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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
PER MAHAVIR SINGH, JM:
These four appeals by the Revenue are arising out of the different orders of Commissioner of Income Tax (Appeals)-8, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-8/IT-691, 435,200, 771/14-15,15-16 dated 31.08.2016, 13.02.2016,25.08.2016. The Assessments were framed by the Dy. Commissioner of Income Tax & Income Tax Officer, Circle 3(2)(1), Mumbai (in short DCIT/ AO) for the AYs 2009-10, 2010-11,2011-12, 2012- 13 order dated 13.02.2015, 30.07.2015,13.03.2014, 17-03-2015 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’).
The first common issue in all these four appeals of Revenue is as regards to the order of CIT(A) deleting the disallowance of additional depreciation by the AO. For this assessee has raised identical worded grounds. Hence, we will take up the facts, issue and grounds from AY 2009-10 in ITA No. 3663/Mum/2016. The grounds reads as under: -
“1. Whether on the facts and in the circumstances and in law the Ld. CIT(A) was right in granting additional depreciation to assessee which is not allowable as per second proviso to section 32(1) of the IT Act.?
Whether on the facts and circumstances and in law the Ld. CIT(A) was right in holding that the additional depreciation allowable u/s. 32(1)(ii) can be carried forward in spite of the fact that there is no specific provisions under the IT Act to do so?
Whether on the facts and circumstances and in law the Ld. CIT(A) was right in allowing assessee
ITA Nos. 7028-7030, 3663/Mum/2016 the benefit of additional depreciation of A.Y. 2008- 09 in AY 2009-10, even though as per section 32(2) of the IT Act only depreciation which cannot be set off against current years income is allowed to be carried forward.?"
Briefly stated facts are that the assessee is a Public Limited company engaged in manufacturing of Electrical contacts and selling the same in domestic as well as international markets. The assessee claimed additional depreciation of Rs. 1,73,42,811/- on Plant and Machinery. As per the provisions of section 32(1)(iia) of the Act, the additional depreciation allowable is 20% of the actual cost of machinery or Plant which has been acquired and installed during the year. According to the AO the assessee claimed additional depreciation in excess of 20%. Thus the assessee claimed excess additional depreciation of ₹ 79,85,157/-. The AO disallowed ₹ 79,85,157/- being additional depreciation under section 32(1) (iia) on Plant & Machinery of last year second half i.e. FY 2007-08 (AY 2008-09) being the balance 50% additional depreciation. But CIT(A) allowed the claim of assessee by stating that the assessee claimed additional depreciation under section 32(1) (iia) of the Income Tax Act. 1961 on new Plant & Machinery acquired and installed during the year under consideration @ 20% (10% if new Plant and Machinery is installed for a period of less than 180 days). The assessee claimed balance 10% additional depreciation in current financial year on new plant and machinery installed in last financial year for a period of less than 180 days i.e. second half of last financial year. The assessee had claimed that normal depreciation in 15% gross block and 80% Gross block on Plant and Machinery had also claimed additional depreciation in 15% gross block and 80% gross block of Plant & Machinery. The assessee had claimed balance 10% additional depreciation in current financial year on new Plant & Machinery installed in last financial year,
ITA Nos. 7028-7030, 3663/Mum/2016 second half as additional depreciation is allowable @20% on machinery purchased during the year. For this CIT(A) observed as under:-
“5.1.1 In this ground, the AO has disallowed appellants claim of additional deprecation u/s 32(1)(iia) of The Act on Plant & Machinery being balance 50% additional deprecation of the last F.Y. i.e. F.Y. 2007-08.(A.Y. 2008-09). I find that the issue at hand is covered by the decision of Hon'ble ITAT, Mumbai in the case Indian Writing Instruments Pvt. Ltd. in ITA No. 6509/Mum/2012 dated 19.03.2014. The Hon’ble ITAT relied on the decision of Coordinate Bench of the ITAT. Delhi in the case of DCII Vs. COSMO Films Ltd. ITA No. 2508 & 2831/DeI/2007 reported in 139 lTD 628(Del) and Coordinate Bench of the ITAT, Delhi in the case of ACIT vs. SIL Investment Ltd. reported in 54 SOT 54(Del). The Coordinate Benches of Tribunal has held as that:
DCIT vs. COSMO Films Ltd.
Section 32 of the Income-tax Act, 1961- Depreciation- Additional depreciation- Assessment year 2004-05. Assessee purchased new assets during preceding previous year which were put to use for less than 180 days- Apart from normal deprecation, assessee was also eligible to claim additional depreciation at rate of 15 per cent for said new assets- Since assets were put to use for less than 180 days. In preceding assessment year assessee claimed only 50 per cent of 15 per cent-
ITA Nos. 7028-7030, 3663/Mum/2016 Balance additional depreciation was claimed by assessee in instant assessment year- Assessing Officer, however, denied said claim- Whether assessee had earned benefit of additional depreciation as soon as he had purchased new assets and balance additional depreciation was to be allowed in instant assessment year- Held, yes.
ACIT Vs. SIL Investment Ltd.
Additional depreciation- Balance of additional depreciation remained due as a result of assets for period of less than 180 days. is to be flowed in immediately succeeding year”
5.1.2 As can be seen from the facts of the instant case, the issues involved are identical to those which were before Hon’ble ITAT in its decision in ITAT Order No. ITA No. 6509/Mum/2012 dated 19.03.2014 which has been extensively referred to above. Hence, following the decision of Jurisdictional Hon’ble ITAT in the case Indian Writing Instruments Pvt. Ltd. supra. appellants claim of additional deprecation u/s 32(1)(iia) of the Act is hereby allowed. This ground of appeal is allowed.”
Aggrieved, now Revenue is in appeal before Tribunal.
We find that this issue is squarely covered by the decision of Hon’ble Madras High Court in the case of CIT vs. Shri T. P. Textiles Pvt. Ltd. (2017) 394 ITR 483 (Mad.), wherein following the decision of Hon’ble Karnataka High Court in the case of CIT vs. Rital India (P.) Ltd. (2016) 380 ITR 423 (Karn). In view of the above decisions of the Hon’ble Madras
ITA Nos. 7028-7030, 3663/Mum/2016 High Court and Karnataka High Court in the case of T. P. Textiles Pvt. Ltd. (supra) and Rital India (P.) Ltd. (supra), we affirm the order of CIT(A) allowing additional depreciation. Appeals of Revenue on this issue are dismissed. All these four appeals of Revenue are dismissed.
The next issue in this ITA 7029/Mum/2016 for AY 2011-12 of Revenue’s appeal is as regards to the order of CIT(A) deleting the disallowance of sundry creditors claimed by assessee by admitting additional evidences filed by the Assessee under Rule 46A of the Income Tax Rules (hereinafter ‘the Rules’) despite the objection by the AO. For this Revenue has raised the following ground No. 1 and 2:-
“1. Whether on the facts and circumstances of the case and in law, the td.CIT(A) is justified in admitting the additional evidences filed by the assessee u/r. 46A of the IT. Rules, 1962 without appreciating the fact that the assessee had failed to file them in the assessment proceedings and no explanation for such lapse was filed in remand proceedings as reported by the Assessing Officer in the remand report submitted.
Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) wasjustified in deleting the disallowance of Rs.77,85,131/- made on account of Sundry Creditors claimed by the assessee..”
Briefly stated facts are that the AO noted from the balance sheet of the assessee that there are outstanding creditors amounting to Rs. 77,85,131/- from below mentioned three parties from whom the assessee
ITA Nos. 7028-7030, 3663/Mum/2016 claimed to have made purchases. The following are the details of purchase:-
M/s Auto repowering Works (I) Pvt. 29,08,833 Ltd. 2. M/s Shil Technologies Pvt. Ltd. 38,83,597 3. M/s Deev Gen-set sales 7 services 9,92,701 7. The AO require the assessee to file confirmations of these creditors and also PAN No, Account statements of these parties and reconciliation statements of accounts in the books of the assessee and PAN No. of these parties. But the assessee could not file confirmations from these parties. Even the assessee could not file bills, vouchers, corresponding bank statement, delivery challan, lorry receipts etc. Accordingly, the AO treated these three creditors as bogus and added to the total income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A), the CIT(A) relying on the remand report of the AO deleted the disallowance of sundry creditors by observing in Para 7.2.2 as under:-
“7.2.2 During the course of remand proceedings, the appellant submitted confirmations of the above 3 parties. At para 3.2 of his remand report, the assessing officer observed, ‘considering the fact that in the assessment order assessing officer disallowed these expense for want of confirmation from the concerned parties, the issue under consideration may be decided in appeal, accordingly.’ Thus, the assessing officer did not express any doubts or objections to the authenticity of the confirmations filed. In view of
ITA Nos. 7028-7030, 3663/Mum/2016 this, the disallowance of Rs. 77,85,131/- is deleted. This ground of appeal is allowed.”
Aggrieved, now Revenue is in appeal before Tribunal.
We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the assessee has filed additional evidences in the shape of confirmations from the concerned parties during remand proceedings but the AO objected to the same. Even the CIT(A) has not doubted that these confirmations are non genuine and no verification is carried out. In the absence of any finding and the decision being cryptic, we set aside this issue and remand the matter back to the file of the AO for fresh adjudication. The AO will carry out limited verification as regards to these confirmations only. The AO will carry out verification of these parties and accordingly will allow the claim of the assessee. This issue of Revenue’s appeal is allowed for statistical purposes.
The next issue in this appeal in ITA No. 7029/Mum/2016 for AY 2011-12 is as regards to the order of CIT(A) deleting the disallowance of transaction reported in ITS. For this Revenue has raised the following ground No. 5 :-
“5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance of transactions of Rs. 15,68,220/- as reported in ITS which could not be reconciled by the assessee.”
We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that the
ITA Nos. 7028-7030, 3663/Mum/2016 AO added the transaction as per AIR details, with reference to item No. 1 at Serial No. 1 amounting to Rs. 15,68,220/-. The AO added this as the assessee could not prove the same. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) deleted the disallowance after taking remand report from the AO by observing in Para 7.4.2 as under:-
“7.4.2 This ground relates to addition of Rs.15,68,220/- being ITS details are not reconciled. The assessing officer has discussed this at para-7 of his order. He has observed that the appellant stated that this transaction did not pertain to them, therefore the assessing officer rejected this contention and made the addition.
7.4.2 In his remand report dated 18/01/2016, at Para 3.1 the assessing officer observed, “In response of the addition made by the AO of Rs. 15,68,220/- relying upon AIR information, the assessee in demand proceedings has submitted copy of bill issued by ………………………….and copy of ledger ………….transaction carried out during the FY 2010-11 relevant to AY 2011-12. It is submitted by the assessee that you to oversight the said transaction was not owned to explained during the scrutiny proceedings. In support of its claim the assessee has also submitted Ledger of ………..transactions done during the AY 2011-12 which resulted to loss of Rs. 1,13,77,119/ on this account. In view of the details filed by the assessee the issue of addition may be decided accordingly.
10 ITA Nos. 7028-7030, 3663/Mum/2016 7.4.2 I have given due consideration to the detailed explanation filed by the appellant and have also noted that the assessing officer has not offered any adverse amends. Since the impugned transactions has been accounted for in the P&L account, there has been no loss to revenue. In view of this, this ground of appeal is allowed and the addition of Rs. 15,68,220/- is deleted.”
We find from the above that the assessee has been able to explain this transaction as appearing in AIR information and this has been verified by the AO. Since, the AO has not raised any objection as regards to genuineness of transaction and fact coming is that this transaction is recorded in the books of account, we need not to interfere in the order of CIT(A). This issue of Revenue’s appeal is dismissed.
In the result, the appeal of Revenue in ITA No. 7029/Mum/2016 is partly allowed. Rest of the appeals of revenue in ITA No. i.e. 7028, 7030 & 3663/Mum/2016 are dismissed.
Order pronounced in the open court on 12-07-2018.
Sd/- Sd/- (राजेश कुमार /RAJESH KUMAR) (महावीर स िंह /MAHAVIR SINGH) (लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER) मुिंबई, ददनािंक/ Mumbai, Dated: 12-07-2018 सुदीप सरकार, व.निजी सचिव / Sudip Sarkar, Sr.PS
11 ITA Nos. 7028-7030, 3663/Mum/2016 आदेश की प्रनिलिपप अग्रेपिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त(अपील) / The CIT(A) 3. आयकर आयुक्त / CIT 4. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण, मुिंबई / DR, ITAT, 5. Mumbai गार्ड फाईल / Guard file. 6.
आदेशािुसार/ BY ORDER, त्यावपत प्रयत //True Copy// उप/सहायक पंजीकार (Asstt. Registrar) आयकर अपीिीय अचिकरण, मुिंबई / ITAT, Mumbai