ACIT, Hubli V. Sri. Mohit K. Mehta, Hubli

ITA 841/BANG/2009

• Counselvise Citation: 84121114 RSA 2009
• Duration Of Justice: 2 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P C CHADAGA
• Assessee Lawyers: ABHAY SINGH MEHTA
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N.K SAINI, ACCOUNTANT MEMBER AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NO.841/B ANG/2009 (ASST. YE AR 2006-07) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), HUBLI. . APPELLANT VS. SHRI MOHIT K MEHTA, SHRINATH CHAMBER, NEW COTTON MARKET, HUBLI. . RESPONDENT APPELLANT BY : SHRI ABHAY SINGH MEHTA REVENUE BY : SHRI P.C CHADAGA DATE OF HEARING : 08-11-2011 DATE OF PRONOUNCEMENT : 25-11-2011 O R D E R PER SMT. P MADHAVI DEVI, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2006-07. THE APPEAL IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), HUBLI DATED 19.05.2009. ITA NO.841/B/09 2 THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED U /S 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, WHO IS AN INDIVIDUAL IS A DEALER IN IRON & STEEL, CEMENT ETC . DURING THE RELEVANT ASSESSMENT YEAR, THE AO NOTICED THAT THE ASSESSEE H AD CLAIMED DEPRECIATION ON WIND MILL FOR THE FIRST TIME. HE C ALLED FOR THE DETAILS OF WIND MILL. FROM THE DETAILS FURNISHED BY THE ASS ESSEE, HE OBSERVED THAT THE ASSESSEE HAS SET UP WIND ELECTRIC GENERATO R OF 315 KVA. THE ASSESSEE WAS ASKED TO FURNISH THE DATE OF COMMI SSIONING OF THE GENERATOR, DETAILS OF ELECTRICITY GENERATED FROM TH E WIND MILL, ELECTRICITY SOLD TO THE ELECTRICITY AUTHORITIES, BI LLS RAISED AND PAYMENTS RECEIVED. THE ASSESSEE FURNISHED THE DETAILS AND F ROM THE SAME, THE AO OBSERVED THAT THE INVOICES FOR PURCHASE OF WIND MILL WERE DATED 31.3.2006 AND THE CHARGES FOR INSTALLATION AND COMM ISSIONING WERE ALSO PAID ON 31.3.2006. HE, THEREFORE, CAME TO THE CONCLUSION THAT THE WIND MILL COULD NOT HAVE BEEN COMMISSIONED ON OR BE FORE 31.3.2006. THE ASSESSEE ALSO FILED OTHER DETAILS AND AFTER PER USAL OF THE SAME, THE AO OBSERVED THAT THE ELECTRICITY IMPORTS AND EXPORT S ARE ONLY IN RESPECT OF TESTING OF THE GENERATORS AND THAT THE A SSESSEE HAS NOT PRODUCED DETAILS IN RESPECT OF ELECTRICITY GENERATE D, BILLS RAISED AND ITA NO.841/B/09 3 PAYMENTS RECEIVED. HE ALSO OBSERVED THAT THE PROFI T AND LOSS ACCOUNT ENCLOSED WITH THE RETURN OF INCOME DOES NOT SHOW AN Y RECEIPTS FROM THIS UNIT. HE, THEREFORE, DISALLOWED THE CLAIM OF DEPRECIATION. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE CIT(A). 4. THE CIT(A) DELETED THE ADDITION HOLDING THAT THE GENERATORS WERE KEPT READY FOR USE I.E FOR PASSIVE USE AND, TH EREFORE, THEY ARE ELIGIBLE FOR DEPRECIATION. HOWEVER, AS REGARDS THE GENERATION OF ELECTRICITY THROUGH WIND MILL ON 31.3.2006 IS CONCE RNED, THE ISSUE WAS DECIDED AGAINST THE ASSESSEE. 5. AGGRIEVED BY THE RELIEF GIVEN BY THE CIT(A), THE REVENUE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE TRI BUNAL VIDE ORDER DATED 29.3.2010 ALLOWED THE REVENUES APPEAL HOLDI NG THAT THERE IS NO COMMENCEMENT OF BUSINESS WHEN THERE IS NO ACTUAL USER OF THE WIND MILL SYSTEM AND, THEREFORE, THERE CANNOT BE A COMPLIMENTARY CONCEPT OF PASSIVE USER TO THE BENEFIT OF THE ASSES SEE. BEFORE THE TRIBUNAL, THE ASSESSEE HAS RAISED ARGUMENTS AGAINST THE FINDINGS OF THE CIT(A) TO THE EFFECT THAT ENTITLED FOR DEPRECIATION ON THE GROUND OF ACTUAL USER. HOWEVER, THE TRIBUNAL DID NOT CONSIDE R THE ARGUMENT OF ITA NO.841/B/09 4 THE ASSESSEE ON THIS ISSUE ON THE GROUND THAT THE A SSESSEE NEITHER FILED ANY APPEAL NOR CROSS-OBJECTION AGAINST THIS FINDIN G OF THE CIT(A). 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE HONBLE HIGH COURT OF KARNATAKA AND HONBLE HIGH COURT VIDE ITS ORDERS DATED 10/03/2011 HAS OBSERVED THAT THE ASSESSEE WA S ENTITLED UNDER RULE 27 OF THE INCOME-TAX APPELLATE TRIBUNAL RULES, TO RAISE THE ISSUE WHICH WAS HELD AGAINST THE ASSESSEE EVEN WITHOUT FI LING AN APPEAL OR CROSS-OBJECTION AND THE HONBLE HIGH COURT HAS REMI TTED THE ISSUE BACK TO THE TRIBUNAL FOR FRESH RECONSIDERATION OF T HE ISSUE. THUS THE APPEAL IS AGAIN BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI P.C CH ADAGA WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BE FORE THE AUTHORITIES BELOW, SUBMITTED THAT THE ASSESSEE HAS IN FACT STAR TED GENERATING ELECTRICITY AND THAT THE ASSESSEE HAS ALL THE EVID ENCES NECESSARY TO PROVE THE SAME. WHEN A QUERY WAS RAISED BY THIS BE NCH, HE FAIRLY ADMITTED THAT SAID EVIDENCE WAS NOT FILED BEFORE TH E AO OR BEFORE THE CIT(A), AS IT WAS NOT CALLED FOR. THE LEARNED DR W AS ALSO HEARD WHO SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.841/B/09 5 8. HAVING CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE BEFORE US IS AS TO W HETHER THE CONTENTION OF THE ASSESSEE THAT IT HAS ACTUALLY GENERATED ELEC TRICITY WAS AT ALL CONSIDERED BY THE AO AND THE CIT(A). THE AO IN THE ASST. ORDER HAS OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVI DENCE BEFORE HIM TO SHOW THAT IT HAS IN FACT GENERATED ELECTRICITY. THUS THE EVIDENCE IN POSSESSION OF THE ASSESSEE TO PROVE THAT HE HAS ALR EADY STARTED GENERATING ELECTRICITY AS ON 31.3.2006 IS FRESH EV IDENCE AND IS ESSENTIAL FOR PROPER APPRECIATION AND ADJUDICATION OF THE ISSUE. THEREFORE, WE DEEM IT FIT AND PROPER TO REMIT THE I SSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE SA ID DETAILS AND RECONSIDER THE ISSUE IN ACCORDANCE WITH LAW. NEEDLE SS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF H EARING AND ALSO OPPORTUNITY TO PRODUCE THE EVIDENCES, IF ANY, IN IT S POSSESSION IN SUPPORT OF ITS CONTENTIONS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS POSED OFF AS ABOVE. ITA NO.841/B/09 6 ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH NOV, 2011. SD/- SD/- (N.K SAINI) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 25/11/2011 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.