Farmson Pharmaceuticals Gujarat ... vs Assessee

Farmson Pharmaceuticals Gujarat Pvt. Ltd. ACIT 1(2) 28-35, GIDC Industrial Estate Vs Baroda. Nandesari, Baroda.

PAN : AAACF 3358 B

अपीलाथ!/ (Appellant) "#यथ!/ (Respondent)

Assessee(s) by : Shri Milin Mehta, AR Revenue by : Shri Roopchand, SR

सन ु वाई क तार ख/ Dateof Hearing : 30/01/2015 घोषणा क तार ख / Date of Pronouncement: 19/02/2015

आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER: These are appeals filed

by the assessee against the order of the CIT(A)-I, Baroda dated 10.12.2010 and 14.12.2010 for Asstt.Years 2000-01 and 2001-02 respectively.

2. In both these appeals, common ground no.1 and 2 of the appeal reads as under:

"1. The ld.CIT(A) erred in fact and in law in confirming the action of the AO in invoking the provisions of the section 147 of the Act, 1961 and completing the assessment, commenced under invalid exercise of powers u/s.147 of the Act.

The ld.CIT(A) erred in fact and in law in confirming the action of the AO in continuing with reassessment proceedings rejecting the objections raised by the appellant during the course of proceedings.

ITA No.663 and 664/Ahd/2011 2

2. The ld.CIT(A) erred in fact and in law in confirming the action of the AO in making disallowance/additions/adjustments in issues other than the issues on which the reopening of assessment is made.

3. At the time of hearing, the AR of the assessee submitted that he is not pressing these grounds of the appeal. Hence, the ground nos.1 and 2 of the appeal are dismissed for want of prosecution in both the years under appeal.

4. The common ground no.3 of the appeal, in both the years, is directed against the order of the CIT(A), confirming action of the AO in not allowing 100% depreciation and restricting the same to 25% on pollution control equipments.

5. Brief facts of the case are that the AO observed that the assessee has claimed depreciation allowance at 100% on pollution control equipment, which when verified do not match with the prescribed rates of depreciation allowance of the pollution control equipments in the relevant appendix provided in I.T.Rules. The AO show-caused assessee on this issue. The assessee failed to provide any explanation or submitted documents in support of its claim. Therefore, the AO restricted the disallowance to 25% as against 100% claimed by the assessee.

6. On appeal, the CIT(A) held that except for expenditure on electronic motor of Rs.90,672/-, and Rs.7,29,486/- on spin flash dryer, the rest of the expenditure is on components used in the existing control equipments. The CIT(A) further observed that the spin flash dryer was not indicated in Appendix-1 of the depreciation table, and therefore, the AO was justified in deleting depreciation at 25% on investment of Rs.7,29,486/- on spin flash dryer. He further observed that the expenditure on electronic motor of Rs.90,672/- was also eligible for depreciation at 25%. He held that other expenditure on ball ITA No.663 and 664/Ahd/2011 3

bearing, channels, belts, plates, pumps, etc are eligible for 100% depreciation. He, accordingly, directed the AO to work out depreciation depending on the usage period.

7. Similarly, for the Asstt.Year 2001-02, the AO restricted the disallowance at 25% for the same reasons as given in the Asstt.Year 2000-01.

8. On appeal, the CIT(A) confirmed the action of the AO.

9. Before us, the AR of the assessee reiterated the submissions made before the CIT(A) and argued that the assets formed part of the pollution control equipment being mechanically skimmed oil and grease removal system.

10. DR supported the orders of the lower authorities.

11. We find that none of the lower authorities has given any finding that whether electric motor and spin flash dryer are part of mechanically skimmed oil and grease removal system or not. Further, AR of the assessee has also not brought any material to substantiate the contention raised by him. The AO has simply stated that the description of the equipments purchased by the assessee did not match with description given in Rule. He has not brought on record even the details of the equipments purchased, much less, the reason for his arriving at the conclusion that the same does not match with the description given in the Rule. The AO has not stated anything about the functionality of the equipments purchased by the assessee. In the absence of the same, we are not in a position to adjudicate the issue completely. We, therefore, set aside the orders of the lower authorities on this issue and remit the matter back to the file of the AO for proper verification and to record a clear finding as to whether the equipments purchased by the assessee are part of mechanically skimmed oil and ITA No.663 and 664/Ahd/2011 4

grease removal system or not, and thereafter, re-adjudicate the issue as per law. Needless to mention that he shall allow reasonable opportunity of hearing to the assessee before adjudicating the issue afresh. Thus, this ground of appeal of the assessee is allowed for statistical purpose.

12. In the result, both the appeals of the assessee are partly allowed for statistical purpose.

Order pronounced in the Court on Thursday, the 19th February, 2015 at Ahmedabad.

Sd/- Sd/- (SHAILENDRA KUMAR YADAV) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 19/02/2015