ACIT, Trichy V. M/s. Asian Hand Looms, Karur

ITA 803/CHNY/2011

• Counselvise Citation: 80321714 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D B ENCH C HENN AI BEFORE DR.O.K.NARAYANAN, VICE PRESIDENT AND SHRI S.S.GODARA , JUDICIAL MEMBER .. ITA NO. 803 /MDS./ 20 11 ASSESSMENT YEAR: 200 7 - 08 ASST. COMMISSIONER OF INCOME TAX, CIRCLE - II, RANGE II, 44, WILLIAMS ROAD, TRICHY - 1. VS. M/S.ASIAN HAND LOOMS, I.D.PUGALUR ROAD, KARUR. PAN AABFA 0568 Q (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI K E B RENGARAJAN JR.STANDING COUNSEL ASSESSEE BY : SHRI S.SRIDHAR, ADVOCATE DATE OF HEARING : 27 .0 6 .12 DATE OF PRONOUNCEMENT : 27 .0 6 .12 O R D E R PER S.S.GODARA , JUDICIAL MEMBER : THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF CIT(A) - 1, TIRUCHIRAPALLI DATED 25.02.2010 PASSED IN ITA NO.322/09 - 10 ARISING OUT OF PROCEEDINGS UNDER SECTION143(3) OF 2 ITA NO. 803 /MDS./ 11 THE INCOME TAX ACT, 1961. THE RELEVANT ASSESSMENT YEAR IS 2007 - 08. 2. BR IEF FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS A MANUFACTURER AND SUPPLIER OF CLOTH AND ALSO INVOLVED IN THE BUSINESS OF WIND MILL POWER GENERATION , HAD FILED ITS RETURN FOR ASSESSMENT YEAR IN HAND AS RS.1,47,790/ - . THE A.O. SELECTED THE CASE FOR S CRUTINY THEREBY ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. 3. IN ITS ENCLOSURES WITH ITS RETURN , T HE ASSESSEE HAD DECLARED TURNOVER OF RS.34.32 CRORES AND GROSS PROFIT @ 25.12%. IT ALSO DEBITED WEAVING EXPENSES OF RS.85.17 LAKHS, STITCHING EX PENDITURE OF RS.50 LAKHS AND OTHERS AS RS.133 LAKHS. 3.1. THE A.O. FOUND THAT EXCEPT SELF - MADE VOUCHERS, THERE WAS NOTHING IN SUPPORT PRODUCED BY ASSESSEE. THEREFORE, HE MADE ESTIMATED ADDITION OF RS.10 LAKHS IN ASSESSEE S TOTAL INCOME. 3.2. FURTHER, REGARDING ASSESSEE S CLAIM OF DEPRECIATION @ 80% RELATING TO CIVIL AND ELECTRICAL WORKS PERTINENT TO THE WIND MILL IN QUESTION , ASSESSING OFFICER ALLOWED THE SAME ONLY @ 10% BY FOLLOWING THE ASSESSMENT ORDERS OF A.Y.S 2005 - 06 & 2006 - 07 IN ASSESSEE 'S OWN CASE AS UNDER: - WDV DEPRECIATION CLAIMED ALLOWED RS. RS. RS. 3,53,53,775 1,78,62,960 35,35,377 1,37,70,000 5,76,000 13,77,000 33,30,000 3,84,000 3,30,000 60,23,654 6,94,620 6,02,365 TOTAL 1,95,17,58 0 58,44,742 3 ITA NO. 803 /MDS./ 11 3.3. IN THIS MANNER, A.O. COMPUTED THE ASSESSEE S TOTAL INCOME AS RS.71,30,249/ - . 3.4. IN APPEAL, CIT(A) HAS RELIED ON THE DECISION OF ITAT, CHENNAI TRIBUNAL IN ASSESSEE'S OWN CASE DATED 20.12.09 FOR A.Y.2005 - 06 WHEREIN IT HAD BEEN HELD IN ITS FAVOUR AS UNDER: - IN OUR OPINION, THE EXPENSES RELATING TO THE LAND AND FOUNDATION SPECIALLY INCURRED WITH A VIEW OF SERVE THE TECHNICAL REQUIREMENTS WOULD ALSO BECOME A PART OF THE PLANT IN A CASE THAT OF A WIND MILL. IF WE TOOK AT APPENDIX 1 TO THE INCOME TAX RULES, PRESCRIBING THE RATES OF DEPRECIATION, IT CAN BE SEEN THAT LEGISLATURE HAS GIVEN HIGHER DEPRECIATION RATE OF 80% ON ANTI - POLLUTION DEVICES, ENERGY SAVING AND RENEWABLE ENERGY DEVICES. APPARENTLY, THESE HIGHER RATE HAVE BEEN GIVEN NO T SOLELY FOR OFF - SETTING THE IMPAIRMENT IN VALUE OF SUCH ASSETS ON ACCOUNT OF USE, BUT ALSO TO ENCOURAGE SUCH ENTREPRENEURIAL VENTURES WHICH RESULT IN ENERGY SAVINGS OR UTILIZATION OF RENEWABLE ENERGY SOURCES, OR PREVENTION OF POLLUTION. IF A VERY LIMITED MEANING IS GIVEN TO THESE TERMS USED IN APPENDIX I OF THE I. T. RULES, IT WOULD DEFEAT THE VERY PURPOSE FOR WHICH 4 ITA NO. 803 /MDS./ 11 SUCH ENHANCED DEPRECIATION WAS PROVIDED FOR. THEREFORE, IN OUR OPINION, ASSESSEE S CLAIM FOR DEPRECIATION SHOULD BE RESTRICTED IN THE MAN NER MADE BY THE A.O. THEREFORE, THE REVENUE HAS RAISED THE GROUNDS IN THE INSTANT APPEAL RAISING ISSUE OF DEPRECIATION ALLEGING THEREIN THAT CIT(A) HAS WRONGLY ACCEPTED ASSESSEE S CLAIM AS RAISED . 3.5. REITERATING THE SUBMISSIONS MADE IN GROUN DS, THE D.R. HAS ARGUED THAT IN THE INSTANT CASE, THE CIT(A) HAS WRONGLY RELIED ON THE ORDER OF ITAT CHENNAI PASSED IN ASSESSEE'S OWN CASE SINCE THE APPEAL AGAINST THE SAID ORDER IS PENDING BEFORE THE HON BLE JURISDICTIONAL HIGH COURT. HE HAS FURTHER SUBM ITTED THAT THE DEPRECIATION IN QUESTION DOES NOT RELATE TO MACHINERY, FORM ING INTEGRAL PART OF THE WIND MILL. 3.6. OPPOSING THE ARGUMENTS, LD. A.R. HAS SUPPORTED THE FINDINGS OF THE CIT(A) AND PRAYED FOR REJECTION OF THE APPEAL BY RELYING ON DECISION OF HON BLE ITAT CHENNAI IN THE CASE OF M/S.EVEREADY SPINNING MILLS PVT LTD., VS. ACIT DATED 30.11.11 IN ITA NO.1571/MDS./11. 5 ITA NO. 803 /MDS./ 11 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AT LENGTH. ADMITTEDLY, THE ASSESSING OFFICER WHILE REJECTING THE ASSESSEE S CLAIM OF DEPRECIATION, HAD RELIED ON ASSESSMENT ORDER IN A.YS.2005 - 06 & 2006 - 07 DECLINING ASSESSEE S CLAIM OF DEPRECIATION WHEREAS THE CIT(A) HAS TAKEN NOTE OF THE FACT THAT REGARDING THE SAME VERY A.Y.S AS STATED ABOVE, AS SESSEE S APPEAL HAS BEEN ACCEPTED (SUPRA) . 4.1. THEREFORE, IN OUR OPINION, CONTENTION OF THE REVENUE THAT EACH ASSESSMENT Y EAR IS DIFFERENT AND MERE FACT THAT ITS APPEAL AGAINST THE SAID ORDER OF CO - ORDINATE BENCH OF THIS TRIBUNAL IS PENDING BEFORE THE HO N BLE JUR ISDICTIONAL HIGH COURT, ARE NO GROUND TO INTERFERE. APART FROM THIS, THERE IS NO MATERIAL CONTRARY PRODUCED BY REVENUE SO AS TO CONTRADICT THE FINDINGS ARRIVED AT BY CIT(A). 4.2. THEREFORE, BY FOLLOWING PRINCIPLE OF CONSISTENCY , WE FIND NO GR OUND SO AS TO INTERVENE IN ORDER OF THE CIT(A) AND THE APPEAL OF REVENUE STANDS DISMISSED. 6 ITA NO. 803 /MDS./ 11 ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON WEDNESDAY, THE 27 TH JUNE , 2012. SD/ - SD/ - ( DR .O.K.NARAYANAN) ( S.S.GODARA ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 27 TH JUNE , 2012 . K S SUNDARAM COPY TO: ASSESSEE / AO / CIT (A) / CIT / D.R. / GUARD FILE 7 ITA NO. 803 /MDS./ 11