PUDUMJEE PULP & PAPER MILLS LTD.,PUNE vs. JOINT COMMISSIONER OF INCOME-TAX,

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ITA 2144/PUN/2016Status: DisposedITAT Pune01 August 2018AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the AO allowed normal depreciation on the capitalized sundry expenses, the assessee was also eligible for additional depreciation. The denial of additional depreciation by the lower authorities was deemed unsustainable.

What were the facts?

The assessee claimed additional depreciation on capitalized sundry expenses incurred for installation of plant and machinery. The Assessing Officer (AO) allowed normal depreciation but denied additional depreciation. The Commissioner (Appeals) upheld the AO's decision.

What were the issues?

Whether additional depreciation is allowable on capitalized sundry expenses incurred for installation of plant and machinery, when normal depreciation has already been allowed.

Which sections of the Income-tax Act were involved?

Section 32(1)(iia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM

For Appellant: Shri Nikhil Pathak
For Respondent: Shri Mukesh Jha
Hearing: 23.07.2018Pronounced: 01.08.2018

आदेश आदेश

PER D. KARUNAKARA RAO, AM :

There are three appeals filed by the assessee under consideration involving Assessment Years 2009-10 and 2011-12. They are filed against the separate orders of CIT(A)-6, Pune, commonly dated 28-06-2016. All these appeals are taken up for adjudication by this composite order.

2.

At the outset, Ld. Counsel for the assessee submitted that the appeal No.2144/PUN/2016 for A.Y. 2011-12 is not pressed. Accordingly, the said appeal is dismissed as ‘not pressed. That leaves two appeals ITA Nos. 2142 and 2143/PUN/2016 for adjudication and the appeal wise adjudication of the said appeals are taken up in the following paragraphs. AMJ Land Holdings Ltd., A.Y. 2009-10

3.

Grounds raised by the assessee read as under :

“1. Dis-allowance of Additional Depreciation: Rs. 1,56,193 out of claim of Rs. 22,74,873. (a) On the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) erred in disallowing the additional depreciation of Rs. 1,56,193 (out. of the total claim of Rs. 22,74,873) on the additions made to the plant and machinery of Rs.7,80,963, calling them as spare parts (presumably), out of the total addition to machinery of Rs. 110.74 Lakhs. Whereas on the new machinery, installed at the plant, the Assessing Officer allowed normal depreciation, the CIT (Appeals) erred in confirming the action of the assessing officer in denying the additional depreciation on additions of Rs. 7,80,963 . (b) On the facts and in the circumstances of the case, the CIT (Appeals) further erred in dismissing the alternative submission made by the Appellant that in the event of the claim of additional depreciation is disallowed the entire cost of machinery may be allowed as repairs and replacement of machinery as a revenue expenditure. He should have held the amount of Rs. 7,80,963 as a revenue expenditure. (c) On the facts and in the circumstances of the case, the CIT( Appeals) further erred in dis-regarding the crux of the Hon. Tribunal's Order in the case of Appellant, on the same and identical matter, for the Assessment Years 2007-08 and 2008-09 and respecting the said Order he should have allowed the claim of additional depreciation of Rs. 22,74,873, in toto, 2 Your Appellant craves leave to add, alter or amend the Grounds of Appeal on or before the hearing of this appeal.”

4.

Referring to Ground Nos. 1(1) to 1(c), Ld. Counsel for the assessee

submitted that the only issue for adjudication relates to allowing the claim of additional depreciation on the sundry expenses of Rs.7,80,963/- for the A.Y.

2009-10 which were actually capitalized to the asset account on which normal depreciation was claimed and undisputedly already allowed by the AO.

5.

Giving facts, Ld. Counsel for the assessee brought our attention to page 5 of the paper book and submitted that assessee installed plant and machinery procured from (1) Jyoti Ltd., (2) Servali Engineering Works Pvt.

Ltd., and (3) Parson Machinery Pvt. Ltd., and claimed depreciation on the assets including the capitalized sum of Rs.7,80,963/-. This amount is incurred on sundry accounts. Bringing our attention to page 9 of the paper AMJ Land Holdings Ltd.,

book, Ld. Counsel for the assessee listed out the nature of expenditure

which are incurred as they are required for installation of the plant and machinery about which there is no dispute. Therefore, it is the case of Ld.

Counsel for the assessee that sum of Rs.7,80,963/- was incurred in connection with the installation of plant and machinery which are depreciable assets. AO allowed the claim of normal depreciation on these

capitalized expenditure as well. However, he denied the claim of additional

depreciation giving flimsy grounds of non-furnishing of details and also on holding that the items mentioned at page 9 of the paper book constitute

plant and machinery in their individual capacity.

6.

Ld. DR for the Revenue relied on the orders of the AO and the CIT(A).

7.

On hearing both the parties, we find allowing of additional

depreciation on capitalized amount of Rs.7,80,963/- is the subject matter of litigation before us. On perusal of the facts furnished before us, we find

there is no dispute about the genuineness of this expenditure and investment of such expenditure for installation of the eligible plant and machinery. AO also granted normal depreciation on such capitalized sundry

expenses. However, the AO denied the claim of additional depreciation on the claim of sundry expenses without giving sustainable reason for the denial. Rs.7,80,963/- stands already loaded to the cost of the assets and the same is allowed by the AO at the time of allowing the normal

depreciation on the said assets consisting the loaded cost of the assets. In our view, these expenses constitute part of the eligible plant and machinery

for claim of additional depreciation over and above the normal depreciation.

Therefore, in our view, the finding of the AO and the CIT(A) is unsustainable.

The issue raised by the assessee is allowable. AO is directed to grant

additional depreciation on this part of capitalized expenditure on account of AMJ Land Holdings Ltd.,

plant and machinery. Accordingly, the issue raised by the assessee is allowed.

8.

In the result, the appeal of the assessee is allowed. A.Y. 2010-11

9.

The issue raised by the assessee in this appeal is also identical.

Therefore, our decision in granting additional depreciation on the capitalized

expenditure on account of plant and machinery shall apply to this assessment year too. Thus, the grounds raised by the assessee are allowed.

10.

In the result, the appeal of the assessee is allowed.

11.

To sum up, ITA No.2144/PUN/2016 filed by the assessee is dismissed

and ITA Nos. 2142 & 2143/PUN/2016 filed by the assessee are allowed.

Order pronounced on 01st day of August, 2018. (VIKAS AWASTHY) (D. KARUNAKARA RAO) "याियक "याियक सद"य "याियक "याियक सद"य सद"य /JUDICIAL MEMBER लेखा सद"य लेखा लेखा सद"य लेखा सद"य सद"य / ACCOUNTANT MEMBER सद"य

पुणे Pune; "दनांक Dated : 01st August, 2018 सतीश आदेश आदेश क" आदेश आदेश क" क" "ितिलिप क" "ितिलिप "ितिलिप अ"ेिषत "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order forwarded to : अ"ेिषत

अपीलाथ" / The Appellant

1.

""यथ" / The Respondent

2.3.

The CIT(A)-6, Pune

4.

The Pr.CIT-5, Pune िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, “B Bench” Pune; 5. गाड" फाईल / Guard file. 6. आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार आदेशानुसार

स"यािपत "ित //// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

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