TMI Blog2012 (10) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... its proper perspective, Therefore, restore the matter to the file of the AO for deciding the issues raised. Decision case remand back to AO - ITA Nos.5044 to 5046/Del/2010 & ITA No.987/Del/2011 - - - Dated:- 13-7-2012 - SHRI G.D. AGRAWAL, AND SHRI A.D. JAIN, JJ. Assessee by : Shri Akhil Mahajan, CA Revenue by : Shri Niranjan Kouli, CIT, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER ITA Nos.5044 to 5046/Del/2010 are assessee s appeals for A.Y.s 2004-05 to 2006-07 and ITA No.987/Del/2011 is assessee s appeal for A.Y. 2007-08 against the orders passed by the CIT (A)-XII, New Delhi. 2. The first issue common to all these appeals is concerning disallowance of depreciation on trial run expenditure, amounting to Rs. 11,74,59,492/- for A.Y. 2004-05, Rs. 8,80,94,619/- for A.Y. 2005-06, Rs. 3,96,42,579/- for A.Y. 2006-07 and Rs. 3,36,96,190/- for A.Y. 2007-08. The Assessing Officer disallowed the claim of the assessee, holding that for Assessment Year 2003-04, it had been held in the assessment order that since there was commercial production and not trial production, the expenditure incurred was not to be allocated to the fixed assets during the next financial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se complaints were placed before the lower authorities nor the ld. CIT(A) examined these aspects. We find that he lower authorities did not make any attempt to ascertain the international and domestic rates of citric acid vis-a-vis rates at which the assessee sold its products in order to ascertain as to whether or not the product manufactured by the assessee was really substandard, as claimed by the assessee. The manufacture of such a product without the help quality control experts is well nigh impossible. No such reports on quality of the product were either produced before the AO or the ld. CIT(A) and even before us. As already stated ,in the year under consideration domestic sale of Rs.34,56,81,771/- and export sale of Rs.2,76,86,320/- have been made. There is no material before us in order to ascertain as to whether or not the entire production of 7626 MT was substandard so as to necessitate trial production. Hon ble Bombay High Court in CIT vs. Hindustan Antibiotics Ltd., 93 ITR 548,observed that until the company reaches a stage where it is in a position to decide that a final product, which could ultimately be sold in the market, could be manufactured or produced by it, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r AYs 2004-05 and 2007-08, the matter is remitted to the file of the Assessing Officer to be decided afresh in accordance with law, in keeping with the Tribunal order for Assessment Year 2003- 04 (supra). For AYs 2005-06 and 2006-07, however, the order of the Ld. CIT (A) is upheld. 8. In ITA No.5045/Del/2010 for A.Y. 2005-06, the second issue is regarding allowance of depreciation on Plant Machinery being power plant, @ 10% and not @ 25%, as claimed. 9. The facts are that during the year, the assessee showed plant and machinery of Rs. 21,05,53,381, as an addition to Plant Machinery under Schedule IV of the books of account. In Form 3CD, however, such addition was shown as addition to building. The Assessing Officer allowed depreciation at 10% i.e., the rate applicable to building. The Ld. CIT (A) upheld this action of the Assessing Officer, following Goetze (India) Ltd. vs. Commissioner of Income-tax , 284 ITR 323 (SC), as done by the Assessing Officer, holding that the higher rate of depreciation @ 25%, as claimed by the assessee, ought to have been claimed by filing a revised return; that the Assessing Officer had also disallowed the claim on the basis of audit rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the impugned order in this regard. It has been contended that undisputedly, in Schedule IV of the books of account of the assessee, the addition was shown as addition to Plant Machinery ; the addition was, however, shown as addition to building in Form 3CD; that the Assessing Officer disallowed the assessee s claim on the basis of the audit report in Form 3CD besides on the basis of the decision in Goetze (India) (supra); that the Ld. CIT (A) has correctly observed that the tax audit report is signed by the auditor as well as approved by the directors of the company and, as such, it cannot be changed subsequently by filing a claim, without altering the contents of the report; that since the assessee did not file any revised Form 3CD, Goetze (India) Ltd. (supra) is squarely applicable and, therefore, the action of the Assessing Officer in granting depreciation @ 10% as against the claim of 25%, as confirmed by the Ld. CIT (A), is wholly in accordance with law; and that, therefore, the grievance of the assessee in this regard does not hold water and the same be rejected. 12. We have heard the parties on this issue and have perused the material on record with regard the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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