9911796707
TMI Blog2011 (12) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed only for moulds used in the plastic/rubber industry, the AO ought to have been allowed depreciation @ 25% on the moulds, which were used in its business of manufacturing TV, AC, Washing Machine, etc. and the excess depreciation claimed by the assessee should have been disallowed. In view of the above observations, the CIT issued show cause u/s 263 to the assessee, against which the assessee filed its submissions dated 23/3/2010, which were reproduced by the CIT in his order at page 2 and the same were extracted below: "The assessee has claimed that it is also manufacturing plastic and rubber components which are used in making television, washing machine, air condition etc. On the mounds for making rubber and plastic compoents used in electronics items, manufactured by the assessee, it had claimed the higher rate of depreciation @ 40%. It has also been further clarified by the assessee that it has claimed depreciation @ 25% on moulds and dyes which were used in the manufacture of articles other than rubber and plastic items for manufacturing the electrical goods, assessee requires the mould for manufacturing the plastic coatings also and therefore higher claim was justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove findings, the CIT set aside the order of the AO and restored the matter to the file of the AO with a direction to examine the issue in detail and decide the same afresh after due verification and after providing reasonable opportunity of hearing to the assessee. Aggrieved by the order of the CIT, the assessee is in appeal before us. 5. Before us, the learned counsel for the assessee submitted that depreciation @ 40% claimed by the assessee on the moulds for making rubber and plastic components used in the electronic items manufactured by the assessee. It is submitted that according to the entry in the depreciation schedule (supra), as held by the CIT, the assessee is a manufacturer of electronic goods and not manufacturer of plastic or rubber goods and, therefore, the assessee's industry does not fall within the entry of the depreciation schedule as per Rule 5 of the Income-tax Act, but, he pointed out that the entry only says that moulds used in the rubber and plastic goods factory and the assessee used moulds in his factory for the purpose of manufacturing plastic goods, which are necessary for its business, i.e. in manufacturing TV, washing machine, etc., therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO. 7. We have considered the rival submissions, perused the record, and gone through the orders of the authorities below as well as the decisions cited. The only issued involved in this appeal is whether the learned CIT is right in invoking the provisions of section 263 of the Act, or not ? The provisions section 263 read as under:- "263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include- (i) an order of assessment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The power of suo motu revision under sub-section (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this subsection, viz. (1) the order is erroneous ; (2) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions "erroneous", "erroneous assessment" and "erroneous judgment" have been defined in Black's Law Dictionary. According to the definition, "errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of BPL Refrigeration Ltd. (supra) has held as under:- "In the present case also though some parts are used in manufacture of washing machine, vacuum cleaners, etc. yet these parts are manufactured by the assessee itself. These parts are admittedly rubber and plastic goods. Thus the moulds used in manufacture of such rubber and plastic goods are to be held as used in rubber and plastic goods factories. There need not be a separate and distinguishable factory for production of such items and the moulds need not be used in such separate factory. Once the moulds are used for manufacture of rubber and plastic goods parts though in a composite factory manufacturing washing machine, vacuum cleaners, etc., the assessee is eligible for deduction at higher rate of depreciation, i.e., 40 per cent. As per Appendix I to the Income Tax Rules. We are therefore in agreement with the submission of learned counsel for the assessee. In view of our discussion above, we reverse the finding of the learned CIT(A) and allow the claim of the assessee." 7.5 In the present case, though the assessee is in the business of manufacturing TV, Washing Machine, etc. he manufactured plastic and rubber goods in co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
