VINODKUMAR S JAIN, MUMBAI V. ASST CIT CIT 16(1), MUMBAI

ITA 916/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3024 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 10-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER IT A NO. 916 /MUM/201 5 : (A.Y : 20 11 - 12 ) VINODKUMAR S. JAIN C/O. KARNAVAT & CO., 2A KITAB MAHAL, 1 ST FLOOR, 192, DR. D.N. ROAD, MUMBAI 400 001. PAN : A BRPJ3452H ( APPELLANT ) VS. ACIT, CIRCLE - 16(1), MUMBAI (RESPONDENT) ASSESSEE BY : SHRI SUNIL HIRAWAT REVENUE BY : SHRI SANTOSH MANKOSKAR DATE OF HEARING : 29 /0 6 /2016 DATE OF PRONOUNCEMENT : 29 /0 6 /2016 O R D E R THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 30 , MUMBAI DATED 2 2. 12 .201 4 , PERTAINING TO THE ASSESSMENT YEAR 20 11 - 12 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 10.03.2014 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL THE ONLY SOLITARY ISSUE RAISED BY THE ASSESSEE PERTAINS TO THE ACTION OF INCOME - TAX AUTHORITIES IN DISALLOWING ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE U/S 32(1)(IIA) OF THE ACT AMOUNTING TO 25,60,000/ - ON THE COST OF WIND MILL. 2 VINODKUMAR S. JAIN ITA NO. 916/MUM/2015 3. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD INSTALLED A WIND MILL, INCLUDING WIND TURBINE GENERATOR COSTING RS. 1,28,00,000/ - DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION @ 20% ON SUCH MACHINERY IN TERMS OF SEC. 32(1)(IIA) OF THE ACT. THE ASSESSING OFFICER DENIED THE CLAIM OF ADDITIONAL DEPRECIATION ON THE GROUND THAT GENERATION OR GENERATION A ND DISTRIBUTION OF POWER WAS INCLUDED IN SEC. 32(1)(IIA) OF THE ACT BY THE FINANCE ACT, 2012 W.E.F. 1.4.2013 AND SINCE THE CASE OF THE ASSESSEE IS OF A PRIOR PERIOD, THE ADDITIONAL DEPRECIATION WAS NOT ALLOWABLE TO THE ASSESSEE. THE CIT(A) HAS ALSO AFFIRM ED THE ACTION OF THE ASSESSING OFFICER BY PRIMARILY CONFIRMING THE REASONING ADVANCED IN THE ASSESSMENT ORDER. AS PER THE CIT(A), THE AMENDMENT TO SEC. 32(1)(IIA) OF THE ACT MADE BY THE FINANCE ACT, 2012 INTRODUCING ADDITIONAL DEPRECIATION ON MACHINERY US ED IN THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER WAS EFFECTIVE ONLY FROM ASSESSMENT YEAR 2013 - 14 AND, THEREFORE, THE IMPUGNED CLAIM OF THE ASSESSEE WAS NOT MAINTAINABLE FOR THE CAPTIONED ASSESSMENT YEAR, WHICH IS PRIOR TO ASSESSMENT YEAR 2013 - 14. 4. AGAINST THE AFORESAID, LEARNED REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THE CLAIM OF THE ASSESSEE WAS SUPPORTED BY THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS ATLAS EXPORT ENTERPRISE, 373 ITR 414 (MAD.) AN D HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. DIAMINES AND CHEMICALS LTD., 222 TAXMAN 218 , WHEREIN EVEN FOR ASSESSMENT YEAR PRIOR TO ASSESSMENT YEAR 2013 - 14, CLAIM FOR ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT HAS BEEN ALLOWED ON THE COST INC URRED FOR SETTING - UP OF WIND MILL FOR GENERATION 3 VINODKUMAR S. JAIN ITA NO. 916/MUM/2015 OF ELECTRICITY. IT WAS, THEREFORE, CONTENDED THAT EVEN ON THE BASIS OF THE PROVISIONS OF SEC. 32(1)(IIA) OF THE ACT , AS IT STOOD PRIOR TO THE AMENDMENT BY THE FINANCE ACT, 2012, THE CLAIM FOR ADDITIONAL DEP RECIATION WAS ALLOWABLE. APART THEREFROM, IT HAS ALSO BEEN POINTED OUT THAT IN THE FOLLOWING TWO DECISIONS, VIZ., DCIT VS. THE HUTTI GOLD MINES CO. LTD. (ITA NO. 832/BANG/2012) DATED 2.8.2013 OF BANGALORE BENCH OF TRIBUNAL AND ACIT VS. M. SATISHKUMAR (ITA NO. 718/MDS/2012) DATED 28.9.2012 OF CHENNAI BENCH OF TRIBUNAL, IT HAS BEEN HELD THAT THE AMENDMENT BY THE FINANCE ACT, 2012 REFERRED TO BY THE ASSESSING OFFICER WAS MERELY CLARIFICATORY IN NATURE AND DOES NOT DIS - ENTITLE AN ASSESSEE FROM CLAIMING DEPRECI ATION EVEN IN THE ASSESSMENT YEAR PRIOR TO THE ASSESSMENT YEAR 2013 - 14 IN THE BUSINESS OF GENERATION OF ELECTRICITY . 5. ON THE OTHER HAND, THE LD. DR APPEARING FOR THE REVENUE HAS REITERATED THE REASONING ADVANCED BY THE LOWER AUTHORITIES, WHICH I HAVE AL READY ADVERTED TO IN THE EARLIER PART OF THIS PART AND IS NOT REPEATED FOR THE SAKE OF BREVITY. 6. SEC. 32(1)(IIA) OF THE ACT, AS IT STOOD FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, READS AS UNDER : - 32(1) (IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING , A FURTHER SUM EQUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II) 4 VINODKUMAR S. JAIN ITA NO. 916/MUM/2015 OSTENSIBLY, SEC. 32(1)(IIA) OF THE ACT PRESCRIBE S ADDITIONAL DEPRECIATION ON THE COST OF NEW PLANT AND MACHINERY ACQUIRED AND INSTALLED AFTER 31.3.2005 BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING AND SUCH ADDITIONAL DEPRECIATION EQUALS TO 20% OF THE ACTUAL COST OF SUCH PLANT AND MACHINERY. IN THE CASE BEFORE US, ASSESSEE HAD CLAIMED ADDITIO NAL DEPRECIATION ON THE COST OF WIND MILL WHICH IS USED FOR PRODUCTION OF ELECTRICITY. AS PER THE JUDGMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF ATLAS EXPORT ENTERPRISE ( SUPRA ) AS WELL AS HON'BLE GUJARAT HIGH COURT IN THE CASE OF DIAMINES AND CHEMIC ALS LTD. ( SUPRA ) , PRODUCTION OF ELECTRICITY THROUGH WIND MILL QUALIFIES FOR THE CLAIM OF ADDITIONAL DEPRECIATION IN TERMS OF SEC. 32(1)(IIA) OF THE ACT. THE HON'BLE MADRAS HIGH COURT REFERRED TO ITS EARLIER DECISION IN THE CASE OF CIT VS. HI TECH ARAI LTD ., 321 ITR 477 WHICH HAD APPROVED THAT SETTING - UP OF A WIND MILL WOULD FALL WITHIN THE EXPRESSION SETTING UP OF A NEW MACHINERY OR PLANT FOR THE PURPOSES OF SEC. 32(1)(IIA) OF THE ACT. THE AFORESAID DECISION OF THE HON'BLE MADRAS HIGH COURT PERTAINS TO ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 WHEREAS THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT PERTAINS TO ASSESSMENT YEAR 2007 - 08, ALL THE THREE ASSESSMENT YEARS BEING PRIOR TO THE ASSESSMENT YEAR 2013 - 14 WHEN THE PROVISIONS OF SEC. 32(1)(IIA) OF THE ACT WAS AMENDED TO INCLUDE THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER. THE CASE BEFORE ME ALSO PERTAINS TO AN ASSESSMENT YEAR PRIOR TO ASSESSMENT YEAR 2013 - 14, AND IN MY VIEW, IT IS FULLY GOVERNED BY THE RATIO OF THE JUDGMENT OF THE HON'B LE MADRAS AND GUJARAT HIGH COURT S. THUS, IN MY VIEW, THE LOWER AUTHORITIES ERRED IN DENYING THE CLAIM OF THE ASSESSEE. 5 VINODKUMAR S. JAIN ITA NO. 916/MUM/2015 7. IN FACT, THE ARGUMENT SET - UP BY THE ASSESSING OFFICER HAS ALREADY BEEN CONSIDERED BY THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF THE HUTTI GOLD MINES CO. LTD. (SUPRA) BY REL YING ON AN EARLIER DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF M. SATISHKUMAR ( SUPRA ). AS A CONSEQUENCE, I FIND NO REASON TO UPHOLD THE ORDER OF CIT(A), WHICH IS HEREBY SET - ASIDE. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW ASSESSEES CLAIM FOR ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT WITH R ESPECT TO THE COST OF WIND MILL. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 9 T H JUNE, 2016. SD/ - ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 2 9 T H JUNE , 2016 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI