The ACIT, Circle-8,, Ahmedabad v. Zoetic Ayurvedics Pvt.Ltd.,, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND N. S. SAINI A M) ITA NO.3238/AHD/2007 A. Y.: 2004-05 THE A. C. I. T. CIRCLE-8 4 TH FLOOR AJANTA COMM. CENTRE A WING ASHRAM ROAD AHMEDABAD VS ZOETIC AYURVEDICS PVT. LTD. NIRMOTI 21 SHANTI BHAVAN NEW SHARDA MANDIR ROAD PALDI ASHRAM ROAD AHMEDABAD PA NO. AAACZ 1407D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI C. K. MISHRA DR RESPONDENT BY SMT. URVASHI SHODHAN AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XIV AHMEDABAD DATE D 16-05-2007 FOR ASSESSMENT YEARS 200405 ON THE FOLLOWING EFFECTIVE GROUNDS: 1. THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4 19 139/- ON ACCOUNT OF DEDUCTION CLAIMED IN RE SPECT OF PRELIMINARY EXPENSES AND PREOPERATIVE EXPENSES. 2. THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.19 13 498/- ON ACCOUNT OF DEPRECIATION ON ASSETS . 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. THE LEARNED CIT(A) NOTED THAT THE AO OBSERVED TH AT ALTHOUGH THE ASSESSEE HAS STARTED TRIAL PRODUCTION IN SEPTEMBER 2004 COMMERCIAL PRODUCTION HAS STARTED ONLY FROM 05-10-2004. HENCE HE DISALLOWED THE DEPRECIATION ON PLANT AND MACHINERY FOR A PERIOD LE SS THAN 180 DAYS AND MADE DISALLOWANCE OF 50% WHICH COMES TO RS.19 13 49 8/-. THE AO HAS ITA NO.3238/AHD/2007 ZOETIC AYURVEDICS PVT. LTD. 2 ALSO NOT ALLOWED PRE-OPERATING EXPENSES AND PRELIMI NARY EXPENSES STATING THAT THE ASSESSEE HAS NOT STARTED FULL PROD UCTION. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESS EE HAS STARTED PRODUCTION IN SEPTEMBER 2004 BY PUTTING THE PLANT AND MACHINERY IN USE AND THEREFORE FULL DEPRECIATION IS ALLOWABLE A S WELL AS THE PRE- OPERATIVE AND PRELIMINARY EXPENSES SHOULD ALSO BE ALLOWED. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE BECA USE THE PLANT AND MACHINERY WERE PUT TO USE. THEREFORE THE DEPRECIAT ION AND EXPENSES SHALL HAVE TO BE ALLOWED. ADDITIONS WERE ACCORDINGL Y DELETED. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARN ED CIT(A). ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. THE LEARNED COUN SEL FOR THE ASSESSEE CLARIFIED THAT PRODUCTION HAS COMMENCED FROM SEPTEM BER 2003 AND BY MISTAKE IT IS MENTIONED AS SEPTEMBER 2004 IN THE O RDERS OF THE AUTHORITIES BELOW. THE LEARNED COUNSEL FOR THE ASS ESSEE FILED COPIES OF THE REPLIES FILED BEFORE THE AO ALONG WITH ANNEXURE S IN SUPPORT OF THE SAME. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT SINCE COMMERCIAL PRODUCTION STARTED IN SEPTEMBER 2003 T HEREFORE THE ASSESSEE IS ENTITLED FOR DEPRECIATION AS WELL AS DE DUCTION OF THE EXPENDITURE. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE DEPARTMENTAL APPEAL HAS NO MERIT. THE SAME IS L IABLE TO BE DISMISSED. THE ASSESSEE HAS PROVED ON RECORD THAT I T STARTED PRODUCTION IN SEPTEMBER 2003 WHICH FACT HAS ALSO NOT BEEN DIS PUTED BEFORE THE AUTHORITIES BELOW. THEREFORE IT STANDS PROVED THAT THE BUSINESS ACTIVITIES OF THE ASSESSEE HAVE COMMENCED AT THE MOMENT THE PR ODUCTION IS STARTED THE ASSESSEE WOULD BE ENTITLED FOR FULL DE PRECIATION BECAUSE THE SAME FALLS FOR MORE THAN 180 DAYS. THE AO WITHOUT G IVING ANY SPECIFIC ITA NO.3238/AHD/2007 ZOETIC AYURVEDICS PVT. LTD. 3 FINDING AS TO HOW HE DISALLOWED THE DEPRECIATION AN D THE EXPENDITURE HAS MADE THE ADDITIONS MERELY ON AD HOC BASIS. THE LEAR NED CIT(A) ON CONSIDERATION OF THE MATERIAL ON RECORD RIGHTLY DEL ETED BOTH THE ADDITIONS. AS A RESULT WE DO NOT FIND ANY MERIT IN THE DEPART MENTAL APPEAL. THE LEARNED DR HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). WE CONFIRM THE FINDINGS OF THE LEARNED CIT( A) AND DISMISS THESE GROUNDS OF APPEAL OF THE REVENUE. 6. AS A RESULT THE DEPARTMENTAL APPEAL STANDS DISM ISSED. ORDER PRONOUNCED ON 07-05-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 07- 05-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD