M/S SANJAY SHANKARRAO JADHAO,AMRAVATI vs. JIOINT C.I.T. AMRAVATI RANGE, AMRAVATI

PER SHAMIM YAHYA, J.M.

The present appeal filed the assessee is against the impugned

order dated 2nd December 2016, passed by the learned Commissioner

(Appeals)–1, Nagpur, relevant to the assessment year 2011–12.

“1. The addition of Rs.2,88,986/- on account of depreciation upheld by CIT(A) is unjustified, unwarranted and bad in law.

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Act 1961 at Rs.67,90,180/- ought to have been allowed as claimed

plant and machinery.

The Assessing Officer, during the course of assessment proceedings,

noted that in case of one of its business concerns namely M/s. Jadhao

Cotex, no business activity had been undertaken during the year. It

was also noted that the business activity was closed since the

assessment year 2008–09. The Assessing Officer disallowed

administrative expenditure and depreciation totaling to ` 3,13,584 on

this account.

administrative expenditure but disallowed depreciation expenses

amounting to ` 2,88,986. The learned CIT(A) did not accept assessee’s

contention that there was a temporary suspension, hence, he

distinguished the decision of the Hon’ble Supreme Court in CIT v/s

Vikram Cotton Mills Ltd., [1988] 169 ITR 597 (SC), which was relied

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upon by the learned Counsel for assessee. Against the above order,

assessee being aggrieved is in appeal before us.

“C) It is undisputed fact that plant and machinery on which depreciation is claimed at ` 2,88,986 is part of block of assets of the opening written down value;

D) It is settled proposition of law that individual use of asset of block of asset is not the condition precedent for allowance of depreciation at the hands of assessee. Issue covered in favour of the assessee by decision of Hon’ble Delhi High Court in the case of Oswal Agro Mills. Ltd.

i) CIT v/s Oswal Agro Mills Ltd., [2012] 341 ITR 467 (Del).

E) The financial statement of Jadhao Cotex placed in paper book at Page–1 to 5 would indicate that assessee had opening stock as well as closing stock and has also debtors and creditors in respect to this business. The business is temporarily suspended and not closed and therefore allowance of expenses and depreciation cannot be disputed.

F) Reliance on:

i) Hon’ble Delhi High Court order in ITA no.530/ 2011 in the case of Integrated Technologies Ltd., vide order dated 16.12.2011;

ii) CIT v/s Vikram Cotton Mills Ltd., [1988] 169 ITR 597 (SC);

iii) DCIT v/s Dempo Industries Pvt. Ltd., [2015] 45 CCH 105 (Panaji) (Trib.);

iv) ITO v/s Mokul Finance Pvt. Ltd., [2007] 110 TTJ 445.”

the orders of the authorities below.

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available on record. Upon careful consideration, we find that in the

present case, the assessee runs several business concerns and has

combined block of assets. In such a situation, the decision of the

Hon’ble Delhi High Court in Oswal Agro Ltd. (supra) has been rightly

relied upon by the learned Counsel for assessee. When a particular

asset is added into the particular block of assets irrespective of the

fact that an individual item in the said block remains unutilized

depreciation in the block of asset has to be granted. This position duly

follow the decision of the Hon’ble Delhi High Court in Oswal Agro Ltd.

(supra). Furthermore, the assessee has claimed that the business was

temporarily suspended and opening and closing stock as well as

debtors and creditors continued to be in the business. In such

circumstances, the claim of depreciation is further allowable on the

touch stone of the decision of the Hon’ble Supreme Court in Vikram

Cotton Mills Ltd. (supra). Consequently, following the precedent, we

set aside the impugned order passed by the learned CIT(A) and decide

the issue in favour of the assessee. This ground is allowed.

amounting to ` 67,90,180.

5 Shri Sanjay Shankarrao Jadhao

agricultural land in its original return of income. It came to be noticed

by the Assessing Officer during the course of assessment. Assessee

filed belated revised return of income. The Assessing Officer added

capital gain on sale of land but did not grant any benefit under section

54B of the Act for purchase of agricultural land on the ground that the

same was not based on the original return of income but raised in the

revised return of income upon placing relied on the decision of the

Hon’ble Supreme Court in Goetz India Ltd. v/s CIT, 284 ITR 323 (SC).

submissions which are summarized as under:–

“A) The assessee submitted revised return claiming exemption under section 54B in respect to investment in agricultural land. A.O. held that original return is not in time and therefore, no valid revised return can be submitted. The exemption u/s 54B was therefore rejected on this technical ground.

In the case of assessee long term capital gain on sale of agricultural land has been assessed to tax at Rs.92,57024/-. The investment has been made in respect to agricultural land to the tune of Rs.65 lacs for which exemption has been claimed u/s 54B of I.T. Act 1961 along with expenses incurred on registration to the tune of Rs.2,90180/-. Eligibility to claim exemption u/s 54B has not been disputed by A.O. as well as by CIT(A).

A.O. has not allowed the exemption as according to him the same was not claimed in the original return and there is no valid revised return submitted by the assessee.

The CIT(A) has not accepted the claim of assessee as according to her assessee could not have legally made claim before A.O.

The decision of Hon'ble 011(A) is contrary to the decision of Hon'ble Bombay High Court in case of M/s Pruthvi Brokers and

6 Shri Sanjay Shankarrao Jadhao

Shareholders Pvt. Ltd. reported at 349 ITR 336 (Bom.).

The details of purchase and sale of agricultural land are placed in paper books at page 7 to 29.”

the orders of the authorities below.

available on record. Upon careful consideration, we find that the

assessee has not been able to make the claim of exemption under

section 54B of the Act in the original return of income. The Assessing

Officer has failed to entertain the same by placing reliance on the

decision of the Hon’ble Supreme Court in Goetz India Ltd. (supra).

However, in the same case of Goetz India Ltd. (supra) the Hon’ble

Supreme Court had expounded that the said decision will not impinge

upon the appellate authorities’ right to entertain additional grounds.

Furthermore, to the same effect, there is exposition of the Hon’ble

Jurisdictional High Court in the case of Pruthvi Brokers and

Shareholders Pvt. Ltd. (supra). Consequently, in our considered

opinion, when the assessee has duly submitted the documents

regarding purchase of agricultural land and the same are already on

record before the Assessing Officer, the Assessing Officer has not find

any fault in the purchase documents. Accordingly, being all the

necessary purchase documents are on record, in our considered

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opinion, the assessee deserves to succeed on this count. Hence, we

are of the considered opinion that assessee’s claim of exemption under

section 54B of the Act is to be allowed. Accordingly, we set aside the

impugned order passed by the learned CIT(A) and decide the issue in

favour of the assessee. This ground is allowed.

Order pronounced in the open Court on 08.05.2018

Sd/- Sd/- RAM LAL NEGI SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER

NAGPUR, DATED: 08.05.2018

Copy of the order forwarded to:

(1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Nagpur City concerned; (5) The DR, ITAT, Nagpur; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary (Sr. P.S./P.S.) ITAT, Nagpur