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Income Tax Appellate Tribunal, BENCH ‘C’ KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Dr.Arjun Lal Saini, AM ]
The captioned appeal filed by the assessee pertaining to A.Y.2008-09, is directed against the order passed by the Commissioner of Income Tax –(A)-21, Kolkata in Appeal No.1002/DCIT,Cir-22,Kol/CIT(A)-21/KOL/14-15, dated 15.01.2016, which in turn arises out of an order passed by the Ld. Assessing Officer u/s 143(3) of Income Tax Act, 1961 (in short, ‘the Act’) dated 30.12.2010.
The facts of the case are as stated in brief. The Assessee filed its return of income voluntarily on dated 29.09.2008 declaring a total income at Rs. ‘Nil’ with a current year loss to the tune of Rs.20,26,997/- and claimed refund of Rs.60,000/-. The income tax return was processed u/s 143(1) of the Act by the department, but later on the case was selected for scrutiny u/s 143(3) of the Act and the AO has completed the assessment u/s 143(3) by making the disallowance in respect of depreciation of Rs.20,72,643/-.
Sarada Pharmacy A..Y.2008-09 3. Aggrieved from the order of the ld. AO, the assessee has filed an appeal before the ld. CIT(A), who has also confirmed the order of the AO by observing the followings :- “From the scheme of arrangement, or apparent from the materials on record, shows that the referred Machine was provided by M/s. Stryker India (P) Ltd. on loan basis and the said navigation system was used only once by one Dr. S. Bhattacharya for only one surgery. In course of assessment proceeding the assessee was asked to give explanation as to why assessee's claim of depreciation not be allowed as no evidence whatsoever has been produced to show that the machine was put to use and the basis on which the machine was taken from M/s. Stryker. In response the Ld. AR had produced a self made bill dated 04.08.2007 in the consignee's name (one Shri S. Banerjee) who was claimed to have been operated by Dr. S. Bhattacharya and claimed to have put the machine in use during the year for more than 180 days. However, the compliance received from M/s. Stryker India (P), Ltd. shows that by virtue of one invoice bill dated 30.06.2007 the total system costing Rs.35,86,563.64/- was sent to the assessee on loan basis and the same was returned to M/s. Stryker India (P) Ltd. on 27.10.2009 with amount refunded to the assessee of Rs.32,55,926.82/-. The response of M/s. Stryker India (P) Ltd. clearly established the fact that the referred machine was taken by the assessee on loan basis and subsequently the said system was duly returned to the actual owner at the almost same price of Rs.32,55,926.82/- by the appellant. The records show that the appellant had claimed depreciation of Rs.20,72,643/- in the A.Y. 2008-09 and Rs.8,28,988/- (in A.Y. 2009-10), Rs.8,36,554/- (A.Y. 2010-11) and Rs.8,503 (in A.Y. 2011-12). In this regard, it is seen that the appellant had not shown any capital gain in the year of returning the machine to M/s. Stryker India (P) Ltd. Had the assessee been the real owner, it would have claimed capital gain in the A.Y. 2010-11 but here the assessee has not claimed to be the owner. In view of above, it is clearly established that the appellant was not the real owner of the referred machine" and the system was taken from M/s. Stryker India (P) Ltd. on loan basis by the appellant. In view of this, the disallowance, of the claim of depreciation of Rs.20, 72,643/- by the appellant, by the Assessing Officer is correct.”
Not being satisfied with the order of the ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal.
1. That the Ld. CIT(A) has erred in sustaining disallowance of depreciation of Rs.20,72,643/- without appreciating the fact that the machine was purchased on the basis of genuine commercial tax invoice.”
The solitary grievance of the assessee is that the AO has not allowed the depreciation claimed by the assessee at Rs.20,72,643/-. The assessee has claimed to have purchased the machine and used for two years and after two years the assesee has returned the machine to the original seller and the assessee has claimed
Sarada Pharmacy A..Y.2008-09 depreciation for two years. The ld. AO stated that in order to claim the depreciation there should be ‘ownership of the asset’ and there should be ‘put to use’ by the assessee during the previous year. The ld. AO has doubted the tax invoice of the machines purchased and he has also objected that the machine has never been used by the assessee. Therefore, the claim of depreciation by the assessee is not allowed. Since the assessee has failed to demonstrate the proper ownership of the machine and put to use during the relevant previous year hence the AO has disallowed the claim of depreciation. The ld. CIT(A) has also confirmed the action of the AO only on two grounds that the assessee has failed to prove the ‘ownership of the machine’ and ‘put to use’ during the relevant previous year. Hence now the assessee is in appeal before us on this solitary grievance.
Before us, the ld. AR for the assessee has submitted the ledger account, the date on which the machine was purchased, tax invoice in respect of the supply of the machine and other details pertaining to the machine.
On the other hand, the ld. Departmental Representative for the revenue has primarily reiterated the stand taken by the AO and the ld. CIT(A), which we have already noted in our earlier para, and is not being repeated for the sake of brevity.
Having heard the rival submissions, perused the materials available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the facts narrated by him above. He has shown us the documents like tax invoice of the machinery, ledger accounts, payment details and the confirmations. These are the sufficient evidence to claim the ownership of the fixed asset. Therefore we are of the view that this issue requires fresh examination at the end of the AO. The ld. AO should verify the documents relating to ownership and put to use. Accordingly, we set aside the order of the ld CIT(A) and restore this issue, to the file of the Assessing Officer with the direction to ascertain the ‘ownership’ and ‘put to use’ after taking into account the tax invoice, confirmation, proof to returned back the machine to Sarada Pharmacy A..Y.2008-09 original seller, the ledger account, and other documents submitted by the assessee. Therefore we direct the AO to examine the issue in the light of the discussion made supra.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 19.10.2016.