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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI P.M. JAGTAP(KZ) & SHRI PARTHA SARATHI CHAUDHURY
आदेश/ORDER
PER SHRI PARTHA SARATHI CHAUDHURY, JM.
This appeal preferred by the Revenue emanates from the order of ld.CIT(A) for A.Y.2014-15 as per the following grounds of appeal.
“1. Whether, on the facts and in the circumstances of the case and law, the Ld. CIT (A)-2, is justified in holding that the assessee is engaged in the business activities and the meager receipts received from fisheries permission fees, sale of tender forms and Misc. income of Rs.10,52,267/- are 'business receipts' instead of treating it as 'income from other sources', which was not at all the main business of the assessee but only an allied activity.
2. Whether, on the facts and in the circumstances of the case and law, the Ld. CIT (A)-2, Aurangabad is justified in allowing the claim of depreciation amounting to Rs.27,65,60,139/-disallowed by the A.O., without appreciating the fact that the water conservation projects and other assets on which depreciation was claimed has not been used for the purpose of business and assessee has not earned any income from its business activities.
3. On the facts and in the circumstances of the case, the order of the AO be restored and that of the CIT (A)-2 be vacated.”
That with regard to ground No.1, the ld. D.R. at the very outset submitted that there is no mention of this issue in the order of the ld.CIT(A). That also in the assessment order there is no discussion with regard to this issue.
We have perused the orders of the sub-ordinate authorities and having gone through them, we find that there is no mention of this issue neither in the order of the Assessing Officer nor in the order of ld.CIT(A).
Therefore, this ground taken by the Revenue does not arise from the orders of sub-ordinate authorities. In such scenario, this ground is dismissed.
That with regard to the next ground, it was submitted by the Ld.A.R. that this issue is covered in favour of the assessee by the orders of Pune Tribunal in the earlier years in assessee’s own case. He has filed the copies of those orders on record. The ld.D.R. conceded to these facts.
We have perused the case records, heard the contentions of the parties herein and analyzed the facts and circumstances. The issue pertains to the claim of depreciation on Water Conservation Projects and other assets and it is the grievance of the Revenue that such assets have not been used for the purpose of business and the assessee has not earned any income from such business activities and hence, the ld.CIT(A) was not right in giving relief on this issue. We also find in the Pune Tribunal order dated dt.23.03.2018 in & 1568/PUN/2015 for A.Ys.2010-11 and 2011-12, respectively, wherein the depreciation has been allowed to the assessee and the relevant portion of the same is extracted herein below :
6.We have heard the submissions made by representatives of rival sides and have perused the orders of Authorities below. We have also considered the decisions and documents on which the ld. AR of assessee has placed reliance to support his submission. Two issues have been raised by the Revenue in its appeals. The first issue is with respect to head of income under which income from fisheries is to be assessed i.e. whether it is ‘business income’ or ‘income from other sources’. The second issue raised by the Revenue is whether the assessee is eligible to claim depreciation on reservoir when no income has been declared from new asset acquired by assessee. In so far as the first issue relating to income from fisheries is concerned, we find that it would be relevant to refer the objects of assessee. Chapter- IV of the Maharashtra Water Conservation Corporation Act, 2000 deals with functions and powers of Corporation. In section 18 of the said Act, functions of the Corporation are enumerated. In clause-(m) of Section 18, fisheries has been mentioned as one of the activities promoted by the assessee. The relevant extract of section 18 is reproduced herein below for ready reference: “18. The functions of the Corporation shall be as follows, namely:- (a)……………. (b)……………. ……………. ……………. (m) to promote irrigation related activities such as fisheries, pisciculture, floriculture, horticulture, sericulture, etc.
A perusal of the section 18 reveals that the functions or objects mentioned are not divided into main functions/objects or ancillary functions/objects. Thus, any income earned by the assessee from any of the activities/functions carried out as listed in section 18 would fall within the ambit of activities carried out by the assessee and income earned from such activities would be ‘business income’ of the assessee. Therefore, in our considered view, the income earned by assessee from fisheries, howsoever, small it may be, is ‘business income’ of the assessee. Accordingly, ground No. 1 raised in appeals by Revenue for both the assessment years is dismissed.
7. The second issue raised in the appeal by the Revenue is with respect to claim of depreciation. The Assessing Officer rejected the assessee’s claim of depreciation for the following reasons: (i) The assessee has not earned income from its main business of irrigation and water supply. (ii) The income earned from fishing contract is not the main business of the assessee.
(iii) For the purpose of claiming depreciation the assets must have been used for the purpose of business. Since no income has been earned from the assets, therefore, it cannot be said the asset is put to use. Hence, depreciation on the said asset can be allowed to the assessee. We find that objections raised by the Assessing Officer to disallow assessee’s claim of depreciation are not sustainable. The Commissioner of Income Tax (Appeals) allowed the claim of assessee by following the decision of Co-ordinate Bench of Tribunal in the case of Tapi Irrigation Development Corporation Vs. ITO (supra). In the present case, we find that the assessee has earned income from allocating contract for fishing at newly created reservoir. While adjudicating ground No.1 of the appeal, we have held income earned by assessee from fisheries as ‘Business Income’ of the assessee. Thus, the asset had come into existence and assessee has earned some income from the said asset. It is not disputed by the Revenue that income from fisheries is not from reservoir on which depreciation has been claimed by the assessee. The quantum of the income earned from asset would not determine whether the asset has been put to use or not. Once the asset has come into existence and is put to use, the assessee is eligible to claim depreciation on same. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals). Accordingly, the order of Commissioner of Income Tax (Appeals) is upheld and ground No. 2 raised in appeals by Revenue for both the assessment years are dismissed.
To sum up, appeals of the Revenue for assessment years 2010-11 and 2011-12 are dismissed.”
Respectfully, following our order in assessee’s own case for A.Ys.2010-11 and 2011-12 in & 1568/PUN/2015 (supra), we sustain the relief provided to the assessee and hence, there is no need for any interference with the findings of the first appellate authority.
Accordingly, ground No.2 raised by the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced on 25th day of November, 2020.