VIFOR PHARMA PVT. LTD., V. ACIT CIR -18 & 19,

MA 109/MUM/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3633 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI- F,BENCH , , BEFORE S/SH. SHAILENDRA KUMAR YADAV,JUDICIAL MEMBER& RAJENDRA,ACCOUNTANT MEMBER MA NO.109/MUM/2015(ARISING OUT OF ITA/504/MUM/2013) -ASSESSMENT YEAR 2009-10 M/S. VIFOR PHARMA PVT. LTD. PLOT NO.1, UDYOG NAGAR ESTATE S.V. ROAD, GOREGAON MUMBAI-400002. PAN: AAACV 4180 F VS THE ACIT CIR. 18 & 19 AAYAKAR BHAVAN, 4 TH FLOOR M.K. ROAD MUMBAI-400020 ( / ASSESSEE) ( / RESPONDENT) /ASSESSEE BY : SH.R.C. MODI / REVENUE BY : SH.AARSI PRASAD (DR) / DATE OF HEARING : 11 - 09-2015 / DATE OF PRONOUNCEMENT : 18-11 -2015 / O R D E R PER RAJENDRA, A.M. : VIDE ITS APPLICATION,DATED 11.05.2015,THE ASSESSEE- COMPANY HAS STATED THAT CERTAIN MISTAKES WERE APPARENT IN THE ORDER OF THE TRIBUNAL DATED 01 .04.2015,(ITA 504/MUM/2013), THAT SAME ARE TO BE RECTIFIED AS PER THE PROVISIONS OF SECTIO N 254(2) OF THE ACT.IT HAS BEEN FURTHER STATED THAT IN THE APPELLATE ORDER AT PARA-5 THE DETAILS O F DEFINITION OF PLAN U/S. 43(3) WAS MENTIONED, THAT THE TRIBUNAL MISCONCEIVED THE ADDITION TO PLAN T AND MACHINERY AS BUILDING INSTEAD OF PLANT, THAT THE PHOTOGRAPHS OF PLANT AND MACHINERY ALONG WITH THE FITTINGS WERE FILED, THAT THE SAME WERE NOT CONSIDERED,THAT TRIBUNAL HAD NOT CONS IDERED THE FACT THAT 2BSF MACHINES WERE INSTALLED AT MUMBAI,THAT ONE BSF MACHINE WAS INSTAL LED AT KANDLA,THAT BOTH WERE COMMISSIONED,THAT THE ADDITIONS MADE TO THE MACHINE S DID NOT HAVE INDEPENDENT VALUE, THAT THE FALSE CEILING WAS PART OF MACHINERY, THAT THE M ACHINERIES COULD NOT FUNCTION WITHOUT A CHILLING PLANT, THAT THE CLEAN ROOM WAS NOTHING BUT A QUARANTINE ROOM, THAT ALL THE MACHINERIES WERE PART OF PLANT AND MACHINERY ONLY, THE DECISION S CONSIDERED BY THE TRIBUNAL WERE FOR AY 04-05 AND 05-06, THAT THE DETAILS OF EXPENSES AND C OPIES OF BILLS WERE AVAILABLE IN THE PAPER BOOK, THAT THE TRIBUNAL HAD ERRED IN STATING THAT N O ARGUMENTS WERE ADVANCED. 2. BEFORE US THE AUTHORISED REPRESENTIATIVE(AR)STATED THAT ADDITIONS WERE PART OF PLANT AND MACHINERY,THAT THE DETAILS WERE NOT CONSIDERED FULL Y, THAT THE CASES RELIED UPON BY THE ASSESSEE DEALT WITH THE ISSUE BEFORE THE BENCH.DEPA RTMENTAL REPRESENTATIVE(DR)STATED THAT THE TRIBUNAL HAD DEALT WITH THE ISSUE AT LENGTH. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 1.4.2015. 3. DURING THE COURSE OF HEARING LD. AR DID NOT DIS PUTE TO THE FINDINGS OF AO ACCORDING TO WHICH THESE EXPENSES HAVE BEEN INCURRED ON WALL PARTITION , FALL CEILING, FLOORING AND SLIDING. BUT, IT IS THE CASE OF LD. AR THAT THESE WORK SHOULD BE TREAT ED TO BE PART OF PLANT AND MACHINERY AS WITHOUT CARRYING OUT THESE WORKS THE ASSESSEE COULD NOT COMPLY WITH THE STANDARDS WHICH ARE REQUIRED FOR MANUFACTURING PHARMACEUTICAL ITEMS PRO DUCED BY THE ASSESSEE. LD. AR ALSO SUBMITTED THAT ASSESSEE HAS ALSO INCURRED HUGE EXPE NDITURE ON BUILDING WHICH ARE NOT INCLUDED IN THE PLANT AND MACHINERY. HE SUBMITTED THAT AT PAGE-52 OF THE PAPER BOOK WORK-IN-PROGRESS OF BUILDING IS TOTAL SUM OF RS.2,13,73,424/-. THUS , IT WAS SUBMITTED BY LD. AR THAT IT WOULD BE INCORRECT IF EXPENSES INCURRED BY THE ASSESSEE WHIC H IS FOR THE EFFICIENT WORKING OF THE PLANT AND MACHINERY ARE CONSIDERED TO BE INCURRED FOR THE PU RPOSE OF BUILDING OR FURNITURE OR FITTINGS. LD. AR CARRIED US THROUGH DETAILS FILED IN THE PAPER B OOK, WHICH IS FROM PAGES 17 TO 47 OF THE PAPER MA:109/M/15 VIFOR PHARMA A.Y.09-10 2 BOOK, IN WHICH DETAILS OF BILLS RELATING TO THE IMP UGNED EXPENDITURE HAVE BEEN FILED. THUS, IT WAS PLEADED BY LD. AR THAT THESE EXPENDITURE SHOULD BE CONSIDERED TO BE INCURRED IN RELATION TO PLANT AND MACHINERY AND DEPRECIATION RATE APPLICA BLE TO PLANT AND MACHINERY SHOULD BE ALLOWED. 3.1 LD. AR RELIED UPON THE DECISION OF AHMEDABAD IT AT IN THE CASE OF MADHU INDUSTRIES LTD. VS. ITO, ORDER DATED 23/7/2010 IN ITA NO.4172/AHD/2007. COPY OF THIS ORDER WAS PLACED ON OUR RECORD AND ALSO GIVEN TO LD. DR, WHEREIN ELECTRICAL INSTALLATIONS CONSISTING OF ELECTRICAL WIRES, PLUGS, CABLES, MC BOX AND ELECTRICAL ITEMS WHICH DO ES NOT FUNCTION INDEPENDENTLY WERE CONSIDERED TO BE PART OF PLANT AND MACHINERY AND ACCORDINGLY DEPRECIATION WAS HELD ALLOWABLE AS ON PLANT & MACHINERY IN PLACE OF LOWE R DEPRECIATION APPLICABLE TO ELECTRICAL INSTALLATION. IT WAS SUBMITTED BY LD. AR THAT THE SAME LOGIC SHOULD BE APPLIED TO THE PRESENT CASE. 3.2 LD. AR FURTHER PLACED RELIANCE ON THE DECISION OF ITAT MUMBAI IN THE CASE OF ACIT VS. JBF INDUSTRIES LTD., ITA NO.4035/MUM/2006 DATED 17/12/ 2014, COPY OF THIS ORDER WAS ALSO PLACED ON OUR RECORD AND WAS ALSO GIVEN TO LD. DR. IN THI S DECISION ALSO SIMILAR PROPOSITION HAS BEEN LAID DOWN. THUS, IT WAS PLEADED BY LD. AR THAT APP ROPRIATE RELIEF MAY BE GRANTED TO THE ASSESSEE. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY AO & LD. CIT(A). 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE WORD PLANT HAS BEEN DEFINED IN SECTION 43(3) AS UNDER: (3) PLANT INCLUDES SHIPS, VEHICLES, BOOKS, SCIEN TIFIC APPARATUS AND SURGICAL EQUIPMENT USED FOR THE PURPOSE OF THE BUSINESS OR PROFESSION [BUT DOES NOT INCLUDE TEA BUSHES OR LIVESTOCK] [OR BUILDINGS OR FURNITURE AND FITTINGS] AS IT CAN BE SEEN FROM THE ABOVE PROVISION, DEFIN ITION OF PLANT IS INCLUSIVE IN NATURE AND NOT EXHAUSTIVE. THUS, THERE IS A WIDE SCOPE FOR INCLUD ING MANY ITEMS IN THE DEFINITION. IT IS A MATTER OF FACT THAT LEGISLATURE HAS STEPPED IN SPECIFICALL Y EXCLUDING BUILDING FROM THE DEFINITION OF PLANT AND SUCH AMENDMENT WAS BROUGHT BY THE FINAN CE ACT 2003 W.E.F. 2004. EARLIER TO THIS, CONSIDERING THE WIDE SCOPE OF THE WORD PLANT VARI OUS COURTS HAVE RENDERED DECISION IN FAVOUR OF ASSESSEE WHERE IN BUILDING REQUIRED SPECIFICALLY FOR THE PURPOSE OF PLANT WAS ALSO CONSIDERED PART OF PLANT AND MACHINERY. ACCORDI NGLY, IT WAS HELD THAT THE SAID BUILDING BEING INTEGRAL PART OF THE PLANT WAS ALSO IN THE NATURE OF PLANT. ONE OF SUCH CASE IS THE DECISION OF HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. SHIVALIK HATCHERIES PVT. LTD., 188 TAXAMAN 291(HP), WHEREIN CONSIDERING THE VARIOUS EX ISTING DECISIONS THEIR LORDSHIPS HAVE HELD THAT IF THE BUILDING HAS BEEN DESIGNED SPECIFICALLY TO FURTHER CAUSE OF MANUFACTURE OR PRODUCTION, THEN THE SAME IS PLANT. IN THE SAID CASE POULTR Y SHEDS, SPECIFICALLY DESIGNED TO PROTECT THE BIRDS FROM DISEASES BY ENSURING PROPER LIGHT AND CI RCULATION OF AIR, PROPER SCIENTIFIC FEEDING ARRANGEMENT, PROPER ARRANGEMENT FOR COLLECTION OF MANURE AND DROPPINGS, PROPER ARRANGEMENT OF MEDICATION AND VACCINATION AND TO INCREASE THEIR PRODUCTIVITY WAS CONSIDERED TO BE PLANT WITHIN THE MEANING OF UNAMENDED SECTION 43(3). THU S, EARLIER TO THE AMENDMENT BROUGHT INTO STATUTE BY FINANCE ACT 2003 W.E.F. 1/4/2004 SUCH V IEW WAS POSSIBLE BUT IN VIEW OF THE AMENDMENT BROUGHT INTO STATUTE BY THE LEGISLATURE VIDE WHICH BUILDING OR FURNITURE AND FITTINGS HAS BEEN SPECIFICALLY EXCLUDED, SUCH VIEW CANNOT BE TAKEN BY THE TRIBUNAL AS THE SAID VIEW WOULD BE AGAINST THE PROVISIONS OF THE STATUTE. THE LEGISLA TURE HAS ALL THE PWERS TO PROVIDE DEFINITION OF A WORD AND SPECIFICALLY WHEN SUCH DEFINITION IS INCLU SIVE LEGISLATURE HAS POWER TO RESTRICT THE SCOPE OF A WORD. THIS AMENDMENT HAS BEEN BROUGHT INTO ST ATUTE BY THE LEGISLATURE AND IN THE CLARIFICATION AND IN THE NOTES OF CLAUSES VIDE WHIC H AMENDMENT WAS BROUGHT INTO THE STATUTE BY FINANCE ACT 2003, 260 ITR 128 (ST.), THE RELEVANT P ORTION AT PAGE 208, IT IS EXPLAINED AS UNDER: CLARIFICATORY AMENDMENTS REGARDING DEFINITIONS OF CERTAIN TERMS RELEVANT TO INCOME FROM PROFITS AND GAINS FROM BUSINESS OR PROFESSION. THE EXISTING PROVISIONS CONTAINED IN CLAUSE(3) OF S ECTION 43 DEFINES THE EXPRESSION PLANT IN AN INCLUSIVE MANNER AND FURTHER EXCLUDES TEA BUSHES OR LIVESTOCK. THE COVERAGE OF THE TERM PLANT HAS BEEN A SUBJECT MATTER OF LITIGATION, PARTICULARLY ON THE ISSUE, WHETHER BUILDINGS OR FURNITURE AND FITTINGS CONSTIT UTE PLANT. MA:109/M/15 VIFOR PHARMA A.Y.09-10 3 5.1 AS IT CAN BE SEEN FROM THE ABOVE CLARIFICATION, THE COVERAGE OF TERM PLANT WAS SUBJECT MATTER OF LITIGATION, PARTICULARLY ON THE ISSUE WHE THER BUILDING OR FURNITURE AND FITTINGS CONSTITUTE PLANT AND TO CLARIFY THE INTENTION OF THE STATUTE SUCH AMENDMENT HAS BEEN BROUGHT. SUCH AMENDMENT BROUGHT INTO THE STATUTE BY THE LEGISLATU RE HAS NOT BEEN SHOWN TO BE VIOLATIVE OF CONSTITUTIONAL PROVISION. THEREFORE, ACCORDING TO CLEAR LEGISLATIVE INTENT THE ASSESSEE CANNOT TAKE THE BENEFIT OF HIGHER DEPRECIATION BY INCLUDIN G BUILDING IN THE VALUE OF PLANT. IN THE CASE OF CIT VS. SHIVALIK HATCHERIES LTD. (SUPRA) THE REL IEF WAS GRANTED TO THE ASSESSEE ONLY ON THE GROUND THAT THE CASE PERTAINS TO THE ASSESSMENT YEA R WHICH IS PRIOR TO THE APPLICABILITY OF THE AMENDMENT. THE CASE LAW RELIED UPON BY LD. AR DO N OT SUPPORT THE CASE OF THE ASSESEE AS THE SAME IS NOT DIRECTLY ON THE ISSUE INVOLVED IN THE P RESENT APPEAL. SIMILARLY, THE OTHER CASE RELIED UPON BY THE ASSESSEE BEFORE AO AND LD. CIT(A) DO NO T SUPPORT THE CASE OF THE ASSESSEE ON THE GROUND THAT THE SAME BELONG TO ASSESSMENT YEARS PRI OR TO THE AFOREMENTIONED AMENDMENT AND LD. CIT(A) HAS ALSO HELD THAT THOSE CASE LAW CANNOT ADV ANCE THE CASE OF THE ASSESSEE DUE TO AMENDMENT IN THE STATUTORY PROVISION. THOUGH THE D ETAILS OF EXPENDITURE HAS BEEN SUBMITTED BUT LD. AR OF THE ASSESSEE DID NOT ARGUE SPECIFICALLY O N EACH OF THE EXPENDITURE. THEREFORE, WE HAVE NOT GONE INTO THE DETAILS OF THE EXPENDITURE TO IDE NTIFY THAT WHETHER ANY OF THE EXPENDITURE DOES NOT BELONG TO BUILDING OR FURNITURE & FITTINGS. M AINLY FROM THE DETAILS WE HAVE FOUND THAT THE PAYMENTS ARE MADE TO AEOLUS TECHNOVATIONS P LTD. W HICH ARE FOR THE INSTALLATION AND COMMISSIONING WORK OF CLEAN ROOMS AND ARE IN THE NA TURE OF BUILDING AND NO SPECIFIC EXPENSES WERE PLEADED BY LD. AR TO CONTEND THAT THE SAME SH OULD BE EXCLUDED FROM THE AMBIT OF BUILDING AND INCLUDED IN THE AMBIT OF PLANT. FROM THE ABOVE ORDER OF 01.04.2015,IT IS CLEAR THAT THE TRIBUNAL HAD RECORDED ALL THE ARGUMENTS ADVANCED BY THE AR AT PARA 3 - 3.2 OF THE ORDER.AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE DEFINITION OF PLANT,T HE TRIBUNAL HAD ARRIVED AT A PARTICULAR CONCLUSION.IF THE ASSESSEE IS AGGRIEVED BY THE ORDE R, THE CORRECT REMEDY WOULD BE TO APPROACH THE HONBLE HIGH COURT.IT IS NOT A CASE WHERE JUDG MENTS OF HONBLE APEX COURT OR HIGH COURTS HAVE NOT BEEN FOLLOWED OR WHERE THE GROUND O F APPEAL HAS NOT BEEN DEALT WITH. SECTION 254 (2) OF THE ACT WAS INSERTED WITH A VIEW TO RECT IFY ARITHMETICAL ERRORS OR THE ERRORS WHICH ARE APPARENT FROM THE RECORD. THE SECTION DOES NOT GIVE POWER OF REVIEW TO THE TRIBUNAL.WHAT THE ASSESSEE WANTS FROM US IS TO REVIEW THE ORDER D ATED 1.4.2015.IN THE CASE OF RAMESH ELECTRICALS (203ITR497)THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER : UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961, T HE APPELLATE TRIBUNAL MAY, 'WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD' , AMEND ANY ORDER PASSED BY IT UNDER SUB- SECTION (1) WITHIN THE TIME PRESCRIBED THEREIN. IT IS AN ACCEPTED POSITION THAT THE APPELLATE TRIBUNAL DOES NOT HAVE ANY POWER TO REVIEW ITS OWN ORDERS UNDER THE PROVISIONS OF THE ACT. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES IS TO R ECTIFY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPARENT FROM THE RECORD. THIS IS MERELY A POWER OF AMENDING ITS ORDER. THE POWER OF RECTIFICATION UNDER SECTION 254(2) CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMEN TS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MA Y BE AN ERROR OF JUDGMENT. THE TRIBUNAL CANNOT, IN THE EXERCISE OF ITS POWER OF RE CTIFICATION, LOOK INTO SOME OTHER CIRCUMSTANCES WHICH WOULD SUPPORT OR NOT SUPPORT IT S CONCLUSION. (EMPHASIS BY US). THE JUDGMENT CLEARLY HOLDS THAT NON CONSIDERATION O F AN ARGUMENT CANNOT BE TREATED MISTAKE APPARENT FROM RECORD.THEREFORE, WE HOLD THAT THERE IS NO MISTAKE IN THE IMPUGNED ORDER OF THE TRIBUNAL. AS A RESULT, MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE STANDS DISMISSED. . MA:109/M/15 VIFOR PHARMA A.Y.09-10 4 ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER,2015. SD/- SD/- ( / SHAILENDRA KUMAR YADAV ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 18.11.2015 . . . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.