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Income Tax Appellate Tribunal, DIVISION BENCH ‘A’, CHANDIGARH
Before: MS DIVA SINGH & MS. ANNAPURNA GUPTA
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.
Ground Nos. 1 and 2 raised by the Revenue relate to
the issue of disallowance of depreciation on “paper brand”
and are being taken up together. The said grounds read as
under:
"Whether on the fact and circumstances of the case, the Ld. CIT(Appeals)-2, Noida has erred in deleting the addition of Rs.18,23,590/- made by Assessing Officer on a/c of disallowance of depreciation on "paper brand" when brands are not covered under the provision of 32(1) and are not a depreciable assets?" 2. "Whether on the fact and circumstances of the case, the Ld. CIT(Appeals)-2, Noida has erred in deleting the addition of Rs.18,23,590/- made by Assessing Officer on a/c of disallowance of depreciation on "paper brand" by relying on the decision of Hon'ble ITAT, New Delhi 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?" 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.
The matter was carried in appeal before the
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.
During the course of hearing before us, the Ld. DR
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.
The Ld. counsel for assessee, on the other hand, relied
upon the order of the Ld.CIT(Appeals).
We have heard the rival contentions. We find no merit
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.
Ground Nos.3, 4 and 5 raised by the Revenue all relate
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:
"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" when the complete plant was not put to use by the assessee during the year?" 4. "Whether on the fact and circumstances of the case, the Ld. CIT(Appeals)-2, Noida has erred in deleting the addition of Rs.20,08,107/- made by Assessing Officer when during the appellate proceedings for A.Y. 2008-09 before the Ld. CIT(A), New Delhi the Assessing Officer in his remand report had strongly objected to admission of additional evidences & thus the order of the Hon'ble ITAT is against the decision of the Hon'ble ITAT, New Delhi in the case of ITO, Ward-24(3) vs Kuldeep & against the decision of the Hon'ble Delhi High Court in the case of
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 Ld.CIT(Appeals) deleted the disallowance following
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.
During the course of hearing before us, at the outset,
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.
Vis-à-vis ground Nos.3 and 5, the Ld. DR admitted
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.
Ld.Counsel for the assessee relied on the order of the
CIT(A).
In view of the above, since it has been fairly admitted
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 .
In the result, the appeal of the Revenue is 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