M/s. Maharaja Shree Umaid Mills Ltd. Jaipur, Jaipur V. DCIT Circle-6, Jaipur, Circle-6, Jaipur

ITA 783/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3740 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA; RUNI PAL JCIT DH
• Keywords: Depreciation; Additional depreciation; Question of law; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 32(1)(iia); 201; 13; 32; 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 783/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-13 M/S MAHARAJA SHREE UMAID MILLS LTD. KHAITAN BHAWAN, M.I. ROAD, JAIPUR CUKE VS. DCIT, CIRCLE-06, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCM1849B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SH. B. K. GUPTA (CIT) & SMT. RUNI PAL (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/12/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 27/02/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), AJMER DATED 01.04.2019 WHEREIN THE ASSESSEE HAS TAK EN FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE VALIDITY OF THE ORDER PASSED BY AO U/S 147 OF IT. A CT, 1961. 2. THE LD. CIT(A) ERRED IN LAW AND FACTS BY CONFIRM ING RE-ASSESSMENT PROCEEDINGS ON BASIS OF A MERE CHANGE OF OPINION ON THE SAME SETS OF FACTS AS EXISTED AND UNDER THE KNOWLEDGE OF THE LD. AO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS. 5,25 ,57,261/- ON NEW WIND MILLS INSTALLED IN WIND POWER GENERATION UNIT AND R S. 11,60,381/- ON NEW PLANT & MACHINERY INSTALLED IN TEXTILE DIVISION. ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALES OF TEXTILES (YARN & FABRICS) AND GENERATION OF POWER. IT E-FILED ITS RETURN OF INCOM E ON 28.09.2012 DECLARING TOTAL INCOME OF RS.4,94,32,33,840/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 17.03.2015 AT TOTAL INCOME OF RS.4,95,59,27,360/ -. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 DT. 15.11.2 016 BY RECORDING THE FOLLOWING REASONS:- THE ASSESSEE E-FILED ITS RETURN OF INCOME FOR AY 2 012-13 ON 28.09.2012 DECLARING TOTAL INCOME OF RS.494,32,33,840/-, WHICH WAS ASSESSED U/S 143(3) AT THE TOTAL INCOME OF RS.495,59,27,360/- ON 17.03.2015. ON GOING THROUGH THE RECORDS, IT WAS NOTICED THAT A SSESSEE HAD MADE ADDITIONS AMOUNTING TO RS.52,55,72,612/- UNDER THE HEAD WIND MILLS AT WIND POWER GENERATION UNIT IN THE DEPRECIATION CHAR T AND CLAIMED ADDITIONAL DEPRECIATION OF 20% (10% FOR LESS THAN 1 80 DAYS) THEREUPON. TOTAL DEPRECIATION CLAIMED TO THE TUNE OF RS.26,27, 86,306/- (I.E. OF 80% + OF 20%=50%). THE ASSESSEE WAS ALLOWED ADDIT IONAL DEPRECIATION OF RS.5,37,14,642/- ON NEW MACHINERY. ON GOING THROUGH THE PROVISIONS OF CLAUSE (IIA) OF SUB-SECTION (1) OF SECTION 32, IT IS FOUND THAT ADDITIONAL DEPRECIATIO N ON NEW MACHINERY AND PLANT USED IN THE BUSINESS OF GENERATION OR GENERAT ION AND DISTRIBUTION OF POWER IS ALLOWABLE W.E.F. 01.04.2013. HOWEVER, IN THIS CASE TAX WAS PAID U/S 115JB. EVEN AFTER CONSIDERING THIS DISALLOWANCE, TAX WOULD BE PAYABLE U/S 115JB. HENCE , THE INCOME OF RS.5,37,17,642/- HAS ESCAPED FROM ASSESSMENT. IN VIEW OF THE ABOVE FACTS, I HAVE REASONS TO BELIE VE THAT INCOME TO THE TUNE OF RS.5,37,17,642/- HAS ESCAPED ASSESSMENT WIT HIN THE MEANING OF ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 3 PROVISIONS OF SECTION 147 OF THE IT ACT, 1961 FOR T HE ASSTT. YEAR 2012-13. THE ESCAPEMENT WAS ON ACCOUNT OF FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS. 3. AGAINST THE NOTICE ISSUED U/S 148, THE ASSESSEE FILED OBJECTION VIDE LETTER DT. 16.08.2017. THE AO, HOWEVER, REJECTED THE SAME VIDE LETTER DATED 17.08.2017 AND COMPLETED THE ASSESSMENT U/S 147 BY DISALLOWING THE CLAIM OF ADDITIONAL DEPRECIATION TO THE EXTENT OF RS.5,37,17 ,642/-. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) WHO HAS UPHELD THE VALIDITY OF REASSESSMENT AND DISALLOWANCE OF ADDITI ONAL DEPRECIATION. AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. IN GROUND NO. 1 & 2, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REASSESSMENT U/S 147 OF THE ACT. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT THE ISSUE REGARDING THE CLAIM OF ADD ITIONAL DEPRECIATION WAS EXAMINED IN THE COURSE OF ASSESSMENT PROCEEDINGS U/ S 143(3) AS EVIDENT FROM THE FOLLOWING:- (A) THE CLAIM OF ADDITIONAL DEPRECIATION IS DULY REFLEC TED IN THE DEPRECIATION CHART FILED WITH TAX AUDIT REPORT. (B) IN ASSESSMENT PROCEEDINGS, AO EXAMINED THE ASSESSEE S CLAIM OF DEPRECIATION ALONG WITH ADDITIONAL DEPRECIATION ON WINDMILLS INSTALLED AT WIND POWER GENERATION UNIT AND AFTER CONSIDERING THE SAM E ALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION AND DISALLOWED PART OF THE CLAIM OF DEPRECIATION. 5. IT WAS SUBMITTED BY THE LD AR THAT FROM THE ABOV E, IT CAN BE NOTED THAT AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS HAS EXAMI NED THE CLAIM OF ADDITIONAL DEPRECIATION. REASONS RECORDED BY THE AO REFER TO T HE DEPRECIATION CHART WHICH ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 4 WAS ALREADY FILED WITH THE TAX AUDIT REPORT. ALL TH E MATERIAL REGARDING CLAIM OF ADDITIONAL DEPRECIATION WAS ON RECORD OF AO WHILE C OMPLETING THE ASSESSMENT U/S 143(3). NO NEW OR FRESH MATERIAL IS BROUGHT ON RECORD BY AO BEFORE INITIATING ACTION U/S 148. THEREFORE, THE OBSERVATI ON OF AO IN THE REASONS RECORDED THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACT IS INCORRECT. THUS, REOPENING THE ASS ESSMENT U/S 148 ON AN ISSUE WHICH IS ALREADY CONSIDERED BY AO IN ORIGINAL ASSES SMENT PROCEEDINGS IS ONLY ON ACCOUNT OF CHANGE OF OPINION. ON SUCH CHANGE OF OPINION, REASSESSMENT PROCEEDINGS INITIATED BY HIM, EVEN WITHIN A PERIOD OF 4 YEARS, IS ILLEGAL AND BAD IN LAW. FOR THIS PURPOSE RELIANCE IS PLACED ON FOLL OWING CASES:- CIT VS. HINDUSTAN ZINC LTD. (2016) 241 TAXMAN 392 ( RAJ.) ACIT VS. MANGALAM CEMENT LTD. (2017) 148 DTR 329 (J AIPUR) ITO VS. TECHSPAN INDIA (P) LTD. & ANR. 255 TAXMAN 1 52 (SC) PCIT VS. TUPPERWARE INDIA PVT. LTD. (2015) 127 DTR 161 (DEL.) 6. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAS CONFIRMED THE VALIDITY OF REOPENING OF REASSESSMENT BY REFERRING TO CLAUSE (C ) OF EXPLANATION 2 TO SECTION 147 ACCORDING TO WHICH COMPUTATION OF EXCESSIVE DEP RECIATION ALLOWANCE IS DEEMED TO BE A CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HOWEVER, IN THE PRESENT CASE, THE ADDITIONAL DEPREC IATION ALLOWED BY THE AO ON POWER GENERATING UNIT THOUGH SPECIFICALLY INCLUDED IN SECTION 32(1)(IIA) W.E.F. 01.04.2013 BUT EVEN BEFORE THIS INSERTION, IT WAS H ELD ALLOWABLE IN VARIOUS JUDGMENT PRONOUNCED BY THE VARIOUS HIGH COURTS. THE REFORE, IT IS NOT A CASE COVERED UNDER CLAUSE (C) OF EXPLANATION 2 TO SECTIO N 147. IN VIEW OF ABOVE, ASSESSMENT FRAMED BY THE AO U/S 147 IS ILLEGAL AND BAD IN LAW AND THE SAME BE QUASHED. ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 5 7. ON THE CONTRARY, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IT WAS SUBMITTED THAT THE AO HAD SPECIFIC I NFORMATION IN HIS POSSESSION THAT ADDITIONAL DEPRECIATION OF RS.5,37,17,642/- NO T ADMISSIBLE TO THE ASSESSEE WAS CLAIMED BY THE ASSESSEE AS DEDUCTION AND ALLOWE D BY THE AO. THEREFORE, THE AO HAD SUFFICIENT MATERIAL WITH HIM TO FORM THE BELIEF THAT INCOME PERTAINING TO AY 2012-13 HAS ESCAPED ASSESSMENT. IT IS NOT A CASE OF CHANGE OF OPINION. IN VIEW OF CLAUSE C OF EXPLANATION 2 TO SE CTION 147, THE AO CAN OPEN THE ASSESSMENT U/S 147 IF EXCESSIVE DEPRECIATION AL LOWANCE UNDER THE ACT HAS BEEN CLAIMED BY THE ASSESSEE. IT WAS ACCORDINGLY TH AT THERE IS NO INFIRMITY IN THE ORDER OF THE LD CIT(A) WHERE HE UPHELD THE VALI DITY OF REOPENING THE ASSESSMENT U/S 147 OF THE ACT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, IT IS NOTED THAT THE NOTICE U/S 148 HAS BEEN ISSUED ON 15.11.2016, I.E, WITHIN A PERIOD OF FOUR YEARS FROM THE END OF IMPUGNED ASSESSMENT YEAR 2012-13 AND THEREFORE, THE ADDITION AL CONDITIONS PRESCRIBED IN PROVISO TO SECTION 147 TO ACQUIRE JURISDICTION U/S 147 IS NOT RELEVANT AND HENCE, NOT CONSIDERED IN THE PRESENT CASE. NOW, COMING TO THE CONTENTION ADVANCED BY THE LD AR WHEREIN HE HAS ASSAILED THE ACTION OF THE ASSESSING OFFICER IN INITIATING THE REASSESSMENT PROCEEDINGS FOR THE REA SON THAT WHERE IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE MATTER RELATIN G TO CLAIM OF ADDITIONAL DEPRECIATION ON WINDMILLS WAS EXAMINED BY THE ASSES SING OFFICER, IN SUCH CIRCUMSTANCES, REASSESSMENT PROCEEDINGS INITIATED BY HIM ON THE VERY SAME ISSUE AMOUNTS TO CHANGE OF OPINION AND ON SUCH CHAN GE OF OPINION, REASSESSMENT PROCEEDINGS CANNOT BE SUSTAINED AS HEL D BY CATENA OF DECISIONS OF VARIOUS COURTS AND TRIBUNALS. WE HAVE GONE THES E DECISIONS RENDERED IN THE SPECIFIC FACTS AND CIRCUMSTANCES OF EACH CASE. THE RE IS NO DISPUTE ON THE LEGAL PROPOSITION THAT WHERE THE MATTER HAS ALREADY BEEN EXAMINED BY THE ASSESSING OFFICER IN THE ORIGINAL PROCEEDINGS AND AN OPINION HAS BEEN FORMED BY THE ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 6 ASSESSING OFFICER AND THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED, THEN ON THE SAME MATTER, THE ASSESSING OFFICER CANNOT INITIATE THE REASSESSMENT PROCEEDINGS DISALLOWING SUCH A CLAIM MADE BY THE AS SESSEE. 9. FOR THE PURPOSES, IT IS RELEVANT TO EXAMINE WHET HER IN THE INSTANT CASE, THE ASSESSING OFFICER HAS EXAMINED THE CLAIM OF ADD ITIONAL DEPRECIATION IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND ANY FINDINGS RE CORDED IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. IN APB, PAGE 4 , WE FIND THAT IN RESPONSE TO INFORMATION SOUGHT BY THE ASSESSING OFFICER U/S 142(1) DATED 5.11.2014, THE ASSESSEE HAS FILED ITS SUBMISSION DATED 3.12.2014. AT POINT NO.5, THE ASSESSING OFFICER HAS SOUGHT INFORMATION ON DETAILS OF FIXED ASSETS ON WHICH ADDITIONAL DEPRECIATION OF RS 19,09,306 IS CLAIMED AND CALCULA TION THEREOF. IN RESPONSE, THE ASSESSEE COMPANY HAS SUBMITTED AS UNDER: THE ASSESSEE HAS THE HONOUR TO SUBMIT THAT THE ADD ITIONAL DEPRECIATION OF RS. 19,09,306/- IS PERTAINING TO THE FIXED ASSETS IN TH E NATURE OF NEW PLANT & MACHINERY ACQUIRED AND INSTALLED IN THE PREVIOUS YE AR 2010-11 AND USED FOR LESS THAN 180 DAYS IN THAT YEAR, AND THEREFORE, ONL Y 50% OF THE ALLOWABLE ADDITIONAL DEPRECIATION (20%) UNDER SECTION 32(1)(I IA) WAS CLAIMED IN THAT YEAR EQUIVALENT TO RS. 19,09,306/-. THEREFORE, THE BALAN CE 50% (I.E 10% OF THE COST OF THE PLANT & MACHINERY ACQUIRED AND INSTALLED AND USED FOR LESS THAN 180 DAYS IN THE PREVIOUS YEAR 2010-11) OF THE ALLOWABLE ADDI TIONAL DEPRECIATION EQUAL TO RS. 19,09,306/- IS CLAIMED IN THE PREVIOUS YEAR 201 1-12 (ASSESSMENT YEAR 2012-13). COPY OF RELEVANT ANNEXURE-C TO FORM 3CD O F THE TAX AUDIT REPORT FOR THE ASSESSMENT YEAR 2012-13 AND ASSESSMENT YEAR 2011-12 ARE ENCLOSED HEREWITH AND COLLECTIVELY MARKED AS ANNEXURE-4. IT IS SUBMITTED THAT THE TOTAL ADDITIONS TO THE PLANT & MACHINERY USED FOR LESS TH AN 180 DAYS (15% BLOCK) AS PER ANNEXURE-C TO FORM 3CD OF TAX AUDIT REPORT PERT AINING TO THE ASSESSMENT YEAR 2011-12 WERE RS. 19,09,30,64/-, AND THEREFORE, ON THESE ADDITIONS THE ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 7 HUMBLE ASSESSEE HAD CLAIMED 10% ADDITIONAL DEPRECIA TION WHICH COME TO RS. 19,09,306/- IN THE ASSESSMENT YEAR 2011-12 AND BALA NCE 10% RS. 19,09,306/- WAS THUS CLAIMED IN THE NEXT ASSESSMENT YEAR 2012-1 3 (PREVIOUS YEAR 2011- 12). THE ABOVE CALCULATIONS ARE ALSO VERIFIED AND CERTIF IED BY THE TAX AUDITOR AS STATED AT POINT NO. 14 OF THE FORM 3 CD ANNEXED TO THE TAX AUDIT REPORT FOR THE RELEVANT ASSESSMENT YEARS. 10. WE THEREFORE FIND THAT THE QUERY RAISED AND RES PONSE SUBMITTED IS LIMITED TO ADDITIONAL DEPRECIATION OF RS 19,09,306 ON PLANT AND MACHINERY ACQUIRED IN THE EARLIER FINANCIAL YEAR 2010-11 RELEVANT TO ASSE SSMENT YEAR 2011-12 AND NOT PLANT AND MACHINERY WHICH HAS BEEN ACQUIRED AND INS TALLED DURING THE CURRENT FINANCIAL YEAR 2011-12 RELEVANT TO IMPUGNED ASSESSM ENT YEAR 2012-13. THEREFORE, AS FAR AS ADDITIONAL DEPRECIATION ON WIN DMILLS CAPITALIZED UNDER THE HEAD WIND MILLS AT WIND POWER GENERATION UNIT DUR ING THE YEAR UNDER CONSIDERATION IS CONCERNED AND WHICH IS THE SUBJECT MATTER OF DISPUTE, WE FIND THAT THERE WAS NO SPECIFIC QUERY RAISED BY THE ASSE SSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AS PART O F NOTICE U/S 142(1) IS CONCERNED. 11. NOW COMING TO THE ASSESSMENT ORDER PASSED U/S 1 43(3) OF THE ACT, WHICH HAS BEEN RELIED UPON BY THE LD AR IN SUPPORT OF HIS CONTENTION THAT ASSESSEEES CLAIM OF DEPRECIATION ALONGWITH ADDITIO NAL DEPRECIATION WAS EXAMINED BY THE ASSESSING OFFICER. 12. ON PERUSAL OF ASSESSMENT ORDER DATED 17.03.2015 , WE FIND THAT THE MATTER UNDER EXAMINATION BY THE ASSESSING OFFICER W AS LIMITED TO CLAIM OF NORMAL DEPRECIATION @ 80% AS CLAIMED BY THE ASSESSE E AS COMPARED TO DEPRECIATION @ 10% ON CIVIL WORKS (BUILDINGS) AND @ 15% ON ELECTRICAL ITEMS ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 8 (PLANT AND MACHINERY). THE MATTER RELATING TO CLAI M OF ADDITIONAL DEPRECIATION WAS THEREFORE NOT EXAMINED BY THE ASSESSING OFFICER . WHERE THE MATTER HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER, THERE IS NO QUESTION OF CHANGE OF OPINION AS THERE IS NO FORMATION OF OPINION AT FIRS T PLACE. THEREFORE, THE CONTENTIONS SO ADVANCED BY THE LD AR THAT IT IS A C ASE OF CHANGE OF OPINION AND REASSESSMENT PROCEEDINGS CANNOT BE SUSTAINED ON SUC H CHANGE OF OPINION IS NOT ACCEPTED. 13. FURTHER, WE FIND THAT IN THE REASONS SO RECORDE D BY THE ASSESSING OFFICER, HE HAS STATED THAT BY VIRTUE OF AMENDMENT BROUGHT-I N BY THE FINANCE ACT, 2012, THE CLAIM OF ADDITIONAL DEPRECIATION U/S 32(1 )(IIA) IS ALLOWABLE W.E.F 1.04.2013 RELEVANT TO ASSESSMENT YEAR 2013-14 WHICH EX-FACIE SUGGEST THAT SUCH CLAIM HAS BEEN WRONGLY CLAIMED AND ALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS WITHOUT EXAMINATION IS CLEARLY A CASE O F EXCESS CLAIM OF DEPRECIATION AND JURISDICTION HAS BEEN RIGHTLY INVO KED BY THE ASSESSING OFFICER U/S 147 OF THE ACT. IN THE RESULT, GROUND NO. 1 AN D 2 OF THE ASSESSEES APPEAL IS DISMISSED. 14. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E DISALLOWANCE OF ADDITIONAL DEPRECIATION ON MERITS. IN THIS REGARD, BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE MADE ADDITIONS AMOUNTING TO RS.52,55,72,612/- UNDER THE HEAD WIND MILLS AT WIND POWER GENERATION UNIT & RS.1,16,03,810/- UNDER THE HEAD ENERGY SAVING EQUIPMENTS AT TEXTILE UNIT AND CLAIMED ADDITIONAL DEPRECIATION OF 10% (BEING LESS THAN 180 DAYS), I.E. RS.5,37,17,642/-. THE AO OBSERVED THAT IN VIEW OF THE PROVISION OF SEC. 32(1)(IIA), THE CLAIM OF ADDITIONAL DEPRECIATI ON ON NEW PLANT & MACHINERY IS NOT ALLOWABLE AS THE SAME IS ALLOWABLE W.E.F. 01.04 .2013 AS PER THE AMENDMENT MADE IN FINANCE ACT, 2012. ACCORDINGLY, H E DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION OF RS.5,37,17,642/-. ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 9 15. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD CIT(A). THE LD. CIT(A) HELD THAT THE AMENDMENT IN C LAUSE (IIA) OF SUB-SECTION 1 OF SECTION 32 WAS INSERTED W.E.F. 01.04.2013 TO INC LUDE OR IN THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER . BEFORE THE AMENDMENT INSERTED BY THE FA, 2012, ADDITIONAL DEPRECIATION W AS NOT ADMISSIBLE ON ANY PLANT OR MACHINERY ACQUIRED OR INSTALLED BY AN ASSE SSEE ENGAGED IN THE BUSINESS OF GENERATION AND DISTRIBUTION OF POWER. T HEREFORE, HE CONFIRMED THE DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS.5,37, 17,642/-. 16. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT FOR CLAIM OF ADDITIONAL DEPRECIATION U/S 32(1)(IIA), WHAT IS REQ UIRED IS THAT NEW P&M HAS BEEN ACQUIRED AND INSTALLED BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THERE IS NO DISPUTE AS TO THE FACT THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MA NUFACTURING AND SALE OF TEXTILE YARN AND FABRICS. FOR UNINTERRUPTED SUPPLY OF POWER TO ITS YARN MANUFACTURING UNIT, IT INSTALLED NEW P&M FOR PRODUC TION OF POWER. THEREFORE, THE ELECTRICITY PRODUCED BY POWER PLANT ARE BASICAL LY FOR MANUFACTURING OF ARTICLE OR THING. HENCE, THE SUBSEQUENT AMENDMENT M ADE IN A.Y. 13-14 DOES NOT AFFECT THE CLAIM OF ADDITIONAL DEPRECIATION ON THE POWER PLANT. FOR THIS RELIANCE IS PLACED ON THE DECISION OF ITAT JAIPUR B ENCH IN CASE OF ACIT VS. MANGALAM CEMENT LTD. (2017) 148 DTR 329 (JAIPUR) (T RIB.) WHEREIN AO DISALLOWED ADDITIONAL DEPRECIATION ON POWER GENERAT ING PLANT ON THE GROUND THAT GENERATION AND DISTRIBUTION OF ELECTRICITY WAS INSERTED IN SEC. 32(1)(IIA) FOR THE FIRST TIME BY THE FA, 2012 WHICH IS PROSPECTIVE IN OPERATION. IT WAS HELD THAT THE AMENDMENT CANNOT BE READ TO NEGATE THE SET TLED LEGAL POSITION THAT GENERATION OF ELECTRICITY IS AKIN TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING. THE AMENDMENT BY THE FA, 2012 GIVEN AN IMPET US TO THE VIEW THAT GENERATION OF ELECTRICITY IS A MANUFACTURING PROCES S. FURTHER, ONCE THE AO HAS ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 10 ACCEPTED THE ASSESSEE CLAIM OF DEPRECIATION U/S 32( 1)(II), THERE IS NO REASON WHY THE ASSESSEE SHOULD BE DENIED THE CLAIM OF ADD ITIONAL DEPRECIATION ON THE SAME ASSETS U/S 32(1)(IIA). IT WAS FURTHER SUBMITTE D THAT THE SAID DECISION OF THE COORDINATE BENCH HAS SINCE BEEN AFFIRMED BY THE HONBLE RAJASTHAN HIGH COURT IN CASE OF PR. CIT, KOTA VS M/S MANGALAM CEME NT LTD (DB APPEAL NO. 211/2017 & 213/2017 DATED 4.09.2017) WHEREIN THE HONBLE HIGH COURT HAS HELD THAT WE ARE IN COMPLETE AGREEMENT WITH THE VI EW TAKEN BY THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW ARISES. FURTHER, RE LIANCE IN THIS CONNECTION WAS PLACED ON FOLLOWING CASES:- PCIT VS. NTPC SAIL POWER CO. (P) LTD. (2019) 178 DT R 53 (DEL.) PRINCIPAL CIT VS. KANISHK STEEL INDUSTRIES (2016) 9 6 CCH 0292 (MAD.) CIT VS. DIAMINES & CHEMICALS LTD. (2014) 109 DTR 62 (GUJ.) JCIT VS. MINERAL ENTERPRISES LTD. (2013) 144 ITD 68 0 (BANG.) CIT VS. VTM LTD. (2009) 319 ITR 336 (MAD.) GIRIRAJ ENTERPRISES VS. DCIT (2017) 149 DTR 95 (PUN E) SANWARIA AGROILS LTD. VS. ACIT (2017) 165 ITD 604 ( INDORE) 17. IT WAS FURTHER SUBMITTED THAT THE EXPRESSION ARTICLE OR THING USED IN SECTION 32(1)(IIA) IS NOT DEFINED IN THE IT ACT, 19 61. SUPREME COURT IN CASE OF STATE OF ANDHRA PRADESH VS. NTPC LTD. 5 SSC 203 HEL D THAT ELECTRICITY IS GOODS AND THEREFORE PRODUCTION/GENERATION OF ELECTRICITY IS PRODUCTION OF ARTICLE OR THING. FURTHER, DELHI TRIBUNAL IN CASE OF NTPC LTD. VS. DCIT (2012) 54 SOT 177 WHEREIN ASSESSEES CLAIM OF ADDITIONAL DEPRECIATION WAS DISALLOWED ON THE GROUND THAT POWER/ELECTRICITY GENERATED BY ASSESSEE COULD NOT BE EQUATED WITH AN ARTICLE OR THING WHICH WAS BEING MANUFACTURED IN AN INDUSTRIAL UNDERTAKING, HELD THAT IF THERE CAN BE SALE AND PURCHASE OF ELEC TRIC ENERGY LIKE ANY MOVEABLE OBJECT, THEN ELECTRIC ENERGY IS COVERED BY THE DEFI NITION OF GOODS AND THUS ADMISSIBILITY OF ADDITIONAL DEPRECIATION COULD NOT BE DENIED TO ASSESSEE MERELY ON THE GROUND THAT ELECTRICITY IS NOT AN ARTICLE OR THING. IN VIEW OF THE SAID ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 11 DECISIONS, P&M ACQUIRED AND INSTALLED BY ASSESSEE F OR GENERATION OF ELECTRICITY IS AKIN TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING AND CONSEQUENTLY ASSESSEE IS ENTITLED FOR ADDITIONAL DEPRECIATION U/ S 32(1)(IIA) ON SAME. 18. IN RESPECT OF DISALLOWANCE OF ADDITIONAL DEPREC IATION OF RS.11,60,381/-, IT WAS SUBMITTED THAT THE SAME IS CLAIMED IN RESPECT O F ENERGY SAVING DEVICES OF RS. 1,16,03,810/- ACQUIRED AND INSTALLED DURING THE YEAR IN THE TEXTILE MANUFACTURING UNIT. ADDITIONAL DEPRECIATION ON THES E PLANT & MACHINERY IS DIRECTLY ALLOWABLE UNDER SECTION 32(I)(IIA) OF THE ACT. 19. IN VIEW OF ABOVE, IT WAS SUBMITTED THAT THE DIS ALLOWANCE OF ADDITIONAL DEPRECIATION OF RS.5,37,17,642/- CONFIRMED BY LD. C IT(A) IS UNCALLED FOR AND THE SAME BE DIRECTED TO BE DELETED. 20. ON THE CONTRARY, THE LD. DR SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. IT WAS SUBMITTED THAT THE AMENDMENT IN CLAU SE (IIA) OF SUB-SECTION 1 OF SECTION 32 WAS INSERTED W.E.F. 01.04.2013 TO INCLUD E OR IN THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER . BEFORE THE AMENDMENT INSERTED BY THE FINANCE ACT, 2012, ADDITIONAL DEPRE CIATION WAS NOT ADMISSIBLE ON ANY PLANT OR MACHINERY ACQUIRED OR INSTALLED BY AN ASSESSEE ENGAGED IN THE BUSINESS OF GENERATION AND DISTRIBUTION OF POWER AN D OUR REFERENCE WAS DRAWN TO THE MEMORANDUM EXPLAINING THE FINANCIAL BILL, 20 12. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE ACTION OF THE LD CIT(A) WHERE HE HAS CONFIRMED THE DISALLOWANCE OF ADDITIONAL DEPRECIATI ON OF RS.5,37,17,642/-. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, WE FIND THAT IN RESPECT OF CLAI M OF ADDITIONAL DEPRECIATION OF RS.11,60,381/- ON ENERGY SAVING DEVICES OF RS. 1,16 ,03,810/- WHICH HAVE BEEN ACQUIRED AND INSTALLED DURING THE YEAR, THERE CANNO T BE ANY DISPUTE AS THE ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 12 SAME IS CLEARLY ALLOWABLE UNDER SECTION 32(I)(IIA) OF THE ACT AND THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2012 DOESNT IN ANY MANNER IMPACT SUCH A CLAIM OF THE ASSESSEE AND THUS, THE DISALLOWANCE SO MADE OF ADDITIONAL DEPRECIATION IS HEREBY DIRECTED TO BE DELETED. 22. IN RESPECT OF ADDITIONAL DEPRECIATION OF RS 5,2 5,57,261/- ON WINDMILLS IN RESPECT OF WHICH THE ASSESSEE HAS MADE ADDITIONS AM OUNTING TO RS 52,55,72,612/- UNDER THE HEAD WIND MILLS AT WI ND POWER GENERATION UNIT, WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINES S OF MANUFACTURING AND SALE OF TEXTILES (YARN & FABRICS) AND GENERATION AND SUP PLY OF POWER AND SATISFIES THE NECESSARY CONDITION FOR CLAIM OF ADDITIONAL DEPRECI ATION AS PRESCRIBED UNDER SECTION 32(1)(IIA) OF THE ACT AND SUCH WINDMILLS HA VE BEEN ACQUIRED AND INSTALLED IN THE FINANCIAL YEAR RELEVANT TO IMPUNGE D ASSESSMENT YEAR 2012-13 MUCH AFTER 31.03.2005. FURTHER, WE FIND THAT THE A SSESSEES CASE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN CASE OF MANGALAM CEMENTS (SUPRA) WHEREIN THE AMENDMENT BROUGHT IN BY THE FIN ANCE ACT 2012 HAVE BEEN DULY CONSIDERED AND ADDITIONAL DEPRECIATION ON WIND MILLS FOR AY. 2008-09 AND AY 2009-10 WAS ALLOWED. WE REFER TO THE RELEVANT F INDINGS OF THE COORDINATE BENCH WHICH READS AS UNDER: 16.5 ON REVIEW OF PROVISIONS OF SECTION 32 READ WI TH THE RULES, IT IS CLEAR THAT AN UNDERTAKING ENGAGED IN GENERATION OR GENERA TION & DISTRIBUTION OF POWER HAS AN OPTION TO CLAIM THE DEPRECIATION EI THER U/S 32(1)(I) OR 32(1)(II) OF THE ACT. THERE IS NO DISPUTE THAT THE ASSESSEE HAS CLAIMED DEPRECIATION U/S 32 (1)(II) OF THE ACT. THE AO HAS NOT DISPUTED THE SAID CLAIM OF THE ASSESSEE IN RESPECT OF CLAIM OF DEPREC IATION U/S 32(1)(II) OF THE ACT WHEREBY THE ASSESSEE HAS CLAIMED DEPRECIATI ON @ 80% ON THE ASSETS PERTAINING TO THE POWER PLANT AT MORAK AND W INDMILL AT JAISALMER IN THE YEAR UNDER CONSIDERATION. ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 13 16.6 WE NOW REFER TO THE PROVISIONS OF SECTION 32(1 )(II)(A) OF THE ACT WHICH READS AS UNDER: '(IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (O THER THAN SHIPS AND AIRCRAFT) WHICH HAS BEEN ACQUIRED AND INSTALLED AFT ER THE 31ST DAY OF MARCH, 2005BY AN ASSESSEE ENGAGED IN THE BUSINESS O F MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING OR IN THE BUSINE SS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER, A FURTHER SUM EQUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II).' 16.7 A READING OF THE ABOVE PROVISIONS MAKES IT CLE AR THAT THE ADDITIONAL DEPRECIATION @ 20% OF THE ACTUAL COST OF MACHINERY & PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II). IN OTHER WO RDS, OVER AND ABOVE THE DEPRECIATION CLAIMED AND ALLOWED U/S 32(1)(II) OF THE ACT, THE ASSESSEE SHALL BE ELIGIBLE FOR AN ADDITIONAL DEPREC IATION OF 20% OF THE ACTUAL COST OF SUCH MACHINERY AND PLANT. IT FURTHER PROVIDES THAT A MACHINERY OF PLANT SHOULD BE A NEW MACHINERY OR PLA NT (OTHER THAN SHIPS AND AIRCRAFT) WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31ST DAY OF MARCH, 2005. IT FURTHER PROVIDES THAT THE ADDITIONA L DEPRECIATION IN NEW MACHINERY OR PLANT SHALL BE ALLOWED IN THE HANDS OF THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTIO N OF ANY ARTICLE OR THING OR IN THE BUSINESS OF GENERATION OR GENERATIO N & DISTRIBUTION OF POWER. IN THE INSTANT CASE, IT IS NOT IN DISPUTE TH AT NEW MACHINERY OR PLANT HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31S T MARCH 2005. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS CLAIMED D EPRECIATION U/S 32(1)(II) OF THE ACT. ONCE THE AO HAS ACCEPTED THE ASSESSEE'S CLAIM U/S 32(1)(II) OF THE ACT, WE DO NOT SEE A REASON WHY TH E ASSESSEE SHOULD BE DENIED THE CLAIM OF ADDITIONAL DEPRECIATION ON THE SAME ASSETS U/S 32(1)(IIA) OF THE ACT. ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 14 16.8 IT IS NOW A SETTLED POSITION AS HELD BY THE HO N'BLE SUPREME COURT AND THE VARIOUS CO-ORDINATE BENCHES OF THE TRIBUNAL THAT THE PROCESS OF GENERATION OF ELECTRICITY IS AKIN TO MANUFACTURE OF AN ARTICLE OR THING, THE ASSESSEE IN THE INSTANT CASE SATISFY THE REQUIREMEN T THAT IT IS ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF AN ART ICLE OR THING. NOW COMING TO THE AMENDMENT WHICH HAS BEEN BROUGHT-IN B Y THE FINANCE ACT 2012 W.E.F. A.Y. 2013-14WHEREBY THE ASSESSEE ENGAGE D IN THE BUSINESS OF GENERATION OR GENERATION & DISTRIBUTION OF POWER HAVE SPECIFICALLY BEEN INCLUDED AND HELD ELIGIBLE FOR CLAIM OF ADDITIONAL DEPRECIATION. IN OUR VIEW, THE SAID AMENDMENT CANNOT BE HELD TO DISENTIT LE THE ASSESSEE TO CLAIM OF THE ADDITIONAL DEPRECIATION. VARIOUS COORD INATE BENCHES HAVE HELD THAT EVEN PRIOR TO THE AMENDMENT BROUGHT IN BY THE FINANCE ACT 2012, THE ASSESSEES ENGAGED IN GENERATION OR GENERA TION AND DISTRIBUTION OF ELECTRICITY WERE HELD ELIGIBLE FOR ADDITIONAL DEPRECIATION. IN THIS REGARD, REFERENCE CAN BE DRAWN TO THE DECISION OF NTPC LTD. (SUPRA), M. SATISH KUMAR (SUPRA) AND DAMODAR V ALLEY CORPN. (SUPRA). NO CONTRARY AUTHORITY HAS BEEN BROU GHT TO OUR NOTICE. IN OUR VIEW, THE SAID AMENDMENT CANNOT BE READ TO NEGA TE THE SETTLED LEGAL POSITION THAT GENERATION OF ELECTRICITY IS AKIN TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING. AS HELD BY COORD INATE BENCH IN M SATISH KUMAR (SUPRA), THE SAID AMENDMENT BY THE FINANCE AC T 2012 GIVES AN IMPETUS TO THE VIEW THAT GENERATION OF ELECTRICITY IS A MANUFACTURING PROCESS. IN LIGHT OF ABOVE, THE ASSESSEE IS HELD EN TITLED TO THE ADDITIONAL CLAIM OF DEPRECIATION ON THE POWER PLANT AND THE WI NDMILL INSTALLED DURING THE YEAR. HENCE THE GROUND OF THE DEPARTMENT IS DIS MISSED. 23. THE AFORESAID DECISION OF THE COORDINATE BENCH HAS SINCE BEEN AFFIRMED BY THE HONBLE RAJASTHAN HIGH COURT HOLDING THAT IT IS IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE TRIBUNAL. THEREFORE, RE SPECTFULLY FOLLOWING THE ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 15 DECISION OF THE COORDINATE BENCH AND THE HONBLE RA JASTHAN COURT IN CASE OF MANGALAM CEMENTS (SUPRA), THE CLAIM OF ADDITIONAL D EPRECIATION ON WINDMILLS IS ALLOWED AND THE GROUND OF APPEAL IS THUS ALLOWED. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/02/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-06, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 783/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 16 ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 17 ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 18 ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 19 ITA NO. 783/JP/2019 M/S MAHARAJA SHREE UMAID MILLS LTD., JAIPUR VS. DC IT, JAIPUR 20