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TMI Blog2018 (12) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... tiate its claim of depreciation on ETP to re-examine the claim of foreign travelling in the light of the details filed before the CIT(A). It was thereafter stated that both the above additions were re-affirmed by the A.O. and the same were confirmed by the CIT(A). 3. Aggrieved by the same the assessee has now come up in appeal before us. Taking up ground of appeal No.1 relating to disallowance of depreciation on ETP and which read as under: "1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the addition of Rs. 20,80,484/- made on account of disallowance of depreciation on Effluent Treatment Plant which is arbitrary and unjustified." 4. The Ld. counsel for assessee first took us through the order of the I.T.A.T. in the first round dated 24.9.2012 restoring the issue back to the A.O. Drawing our attention to paras 8 to 14 of the order wherein the issue was dealt with the Ld. counsel for assessee pointed out that the facts relating to the issue were that the assessee had shown an addition of Rs. 41,60,961/- on account of addition to ETP on which depreciation was allowable @ 100%. But the assessee had claimed depreciation @ 50% only, having used it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by seeking information u/s 133(6) of the Act from the Additional Superintendent Engineer, Operation Division (PSPCL), Lalru, Punjab regarding the date on which the additional power load of 350.064 KW was actually sanctioned by PSEB (now PSPCL) to the assessee. It was pointed out from the order that the same was stated to have been granted to the assessee only on 20.5.2009. The said information was confronted to the assessee who stated in reply that new ETP had run on the existing power load available with the company. The A.O. dismissed this contention of the assessee stating that the assessee had never before raised this contention before any of the authorities i.e. the A.O., CIT(A) or even I.T.A.T. in the first round. He, therefore, held that since the load to run the plant was granted only in the next financial year, the assessee could not have possibility put to use the ETP in the impugned year. The depreciation claimed by the assessee of Rs. 20,80,484/- was accordingly disallowed by the A.O. It was thereafter pointed out that the CIT(A) also upheld the disallowance for the same reason. Our attention was drawn to the findings of the Ld.CIT(A) at para 3.3 of his order as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asnot required on account of the low capacity production of beer during this period. It was pointed out that the increase in power load was thereafter made available on 27.5.2009. The written submissions to this effect were filed before us dated 5.9.2018 as under: Respectfully submit as under: - 1. Molson Coors India Pvt. Ltd., formerly known as Mount Shivalik Breweries Ltd., was incorporated on 31st October,1972, and started business of Manufacturing/Sales of Beer at Bhankarpur, Derabassi. 2. That the first Effluent Treatment plant (hereinafter mentioned as ETP),was installed in Financial Year 1972-73, when the first brewery was set up in Bhankarpur and thereafter its upgradation was done around 3-4 times, as per the need of the plant. 3. That during the year under consideration, ETP was installed on 27.01.2009 and was commissioned immediately after receiving consent letter dated 20.02.2009 from Punjab Pollution Control Board. Since this period being Off Season for beer Industry, the existing power load was sufficient for the commissioning of new ETP plant. The increase in power load from 1164.844KW by 350.064 KW was made available on dated 27.05.2009, after receipt of san ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of depreciation was tax neutral action since the asset was eligible for depreciation @ 100% which having been denied in the impugned year to the extent of 50% as claimed by the assessee, was to be allowed completely @ 100% in the succeeding year and that the assessee had returned sufficient profits in both the years. Therefore, the additional taxes collected in the impugned year would be required to be refunded in the succeeding year on account of the said action of the A.O. 8. The Ld. DR, on the other hand, relied upon the order of the lower authorities. 9. We have heard the rival contentions, perused the orders of the authorities below. The issue to be determined and adjudicated is whether the assessee was able to establish that its ETP was installed and put to use during the year, enabling it to claim depreciation on the same. The facts which are not disputed are that all the purchase bills relating to various components necessary for construction of ETP relate to the period up to March, 2009 of the impugned year and none of the bills pertain to the succeeding year. Also the assessee had obtained no objection certificate from the Punjab Pollution Control Board for release of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that this was the lean period for the beer industry. Therefore, it logically follows that the power load required to run the assessee's brewery being far less than the normal and the assessee could have managed to run the same with the existing power load. The contention of the Revenue, therefore, that it was not possible to run such a heavy plant without additional power load is, therefore, without any merits and is dismissed by us. Moreover, we do not find any merit in the contention of the Revenue that this plea of the assessee is unacceptable for the reason that it was not raised by the assessee before the authorities earlier in the first round. The merits of the contention are to be judged on the basis of the facts on which it is based and have nothing to do with the point of time with which they are raised. The fact that this was the lean period of the beer industry and, therefore, the brewery was capable of being run on far less than normal electricity load having not been disputed, there was merit in the claim of the assessee that the addition made to the capacity of the existing ETP plant in the impugned year was capable of running on the available power load and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for business purposes and so the entire amount was disallowed. The assessee had filed certain evidences in appellate proceedings before Commissioner of Income Tax (Appeals), but reason for not submitting the same before the Assessing Officer had not been given and so these were not accepted and the addition was confirmed. The ITAT directed the Assessing Officer to re-examine the issue by considering the details filed before Commissioner of Income Tax (Appeals). The assessee accordingly produced certain documents before the A.O. in the second round, which were rejected as not sufficient for establishing the factum of having incurred expenditure wholly and exclusively for the purpose of business of the assessee stating that they only gave the details of the expenses incurred and only proved the factum of expenditure having been incurred without establishing that they were incurred for the purpose business of the assessee. The A.O., however, allowed the expenditure to the extent of Rs. 2,17,195/- incurred by the Managing Director (in short 'MD') on his trip to Germany on finding that expenses of the employees of the assessee company on the trip undertaken to Germany had been allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has failed to prove that the trip was undertaken for the purpose of business of the assessee. The only evidence, we find, which have been filed by the assessee gives the details of the trip and proof of expenses incurred by way of bills of travel agent and bills of foreign exchange purchased. No evidence to prove the visit of the MD to breweries in Edinburgh had been filed, nor any other evidence to prove that the trips were undertaken for business purpose. Therefore, we uphold the order of the Ld.CIT(A) in disallowing the claim of foreign travelling expenses incurred on the trip undertaken by the MD of the assessee company to UK. As far as the trip undertaken by the MD of the assessee company to Germany, we find merit in the contention of the assessee. Admittedly, the business purpose of the trip to Germany stands established and accepted by the A.O. while allowing expenses incurred on other employees of the assessee company who had accompanied the MD on the said trip. Having accepted the same, he has allowed the expenses incurred on the MD but has restricted it to the extent of Rs. 2,17,195/- disallowing expenditure to the extent of Rs. 3,27,030/- for the reason that he found ..... X X X X Extracts X X X X X X X X Extracts X X X X
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