JCIT(OSD), C-1(1), CHANDIGARH vs. M/S KUANTUM PAPERS LTD., CHANDIGARH

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH

BEFORE MS DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.55/Chd/2018 (Assessment Year : 2014-15) The D.C.I.T., Vs. M/s Kuantum Papers Ltd., Circle-1(1), SCO 18-19, 1st Floor, Sector 8-C, Chandigarh. Chandigarh. PAN: AADCA2231K (Appellant) (Respondent)

Appellant by : Smt. Chanderkanta, Add.CIT Respondent by : Shri Vineet Krishan, Adv. Date of hearing : 03.05.2018 Date of Pronouncement : 10.05.2018

ORDER PER ANNAPURNA GUPTA, A.M.:

This appeal filed by the Revenue is directed against

the order of learned Commissioner of Income

Tax(Appeals)-2, Noida dated 25.10.2017, relating to

assessment year 2014-15.

the issue of disallowance of depreciation on “paper brand”

and are being taken up together. The said grounds read as

under:

No.2263/Del/2012 dated 11.05.2017 for the assessee's case for A.Y. 2008-09, without adverting to the fact that each assessment year is separate as per the Income Tax act,1961?" 3. Briefly stated the assessee is engaged in the business

of manufacturing of writing & printing paper. While framing

assessment for the impugned assessment year, the AO

disallowed depreciation claimed by the assessee of Rs.

18,23,590/-on “paper brands” purchased by the assessee

in F.Y 2005-06 for a total consideration of

Rs.6,03,52,000/-, holding that “paper brand” was not a

depreciable asset and rather it was an appreciable asset

whose value enhanced with time, following his order passed

u/s 143(3) of the Act, for A.Y 2008-09 in the case of the

assessee.

Ld.CIT(Appeals) who deleted the disallowance, following the

decision of the I.T.A.T. in the case of the assessee for

assessment year 2008-09 and assessment years 2006-07 to

2013-14, wherein identical issue was found to have been

decided in favour of the assessee.

though fairly conceded that the I.T.A.T. had decided

identical issue in favour of the assessee in assessment year

2008-09 and assessment years 2006-07 to 2013-14 vide

their orders passed in ITA No.2263/Del/2012 and in ITA

Nos.1339 to 1346/Del/2012,he however relied upon the

order of the Assessing Officer.

upon the order of the Ld.CIT(Appeals).

in the present grounds raised by the Revenue. Admittedly,

identical issue has been decided by the I.T.A.T. in the case

of the assessee itself, in its favour. No distinguishing facts

have been brought to our notice by the Ld. DR. We,

therefore, see no reason to interfere in the order of the

Ld.CIT(Appeals) who has followed the order of the I.T.A.T.

passed in the case of the assessee itself on identical issue

while deleting the disallowance so made. Ground of appeal

Nos.1 and 2 raised by the Revenue are, therefore,

dismissed.

to the issue of disallowance of depreciation on chemical

recovery plant. The same are, therefore, being taken up

together for adjudication. Ground Nos.3, 4 and 5 read as

under:

Manish Buildwell Pvt. Ltd., (2012) wherein it has been held that Ld. CIT(A) was not justified in deleting the addition without further giving an opportunity to the AO & thus the requirement of giving the AO andopportunityasperRule46A(3),was not met?" 5. "Whether on the fact and circumstances of the case, the Ld. CIT(Appeals)-2, Noida has erred in deleting the addition of Rs.17,06,892/- made by Assessing Officer on a/c of disallowance of depreciation on "chemical recovery plant" by relying on its decision in ITA No. 2263/Del/2012 dated 11.05.2017 for the assessee's case for A.Y. 2008-09, without adverting to the fact that each assessment year is separate as per the Income Tax act, 1961?" 9. Brief facts relevant to the issue are, during the year

under consideration, the assessee had claimed depreciation

of Rs.2,33,55,272/- on the chemical recovery plant which

had been installed at the factory premises of the assessee

at Saila Khurd, District Hoshiarpur, Punjab. The total cost

of plant was at Rs.42,53,48,679/-. The Assessing Officer

noted that the issue had been dealt while framing the

assessment u/s 143(3) of the Act for assessment year 2008-

09 of the assessee, wherein depreciation had been

disallowed on finding that the aforesaid plant & machinery

had not been put to use in the month of March, 2008 as

claimed by the assessee, but had been put to use in the

month of April, 2008. The Assessing Officer noted that the

assessee’s appeal against the said order had been allowed

by the CIT(Appeals). But further taking note of the fact that

against the aforesaid order of the CIT(Appeals), the

Revenue had filed an appeal before the Hon'ble ITAT and

therefore to keep the matter alive, depreciation claimed on

chemical recovery plant was disallowed for assessment

year 2008-09, for calculating Written Down Value

(hereinafter referred to as “WDV”) of the asset and

accordingly the depreciation for the impugned year was

worked out at Rs. 2,16,48,380/- as against

Rs.2,33,55,272/- claimed by the assessee. The

disallowance to the extent of excess depreciation claimed

therefore of Rs. 17,06,892/- was made. The relevant

findings of the Assessing Officer at para 4 of his order is as

under:

“4. The assessee, during the year under consideration, has claimed depreciation of Rs.2,33,55,272/- on the chemical recovery plant which has been installed at the factory premises of the assessee at Saila Khurd, District Hoshiarpur, Punjab. The total cost of plant is at Rs.42,53,48,679/-. A detailed discussion on the above matter has been made in the assessment order u/s 143(3) dated 30.12.2010 for A.Y. 2008-09. The AO disallowed depreciation in A.Y. 2008-09 and has concluded that the aforesaid plant & machinery was not put to use in the month of March, 2008 as claimed by the assessee but has been put to use in the month of April, 2008. Therefore, disallowance of depreciation was made in A.Y. 2008-09. The assessee filed an appeal against order u/s 143(3) and the Hon'ble CIT(A)-IV, New Delhi vide order dated 16.02.2012 in Appeal No. 98/10-11 has deleted the disallowance of depreciation on chemical recovery plant. Against the aforesaid order of the CIT(A), the Revenue has filed an appeal before the Hon'ble ITAT and therefore to keep the matter alive depreciation claimed on chemical recovery plant has been disallowed in the assessment u/s 143(3)/153A for A.Y. 2008-09. As the depreciation for A.Y. 2008-09 has been disallowed and the depreciation in A.Y. 2009-10 has been allowed on the full cost of plant as the same was put to use in April, 2008. Total depreciation of Rs. 14,88,72,038/- has been allowed in A.Y. 2009-10, depreciation of Rs. 4,14,71,496/- has been allowed in A.Y. 2010-11, depreciation of Rs. 3,52,50,772/-has been allowed, in A.Y. 2011-12, depreciation of Rs.2,99,63,156/- has been allowed in A.Y. 2012-13 and depreciation of Rs.2,54,68,683/- has been allowed in A.Y. 2013-14. The WDV as on 01.04.2013 amounts to Rs.14,43,22,535/- on which depreciation allowable for the year under consideration comes to Rs.2,16,48,380/- as against depreciation of Rs.2,33,55,272/- claimed by the assessee. Therefore, the net disallowable depreciation comes to Rs.17,06,892/-. In view of the above, depreciation of Rs.17,06,982/- is disallowed and added to the income of the assessee. The assessee furnished inaccurate particulars of income and therefore, provisions of section 271(l)(c)

are attracted and therefore, penalty proceedings u/s 271(l)(c) are also considered separately.”

the orders of the I.T.A.T. in the case of the assessee for

assessment year 2008-09 and for assessment years 2006-

07 to 2013-14 wherein he found that identical issue of

disallowance of depreciation of chemical recovery plant had

been decided in favour of the assessee.

it was pointed out that ground No.4 relating to the

admission of additional evidences was not relevant to the

present case since no additional evidences were filed in the

present case. Ground No.4 raised by the Revenue,

therefore, is dismissed.

that the basis for making disallowance in the present case,

was the disallowance of depreciation on the said asset in

assessment year 2008-09 and the allowance thereof in

subsequent years ,which consequently resulted in WDV as

at the beginning of the impugned year being

Rs.14,43,22,535/- ,entitling the assessee to depreciation

thereon of Rs.2,16,48,380/- as against Rs.2,33,55,272/-

claimed by the assessee. The Ld.DR fairly admitted that the

disallowance of depreciation made in A.Y 2008-09 had

been deleted by the I.T.A.T. in its aforestated order and the

basis of disallowance made in the impugned year therefore

did not survive.

CIT(A).

by the Ld. DR that the disallowance of depreciation in the

chemical recovery plant does not survive, since the very

basis on which it was made by the Assessing Officer was

the disallowance of depreciation on the chemical recovery

plant in assessment year 2008-09, resulting in reducing

the claim of depreciation in the impugned year, which has

been deleted by the I.T.A.T. in its order passed in

assessment year 2008-09, we find no reason to interfere in

the order of the CIT(A).

Ground Nos.3 and 5 raised by the Revenue are also

dismissed .

Order pronounced in the open court.

Sd/- Sd/-

(DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 10th May, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh