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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri N.K. Pradhan
आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned orders dated 25/10/2010 & 09/09/2011 for the Assessment Years 2007-08 & 2008-09 of the Ld. First Appellate Authority, Mumbai.
2 M/s. M.J. Labs P. Ltd. & 8312 /Mum/2011
The common ground raised
by the assessee pertains to upholding the addition of excess depreciation of Rs. 27,31,316/- (Assessment Year 2007-08) and Rs. 21,10,907/- (Assessment Year 2008-09) on account of denial of depreciation claimed towards plant & machinery. The crux of argument advanced by Shri Rashmikant C. Modi, ld. counsel for the assessee is that the machinery in question is a energy saving device, therefore the assessee is entitled for depreciation @ 80%. Alternatively, it was argued that if the claim is not granted at the rate of 80%, then such plant & machinery may be in the category of computers on which the claim is allowable at 60%. Our attention was invited to the letter dated „nil‟, obtained from Dr. Prakash K. Bhansali, M.Sc., Ph.D., DCP, Ayurved Ratna, having experience of 26 years in R & D & analytical field as Technical Manager (approved by FDA in chemical instruments, micro, sterility, Pyrogen & Toxicity Testing) attached in the paper book filed by the assessee. The crux of argument on behalf of the assessee is that the assessee falls under the category of “Energy Saving Devices” and thus, entitled for higher rate of depreciation i.e. 80%. 2.1. On the other hand, ld. DR Shri Neil Philiph defended the addition by contending that the stand taken in the assessment order / impugned order is quite justifiable as the claimed machinery is not energy saving device. This stand of the ld. DR is that the assessee is entitled for depreciation @
3. M/s. M.J. Labs P. Ltd. & 8312 /Mum/2011 10% on general electrical installation and 15% on claimed electrical Energy Saving Devices. 2.2 We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee company is engaged in business activity of conducting lab test in the field of Pharmaceuticals, declaring income of Rs. 17,78,157/-. The case of the assessee was selected for security and therefore, while framing the assessment under section 143(3) of the Act on 11/12/2009, the total income was assessed at Rs. 45,21,880/-. While doing so, the ld. Assessing Officer disallowed the claimed depreciation @ 80% on plant and machinery. The plant and machinery, held by the assessee was claimed to false under the category of “Energy Saving Devices”, entitled for higher rate of depreciation at 80%. The ld. Assessing Officer merely allowed the depreciation @15% and disallowed to the extent of Rs. 27,31,316/- out of claimed Rs. 47,16,957/-. It is noted that on general electrical installation, the assessee claimed depreciation @15% whereas on the electrical installation (Energy Saving Devices) the claimed depreciation is @ 80%. On appeal before the Ld. Commissioner of Income Tax (Appeals), the stand taken in the assessment order was affirmed. The assessee is in further appeal before this Tribunal. 2.3 It is worth mentioning that this appeal was heard on 03/11/2016 wherein the Bench directed the assessee to substantiate its claim that the plant & machinery is in fact an 4 M/s. M.J. Labs P. Ltd. & 8312 /Mum/2011 Energy Saving Device. Today i.e. 10/11/2016 the assessee produced a certificate from an expert namely Dr. Prakash K. Bhansali. The letter is reproduced hereunder for ready reference and analysis:-
5 M/s. M.J. Labs P. Ltd. & 8312 /Mum/2011 2.4 We have perused the letter of the expert namely Dr.Prakash K. Bhansali, who verified the instrument broachers of the assessee and certified that the instrument namely Micro-processor / Micro-controller is an energy saving device/instrument with support of software and computer with UPS. The authenticity of this certificate was not challenged by the Revenue. It is also noted that another letter dated 10/06/2013 (page No. 37 of the paper book) has been annexed by the assessee, wherein Dr. Nitin R. Nimkar has identically certified. The said letter is also reproduced hereunder:-
6 M/s. M.J. Labs P. Ltd. & 8312 /Mum/2011 2.5 Considering the arguments and the aforementioned letters from the expert/technical persons, wherein it has been certified that the claimed instruments are micro processor / micro controller are Energy Saving instruments working with the support of software and computer. No contrary evidence, contradicting the claim of the assessee, was produced before us by the Revenue, therefore, we find merit in the claim of the assessee and allow the same. However, it is noticed from page No. 29 of the list of Lab Equipments there are whirlpool refrigerator and Samsung refrigerator (Item No. 11 & 12) which cannot be said to be Energy Saving Device, consequently on both these items/ refrigerators, the depreciation is allowable only to the extent of 15% and on the remaining equipments which are held to be Energy Saving Devices (as mentioned in the aforementioned letters issued by Technical persons) the depreciation is allowable @ 80% which is otherwise allowable on such item as is evidenced from the table available at pages 45 to 48 of the paper book mentioning the rates of depreciation for Assessment Years 2003-04 and onwards, detailed in Appendix-I wherein at page No. 47 [clause ix-B(c)] the energy saving devices based on Micro-processor based control systems. Thus, this ground of the assessee is partly allowed. This conclusion of ours will be identically applicable to the Assessment Year 2008-09 (ITA No.8312/MUM/2011) also.