Sri Vigneswara Foundry, Erode vs Assessee
- CitationITA No.2010/Mds/2014
Ratio decidendi
The rule this decision rests on
The disallowance of the ex-gratia payment is rejected by following the co-ordinate bench's decision in the assessee's own case for the preceding assessment year, the correctness of which the Revenue did not dispute; the ratio is that the coordinate bench's ruling on the same issue for the same assessee governs the present year. On additional depreciation, the claim under the Act's additional depreciation provision for a new plant engaged in manufacture or production cannot be decided merely by the assessee's business classification; the question whether the assessee actually produced or generated any article or thing, including electricity, is a factual issue. Where the authorities below failed to consider the assessee's plea that it offered income from power generation, the matter is to be remitted to the Assessing Officer for fresh determination according to law, with the assessee entitled to produce its supporting details.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
ी ए. मोहन अलंकामणी, लेखा सद य एवं ी एस.एस. गोदारा, या#यक सद य केसम$
BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER
आयकर अपील सं./ITA No.2010/Mds/2014 #नधा%रण वष% / Assessment Year : 2010-11
M/s Sri Vigneswara Foundry, The Assistant Commissioner of C/o Shri S. Sridhar, Advocate, v. Income Tax, 112/1, Periyar Street, Circle III, Erode-1. Coimbatore.
PAN : AALFS 5096 H (अपीलाथ)/Appellant) (+,यथ)/Respondent)
अपीलाथ) क- ओर से/Appellant by : Shri S. Sridhar, Advocate +,यथ) क- ओर से/Respondent by : Shri A.V. Sreekanth, JCIT
सन ु वाई क- तार ख/Date of Hearing : 26.02.2015 घोषणा क- तार ख/Date of Pronouncement : 05.03.2015
आदे श /O R D E R
PER S.S. GODARA, JUDICIAL MEMBER:
This assessee's appeal for assessment year 2010-
11arises from order of the Commissioner of Income Tax
(Appeals)-I, Coimbatore, dated 01.07.2014 passed in Appeal
-2- I.T.A. No. 2010/Mds/2014
No.28/13-14 upholding the Assessing Officer's action of
disallowing unexplained expenditure on ex-gratia payment of `
26,31,500/- and additional depreciation of ` 23,23,800/-, in
proceedings under Section 143(3) of the Income-tax Act, 1961
(in short 'the Act').
2. The assessee's pleadings raise two substantive grounds
of appeal. The first one pertains to disallowance of ex-gratia
payment of ` 26,31,500/-. The assessee is fair enough at the
outset to produce a copy of the 'tribunal's' order in I.T.A. No.
1672/Mds/2014 decided in its own case for preceding
assessment year on the very issue. The Revenue does not
dispute correctness thereof. We appreciate this fair stand and
reject this ground in favour of the Revenue by following order of
the co-ordinate bench.
3. The second issue that arises for our adjudication is that of
additional depreciation. The assessee-firm is having income
from business, rent and capital gains. It had filed its return on
07.10.2010 declaring total income of ` 38,94,152/-. The
Assessing Officer took up 'scrutiny'. He found the assessee to
-3- I.T.A. No. 2010/Mds/2014
have claimed additional depreciation, i.e. 100% depreciation on
the windmills. The Assessing Officer referred to Section
32(1)(iia) of the Act providing relief of initial additional
depreciation (over and above normal rate) is @ 20% of the
annual cost on new machinery or plant engaged in
manufacturing of any article or thing in the year of acquisition or
installation. He observed that the assessee was not engaged in
any such manufacturing or production so as to claim additional
depreciation. This resulted in the impugned disallowance of `
23,23,800/-.
4. The assessee preferred an appeal. The CIT(Appeals)
has affirmed the A.O.'s findings as under:-
"This ground of appeal is against the disallowance of additional depreciation claim. The appellant submitted that the assessee firm is involved in the business of manufacture or production of article or thing. Hence he is eligible for additional depreciation. On going through the facts of the case, it is evident that the assessee was not engaged in the business of manufacture or production of any article or thing. This is the 1st claim of additional depreciation on the windmill installed and the additional depreciation claimed cannot be allowed since the assessee was not involved in any manufacturing or production activity at the time of installation of the windmill. Only in the subsequent years the assessee can claim that he is engaged in manufacturing or production activity, since he will be in the business of production / generation of electricity when the present windmills were installed on which additional depreciation can be claimed.
-4- I.T.A. No. 2010/Mds/2014
The assessee is not in the business of manufacturing activity to claim additional depreciation for this assessment year. Hence the Assessing Officer rightly disallowed the claim of additional depreciation. This ground of appeal is DISMISSED."
5. We have heard both parties and perused the case file.
The assessee submits to have offered income from power
generation in its Profit & Loss account of ` 39,737/-. The
authorities below have not considered this plea in either of the
order under challenge. The Revenue fails to controvert this
factual position. We deem it proper to observe that whether or
not the assessee has produced any power or not is a more
factual issue. Therefore, in the larger interest of justice, the
issue is remitted back to the file of the assessing authority for
fresh decision as per law. The assessee shall be at liberty to
produce all of its details in support its claim of additional
depreciation.
6. The assessee's appeal is partly allowed for statistical
purposes.
-5- I.T.A. No. 2010/Mds/2014
Order pronounced on Thursday, the 5th of March, 2015 at
Chennai.
sd/- sd/- (A.Mohan Alankamony) (S.S. Godara) (ए. मोहन अलंकामणी) (एस.एस. गोदारा) लेखा सद य/Accountant Member या#यक सद य/Judicial Member
चे नई/Chennai, th 3दनांक/Dated, the 5 March, 2015.
Kri.
आदे श क- +#त5ल6प अ7े6षत/Copy to: 1. अपीलाथ)/Appellant 2. +,यथ)/Respondent
3. आयकर आयु8त (अपील)/CIT(A)-I, Coimbatore
4. आयकर आयु8त/CIT-I, Coimbatore
5. 6वभागीय +#त#न ध/DR
6. गाड% फाईल/GF.
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