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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ : NEW DELHI
Before: SHRI J.S. REDDYSHRI CHANDRA MOHAN GARG
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal by the Revenue has been directed against the order of the CIT(A)-VIII, New Delhi dated 30.09.2013 in Appeal No. 372/2010-11 for AY 2011-12.
Ground Nos. 2, 3 and 4 are general in nature, which need no adjudication. The remaining grounds of the Revenue read as under:
“1. Whether on the facts and in the circumstances of the case the CIT(A) erred in law and on facts in deleting the addition of Rs. 9,67,404/- being disallowance of additional depreciation on electrical fittings.
1.1. Whether on the facts and in the circumstances of the case the CIT(A) erred in treating electrical fitting being part of plant and machinery in view of the fact that the same are treated distinct and separate block of asset.”
Apropos these grounds, we have heard the arguments of the ld. D.R and carefully perused the relevant material on record before us. The ld. D.R, supporting the action of the AO, submitted that the AO made addition of Rs. 9,67,404/- by observing that the assessee has extended the definition of ‘’plant and machinery’ to include electrical fittings which is separate from plant and machinery in the block of assets and hence the same cannot be considered as a part of any plant and machinery by any stretch of imagination. The ld. D.R pointed out that the Income –tax Act, 1961 provides additional depreciation only on plant and machinery, therefore, the AO rightly disallowed the same for electrical fittings and the ld. CIT(A) deleted the addition without any good cause or justified reason. The ld. D.R submitted that the impugned order maybe set aside by restoring that of the AO.
When the case was called for hearing, neither the respondent assessee nor the ld. A.R appeared before us. However, on perusal of the appeal record, we found that the appeal could be decided in the absence of the assessee after hearing the ld. D.R. on the sole issue. Therefore, we proceed to decide the appeal in the absence of the assessee.
On a careful consideration of the submissions and from the operative part of the impugned order, we note that the ld. CIT(A) granted relief to the assessee after considering the submissions of the ld. A.R given at pages 8 to 10 of his order. The ld. A.R relied on sub- clause (iia) of clause 1 of section 32 is reproduced herein below:
“(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing 90[or in the business of generation or generation and distribution of power], a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) :
Provided that no deduction shall be allowed in respect of— (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (B) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or (C) any office appliances or road transport vehicles; or (D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profits and gains of business or profession” of any one previous year;]”
The ld. A.R submitted before the ld. CIT(A) that the assessee company had set up an industry by installing the plant to manufacture MS ingots. The legislation, while defining plant u/s 143(3) of the Act specified that it did not include tea bushes, live-stock or buildings or furniture and fittings. The company was entitled to normal depreciation @15% on entire plant and additional depreciation @ 20% on entire plant. The ld. A.R further argued that once the AO admitted that the assessee company was entitled to depreciation on entire plant @ 15%, instead of 10%, he cannot hold at the same time that the electrical fitting was not part of plant. Satisfied with the submissions of the ld. A.R, the ld. CIT(A) has held as under:
I have perused the assessment order, written submissions of the ld. A.R and discussed the matter with him carefully. The AO had allowed all the normal depreciation at the rate of 15% and additional depreciation @ 20% on plant and machinery, electrical fittings and transformer to the appellant, except additional deprecation at the rate of 20% on electrical fittings of Rs. 9,67,404/-
The grievance of the appellant is restricted to this figure only.
The appellant satisfies all the conditions for obtaining the additional depreciation on electrical fittings. The AO should examine very carefully the conditions laid down for allowing additional depreciation. The Government had allowed additional depreciation to increase manufacture activities in the country. So that we can compete with our neighbours [china] in producing quality produces in international market. Therefore, the AO is directed to allow this additional deprecation of Rs. 9,67,404/- on electrical fittings.”
In view of the above, the AO denied additional deprecation @ 20% on electrical fittings which is in extricable part of plant and machinery and both are used simultaneously and plant and machinery cannot be used without electrical fittings. Hence, the ld. CIT(A) rightly granted relief to the assessee. We are unable to see any 5 ambiguity or any other valid reason to interfere with the said impugned order and we uphold the same. Accordingly Ground Nos. 1 & 1.1 of the Revenue being devoid of merits stand dismissed.
In the result, the appeal of the Revenue is dismissed. The decision is pronounced in the open court on 01.10.2015.