Heena International, Ludhiana v. ITO, Ludhiana

ITA 776/CHANDI/2016 | 2010-2011
Pronouncement Date: 26-10-2016 | Result: Allowed

Appeal Details

RSA Number 77621514 RSA 2016
Assessee PAN AACFH9983P
Bench Chandigarh
Appeal Number ITA 776/CHANDI/2016
Duration Of Justice 4 month(s) 15 day(s)
Appellant Heena International, Ludhiana
Respondent ITO, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 26-10-2016
Assessment Year 2010-2011
Appeal Filed On 10-06-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER ITA NO. 776/CHD/2016 ASSESSMENT YEAR: 2010-11 M/S HEENA INTERNATIONAL VS THE ITO 19 ADARSH COLONY WARD VII(1) BAREWAL ROAD LUDHIANA. LUDHIANA. PAN: AACFH9983P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAHIL KOCHAR RESPONDENT BY : SHRI S.K.MITTAL DR DATE OF HEARING : 18.10.2016 DATE OF PRONOUNCEMENT : 26.10.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-3 LUDHIANA DATED 31.03.2016 FOR ASSESSMENT YEAR 2010-11CHALLENGING T HE DISALLOWANCE OF DEPRECIATION OF RS. 5 36 641/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT ON PERUSAL OF THE DEPRECIATION CHART IT WAS NOTICED THAT ASSESSEE HA S CLAIMED DEPRECIATION AT RS. 5 36 641/- ON WDV OF MACHINERY AT RS. 35 77 608/-. IT WAS FURTHER NOTIC ED THAT ASSESSEE WAS ENGAGED IN THE TRADING OF CYCLES AND C YCLE PARTS. IT HAS DEBITED TO THE TRADING ACCOUNT AN AM OUNT OF RS. 1 48 640/- ON ACCOUNT OF PACKING MATERIAL ONLY. THE 2 ASSESSING OFFICER THEREFORE NOTED THAT ASSESSEE W AS NOT ENGAGED IN ANY MANUFACTURING ACTIVITY. THE ASSESSE E HAD SHOWN ADDITION OF RS. 42 08 951/- TO THE MACHINERY ACCOUNT ON WHICH DEPRECIATION @ 15% HAS BEEN CLAIME D AND WDV OF THE MACHINERY AS ON 31.03.2009 AT RS. 35 77 608/- CARRIED OVER TO THE NEXT YEAR I.E. ASSE SSMENT YEAR UNDER APPEAL. SO FAR AS FACTS OF THE CASE ARE CONCERNED THESE ARE SAME AS WERE IN THE LAST YEAR. THE ASSESSING OFFICER THEREFORE ASKED THE ASSESSEE AS TO WHY DEPRECIATION BE NOT WITHDRAWN. 3. THE ASSESSEE EXPLAINED THAT MACHINERY ON WHICH DEPRECIATION HAS BEEN CLAIMED WAS IMPORTED UNDER EPCG LICENSE WHEREIN IT IS CLEARLY MENTIONED THAT S AME WILL BE INSTALLED IN THE PREMISES OF THE SUPPORTING MANUFACTURER M/S RAM SONS CYCLES PVT. LTD. LUDHIAN A FROM WHOM IT PURCHASED THE GOODS FOR EXPORTS. THE ASSESSEE FILED COPY OF THE LICENSE. IT WAS FURTHER SUBMITTED THAT PRODUCTS WERE MANUFACTURED AS PER QUALITY AND SPECIFICATION GIVEN BY IT. IT HAS FURT HER STATED THAT SINCE THE MACHINERY BELONG TO IT AND WA S USED FOR ITS PURPOSE DEPRECIATION IS ALLOWABLE. T HE ASSESSING OFFICER HOWEVER DID NOT ACCEPT CONTENTI ON OF THE ASSESSEE BECAUSE ACCORDING TO SECTION 32 OF THE IT ACT MACHINERY IS REQUIRED TO BE INSTALLED AT THE BUSINESS PREMISES OF THE ASSESSEE AND MUST BE USED EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS OR PROF ESSION. 3 SINCE MACHINERY IS NOT INSTALLED AT THE BUSINESS PREMISES OF THE ASSESSEE AND AS PER AUDIT REPORT NO MANUFACTURING ACTIVITY HAS BEEN DONE BY ASSESSEE ASSESSING OFFICER DISALLOWED DEPRECIATION. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND SAME SUBMISSIONS WERE REITERATED. IT WAS ALSO SUBMITTED THAT MACHINERY IS INSTALLED AT T HE PREMISES OF SUPPORTING MANUFACTURER M/S RAM SONS CYCLES PVT. LTD. LUDHIANA FOR MANUFACTURING GOODS UNDER ASSESSEE'S BRAND NAME AS PER SPECIFICATION GI VEN. THE ASSESSEE IS ENGAGED IN PURCHASING AND EXPORTING TYRES AND TUBES FOR THE PURPOSE OF EXPORT AND MACHI NERY WAS INSTALLED IN THE PREMISES OF SUPPORTING MANUFACTURER FOR SMOOTH AND UNINTERRUPTED SUPPLY OF THE GOODS FOR THE ASSESSEE AS PER SPECIFICATION OF ASSESSEE. COPY OF THE MOU WITH THE SUPPORTING MANUFACTURER WAS RELIED UPON. THE ASSESSEE ALSO SUBMITTED THAT IT IS NOT THE REQUIREMENT UNDER SECT ION 32 OF THE ACT THAT MACHINERY SHOULD BE INSTALLED AT THE BUSINESS PREMISES OF THE ASSESSEE. IT WAS SUBMITTE D THAT SINCE MACHINERY WAS INSTALLED AT THE PREMISES OF THE SUPPORTING MANUFACTURER BY THE ASSESSEE AND USE D FOR BUSINESS PURPOSE OF THE ASSESSEE THEREFORE ASS ESSEE IS ENTITLED FOR DEPRECIATION. 5. THE LD. CIT(APPEALS) HOWEVER NOTED THAT COPY O F THE MOU WITH M/S RAM SONS CYCLES PVT. LTD. WAS NOT 4 FILED BEFORE HIM. THE LD. CIT(APPEALS) HOWEVER N OTED THAT MACHINERY WAS OWNED BY THE ASSESSEE BUT NO SUPPORTING DOCUMENTS HAVE BEEN PRODUCED TO SHOW THA T GOODS WERE PRODUCED UNDER THE BRAND NAME OF THE ASSESSEE AS PER QUALITY AND SPECIFICATION GIVEN BY THE ASSESSEE. APPEAL OF THE ASSESSEE WAS ACCORDINGLY DISMISSED. 6. AFTER CONSIDERING RIVAL SUBMISSIONS I AM OF THE VIEW MATTER REQUIRES RE-CONSIDERATION AT THE LEVEL OF THE LD. CIT(APPEALS). THE ASSESSEE HAS FILED COPY OF T HE MOU IN THE PAPER BOOK WHICH CLEARLY SUPPORTS CASE O F THE ASSESSEE THAT MACHINERY WAS OWNED BY ASSESSEE WHICH IS ALSO NOT DISPUTED BY THE LD. CIT(APPEALS) AND THAT IT WAS INSTALLED IN THE PREMISES OF THE SUPPOR TED MANUFACTURER FOR THE PURPOSE OF PRODUCTION ON BEHAL F OF THE ASSESSEE. THE ASSESSEE ALSO SUBMITTED GP RATE INCREASED TO EXPLAIN BEFORE LD. CIT(APPEALS) THAT PRODUCTION HAS BEEN DONE IN THE BRAND NAME OF THE ASSESSEE AS PER SPECIFICATION GIVEN BY ASSESSEE. E VEN WHEN MACHINERY IS KEPT READY DEPRECIATION IS ALLOW ABLE TO ASSESSEE. I RELY ON JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PEPSU ROAD TRANSP ORT CORP. 253 ITR 303. THERE IS NO REQUIREMENT UNDER SECTION 32 OF THE ACT THAT MACHINERY SHOULD BE INST ALLED IN THE PREMISES OF THE ASSESSEE ONLY FOR THE PURPOS E OF CLAIMING DEPRECIATION. I THEREFORE SET ASIDE THE ORDER OF LD. CIT(APPEALS) AND RESTORE THIS ISSUE TO HIS F ILE WITH 5 DIRECTION TO RE-DECIDE APPEAL OF THE ASSESSEE STRIC TLY IN ACCORDANCE WITH LAW BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FILE COPY OF MOU WITH SUPPO RTING MATERIAL BEFORE LD. CIT(APPEALS) ALONGWITH DETAILS AND MATERIAL TO SHOW THAT PRODUCTION WAS DONE IN THE BR AND NAME OF THE ASSESSEE AS PER HIS SPECIFICATIONS OR MACHINERY KEPT READY FOR PRODUCTION FOR FINAL DISP OSAL OF THE MATTER. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 26 TH OCTOBER 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT DR ASSISTANT REGISTRAR ITAT/CHD