POLYCHEM LTD, V. ASST CIT CEN CIR 1(2),

MA 293/MUM/2012

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9867 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 14-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: D J SHUKLA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH, C, MUMBAI BEFORE, SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER MA NO: 293/M/2012 ARISING OUT OF : 3787/MUM/2007 ASSESSMENT YEAR : 2003-04 POLYCHEM LTD. ORIENTAL HOUSE 4 TH FLOOR, 7 J. TATA ROAD MUMBAI-400 020 PAN NO.: AAACP 6718 M ASSTT. COMMISSIONER OF INCOME TAX -1(2) 5 TH FLOOR, AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. (APPLICANT) VS. (RESPONDENT) APPLICANT BY : SHRI D.J. SHUKLA RESPONDENT BY : SHRI A.B. KOLI DATE OF HEARING : 14.12.2012 DATE OF PRONOUNCEMENT : 09.01.2013 ORDER PER RAJENDRA SINGH (AM). THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY TH E ASSESSEE FOR AMENDMENT OF THE ORDER DATED 21.4.2009 OF THE TRIBU NAL IN ITA NO.3737/M/2007. THE ASSESSEE IN THE MISCELLANEOUS A PPLICATION HAS POINTED OUT CERTAIN MISTAKES. 2. BEFORE WE PROCEED TO DEAL WITH THE POINTS MADE IN THE MISCELLANEOUS APPLICATION, IT WOULD BE APPROPRIATE TO GIVE A BRIEF BACKGROUND OF THE CASE. THE ASSESSEE HAD EIGHT UNIT S FOR MANUFACTURING OF CERTAIN PRODUCTS. THE AO IN THE ASSESSMENT ORDER OBSERVED THAT SOME MA NO.293/M/12 ARISING OUT OF ITA NO. 3787/M/07 A.Y:03-04 2 OF THE UNITS HAD BEEN CLOSED AND, THEREFORE, HE ALL OWED ONLY 50% OF THE DEPRECIATION CLAIMED. IN APPEAL, CIT(A) NOTED THAT THE ASSESSEE WAS HAVING EIGHT MANUFACTURING UNITS AT NIRA (DIST. PUN E), CHEMBUR, GOREGAON, MUMBAI AND BARODA AND OUT OF THE EIGHT UN ITS SIX UNITS ADMITTEDLY WERE CLOSED. IN RESPECT OF THE REMAINING TWO UNITS, CIT(A) NOTED THAT MANUFACTURING UNIT OF POLY VINYL ALCOHOL PLANT AT NIRA HAD NOT OPERATED FROM ASSESSMENT YEAR 1998-99 AND POLYSTYRE NE UNIT AT GOREGAON HAD OPERATED ONLY UP TO 1997. THE AO, THER EFORE, CONCLUDED THAT THE ASSESSEE HAD NOT USED PLANT AND MACHINERY IN RESPECT OF THESE TWO UNITS FOR FOUR CONTINUOUS YEARS PRIOR TO THE PR EVIOUS YEAR WITH REFERENCE TO ASSESSMENT YEAR 2003-04. CIT(A) THEREF ORE HELD THAT WHEN THE UNITS HAD NOT FUNCTIONED DEPRECIATION COULD NOT BE ALLOWED. CIT(A) PLACED RELIANCE ON THE JUDGMENT OF HON'BLE HIGH COU RT OF BOMBAY IN THE CASE OF DINESHKUMAR GULABCHAND AGARWAL VS. CIT & A NR.(267 ITR 768). CIT(A) ACCORDINGLY DISALLOWED THE ENTIRE CLAIM OF D EPRECIATION. AGGRIEVED BY THE DECISION OF CIT(A) THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. IT APPEARS FROM THE ORDER OF THE TRIBUNAL THAT THE ASS ESSEE BEFORE THE TRIBUNAL HAD ONLY CONTENDED THAT THE ASSETS IN THE UNITS WHICH WERE NOT FUNCTIONING WERE READY FOR USE AND WERE ON STANDBY . THEREFORE, DEPRECIATION SHOULD BE ALLOWED IN VIEW OF THE JUDGM ENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. REFRIGERATION & ALLIED INDUSTRIES LTD. (247 ITR 12). THE TRIBUNAL OBSERVED THAT SINCE THE UNITS WERE NOT FUNCTIONING FOR SEVERAL YEARS, THE CONCEPT OF STAN DBY WAS IRRELEVANT AND MA NO.293/M/12 ARISING OUT OF ITA NO. 3787/M/07 A.Y:03-04 3 NOT APPLICABLE AND FOLLOWING THE JUDGMENT OF THE HO N'BLE HIGH COURT OF BOMBAY IN THE CASE OF DINESHKUMAR GULABCHAND AGARWA L (SUPRA), THE TRIBUNAL CONFIRMED THE ORDER OF CIT(A) AGGRIEVED BY WHICH, THE PRESENT MISCELLANEOUS APPLICATION HAS BEEN FILED. 3. IN THE MISCELLANEOUS APPLICATION IT HAS BEEN SUB MITTED THAT THE ASSESSEE DURING THE YEAR HAD INCURRED EXPENSES ON R EPAIR OF PLANT AND MACHINERY WHICH SUPPORTED THE CLAIM OF DEPRECIATION . THE UNITS OF THE ASSESSEE HAD WORKED FULLY DURING THE YEAR AND IT WA S NOT CORRECT TO SAY THAT THE ENTIRE PLANT AND MACHINERY HAD NOT WORKED DURING THE YEAR. IT HAS ACCORDINGLY BEEN REQUESTED THAT THE ORDER MAY B E RECALLED AND MISTAKES RECTIFIED. 4. WE HAVE HEARD BOTH PARTIES, PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE ASSESSEE HAD EIGHT UNITS SIX OF WHICH WERE ADMITTEDLY CLOSED. IN RESPECT OF REMAINING TWO, CIT A) HAD GIVEN A CLEAR FINDING THAT THERE HAD NOT OPERATED FROM ASSESSMENT YEAR 1998-99 AND, THEREFORE, PLANT AND MACHINERY IN THESE UNITS HAD N OT BEEN USED FOR FOUR CONTINUOUS YEARS. CIT(A) THEREFORE, DISALLOWED THE ENTIRE DEPRECIATION. IN APPEAL THE TRIBUNAL CONFIRMED THE ORDER OF CIT(A). IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL THAT THE ASSESSEE BEFORE THE TRIBUNAL HAD ONLY RAISED THE ISSUE OF READY FOR USE OR STAND BY C ONCEPT FOR CLAIM OF DEPRECIATION WHICH WAS DULY DEALT WITH BY THE TRIBU NAL WHO FOLLOWING THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IN THE CAS E OF DINESHKUMAR MA NO.293/M/12 ARISING OUT OF ITA NO. 3787/M/07 A.Y:03-04 4 GULABCHAND AGARWAL (SUPRA), DISALLOWED THE CLAIM OF DEPRECIATION. THE CLAIM OF THE ASSESSEE THAT IT HAD ARGUED BEFORE THE TRIBUNAL THAT PLANT AND MACHINERY HAD BEEN USED AS REPAIR AND MAINTENAN CE EXPENSES WERE ALSO CLAIMED IS NOT SUPPORTED BY ANY MATERIAL ON RE CORD. MOREOVER MERE INCURRING OF EXPENSES ON MAINTENANCE DOES NOT MEAN THAT PLANT AND MACHINERY HAD ACTUALLY WORKED. WE, THEREFORE, DO NO T SEE ANY APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL. THE TRIBUNAL HAS NO POWER TO REVIEW ITS OWN ORDER AND IT CAN RECTIFY ONLY PATENT AND OB VIOUS MISTAKES. NO SUCH MISTAKE HAS BEEN POINTED OUT. WE, THEREFORE, R EJECT THE MISCELLANEOUS APPLICATION. 5. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE ASSESSEE STANDS REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.01.2013. SD/- SD/- (AMIT SHUKLA) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 09.01.2012. JV. MA NO.293/M/12 ARISING OUT OF ITA NO. 3787/M/07 A.Y:03-04 5 COPY TO: THE APPLICANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.