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TMI Blog2012 (10) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure incurred was not to be allocated to the fixed assets during the next financial year and capitalized and so the assessee was not entitled to claim such depreciation. This was followed by the Assessing Officer in all the assessment years before us. The Ld. CIT (A) also did not allow the assessee's claim. 3. Before us, the learned counsel for the assessee has placed a copy of the Tribunal order dated 16.12.2011 in ITA No.3218/Del/2010, for Assessment Year 2003-04, wherein the matter has been remitted by the Tribunal to the Assessing Officer for decision afresh. 4. The Ld. DR, on the other hand, has placed reliance on the impugned orders in this regard. 5. Having heard the parties and having perused the material on record with regard to this issue, we find that the Tribunal vide its order dated 16.12.2001 (supra) for A.Y. 2003-04, has remitted the matter to the file of the Assessing Officer by making the following observations:- "5. We have heard both the parties and gone through the facts of the case. The issues as to whether the assessee undertook trial production or commercial production and when trial production ended and commercial production started, are ess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which could ultimately be sold in the market, could be manufactured or produced by it, it will be idle formality to say that it had started manufacture or production of articles simply because trial products are prepared with a view to verify whether they can be ultimately used in the preparation or manufacture of the final products. In the present case, however, we find that no material whatsoever has been produced by the assessee before any of the income-tax authorities and even before us to show that the production made by the assessee in the year under consideration was merely a trial production and that the goods produced were not for commercial sale even when the assessee made sales in domestic market and international market of more that Rs.37 crores. Even otherwise, the ld. CIT(A) have not recorded her specific findings as to when the trial production ended and commercial production started nor adjudicated each of the grounds of appeal of the assessee separately and nor even recorded her findings on the disallowance of expenditure, capitalized in the preceding year. In view of the foregoing, especially when complete facts and documents have not been placed before us whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn; that the Assessing Officer had also disallowed the claim on the basis of audit report in Form 3CD, which cannot be changed subsequently by filing a claim without altering the contents thereof; and that if the assessee had to alter its claim, he should have filed a revised Form 3CD, which was not done. 10. Before us, it has been maintained on behalf of the assessee, that the addition was, in fact, to "Plant & Machinery" and had inadvertently wrongly been shown as addition to "building" in Form 3 CD; that a statement showing the details of the addition was filed by the assessee before the Assessing Officer on 26.11.2007, demonstrating that the addition to the assets was eligible for depreciation @ 25%, as applicable to "Plant & Machinery" and not @ 10%, as applicable to "building"; that the assessee's claim was, however, rejected by the Assessing Officer, citing 'Goetze (India) Ltd.' (supra); that the Ld. CIT (A) wrongly upheld the Assessing Officer's action; that Explanation 5 to Section 32 (1) is very clear in this regard, as it states that the provisions of Section 32 (1) shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard the parties on this issue and have perused the material on record with regard thereto. At the outset, it would be proper to mention Explanation 5 to Section 32 (1) of the IT Act. This Explanation reads as follows:- "Section 32 (1) Explanation 5: For the removal of doubts, it is, hereby, declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income." 13. As per Section 32 (1) (i), in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets, owned, wholly or partly by the assessee and used for the purposes of business or profession, the deductions enumerated under the said Section shall be allowed. 14. In 'KKSK Leather Processors (P) Ltd.' (supra), it has been held, inter alia, that the Explanation 5 to sub-section (1) of Section 32 makes it clear that the provisions of sub-section (1) of Section 32 shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income. From the provisions of sub-section (1) of Section 32 along with the Explanation 5, it is clear that the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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