACTURE OR PRODUCTION OF PRODUCTS / THINGS. THUS THE ACTIVITY OF THE ASSE SSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION AS PER THE PROVISION OF SEC TION 32(1)(IIA) OF THE ACT. THE LD. AR HOWEVER, SUBMITTED THAT VARIOUS COURTS H AVE HELD THAT ACTIVITY OF MINING AND EXTRACTION OF COAL AMOUNTS TO MANUFACTUR ING ACTIVITY. THEREFORE, ASSESSEE CANNOT BE DENIED THE BENEFIT OF ADDITIONAL DEPRECIATION AS PER THE PROVISION OF SECTION 32(IIA) OF THE ACT. LD. AR IN SUPPORT ASSESSEES CLAIMED RELIED ON THE JUDGMENT OF VARIOUS COURTS WHICH HAVE BEEN EXPLAINED IN THE PRECEDING PARAGRAPH OF THIS ORDER. LD. AR FURTHER SUBMITTED THAT THE ACTIVITIES OF THE ASSESSEE AND DETAILS OF THE FIXED ASSETS HAVE BEEN DULY EXAMINED BY AO DURING T HE ASSESSMENT PROCEEDINGS. LD. AR FURTHER SUBMITTED THAT AO HAS I SSUED TWO NOTICES U/S. 142(1) ON 22.02.2013 AND 10.10.2013 RESPECTIVELY WH ERE THE FOLLOWING QUESTIONS WERE RAISED TO THE ASSESSEE. THE QUESTION RAISED BY AO IN THE NOTICE ISSUED U/S 142(1) OF THE ACT DATE 22.02.2013 :- 3. DETAILED NOTE ON NATURE OF BUSINESS ACTIVITIES. 4. XXXXXXX 5. XXXXXXX 6. COPY OF STATUTORY AUDIT REPORT & TAX AUDIT REPOR T (3CD) WITH ALL ITS ANNEXURE & SCHEDULES. ITA NO.779/KOL/2016 A.Y. 2011-12 BLA INDUSTRIES PVT. LTD. VS. PR. CIT-1, KOL. PAGE 5 7. COPY OF IT RETURN, COPY OF FINAL ACCOUNTS, COMPU TATION OF INCOME. XXXXXXXXXXXXXXXXXX 15. DETAILS OF ADDITION/DELETION OF FIXED ASSETS AL ONG WITH DOCUMENTARY EVIDENCE. SIMILARLY NOTICE ISSUED U/S 142(1) OF THE ACT DATED 10.10.2013 WHERE THE QUESTION RAISED BY AO AS UNDER:- 3. PLEASE STATE IN BRIEF BUSINESS ACTIVITIES PERFO RMED DURING THE PREVIOUS YEAR. XXXXXXXXXXXXXXXX 5. BALANCE SHEET XXXXXXXXXX III) FIXED ASSETS PLEASE FILE DETAILS OF FIXED ASSETS ALONG WITH PROD UCTION OF EVIDENCE OF PURCHASE AND PUT TO USE IN RESPECT OF NEW ASSETS AC QUIRED DURING THE YEAR. LD. AR FURTHER SUBMITTED THAT THE REPLY OF THE ABOV E NOTICES, WERE DULY MADE BY THE ASSESSEE VIDE LETTER DATED 27.02.2013 AND 21 .10.2013 RESPECTIVELY. THE REPLY OF ASSESSEE DATED 27.02.2013 IN RESPONSE TO THE NOTICE ISSUED U/S 142(1) OF THE ACT VIDE DATED 22.2.2013 STAND AS UND ER:- 1) .. 2) BRIEF NOTE ON ACTIVITIES OF BUSINESS IS ENCLOSE D AS ANNEX B XXXXXXXXXXXXXXXXXXXXXXX 12) DETAILS OF ADDITION / DELETION OF FIXED ASSETS IS ENCLOSED AS ANNEX J THE REPLY OF THE ASSESSEE VIDE LETTER DATED 21.10.2 013 IN RESPONSE TO THE NOTICE ISSUED U/S 142(1) OF THE ACT VIDE DATED 10.1 0.2013 STAND AS UNDER:- 1 ) 2) 3) BRIEF NOTE ON ACTIVITIES OF BUSINESS HAD ALREADY BEEN SUBMITTED VIDE LETTER DATED 27/02/2013 AS ANNEXURE-B OF THE SUBMISSION DA TED 27/02/2013 XXXXXXXXXXXXXXXXXX 8) DETAILS OF ADDITION/DELETION OF FIXED ASSET HAD ALREADY BEEN SUBMITTED VIDE LETTER DATED 27/02/2013 AS ANNEXURE-J OF THE SUBMIS SION DATED 27/02/2013. ITA NO.779/KOL/2016 A.Y. 2011-12 BLA INDUSTRIES PVT. LTD. VS. PR. CIT-1, KOL. PAGE 6 IN VIEW OF ABOVE, LD. AR SUBMITTED THAT THE AO HAS PASSED ASSESSMENT ORDER AFTER CONSIDERING THE MATERIAL FACTS WHICH WERE PRO DUCED AT THE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE, THE ORDER OF AO CANNOT BE HELD AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE ON THE GROUND THAT ASSESSING OFFICER HAS FAILED TO CONDUCT NECESSARY E NQUIRIES. ON THE OTHER HAND, LD. DR CONCEDED THE FACT THAT AS SESSEE HAS FURNISHED NECESSARY DETAILS REGARDING THE ADDITION OF PLANT A ND MACHINERIES DURING THE YEAR BUT THE AO BEFORE ALLOWING THE ADDITIONAL DEPR ECIATION CLAIMED BY ASSESSEE FAILED TO CONDUCT THE NECESSARY ENQUIRIES WHETHER THE CONDITIONS SPECIFIED U/S. 32(1)(IIA) OF THE ACT HAVE BEEN FULF ILLED BY ASSESSEE. LD. DR DREW OUR ATTENTION ON EXPLANATION-2 TO SECTION 263 OF THE ACT AND SUBMITTED THAT NON ENQUIRY RENDERS THE ORDER OF AO AS ERRONEO US IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. LD. DR IN SUPPORT OF RE VENUES CLAIM RELIED ON THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. MAITHAN INTERNATIONAL REPORTED IN 375 ITR 123 (CAL), WHEREIN IT WAS HELD AS UNDER:- 19. IT IS NOT THE LAW THAT THE ASSESSING OFFICER OCCUP YING THE POSITION OF AN INVESTIGATOR AND ADJUDICATOR CAN DISCHARGE HIS FUNC TION BY PERFUNCTORY OR INADEQUATE INVESTIGATION. SUCH A COURSE IS BOUND TO RESULT IN ERRONEOUS AND PREJUDICIAL ORDERS. WHERE THE RELEVANT ENQUIRY WAS NOT UNDERTAKEN, AS IN THIS CASE, THE ORDER IS ERRONEOUS AND PREJUDICIAL TOO AN D THEREFORE REVISABLE. INVESTIGATION SHOULD ALWAYS BE FAITHFUL AND FRUITFU L. UNLESS ALL FRUITFUL AREAS OF ENQUIRY ARE PURSUED THE ENQUIRY CANNOT BE SAID TO H AVE BEEN FAITHFULLY CONDUCTED. IN A DIFFERENT CONTEXT THE APEX COURT OB SERVED 'CONTRA VERITATEM LEX NUNQUAM ALIQUID PERMITTIT : IMPLIES A DUTY ON T HE COURT TO ACCEPT AND ACCORD ITS APPROVAL ONLY TO A REPORT WHICH IS THE R ESULT OF FAITHFUL AND FRUITFUL INVESTIGATION' LD. DR VEHEMENTLY RELIED ON THE ORDER OF LD. PR. CI T. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE RIVAL PARTIES. WE HAVE ALSO EXAMINED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND THE JUDGMENT / ORDERS CITED BY THE REPRESENTATIVES OF BOTH THE PAR TIES. IN THE INSTANT CASE, THE ORDER OF AO WAS CONSIDERED AS ERRONEOUS AND IN SO F AR AS PREJUDICIAL TO THE INTEREST OF REVENUE BY THE LD. PR. CIT U/S 263 OF T HE ACT. ITA NO.779/KOL/2016 A.Y. 2011-12 BLA INDUSTRIES PVT. LTD. VS. PR. CIT-1, KOL. PAGE 7 AS PER THE NOTICE ISSUED U/S 263 OF THE ACT IT WAS ALLEGED THAT THE ACTIVITY OF THE ASSESSEE I.E. MINING AND EXTRACTING OF COAL IS NOT MANUFACTURING ACTIVITY. THEREFORE ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL D EPRECIATION. BUT THE LD. PR. CIT IN HIS ORDER U/S 263 HELD THAT AO WAS SUPPOSED TO VERIFY THE FACTS AS DETAILED UNDER:- 4. THE POINTS THAT WERE SUPPOSED TO BE VERIFIED BY THE AO, IN THE CASE OF A COMPLETE SCRUTINY UNDER CASS WERE: (I) OWNERSHIP, NATURE OF ASSET, IF THE SAME WERE ME ANT FOR MANUFACTURING & USER OF SUCH ADDITIONAL ASSETS (II) PERIOD OF USER (III) WHETHER THE ASSESSEE COMPANY WAS ENGAGED IN T HE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. 5. I WAS OF THE VIEW THAT SINCE THE AO HAD NOT EVEN LOOKED INTO THIS CLAIM AT ALL, NO LIMB OF EXPECTED VERIFICATION HAD BEEN DONE AND THUS THE ASSESSMENT HAD BEEN RENDERED ERRONEOUS AND SINCE TH E TAX IMPACT WAS TO THE TUNE OF 4,21,816/- THE ASSESSMENT HAD CAUSED OBVIOUS PREJUDICE TO THE INTEREST OF REVENUE. FROM THE ALLEGATION RAISED IN THE NOTICE U/S 263 OF THE ACT, IT WAS OBSERVED THAT THE ORDER OF AO WAS CONSIDERED AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE ON THE GROUND THAT ACTIVITY OF MINING AND EXTRACTING COAL DOES NOT AMOUNT TO MANUFACTURE. THEREFORE, THE AS SESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION. IN THIS REGARD, WE FIND TH E ISSUE WHETHER THE MINING AND EXTRACTING OF COAL IS MANUFACTURING ACTIVITY HA S BEEN SETTLED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. G.S ATWAL & CO. REPORTED IN 254 ITR 592 (CAL) WHEREIN IT WAS HELD AS UNDER:- THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. MERCANTILE CONSTRUCTION CO. [1994] 74 TAXMAN 41 HAS HELD THAT THE WINNING OF COAL IS NO DOUBT PRODUCTION AS AFTER WINNING COAL, SOMETHING THAT WA S NOT THERE COMES UP AND IT IS, THEREFORE, A PRODUCTION OF COAL. [PARA 14] THE POINT THAT THE ASSESSEE WAS NOT AN INDUSTRIAL U NDERTAKING EVEN THOUGH IT MIGHT BE ENGAGED IN PRODUCTION OF COAL WAS ALSO TO BE DECIDED AGAINST THE REVENUE. UNDER THE DEFINITION OF AN 'INDUSTRIAL UND ERTAKING' GIVEN UNDER SECTION 33B, EXPLANATION , MINING ACTIVITY WOULD BRING THE ASSESSEE WITHIN T HE DEFINITION OF AN 'INDUSTRIAL UNDERTAKING'. [PARA 15] SO FAR AS THE ASSESSEE WAS CONCERNED, AN UNDERTAKIN G, IT CERTAINLY WAS. THERE WAS NO FACT TO SHOW THAT THE ASSESSEE WAS NOT AN INDUSTRIAL UNDERTAKING. ORDINARILY SPEAKING IF A MANUFACTURING ACTIVITY OR AN ARTICLE PRODUCING ACTIVITY IS CARRIED ON, AN UNDERTAKING CA RRYING ON SUCH ACTIVITY IS TO ITA NO.779/KOL/2016 A.Y. 2011-12 BLA INDUSTRIES PVT. LTD. VS. PR. CIT-1, KOL. PAGE 8 BE CLASSED AS AN INDUSTRIAL ONE. IT MIGHT BE SMALL SCALE OR LARGE SCALE, THAT DOES NOT MATTER MUCH. EVEN IF AN UNDERTAKING IS MAN UFACTURING OR PRODUCING ARTICLES, BUT IS STILL NOT TO BE CLASSED AS AN INDU STRIAL ONE, FOR THIS CLEAR INDICATIONS HAVE TO BE GIVEN AS TO WHY THIS DIFFERE NCE SHOULD BE MADE IN THE CASE OF THE UNDERTAKING IN QUESTION, SO THAT IT STA NDS OUT FROM THE GENERAL CATEGORY. NO SUCH PARTICULAR DIFFERENCE WAS SHOWN I N THE INSTANT CASE EXCEPTING THAT THE ASSESSEE WAS ALSO SAID TO CARRY ON TRANSPORT BUSINESS. [PARA 16] IF AN ASSESSEE OWNS THE MACHINERY FOR WHICH INVESTM ENT ALLOWANCE IS CLAIMED, AND SUCH MACHINERY IS USED FOR PRODUCTION, THEN THE SECTION APPLIES; IT DOES NOT MATTER IF THE USE FOR PRODUCTION IS MAD E BY THE LESSEE OR ONLY IN ONE INDUSTRIAL PART OF THE ASSESSEE'S BUSINESS UNDE RTAKING. ACCORDINGLY, THE TRANSPORT BUSINESS OF THE ASSESSEE DID NOT TILT THE QUESTION ONE WAY OR THE OTHER. IN THE RESULT, THE INVESTMENT ALLOWANCE WAS TO BE ALLOWED TO THE ASSESSEE. [PARAS 17 & 18] FROM THE ABOVE PROPOSITION, WE FIND THAT FROM THERE REMAINS NO AMBIGUITY THAT THE ACTIVITY OF ASSESSEE I.E. MINING AND EXTRACTING OF COAL IS MANUFACTURING ACTIVITY. THEREFORE, ASSESSEE IS VERY MUCH ENTITLE FOR ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT. IT WAS ALSO OBSERVED THAT THE ISSUE ABOUT THE ACTIV ITIES OF ASSESSEE WAS DULY EXAMINED BY AO DURING THE COURSE OF ASSESSMENT PROC EEDINGS AS EVIDENT FROM THE SUBMISSION OF LD. AR DISCUSSED IN THE PREC EDING PARAGRAPHS. THEREFORE, IN OUR CONSIDERED VIEW AO ALLOWED THE CL AIM OF ASSESSEE FOR THE ADDITIONAL DEPRECIATION AFTER NECESSARY VERIFICATIO N AND APPLICATION OF HIS MIND. SIMILARLY, WE FIND THAT LD. PR. CIT IN HIS IMPUGNED ORDER U/S 263 OF THE ACT HAS HELD THAT AO HAS NOT VERIFIED THE NECESSARY DETAILS OF THE PLANT AND MACHINERY PURCHASED DURING THE YEAR. IN THIS REGARD, WE FIND THAT THE AO HAS RAISED THE QUERIES REGARDING THE ADDITION OF FIXED ASSET WHICH ARE DULY RESPONDED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING . THE QUERY AND THE REPLIES MADE BY THE ASSESSEE HAVE ALREADY BEEN DISC USSED IN THE PRECEDING PARAGRAPH. THEREFORE, WE ARE INCLINED NOT TO REPEAT THE SAME FOR THE SAKE OF BREVITY. 6.1 IN VIEW OF ABOVE, WE FEEL THAT THE ASSESSMENT O RDER U/S 143(3) OF THE ACT WAS PASSED DULY AFTER DUE EXAMINATION OF THE RE CORDS FOR THE ADDITION OF ITA NO.779/KOL/2016 A.Y. 2011-12 BLA INDUSTRIES PVT. LTD. VS. PR. CIT-1, KOL. PAGE 9 PLANT AND MACHINERY AS WELL AS ACTIVITIES CARRIED O N BY ASSESSEE. WE ALSO FIND THAT THE PRINCIPLES LAID DOWN BY THE HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF MEITHAN INTERNATIONAL (SUPRA) IS NOT APPLICABLE IN THE CASE IN HAND AS THE QUERY WAS RAISED DURING THE COURSE OF SCRUTINY PROCEEDINGS WHICH WAS SATISFACTORILY REPLIED BY ASSESSEE. THEREFORE, IT C ANNOT BE HELD THAT ASSESSMENT WAS FRAMED WITHOUT ANY ENQUIRY WITH RESP ECT TO ADDITIONAL DEPRECIATION CLAIMED BY ASSESSEE. IN VIEW OF ABOVE, WE HOLD THAT THE IMPUGNED ORDER PASSED BY LD. PR. CIT U/S263 IS NOT SUSTAINABLE IN THE EYES OF LAW. HENCE, THE GROUND OF ASSESSEES APPEAL IS ALLO WED. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 28 /02/2018 SD/- SD/- ($ &) ( &) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (- 28 / 02 /201 8 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-BLA INDUSTRIES PVT. LTD. 84 MAKER CHA MBERS III, NARIMAN POINT MUMBAII-400021 2. / RESPONDENT-PR. CIT-1, AAYKAR BHAWAN, KOLKATA 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 $$3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,