R.C.C.(Sales) P. Ltd, Mumbai vs Assessee

सर्वश्री आय.सी.शभमव, रेखम सदस्म एवुं श्री संजम गगव, न्ममयमक सदस्म BEFORE SHRI R.C.SHARMA, AM & SHRI SANJAY GARG, JM आमकय अऩीर सं./ITA No.8200/Mum/2011 ( नििाारण वषा / Assessment Year :2005-06) M/s R.C.C.(Sales) Pvt. Ltd., Vs. ACIT, CC-38, Mumbai Malhotra House, Opp.GPO, Fort, Mumbai-400001 स्थममी रेखम सं ./ जीआइआय सं ./ PAN/GIR No. : AAACR 9675 D (अऩीरमथी /Appellant) .. (प्रत्मथी / Respondent)

यनधमवरयती की ओर से /Assessee by : Dr. Prayag Jha यमजस्र् की ओर से /Revenue by : Shri Santosh Kumar

सुनर्मई की तमयीख / Date of Hearing : 07/05/2015 घोषणम की तमयीख/Date of Pronouncement 10/06/2015

आदे श / O R D E R

PER R.C.SHARMA (A.M):

This is an appeal filed by the assessee against the order of CIT(A)-

41, Mumbai, dated 13-9-2011, for the assessment year 2005-06, in the

matter of order passed u/s.143(3) r.w.s.153C of the I.T.Act.

2. The only grievance of the assessee relates to disallowance of claim

of additional depreciation u/s.32(1)(iia) amounting to Rs.21,88,487/-.

3. Rival contentions have been heard and record perused. In this

case, original assessment u/s.143(3) was completed on 27-11-2007,

wherein assessee's claim for additional depreciation was allowed. 2 ITA No.8200/11

Thereafter the CIT invoked his power u/s.263 and the matter was restored

to the file of AO after having the following observations :-

"The assessee had claimed additional depreciation for Rs.21,88,487/- on Plant & Machinery installed during the year. The company existed prior to 31st March, 2002. Additional depreciation is allowable when the installed capacity is increased by 10% as on 01.04.2002 and the same should have been certified in Form 3AA by a Chartered Accountant. In the absence of the certificate in Form 3AA indicating substantial expansion of the company, the claim of additional depreciation to the extent of Rs.21,88,487/- needs to be disallowed."

The AO passed order u/s.143(3) giving effect to the order of CIT u/s.263,

wherein he observed that during the course of assessment proceedings

assessee filed various details and also filed Form 3AA to claim the

additional depreciation u/s.32(1)(iia) amounting to Rs.21,88,487/-. The AO

reproduced conditions to be fulfilled before claiming additional

depreciation at para 6 on page 2 of the order. The AO observed that the

condition of increase in capacity by not less than 10% of installed capacity

is to be mandatorily accompanied by the certificate in the form of report of

a Chartered Accountant in Form 3AA. As per the AO in the instant case,

assessee has failed to submit the said form 3AA along with the return of

income and also during the original assessment proceedings u/s.143(3).

He, therefore, declined assessee's claim on additional depreciation.

4. The CIT(A) confirmed the action of the AO by observing as under :-

"From the perusal of P&L a/c. it was clear that sales were shown at Rs.3.11 crores only while the job work charges and other income was shown at Rs.43.52 crores and Rs.34.42 crores respectively. It shows that a major portion of the manufacturing activity was towards outsourcing because job charges constitute substantial part of the total income. Finally, the AO has held that the aspect of installed capacity has to be mandatorily accompanied by a certificate in the form of report of a Chartered Accountant in form 3 ITA No.8200/11

3AA which was not submitted even during the proceedings u/s.143(3) which is a mandatory condition for claiming addition depreciation. In view of these facts and circumstances, it is held that the appellant has failed to fulfill the conditions for claiming additional depreciation. Therefore, the disallowance made by the AO is upheld and the ground of appeal is dismissed."

5. We have considered rival contentions and carefully gone through

the orders of the authorities below. The claim of additional depreciation

u/s.32(1)(iia) was declined merely on the plea that assessee has not filed

auditor certificate in Form 3AA along with the return of income. We found

that assessee's claim for deduction of additional depreciation was allowed

by the department in scrutiny assessment u/s.143(3). Thereafter the

CIT(A) by invoking provisions u/s.263 restored the matter back to the file

of the AO. The assessee filed Form No.3AA being certificate in the form of

report of CA before the AO during the course of proceedings u/s.143(3)

r.w.s.263, but the AO again declined the claim on the plea that this report

was not filed along with original return of income. Ld. AR drew our

attention to the letter dtd.18-9-2013 issued by the concerned AO to the

assessee, wherein copy of Form 3AA along with its enclosures were

supplied to the assessee on its request. As per the report in Form 3AA

u/s.32(1)(iia) dated 30-9-2005 assessee is entitled to claim additional

depreciation of Rs.21,88,487/-. The report also certified that as per

provisions of clause (B) of the first proviso to clause (iia) of sub-section (1)

of Section 32 of the IT Act, 1961, in respect of the assessment year 2005-

06 is Rs.21,88,487/- which has been determined on the basis of new

machinery and plant acquired and installed by the assessee during the

course of substantial expansion by way of increase in installed capacity of 4 ITA No.8200/11

the industrial undertaking existing before the 1st day of April, 2002. The

said amount has been worked out on the basis of the details in the

Annexure-B. The Annexure-B attached with the report indicates

expansion of capacity by 90%. Mere non-filing of report with the original

return cannot be made the ground for decline of claim of additional

depreciation, when undisputedly during the course of scrutiny

assessment, the same was furnished before the AO and the AO has also

considered the same. We found that all the conditions provided under

Clause B of 1st Proviso to clause (iia) to Section 32 of the Act was

complied with. Accordingly, the assessee was entitled for claim of

additional depreciation of Rs.21,88,487/-.

6. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on this 10/06/2015.

Sd/- Sd/- (संजम गगव) (आय.सी.शभमव) (SANJAY GARG) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भुंफई Mumbai; ददनमंक Dated 10/06/2015 प्र.कु.मभ/pkm, यन.स/ PS

आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to :

1. अऩीरमथी / The Appellant

2. प्रत्मथी / The Respondent.

3. आमकय आमुक्त(अऩीर) / The CIT(A), Mumbai.

4. आमकय आमुक्त / CIT

5. वर्बमगीम प्रयतयनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai आदे शािसार/ BY ORDER,

6. गमडव पमईर / Guard file.

सत्ममवऩत प्रयत //True Copy// उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai 5 ITA No.8200/11