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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH AHMEDABAD
PER S. S. GODARA, JUDICIAL MEMBER
This Revenue’s appeal for assessment year 2008-09 arises against the CIT(A)-6, Ahmedabad’s order dated 30.06.2014, in case no. CIT(A)-VI/DCIT (OSD) R-1/187/12-13, reversing Assessing Officer’s action disallowing assessee’s depreciation claim of Rs.57,23,043/- ; in proceedings u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short “the Act”. Heard both sides. Case file perused.
The Revenue’s solitary substantive grievance seeks to revive the above depreciation disallowance amounting to Rs.57,23,043/- pertaining to assessee’s
ITA No. 2394/Ahd/14 (DCIT(OSD) vs. Bhagwati Spherocast P. Ltd.) A.Y. 2008-2009 - 2 -
melting furnace purchased during the year stated to be in the nature of an energy saving machine being a flameless furnace. Learned Departmental Representative vehemently pleads that the CIT(A) has not appreciated the assessee to have claimed higher rate of depreciation applicable to plant and machinery “Iron & Steel Industry”-Rolling Mill Roles @ 80% for more than 180 days, 40% for less than that, 10% for less than 180 days against above normal depreciation applicable to plant and machinery of 15% or 7.5% in the nature of additional depreciation; as the case may be.
The assessee derives strong support from the impugned lower appellate findings deleting the depreciation disallowance in question as follows:
“4.4 In the assessment order u/s 143(3) r.w.s. 147 the A.O observed that the appellant had claimed depreciation @ 80% and additional depreciation @ 10% on the plant & machinery; the higher rate of depreciation and the additional depreciation were applicable for Iron and steel Industry Rolling Mills; since the appellant was running foundry, the said rates are not applicable; appellant was entitled to depreciation @ 15% and was not entitled to additional depreciation. Accordingly, the excess depreciation claimed was disallowed. 4.5 The contentions of the appellant are that the appellant was engaged in the business of manufacturing SG iron, alloy & high duty cast iron casting furnace ; it had purchased melting furnace during year; the said flameless furnace results in energy saving; the rate of depreciation allowable would be 80%; opening written down value of the block of assets cannot be disturbed; disallowing part of the depreciation claimed has no revenue effect over the years, as the appellant has been making profits in the succeeding years; depreciation @ 80% was allowed on a similar furnace purchased during the previous year relevant to A.Y. 2005-06; no disallowance of the depreciation was made in the scrutiny assessment for A.Y. 2006-07 and therefore impugned disallowance may be deleted. 4.6 Having considered the facts of the matter. I am inclined to accept the contentions of the appellant. As seen from sub-para 8(ix) of Appendix-I, under the head 'machinery & plant', energy saving devices being (b) "flameless furnace and continuous pusher type" furnace" are entitled to depreciation @ 80%. Appellant has furnished necessary evidence to show that the induction melting furnace purchased during the year is flameless furnace, which is energy saving device. Therefore, A.O is directed to delete the disallowance of depreciation. In this connection, it is also seen that in the previous year relevant to A.Y. 2005-06 depreciation was allowed @ 80% on a similar furnace purchased during that year. It is also seen that the appellant admitted income falling under the maximum marginal rate [in the succeeding assessment years from 2009-10 to 2012-13],
ITA No. 2394/Ahd/14 (DCIT(OSD) vs. Bhagwati Spherocast P. Ltd.) A.Y. 2008-2009 - 3 -
substantiating the contention that the disallowance of depreciation would be tax neutral. Impugned disallowance is deleted. This ground of appeal is allowed.”
We have given our thoughtful consideration to rival submissions. It has come on record that the CIT(A) refers to an identical issue being decided in assessee’s favour in assessment year 2005-06 qua a similar furnace. Pages 13 to 14 in the lower appellate order sufficiently indicate relevant details of the induction melting furnace purchased and treated eligible for depreciation in the said assessment year. Learned Departmental Representative fails to dispute in the course of hearing the fact that assessee’s furnace being a flameless one is an energy saving device as per Appendix-I of the Income Tax Rules prescribing depreciation rate thereupon @80% . We therefore find no reason to disturb CIT(A)’s conclusion under challenge.
This Revenue’s appeal is accordingly dismissed.
[Pronounced in the open Court on this the 29th day of September, 2017.]
Sd/- Sd/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 29/09/2017 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।