M.P. GLYCHEM INDUSTRIES LTD, MUMBAI v. ACIT CEN CIR-40, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B : MUMBAI BEFORE SHRI D. MANMOHAN HONBLE VICE PRESIDENT AND SHRI ANANDI LAL GEHLOT ACCOUNTANT MEMBER ITA. NO. 3564/MUM/2008 ASSESSMENT YEAR 2005-2006 ANIK INDUSTRIES LIMITED (FORMERLY KNOWN AS M.P. GLYCHEM INDUSTRIES LTD. ) MUMBAI PAN AAACM-2696-K VS. ACIT C.C. 40 MUMBAI (APPELLANT) (RESPONDENT) ITA. NO. 3799/MUM/2008 ASSESSMENT YEAR 2005-2006 DCIT C.C. 40 MUMBAI VS. ANIK INDUSTRIES LIMITED (FORMERLY KNOWN AS M.P. GLYCHEM INDUSTRIES LTD. ) MUMBAI PAN AAACM-2696-K (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI SATISH CHANDRA FOR REVENUE : SHRI S.S. RANA (DR) ORDER PER D. MANMOHAN V.P. 1. THESE CROSS-APPEALS ARE DIRECTED AGAINST THE OR DER PASSED BY THE CIT CENTRAL-VII MUMBAI. 2. AS COULD BE NOTICED FROM THE ORDER OF THE LEARN ED CIT(A) THE ORIGINAL NAME OF THE COMPANY WAS M/S. MADHYA PRADE SH GLYCHEM INDUSTRIES LTD. BUT CONSEQUENT UPON CHANGE OF NAME FRESH CERTIFICATE OF INCORPORATION WAS OBTAINED FROM THE MINISTRY OF COM PANY AFFAIRS WHEREBY IT IS PRESENTLY KNOWN AS ANIK INDUSTRIES L IMITED. HOWEVER APPEAL BEFORE THE ITAT HAVING BEEN FILED IN THE OLD NAME THE ASSESSEE- COMPANY WAS DIRECTED TO CURE THE DEFECT IN THE CAUS E TITLE AND IN 2 OBEDIENCE TO THE DIRECTIONS OF THE BENCH A FRESH FO RM 36 WAS FILED. ACCORDINGLY NEW NAME IS TAKEN ON RECORD AND WE PROC EED TO DISPOSE OF THE APPEALS ON MERITS. 3. IN THE APPEAL FILED BY THE ASSESSEE DISALLOWANC E OF DEPRECIATION OF WIND MILL FARM WAS CHALLENGED BEFOR E US CONTENDING INTER ALIA THAT THE WIND MILL STARTED ITS PRODUCTION ON 30-9-2004 AND IN FACT GENERATED 85 KWH POWER ON THAT DAY WHICH WAS CERTIF IED BY STATE GOVERNMENT BODY I.E. MADHYA PRADESH STATE ELECTRIC ITY BOARD IN WHICH EVENT ASSESSEE-COMPANY IS ELIGIBLE TO CLAIM DEPRECI ATION FOR THE FULL YEAR. 4. AS COULD BE NOTICED FROM THE ASSESSMENT ORDER THE ASSESSEE-COMPANY BELONGS TO THE GROUP OF GENERAL FO ODS LIMITED. CONSEQUENT TO THE SURVEY ACTION THE ASSESSING OFFIC ER CONCLUDED THAT THE WIND MILL HAS NOT COMMENCED PRODUCTION OF ELECTRICI TY BEFORE 30-09-2004 AND HENCE ASSESSEE IS ENTITLED TO ONLY 50% OF THE DEPRECIATION BECAUSE THE WIND MILL WAS COMMISSIONED AND BECAME OPERATION AL FOR A PERIOD OF LESS THAN 180 DAYS IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. 5. AT THE TIME OF HEARING LEARNED COUNSEL APPEAR ING ON BEHALF OF THE ASSESSEE SUBMITTED THAT UNDER IDENTICAL CIR CUMSTANCES THE ITAT G BENCH MUMBAI FOUND THAT CERTIFICATE OF THE SU PERINTENDING ENGINEER OF THE MPSEB SHOULD NOT BE IGNORED IN WHICH EVENT I T HAS TO BE ACCEPTED THAT THE WIND MILL HAS COMMENCED PRODUCTION I.E. G ENERATED ELECTRICITY ON 30-9-2004 ITSELF AND IN TURN ASSESSEE IS ENTIT LED TO CLAIM DEPRECIATION IN FULL. LEARNED COUNSEL FILED BRIEF W RITTEN SUBMISSIONS TO HIGHLIGHT THAT THE FACTS AND CIRCUMSTANCES IN THE C ASE OF GENERAL FOODS LIMITED (ITA. NO. 3731 & 3732/MUM/2008 DATED 22-12- 2009) ARE IDENTICAL TO THE FACTS IN THE ASSESSEES CASE. 3 6. LEARNED DR HOWEVER SUBMITTED THAT DURING THE C OURSE OF SURVEY IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE WAS NO RECORD MAINTAINED BY THE ASSESSEE TO PROVE THAT THE WIND M ILL HAD STARTED GENERATING ELECTRICITY FROM 30-9-2004 ITSELF. HE RE LIED UPON THE OBSERVATIONS OF THE TAX AUTHORITIES TO SUBMIT THAT THE STATEMENT OF SHRI GOUTHAM AUTHORISED SIGNATORY OF THE ASSESSEE-COMPA NY LENDS SUPPORT TO THE CONCLUSION REACHED BY THE ASSESSING OFFICER THAT THE WIND MILL WOULD NOT HAVE COMMENCED ITS OPERATION BY 30-9-2004 . 7. ON THE OTHER HAND LEARNED COUNSEL APPEARING O N BEHALF OF THE ASSESSEE STRONGLY RELIED UPON THE ORDER PASSED BY THE ITAT (SUPRA) AND ALSO THE FACTS OF THE INSTANT CASE TO SHOW THAT THE TAX AUTHORITIES HAVE NO REASON TO DISCARD THE CERTIFICATE ISSUED BY THE SUPERINTENDING ENGINEER OF MPSEB. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RECORD. THERE IS NO DISPUTE THAT THE FA CTS AND CIRCUMSTANCES IN THE INSTANT CASE ARE IDENTICAL TO THE FACTS WHIC H WERE SUBJECT MATTER OF CONSIDERATION BY THE ITAT G BENCH MUMBAI IN THE CASE OF GENERAL FOODS LIMITED. CONSISTENT WITH THE VIEW TAKEN THERE IN WE HOLD ON THE BASIS OF CERTIFICATE OF SUPERINTENDING ENGINEER OF MPSEB THAT THE WIND MILL HAS TO BE CONSIDERED AS HAVING COMMENCED ITS O PERATIONS AND GENERATED ELECTRICITY ON 30-9-2004 ITSELF IN WHICH EVENT ASSESSEE WOULD BE ENTITLED TO CLAIM DEPRECIATION IN FULL. THE ASSE SSING OFFICER IS DIRECTED ACCORDINGLY. 9. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED. 10. ITA. NO. 3799/MUM/2008 :- THE ONLY GROUND URGED IN THE APPEAL FILED BY THE REVENUE READS AS UNDER : 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN ALLOWING BENEFIT O F TELESCOPING OF RS.50 00 000/- WHILE UPHOLDING THE A .OS ACTION OF DISALLOWANCE OF DEPRECIATION AT RS.2 62 9 9 246/-. 11. AT THE TIME OF HEARING LEARNED DR FAIRLY ADMI TTED THAT IN THE EVENT OF DECIDING ASSESSEES APPEAL BY ALLOWING DEP RECIATION AT 100% OF THE CLAIM REVENUES APPEAL WOULD BECOME INFRUCTUOU S. UNDER THESE CIRCUMSTANCES APPEAL FILED BY THE REVENUE IS DISMI SSED AS INFRUCTUOUS. ORDER PRONOUNCED ACCORDINGLY ON 21-04-2010. SD/- SD/- (ANANDI LAL GEHLOT) ( D MANMOHAN ) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI : DATED: 21 ST APRIL 2010 VBP/- COPY FORWARDED TO: 1 ANIK INDUSTRIES LIMITED (FORMERLY KNOWN AS M.P. GLYCHEM INDUSTRIES LTD. ) 410 TULSIANI CHAMBERS NARIMAN POINT MUMBAI PAN AAACM-2696-K 2 ACIT RANGE 3 (2) MUMBAI 3 CIT (A) CENTRAL-VII MUMBAI. 4 CIT CENTRAL-IV MUMBAI. 5 DR B BENCH 6. GUARD FILE /TRUE COPY/ BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI 5 SL. NO. PARTICULARS DATE INITIAL 1. DRAFT DICTATED ON 19-04-2010 SR. P.S. 2. DRAFT PLACED BEFORE THE MEMBER 20-04-2010 SR. P.S. 3 DRAFT APPROVED AND SENT TO SECOND MEMBER 20-04-2010 V.P. 4. DRAFT APPROVED BY SECOND MEMBER 20-04-2010 A.M. 5. DRAFT RECEIVED BY SR. P.S. SR. P.S. 6. KEPT FOR PRONOUNCEMENT SR. P.S. 7. SENT TO BENCH CLERK SR. P.S. 8. DATE OF DISPATCH OF THE ORDER