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TMI Blog2020 (1) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... of all the machines were given. Assessee requested AO to carry out the physical inspection of the machines. But ld. A.O. did not bother to inspect the same for the reason that ITAT did not give him direction to physically inspect the machines wherein in department appeal filed before the ITAT directed the ld. A.O. that he shall pass reasoned order by giving reasonable sufficient opportunity to the assessee considering the valuation report of Dalal Mott Macdonald and the evidences produced by the assessee for purchase of tangible assets. As we can see, ld. A.O. did not bother to carry out the physical inspection and valuation report of Dalal Mott Macdonald and did not consider evidences such as photograph of the plant and machinery submitted before the ld. A.O. in pursuant to the ITAT direction. We draw support from the case of CIT vs. S. Khader Khan Son [2013 (6) TMI 305 - SC ORDER ] wherein has held that only on the basis of statement recorded during the survey proceeding u/s. 133A cannot be basis of addition. - Decided in favour of assessee. - ITA. Nos: 1140, 1342 to 1344/AHD/2015 - - - Dated:- 25-11-2019 - Shri Mahavir Prasad, Judicial Member And Shri Waseem Ahm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due to financial crisis the details could not be produced at the time of survey which is not in dispute and is also supported by the fact that assessee filed the return of income declaring losses of ₹ 19.95 Crores. The assessment year under appeal is 2002-03 and survey is conducted after several years on 1503-2005. The asset valuation report of Dalai Mott MacDonald of May/2003 was found during the course of survey. Copy of the said report is filed on record which valuation report is prepared, on the basis of information, data and particulars provided by Industrial Development Bank of India and the assessee. The learned Counsel for the assessee prepared a chart and referred to page numbers in the report of the valuer and by referring the details noted in the assessment order explained that all the assets not found by AO are specifically mentioned in the valuation report. Therefore, claim of the AO is incorrect that the assets are not mentioned in the valuation report which, was prepared about two years prior to the date of survey. The valuation shown by the valuer of assets was also stated to be more than the value claimed by the assessee. The assessee produced all the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not responded to the notice of the AO may not be a ground for denying claim of the assessee on tangible assets. The learned CIT(A) also failed to consider that specific items of tangible assets are recorded in the report of Dalai Mott MacDonald, Since the material supplied by the assessee is not examined in detail and complete details of the assets are recorded in the report of valuation prepared prior to the survey at the instance of IDBI, therefore, we are of the view the 'matter as regards depreciation on tangible assets requires reconsideration at the level of the AO. We accordingly, confirm the order of the learned CIT(A) in granting depreciation on intangible assets. The departmental appeal on ground No.1 is accordingly dismissed. However, the order of learned CIT(A) in refusing to grant depreciation on tangible assets is set aside and the matter is restored to the file of the AO for reconsideration. The AO shall pass reasoned order by giving reasonable sufficient opportunity to the assessee considering the valuation report of Dalai Mott MacDonald and the 'evidences produced by the assessee for purchase of tangible assets. In the result, ground no. 2 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and the depreciation was rightly claimed. The assessee had purchased plant machinery not only from the alleged associated concerns, but purchased machinery parts in large number from overseas market from world leader manufacturers as well. The total machinery purchased worth ₹ 94,97,96,045/- was added during the year, which included integrated software purchased from Design Electronics Soft Design. When the machineries were purchased, the company had two alternatives to purchase the software either to purchase inbuilt software along with the machine from original supplier located at Switzerland or to get it developed locally. By this process, the company could save large amount of customs duty and valuable foreign exchange of the country. The development of software from local market was for the immediate availability for after sales service. For the purpose of developing software to be fitted in the machineries imported from AISA Switzerland, Applitech Solution had deputed its engineers to AISA Company, so that they could get detailed knowledge, technical specifications, criticality of the machine and other hardware configuration requirements. Applitech Solution Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passes and store receipts etc. which were properly maintained. Therefore, it was submitted that the depreciation should be allowed, The learned CIT(A) considering facts and the explanation of the assessee partly allowed the claim of the assessee. 4. The pursuant to the direction of the ITAT order dated 06.01.2012. Ld. A.O. called the assessee. Assessee furnished certain detail and reiterated the stand taken by the assessee. 5. Apart from that assessee has submitted all the purchase bills installations report and report of the surveyor and also submitted details of loan taken by the assessee from IDBI Bank in order to install machine and wrote three letters along with photographs of the machines to ld. A.O. to come and inspect machines etc. before disallowing the claim of the assessee for depreciation. But ld. A.O. did not physically inspected the machines upon which depreciation was claimed and ld. A.O. confirmed his earlier order. 6. Thereafter assessee preferred appeal before the ld. CIT(A) who just confirmed the order of the ld. Assessing Officer stating that ld. A.O. has rightly relied on the statement taken during the course of survey wherein surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 19.09.2012 requesting the Assessing Officer to carry out the physical inspection of the machines. But ld. A.O. did not bother to inspect the same for the reason that ITAT did not give him direction to physically inspect the machines wherein in department appeal filed before the ITAT directed the ld. A.O. that he shall pass reasoned order by giving reasonable sufficient opportunity to the assessee considering the valuation report of Dalal Mott Macdonald and the evidences produced by the assessee for purchase of tangible assets. As we can see, ld. A.O. did not bother to carry out the physical inspection and valuation report of Dalal Mott Macdonald and did not consider evidences such as photograph of the plant and machinery submitted before the ld. A.O. in pursuant to the ITAT direction. 10. We draw support from the case of Hon ble Supreme Court in the matter of CIT vs. S. Khader Khan Son (2013) 352 ITR 480 (SC) wherein Hon ble Supreme Court has held that only on the basis of statement recorded during the survey proceeding u/s. 133A cannot be basis of addition. There has to be corroborative evidence in support of the contention of the ld. A.O.. In our considered opinion, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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