M/S MAC ALLOYS PVT. LTD.,KOLKATA vs. ITO, WD-3(4), KOLKATA, KOLKATA

The assessee in the present case is a company which is carrying on the business of manufacturing of iron ingots. The return of income for the year under consideration was filed by it on 13.11.2007 declaring a total income of Rs. 11,71,641/-. In the said return, additional depreciation of Rs. 1,74,874/- was claimed by the assessee on moulds. According to the AO, additional depreciation under section 32(1)(iia) of the Act was available only in respect of plant and Assessment Year: 2007-08 M/s. MAC Alloys Pvt. Ltd. machinery and since the moulds, according to the AO, was not an item of plant and machinery, he disallowed the claim of the assessee for additional depreciation on mould. During the course of appellate proceedings before the Ld. CIT(A), it was contended on behalf of the assessee that normal depreciation was allowed by the AO on the mould by treating the same as plant & machinery but only the claim for additional depreciation was disallowed. The Ld. CIT(A) did not controvert this contention raised on behalf of the assessee. He however held that no documentary evidence was produced by the assessee either during the course of assessment proceedings or even during the course of appellate proceedings to substantiate this claim for purchase and installation of mould in the year under consideration. He accordingly confirmed the disallowance made by the AO on account of assessee’s claim for additional depreciation on merit. Aggrieved by the order of the Ld. CIT(A), assessee has preferred this appeal before the Tribunal.

I have heard the arguments of both the sides and also perused the relevant material available on record. The learned counsel for the assessee has contended that the mould was treated by the AO as plant & machinery while allowing depreciation at the normal rate and he therefore was not justified in disallowing the assessee’s claim for additional depreciation on the ground that it was not an item of plant and machinery. He has contended that when this infirmity in the decision of the AO was brought to the notice of the Ld. CIT(A) by the assessee, the Ld. CIT(A) still confirmed the disallowance made by the AO on an altogether different ground that no evidence was produced by the assessee to substantiate its claim for purchase and installation

Assessment Year: 2007-08 M/s. MAC Alloys Pvt. Ltd. of mould. He has contended that the assessee company is in a position to support and substantiate its claim for purchase and installation that mould on evidence and urged that an opportunity may be given to the assessee to substantiate its claim by sending the matter back to the AO for verification. The learned DR, on the other hand has contended that he has no objection if an opportunity is given to the assessee by sending the matter back to the AO for verification of the assessee’s claim on account of additional depreciation on mould. The impugned order of the Ld. CIT(A) on this issue is accordingly set aside and the matter is restored to the file of the AO for deciding the same afresh after verifying the claim of the assessee for additional depreciation on mould on merit in accordance with law.

In the result, the appeal of the assessee is treated as allowed for statistical purpose. Order Pronounced in the Open Court on 18th July, 2018.