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TMI Blog2017 (5) TMI 1685X X X X Extracts X X X X X X X X Extracts X X X X ..... f the fact that the assessee has explained that the assessee it is engaged in manufacturing, the machinery which is unique to each customers custom built non-homogenous product and non-repetitive in nature which makes the measure of installed capacity as a subjective affair. CIT(A) made the personal visit to the factory and had discussed with reference to the measurement of the installed capacity on the basis of material removal ratio and given a finding that increase in capacity as percentage w.r.t. the earlier year is above 25%. For a query from the bench, the Ld.DR replied that the there was an increase in production more than 25% after installation of the plant and machinery and there were substantial increase in power consumption and other related items of productions. Considering totality of the facts that the CIT(A) has given clear analysis of measurement and made personal visit and given a finding that the increase in capacity as percentage is more than 25%. - Decided against revenue. - ITA Nos.19 & 1835/Mds/2012 - - - Dated:- 12-5-2017 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER For the Appellant : Mr.Supriyopal, JC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(i)(iia) to allow the additional depreciation. According to the AO from the Annual Report, the installed capacity was 1800 tonnes as against the licenced capacity of 2250 tonnes. The assessee did not produce any evidence to show that the installed capacity was increased by 25% during the year under consideration to be entitled for additional depreciation and hence the AO disallowed the depreciation. This issue was travelled up to the ITAT and the Hon ble ITAT A Bench, Chennai, in ITA No.789/Mds/2007 for the AY 2003-04 dated 18.12.2009, has remitted the matter back to the file of the AO as under: 15. We have perused the orders and heard the rival contention. Assessing Officer has went by form 3AA filed by the assessee in support of its claim u/s.32(1)(iia) of the Act. No doubt, annexure to such report mentions that installed capacity of 31st day of March, 02 as 1800 tonnes. Similarly, the annual report of the assessee for the financial year 2002-03, in its page-22, mentions the installed capacity as on 31.3.03 as 1800 tonnes. Assessing Officer therefore came to a conclusion that there was no increase in the installed capacity during the relevant previous year. Howsoever i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantum increase in installed capacity. If it is able to produce some evidence to prove an increased capacity in excess of 25%, in our opinion, its claim has to be considered. Assessee is only seeking one more opportunity to prove that the increase in installed capacity exceeded 25% and we do not find any prejudice to be caused to the revenue if such opportunity granted. Therefore, in the interest of the justice, we set aside the orders of the authorities below and remit the matter back to the Assessing Officer for consideration afresh. Assessee shall be given an opportunity for producing whatever evidence in support of its claim and the Assessing Officer shall proceed in accordance with law in a pragmatic manner taking into account the peculiarities of assessee s business. In the second round, the assessee submitted a Chartered Engineers Report to support the increase in installed capacity which was not admitted by the AO stating that it was a postmortem report cannot be taken as concrete and additional evidence. The AO relied on the Annual Report where there was no change in the installed capacity and licensed capacity and compared the same with the earlier years sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nique to each of its customer being custom built, non-homogenous product and non-repetitive in nature which makes the measurement of the installed capacity a subjective affair. Taking into consideration, the observations of the Hon ble ITAT for the assessment year 2003-04, the evidence produced in the form of Material Removal Ratio based on Horse power, hours of working, horizontal machine centre, vertical machine centre, turning, milling, etc., the increase in capacity as percentage with respect of 31.3.2002 is above 25% and hence the Assessing Officer is directed to allow additional depreciation. These grounds of appeal are allowed. 4.2 Aggrieved by the Order of the Ld.CIT(A), the Department is on appeal before us. During the appeal hearing, the Ld.DR argued that the assessee has not produced any evidence to show that there was increase in capacity installed to the extent of 25% to be eligible for additional depreciation. In the assessee s case, the installed capacity and the licensed capacity was one and the same in the earlier and the Assessment Year under consideration. The annual report did not show any increase in the increase of the capacity. The Chartered E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installation and for admission of the Chartered Engineers Certificate as an evidence, he should have examined the Chartered Engineer Certificate regarding the increase in capacity as per the provisions of the Income Tax Act before brushing aside the Chartered Engineers Certificate. The other alternative available for the AO is to make a personal visit along with Chartered Engineer and examine the correctness of increase in the installed capacity or refer the matter to DVO. Instead, the AO simply relied on the annual accounts in spite of the fact that the assessee has explained that the assessee it is engaged in manufacturing, the machinery which is unique to each customers custom built non-homogenous product and non-repetitive in nature which makes the measure of installed capacity as a subjective affair. The Ld.CIT(A) made the personal visit to the factory and had discussed with reference to the measurement of the installed capacity on the basis of material removal ratio and given a finding that increase in capacity as percentage w.r.t. the earlier year is above 25%. For a query from the bench, the Ld.DR replied that the there was an increase in production more than 25% after inst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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