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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI KUL BHARAT & SHRI WASEEM AHMED
PER SHRI KUL BHARAT, JUDICIAL MEMBER :
This appeal by the Assessee pertaining to the Assessment Year (AY) 2013-14 is directed against the order of the Ld. Commissioner of Income Tax(Appeals) - 2, Ahmedabad (‘CIT(A)’ for short) dated 19.12.2017. The assessee has raised the following grounds of appeal:- 1. “The learned Commissioner of Income Tax (Appeals) has erred in dismissing the ground of appeal raised before him against the computation of the total income of Rs.92,14,530/- which has been rectified by the Assessing officer at Rs.63,37,790/- vide order dtd. 18/01/2016 passed u/s.154 of the I.T. Act, 1961 as against total income of Rs.55,59,050/-declared by the appellant in the return of income filed on 19/09/2013 holding that the same is general does not require adjudication.
2. The learned Commissioner of Income Tax (Appeals) has erred in dismissing the ground of appeal raised before him against the disallowance of Rs.35,95,933/- made by the Assessing Officer for the alleged excess claim of additional - 2 - Futura Ceramics Pvt. Ltd. vs. DCIT Asst.Year – 2013-14 depreciation, which has been subsequently rectified by him at Rs.7,19,187/- vide order dtd. 18/01/2016 passed u/s.154 of the I.T. Act, 1961.
The Appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.”
2. The only effective ground of this appeal is against declining the claim of the assessee for additional depreciation.
The facts giving rise to the present appeal are that the case of the assessee is picked for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) was framed by order dated 31.12.2015. While framing the assessment, the Assessing Officer disallowed additional depreciation amounting to Rs.35,95,933/-. The basis for disallowing the additional depreciation was that the items are neither plant & machinery nor parts thereof on which additional depreciation could be granted. Subsequently, the Assessing Officer rectified mistake u/s 154 and restricted addition to the extent of Rs.7,19,187/- against this the assessee preferred an appeal before the Learned CIT(A). The Learned CIT(A) dismissed the ground of appeal on the ground that some of the items like; payment for factory visit, payment for vehicle charges, payment for inspection are not relating to plant and machinery, and therefore, could be considered for additional depreciation.
4. Aggrieved by this the assessee is in further appeal before us. The Learned Counsel for the assessee Shri Aseem L. Thakkar vehemently argued that the authorities below are not justified in disallowing the claim. He submitted that law is very clear that additional depreciation is allowable. He drew our attention to Section 32(1)(iia) of the Act. He further submitted that as per this provision actual cost defined u/s 43(1) is to be adopted. He contended that all expenditure relates to the expenditure incurred on installation of the asset. The Learned Counsel relied on the judgment of Hon’ble High Court of Madras in the case of Trichy Distilleries & Chemicals Ltd. vs. CIT reported in (1999) 235 ITR 194 - 3 - Futura Ceramics Pvt. Ltd. vs. DCIT Asst.Year – 2013-14 (Madras). On the contrary, the Learned DR oppose the submission and submitted that the assessee ought to prove the nexus between the expenditure incurred and the installation of the asset. He further contended that the assessee has to prove incurring of the expenditure which would form part of the actual cost of the asset. In the absence of such claim of the assessee it cannot be allowed.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The Learned Counsel for the assessee submitted that the amount which has been incurred for purchase and installation is reproduced in the impugned order that includes interest on bank term loan which has been capitalized from the month of April to month of October. Further expenditure have been incurred on the insurance. We find that so far as the interest and insurance is concerned same is verifiable from records hence the Assessing Officer would delete this addition however, in respect of the other expenditure the Assessing Officer would verify whether this expenditure is related to installation of the plant and machinery and would delete if it is found to be incurred for the said purpose. The ground raised in appeal is allowed in the terms indicated above.
In the result, the appeal filed by the assessee in A.Y. 2013-14 is allowed. This Order pronounced in Open Court on 01/10/2019 Sd/- Sd/- ( WASEEM AHMED ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 01/10/2019 Priti Yadav, Sr.PS - 4 - Futura Ceramics Pvt. Ltd. vs. DCIT Asst.Year – 2013-14