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TMI Blog2018 (12) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... r the items of electrical installation constitute integral part of plant and machinery, and then the issue in dispute may be decided in accordance with law. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. The sole ground of the appeal of the assessee is accordingly allowed for statistical purposes. Disallowance of seed development or agronomic expenditure - revenue or capital expenditure - Held that:- As decided in assessee's own case for assessment year 2007-08 second question relates to seed development/agronomy expenditure which was treated as capital in nature by the AO. The CIT(A) took a contrary position; that was endorsed by the ITAT being pure finding of fact. Disallowance of depreciation on building by relying on the additional evidences submitted by the assessee - admission of additional evidence - Held that:- The matter required to be restored to the file of the Ld. CIT(A) for complying the requirements of Rule 46A(3) and provide opportunity to the Assessing Officer. However, while dealing with the earlier ground, we have restored the issue in dispute involved in that ground to the file of the Assessing Officer. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer and totally relying upon the decision of his predecessor in assessee's case for earlier assessment years? 2. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) erred in allowing relief to the assessee by deleting the disallowance of depreciation claim of the assessee on building amounting to ₹ 1,84,37,305/- by relying upon the additional evidence accepted and without giving opportunity to the assessing officer as per provisions of Rule 46A.? 3. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law. 4. That the grounds of appeal are without prejudice to each other. 5. That the appellant craves leave to add, alter, amend or forego any ground(s) of the appeal raised above at the time of the hearing. 3. Briefly stated facts of the case as culled out from the order of the lower authorities are that the assessee company was incorporated on 22/03/1996 and was engaged in the business of frozen foods, mainly frozen french fries , which were sold mainly to McDonald and retailed through various grocery shops. For the year under consideration, the assessee filed return of income on 30/09/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. 4.2 Before the Ld. CIT(A), the assessee submitted that the assets under the category of electrical fitting comprised of electrical transformer and its fittings, industrial lighting, plugs, site electricity cost, which are part and parcel of plant and machinery. The assessee submitted that accounts of the assessee were audited by a reputed firm affiliated to Price Water House Coopers and thus proper regard should be given to the Audit Report and depreciation should be allowed at the rate of 15% instead of 10% allowed by the Ld. AO. The Ld. CIT(A), however, rejected the claim of the assessee holding that electrical fittings are independent of plant and machinery installed and same can be used for several machines at the same time. The Ld. CIT(A) observed that when a plant or machine is replaced, the electrical fitting of the building and the connection to the main transformer remain the same and does not move along with the plant and machinery . Thus according to him, the electrical installations stands as a separate asset and cannot be treated at par with plant and machinery. 4.2 Before us, the Ld. counsel of the assessee filed a paper book containing pages 1 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trical Engineering Design Costs Vendor S.No 9 554,912 Labour costs for Electrical Work Vendor S.No 7 611,317 Other electrical work connected to Plant and Machinery Set up. Vendor S. No 8 and 12 to 20 13,33,318 GRAND TOTAL 5,47,70,995 4.5 The claim of the assessee that these items of electrical fittings form part of plant and machinery whereas according to the Revenue same falls under the category of furniture and feature . It is evident from the above table that expenses have been incurred on power charges paid to Gujarat electricity board, engineering design and labour cost for electrical work. On perusal of page 39 to 40 of the paper book, we find that assessee has paid ₹ 5,59,899/- for false ceiling, ₹ 5,54,490/- paid for electricity cost during plant commissioning and trial, ₹ 45,486/- for boundary and leveling of electric post etc. Thus, from these details, it cannot be ascertained that expenses have been incurred specific to any plant and machinery and the electri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T in assessee s case for A Y. 2006-07. Thus, as on date, as per record, the order of my Ld. Predecessor CIT(A) and the order of the Hon ble ITAT on this issue is good in law. If there is any decision received from the Hon ble High Court on this issue, the AO may follow the decision accordingly. In the order of Ld. CIT(A) for A.Y 2006-07 in assessee s own case, it is held that since the potatoes grown have been sold for more than ₹ 2 crores and the receipt is offered for taxation, this is a trading operation and accordingly, the expenses incurred should be considered as revenue. Confirming the order of Ld. CIT(A), the Hon ble ITAT in ITA No. 4671/Del/2009 vide order dated 28.02.2011, it is held that, it can be very well concluded that these expenses are directly related to the business activity of the assessee. Hence, the expenditure involved has to be allowed as revenue expenditure. . In view of the decision of the Hon ble ITAT in this case, the addition made is deleted and the ground of appeal is allowed. 5.2 Before us, the Ld. DR relied on the order of the Assessing Officer and submitted that expenses incurred are for the enduring benefit and, therefore, liable to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the additional evidences. The relevant finding of the Ld. CIT(A) on the issue in dispute is reproduced as under: 7.3 The reason given by AO, and the submission of the appellant are considered. The appellant submitted four documents to prove the case. i. Copies of electricity bills ii. Letter to Dy. Director, Industrial Safety Health written by appellant iii. Copy of Machinery Installation Certificate by a Chattered Engineer. iv. A copy of the certificate given by Chattered Engineer regarding completion of the building as on 20.03.2007. The documentary evidences to substantiate the claim of depreciation on the building submitted u/r 46A are admissible at the appellate stage as the appellant as these documents are crucial for deciding the case. The documents furnished by the appellant can be admitted under Rule 46A to decide the issues involved on merit. In the case of CIT vs. Virgin Securities Credits P. Ltd. (2011) 332 ITR 396 (Del.) the jurisdictional High Court held that evidence crucial in disposal of case can be admitted. Since, the documents filed by the appellant before the CIT(A) are of the nature that may advance the interest of justice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions and perused the relevant material on record. The undisputed fact in the case is that the Assessing Officer objected admission of additional evidence and the Ld. CIT(A) after admitting the additional evidences, has not sought any comment from the Assessing Officer on the merit of the additional evidences. In identical circumstances, the Hon ble Delhi High Court in the case of Manish Buildwell P. Ltd. (supra) has observed as under: 24. In the present case, the CIT(A) has observed that the additional evidence should be admitted because the assessee was prevented by adducing them before the AO. This observation takes care of cl. (c) of sub-r. (1) of r. 46A. The observation of the CIT(A) also takes care of sub-r. (2) under which he is required to record his reasons for admitting the additional evidence. Thus, the requirement of sub-rs. (1) and (2) of r. 46A have been complied with. However, sub-r. (3) which interdicts the CIT(A) from taking into account any evidence produced for the first time before him unless the AO has had a reasonable opportunity of examining the evidence and rebut the same, has not been complied with. There is nothing in the order of the CIT(A) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equirements of Rule 46A(3) and provide opportunity to the Assessing Officer. However, while dealing with the earlier ground, we have restored the issue in dispute involved in that ground to the file of the Assessing Officer. Thus, to avoid simultaneous proceedings at multiple levels, we feel it appropriate to restore this issue also to the file of the Assessing Officer along with direction to the assessee to produce all evidences on the issue in dispute before the Assessing Officer. The Assessing Officer, thereafter may decide the issue in dispute in accordance with law after providing adequate opportunity of being heard to the assessee. The ground No. 2 of the appeal of the Revenue is accordingly allowed for statistical purposes. 7. Grounds no. 3 4 are general in nature, hence not required to adjudicate upon. ITA No.4977/Del/2014 8. Now, we take up the appeal of the assessee having ITA No. 4977/Del/2014 for assessment year 2009-10. The sole ground raised by the assessee is reproduced as under: That, on the facts and circumstances of the case and in law, the Learned Commissioner of Income-Tax (Appeals)-lX, New Delhi [ CIT(A) ], erred in concurring with the v ..... 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