9911796707
TMI Blog2010 (5) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... this expenditure in the assessment year under consideration. - ITAT No. 410 & 411/Hyd/2007 - - - Dated:- 21-5-2010 - SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER Appellant by : Shri Lakshmi Niwas Sharma Respondent by : Smt. Vasundhara Sinha, DR ORDER Per Chandra Poojari, Accountant Member These two appeals preferred by the assessee are directed against different orders passed by the CIT(A) IV, Hyderabad dated 38.4.2006 and pertains to the assessment years 2001-02 2003-04. Since common issues are involved in these two appeals, they are clubbed together, heard together and disposed off vide this common order for the sake of convenience. 2. In both the appeals the first ground raised by the assessee are common and general in nature and does not require any adjudication. 3. The grounds 6 7 raised in these two appeals for which there is no permission from COD and accordingly these two grounds are dismissed. 4. The next ground Nos.3,4 and 5 are with reference to disallowance of depreciation on SAF Plant. 5. Brief facts of the case are that there was disallowance of depreciation on SAF Plant of Rs.4,45,39,956/- in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Its main activity is production of sponge iron and sale of the same. He stated as follows: 9.1. The plant and machinery was established in the year 1980 at Palvancha and thereafter there was a substantial expansion during the year 1985 and the full production including the production in the expanded that commenced in July, 1985. As can be seen from the flow chart of the pig ore and coal. The lump iron ore and the coal are crushed, they are scrammed to the size and are fed to the manufacturing process. In so far as the coal is concerned, the entire coal is used in the kiln but in so far as iron ore is concerned, 0.6% to 1% of the iron ore fines remain and cannot be used in the process of manufacture. Therefore, they have to be dumped as wastage and assessee did not find any use for the said iron ore fines. In so far as coal is concerned, the plant leaves waste heat char. The assessee was of the view that by using the sponge iron fines and the heat char it can manufacture pig iron from the sponge iron and also produce silicon manganese. Therefore, in the year 1996 it established submerged arc furnace (SAF) so as to enable the company to manufacture pig/silicon manganese. The entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total income at Rs.Nil. 11. He drew our attention to the provisions of sec.32(1) of the IT Act and stated that as per sub clause (ii) of sub section 1 of Sec.32, the prescribed percentage of depreciation to be computed on the written down value of block of assets. The written down value is defined by sec.43(6)(c ) of the IT Act. He submitted that even when a part of the asset is not put to use the written down value becomes allowable for depreciation. Only when entire block of assets is not put to use, depreciation may not be allowable. The concept of block assets introduced for the purpose of arriving at depreciation provides for depreciation even on those assets which are not used during the previous year. He submitted that in the case of block assets, the utilization of assets is not relevant as the assessee becomes entitled for depreciation if the block is put to use whether partly or totally. This concept was introduced w.e.f. 1.4.88 by the Taxation Laws and Amendments and Miscellaneous Provisions Act, 1988. He submitted that when the assets are formed into a block of assets cannot again be separated. The intention of the Legislature is to grant depreciation on the wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from January, 1994 to March 1996 and submitted that consumption of electricity has gone up in the month of June 1994 and August 1994 to December 1994 for heating up/trial operation of SAF plant. In December, 1995 and January 1996 again consumption of power has gone up. He also contended that even closed unit entitled for depreciation or depreciation even allowable if assets not used at all for entire year. For this purpose he relied on various unreported ITAT orders. 15. On the other hand the departmental representative submitted that before the assessing officer assessee has taken only one plea that the SAF plant was kept ready for use. Now the plea of the assessee is that the SAF plant was used in earlier years and only in this assessment years under consideration it was not used due to business considerations. He drew our attention to the page No.2 of the assessment order of assessment year 2003-04. Further he drew our attention to the Audit Report of these assessment years. Further he submitted that as per 28th Annual Report of the assessee the SAF Plant has been capitalized w.e.f. 1.4.1999. The plant has not been in operation since capitalization. However, depreciation has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are not produced before the lower authorities. The evidence produced by the assessee at this stage without any petition for admission of this evidence or explaining the reason for not producing the same before the lower authorities, we are not in a position to consider the same. The assessee has not shown any reasonable cause for not producing the same before the lower authorities. There is no iota of evidence or discussion regarding this evidence in the order of the lower authorities. In our opinion, this evidence cannot be considered at this stage. 15.2. Further, the SAF plant is not an integral part of the main Plant and the main plant can function without involving SAF plant. The assessee was not able to show any evidence to the effect that the said SAF plant was kept ready with intention to use. On the other hand, various parts of the said plant was removed at various times. Then it means that there was no intention to use of this plant. This was fortified by the Schedule -18, Notes given at Para 7 of Annual Report for the year 1995-96 wherein it was stated that after ascertaining the possibility of producing the pig iron out of the sponge iron by trial operation, the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied on the order of the Tribunal dated 11.7.2005 in ITA No.12/Hyd/2002 Others for the assessment year 1998-99 and others in the case of NMDC Ltd. Vs. DCIT for the proposition that provisions made towards additional liability on account of enhanced wage and salary are allowable in the year of making such provision. After carefully examining the facts of the case, we are of the opinion that these expenses are disallowed on non production of evidence by the assessee for incurring these expenses. In the interest of justice, we set aside this issue to the file of assessing officer for fresh consideration with a direction to the assessee to produce necessary evidence in support of its claim. The assessing officer required to reexamine the issue in accordance with law. 19. The last common ground in both the appeals are relating to incorrect calculation of MAT. 20. Brief facts of the case are that while computing the income u/s 115JB, the assessing officer inter alia added the various provisions to the book profit. Before the CIT(A), the assessee not able to lead any evidence in support of its claim. After hearing both the parties, we set aside this issue to the file of assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
