M/s Mount Shivalik Brewereis Ltd., Mohali V. DCIT, Mohali

ITA 82/CHANDI/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0740 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 22-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: TEJ MOHAN SINGHJ
• Keywords: Depreciation
• Section: 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !'# , #$ % & ' ( , )*' BEFORE: SMT.DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, A M ./ ITA NO.82/CHD/2015 / ASSESSMENT YEAR : 2009-10 M/S MOUNT SHIVALIK BREWEREIS LTD., MOHAN GRAME, P.O. BHANKARPUR, MOHALI. THE D.C.I.T., CIRCLE 6(1), MOHALI. ./PAN NO: AAACM9806D /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI TEJ MOHAN SINGHJ, ADV. ! / REVENUE BY : SHRI MANJIT SINGH, SR.DR '# $ /DATE OF HEARING : 05.09.2018 %&'(# /DATE OF PRONOUNCEMENT: 30.11.2018 )+ /ORDER PER ANNAPURNA GUPTA, A.M . : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-2, CHANDIGARH (IN SHORT CIT(A) DATED 31.12.2014 PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 (IN SHORT REFERRED TO A S ACT). 2. AT THE OUTSET, IT WAS POINTED OUT THAT THIS WAS THE SECOND ROUND BEFORE THE I.T.A.T. DRAWING OUR ATTENTION TO THE ORDER OF THE LD.CIT(A) AT PARA 2.1 IT WAS POINTED OUT THAT IN TH E FIRST ROUND BEFORE THE I.T.A.T. THE ISSUES RELATING TO CLAIM O F DEPRECIATION ON EFFLUENT TREATMENT PLANT (IN SHORT REFERRED TO AS ETP) OF RS.20,84,484/- AND FOREIGN TRAVELLING EXPENSES OF M ANAGING DIRECTOR OF RS.14,21,898/- WERE RESTORED TO THE FIL E OF THE A.O. DIRECTING HIM TO RE-EXAMINE THE ISSUE AND ALSO DIRE CTING THE ASSESSEE TO PRODUCE FURTHER EVIDENCE TO SUBSTANTIAT E ITS CLAIM OF ITA NO.82/CHD/2015 A.Y.2009-10 2 DEPRECIATION ON ETP TO RE-EXAMINE THE CLAIM OF FORE IGN TRAVELLING IN THE LIGHT OF THE DETAILS FILED BEFORE THE CIT(A) . IT WAS THEREAFTER STATED THAT BOTH THE ABOVE ADDITIONS WERE RE-AFFIRM ED BY THE A.O. AND THE SAME WERE CONFIRMED BY THE CIT(A). 3. AGGRIEVED BY THE SAME THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. TAKING UP GROUND OF APPEAL NO.1 R ELATING TO DISALLOWANCE OF DEPRECIATION ON ETP AND WHICH READ AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN UPHOLDING THE ADDITION OF RS.20,80,484/- MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON EFFLUENT TREATMENT PLANT WHICH IS ARBITRARY AND UNJUSTIFIED. 4. THE LD. COUNSEL FOR ASSESSEE FIRST TOOK US THROU GH THE ORDER OF THE I.T.A.T. IN THE FIRST ROUND DATED 24.9.2012 RESTORING THE ISSUE BACK TO THE A.O. DRAWING OUR ATTENTION TO PAR AS 8 TO 14 OF THE ORDER WHEREIN THE ISSUE WAS DEALT WITH THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE FACTS RELATING TO THE ISSUE WERE THAT THE ASSESSEE HAD SHOWN AN ADDITION OF RS.41,60 ,961/- ON ACCOUNT OF ADDITION TO ETP ON WHICH DEPRECIATION WA S ALLOWABLE @ 100%. BUT THE ASSESSEE HAD CLAIMED DEPRECIATION @ 50% ONLY, HAVING USED IT FOR LESS THAN 180 DAYS. THUS DEPRECI ATION OF RS.20,80,484/- WAS CLAIMED BY THE ASSESSEE ON THE E TP INSTALLED. IT WAS THEREAFTER POINTED OUT THAT THE A .O. HAD DENIED THE SAID CLAIM OF THE ASSESSEE BY STATING THAT THE INVOICES OF THE PURCHASES OF THE PLANT REVEALED THAT THE PURCHASES WERE MADE FROM NOVEMBER 2008 TO MARCH 2009 FOR THE SAID ETP, WHICH MEANT THAT THE ASSESSEE WAS IN THE PROCESS OF DESIG NING AND INSTALLING THE PLANT AND, THEREFORE, COULD NOT HAVE PUT TO USE IN THE YEAR. THE MATTER WAS CARRIED IN APPEAL BEFORE T HE CIT(A) WHO UPHELD THE ADDITION. THEREAFTER DRAWING OUR ATTENTI ON TO PARA 11 OF THE ORDER THE LD. COUNSEL FOR ASSESSEE POINTED O UT THAT VARIOUS ITA NO.82/CHD/2015 A.Y.2009-10 3 PURCHASE BILLS OF THE PLANT WERE PLACED BEFORE THE I.T.A.T. AND ALSO CLEARANCE CERTIFICATE ISSUED BY PUNJAB POLLUTI ON CONTROL BOARD DATED 20.2.2009 TO PROVE THAT THE ASSESSEE HA D ALREADY PUT THE ETP TO USE. IT WAS POINTED OUT THAT AFTER G OING THROUGH THE CERTIFICATE, THE I.T.A.T. HELD THAT THE SAID CE RTIFICATE WAS ONLY A NO OBJECTION CERTIFICATE FOR RELEASE OF ADDITIONA L POWER AND THE ASSESSEE MUST HAVE APPROACHED THE ELECTRICITY AUTHO RITIES FOR RELEASE OF POWER ONLY THEREAFTER AND AFTER WHICH TH E PLANT COULD NOT HAVE BEEN OPERATED AND SINE NO FURTHER EVIDENCE WAS FILED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM OF HAVING PU T THE ETP TO USE IN THE YEAR ITSELF, THE MATTER WAS RESTORED BAC K TO THE A.O. FOR RE-EXAMINATION. THE LD. COUNSEL FOR ASSESSEE TH EREAFTER DREW OUR ATTENTION TO THE ASSESSMENT ORDER FRAMED THEREA FTER AND POINTED OUT THAT THE ASSESSEE DURING THE COURSE OF PROCEEDINGS BEFORE THE A.O. HAD FILED ADDITIONAL DOCUMENTS AS P ROOF OF HAVING INSTALLED THE ETP DURING THE YEAR AS UNDER: I) BREWER AND ENGINEER CERTIFICATE II) PSEB DEMAND NOTICE FOR INCREASE IN LOAD III) PPCB CLEARANCE CERTIFICATE DATED 20.2.2009 IV) PPCB CONSENT DATED 26.2.2009 5. IT WAS THEREAFTER POINTED OUT THAT THE A.O. HAD REJECTED ALL THE ABOVE EVIDENCES AS NOT BEING SUFFICIENT TO PROV E THE ASSESSEES CLAIM HOLDING THAT BREWER CERTIFICATE WA S ISSUED BY CHIEF ENGINEER AND BREWER OF THE ASSESSEE COMPANY A ND, THEREFORE, COULD NOT BE RELIED UPON AND REST OF THE EVIDENCES ONLY SHOWED THAT THE ASSESSEES REQUEST FOR ADDITIONAL L OAD HAD BEEN PROVED AND NONE OF THE DOCUMENTS GAVE A CLEAR CUT I DEA ABOUT THE ACTUAL DATE WHEN THE PLANT WAS PUT TO USE. IT WAS THEREAFTER POINTED OUT THAT THE A.O. CONDUCTED HIS OWN ENQUIRI ES BY ITA NO.82/CHD/2015 A.Y.2009-10 4 SEEKING INFORMATION U/S 133(6) OF THE ACT FROM THE ADDITIONAL SUPERINTENDENT ENGINEER, OPERATION DIVISION (PSPCL) , LALRU, PUNJAB REGARDING THE DATE ON WHICH THE ADDITIONAL P OWER LOAD OF 350.064 KW WAS ACTUALLY SANCTIONED BY PSEB (NOW PSP CL) TO THE ASSESSEE. IT WAS POINTED OUT FROM THE ORDER THAT TH E SAME WAS STATED TO HAVE BEEN GRANTED TO THE ASSESSEE ONLY ON 20.5.2009. THE SAID INFORMATION WAS CONFRONTED TO THE ASSESSEE WHO STATED IN REPLY THAT NEW ETP HAD RUN ON THE EXISTING POWER LOAD AVAILABLE WITH THE COMPANY. THE A.O. DISMISSED THIS CONTENTION OF THE ASSESSEE STATING THAT THE ASSESSEE HAD NEVER BEFORE RAISED THIS CONTENTION BEFORE ANY OF THE AUTHORITIES I.E. THE A.O., CIT(A) OR EVEN I.T.A.T. IN THE FIRST ROUND. HE, THEREFORE, HELD THAT SINCE THE LOAD TO RUN THE PLANT WAS GRANTED ONLY IN THE N EXT FINANCIAL YEAR, THE ASSESSEE COULD NOT HAVE POSSIBILITY PUT T O USE THE ETP IN THE IMPUGNED YEAR. THE DEPRECIATION CLAIMED BY T HE ASSESSEE OF RS.20,80,484/- WAS ACCORDINGLY DISALLOWED BY THE A.O. IT WAS THEREAFTER POINTED OUT THAT THE CIT(A) ALSO UPHELD THE DISALLOWANCE FOR THE SAME REASON. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE LD.CIT(A) AT PARA 3.3 OF HIS OR DER AS UNDER: 3.3 I HAVE CONSIDERED THE FACTS OF THE ISSUE. THE APPELLANT HAD PRODUCED CERTAIN DOCUMENTS BEFORE THE ASSESSING OFF ICER, WHICH HAVE RIGHTLY BEEN REJECTED BY THE ASSESSI NG OFFICER, SINCE THESE WERE NOT RELEVANT TO DECIDE AS TO WHEN THE EFFLUENT TREATMENT PLANT WAS PUT TO USE. THE CERTIFICATE ISSUED BY THE BREWER AND ENGINEER OF APPELLANT COMPANY HAS RIGHTLY BEEN REJECTED BY THE ASSESSING OFFICER, SINCE IT HAS BEEN SIGNED BY THE APPELLANT'S OWN EMPLOYEE. THE OFFICE OF ADDITIONAL SUPERI NTENDENT ENGINEER HAS CONFIRMED THAT THE ADDITIONAL POWER LOA D WAS GRANTED TO THE APPELLANT ONLY ON 20.05.2009 AND THE EFFLUENT TREATMENT PLANT COULD NOT HAVE BEEN PUT INTO OPERAT ION WITHOUT THE ADDITIONAL POWER LOAD. THE CONTENTION O F THE APPELLANT IS THAT THE SAID PLANT WAS RUN ON THE EXI STING POWER LOAD, BUT IT IS NOT POSSIBLE TO RUN SUCH A HEAVY PL ANT WITHOUT ADDITIONAL POWER LOAD AND THE ELECTRICITY DE PARTMENT WOULD NOT PERMIT THE SAME. MOREOVER, THIS ARGUMENT WAS NEVER TAKEN IN THE ORIGINAL ASSESSMENT PROCE EDINGS OR IN THE APPELLATE PROCEEDINGS. THEREFORE, IT IS HELD THAT THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE DEPRECIA TION AND HER ITA NO.82/CHD/2015 A.Y.2009-10 5 ACTION IN THIS REGARD IS ACCORDINGLY UPHELD. GROUND OF APPEAL NO. 1 IS DISMISSED. 6. THEREAFTER THE LD. COUNSEL FOR ASSESSEE MADE DET AILED SUBMISSIONS BEFORE US DESCRIBING THE NATURE OF THE BUSINESS OF THE ASSESSEE OF BEING MANUFACTURING AND SALES OF BE ER AND THAT IT ITS FIRST ETP WAS INSTALLED IN FINANCIAL YEAR 1972- 73 WHEN THE FIRST BREWERY WAS SET UP AND THEREAFTER ITS UPGRADA TION WAS DONE AROUND 3-4 TIMES. IT WAS CONTENDED THAT THE ASSESSE E HAS ONLY ONE ETP AND THE ADDITION MADE DURING THE YEAR WAS O NLY BY WAY OF ENHANCING THE CAPACITY OF ETP FROM 100 KLD TO 15 6 KLD. IT WAS POINTED OUT THAT ETP WAS PURCHASED FROM M/S LAR S ENVIRO PVT. LTD. AND PUT TO USE ON 27.1.2009 AS PER THE CH IEF BREWER CERTIFICATE. THE DIFFERENT COMPONENTS OF THE ETP WE RE POINTED OUT TO US AND THAT OUT OF VARIOUS COMPONENTS 3 WERE PRE FABRICATED WHILE THE BALANCE WAS CIVIL WORK DONE AT THE SITE O F THE ASSESSEE. THE ASSESSEE THEREAFTER CONTENDED THAT THE AVERAGE POWER LOAD NEEDED TO RUN ETP PLANT WAS 70 KW AND AFTER INSTALL ATION OF ETP ON 27.1.2009 AND ITS COMMISSIONING IMMEDIATELY AFTE R RECEIVING THE CONSENT LETTER FROM PPCB ON 20.2.2009, THE ETP WAS PUT TO USE ON THE EXISTING POWER LOAD ITSELF SINCE THIS WA S OFF SEASON OF BEER INDUSTRY AND EXTRA LOAD WASNOT REQUIRED ON ACC OUNT OF THE LOW CAPACITY PRODUCTION OF BEER DURING THIS PERIOD. IT WAS POINTED OUT THAT THE INCREASE IN POWER LOAD WAS THE REAFTER MADE AVAILABLE ON 27.5.2009. THE WRITTEN SUBMISSIONS TO THIS EFFECT WERE FILED BEFORE US DATED 5.9.2018 AS UNDER: RESPECTFULLY SUBMIT AS UNDER: - 1. MOLSON COORS INDIA PVT. LTD., FORMERLY KNOWN AS M OUNT SHIVALIK BREWERIES LTD., WAS INCORPORATED ON 31 ST OCTOBER,1972, AND STARTED BUSINESS OF MANUFACTURING/SALES OF B EER AT BHANKARPUR, DERABASSI. 2. THAT THE FIRST EFFLUENT TREATMENT PLANT (HEREINAF TER MENTIONED AS ETP),WAS INSTALLED IN FINANCIAL YEAR 1972-73, WH EN THE ITA NO.82/CHD/2015 A.Y.2009-10 6 FIRST BREWERY WAS SET UP IN BHANKARPUR AND THEREAFT ER ITS UPGRADATION WAS DONE AROUND 3-4 TIMES, AS PER THE N EED OF THE PLANT. 3. THAT DURING THE YEAR UNDER CONSIDERATION, ETP WAS INSTALLED ON 27.01.2009 AND WAS COMMISSIONED IMMEDIATELY AFTER RECEIVING CONSENT LETTER DATED 20.02.2009 FROM PUNJ AB POLLUTION CONTROL BOARD. SINCE THIS PERIOD BEING OF F SEASON FOR BEER INDUSTRY, THE EXISTING POWER LOAD WAS SUFFICIENT FOR THE COMMISSIONING OF NEW ETP PLANT. THE INCREASE IN POWER LOAD FROM 1164.844KW BY 350.064 KW WAS MADE AVAILA BLE ON DATED 27.05.2009, AFTER RECEIPT OF SANCTION FROM PSEB. 4. THAT THE UNIT HAS ONLY ONE ETP, OF WHICH CAPACIT Y WAS ENHANCED FROM 100 KLD TO 156 KLD. (KILO LITERS PER DAY.) 5. THAT THIS ETP WAS PURCHASED FROM M/S LARS ENVIRO PVT. LTD. & HAD BEEN INSTALLED & COMMISSIONED AT MOUNT SHIVALIK BREWERIES LTD, BHANKARPUR AND PUT TO USE O N 27 TH JANUARY,2009. NO TRIAL RUN WAS REQUIRED FOR THIS TYPE OF PLANT. THAT THE AVERAGE TIME REQUIRED TO IN STALL THIS PLANT AROUND 5-6 MONTHS 6. EFFLUENT TREATMENT PLANT OR ETP IS ONE TYPE OF WASTE WATER TREATMENT METHOD WHICH IS PARTICULARLY DESIGN ED TO PURIFY INDUSTRIAL WASTE WATER. ITS AIM IS TO REL EASE SAFE WATER TO ENVIRONMENT FROM THE HARMFUL EFFECT CAUSED BY THE EFFLUENT THE QUANTITY & QUALITY OF WASTE WATER GENERATION FLUCTUATES DEPENDING ON OPERATION LIKE RAW MATERIAL HANDLING, WORT PREPARATION, FERMENTATION, WATER CONSUMPTION, SOLID LIQUID SEPARATION, PACKAGING ETC . THE EFFLUENT DISCHARGED IS HIGHLY ORGANIC & ACIDI C IN NATURE WITH HIGH COD, BOD, CONSISTING OF EASILY BIODEGRADABLE SUGARS, SOLUBLE STARCH, ETHANOL, VOLA TILE, FATTY ACID, SUSPENDED SOLIDS, YEAST ETC. WHICH MAY POLLUTE THE WATER BODIES CONSIDERABLY IF DRAINED AS SUCH. IN ORDER TO MEET REQUIREMENTS OF CPCB/PPCB, E TP PLANT IS INSTALLED WHICH CONSISTS OF FOLLOWING: COL LECTION TANK 1. UASB REACTOR 2. PRIMARY CLARIFIER 3. AEROBIC TREATMENT TANK 4. SECONDARY CLARIFIER 5. SAND FILTER 6. ACTIVATED CARBON FILTER 7. STUDGE DRYING BEDS THAT OUT OF THE ABOVE COMPONENTS OF THE PLANT SAND FILTER AND ACTIVATED CARBON IS PREFABRICATED AND BALANCE IS CIVIL WORK WHICH IS DONE AT THE SITE. ITA NO.82/CHD/2015 A.Y.2009-10 7 AVERAGE POWER LOAD NEEDED TO RUN THE ETP PLANT IS 70KW. THAT TOTAL AREA COVERED BY THIS PLANT IS AROUND 3458 SQUARE METERS. THE DIMENSIONS OF THE COMPONENTS OF ETP ARE AS UNDER: - NAME OF UNIT DIMENSIONS COLLECTION SUMP 2X2.8X2.5 BUFFER TANK DIA: 8MM, SWD:2.7 UASB REACTOR DIA:9.5M, SWD-6 AERATION LAGOON (EQUALIZATION TANK) 13.5XL3.5X2.75 CLARIFIER DIA: 8M, SWD:2.75M DIA:6X8M MCC ROOM/LAB 4X6 SDB -10X7.6NOS FLARE STACK DIA:0.06M THAT THE PHOTOGRAPHS ARE ENCLOSED FOR YOUR READY REFEREN CE. 7. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, CONTEND ED THAT THE ETP BEING CAPABLE OF RUNNING OF THE EXISTING POWER LOAD THE DENIAL OF CLAIM OF DEPRECIATION MERELY BECAUSE THE ADDITIONAL LOAD WAS SANCTIONED IN THE SUCCEEDING YEAR WAS WRON G. THE LD. COUNSEL FOR ASSESSEE FURTHER STATED THAT IN ANY CAS E DENIAL OF DEPRECIATION WAS TAX NEUTRAL ACTION SINCE THE ASSET WAS ELIGIBLE FOR DEPRECIATION @ 100% WHICH HAVING BEEN DENIED I N THE IMPUGNED YEAR TO THE EXTENT OF 50% AS CLAIMED BY TH E ASSESSEE, WAS TO BE ALLOWED COMPLETELY @ 100% IN THE SUCCEEDI NG YEAR AND THAT THE ASSESSEE HAD RETURNED SUFFICIENT PROFITS I N BOTH THE YEARS. THEREFORE, THE ADDITIONAL TAXES COLLECTED IN THE IMPUGNED YEAR WOULD BE REQUIRED TO BE REFUNDED IN THE SUCCEE DING YEAR ON ACCOUNT OF THE SAID ACTION OF THE A.O. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE TO BE DETERMINED A ND ADJUDICATED IS WHETHER THE ASSESSEE WAS ABLE TO EST ABLISH THAT ITA NO.82/CHD/2015 A.Y.2009-10 8 ITS ETP WAS INSTALLED AND PUT TO USE DURING THE YEA R, ENABLING IT TO CLAIM DEPRECIATION ON THE SAME. THE FACTS WHICH ARE NOT DISPUTED ARE THAT ALL THE PURCHASE BILLS RELATING T O VARIOUS COMPONENTS NECESSARY FOR CONSTRUCTION OF ETP RELATE TO THE PERIOD UP TO MARCH, 2009 OF THE IMPUGNED YEAR AND N ONE OF THE BILLS PERTAIN TO THE SUCCEEDING YEAR. ALSO THE ASSE SSEE HAD OBTAINED NO OBJECTION CERTIFICATE FROM THE PUNJAB P OLLUTION CONTROL BOARD FOR RELEASE OF ADDITIONAL POWER LOAD OF 350.064 KW TO THE ASSESSEE AND HAD ALSO OBTAINED SANCTION FROM THE SAID BOARD FOR DISCHARGE OF EFFLUENT OUT OF THE PREMISES OF THE ASSESSEE BREWERIES BY END OF FEBRUARY, 2009 IN THE FORM OF CLEARANCE CERTIFICATE ISSUED BY THE BOARD DATED 20. 2.2009 AND CONSENT LETTER GIVEN BY THE BOARD FOR DISCHARGE OF EFFLUENT DATED 26.2.2009. FURTHER THE CHIEF ENGINEER AND CHIEF BRE WER OF THE ASSESSEE COMPANY HAD CERTIFIED ETP HAVING BEEN INST ALLED AND COMMISSIONED AND THUS PUT TO USE ON 27.02.2009. THU S THE ABOVE FACTS UNDENIABLY PROVE THAT THE PLANT WAS INS TALLED BEFORE THE CLOSE OF THE YEAR AND ONLY REASON FOR RESTORING THE ISSUE BACK TO THE A.O. IN THE FIRST ROUND BY THE I.T.A.T. WAS THAT THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE THAT THE ASSE T WAS PUT TO USE ALSO DURING THE YEAR SINCE NO EVIDENCE IN THIS REGARD WAS FILED BY THE ASSESSEE HAVING FURNISHED ONLY THE CLE ARANCE CERTIFICATE FROM PPCB FOR RELEASE OF ADDITIONAL POW ER LOAD BUT NO EVIDENCE OF HAVING TAKEN THE SAME HAD BEEN FILED. T HUS WHAT THE ASSESSEE WAS REQUIRED TO PROVE WAS THAT ETP HAD BEE N PUT TO USE DURING THE YEAR, ITS INSTALLATION FOR ALL PURPOSES NOT BEING IN DISPUTE. THE ASSESSEE IN THIS REGARD, WE FIND, HAS STATED THAT BEING INSTALLED, THE ETP WAS READY FOR USE ALSO SIN CE IT WAS CAPABLE OF BEING USED WITH THE AVAILABLE POWER CAPA CITY WITH THE ITA NO.82/CHD/2015 A.Y.2009-10 9 ASSESSEE SINCE IT WAS THE LEAN PERIOD OF WORKING OF THE ASSESSEE BREWERY AND LESS LOAD WAS REQUIRED FOR RUNNING THE ETP. THE REVENUE, ON THE OTHER HAND, HAS DISPUTED THIS CLAIM E OF THE ASSESSEE STATING THAT IT HAD NOT TAKEN THIS GROUND EARLIER BEFORE THE AUTHORITIES IN THE FIRST ROUND AND FURTHER FOR THE REASON THAT ADDITIONAL LOAD WAS PROVIDED ONLY IN THE SUBSEQUENT YEAR. ON THIS BASIS THE REVENUE HAS RESTED ITS CASE THAT THE ASSESSEES CONTENTION OF PUTTING ETP TO USE IN THE CURRENT YEA R CANNOT BE BELIEVED AND SINCE ADDITIONAL LOAD WAS SANCTIONED I N THE SUCCEEDING YEAR ONLY IT WAS TO BE TREATED AS HAVING BEEN PUT TO USE IN THE SUCCEEDING YEAR ONLY. WE DO NOT FIND ANY REASON TO DISBELIEVE THE CONTENTION OF THE ASSESSEE THAT ETP WAS PUT TO USE ON THE EXISTING LOAD AVAILABLE WITH THE ASSESSEE. T HE CONTENTION OF THE ASSESSEE THAT EXISTING LOAD WAS SUFFICIENT F OR COMMISSIONING OF THE NEW ETP PLANT SINCE THIS PERIO D WAS THE OFF SEASON FOR THE BEER INDUSTRY, WE FIND THAT THE REVE NUE HAS NOT CONTROVERTED THE SAME. THE REVENUE HAS NOT DISPUTED THE FACT THAT THIS WAS THE LEAN PERIOD FOR THE BEER INDUSTRY . THEREFORE, IT LOGICALLY FOLLOWS THAT THE POWER LOAD REQUIRED TO R UN THE ASSESSEES BREWERY BEING FAR LESS THAN THE NORMAL A ND THE ASSESSEE COULD HAVE MANAGED TO RUN THE SAME WITH TH E EXISTING POWER LOAD. THE CONTENTION OF THE REVENUE, THEREFOR E, THAT IT WAS NOT POSSIBLE TO RUN SUCH A HEAVY PLANT WITHOUT ADDI TIONAL POWER LOAD IS, THEREFORE, WITHOUT ANY MERITS AND IS DISMI SSED BY US. MOREOVER, WE DO NOT FIND ANY MERIT IN THE CONTENTIO N OF THE REVENUE THAT THIS PLEA OF THE ASSESSEE IS UNACCEPTA BLE FOR THE REASON THAT IT WAS NOT RAISED BY THE ASSESSEE BEFOR E THE AUTHORITIES EARLIER IN THE FIRST ROUND. THE MERITS OF THE CONTENTION ARE TO BE JUDGED ON THE BASIS OF THE FAC TS ON WHICH IT ITA NO.82/CHD/2015 A.Y.2009-10 10 IS BASED AND HAVE NOTHING TO DO WITH THE POINT OF T IME WITH WHICH THEY ARE RAISED. THE FACT THAT THIS WAS THE L EAN PERIOD OF THE BEER INDUSTRY AND, THEREFORE, THE BREWERY WAS C APABLE OF BEING RUN ON FAR LESS THAN NORMAL ELECTRICITY LOAD HAVING NOT BEEN DISPUTED, THERE WAS MERIT IN THE CLAIM OF THE ASSESSEE THAT THE ADDITION MADE TO THE CAPACITY OF THE EXISTING E TP PLANT IN THE IMPUGNED YEAR WAS CAPABLE OF RUNNING ON THE AVA ILABLE POWER LOAD AND WITHOUT POINTING ANY FALSITY IN THE CONTEN TION RAISED BY THE ASSESSEE THE SAME CANNOT BE REJECTED MERELY FOR THE REASON THAT IT WAS NOT RAISED EARLIER BY THE ASSESSEE. MOR EOVER WE ALSO FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT T HE ENTIRE EXERCISE OF DISALLOWANCE OF DEPRECIATION IS A TAX N EUTRAL EXERCISE SINCE THE DEPRECIATION DISALLOWED IN THE IMPUGNED Y EAR IS ELIGIBLE FOR ALLOWANCE IN THE SUCCEEDING YEAR SINCE THE ASSE SSEE AS PER THE REVENUE AUTHORITIES HAD PUT TO USE THE ETP IN T HE SUCCEEDING YEAR AND RATE OF DEPRECIATION ON THE SAME @ 100% IS NOT DISPUTED. FURTHER THE ASSESSEE HAS CONTENDED THAT I T HAD RETURNED SUFFICIENT PROFITS IN BOTH THE YEARS AND, THEREFORE, THE TAX DEMAND RAISED IN THE IMPUGNED YEAR BY DENIAL OF DEDUCTION ON DEPRECIATION CLAIMED BY THE ASSESSEE ON ETP PLAN T WOULD BE REQUIRED TO BE REFUNDED IN THE SUCCEEDING YEAR BY G RANTING DEPRECIATION IN THE SAID YEAR. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE WE HOLD THAT THE INSTALLA TION OF THE ETP IN THE IMPUGNED YEAR NOT BEING IN DISPUTE AND T HE ASSESSEE HAVING PROVED THAT ETP WAS CAPABLE OF BEING RUN ON THE EXISTING LOAD AVAILABLE WITH THE ASSESSEE IN THE IMPUGNED PE RIOD BEING A LEAN PERIOD IN THE BEER INDUSTRY THE FACTUM OF ETP BEING PUT TO USE IN THE IMPUGNED YEAR STANDS ESTABLISHED. THE AS SESSEE IS, THEREFORE, WE HOLD, IS ELIGIBLE TO CLAIM DEPRECIATI ON @ 50% OF THE ITA NO.82/CHD/2015 A.Y.2009-10 11 VALUE OF THE ASSET. THE ORDER PASSED BY THE CIT(A) DENYING THE SAID CLAIM IS, THEREFORE, SET ASIDE AND GROUND NO.1 RAISED BY THE ASSESSEE IS, THEREFORE, ALLOWED. 10. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE A DDITION OF RS.12,04,703/- MADE ON ACCOUNT OF DISALLOWANCE OF FO REIGN TRAVEL EXPENSES WHICH IS ARBITRARY AND UNJUSTIFIED. THE ABOVE GROUND RELATES TO THE DISALLOWANCE OF FOR EIGN TRAVELING EXPENSES MADE BY THE A.O. AND UPHELD BY T HE CIT(A) TO THE EXTENT OF RS.12,04,703/-. 11. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS.14,21,898 /- ON ACCOUNT OF FOREIGN TRAVELLING OF THE MANAGING DIRECTOR ( MD) OF THE ASSESSEE COMPANY. THE ASSESSEE HAD SUBMITTED IN THE ORIGINAL ASSESSMENT PROCEEDINGS THAT THE VISITS WER E FOR BUSINESS PURPOSES, BUT HAD NOT FILED ANY DOCUMENTARY EVIDENC ES TO PROVE THAT THE SAID EXPENSES WERE INCURRED WHOLLY AND EXC LUSIVELY FOR BUSINESS PURPOSES AND SO THE ENTIRE AMOUNT WAS DISA LLOWED. THE ASSESSEE HAD FILED CERTAIN EVIDENCES IN APPELLATE P ROCEEDINGS BEFORE COMMISSIONER OF INCOME TAX (APPEALS), BUT RE ASON FOR NOT SUBMITTING THE SAME BEFORE THE ASSESSING OFFICER HA D NOT BEEN GIVEN AND SO THESE WERE NOT ACCEPTED AND THE ADDITI ON WAS CONFIRMED. THE ITAT DIRECTED THE ASSESSING OFFICER TO RE-EXAMINE THE ISSUE BY CONSIDERING THE DETAILS FILED BEFORE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE ACCORDINGLY PRO DUCED CERTAIN DOCUMENTS BEFORE THE A.O. IN THE SECOND ROUND, WHIC H WERE REJECTED AS NOT SUFFICIENT FOR ESTABLISHING THE FAC TUM OF HAVING INCURRED EXPENDITURE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE STATING THAT THEY ONLY GAV E THE DETAILS ITA NO.82/CHD/2015 A.Y.2009-10 12 OF THE EXPENSES INCURRED AND ONLY PROVED THE FACTUM OF EXPENDITURE HAVING BEEN INCURRED WITHOUT ESTABLISHI NG THAT THEY WERE INCURRED FOR THE PURPOSE BUSINESS OF THE ASSES SEE. THE A.O., HOWEVER, ALLOWED THE EXPENDITURE TO THE EXTEN T OF RS.2,17,195/- INCURRED BY THE MANAGING DIRECTOR (IN SHORT MD) ON HIS TRIP TO GERMANY ON FINDING THAT EXPENSES OF THE EMPLOYEES OF THE ASSESSEE COMPANY ON THE TRIP UNDERTAKEN TO G ERMANY HAD BEEN ALLOWED BY THE A.O. AND ON HOLDING THAT THE SA ID AMOUNT WAS SUFFICIENT FOR INCURRING ON MD OF THE COMPANY W HILE THE REMAINING WAS DISALLOWED HOLDING THE SAME TO BE EXT RAVAGANT AND HOLDING THAT THE SOME PERSONAL ELEMENT COULD HA VE ALSO BEEN INVOLVED IN THE SAME. THE LD.CIT(A) UPHELD THE ORDE R OF THE A.O. 12. BEFORE US, THE LD. COUNSEL FOR ASSESSEE REITERA TED THE CONTENTIONS MADE BEFORE THE LOWER AUTHORITIES STATI NG THAT THE MD OF THE COMPANY HAD UNDERTAKEN TWO TRIPS ONE TO U .K. AND THE OTHER TO GERMANY. IT WAS CONTENDED THAT IN U.K. THE MD HAD VISITED THE BREWERIES IN EDINBURGH, UK, NAMELY HEIN EKEN, WHICH HAD ACQUIRED THE UK BUSINESS OF SCOTTISH & NEW CAS TLE AND SCOTTISH COURAGE BREWING LTD. IN APRIL, 2008 AND TO EXPLORE NEW TECHNICAL AND BUSINESS OPPORTUNITIES IN THE BEE R BUSINESS. IT WAS CONTENDED THAT THE MD HAD STAYED AT HOTEL BA LMORAL, EDINBURGH. COPY OF BRIEF PROFILE OF THE HEINEKEN UK WAS ALSO FILED. AS FAR AS THE TRIP UNDERTAKEN TO GERMANY, IT WAS CONTENDED THAT THE MAIN PURPOSE WAS TO ATTEND THE ANNUAL EURO PEAN TRADE FAIR FOR THE BEVERAGE INDUSTRY NAMED THE BRAU BEVI LE 2008 IN NUREMBERG, GERMANY WHICH WAS ONE OF THE MOST IMPORT ANT EUROPEAN TRADE FAIRS FOR PRODUCTION AND MARKETING O F BEER AND SOFT DRINKS. IT WAS FURTHER CONTENDED THAT THE EXPE NDITURE INCURRED ON THE TRIP OF THE EMPLOYEES OF THE ASSESS EE COMPANY TO ITA NO.82/CHD/2015 A.Y.2009-10 13 GERMANY, NUREMBERG HAD BEEN ALLOWED BY THE A.O. AND , THEREFORE, THERE WAS NO REASON TO DISALLOW A PORTIO N OF THE EXPENDITURE INCURRED ON THE MD ALSO ON THE SAME TRI P. 13. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW STATING THAT THE ASSESSEE HAD ONLY RAISED GENERAL CONTENTIONS AND HAD FAILED TO PROVE WITH EV IDENCE THE BUSINESS PURPOSE OF THE TRIPS UNDERTAKEN AND FURTHE R THAT THE TRIP UNDERTAKEN TO GERMANY NUREMBERG HAD BEEN RIGHT LY DISALLOWED TO THE EXTENT OF RS.3,27,030/- SINCE THE PERSONAL ELEMENT COULD NOT BE RULED OUT IN THE SAME AND ALSO THAT THE EXPENDITURE INCURRED WERE EXCESSIVE SINCE WHILE A S UM OF RS.2,17,195/- WAS SPENT ON THE TRIP OF ONE EMPLOYEE THE AMOUNTS SPENT ON THE TRIP OF MD WAS RS.5,44,225/- W HICH WAS UNREASONABLE AND EXCESSIVE AND THIS RIGHTLY DENIED BY THE REVENUE AUTHORITIES. 14. WE HAVE HEARD THE RIVAL CONTENTIONS. VIS--VIS THE CLAIM OF THE ASSESSEE OF FOREIGN TRAVELLING EXPENSES INCURRE D ON THE TRIPS UNDERTAKEN TO UK WE AGREE WITH THE REVENUE AUTHORIT IES THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE TRIP WAS UNDE RTAKEN FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE ONLY EVIDE NCE, WE FIND, WHICH HAVE BEEN FILED BY THE ASSESSEE GIVES THE DET AILS OF THE TRIP AND PROOF OF EXPENSES INCURRED BY WAY OF BILLS OF T RAVEL AGENT AND BILLS OF FOREIGN EXCHANGE PURCHASED. NO EVIDENCE TO PROVE THE VISIT OF THE MD TO BREWERIES IN EDINBURGH HAD BEEN FILED, NOR ANY OTHER EVIDENCE TO PROVE THAT THE TRIPS WERE UNDERTA KEN FOR BUSINESS PURPOSE. THEREFORE, WE UPHOLD THE ORDER OF THE LD.CIT(A) IN DISALLOWING THE CLAIM OF FOREIGN TRAVE LLING EXPENSES INCURRED ON THE TRIP UNDERTAKEN BY THE MD OF THE AS SESSEE COMPANY TO UK. AS FAR AS THE TRIP UNDERTAKEN BY THE MD OF THE ITA NO.82/CHD/2015 A.Y.2009-10 14 ASSESSEE COMPANY TO GERMANY, WE FIND MERIT IN THE C ONTENTION OF THE ASSESSEE. ADMITTEDLY, THE BUSINESS PURPOSE OF T HE TRIP TO GERMANY STANDS ESTABLISHED AND ACCEPTED BY THE A.O. WHILE ALLOWING EXPENSES INCURRED ON OTHER EMPLOYEES OF TH E ASSESSEE COMPANY WHO HAD ACCOMPANIED THE MD ON THE SAID TRIP . HAVING ACCEPTED THE SAME, HE HAS ALLOWED THE EXPENSES INCU RRED ON THE MD BUT HAS RESTRICTED IT TO THE EXTENT OF RS.2,17,1 95/- DISALLOWING EXPENDITURE TO THE EXTENT OF RS.3,27,03 0/- FOR THE REASON THAT HE FOUND THE SAME TO BE EXCESSIVE AS CO MPARED TO OTHER EMPLOYEES AND PERSONAL USE COULD NOT BE RULED OUT FOR THE SAME. WE CANNOT AGREE WITH THIS CONTENTION OF THE R EVENUE. THERE IS NO JUSTIFICATION FOR HOLDING THE EXPENSES INCURRED ON THE MD AS EXCESSIVE. SURELY THE STATURE OF AN MD IF FAR ABOVE THAT OF THE OTHER EMPLOYEES OF THE COMPANY AND THEREFORE T HE EXPENSES CANNOT BE SAID TO BE EXCESSIVE BY COMPARING WITH TH E QUANTUM INCURRED ON OTHER EMPLOYEES.EVEN WHILE DISALLOWING EXPENSES FOR PERSONAL USAGE, ONLY GENERAL STATEMENTS HAVE B EEN MADE THAT SOME PERSONAL ELEMENT MUST BE INVOLVED IN THE TRIP TO GERMANY. THERE IS THEREFORE WE FIND NO BASIS EITHER FOR HOLDING THE EXPENSES INCURRED ON THE MDS TRIP TO GERMANY E XCESSIVE OR PERSONAL. THE REVENUE CANNOT DENY THE CLAIM OF EXPE NDITURE ON WHIMS AND FANCIES. THE SAME IS, THEREFORE, NOT ACCE PTABLE. IN VIEW OF THE SAME, WE HOLD THAT THE DENIAL OF CLAIM OF EXPENDITURE INCURRED ON THE TRIP OF THE MD OF THE ASSESSEE COMP ANY TO GERMANY WAS UNWARRANTED AND UNCALLED FOR AND THE SA ME IS DIRECTED TO B ALLOWED TO THE ASSESSEE. THE DISALLOW ANCE OF CLAIM OF EXPENDITURE, THEREFORE, TO THE EXTENT OF RS.3,27 ,030/- IS DELETED. ITA NO.82/CHD/2015 A.Y.2009-10 15 IN EFFECT THE CLAIM OF EXPENDITURE INCURRED ON THE TRIP OF MD TO UK IS DENIED WHILE THAT ON THE TRIP TO GERMANY I S ALLOWED IN TOTALITY. THE GROUND OF APPEAL NO.2 RAISED BY THE A SSESSEE IS, THEREFORE, PARTLY ALLOWED. 15. IN EFFECT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- $ %' & ( (DIVA SINGH) (ANNAPURNA GUPTA) ,' / JUDICIAL MEMBER )*' / ACCOUNTANT MEMBER $ /DATED: 30 TH NOVEMBER, 2018 * * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR