ACIT, Jaipur V. DEVGIRI EXPORTS, Jaipur

ITA 794/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5552 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJIV SOGANI C A DHK
• Keywords: Depreciation; Opportunity of being heard
• Section: 143(3)

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 VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 794/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. M/S DEVGIRI EXPORTS, 43, SANGRAM COLONY, C- SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABFD 1226 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJIV SOGANI (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/12/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 29/01/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 30/08/2013 OF THE LEARNED C.I.T.(A)-II JAIPUR, FOR A .Y. 2010-11. THE EFFECTIVE GROUND OF APPEAL IS AS UNDER:- (I) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD CIT(APPEALS) HAS ERRED IN DELETING ADDITION OF RS. 63,74,266/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF EXCESS DEPRECIATION CLAIM ED ON WIND TURBINE GENERATOR MACHINE. 2 ITA NO. 794/JP/2013 ACIT VS DEVGIRI EXPORTS (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(APPEALS) HAS ERRED IN HOLD ING THAT DEPRECIATION @ 80% HAS TO BE ALLOWED ON WIND TURBINE GENERATOR MACHINE WITHOUT SEGREGATING INVESTMENT ON BUILDING PART AND ON ELECTRIC ITEM WIT HOUT APPRECIATING THAT DEPRECIATION @ 80% IS ALLOWABLE ON WIND TURBINE GENERATOR MACHINE AND NOT ON ELECTRICA L FITTINGS AND BUILDING ETC. 2. THE SOLE GROUND OF THE REVENUES APPEAL IS AGAINS T DELETING THE ADDITION OF RS. 63,74,266/- MADE BY THE ASSESSING O FFICER ON ACCOUNT OF DISALLOWANCE OF EXCESS DEPRECIATION CLAIMED ON WIND T URBINE GENERATOR MACHINE. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF COTTON/ WOOLEN FLOOR COVERING HANDLOOM ITEMS MADE UPS ETC. THE ASSESSEE FILED ITS E-RETURN OF INCOME ON 15/09/2010 DECLARING TOTAL INCOME OF RS. 1,82,69,45 0/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON WIND MILL PLANT @ 80% AND OUT OF THIS THE ASSESSEE CLAIMED 50% DEPRECIATION BEING ASSETS USED LESS THAN 180 DAYS A T RS. 3,45,97,708/-. THE LD ASSESSING OFFICER FURTHER OBSERVED THAT AS PER I NCOME TAX RULES, 1962, DEPRECIATION @ 80% ON WIND MILL IS ALLOWABLE BUT FOUND ATION WORK, PLATFORM FOR WINDMILL, SUPPLY OF ELECTRIC ITEMS, CIV IL WORK ETC. HAS NOT COVERED DEPRECIATION @ 80%. HE SEGREGATED ON ASSETS UNDER THE HEAD 3 ITA NO. 794/JP/2013 ACIT VS DEVGIRI EXPORTS CIVIL WORK, POWER EVACUATION CHARGES, ELECTRICAL WORK, COPPER WOUND TRANSFORMER, LABOUR CHARGES, WIND TURBINE, WINDMILL C OMPONENTS, TUBULAR TOWER AND LABOUR WORK FOR INSTALLATION OF WINDMILL AND FINALLY HE FOUND EXCESS DISALLOWANCE OF DEPRECIATION AT RS. 63,74,266 /-. AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD, HE MADE DISA LLOWANCE OF DEPRECIATION OF THE SAME AMOUNT. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD ALLO WED THE APPEAL BY OBSERVING AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSES SMENT ORDER AND APPELLANTS WRITTEN SUBMISSIONS. ASSESSING OFFIC ER RESTRICTED THE DEPRECIATION ON CIVIL CONSTRUCTION WO RK FROM 80% TO 10% AND ELECTRICAL INSTALLATION AT 15% FROM 80% IN THE WINDMILL PROJECT. APPELLANT SUBMITTED THAT CIVIL CONSTRUCTION WORK AND ELECTRICAL INSTALLATIONS ARE P ART OF WINDMILL FOR WHICH COMPOSITE RATE OF DEPRECIATION IS 80%. APPELLANT ALSO RELIED UPON THE DECISIONS OF JURISDI CTIONAL TRIBUNAL AND ALSO OF GUJARAT HIGH COURT. I HAVE GON E THROUGH THESE DECISIONS. THE DECISION OF JURISDICTIONAL TRIB UNAL IN THE CASE OF DCIT VS. DANGAYACH HOTELS PVT. LTD. ITA NO. 747/JP/2011 DATED 13/1/2012 WHEREIN ITAT CATEGORICALL Y HELD THAT THE COST OF CIVIL WORK AND OTHER INSTALLAT IONS HAVE 4 ITA NO. 794/JP/2013 ACIT VS DEVGIRI EXPORTS TO BE ADDED TO THE COST OF WINDMILL AND ARE THUS ELI GIBLE FOR THE DEPRECIATION @ 80%. SINCE FACTS OF THE APPELLANT ARE IDENTICAL, THIS ISSUE IS COVERED IN FAVOUR OF APPEL LANT. THE FACT THAT DEPT. PREFERRED APPEAL IN HIGH COURT WILL NOT LEAVE ANY DISCRETION TO CIT(A) NOT TO FOLLOW ITATS ORDER. ACCORDINGLY ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION ON CIVIL CONSTRUCTION WORK AND ELECTRI CAL INSTALLATION AT THE RATE APPLICABLE TO WINDMILL. IF ANY EFFECT OF REDUCED DEPRECIATION IS ALREADY GIVEN IN FUTURE YEA RS, AO IS DIRECTED TO WITHDRAW THE SAME. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. AT TH E OUTSET, THE LD AR OF THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFORE T HE LD CIT(A) AND FURTHER ARGUED THAT WINDMILLS REQUIRES SCIENTIFICALL Y DESIGNED MACHINERY IN ORDER OF HARNESS THE WIND ENERGY TO THE MAXIMUM POTE NTIAL. SUCH DEVICES HAVE TO BE FITTED AND MOUNTED ON A CIVIL CONSTRUCTI ON, EQUIPPED WITH ELECTRIC FITTINGS IN ORDER TO TRANSMIT THE ELECTRIC ITY SO GENERATED. SUCH CIVIL STRUCTURE AND ELECTRIC FITTINGS ARE CLOSELY INTERCO NNECTED AND LINKED AND THUS FORM AN INTEGRAL PART OF THE WINDMILL, THEREFORE 80% DEPRECIATION IS ALLOWABLE. HE RELIED ON THE DECISION OF HON'BLE RAJA STHAN HIGH COURT IN THE CASE OF K.K. ENTERPRISES (2014) 227 TAXMAN 181, HON' BLE GUJARAT HIGH COURT DECISION IN THE CASE OF PARRY ENGG. AND ELECT RONICS (P) LTD. IN TAX 5 ITA NO. 794/JP/2013 ACIT VS DEVGIRI EXPORTS APPEAL NO. 604/2012 ORDER DATED 29/01/2013. HE FURT HER RELIED ON THE FOLLOWING CASE LAWS: (I) DCIT VS LANCO INFRATECH LTD. (2015) 37 ITR (T) 9 5 (HYD TRIB). (II) ACIT VS KUTTI SPINNERS (P) LTD. (2015) 67 SOT 2 3 (CHENNAI TRIB). THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THIS BENCH HAD ALREADY DECIDED NUMBER OF CASES ON WINDMILL WHERE IT HAS ALREADY BEEN HELD THAT CIVIL WORK AND ELECTRICAL ITEMS CLOSELY LINKED WITH THE WINDMILL AND ALSO ARE INTEGRAL PART THEREOF, IS QUALIFIED DEPRECIATION @ 80%. THE C ASE LAWS CITED BY THE LD AR ARE SQUARELY APPLICABLE, THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A). 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29 TH JANUARY,2016 RANJAN* 6 ITA NO. 794/JP/2013 ACIT VS DEVGIRI EXPORTS VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S DEVGIRI EXPORTS, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.794/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR