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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)]-38, in short CIT(A), in appeal No. CIT(A)-38/IT-121/2012-13 dated 19.08.2013. The order was made under section 154 of the Income-tax Act, 1961 (hereinafter ‘the Act’) dated 27.08.2012 for AY 2006-07 by ACIT, Central Circle-41, Mumbai.
2 2. At the outset, it is noticed that this appeal assessee is time barred by 13 days. The learned Counsel for the assessee stated that the assessee has filed condonation petition supported by the affidavit of the Managing Director of the assessee company, Shri Jagdish M Mistry, who has admitted that the CIT(A)’s order dated 19.08.2013 was received on 26.08.2013 and last date for filing of appeal before Tribunal was 26.10.2013 but actually the appeal was filed on 08.11.2013. According to the learned Counsel, there was delay of 13 days in filing of this appeal. The reason stated in the affidavit was that the Managing Director of the assessee company was out of India and he returned on 09.10.2013 and after signing the same, the appeal was filed before the Tribunal on 08.11.2013 and therefore, the appeal was delayed by 13 days. The learned Counsel for the assessee stated the reasons as under: - “That, appeal against that order to Honourable Tax Appellate Tribunal should have been filed on or before 26.10.2012. However, we had filed the appeal on 08.11.2013 only a delay of 13 days.
The reasons for delay in submission for Appeal are stated below:
The Company is liable to file report u/s 92E for the first time for the assessment year 2013-14 and our office staffs were busy for finalization of the accounts and audit for the assessment year 2013-14. That, I, alongwith my family members am carrying on various business entities, known commonly as Mistry Group."
3 3. When this was pointed out to the learned CIT Departmental Representative, he did not oppose for the condonation of delay.
After hearing both the sides and going through the facts and reasons stated for delay in filing of appeal i.e. 13 days, we are of the view that the cause stated is reasonable and hence, we condone the delay and admit the appeal
The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in rectifying the assessment order framed by the AO under section 143(3) of the Act by passing order under section 154 of the Act thereby the disallowing the claim of additional depreciation. For this assessee has raised following three grounds: - “1. That on the facts and circumstances of the case, the CIT(Appeals) 38 has erred in law in confirming the addition of Rs. 90,54,408/- made by the Assessing Officer vide order passed under section 154 of the Income Tax Act dated 27.08.2012. 2. That on the facts and circumstances of the case, the CIT (Appeals) 38 has erred in law in confirming the action of the Assessing Officer of assuming jurisdiction under section 154 against an order passed under section 143(3) by the proceding Assessing Officer merely based on change of opinion, without having any additional material in hand.
4 3. That on the facts and in the circumstances of the case the CIT(Appeals) 38 has erred in accepting the decision of Assessing Officer that earthmoving equipments are not entitled for additional depreciation.”
Brief facts are that the assessee is a civil contractor specialized in earth moving and mining works and undertake these types of assignments. This activity is being carried out by the assessee for many years. A survey under section 133A of the Act was conducted on the business premises of the assessee on 09.07.2008. The assessee filed its return of income on 28.08.2004 and assessment was completed under section 143(3) read with section 153 A of the Act. The return income was accepted. Subsequently, a notice under section 154(3) of the Act was issue don 30.03.2012 for rectifying the assessment order as the assessee has claimed additional depreciation at the rate of 20% on acquiring and installing of new machinery as per section 32(1)(ii)(a) o the Act. According to the AO additional deprecation can be allowed only if assessee is engaged in the business of manufacturer or production of any article or thing in term of section 32(1)(2)(a) of the Act. According to the AO, since the assessee is a civil contractor the additional depreciation cannot be allowed. Therefore, he disallowed the additional depreciation amounting to Rs. 90,54,408/- under section 154 of the Act vide order dated 27.08.2012. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) also confirmed the action of the AO. The CIT(A) relied on the decisions of Hon’ble Supreme Court in the cases of (i) CIT vs. N.C.
5 Bhuddhiraja & Co. (ii) CIT vs. Pressure Piling Co. (India) P. Ltd. (iii) CIT vs. Shankar Construction Co. & Others (1993) 204 ITR 412 (SC) that the construction company is not manufacturer or producer. Aggrieved, assessee came in appeal before Tribunal.
Before us, the learned Counsel for the assessee relied on the decision of Hon’ble Delhi High court in the case of CIT vs. Radio Today Broadcasting Ltd. (2016) 382 ITR 42 (Delhi), wherein production of radio programmes in favoring the process of recovery editing and making copies prior to broadcasting is equivalent to manufacturing of article or thing. He also relied on the decision of Hon’ble Kerala High Court in the case of Cherian Varkey Construction Co. (P.) Ltd. vs. Union of India (2018) 406 ITR 262 (Ker), wherein allowed the deprecation in respect of the assessee engaged in the business of construction, is entitled to additional depreciation under section 32(1)(4)(a) of the Act in the plant and machinery used in the manufacturing activity after the production of RMC.
On the other hand, the learned Sr. DR relied in the cases of CIT vs. Parry Agro Industries Ltd. (2018) 94 taxmann.com 462 (Kerala), CIT vs. Steel Strips Ltd. (2011) 11 taxmann.com 361 (Punjab & Haryana).
We have heard the rival contentions and gone through the facts and circumstances of the case, we noted that the Hon’ble Delhi High court in the case of Radio Today Broadcasting Ltd. (supra) and Hon’ble Kerala High court in the case of Cherian Varkey Construction Co. (P.) Ltd. (supra) has allowed the claim of additional 6 depreciation, as available under section 32(1)(iia) of the Act even to Civil Contractor. The Hon’ble Kerala High Court has considered this issue as under: - “The next question whether the transit mixers, Tata trucks and Ashok Leyland trucks purchased by the appellant are qualified for additional depreciation under section 32(1)(iia), which are qualified for additional depreciation under section 32(1)(iia), which we notice was found in the affirmative by the JM at the first instance, but not considered by the AM or the Third Member; the Vice-President, who negative the claim on the finding that the making of RMC is not manufacture or production. We are of the opinion that the said question has to be considered afresh by the Tribunal looking into section 32(1)(iia) and the second proviso pointed out by the learned Counsel for the appellant.
On the above reasoning, we answer the first question extracted here-in-above in favour of the assessee and against the Revenue finding that RMC is an article obtained as a result of manufacture. The second question is also answered in favour of the assessee and against the Revenue in so far as finding the assessee, though engaged principally in the business of construction, is entitled to additional depreciation under section 32(1)(iia) for the plant and machinery used in the manufacturing activity being the production of RMC. We leave the question, whether 7 the exemption itself is permissible on the actual cost of vehicles acquired by the assessee in the previous year, to be considered by the Tribunal. Whether the subject vehicles, in the nature of the process involved, qualify to be treated as plant and machinery will be decided by the Tribunal. The income tax appeal is partly allowed and remanded for consideration of that specific question. The respective parties to suffer their costs.”
We noted that there are two diversion of views of different high court as cited above, hence, we are of the view that this is a highly debatable issue which cannot be subject matter of 154 of the Act. No rectification can be carried out because under the provisions of section 154 of the Act, the power to rectify is the mistake which is on the face of record and apparent from the record, which is not the case here. Hence, we delete the addition and allow the appeal of the assessee.