2018 (4) TMI 1357 - AT - Income Tax

Disallowance of 50% depreciation on assets in respect of Unit-II - CIT found that unit-II comments in operations since 20/04/2009 and deleted the disallowance of 50% of depreciation - revenue contending that the CIT(A) committed an error in accepting additional evidence without giving opportunity to the Assessing Officer in violation of Rule 46A - Held that - No doubt CIT(A) stated in his order that on a careful consideration of the evidence furnished before him in the shape of copies of the sales invoices for the period between 20/04/2009 2 30/09/2009 along with the copies of the transporter s receipts, nevertheless it is further observed by him that all these documents were available with the AO also. By no stretch of imagination it could be said that the CIT(A) while allowing the additional evidence, made a wrong statement that all these documents were available with the AO also. Nowhere in the order it is stated that the assessee came forward with any additional evidence at the appellate stage. Assessee simply produced the copies of the documents which are already available with the AO, on considering which, while observing that basing on these documents which were available with the AO, CIT(A) reached their conclusion that Unit-II commenced its operations since 24/08/2009. - Decided against revenue

Summary

Issues involved:
Appeal against disallowance of 50% depreciation on assets in Unit II.

Analysis:
1. The assessee, a manufacturer exporter public limited company, derived income from various cables and wires during the relevant assessment year. The assessing officer disallowed 50% of the depreciation claimed by the assessee for Unit II as the company failed to provide evidence of commencing production in Unit II before September 2009.

2. The assessee appealed to the Commissioner of Income-tax (Appeals) [CIT(A)], who reviewed the documents and found evidence that production in Unit II had started in August 2009. The CIT(A) referred to sales invoices and transporter's receipts to support this finding and deleted the disallowance of depreciation. The revenue challenged this decision, arguing that the CIT(A) should not have accepted additional evidence without giving the Assessing Officer an opportunity to respond, as per Rule 46A.

3. The Departmental Representative (DR) highlighted the CIT(A)'s statement that the company had been making sales from Unit II since April 2009, with excise duty and sales tax duly deposited. The DR contended that the Assessing Officer should have been given a chance to counter this evidence. In response, the Authorized Representative (AR) argued that all documents considered by the CIT(A) were already available with the Assessing Officer, and there was no request for additional evidence under Rule 46A.

4. The ITAT Delhi carefully examined the case and noted that the documents presented to the CIT(A) were also in possession of the Assessing Officer. The ITAT found no indication that the assessee had submitted new evidence during the appeal process. The ITAT concluded that the revenue's appeal lacked merit as the CIT(A) based the decision on existing documents available to the Assessing Officer. Consequently, the ITAT dismissed the revenue's appeal and the assessee's cross objection as moot.

5. The judgment was pronounced on 6th April 2018, with the ITAT upholding the CIT(A)'s decision to delete the disallowance of depreciation for Unit II, as the evidence provided by the assessee was already on record and did not require additional verification under Rule 46A.