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07-01-2019, TPL Plastech, Section 32(1)(iia), 147, 148, Tribunal Mumbai

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1 week 5 days ago #12002 by amit
Section - 32(1)(iia), 147, 148, 11
Order Date - 07-01-2020
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - ACIT
Respondent - TPL Plastech Ltd.
Citation - 120Taxpundit73
Appeal No. - I.T.A. No.6206/Mum/2017
Asstt. Year - 2011-12


PER : Manoj Kumar Aggarwal

1.1 Aforesaid appeal by revenue for Assessment Year [in short referred to as ‘AY’] 2011-12 contest the order of Ld. Commissioner of IncomeTax (Appeals)-18, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-18/IT-331/AC-11(3)(1)/16-17 order dated 30/05/2017 on following grounds of appeal: -

1. Whether in law and on the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating the fact that the notices u/s 143(2) & 142(1) were served on 4.10.2016 fixing the date of compliance on 20.10.2016. The assessee failed to comply with statutory notices u/s 143(2) & 142(1) on the stipulated date. Instead the assessee filed a casual objection on 2.11.2016 captioned as "Sub: Response to the notice providing of reasons recorded for issue of notice u/s 148 of the Income Tax Act, 1961 2011-12 TPL Plastech Ltd. (PAN AAACT 1968P) citing Ref:- ACIT-ll(3)(l)/Notice u/s 148/2016-17." Filing objection after a span of almost one month from the date of receipt of notices u/s. 143(2) & 142(1) is not tenable. Hence, the objection was not disposed of."

2. "Whether in law and on the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating the fact that the assessee used the assets previously used by its parent company, had not disclosed the same and was still claiming additional depreciation in violation of provisions of the Act "

3. "Whether in law and on the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating the fact that the assessee had purchased new plant and machinery worth Rs.9,27,41,361/- from the manufacturing division of Time Technoplast Ltd. which was duly supported by he documentary evidence and claimed the additional depreciation as per the provisions of the Act."

4. "The appellant prays that the order of the CIT (A) on the above grounds be set aside and that of the A.O. be restored."

1.2 We have carefully heard the rival submissions, perused relevant material on record including documents placed in the paper book and deliberated on various judicial pronouncements as cited before us. Our adjudication to the appeal would be as given in the succeeding paragraphs.

2.1 Facts as emanating from case records are that the assessee being resident corporate assessee stated to be engaged in the business of manufacturing of polymer products was assessed for year under consideration u/s. 143(3) r.w.s. 147 on 28/12/2016 wherein the income of the assessee was determined at Rs.623.07 Lacs after sole addition on account of additional depreciation for Rs.338.34 Lacs as against returned income of Rs.284.66 Lacs e-filed by the assessee on 22/09/2011. The regular assessment was framed u/s. 143(3) of the Act on 27/02/2014 assessing the income at Rs.284.72 Lacs.

2.2 Subsequently, the case was reopened by issuance of notice u/s 148 on 30/03/2016 which was duly served upon assessee. In response, the assessee, vide letter dated 28/04/2016, offered original return of income and requested for reasons recorded to reopen the assessment. The reasons were furnished to the assessee on 01/08/2016 and thereafter, notices were issued u/s 143(2) & 142(1) on 04/10/2016 calling for requisite details and explanations.

2.3 The reason which triggered reassessment proceedings, was the fact that the assessee had claimed additional depreciation of Rs.338.34 Lacs on account of addition of plant and machinery, moulds etc. It was noted that during AYs 2010-11 and 2011-12, the assessee had purchased fixed assets of Rs.540.78 Lacs and Rs.988.10 Lacs respectively from its holding company i.e. M/s. Time Technoplast Ltd. Upon perusal of Schedule ‘E of annual accounts of holding company, it was noted that the said entity had alienated assets from its books of accounts for Rs.1179.02 Lacs and Rs.1884.05 Lacs during AYs 2010-11 and 2011-12 respectively. The said fact led Ld. AO to form a belief that the assets purchased by the assessee were previously used by its holding company and assessee was claiming additional depreciation on the previously used assets.

2.4 The assessee, vide submissions dated 02/11/2016, defended the same by submitting that the holding company had machine building division and the entire purchase of machinery was made during AYs 2010-11 and 2011-12. It was wrong presumption on the part of Ld. AO that used machinery was purchased by the assessee. In support, copies of purchase invoices were furnished and the attention was drawn to the fact that excise duty was charged in the invoices itself because goods could not be removed out of the factory without charging excise duty as the excise duty was levied on manufacture. In case of old machinery, no excise duty would be charged.

2.5 However, the said submissions could not find favour with the Ld. AO, who concluded that the assessee could not furnish any irrefutable and clinching evidence to differentiate between the old and new machinery. The assessee failed to furnish one to one reconciliation and mapping of depreciation claimed with item-wise and block-wise plant and machinery. Accordingly, the additional depreciation of Rs.338.34 Lacs claimed by the assessee u/s 32(1)(iia) was disallowed and added to the income of the assessee.

3.1 Before first appellate authority, the assessee assailed the stand of learned AO on legal grounds as well as on merits by way of elaborate written submissions, which have already been extracted on page nos. 3 to 14 of the impugned order. The assessee in its ground of appeal, contested the validity of reassessment proceedings, inter-alia, on the ground that the objections raised by the assessee on 02/11/2016 against reopening were not disposed-off by way of speaking order which was in violation of the procedure laid down by Hon’ble Apex Court rendered in GKN Driveshafts India Ltd. V/s DCIT (259 ITR 19) and also the decision of Hon’ble Bombay High Court rendered in Asian Paints Ltd. V/s DCIT (296 ITR 96), IOT Infrastructure & Engg. Services Ltd. V/s ACIT (329 ITR 547) & Allana Cold Storage V/s ITO (287 ITR 1).

3.2 The assessee also pleaded that there was no tangible material before Ld. AO so as to form a belief that certain income escaped

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