Mepro Pharmaceuticals Pvt. Ltd., Surendranagar V. The Assistant Commr. Income Tax, Surendranagar Circle, Surendranagar

ITA 84/RJT/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1617 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 14-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Assessee Lawyers: DM RINDANI
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.84/RJT/2016 (ASSESSMENT YEAR : 2011-12) MEPRO PHARMACEUTICALS PVT.LTD. 1003, GIDC WADHWAN SURENDRANAGAR VS. THE ACIT SURENDRANAGAR CIRCLE SURENDRANAGAR [PAN NO.AABCM 4177 G] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI D.M. RINDANI, AR RESPONDENT BY : SHRI PRAVIN VARMA, SR.DR DATE OF HEARING 29/08/2018 DATE OF PRONOUNCEMENT 30/ 08 /2018 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL HAS BEEN FILED BEFORE US BY TH E ASSESSEE AGAINST THE ORDER DATED 01.01.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-7, AHMEDABAD [LD.CIT(A) IN SHORT] FOR ASSESSMENT YEAR (AY) 2011 -12 ARISING OUT OF THE ORDER DATED 20.03.2014 PASSED BY THE ACIT, SURENDRANAGAR CIRCL E, SURENDRANAGAR. 2. THE LD. AR HAS NOT BEEN PRESSED GROUND NO.1 AND THEREFORE THE SAME IS REJECTED AS SUCH. 3. THE SECOND GROUND OF APPEAL PERTAINS TO IN ALTERNATIVELY NOT GRANTING DEPRECIATION ON SAME MACHINERY U/S.32 OF THE ACT. THE CASE OF THE ASSESSEE IS THIS THAT THEY HAVE PRAYED FOR DEPRECIATION BEFORE THE LD. ASSESSING OFFICER (AO) ON THE BASIS OF THE EXPENSES INCURRED DURING THE AY 2011-12 WHICH WAS DENIED BY THE AUTHORITIES BELOW. - 2 - ITA NO. 84/RJT/2016 MEPRO PHARMACEUTICALS PVT.LTD. VS. ACIT ASST.YEAR 2011-12 4. THE LD.AR ALSO TAKEN US TO PARAGRAPH NO.6.6 OF T HE ORDER PASSED BY THE AO IN SUPPORT OF HIS ARGUMENTS WHICH IS AS FOLLOWS: 6.6. THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE OF ACTIVITIES CARRIED OUT BY IT AND FILE EVIDENCE OF THE SAME. THE ASSESSEE COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE REGARDING EXPENSES INCURRED IN RESPECT OF SCIENTIFIC RESEARCH EXCEPT COPIES OF PURCHASE BILLS OF MACHINERIES PURCHASE DURING TH E YEAR. IT WAS CLAIMED THAT THE EXPENSES WERE INCURRED FOR IMPROVEMENT OF QUALITY O F PRODUCTION AND MANUFACTURING OF NEW DRUGS. THERE APPEARS TO BE NO FORCE IN THE CONTENTION OF THE ASSESSEE AS SUCH EXPENDITURE IS NOT INCURRED IN RE LATION TO ANY BUSINESS OF ASSESSEE. MOREOVER, IT IS NOTICED THAT THE EXPENS ES INCURRED HAVE BEEN SHOWN IN FIXED ASSETS AND THE ASSESSEE HAS CLAIMED DEPRECIAT ION ON THE SAME. WHERE DEDUCTION HAS BEEN CLAIMED FOR THE COST OF THE ASSE TS U/S.35, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION FOR DEPRECIATION U/S.32. [ES CORTS LIMITED V/S. UNION OF INDIA (1993) 199 ITR 43(SC) AND CIT VS. HICO PRODUCTS PVT .LTD. (2001) 247 ITR 797 (SC)]. 5. ON THE CONTRARY, THE LD.REPRESENTATIVE OF THE RE VENUE CONTENDED BEFORE US THAT THE DEPRECIATION CLAIMED U/S.32 OF THE ACT BY THE ASSES SEE WAS ALLOWED BY THE CIT(A). THIS IS ADMITTEDLY A DISPUTED QUESTION OF FACT WHICH IS REQUIRED TO BE DECIDED BY THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE LD.REPRESENTATIVES OF THE RESP ECTIVE PARTIES AND PERUSED THE RELEVANT DOCUMENTS AVAILABLE ON RECORD. TAKING IN TO CONSIDERATION THE ARGUMENTS MADE BY THE PARTIES WE ARE OF THE VIEW THAT THE ISSUE BE RE FERRED TO THE FILE OF LD. AO TO ASCERTAIN AND/OR VERIFY WHETHER THE ASSESSEE HAS ASKED FOR DE PRECIATION U/S.32 OF THE ACT. IN THE EVENT IF IT IS FOUND THAT A DEPRECIATION IS BEING C LAIMED BY THE ASSESSEE BEFORE THE LD.AO, THE SAME SHALL BE DEALT WITH IN ACCORDANCE WITH LAW . WE, HOWEVER, MAKE IT CLEAR THAT WE ARE NOT MAKING ANY OBSERVATION ON THIS PARTICULAR I SSUE INVOLVED ON MERIT. THE AO IS DIRECTED TO PASS THE ORDER WITHOUT BEING INFLUENCED BY THE OBSERVATION MADE BY US ABOVE. - 3 - ITA NO. 84/RJT/2016 MEPRO PHARMACEUTICALS PVT.LTD. VS. ACIT ASST.YEAR 2011-12 HOWEVER, THE ASSESSEE MUST BE GIVEN A REASONABLE OP PORTUNITY OF HEARING BY THE AO WHILE DISPOSING OF THIS ISSUE IN ACCORDANCE WITH LAW. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 30/ 08 /2018 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/ 08 /2018 .., . ../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-7, AHMEDABAD 5. '#$ , % , /DR,ITAT, RAJKOT 6. $23 45 / GUARD FILE. / BY ORDER, ' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, / ITAT, RAJKOT 1. DATE OF DICTATION .. 29.8.18 (DICTATION-PAD 5- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.8.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER