DCIT,Circle-1, Kolkata, Kolkata V. M/s Brindavan Bottlers Pvt. Ltd., Howrah

ITA 962/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75070 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 09-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2012
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTY
• Assessee Lawyers: ASHIM CHOWDHURY
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NOS. 961 & 962/KOL/2012 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEARS: 2005-06 & 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. BRIND AVAN BOTTLERS (P) LTD. CIRCLE-1, KOLKATA. (PAN: AABCB4781B) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 13.02.2014 DATE OF PRONOUNCEMENT: 13.02.2014 FOR THE APPELLANT: SHRI P. K. CHAKRABORTY, JCIT, SR . DR FOR THE RESPONDENT: SHRI ASHIM CHOWDHURY, ADVOCA TE $0 / ORDER PER SHRI MAHAVIR SINGH, JM: BOTH THESE APPEALS BY REVENUE ARE ARISING OUT OF SE PARATE ORDERS OF CIT(A)-I, KOLKATA IN APPEAL NOS. 198 & 199/CIT(A)-1/C-1/10-11 DATED 27.0 3.2012. ASSESSMENTS WERE FRAMED BY DCIT, CIRCLE-1, KOLKATA U/S. 143(3) R.W.S. 147 OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2005 -06 AND 2006-07 VIDE HIS SEPARATE ORDERS DATED 10.12.2010. SINCE GROUNDS ARE COMMON AND FAC TS ARE IDENTICAL IN BOTH THE APPEALS, WE DISPOSE OF THE SAME BY THIS CONSOLIDATED ORDER BY T AKING THE FACTS AND GROUNDS IN ITA NO. 961/K/2012. 2. THE ONLY COMMON ISSUE IN THESE APPEALS OF REVENU E IS AGAINST THE ORDER OF CIT(A) IN ALLOWING DEPRECIATION ON PLASTIC SHELLS @ 50% INSTE AD OF 25% AS CALCULATED BY THE AO. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.61,00,800/-ON ACCOUNT O F DEPRECIATION ON PLASTIC SHELLS. 2. THAT ON THE FACTS AND IN THE CIREUMSTANCES OF TH E CASE LD CIT (A) HAS ERRED IN DIRECTING THE AO TO ALLOW DEPRECIATION ON PLASTIC S HELLS @ 50% INSTEAD OF 25% AS CALCULATED BY THE AO. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING AND DISTRIBUTION OF SOFT DRINKS I.E. CO-CACOLA, THUMS UP ETC. THESE PLASTIC CRATES AND PALLETS ARE USED IN THE COURSE OF MOVEMENT AND TRANSPORTATION OF SOFT DRINK S BOTTLES MADE OF GLASS/PLASTIC. THESE BOTTLES, PLASTIC CRATES AND PALLETS ARE, THEREFORE, TOOLS OF THE BUSINESS OF THE ASSESSEE AND, 2 ITA NO.961 & 962/K/2012 BRINDAVAN BOTTLERS (P) LTD. , AY:2005-06 & 2006-07 THEREFORE, ENTITLED TO DEPRECIATION. THE ASSESSEE COMPANY CLAIMED DEPRECIATION ON THESE PLASTIC CRATES/PALLETS @ 50% AND HAS ALSO ON EMPTY GLASS BO TTLES. ASSESSEE CLAIMED THE DEPRECIATION BEING QUALIFIED AS PLANT AND MACHINERY. THE AO DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS ALLOWED 25% DEPRECIATION BY OBSERVING AS UNDER: THE SUBMISSIONS HAVE BEEN CONSIDERED. AS PER THE SCHEDULE FOR RATES OF DEPRECIATION SPECIFIED IN I. T. RULES, DEPRECIATION WOULD BE COM PUTED @ 50% ON CONTAINERS MADE OF GLASS OR PLASTICS USED AS REFILLS. HOWEVER, IN TH E INSTANT CASE, PLASTIC CRATES AND PLASTIC PALLETS DID NOT FALL IN THE CATEGORY OF CONTAINERS MADE OF GLASS OR PLASTICS USED AS REFILLS AND AS SUCH DEPRECIATION IS ALLOWABLE @ 25 % FOR THE ASSESSMENT YEAR 2005-06 AND NOT @ 50% AS CLAIMED BY THE ASSESSEE. THUS, EX CESS DEPRECIATION OF RS.61,00,800/- CLAIMED BY THE ASSESSEE AND ALLOWED IN ASSESSMENT I S WITHDRAWN. PENALTY PROCEEDINGS U/S. 271(1)(C) IS INITIATED. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT ORDE R AND THE WRITTEN SUBMISSION IT IS NOTICED THAT ASSESSEE IS ENGAGED IN MANUFACTURING A ND DISTRIBUTION OF DIFFERENT SOFT DRINKS. THE ASSESSING OFFICER THE DISALLOWED THE CL AIM OF 50% DEPRECIATION ON PLASTIC SHELLS AND PLASTIC PALLETS AND ONLY ALLOWED THE NOR MAL DEPRECIATION 25% ON THESE PLASTIC SHELLS AND PALLETS. THESES PLASTIC SHELLS WERE USED FOR IN HOUSE HANDLING AND CARRYING THE GLASS BOTTLES FOR DISTRIBUTION. THE GLASS BOTTL ES ARE PLACED INSIDE THESE PLASTIC SHELLS FOR THE PURPOSE OF DISTRIBUTION. THE ASSESSING OFFI CER ALLOWED THE CIAIM OF EMPTY GLASS BOTTLES @ 50%. AS PER OLD APPENDIX (1) TO THE IT RULES 1962 CLAUSE (4) UNDER THE HEAD OF PLANT AND MACHINERY WHICH COVERS CONTAINERS MADE OF GLASS OR PLASTIC USED AS REFILLS WHICH IS ENTITLED TO DEPRECIATION @ 50%. THEREFORE, ASSESSEE IS ENTITLED TO DEPRECIATION @ 50% ON PLASTIC SHELLS SINCE THESE WERE USED AS REFILLS OF GLASS BOTTLES BY THE ASSESSEE. WHILE THE PLASTIC PALLETS CANNOT BE TERMED AS REFILLS AND THEY ARE ONLY ENTITLED FOR THE NORMAL DEPRECIATION @ 25% .THEREFORE, GROUND NO. 1 IS PART LY ALLOWED AND GROUND NO. 2 IS PREMATURE AND GROUND NO.3 IS INFRUCTOUS. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE US. 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SHRI ASH IM CHOWDHURY, ADVOCATE ARGUED THAT THE AO HAS REDUCED THE CLAIM OF DEPRECIATION FROM 5 0% TO 25% AS APPLICABLE TO NORMAL PLANT AND MACHINERY SIMPLY BY HOLDING THAT THE PLASTIC CR ATES AND PALLETS DID NOT FALL UNDER THE CATEGORY OF CONTAINERS MADE OF GLASS OR PLASTIC USE D AS REFILLS. THE LD. COUNSEL DREW OUR ATTENTION TO NEW APPENDIX 1 OF I. T. RULES, 1962, I TEM NO.3 OF MACHINERY AND PLANT UNDER CLAUSE 4, WHEREIN THE RATE OF DEPRECIATION FOR ALLO WANCE FOR CONTAINERS MADE OF PLASTIC OR GLASS USES AS REFILLS IS AT 50%. LD. COUNSEL FURTHER STA TED THAT THESE CONTAINERS ARE MADE OF GLASS OR PLASTIC AND ARE ALSO USED AS REFILLS. IN ASSESSEE S CONTEXT THE PLASTIC CRATES ARE CAGE TYPE CONTAINERS WHICH ARE FILLED WITH SOFT DRINKS BOTTLE S AND THESE CRATES ARE RETURNED BACK TO THE COMPANY WITH EMPTY BOTTLES AND THE SAME ARE AGAIN U SED FOR THE NEXT PHASE BEING FILLED UP WITH READY BOTTLES AND PROCESS GOES ON LIKE WISE. WE HA VE GONE THROUGH THE OLD APPENDIX 3 ITA NO.961 & 962/K/2012 BRINDAVAN BOTTLERS (P) LTD. , AY:2005-06 & 2006-07 APPLICABLE FOR AY 2003-04 TO 2005-06 (AS PROVIDED U NDER RULE 5 OF I. T. RULES, 1962) TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE AND IN PA RT A UNDER THE HEADING III MACHINERY AND PLANT CLAUSE (4) CLEARLY STATES THE RATE AT WHICH DEPRECIATION IS ADMISSIBLE AND THE RELEVANT PORTION READS AS UNDER: (4) CONTAINERS MADE OF GLASS OR PLASTIC USED AS R EFILLS 50% FROM THE ABOVE TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE IS CLEAR THAT THE CONTAINERS MADE OF GLASS/PLASTIC USED AS REFILLS ARE ELIGIBLE FOR DEPRECIATION @ 50% AND NOT 25%. THE PROVISION UNDER THE INCOME-TAX RULES IS VERY CLEAR AND THERE IS NO AMBIGUITY WHATSOEVER. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A ) HAS RIGHTLY ALLOWED THE CLAIM OF ASSESSEE AND WE CONFIRM THE SAME. 5. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH FEBRUARY, 2014 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT DCIT, CIRCLE-1, KOLKATA. 2 ./,- / RESPONDENT M/S. BRINDAVAN BOTTLERS (P) LTD., P- 18, DOBSON LANE, 7 TH FLOOR, HOWRAH-711101. 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .