9911796707
TMI Blog2021 (12) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in the audited financial accounts, which were there before the AO, but also from the statutory record of RG-1 register, copy of excise return and copy of VAT Return. Once a new factory has been set up with new plant machinery which was used for production during the year and depreciation has been claimed on such plant machinery, then same cannot be denied on the ground that the plant machinery of the new assets purchased during the year were not put to use. The aforesaid finding of the ld. CIT (A) is not only based on appreciation of facts but also in accordance with law and hence said finding is affirmed. - now it is a well trite law even if assets are ready to use, which here in this case was actually put to use, then also depreciation cannot be denied.- Decided in favour of assessee. - ITA No.6708/Del./2018 - - - Dated:- 13-12-2021 - Shri Anil Chaturvedi, Accountant Member And Shri Amit Shukla, Judicial Member For the Assessee : Shri Gautam Jain, Advocate For the Revenue : Shri Kumar Padmapani Bora, Sr.DR ORDER PER AMIT SHUKLA, JM : Aforesaid appeal has been filed by the assessee against the impugned order dated 25.07.2018 passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets to use during the year under assessment on the basis of the Mechanical Completion Certificate, Excise/ VAT Return etc., not appreciating the fact that the use of the assets has to be actual, real effective in the commercial sense and the mere fact that a meager amount of income from operation is reflected in the accounts does not establish that all the block of assets had been actually put to use during the year. 3. The sole issue involved in the present appeal is disallowance of depreciation of ₹ 50,81,93,950/- claimed by the assessee u/s 32 of the Act on the fixed assets acquired/purchased during the year. 4. The facts in brief as discussed in the assessment order is that during the relevant assessment year, assessee has set up a green field project to produce Spandex Filament Yarn at Baddi, Himachal Pradesh. The assessee has installed state of the art plant equipped with latest technology to produce 5000 MT of yarns per annum. For setting up this new industry, the assessee had purchased plant machinery and made addition to the fixed assets amounting to ₹ 3,23,60,13,477/-. The copies of bills purchased in respect of addition to the fixed assets were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t within a time period of 15 days. However, no report was submitted and accordingly, ld. CIT (A) again sent a reminder on 28.03.2018 and asked the AO to submit the remand report by 06.04.2018. However, despite such reminder also, no remand report was furnished. The contents asked in the remand report and the observation made by the ld. CIT(A) in letter dated 16.11.2017 to the AO is quite relevant, therefore, for the sake of ready reference, the same is reproduced hereunder :- To The DCIT, Circle 12(1), Delhi C.R. Building, I.P. Estate, New Delhi Sub : Remand Report in the case of Indorama Industries Ltd., for A.Y. 2012-13 in appeal No.31/17-18 (old appeal No.235/16-17), PAN : AABCI9690N Order passed u/s 143(3) dated 28.03.2016 reg. Please refer to the above. 2. In the appellate proceedings, the appellant has raised the following grounds. 1. Ground No.4 the Ld. AR of the Appellant Company has mentioned that the Ld. Assessing officer has erred both in law and on facts of the case in disallowing the whole Depreciation claimed as per the income tax act, 1961 amounting to ₹ 50,81,93,951/- by alleging that on 18.03.2016 the assessee was specifically ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established that the business of the Appellant Company was started and assets were also put to use during the AY 2012-13 itself. As per the ld. AR, if opportunity of being heard had given to the Appellant Company at the time of assessment proceedings, such proofs must have been submitted before the AO itself. You are requested to comment on the admissibility of additional evidence u/r 46A and merit of the evidences submitted. 6. If required necessary enquiries may be conducted for examining these evidences for which this letter should be treated as directed u/s 250(4) as well. 7. You ore directed to submit your report within 15 days of the receipt of this letter. 7. Even after the reminder, no such remand report was submitted. The ld. CIT (A) had passed the order on 25.07.2018 after a lapse of substantial time, however till the date of passing of the impugned order, also, no communication was received from the AO. Ld. CIT (A) also asked the AO to provide the assessment record to see, whether any query relating to the fact that assets were put to use, was asked by the AO from the assessee or not. From the perusal of the order sheet entry and show-cause notice, he noticed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial into the plant following mechanical completion. 6.7 Apart from mechanical completion certificates, other corroborative evidences and considering the case laws relied upon by Ld. AR, I am of the view that business of the Appellant Company was started during the AY 2012- 13 itself and assets were also put to use in that year. In view of this facts I find that AO is not justified in making the disallowance of depreciation. Hence the same is deleted. Accordingly, grounds of appeal are allowed. 8. Ld. DR for the Revenue submitted that once the ld. CIT (A) has admitted the additional evidence then sufficient opportunity should have been given to the AO and from the perusal of ground 2(b), it can be seen that the Revenue has specifically raised this issue that, in the remand letter, there was no document annexed, therefore, AO never get an opportunity to examine the additional evidences. Thus, he requested that the matter be restored back to the AO to examine the additional evidences and AO will decide the issue in accordance with law. 9. On the other hand, ld. counsel for the assessee strongly objecting to the ld. DR s contention that matter should be restored back to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the AO, he strongly relied upon the decision of Hon ble jurisdictional High Court in case of CIT vs. Imperial Cables (P) Ltd. (2007) 159 taxman 328 (Delhi)(11.09.2006), wherein Hon ble High Court has categorically observed that if more than adequate opportunities have been given to the AO to respond to the application of additional evidence moved by the assessee before the first appellate authority and if AO did not take any interest in the matter, then first appellate authority has no option but to allow the application and to take additional evidence on record. The ratio of said judgment is squarely applicable on the facts of the present case wherein ld. CIT(A) has categorically noted that ample opportunity has been given to the AO and AO did not respond. Thus, the matter should not be set aside and the order of the ld. CIT (A) be upheld. 11. We have heard the rival submissions and perused the material placed on record as well as relevant finding given in the impugned order. From bare perusal of the assessment order, it is seen that ld. AO put a query to the assessee on 18.03.2016 to file the details of fixed assets and why the depreciation should not be denied. In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional documents filed before him which are though part of the statutory record only, but has decided the issue on totality of facts and circumstances as was available before the AO and on the audited financial statements which were not disputed by the ld. CIT (A) or noted by the AO. In fact, in his remand letter, he has categorically pointed out this fact. 14. After considering the entire gamut of facts and material placed on record before the AO and ld. CIT (A), we find that there is no dispute that assessee had not only purchased the assets/plant machinery but also had put to use during the relevant assessment year. This is evident from the fact that production was carried out by utilizing raw material and finished semi-finished stocks at the year end. Not only that, the goods produced had also been sold and revenue from the operation has also been shown at ₹ 6,80,056/-. This is not only mentioned in the audited financial accounts, which were there before the AO, but also from the statutory record of RG-1 register, copy of excise return and copy of VAT Return. Once a new factory has been set up with new plant machinery which was used for production during the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
