HAPPY FORGINGS LTD. Vs. THE JCIT
LAWS(IT)-2014-10-24
INCOME TAX APPELLATE TRIBUNAL
Decided on October 17,2014

Happy Forgings Ltd. Appellant
VERSUS
The Jcit Respondents

JUDGEMENT

Bhavnesh Saini, Member (J) - (1.) THIS appeal by assessee is directed against the order of Ld. Commissioner of Income Tax, Ludhiana dated 18.03.2013 for assessment year 2008 -09, challenging the impugned order under section 263 of the Income Tax Act.
(2.) WE have heard ld. Representatives of both the parties and perused the material on record. Briefly, the facts of the case are that in this case, the assessment was completed vide order dated 21.12.2010 (ld. CIT mentioned 27.12.2010) at income of Rs. 4,53,55,887/ -. The Ld. Commissioner of Income Tax examined the record and found the assessment order to be erroneous in so far as the same was prejudicial to the interest of revenue. The ld. Commissioner of Income Tax issued a show cause notice dated 17.09.2012 under section 263 of the Income Tax Act seeking explanation of the assessee on various items. The show cause notice is reproduced in the impugned order. However, the ld. Commissioner of Income Tax set aside the impugned assessment order on one point/issue with regard to grant of depreciation on forging press. Therefore, for the purpose of disposal of this appeal, the issue of depreciation on the same item is considered. The ld. Commissioner of Income Tax in the show cause notice mentioned that assessee has commissioned 8000 MT Forging Press on 29.03.2008. Depreciation @ 50% of the normal rate was claimed on the same and was allowed. The assessee has however, shown building under construction as on 31.03.2008 which was not put to use on or before 31.03.2008. The Assessing Officer was, therefore, required to enquire into these facts in detail and to ascertain as to whether the said building was for the purpose of installation of the new forging press. If so, then apparently the press also had not been put to use as the building was still under construction. The Assessing Officer was, therefore, required to examine this issue critically as the forging press was commissioned at the fag end of the year. Similar exercise was also to be conducted in respect of other machineries as well. However, in this regard, the Assessing Officer failed to make necessary enquiries and failed to carry out the important verification.
(3.) THE assessee submitted a reply containing the details and information on the issue. The assessee claimed to have commissioned 8000 MT forging press on 29.03.2008 and claimed depreciation at normal rate of 50%. The assessee, however explained before ld. Commissioner of Income Tax that Assessing Officer has allowed the depreciation after going through details submitted before him. Therefore, there is no basis for the ld. Commissioner of Income Tax to invoke the provisions of Section 263 of the Income Tax Act. The ld. Commissioner of Income Tax, however did not accept contention of the assessee. Ld. Commissioner of Income Tax noted in the impugned order that assessee filed copies of various documents before him which includes certificate dated 29.03.2008 from M/s. ATO SPA of Italy certifying that forging press had been successfully installed at the plant of the assessee, copies of the power bill which sanctioned excess load w.e.f. 28.03.2008, copy of the bills of hotel for stay of engineers of M/s. ATO SPA of Italy for installation of the press, copy of the insurance policy from 28.03.2008 and copy of the letter of credit opened by the assessee in favour of supplier i.e. M/s. ATO SPA of Italy bearing the clause of warranty/guarantee for a period of 12 months from the date of installation. The assessee, therefore, pleaded before ld. Commissioner of Income Tax that press was actually put to use on 29.03.2008 and the depreciation on the same was rightly claimed. The ld. Commissioner of Income Tax, however did not accept any of the contention of the assessee. The ld. Commissioner of Income Tax also noted that machine is very costly and since warranty/guarantee is applicable for a period of 12 months from the date of installation, therefore, the assessee as well as supplier must have put it in writing that machine was installed and put to use on a particular day, but assessee has not provided any such document. Ld. Commissioner of Income Tax also noted that since machine has been claimed to be put to use for three days and in the absence of details, the Assessing Officer has not examined the claim of assessee, therefore the impugned assessment order dated 21.12.2010 was set aside and Assessing Officer was directed to re -assess income of the assessee after giving opportunity of being heard to the assessee.;


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