JOIT KUMAR JAIN Vs. ADDITIONAL COMMISSIONER OF INCOME TAX
LAWS(IT)-2014-6-28
INCOME TAX APPELLATE TRIBUNAL
Decided on June 11,2014

Joit Kumar Jain Appellant
VERSUS
ADDITIONAL COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

Rajendra, Member (A) - (1.) CHALLENGING the order Dt. 28.01.2011 of the CIT(A) -26, Mumbai, Assessee has filed following Grounds of Appeal: "1. The learned Assessing Officer and learned CIT(A) erred in ignoring the fact that no valid notice u/s. 143(2) was issued and served on the appellant. 2.THE learned Assessing Officer and learned CIT(A) erred in interpreting section 10(35) related to exemption from tax in respect of long term capital gain. The learned Assessing Officer erred in disallow the claim of depreciation. The learned CIT(A) erred in ignoring concept of block of assets. 3.PRAYERS " The appellant craves leave to add, amend, alter vary and/or withdraw any or all the above grounds of appeal. Grounds of appeal filed by the assessee in appeal No. 3349/Mum/2011 read as under: "1. The learned CIT(A) erred in arriving at conclusion based on personal assumption and surmises. 2. The learned CIT(A) erred in blaming the appellant by forcing his own judgment. 3. The learned CIT(A) erred in interpreting logic of scrutiny assessment. 4. The learned CIT(A) erred in understanding difference between awareness of law and facts of transaction. 5. THE learned CIT(A) erred in concluding of suppression of taxable income. The learned CIT(A) erred in citing of decision of various court decision but avoided more relevant cases decision quoted by same courts. 6.PRAYERS ." The appellant craves leave to add, amend, alter very and/or withdraw any or all the above grounds of appeal. ITA No. 3348/Mum/2011: Assessee, an individual engaged in the business of manufacturing and export of watches, filed his return of income on 30.10.2006 declaring total income of Rs. 25.29 lakhs. Assessing Officer (AO) finalised the assessment u/s. 143(3) of the Act, on 04.11.2008, determining the total income at Rs. 32.59 lakhs. During the course of hearing before us, Authorised Representative (AR) of the assessee did not press ground Nos. 1 and 2. Hence, same stand dismissed as not pressed.
(2.) Ground No. 3 is about disallowance of depreciation. During the assessment proceedings, AO found that assessee had claimed depreciation of Rs. 5.29 lakhs in its proprietary concern M/s. Dicen Industries (DI), that out of the said depreciation Rs. 3.57 lakhs and Rs. 10,272 had been claimed for factory building and plant and machinery respectively. AO observed that no manufacturing activity were carried out during the year in the factory building, that assessee had only purchased watches legally from India and had exported the same to foreign countries. Relying upon the order of the Hon'ble jurisdictional High Court delivered in case of Dinesh Kumar Gulabchand Agarwal v. CIT : [2004] 267 ITR 768/141 Taxman 62 (Bom.), he held that depreciation was allowable only when the assets had actually been used during the year under consideration and not if the assets were merely kept ready for use. He further held that assessee had carried out only trading activities, that no manufacturing activities were undertaken by him. Finally, depreciation on the factory building, amounting to Rs. 3.57 lakhs and on Plant & Machinery of Rs. 10,272/ - was disallowed.
(3.) Aggrieved by the order of the AO, assessee filed an appeal before the First Appellate Authority (FAA). Before him assessee argued that he had installed the Plant & Machinery and factory was working during the year under consideration, that business assets were put to use, that assessee was entitled for depreciation, that factory building in Plant & Machinery was included in block assets. After considering the submission of the assessee and the assessment order, FAA held that assessee had failed to demonstrate with any evidence that factory building as well as Plant & Machinery was actually used for any manufacturing activities carried out by the proprietary concerned i.e. DI, that assets had not been used during the year under consideration, that AO had rightly placed on the cases of Dinesh Kumar Gulabchand Agarwal (supra), Dy. CIT v. Yellamma Dasappa Hospital : [2007] 290 ITR 353/159 Taxman 58 (Kar.) and CIT v. Oriental Coal Co. Ltd. : [1994] 206 ITR 682 : 76 Taxman 240 (Cal.). Finally, he upheld the order of the AO.;


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