DCIT, Circle-4(2), Kolkata, Kolkata v. M/s Vishnu Tea & Industries Private Limited, Kolkata

ITA 1750/KOL/2016 | 2009-2010
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 175023514 RSA 2016
Assessee PAN AACCV1846Q
Bench Kolkata
Appeal Number ITA 1750/KOL/2016
Duration Of Justice 1 year(s) 2 month(s) 29 day(s)
Appellant DCIT, Circle-4(2), Kolkata, Kolkata
Respondent M/s Vishnu Tea & Industries Private Limited, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Department
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-11-2017
Date Of Final Hearing 30-01-2017
Next Hearing Date 30-01-2017
First Hearing Date 30-01-2017
Assessment Year 2009-2010
Appeal Filed On 01-09-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH KOLKATA [BEFORE SRI J. SUDHAKAR REDDY HONBLE AM & SRI A BY T. VARKEY HONBLE JM] I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 200 8-09 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 200 9-10 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010 -11 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 201 1-12 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 ASSESSMENT YEAR: 201 2-13 D.C.I.T. CIRCLE-4(2) KOLKATA. ..APPELLANT 4 TH FLOOR ROOM NO. 11B AAYAKAR BHAWAN P-7 CHOWRINGHEE SQUARE KOLKATA 700 069 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED .RESPONDENT 8 NETAJI SUBHAS ROAD C3/3 GILLANDER HOUSE KOLKATA 700 001 [PAN : AACCV 1846 Q] APPEARANCES BY: SHRI DEV KUMAR KOTHARI FCA APPEARING ON BEHALF OF THE ASSESSEE. SHRI SAURABH KUMAR ADDITIONAL CIT DR. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : NOVEMBER 06 2017 DATE OF PRONOUNCING THE ORDER : 2017 2 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED O R D E R PER J. SUDHAKAR REDDY AM :- THE APPEALS FOR THE ASSESSMENT YEARS 2008-09 2009- 10 2010-11 AND 2011-12 ARE FILED BY THE REVENUE. CROSS-OBJECTIONS HAVE BEE N FILED BY THE ASSESSEE. THE APPEAL FOR THE ASSESSMENT YEAR 2012-13 HAS BEEN FILED BY THE ASSESSEE. 2. AS THE ISSUES ARISING IN ALL THESE APPEALS ARE C OMMON FOR THE SAKE OF CONVENIENCE THEY ARE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS COMMON ORDER. 3. THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING TEA. IT FILES ITS RETURN OF INCOME REGULARLY. 4. FIRST WE TAKE UP THE REVENUE APPEAL FOR THE ASSE SSMENT YEAR 2008-2009 AND THE C.O.S FILED BY THE ASSESSEE. THE GROUNDS RAISED BY THE REVENUE ARE AS FOLLOWS:- 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN ALLOWING DEPRECIATION AT A HIGHER RATE TO THE 'WITHERING THROUGH CLAIMED BY THE ASSESSEE WHEN THE SAME DOES NOT FIND PLACE IN THE RESTRICTIVE DEFINITION IN DEPRECIATION TABLE APPENDED TO THE I. T. RULES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN IGNORING HON'BLE MADRAS HIGH COURT'S DECIS ION ON SIMILAR MATTER OF RESTRICTIVE DEFINITION IN THE CASE OF CIT VS. ADAR TEA PRODUCTS CO. REPORTED IN 178 TAXMAN 126 WHERE THE ASSET CONSIDERED WAS ONLY FLUID BED DRIER. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN ALLOWING DEPRECIATION ON GOODWILL WHICH HA D MERELY BEEN QUANTIFIED 3 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED ON THE REVALUATION AND HENCE THERE HAD BEEN NO GENU INENESS OF SUCH A VALUATION OF AN INTANGIBLE ASSET. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) ERRED IN ALLOWING ASSESSEE'S CONTENTION THAT MAT WA S APPLICABLE ONLY WHEN THERE WAS POSITIVE INCOME AND THE SAME WAS LESS THA N BOOK PROFIT. 5. THE FACTS RELATING TO GROUND NO. 1 & 2 OF THE RE VENUE APPEAL ARE THAT THE ASSESSEE CLAIMS THAT IT IS ENTITLED TO HIGHER RATE OF DEPRECIATION ON ENCLOSED WITHERING TROUGH MACHINE ON THE GROUND THAT THIS I S AN ENERGY-SAVING DEVICE AND A POLLUTION CONTROLLING EQUIPMENT. THE ASSESSING OF FICER WAS OF THE VIEW THAT THESE MACHINES ARE CALLED WITHERING TROUGH MACHINERY AND ARE REQUIRED IN ALL TEA MAKING FACTORIES AND ARE INTEGRAL PART OF THE FACTO RIES. HE RECORDS AT PAGE 2 OF HIS ORDER THAT THE FUNCTION OF THE WITHERING TROUGH MAC HINE IS TO PASS DRY AIR OVER GREEN LEAVES TO DRY THE GREEN LEAVES PROCURED FROM GARDENS SO THAT THE MOISTURE IN THE GREEN LEAVE COULD EVAPORATE GRADUALLY. HE WAS O F THE VIEW THAT THE ENCLOSED WITHERING TROUGH MACHINE IS NOT AN ENERGY SAVING D EVICE OR A POLLUTION CONTROL EQUIPMENT. THE ASSESSING OFFICER ASKED THE ASSESSEE AS TO THE SPECIFIC ITEM TO THE APPENDIX TO THE INCOME TAX RULES WHICH PRESCRIBES T HE RATE OF DEPRECIATION READ WITH SECTION 32 OF THE INCOME TAX ACT UNDER WHICH THE MACHINE HAS BEEN LISTED AS A POWER SAVING DEVICE. IN REPLY THE ASSESSEE COMPAR ED THESE MACHINES TO A SPECIALISED BOILER AND FURNACE LIKE FLUIDISED BED B OILERS OR A FLAMELESS FURNACE WHICH ARE ITEMS OF MACHINERY LISTED IN THE SAID DEP RECIATION SCHEDULE. THE ASSESSING OFFICER OBSERVED THAT SUCH SPECIALISED BO ILERS AND FLAMELESS FURNACES ARE USED IN IRON AND STEEL INDUSTRY OR IN ORE EXTRACTIO N INDUSTRY AND NOT IN TEA INDUSTRY. HE ALSO OBSERVED THAT IN NO OTHER TEA INDUSTRY CASE S DEALT BY HIM (AS HE IS IN CHARGE OF TEA INDUSTRY CIRCLE) THE DEPRECIATION WAS CLAIM ED AT A HIGHER RATE OF 80% ON 4 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED WITHERING TROUGH MACHINES ON SUCH GROUNDS THAT THEY ARE POWER SAVING DEVICES. HE REJECTED THE CLAIM OF THE ASSESSEE FOR HIGHER DEPRE CIATION ON THIS MACHINE AND ALLOWED THE DEPRECIATION AT THE NORMAL RATE ALLOWAB LE AT PLANT AND MACHINERY. THE ASSESSEE CARRIED THE MATTER IN APPEAL. 5.1. BEFORE THE LD. CIT(A) THE ASSESSEE CLAIMED TH AT IT CONVERTED OPEN WITHERING TROUGH MACHINES INTO ENCLOSED WITHERING TROUGH MACHINES BY SELF- FABRICATION WITH A VIEW TO SAVE ENERGY REDUCE CARB ON EMISSION AND CONTROL EFFECT OF POLLUTION ON THE TEA PRODUCED AND ALSO TO REDUCE POLLUTION TO THE ENVIRONMENT. IT CLAIMED THAT ENCLOSED WITHERING TROUGH MACHINES I S BASED ON LATEST TECHNOLOGY AND IT REDUCES ENERGY CONSUMPTION AND ALSO CARBON E MISSION. IT CLAIMED THAT THE PRINCIPLE LAID DOWN FOR DEPRECIATION RATE APPLICABL E IN THE CASE OF FBD DRYER AS HELD BY ITAT KOLKATA IN CASE OF WARRANT TEA LTD. IS EQUALLY APPLICABLE TO SUCH ENCLOSED WITHERING TROUGH MACHINES. HE FURNISHED CERTAIN DATA AND CLAIMED THOSE AS EVIDENCES OF POWER SAVING BY INSTALLATION OF THIS DEVICE. AS AN ALTERNATIVE CLAIM THE ASSESSEE CLAIMED THAT THE ENTIRE COST OF CONVERSION OF OPEN WITHERING TROUGH SYSTEM BE ALLOWED AS REVENUE EXPENDITURE AS IT WAS EARLIER POWERED BY TD OIL AND THIS WAS CONVERTED TO ENCLOSED WITHERING TROUGH MACHINES WHICH IS NOW POWERED BY COAL. THIS WAS TO ACHIEVE MORE EFFICIENC Y AND PRODUCT ACCEPTABILITY. HENCE IT WAS CLAIMED THAT THE EXPENDITURE INCURRED BY WAY OF FABRICATION COST WAS SIMPLY TO CARRY ON BUSINESS MORE EFFICIENTLY AND EF FECTIVELY AND THEREFORE THE ENTIRE EXPENDITURE SHOULD BE ALLOWED AS REVENUE EXP ENDITURE. RELIANCE WAS PLACED ON THE JUDGEMENT OF THE HONBLE CALCUTTA HIGH COURT IN CASE OF THE GENERAL FIBRE DEALERS P. LTD. IN WHICH EXPENSES FOR CONVERSION OF COAL FIRED HE ATER TO OIL FIRED HEATER WAS ALLOWED AS REVENUE EXPENDITURE. THE AO D ID NOT CONSIDER THIS ALTERNATIVE CLAIM. 5 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 5.1.2. THE LD. FIRST APPELLATE AUTHORITY CONSIDERE D THE SUBMISSIONS OF THE ASSESSING AND AT PARA 4 ONWARDS OF HIS ORDER HELD A S FOLLOWS:- A. THAT THE ENTIRE PROCESS OF WITHERING IS CRUCIAL TO THE MANUFACTURING. B. INSTALLATION OF THIS PARTICULAR DEVICE HAS BEEN REMUNERATIVE AND ECONOMICAL TO THE ASSESSEE AND THE DEVICE HAS BEEN INSTALLED WITH THE CLEAR INTENTION TO SAVE ENERGY REDUCE CARBON EMISSION C ONTROL EFFECT OF POLLUTION ON TEA PRODUCED. C. THE MATERIAL FIGURES OF PRODUCTION APPEARED TO J USTIFY THE CONTENTION OF THE ASSESSEE THAT THE ENCLOSED WITHERING TROUGH MA CHINES IS BASED ON LATEST TECHNOLOGY AND IT REDUCES ENERGY CONSUMPTION . D. THAT ENCLOSED WITHERING TROUGH MACHINES IS EQU AL TO FLAMELESS FURNACE AND A FLAT BED DRYER. E. RELIANCE WAS PLEASED ON THE DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX WB-IV KOLKATA VERSUS MCLEOD RUSSEL (IN DIA) LTD. IN ITA NO. 254OF 2001 JUDGEMENT DT. 10.02.2014 (2015) 55 TAXMANN.COM 102(CAL). F. THE AO HAS NOT MADE SIMILAR DISALLOWANCE ON THI S HIGHER RATE OF DEPRECIATION CLAIMED FOR THE ASSESSMENT YEAR 2012-1 3. 5.2. HENCE HE ALLOWED THE CLAIM OF THE ASSESSEE BY DISMISSING THE ISSUE IN DETAIL IN HIS IMPUGNED ORDER 5.3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 5.4. THE ASSESSEE FILED CROSS-OBJECTION IN SUPPORT OF THE ORDER OF THE LD. CIT(A). 5.5. THE LD. COUNSEL FOR THE ASSESSEE SHRI DEV KUM AR KOTHARI FCA SUBMITTED 3 SEPARATE PAPER BOOKS AND RELIED UPON THE ORDER OF T HE LD. CIT(A). HE GAVE THE 6 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED FOLLOWING CHART AND CONTENDED THAT ENCLOSED WITHERING TROUGH MACHINES IS AN ENERGY-SAVING AND POLLUTION CONTROLLING MACHINE. 7 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED HE COMPARED THE MACHINE TO A COOKING VESSEL AND SUB MITTED THAT THE PETROLEUM CONSERVATION RESEARCH ASSOCIATION HAS STA TED THAT PRESSURE COOKERS 8 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED WHEN USED FOR COOKING OF FOOD SAVE ENERGY AS COMPA RED TO COOKING FOOD IN A VESSEL WITHOUT A COVER. THE PITH AND SUBSTANCE OF HIS SUBM ISSIONS IS THAT WHEN WITHERING MACHINES ARE ENCLOSED THEY ARE COMPARABLE TO COOKIN G WITH THE LID ON AND THAT THIS RESULTS IN ENERGY-SAVING. ON A QUERY FROM THE BENCH HE WAS NOT ABLE TO PRODUCE ANY INDEPENDENT STUDY BY ANY INSTITUTION ORGANISAT ION OR INDIVIDUAL IN SUPPORT OF HIS SUBMISSION. THERE IS NO PROOF OR REPORT IN SUPP ORT OF HIS ARGUMENT. 5.5.1. HE SUBMITTED DATA AND ARGUED THAT THIS DEMON STRATES THAT THE ASSESSEE HAS SAVED ENERGY. WE WOULD BE DEALING WITH THE FIGURES BROUGHT OUT IN THE DETAILED CHARTS LATER SUBMITTED BY THE ASSESSEE. HE SUBMITTE D THAT THESE MACHINES FALL IN THE NEW APPENDIX TO INCOME TAX RULES UNDER ITEM NO. (8 )(IX) UNDER THE HEAD: ENERGY SAVING DEVICES A. SPECIALISED BOILERS AND FURNACES : FALLS WITHIN TWO CATEGORIES:- (A) FLAMELESS FURNACES AND CONTINUOUS PUSHER TYPE F URNACES (B) FLUIDIZED BED TYPE HEAT TREATMENT FURNACES 5.5.2. HE RELIED ON THE DECISION OF THE HONBLE CAL CUTTA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX WB-IV KOLKATA VERSUS M CLEOD RUSSEL (INDIA) LTD (SUPRA) & ON THE DECISION OF THE C BENCH OF THE KOLKATA T RIBUNAL IN THE CASE OF WARREN TEA LTD. AND SUBMITTED THAT 100 PER CENT DEPRECIATION WAS HE LD TO BE ALLOWABLE ON VIBRATORY FLUID BED DRYER THOUGH THEY WERE NOT SPECIFICALLY LISTED IN THE DEPRECIATION TABLE. HE RELIED ON THE DECISION O F THE HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VERSUS ADAR TEA PRODUCTS COMPANY [2009] 314 ITR 38 (MAD) AND SUBMITTED THAT THE SAME CANNOT BE APPLIED AS THE 9 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT BINDS THE ITAT BENCH AT KOLKATA ON THIS ISSUE. 5.6. THE LD. DR SHRI SAURABH KUMAR ADDITIONAL CIT DR ON THE OTHER HAND OPPOSED TO THE CONTENTIONS OF THE LD. COUNSEL FOR T HE ASSESSEE AND SUBMITTED THAT THE ASSESSEE CLAIMS TO HAVE FABRICATED CERTAIN COVE RS TO WITHERING TROUGH MACHINES AND CLAIMED THAT THIS IS A POWER SAVING D EVICE. HE ARGUED THAT THE SO- CALLED ENCLOSED WITHERING TROUGH MACHINES WERE NO N-STANDARD EQUIPMENT AT BEST IMPROVISED AND THAT THERE IS NO MATERIAL OR LI TERATURE WHATSOEVER IN THE PUBLIC DOMAIN TO SUBSTITUTE THE CLAIMS OF THE ASSE SSEE. HE SUBMITTED THAT THE LD. CIT(A) HAS ONLY LISTED OUT THE FUNCTION OF WITHERI NG PROCESS IN A TEA INDUSTRY AND HAD SIMPLY ACCEPTED THE CONTENTIONS OF THE ASSESSEE WITHOUT APPLICATION OF MIND AND WITHOUT GOING INTO THE MERITS OF THE CASE. HE S UBMITTED THAT THERE IS NO EVIDENCE WHATSOEVER OF THE ASSESSEE HAVING SAVED E NERGY OR THAT THESE ENCLOSURES HAVING DONE POLLUTION CONTROL. HE POINTED OUT THAT IN THE ALTERNATIVE CLAIM; THE ASSESSEE SUBMITTED THAT AN OPEN WITHERING TROUGH MA CHINE WHICH IS POWERED BY TD OIL WAS CONVERTED INTO ENCLOSED WITHERING TROUG H MACHINES POWERED BY COAL. THIS SHOWS THAT THERE IS NO SAVING ON ENERGY AND IT WAS ONLY A CASE OF ONE FUEL REPLACING THE OTHER. 5.6.1. IN REPLY TO THIS THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT NO STANDARD EQUIPMENT OF THIS TYPE WAS AVAILABLE IN THE MARKET AND HENCE THE ASSESSEE HAD ITSELF DESIGNED THIS MACHINE FABRICATED THE SAME A T ITS SITE INSTALLED THEM AND USED THEM FOR MANUFACTURING TEA. HE REFERRED TO AN ADVIS ORY CIRCULAR ISSUED BY THE TEA RESEARCH INSTITUTE IN SEPTEMBER 2003 AND CERTAIN O THER MATERIAL DOWNLOADED FROM THE INTERNET AND ARGUED THAT THIS MACHINE IS AN ENERGY-SAVING DEVICE. ON A 10 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED QUERY FROM THE BENCH THE LD. COUNSEL FOR THE ASSES SEE COULD NOT POINT OUT EVEN A SINGLE SENTENCE IN SUPPORT OF HIS CONTENTION THAT ENCLOSED WITHERING TROUGH MACHINES ARE ENERGY-SAVING DEVICES FROM THE ADVIS ORY CIRCULAR ISSUED BY THE TEA RESEARCH INSTITUTE OR THE MATERIAL DOWNLOADED FROM THE INTERNET. HE FURNISHED A COMPARISON BETWEEN FBD DRYER AND ENCLOSED WITHERIN G TROUGH MACHINES AND ARGUED THAT BOTH MACHINES ARE SIMILAR. WHILE AGREEI NG THAT THERE IS NO STANDARD MACHINERY OR EQUIPMENT IN THE MARKET HE ARGUED THA T THIS IS NOT THE REQUIREMENT OF LAW. HE PRAYED THAT THE ORDER OF THE LD. CIT(A) BE UPHELD. 6. AFTER HEARING RIVAL CONTENTIONS CONSIDERING THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE-LAW CITED WE WILL AS FOLLOWS:- 6.1. THE LD. CIT(A) EXPLAINED IN HIS ORDER THE NE CESSITY AND PROCESS OF WITHERING IN THE BUSINESS OF THE MANUFACTURING TEA . THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THE SAME. THIS DOES NOT HELP IN US COMING TO A CONCLUSION AS TO WHETHER ENCLOSED WITHERING TROUGH MACHINES IS AN ENERGY-SAVING DEVICE OR A POLLUTION CONTROL EQUIPMENT AS CLAIMED BY THE AS SESSEE. THIS ASSESSEE CLAIMS THAT HE HAS DESIGNED THIS MACHINE FABRICATED THE S AME ON-SITE AND INSTALLED THE SAME. EXCEPT FOR THESE SELF-SERVING STATEMENTS OF T HE ASSESSEE THERE IS NO EVIDENCE WHATSOEVER THAT THIS WITHERING TROUGH MACHINES W HEN ENCLOSED BY FABRICATING A COVER BECOMES AN ENERGY-SAVING DEVICE OR A POLLUTIO N CONTROLLING EQUIPMENT. THE BENCH HAD GRANTED SUFFICIENT TIME TO THE ASSESSEE T O PRODUCE MATERIALS FROM INDEPENDENT SOURCES LIKE TEA RESEARCH INSTITUTE UN IVERSITIES OR ANY OTHER ORGANISATION OR PROFESSORS ETC. IN SUPPORT OF ITS CLAIM THAT ENCLOSING THE WITHERING TROUGH MACHINES WOULD RESULT IN ENERGY-SAVING. ONL Y THE PROCESS OF WITHERING IS EXPLAINED IN ALL THESE MATERIALS FURNISHED BY THE A SSESSEE AND THERE IS NOT IOTA OF 11 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED EVIDENCE THAT ENCLOSING A WITHERING TROUGH MACHINE WOULD CONVERT IT INTO AN ENERGY SAVING DEVICE. 6.2. WE ALSO OBSERVE THAT EARLIER THE ASSESSEE WAS USING TD OIL FOR POWERING THIS WITHERING TROUGH MACHINE AND BY ENCLOSING THE WITHE RING TROUGH MACHINES IT WAS POWERED BY COAL IN PLACE OF TD OIL. NOTHING IS SAID ON WHETHER USING COAL AS A FUEL IN PLACE OF TD OIL WOULD REDUCE THE POLLUTION. IN F ACT COAL AS A FUEL IS A POLLUTANT. IN VIEW OF THE ABOVE DISCUSSION WE HOLD THAT BY CH ANGING THE FUEL THAT IS BEING USED FROM TD OIL TO COAL AND BY MODIFYING T HE WITHERING TROUGH MACHINE BY ENCLOSING IT BY FABRICATION IN OUR VIEW DOES NO T MAKE THE MACHINE AN ENERGY- SAVING EQUIPMENT OR POLLUTION CONTROL EQUIPMENT. 6.2.1. BE IT AS IT MAY THE ASSESSEE FURNISHED THE FOLLOWING COMPARISON OF CONSUMPTION OF ELECTRICITY IN SUPPORT OF ITS CLAIM OF SAVING ENERGY. THIS IS REPRODUCED BELOW FOR READY REFERENCE:- 12 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 13 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 6.3. A PERUSAL OF THE SAME DEMONSTRATES THAT USE OF TD OIL WAS REDUCED DRASTICALLY FROM THE YEAR 2008-09 AND DIS-CONTINUED FROM THE ASSESSMENT YEAR 14 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 2009-10. INSTEAD USE OF COAL AND FIREWOOD HAS INCRE ASED FROM ASSESSMENT YEAR 2008-09. WE DO NOT SEE ANY SAVING THAT THE ASSESSEE HAD ACHIEVED BY REPLACING TD OIL AS FUEL WITH FIREWOOD AND COAL. A PERUSAL OF TH E POWER CONSUMPTION CHARTS SHOW SUBSTANTIAL INCREASE IN USE OF COAL AND FIREWO OD. BOTH THESE FUELS ARE POLLUTANTS. THE COST OF FIREWOOD AND COAL IS LESS T HAN THE COST OF TD OIL. THE CHARTS FILED PROVE THAT THE CHANGE IN THE NATURE OF FUEL R ESULTED IN SOME SAVING. THIS DOES NOT MAKE THE MACHINE AN ENERGY SAVING DEVICE. THUS WE ARE NOT CONVINCED WITH THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. THE LD. CIT(A) HAS IN OUR VIEW SIMPLY ACCEPTED THE CONTENTIONS OF THE ASSESSEE WIT HOUT ENQUIRY AND PROPER APPRECIATION OF THE FACTS. 6.3.1. EVEN OTHERWISE ENCLOSED WITHERING TROUGH M ACHINES DO NOT FALL WITHIN THE SPECIFIED ITEMS OF ENERGY-SAVING DEVICES IN T HE TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE GIVEN IN THE NEW APPEND IX-I UNDER RULED 5 OF INCOME TAX RULES 1962. THE ASSESSEE CLAIMS THAT TH IS EQUIPMENT IS COMPARABLE WITH FLAMELESS FURNACE AND CONTINUOUS PUSHER TYPE F URNACE. THE FUNCTION OF FLAMELESS FURNACE IS AS FOLLOWS:- FLAMELESS FURNACES/COMBUSTION : THE PHENOMENON IS CREATED WHEN THE FUEL TEMPERATU RE IS ABOVE THE IGNITION TEMPERATURE OR IN GENERAL ABO VE 750C. IN THESE CONDITIONS IF THE FUEL IS INJECTED DIRECT LY INTO THE FURNACE AT GIVEN LEVELS OF TURBULENCE AND VELOCITY AND BYPASSING THE MIXER WI TH COMBUSTION AIR THIS GENERATE AN OXIDATION REACTION WHICH DOES NOT OCCUR IN THE VISI BLE RANGE BUT STILL PRODUCES THERMAL ENERGY. 15 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED THE FUNCTION OF WITHERING EQUIPMENT CANNOT BE BY AN Y STRETCH OF IMAGINATION COMPARED WITH THAT OF A FLAMELESS FURN ACE. SIMILAR IS THE FUNCTIONALITY OF THE FLUIDISED BED T YPE DRYER. FLUIDIZED BED TYPE HEAT TREATMENT FURNACES : A METHOD FOR RAPID HEAT TREATMENT QUENCHING AND AGING OF AN ARTICLE INCLUDES PLACING THE ARTICLE IN A FLUIDIZED BED AND CONVEYING THE ARTICLE THROUGH THE BED. HEAT TREATME NT QUENCHING AND AGING OF THE PART CAN BE DONE IN LESS THAN TWO HOURS USING THIS METHOD. T HE METHOD ALSO INCLUDES REMOVING FLUIDIZING MEDIA FROM THE ARTICLE AS THE ARTICLE IS REMOVED FROM THE FLUIDIZED BED. AN ELEVATOR IS USED TO REMOVE THE ARTICLE FROM THE FLUIDIZED BE D. THE ELEVATOR MAY INCLUDE A CONVEYOR FOR MOVING THE ARTICLE INTO ANOTHER FLUIDIZED BED. THE ARTICLE CAN THEN BE PLACED INTO THE SECOND FLUIDIZED BED AND CONVEYED THROUGH THAT BED. EACH F LUIDIZED BED IS CONTROLLED SO THAT A SPECIFIC HEAT TREATMENT CAN BE APPLIED TO THE ARTIC LE BY THE FLUIDIZED BED. THE FLUIDIZED BED CAN BE USED AS A PORTION OF AN AUTOMATED PRODUCTION LINE. THE RETORT OF THE FLUIDIZED BED INCLUDES A SYSTEM FOR RECYCLING THE AIR PASSED THRO UGH THE FLUIDIZING MEDIA IN THE FURNACE. THE RECYCLING SYSTEM INCLUDES A FAN POSITIONED ABOV E THE FLUIDIZING MEDIA IN THE RETORT A FILTER FOR REMOVING ANY FLUIDIZING MEDIA WITHIN THE RECYCLED AIR AND PIPING FOR REINTRODUCING THE RECYCLED AIR TO THE RETORT. THE HEATERS ARE PLA CED WITHIN THE RETORT AND INCLUDE HEAT EXCHANGERS FOR HEATING THE INCOMING COMBUSTION AIR. THE HEATERS ARE RIGIDLY ATTACHED AT ONE END AND FIT WITHIN SLEEVES ATTACHED TO ANOTHER PORT ION OF THE RETORT. THE HEATER TUBES CAN BE REPLACED WITH REFRIGERATION TUBES OR UNITS SO THAT ARTICLES MAY BE QUENCHED. A PLAIN READING OF THIS TAKES US TO A CONCLUSION TH AT THE ASSESSEES CONTENTION IS DEVOID OF MERIT. 16 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 6.3.2. IT IS CLEAR THAT ENCLOSED WITHERING TROUGH MACHINES IS NOT COMPARABLE WITH ANY OF THE ENERGY-SAVING DEVICES LISTED IN THE NEW APPENDIX-I TO THE INCOME TAX RULES 1962. THE ASSESSEE FURTHER CLAIMS THAT ENCLOSED WITHERING TROUGH MACHINES IS POLLUTION CONTROL EQUIPMENT BUT HE H AS NOT SPECIFIED AS TO UNDER WHICH ITEM OF THE NEW APPENDIX-I TO THE INCOME TAX RULES 1962 THIS EQUIPMENT FALLS. IN VIEW OF THE ABOVE DISCUSSION THIS CLAIM ON THE GROUND THAT THE FUNCTIONAL TEST SATISFIES THE REQUIREMENT IS ALSO TO BE REJECT ED. 6.4. HENCE WE HOLD THAT THE ASSESSEE FAILED TO SUBS TANTIATE HIS CLAIM THAT ENCLOSING WITHERING TROUGH MACHINE IS AN ENERGY- SAVING DEVICE OR POLLUTION CONTROL EQUIPMENT WHICH IS ENTITLED TO HIGHER RAT E OF DEPRECIATION. JUST BECAUSE THE ASSESSING OFFICER HAD NOT DISTURBED THIS CLAIM OF THE ASSESSEE IN THE ASSESSMENT YEAR 2012-12 THIS CLAIM CANNOT BE ALLOW ED. THE CASE-LAW RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THIS CASE AS THE FACTS ARE ENTIRELY DIFFERENT. THE FINDINGS IN THOSE CASES ARE THAT THE MACHINES THEREIN FALL WITHIN THIS CATEGORY. WE HAVE GIVEN A FACTUAL FINDING OTHERWISE . BEFORE US THE ASSESSEE HAS NOT ADVANCED ANY ARGUMENTS ON ITS CLAIM FOR ALLOWING TH IS EXPENDITURE AS REVENUE EXPENDITURE. WE FIND THAT THIS SO CALLED ALTERNATIV E CLAIM IS A CONTRADICTORY CLAIM. THE ARGUMENT IS THAT A MACHINE IS FABRICATED AND I T IS ENTITLED TO DEPRECIATION. THIS MEANS THAT IT IS CAPITAL EXPENDITURE. JUST BECAUSE HIGHER RATE OF DEPRECIATION IS NOT ALLOWED ON AN ASSET IT DOES NOT LEAD TO A CONCLUSI ON THAT THE EXPENDITURE INCURRED FOR ACQUIRING AN ASSET IS REVENUE EXPENDITURE. THIS IS AN UNTENABLE CLAIM. IN THE RESULT WE UPHOLD THE FINDINGS OF THE ASSESSING OFF ICER ON THIS ISSUE AND REVERSE THE ORDER OF THE LD. CIT(A). IN THE RESULT THIS GROUND OF THE REVENUE IS ALLOWED AND THE GROUND OF C.O. IS DISMISSED. 17 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 7. GROUND NO. 3 IS ON THE ISSUE OF ALLOWABILITY OF DEPRECIATION ON GOOD-WILL. 7.1. THE FACTS RELATING TO THIS ISSUE ARE AS FOLLOW S:- THE ASSESSEE PURCHASED DULLABHCHERRA TEAS ESTATE THROUGH A DEED DT. 01/01/2006 AND SALE DEED WAS REGISTERED ON 06/05/20 06. IT MADE A CLAIM FOR ALLOWANCE OF DEPRECIATION ON THE GROUND THAT IT HAD ACQUIRED INTANGIBLE ASSETS THROUGH THIS CONVEYANCE DEED. THIS CLAIM WAS NOT MA DE BY THE ASSESSEE IN THE RETURN OF INCOME. THE CLAIM WAS MADE BEFORE THE LD. CIT(A). NO INTANGIBLE ASSET IN THE FORM OF GOODWILL OR OTHER SUCH RIGHTS SOLD B Y DULLABHCHERRA TEA ESTATE OR PURCHASED BY THE ASSESSEE COMPANY AS PER THIS CONVE YANCE DEED. THE ASSESSEE COMPANY REALLOCATED THE PURCHASE CONSIDERATION BETW EEN DIFFERENT ASSETS IT HAD ACQUIRED THROUGH THIS SALE AND ARRIVED AT A VALUE O F AN INTANGIBLE ASSET WHICH IT CLAIMS TO HAVE PURCHASED AND IT TERMED IT AS GOODW ILL AND CLAIMED DEPRECIATION ON THE SAME. SOME OF THE CONTENTIONS OF THE ASSESSEE BEFORE THE LD. FIRST APPELLATE AUTHORITY ARE BROUGHT OUT FOR READY REFERENCE:- WE MAY MENTION THAT AT THE TIME OF PLANNING AND PU RCHASE OF THE DULLABHCHERRA T. E. WE WERE ADVISED TO ALLOCATE VAL UE TOWARDS INTANGIBLE ASSETS AS VALUABLE AND USEFUL ASSETS. HOWEVER AT T HAT TIME WE HAD TO ACCEPT THE ALLOCATION AS MADE BY THE VENDORS AND WE COULD NOT INSIST BECAUSE OF CERTAIN PREJUDICES OF THE VENDOR AND THEIR EXECUTIVES. JUST TO HAVE DEAL CARRIED IN APPELLANTS FAVOUR PROMOTERS OF APPELLANT ACCEPTED T HE ALLOCATION MADE BY VENDORS BECAUSE OTHERWISE APPELLANT MAY HAVE LOST O PPORTUNITY TO PURCHASE THE T.E. FURTHERMORE THE PROMOTERS WERE NEW IN THE BUSINESS AND THIS WAS FIRST ACQUISITION OF T.E. BY THE PROMOTERS. THEREFORE TH EY HAD TO ACCEPT THE DICTATES OF THE VENDOR ABOUT ALLOCATION OF HIGHER AMOUNT TOW ARDS LAND AND PLANTATIONS. FROM THE ORIGINAL GROUNDS OF APPEAL IT IS CLEAR THA T PROPER ALLOCATION OF COST WAS CONTEMPLATED FROM THE BEGINNING AND IT IS NOT N EW ISSUE. 18 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED AFTER GAINING EXPERIENCE THE DIRECTORS AFTER CAREFU L CONSIDERATION OF ALL FACTS VARIOUS INTANGIBLE ASSETS THEIR UTILITY ETC . DECIDED TO ALLOCATE RS. 325 LAKH TOWARDS INTANGIBLE ASSETS FROM LAND AND PLANTATION TO HAVE A PROPER ALLOCATION OF COSTS FOR COMPUTING INCOME. (EMPHASIS SUPPLIED) . THIS DEMONSTRATES THAT THE VENDORS HAVE NOT SOLD A NY INTANGIBLE ASSET TO THE ASSESSEE AND THAT THE ASSESSEE HAD REDUCED THE COST OF ACQUISITION OF LAND AND PLANTATION AND CREATED A NEW ASSET CALLED GOODWILL . THE ASSESSING OFFICER REJECTED THIS CLAIM OF DEPRECIATION MADE BY THE ASS ESSEE. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL 7.2. THE LD. FIRST APPELLATE AUTHORITY ALLOWED THI S CLAIM OF THE ASSESSEE VIDE PARA 14 PAGE 32 OF HIS ORDER TO PARA 17 PAGE 36 OF HIS O RDER BY HOLDING THAT:- A) ADDITIONAL CLAIM FOR DEDUCTION CAN BE MADE BY TH E ASSESSEE WITHIN THE DATE OF FILING OF REVISED RETURN AND BEFORE THE APP ELLATE AUTHORITIES. B) THE AO HAS NOT ALLOWED THE DEPRECIATION ON INTAN GIBLE ASSET WITHOUT ASSIGNING PROPER REASONS. C) THE PURCHASE WAS EFFECTIVE FROM 01/0/1/2006 THO UGH THE CONVEYANCE DEED WAS REGISTERED ON 06/05/2006 AS THE BUSINESS HAS BEEN PURCHASED AS A CORE CONCERN W.E.F 01/01/2006 AND AS POSSESSION O F ALL MOVABLE PROPERTIES WAS TAKEN OVER BY THE ASSESSEE ON 15/03/ 2006. HENCE THE ASSESSEE WAS ENTITLED TO CLAIM DEPRECIATION FROM 01 /01/2006 D) THE DIRECTORS HAVE VERY REASONABLY ASCERTAINED T HE COST OF INTANGIBLE ASSETS AT RS. 325 LAKHS BY COMPARING THE ISSUE WITH A SIMILARLY PLACED TEA ESTATE IN ASSAM NAMELY SUNTOK TEA ESTATE OF HIRAJ ULIE TEA CO. LTD. WITH THE TEA ESTATE OF THE ASSESSEE I.E. DULLABCHERRA TE A ESTATE. 19 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED E) RELIANCE IS PLACED ON THE DECISIONS OF THE HONB LE SUPREME COURT ON THE ISSUE AS TO WHETHER DEPRECIATION IS ALLOWABLE ON GO ODWILL AND OTHER INTANGIBLE ASSETS. F) THE ACTUAL COST OF THESE INTANGIBLE ASSETS IS RS . 325 LAKHS AND DEPRECIATION AT THE RATE OF 25% OF THE SAME AS ALLO WABLE. 7.3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7.4. THE LD. COUNSEL FOR THE ASSESSEE TOOK THIS BE NCH THROUGH THE VARIOUS SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AS WE LL AS JUDGEMENTS OF VARIOUS COURTS AND ARGUED THAT THE VALUE OF INTANGIBLE ASSE TS HAVE BEEN RIGHTLY ARRIVED AT BY THE MANAGEMENT OF THE COMPANY BY RE-ALLOCATING T HE COSTS OF PURCHASE. HE VEHEMENTLY CONTENDED THAT THIS IS NOT A CASE OF RE VALUATION OF ASSETS AND IT WAS ONLY A CASE OF PROPER ALLOCATION OF COST TO VARIOUS ASSETS PURCHASED. AT PAGES 59 TO 68 OF THE PAPER BOOK HE FILED CERTAIN PAPERS TO EX PLAIN AND JUSTIFY THE VALUATION OF INTANGIBLE ASSETS AT RS. 325 LAKHS BY REALLOCATING THE COST OF PURCHASE OF LAND AND PLANTATION. 7.4.1. THE LD. DR ON THE OTHER HAND SUBMITTED THA T THE REGISTERED CONVEYANCE DEED DT. 06/05/2006 GAVE THE VALUE OF EACH AND EVE RY ASSET THAT WAS TRANSFERRED BY THE VENDOR OF DULLABCHERRA TEA ESTATE M/S. GIL LANDERS ARBUTHNOT & COMPANY LTD. TO THE ASSESSEE COMPANY AND THAT THE ASSESSEE HAS ARTIFICIALLY CREATED AN INTANGIBLE ASSET SO AS TO CLAIM DEPRECIATION ON T HE SAME WHEN IN FACT WHAT WAS PAID WAS TOWARDS COST OF LAND AND PLANTATION. HE PO INTED OUT THAT THE ASSESSEE HAD ADMITTED IN ITS WRITTEN SUBMISSIONS THAT NO VALUE H AS BEEN ASSIGNED TO INTANGIBLE ASSETS IN THE CONVEYANCE DEED BETWEEN THE SELLER A ND THE BUYER AND UNDER THOSE CIRCUMSTANCES; THE COST OF EACH ASSETS SOLD ON ACCE PTED BY BOTH THE PARTIES IN THE REGISTERED CONVEYANCE DEED IS BINDING. THE LD. DR A RGUED THAT THERE IS NO 20 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED INTANGIBLE ASSET ACQUIRED BY THE ASSESSEE AND HENCE IT IS NOT ENTITLED TO ANY DEPRECIATION ON THE SAME. 7.5. AFTER HEARING RIVAL SUBMISSIONS CONSIDER THE PAPERS AS RECORD AND ORDERS OF THE AUTHORITIES BELOW WE ARE IN AGREEMENT WITH THE SUBMISSIONS OF THE LD. DR. WHEN A REGISTERED CONVEYANCE DEED HAS BEEN ENTERED INTO BETWEEN THE TWO PARTIES AND THE COST OF EACH ASSET PURCHASED AND SOLD IS SP ECIFIED IN THAT PARTICULAR DEED THEN IT CANNOT BE ALTERED UNILATERALLY BY ONE PARTY AT ITS CONVENIENCE. IT IS NOT OPEN FOR THE ASSESSEE TO REDUCE THE COST OF LAND AND PLA NTATION AND REALLOCATE SUCH REDUCTION IN COST OF TANGIBLE FIXED ASSET TO AN INT ANGIBLE ASSET AND THEREAFTER CLAIM DEPRECIATION. COST OF PURCHASE OF LAND AND PLANTATI ON CANNOT BE REDUCED. THE ASSESSEE HAS NOT FILED DETAILS AS TO THE COST OF WH ICH ASSET HAS BEEN REDUCED SO AS TO ENABLE IT TO CREATE A NEW ASSET CALLED INTANGIBL E ASSET/GOODWILL AND THEREAFTER CLAIM DEPRECIATION ON SUCH ASSET FOR WHICH THERE I S NO COST OF PURCHASE. ALL THE PAPERS JUSTIFYING THE ARRIVING AT OF THE VALUE OF R S. 325 LAKHS AS THE COST OF INTANGIBLE ASSETS ARE SELF-SERVING DOCUMENTS. THE ASSESSEE HAS NEITHER PURCHASED NOR HAS THE SELLER SOLD ANY INTANGIBLE ASSET IN T HIS CASE. THE ASSESSEES CLAIM THAT ITS REQUEST TO THE SELLER TO MAKE SUCH AN ALLOCATIO N WAS REJECTED BY THE SELLER. THE VENDORS WERE VERY CLEAR THAT NO INTANGIBLE PROPERTY OF THEIR IS BEING SOLD TO THE COMPANY. WHAT WAS SOLD INTANGIBLE PROPERTY. UNDER T HE CIRCUMSTANCES THE CLAIM MADE BY THE ASSESSEE THAT IT INCURRED THE COST TO P URCHASE INTANGIBLE ASSET IS FACTUALLY INCORRECT AND FALSE. THIS IS A WRONG AND UNJUSTIFIED CLAIM. IT IS AN INDIRECT WAY OF CLAIMING DEPRECIATION ON LAND AND PLANTATION WHICH IS PATENTLY WRONG AND MISLEADING. 7.6. HENCE THE CLAIM OF THE DEPRECIATION ON SUCH I NTANGIBLE ASSET IS DEVOID OF MERIT. THUS THE GROUND NO. 3 OF THE REVENUE IS ALL OWED AND THE CORRESPONDING 21 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED GROUND OF CROSS-OBJECTION OF THE ASSESSEE SUPPORTIN G THE ORDER OF THE LD. CIT(A) I.E. GROUND NO. 5 IS DISMISSED. 7.7 GROUND NO. 4 OF THE REVENUE IS ON THE LEGAL ISS UE AS TO WHETHER SECTION 115JB OF THE ACT IS APPLICABLE ONLY WHEN THERE IS N O POSITIVE TOTAL INCOME FOR THE ASSESSEE. 7.7.1 THE ASSESSEE RELIES ON THE JUDGEMENT OF THE J URISDICTION TRIBUNAL IN THE CASE OF SASAMUS SUGAR WORKS LTD. VS. DCIT ITA NO. 1024/KOL /2007 ORDER DT. 28/09/2007. IN OUR VIEW THIS DECISION DOES NOT HOLD THE FIELD A NY LONGER AND IN VIEW OF THE SUBSEQUENT DECISIONS OF THE APEX COURT IN THE C ASE OF APOLLO TYRES LTD. VS. COMMISSIONER OF INCOME TAX (2002) 255 ITR 273 (SC) AS WELL AS THE DECISION OF ITAT KOLKATA IN THE CASE OF BHATKAWA TEA INDUSTRIES PVT. LTD. VS. ACIT CIRCLE- 4 KOLKATA IN ITA NO. 813/KOL/2010 FOR THE ASSESSMENT YEAR 2005- 06 WHEREIN IT WAS HELD AS FOLLOWS:- 10.1 WE ARE OF THE CONSIDERED OPINION THAT SECTION 115JB OF THE ACT IS ATTRACTED IN THE CASE OF THE APPELLANT. THE APPELLA NT HAS NOT ALSO BEEN ABLE TO SHOW US THAT THE DEDUCTIONS AS CLAIMED BY IT FROM T HE NET PROFIT AS PER THE P & L ACCOUNT WERE ALLOWABLE AS PER THE PROVISIONS OF THE ACT KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE APEX COURT'S DECISIO N IN THE CASE OF APOLLO TYRES LTD (SUPRA). IN THIS VIEW OF THE MATTER WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD.CIT(A) ON THE ISSUES AGITATED BY TH E APPELLANT IN THE PRESENT APPEAL AND CONFIRM THE SAME. THUS WE REJECT ALL TH E GROUNDS OF APPEAL OF THE ASSESSEE. 22 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 7.7.2 SECTION 115JB OF THE ACT READS AS FOLLOWS:- 115JB. (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT WHERE IN THE CASE OF AN ASSESSEE BEING A COMPANY THE INCOM E-TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIO US YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL [2012] IS LESS THAN [EIGHTEEN AND ONE-HALF PER CENT] OF ITS BOOK PROFIT [SUCH BOOK P ROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABLE BY THE A SSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF [EIGHTE EN AND ONE-HALF PER CENT]]. (2) [EVERY ASSESSEE (A)BEING A COMPANY OTHER THAN A COMPANY REFERRED T O IN CLAUSE (B) SHALL FOR THE PURPOSES OF THIS SECTION PREPARE ITS PROFIT AND LO SS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PART II O F SCHEDULE VI TO THE COMPANIES ACT 1956 (1 OF 1956); OR (B)BEING A COMPANY TO WHICH THE PROVISO TO SUB-SEC TION (2) OF SECTION 211 OF THE COMPANIES ACT 1956 (1 OF 1956)IS APPLICABLE SHALL FOR THE PURPOSES OF THIS SECTION PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVAN T PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANY:] 7.8. ON A PLAIN READING OF THIS SECTION 115 JB WE ARE OF THE CONSIDERED OPINION THAT THE SAME IS ATTRACTED WHENEVER THE BOOK PROFIT AS CALCULATED UNDER THIS SECTION IS IN EXCESS OF THE INCOME COMPUTED UNDER THE REGULAR PROVISIONS OF THE ACT. THERE IS NO REQUIREMENT THAT THE NORMAL PROFIT COMPUTED UNDER THE ACT SHOULD BE A POSITIVE FIGURE AND THAT SHOULD BE PAYABLE ON THE SAME IN ORDER TO ATTRACT THE SPECIAL PROVISIONS UNDER SECTION 115 JB OF THE ACT. NO SUCH REQUIREMENT IS 23 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED MENTIONED IN THIS SECTION. IN FACT SUCH INTROSPECTI ON WOULD DEFEAT THE VERY OBJECTION OF INTRODUCTION OF THIS SECTION. THUS WE UPHOLD THE CONTENTION OF THE REVENUE AND A LLOW THIS GROUND OF THE REVENUE AND DISMISS THE CORRESPONDING GROUND NO. 6 OF THE CROSS-OBJECTION RAISED BY THE ASSESSEE. 7.9 IN THE RESULT THIS APPEAL OF THE REVENUE IS ALL OWED AND THE C.O. OF THE ASSESSEE IS DISMISSED. ITA NO. 1750/KOL/2016 & C.O. NO. 65/KOL/2016 ASSES SMENT YEAR 2009-10 8. GROUND NO. 1 AND 2 OF THE REVENUE APPEAL AND GRO UND NO. 2 3 & 4 OF THE CROSS OBJECTION BY THE ASSESSEE ARE ON THE ISSUE OF RATE OF DEPRECIATION ALLOWABLE ON ENCLOSED WITHERING TROUGH MACHINES. 8.1. WE HAVE ADJUDICATED THIS ISSUE IN PARAGRAPH NU MBER 6 OF THIS ORDER FOR THE ASSESSMENT YEAR 2008-09. CONSISTENT WITH THE VIEW T AKEN THEREIN WE ALLOW GROUND NUMBER 1 AND 2 OF THE REVENUE AND DISMISS GR OUND NUMBER 2 3 & 4 OF THE CROSS OBJECTION. 8.2. GROUND NO. 3 OF THE REVENUE AND GROUND NO. 5 O F THE CROSS OBJECTION IS ON THE ISSUE OF DEPRECIATION ON TANGIBLE ASSET. 8.2.1. CONSISTENT WITH THE VIEW TAKEN BY US WHILE D ISPOSING OF THIS VERY ISSUE FOR THE ASSESSMENT YEAR 2008-09 WE ALLOW THIS GROUND OF THE REVENUE AND DISMISS THE CORRESPONDING GROUND OF THE CROSS OBJECTION. 8.3. GROUND NO. 4 OF THE REVENUE APPEAL READS AS FO LLOWS:- 24 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) ERRED IN ALLOWING A DEDUCTION OF RS. 1 29 38 147/- U/S. 80IE WHICH HAD NOT BEEN CLAIMED IN THE RETURN NOR ANY AU DIT REPORT HAS BEEN FILED IN THAT REGARD. 8.3.1. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS NOT MADE A CLAIM FOR DEDUCTION UNDER SECTION 80 IE IN THE RETURN OF INCOME NOR DI D HE FILE AN AUDIT CERTIFICATE IN SUPPORT OF HIS CLAIM. THE LD. CIT(A) WAS OF THE VI EW THAT THE ASSESSEE IS ENTITLED TO MAKE A CLAIM BEFORE THE AO OTHER THAN BY WAY OF FI LING THE REVISED RETURN OF INCOME. HE HELD THAT THE ASSESSEE HAS MENTIONED IN ITS COMPUTATION OF INCOME THAT DEDUCTION UNDER SECTION 80 IE MAY BE ALLOWED BEFOR E SETTING ASIDE PAST PROFITS AND DEPRECIATION. THIS POSITION IS NOT SUPPORTED B Y THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS CIT [2006] 284 ITR 323 SC WHEREIN IT HAS BEEN HELD AS FOLLOWS:- DEDUCTIONALLOWABILITYCLAIM FOR DEDUCTION BY WAY O F APPLICATION CANNOT BE ENTERTAINED BY AOAO CANNOT ENTERTAIN CLA IM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN NATIONAL THERMAL POWER CO. LTD. VS. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC) DISTINGUISHED; JUDGMENT DT. 17TH DEC. 2004 OF THE DELHI HIGH COURT IN IT APPEAL NO. 770 OF 2004 AFFIRMED 8.3.2. THE ASSESSEE SHOULD HAVE MADE A CLAIM IN ITS RETURN OF INCOME OR BY FILING A REVISED RETURN OF INCOME. IN AN ALTERNATIVE THE AS SESSEE CAN MAKE FRESH CLAIM BEFORE THE APPELLATE AUTHORITIES IF ALL THE FACTS ARE ON RECORD. IN THIS CASE THE BASIC FACTS HAVE NOT BEEN BROUGHT ON RECORD. THE AUDIT RE PORT HAS ALSO NOT BEEN FILED. WE FIND THAT THE ASSESSEE HAS NOT MADE ANY FRESH CLAIM . 25 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 8.3.3. THE LD. FIRST APPELLATE AUTHORITY HAS NOT ADMITTED THIS CLAIM BUT HAS HELD THAT THE ASSESSING OFFICER SHOULD HAVE GRANTED THE DEDUCTION UNDER SECTION 80 IE EQUAL TO 100 PERCENT OF THE PROFITS OF DULLABCHERRA TEA ESTATE AS THE FACT THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IE IS NOT IN DISPUTE. HOW THE LD. CIT(A) HAS COME TO A CONCLUSION THAT THE FACT OF TH E ASSESSEE BEING ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80-IE OF THE ACT AND THAT TH IS FACT IS NOT IN DISPUTE IS NOT KNOWN. THERE ARE NO BASIC FACTS RECORD AND NO AUTHO RITY HAS EXAMINED THE FACTS AND HAVE COME TO A CONCLUSION THAT THE STATUTORY RE QUIREMENTS FOR CLAIM OF DEDUCTION U/S 80-IE HAVE BEEN COMPLIED BY THE ASSES SEE. 8.4. IN OUR VIEW THIS FINDING IS PERVERSE. THE ASS ESSING OFFICER NOR THE LD. CIT(A) HAVE EXAMINED THE BASIC FACTS OR HAVE COME TO THE C ONCLUSION THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IE EQUAL TO 100 PER CENT OF THE PROFITS FOR THE DULLABCHERRA TEA ESTATE. WITHOUT DOING SUCH AN EXER CISE THE LD. CIT(A) HAS DIRECTED GRANT OF THIS DEDUCTION. THIS IS BAD IN LA W. 8.4.1. HENCE THIS GROUND OF THE REVENUE IS ALLOWED AND THE CORRESPONDING GROUND OF THE CROSS-OBJECTION IS DISMISSED. 8.5. GROUND NO. 6 OF THE REVENUE AND GROUND NO. 7 OF THE CROSS-OBJECTION BY THE ASSESSEE ARE ON THE ISSUE OF COMPUTATION OF PR OFITS UNDER SECTION 115JB OF THE ACT. THE ISSUE IS THE SAME AS WAS DEALT BY US WHILE DISPOSING OF GROUND NUMBER 4 OF THE REVENUE APPEAL FOR THE ASSESSMENT YEAR 2008- 09. CONSISTENT WITH THE VIEW TAKEN THEREIN WE ALLOW GROUND NO. 6 OF THE REVENUE AND DISMISS GROUND NO. 7 OF THE CROSS OBJECTION BY THE ASSESSEE. 8.6. IN THE RESULT THE APPEAL OF THE REVENUE IS AL LOWED AND THE CROSS-OBJECTION BY THE ASSESSEE IS DISMISSED. 26 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED ITA NO. 1829/KOL/2016 & C.O. NO. 66/KOL/2016 ASSES SMENT YEAR 2010-11 9. GROUND NO. 1 OF THE REVENUE APPEAL AND GROUND N O. 2 3 & 4 OF THE CROSS- OBJECTION ARE ON THE ISSUE OF RATE OF DEPRECIATION ON ENCLOSED WITHERING TROUGH MACHINES. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE ASSESSMENT YEAR 2008-09 WHILE ADJUDICATING THE VERY SAME ISSUE WE ALLOW TH IS GROUND OF THE REVENUE AND DISMISS THE CORRESPONDING GROUND OF THE CROSS-OBJEC TION RAISED BY THE ASSESSEE. 9.1. GROUND NO. 2 OF THE REVENUE AND GROUND NO. 5 O F THE CROSS-OBJECTION ARE ON THE ISSUE OF DEPRECIATION ON INTANGIBLE ASSETS. CON SISTENT WITH THE VIEW TAKEN BY US WHILE ADJUDICATING THE SIMILAR ISSUE FOR THE ASSESS MENT YEAR 2008-09 WE ALLOW GROUND NUMBER 2 OF THE REVENUE AND DISMISS GROUND N UMBER 5 OF THE ASSESSEES CROSS OBJECTION TO THE EXTENT IT IS ON THIS ISSUE AS THE GROUND ALSO RAISES AND THE ISSUE OF GRANT OF INITIAL DEPRECIATION WHICH WE W ILL BE DEALING IN THE SUBSEQUENT PARAGRAPHS. 9.2. GROUND NO. 3 OF THE REVENUE IS ON THE ISSUE OF ALLOWABILITY OF INITIAL DEPRECIATION UNDER SECTION 32 (1) (IIA) OF THE ACT. GROUND NO. 5 2 ND PART OF THE CROSS-OBJECTION OF THE ASSESSEE ALSO IS ON THE SAME ISSUE. THIS GROUND OF THE REVENUE IS MISCONCEIVED AS THE LD. CIT(A) HAS ALLOW ED INITIAL DEPRECIATION AT THE RATE OF 10% AS THE NEW PLANT AND MACHINERY HAVE BEE N USED FOR LESS THAN 180 DAYS. THE REVENUE IS NOT PER SE DISPUTING THE ALLOWABILIT Y OF INITIAL DEPRECIATION. HENCE BOTH THE PARTS OF THE GROUND OF CROSS-OBJECTION AND GROUND NO. 3 OF THE REVENUE ARE DISMISSED. 9.3. GROUND NO. 4 IS ON THE ISSUE AS TO WHETHER TH E SO-CALLED INTEREST SUBSIDY RECEIVED IS A CAPITAL RECEIPT OR REVENUE RECEIVED. THE FACTS LEADING TO THIS ISSUE IS THAT THE ASSESSEE HAD ACQUIRED DULLABCHERRA TEA ES TATE. IT IS CLAIMED THAT THE UNIT 27 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED DULLABCHERRA TEA ESTATE RECEIVED CERTAIN INTEREST SUBSIDY WHICH PERTAINS TO A PERIOD PRIOR TO THE ACQUISITION OF DULLABCHERRA TEA ESTATE. THE ASSESSEE CLAIMED THAT SUCH RECEIPT IS A CAPITAL RECEIPT. THE LD. CIT (A) HAD HELD THAT THIS IS INTEREST SUBSIDY AND HENCE A CAPITAL RECEIPT. 9.3.1. IN OUR VIEW THIS FINDING OF THE LD. CIT(A) IS NOT CORRECT. THE INTEREST SUBSIDY IN QUESTION PERTAINS TO A PERIOD PRIOR TO THE ACQUI SITION OF DULLABCHERRA TEA ESTATE BY THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE S UBMITS THAT IF THE CLAIM FOR REFUND OF THIS AMOUNT OF INTEREST SUBSIDY RECEIVED IS MADE BY THE FORMER OWNERS OF DULLABCHERRA TEA ESTATE THEN THIS AMOUNT NEEDS TO BE RETURNED AS IT WAS NOT FACTORED IN COMPUTING THE PURCHASE PRICE OF THE EST ATE. IN OUR VIEW THIS RECEIPT HAD ACCRUED DURING THE YEAR AND THE ASSESSEE GOT THE RI GHT TO RECEIVE THE INTEREST IN THIS YEAR ONLY AS IT IS A SUCCESSOR OF DULLABCHERRA TEA ESTATE. THE NATURE OF RECEIPT IS NOT INTEREST SUBSIDY IN THE HANDS OF THE ASSESSEE. THERE IS NO CLAIM FROM THE VENDORS OF DULLABCHERRA TEAS ESTATE TILL DATE ON THE ASSESSEE FOR RETURN OF THIS AMOUNT TO THEM. HENCE THE RECEIPT IS IN THE REVENUE FIELD AND IT HAS ACCRUED AND ARISEN DURING THE YEAR. THUS THIS GROUND OF THE REV ENUE IS ALLOWED. 9.4. COMING TO GROUND NO. 6 & 7 OF THE CROSS OBJECT ION THE ASSESSEE STATES THAT ITS ALTERNATIVE CLAIM FOR DEDUCTION UNDER SECTION 80 IE ON THIS INTEREST SUBSIDY HAS TO BE ALLOWED. THIS ISSUE MAY BE EXAMINED BY THE AS SESSING OFFICER IN ACCORDANCE WITH LAW. THUS GROUND NOS. 6 AND 7 OF THE CROSS-O BJECTION FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9.5. GROUND NO. 4 & 5 OF THE REVENUE APPEAL IS ON T HE ALLOWABILITY OF DEDUCTION UNDER SECTION 80 IE OF THE ACT. 9.5.1. THE FACTS OF THIS ISSUE IS THAT THE ASSESSEE CLAIMS THAT IT HAD MADE ADDITIONS TO PLANT AND MACHINERY EXCEEDING 25% OF THE OPENING BOOK VALUE DURING THE 28 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED FINANCIAL YEAR 2007-08 RELATING TO THE ASSESSMENT YEAR 2008-09. THE ASSESSING OFFICER HELD THAT THIS IS THE INITIAL YEAR OF CLAIM OF DEDUCTION UNDER SECTION 80 IE. HE HELD THAT ASSESSMENT YEAR 2009-10 AS THE SECOND YE AR OF THIS CLAIM OF DEDUCTION. THE ASSESSEE HAD NOT CLAIMED DEDUCTION UNDER SECTIO N 80 IE FOR THIS YEAR IN THE RETURN OF INCOME AS THE GROSS TOTAL INCOME WAS NEGA TIVE. DURING THE ASSESSMENT YEAR 2010-11 THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80 IE ON THE GROUND THAT THIS IS THE INITIAL YEAR AND STATED THAT IT CO ULD CLAIM THE DEDUCTION FOR THE NEXT 10 YEARS FROM ASSESSMENT YEAR 2010-11. THE ASSESSI NG OFFICER HELD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDE R SECTION 80 IE AS THE 3 RD YEAR OF CLAIM AND NOT AS THE INITIAL YEAR OF THE CLAIM. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE. THE LD. FIRST APPELLATE AUTH ORITY UPHELD THIS DECISION OF THE ASSESSING OFFICER. 9.5.2. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE U S. CROSS OBJECTION HAS BEEN FILED ON THIS ISSUE BY THE ASSESSEE. 9.6. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SI DES WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE WHETHER THE ASSESSEE IS ELIG IBLE FOR DEDUCTION UNDER SECTION 80 IE. ON PROFITS FROM DULLABCHERRA TEA ESTATE OR NOT HAS TO BE EXAMINED IN THE INITIAL ASSESSMENT YEAR. INITIAL ASSESSMENT YEAR HAS BEEN DEFINED FOR THE PURPOSE OF THIS SECTION AS MEANS THE ASSESSMENT YEAR RELEVA NT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS THE MANUFACTURING OR P RODUCES ARTICLES OR THINGS OR COMPLETES SUBSTANTIAL EXPANSIONS. TEN CONSECUTIVE YEARS COMMENCE FROM THIS INITIAL AS SESSMENT YEAR. THE ASSESSEE CLAIMS THAT IT COMPLETED SUBSTANTIAL EXPANSION DURI NG THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09. THIS CLAIM HAS NOT BEEN EXAMINED BY ANY AUTHORITY.THE ASSESSING OFFICER HAS NOT EXAMINED TH IS ISSUE IN ANY OF THE EARLIER 29 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED YEARS. THE DEDUCTION IN THE 3 RD YEAR HAS BEEN ALLOWED AS IF THE ENTIRE FACTS HAVE BEEN CONSIDERED IN THE EARLIER YEARS. WHEN NO AUTHORITY HAS VERIFIED THE FACT AS TO WHETH ER THE ASSESSEE HAS COMPLIED WITH THE STATUTORY CONDITIONS LAID DOWN U/ S 80IE OF THE ACT IN ANY OF THE YEARS WE CANNOT UNDERSTAND AS TO HOW THE ASSESSING OFFICER DECIDED TO ALLOW THE CLAIM FOR THE FIRST TIME IN THE 3 RD YEAR. THE HONOURABLE DELHI HIGH COURT IN THE CASE OF CIT VERSUS M/S JANSAMPARK ADVERTISING AND MARKETING (P) LTD. IN ITA 525/2014 JUDGEMENT DT. 11 TH MARCH 2015 AT PARA 42 HELD AS FOLLOWS:- 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS O BLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. B UT CIT (APPEALS) HAVING NOTICED WANT OF PROPER INQUIRY COULD NOT HAVE CLOSED THE C HAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY AS INDEED OF ITAT TO HAVE ENS URED THAT EFFECTIVE INQUIRY WAS CARRIED OUT PARTICULARLY IN THE FACE OF THE ALLEGA TIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL A UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 148 ISSUED BY THE AO AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SE CTION 250(4). THIS APPROACH NOT HAVING BEEN ADOPTED THE IMPUGNED ORDER OF ITAT AN D CONSEQUENTLY THAT OF CIT (APPEALS) CANNOT BE APPROVED OR UPHELD. (EMPHASIS OURS) 9.6.1. IN THE CASE ON HAND THE ASSESSING OFFICER HAS FAILED TO CONDUCT A PROPER ENQUIRY. THE LD. CIT(A) HAS ALSO FAILED IN HIS DUTY ON THIS ISSUE. THUS APPLYING THE PROPOSITION OF LAID DOWN BY THE HONBLE DELHI HIGH COURT TO THE FACTS OF THIS CASE WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSIN G OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER IS DIREC TED TO EXAMINE WHETHER THE CONDITIONS LAID DOWN U/S 80IE OF THE ACT HAVE COMP LIED WITH BY THE ASSESSEE 30 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED COMPANY IN THE INITIAL YEAR AND THEN ONLY COME TO A CONCLUSION ON THIS ISSUE. WE DRAW STRENGTH FOR THIS PROPOSITION FROM THE JUDGEM ENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI PATRA PRAKASHAN LTD. 355 ITR 14(DEL.) IN THE RESULT THIS ISSUE OF ALLOWABILITY OF U/S 80IE OF TH E ACT IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 9.7. GROUND NO. 8 OF THE REVENUE IS ON THE ISSUE OF COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT. 9.7.1. THE ISSUE IS THE SAME AS WAS DEALT BY US WHI LE DISPOSING OF GROUND NO. 4 OF THE REVENUE APPEAL FOR THE ASSESSMENT YEAR 2008-09. CONSISTENT WITH THE VIEW TAKEN THEREIN WE ALLOW THIS GROUND OF APPEAL RAISE D BY THE REVENUE. 9.8. IN THE RESULT APPEAL OF THE REVENUE AND THE C ROSS-OBJECTIONS OF THE ASSESSEE ARE ALLOWED IN PART. ITA NO. 1830/KOL/2016 & C.O. NO. 67/KOL/2016 ASSES SMENT YEAR 2011-12 10. GROUND NO. 1 OF THE REVENUE AND GROUND NOS. 2 3 & 4 OF THE CROSS- OBJECTION BY THE ASSESSEE ARE ON THE ISSUE OF RATE OF DEPRECIATION ALLOWABLE ON ENCLOSED WITHERING TROUGH MACHINES. 10.1. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE ASSESSMENT YEAR 2008-09 WHILE ADJUDICATING THE VERY SAME ISSUE WE ALLOW TH IS GROUND OF THE REVENUE AND DISMISS THESE GROUNDS OF CROSS-OBJECTION RAISED BY THE ASSESSEE. 11. GROUND NO. 2 OF THE REVENUE AND GROUND NO. 5 OF THE CROSS-OBJECTION OF THE ASSESSEE ON THE ISSUE OF CLAIM OF DEPRECIATION ON INTANGIBLE ASSETS. 11.1. CONSISTENT WITH THE VIEW TAKEN BY US WHILE AD JUDICATING THIS FOR THE ASSESSMENT YEAR 2008-09 WE ALLOW THIS GROUND OF TH E REVENUE AND DISMISS THE CROSS-OBJECTION OF THE ASSESSEE ON THIS GROUND. 31 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 12. GROUND NO. 3 OF REVENUE AND GROUND NO. 7 OF TH E CROSS-OBJECTION BY THE ASSESSEE IS ON THE ISSUE OF INITIAL DEPRECIATION. 12.1. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE ASSESSMENT YEAR 2010-11 WHILE ADJUDICATING THE VERY SAME ISSUE WE DISMISS THE GROUND OF THE REVENUE AS WELL AS THE GROUND OF CROSS-OBJECTION OF THE ASSESS EE. 13. GROUND NO. 4 OF THE REVENUE AND CROSS-OBJECTION NO. 7 OF THE ASSESSEE ARE ON THE ALLOWABILITY OF DEDUCTION UNDER SECTION 80 I E OF THE ACT. 13.1. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE ASSESSMENT YEAR 2010-11 WHILE ADJUDICATING THE VERY SAME ISSUE WE SET ASID E THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCOR DANCE WITH LAW. 14. GROUND NO. 5 OF THE REVENUE AND GROUND NO. 8 OF THE CROSS-OBJECTION OF THE ASSESSEE ARE ON THE COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT. 14.1. CONSISTENT WITH THE VIEW TAKEN BY US WHILE DI SPOSING OF GROUND NO. 4 OF THE REVENUE APPEAL FOR THE ASSESSMENT YEAR 2008-09 WE ALLOW THIS GROUND OF APPEAL RAISED BY THE REVENUE AND DISMISS THIS GROUND OF CR OSS-OBJECTION BY THE ASSESSEE. ITA NO. 787/KOL/2017 ASSESSMENT YEAR 2011-12 APPE AL BY THE ASSESSEE 15. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2 KOLKATA (H EREINAFTER THE LD. CIT(A)) PASSED U/S 250 OF THE INCOME TAX ACT 1961 (THE AC T) ARISING OUT OF APPEAL NO. 1236/CIT(A)-2/15-16 FOR THE ASSESSMENT YEAR 2012-1 3 ON THE FOLLOWING GROUNDS:- 1. GENERAL FOR ALL GROUNDS: FOR THAT LEARNED CIT( A ) HAS PASSED THE ORDER WITH A PREJUDICED MIND DENYING VARIOUS RELI EF CLAIMED AND 32 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED MOSTLY CONFIRMING ORDER OF THE AO WITHOUT FULLY CO NSIDERING FACTS AND CIRCUMSTANCES OF THE CASE WRITTEN SUBMISSIONS OF T HE ASSESSEE PRECEDENCE RELIED ON BY ASSESSEE AND NOT FOLLOWING BINDING PRECEDENCE. FURTHERMORE LEARNED CIT(A) WAS ALSO WR ONG IN NOT ASKING AND NOT PROVIDING OPPORTUNITY AND TIME TO FILE FURT HER DETAILS AND EVIDENCES OR EXPLANATION IF ANY WHICH HE REQUIRE D FOR PROPER ADJUDICATION OF APPEAL AND DOING JUSTICE. 2. FOR THAT LEARNED CIT(A) WAS WRONG IN IGNORING EV EN SUMMARIZE CHART WHICH SHOWS HOW VARIOUS ISSUES ARE COVERED I N FAVOUR OF ASSESSEE AS FILED ON TOP OF WRITTEN SUBMISSION AND PAPER BOOK FILED ON 14.02.2017. 3. FOR THAT LEARNED CIT(A) WAS WRONG IN CONFIRMING DISALLOWANCE OF RS.19619/- BEING CLUB EXPENSES WHICH ARE NOMINAL AND NORMAL BUSINESS EXPENSES AND ALLOWABLE AS ALLOWED BY AO IN OTHER YEARS AND ALSO ALLOWABLE AS PER ORDER OF ITAT IN CASE OF WARR EN TEA LTD A COPY OF WHICH WAS FILED BEFORE CIT(A). THE DISALLOWANCE MAY BE DELETED. 4. FOR THAT LEARNED CIT(A) WAS WRONG IN CONFIRMING INVOCATION OF S.14A AND DISALLOWANCE OF RS.63131/- IGNORING PROVI SIONS OF S.14A SUBMISSIONS OF ASSESSEE AND ORDER OF CIT(A) IN EARL IER YEARS. 5. FOR THAT AO MAY BE DIRECTED NOT TO INVOKE S.14A BECAUSE ANY INCOME BY WAY OF DIVIDEND IS NOT AN INCOME WHICH DOES NOT FORM PART OF CHARGEABLE INCOME UNDER I.T. ACT HAS BEEN TAXED UN DER SIMPLIFIED TAXATION SCHEME AND THEREFORE S.14A IS NOT AT ALL APPLICABLE IN RELATION TO SUCH INCOME. THE AO MAY BE DIRECTED TO DELETE DISALLOWANCE 33 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED OF RS.1433/- MADE BY ASSESSEE AND FURTHER RS.63131/ - DISALLOWED BY AO. 6. FOR THAT LEARNED CIT(A) WAS WRONG IN DISMISSING GROUND NO. 5-7 AND 11 BEFORE HIM HOLDING THAT ' THE GROUNDS AS RAISED BY THE APPELLANT ARE NOT ARISES FROM THE IMPUGNED ORDER'. 7. FOR THAT LEARNED AO MAY BE DIRECTED TO ALLOW DEP RECIATION ON CORRECT WDV OF BLOCK OF INTANGIBLE ASSETS AS ALLOWE D BY THE CIT(A) IN EARLIER YEARS. 8. FOR THAT LEARNED AO MAY BE DIRECTED TO ALLOW BAL ANCE OF INCENTIVE U/S 32.1. IIA IN RESPECT OF AY 2012-13 AND ALSO S OME OF EARLIER YEARS WHEREIN 10% DEDUCTION WAS ALLOWED INSTEAD OF 20% DU E TO LESS THAN 180 DAYS AFTER PUTTING TO USE 20% INCENTIVE IN THE FIRST YEAR IS MANDATORY FOR THE REASON THAT ONE TIME INCENTIVE @2 0% OF COST IS TO BE ALLOWED AS LANGUAGE USED IS 'SHALL BE ALLOWED'. 9. ALTERNATELY IN CASE INCENTIVE IS RESTRICTED TO 10% FOR THE REASON THAT ANY ELIGIBLE PLANT AND MACHINERY WAS USED FOR LESS THAN 180 DAYS THEN AO MAY BE DIRECTED TO ALLOW BALANCE 10% IN SUBSEQUE NT YEAR WHEREIN 180 DAYS ARE COMPLETED. 10. FOR THAT LEARNED AO MAY BE DIRECTED TO ALLOW CO RRECTLY DEPRECIATION ON CORRECT WDV OF PLANT AND MACHINERY FOR WHICH DEPRECIATION WAS CLAIMED @80% IN EARLIER YEARS BUT WAS ALLOWED @ 15% BY AO HOWEVER FROM AY 2012-13 AO ALLOWED DEPR ECIATION @80% BUT ON WRONG WDV B/F AS IF 80% DEPRECIATION WAS AL LOWED IN EARLIER YEARS. 34 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 11. FOR THAT LEARNED AO MAY BE DIRECTED TO TREAT A. Y.2012-13 AS 4TH YEAR BASED ON ORDER OF CIT(A) IN EARLIER YEARS HOLD ING THAT AY 2009-10 IS INITIAL YEAR FOR DEDUCTION U/S 80 IE. 12. FOR THAT LEARNED AO MAY BE DIRECTED TO MAKE COM PUTATION OF 100% OF PROFIT OF ELIGIBLE UNDERTAKING CORRECTLY BY INCL UDING ALL INCIDENTAL RECEIPTS AND RECOVERIES AND INCOMES IN SUCH PROFIT AND TO ALLOW DEDUCTION EQUAL TO 100% OF SUCH PROFIT U/S 80LE. 13. FOR THAT LEARNED AO MAY BE DIRECTED TO REVISE T AX U/S 1150 ON 40% OF DIVIDEND DECLARED AS AGAINST 100% OF DIVIDEND. 14. FOR THAT LEARNED AO MAY BE DIRECTED NOT TO INVO KE S.115JB AS HELD BY LEARNED CIT(A) IN EARLIER YEARS. 15. FOR THAT LEARNED AO MAY BE DIRECTED TO CHARGE I NTEREST U/S 234B AND 234C IF ANY BASED ON INCOME AS PER RETURN OF INCOME AND NOT AS PER INCOME ASSESSED. 16. FOR THAT THE APPELLANT SEEK KIND PERMISSION TO RAISE NEW CONTENTIONS AND NEW GROUNDS OF APPEAL AND TO REVISE ANY GROUNDS OF APPEAL AS MAY BE REQUIRED TO SEEK JUSTICE. 15.1. WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND THAT GROUND NO. 1 & 2 ARE GENERAL IN NATURE. 15.2. GROUND NO. 3 IS AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMING THE DISALLOWANCE OF RS. 19619/- CLAIMED AS CLUB EXPENS ES. THE ASSESSEE RELIES ON THE DECISION OF THE ITAT IN THE CASE OF WARREN TEA LTD. AND CLAIMS THAT CLUB EXPENSES SHOULD BE ALLOWED. IN OUR VIEW WHAT IS TO BE SEEN IS AS TO WHETHER THESE EXPENSES ARE INCURRED FOR OFFICIAL PURPOSES OR PERSONAL PURP OSES. IF IT IS INCURRED FOR 35 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED PERSONAL PURPOSE THEN THE SAME HAS TO BE DISALLOWE D. HENCE THIS MATTER IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H ADJUDICATION IN ACCORDANCE WITH LAW AFTER EXAMINING THE VOUCHERS OF CLUB EXPENSES. 15.2.1. IN THE RESULT THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 15.3. GROUND NO. 4 & 5 ARE ON THE ISSUE OF DISALLO WANCE MADE UNDER SECTION 14A OF THE ACT. 15.3.1. THE DIVIDEND EARNED BY THE ASSESSEE COMPANY IS RS. 9770/-. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS RS. 6 3 131/-. THE ASSESSEES CLAIM IS THAT IT HAS NOT INCURRED ANY EXPENDITURE FOR EARNIN G DIVIDEND INCOME. WE FIND THAT THE ASSESSING OFFICER HAS NOT RECORDED HIS SATISFAC TION AS TO WHY THE CONTENTION OF THE ASSESSEE THAT IT HAD NOT INCURRED ANY EXPENSES FOR EARNING OF DIVIDEND INCOME IS WRONG. UNLESS THE AO RECORDS HIS SATISFACTION T HAT THE CLAIM MADE BY THE ASSESSEE IS NOT CORRECT RULE 8D OF THE INCOME TAX RULES 1962 CANNOT BE INVOKED AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CAS E OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT (2010) 194 TAXMAN 2 03 (BOM) AND PR. CIT VS. RELIANCE CAPITAL ASSET MANAGEMENT LTD. JUDGEMENT DT . 19/09/2017 . IN THE CASE OF CIT V.WINSOME TEXTILE INDUSTRIES LTD. [2009] 319 IT R 204 (PH) IT HAS BEEN HELD THAT THE DISALLOWANCE MADE U/S 14A CANNOT EXCEED THE DI VIDEND EARNED. KEEPING IN THIS POSITION OF LAW WE UPHOLD THE CONTENTION OF T HE ASSESSEE AND DELETE THIS ADDITION MADE UNDER SECTION 14 A TO THE EXTENT OF RS.63131/-. DMAT CHARGES OF RS. 1433/- IS DISALLOWED BY THE ASSESSING OFFICER TWICE. HENCE THE DISALLOWANCE IS DELETED AS IT WAS A DOUBLE DISALLOWANCE. 16. GROUND NO. 6 TO 12 ARE REMANDED TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO ADJUDICATE THE SAME ON MERITS FOR THE REASON THAT THE LD. FIRST APPELLATE AUTHORITY WAS WRONG IN HOLDING THAT THESE GROUNDS DO NOT ARISE FOR THE 36 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED ORDER OF THE ASSESSING OFFICER. IN THE RESULT THES E GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 17. GROUND NO. 13 IS ON THE ISSUE WHETHER 40 PER C ENT OF THE DIVIDEND INCOME OR 100 PER CENT OF THE DIVIDEND INCOME IS TO BE CON SIDERED FOR THE PURPOSES OF SECTION 115O. RECENTLY THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA & ORS. VS. TATA TEA CO. LTD. IN CA NO. 9178 OF 2012 JUDGEMENT DT. 20/09/2017 WHEREIN IT WAS HELD AS FOLLOWS:- 33. THIS COURT HOWEVER WHILE CONSIDERING THE NAT URE OF DIVIDEND IN THE ABOVE CASE HELD THAT ALTHOUGH WHEN THE INITIAL SOURCE WHI CH HAS PRODUCED THE REVENUE IS LAND USED FOR AGRICULTURAL PURPOSES BUT TO GIVE TO THE WORDS 'REVENUE DERIVED FROM LAND' APART FROM ITS DIRECT ASSOCIATION OR RE LATION WITH THE LAND AN UNRESTRICTED MEANING SHALL BE UNWARRANTED. AGAIN AS NOTED ABOVE NALIN BEHARI LAL SINGHA (SUPRA) OBSERVATION WAS MADE THAT SHARES OF ITS PROFITS DEC LARED AS DISTRIBUTABLE AMONG THE SHAREHOLDERS IS NOT IMPRESS ED WITH THE CHARACTER OF THE PROFIT FROM WHICH IT REACHES THE HANDS OF THE SHARE HOLDER. WE THUS FIND SUBSTANCES IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE UNION OF INDIA THAT WHEN THE DIVIDEND IS DECLARED TO BE DISTRIBUTED AND PAID TO COMPANY'S SHAREHOLDER IT IS NOT IMPRESSED WITH CHARACTER OF S OURCE OF ITS INCOME. 17.1. RESPECTFULLY FOLLOWING THIS JUDGEMENT THIS G ROUND OF THE ASSESSEE IS DISMISSED. 18. GROUND NO. 14 IS ON THE ISSUE OF COMPUTATION O F BOOK PROFITS U/S 115JB. THIS ISSUE HAS BEEN DEALT BY US WHILE DISPOSING OF GROUND NO. 4 OF THE REVENUE APPEAL FOR THE ASSESSMENT YEAR 2008-09. CONSISTENT WITH THE VIEW TAKEN BY US WHILE WE ALLOW THIS GROUND OF APPEAL RAISED BY THE ASSESSEE. 37 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 19. GROUND NO. 15 IS AGAINST THE LEVY OF PENALTY U/ S 234B & 234C. LEVY OF INTEREST IS CONSEQUENTIAL IN NATURE AND HENCE THIS GROUND OF THE ASSESSEE IS DISMISSED. 20. GROUND NO. 20 IS GENERAL IN NATURE. 21. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. KOLKATA THE DAY OF NOVEMBER 2017. [ ABY T. VARKEY ] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : .11.2017 {SC SPS} 38 I .T.A. NO. 1749/KOL/2016 C.O. NO. 64/KOL/2016 A/O. I.T.A. NO. 1749/KOL/2016 ASSESSMENT YEAR: 2008-09 I.T.A. NO. 1750/KOL/2016 C.O. NO. 65/KOL/2016 A/O. I.T.A. NO. 1750/KOL/2016 ASSESSMENT YEAR: 2009-10 I.T.A. NO. 1829/KOL/2016 C.O. NO. 66/KOL/2016 A/O. I.T.A. NO. 1829/KOL/2016 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 1830/KOL/2016 C.O. NO. 67/KOL/2016 A/O. I.T.A. NO. 1830/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 787/KOL/2017 M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED COPY OF THE ORDER FORWARDED TO: 1. D.C.I.T. CIRCLE-4(2) KOLKATA 4 TH FLOOR ROOM NO. 11B AAYAKAR BHAWAN P-7 CHOWRINGHEE SQUARE KOLKATA 700 069 2. M/S. VISHNU TEA & INDUSTRIES PRIVATE LIMITED 8 NETAJI SUBHAS ROAD C3/3 GILLANDER HOUSE KOLKATA 700 001 3. CIT(A)- 4. CIT- 5. CIT(DR) KOLKATA BENCHES KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT KOLKATA BENCHES