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The DCIT, Circle-4, Ahmedabad Versus Gyscoal Alloys Ltd.

Disallowance of depreciation and additional depreciation on rough forged rolls - CIT(A) allowed the claim - Held that:- We reiterate that the Assessing Officer had invoked the impugned disallowance for the reason that the assessee had not be able to prove the necessary details of rolls in question being purchase followed by their installation in put to use condition before 31.03.2007. This resulted in disallowance of depreciation and additional depreciation in question. The CIT(A) discusses that .....

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r the Respondent : Shri Sunil Talati, AR ORDER Per S. S. Godara, Judicial Member This Revenue's appeal for assessment year 2007-08, arises from order of the CIT(Appeals)-VIII, Ahmedabad, dated 16.12.2010 passed in Appeal No. CIT(A)-VIII/IDC-4/757/09-10, in proceedings u/s.143(3) of the Income Tax Act, 1961, hereafter 'the Act'. 2. The Revenue's first substantive ground challenges CIT(A)'s order deleting disallowance of ₹ 75,89,298/- of depreciation and additional deprec .....

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water pump set, polishing machine, straightening machine, sharper machine and other plant and machinery, send filing work for their new projects etc. The assessee had shown further purchases of fixed assets of ₹ 75,17,932/- from another entity M/s. D & H Enterprise operating from the very Ahmedabad address. The authorized signatory at both the entities' behest happened to be the same person. The Assessing Officer accordingly sought from assessee return of income filed by both this .....

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ssee had not submitted the relevant details of later entity M/s. D & H Enterprise. He accordingly observed that assessee's purchase of fixed assets aggregating to ₹ 2,16,82,709/- appeared to be bogus and depreciation of ₹ 32,52,556/- with additional depreciation of ₹ 43,36,742/- had to be disallowed. He acted accordingly and invoked the impugned gross disallowance of ₹ 75,89,298/-. 3. The assessee preferred appeal. It filed additional evidence in the nature of sal .....

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thereby deleting the impugned disallowance as under: "12. Ground No.1 Coming to the Ground No.1 as the assessee company has pointed out that total purchase of Fixed Assets during the Asst. Year 2007-08 are of ₹ 6,28,42,859/- and transfer from W.I.P. of previous year i.e. Asst.Year 2006-07 is of ₹ 3,45,44,960/-. So total addition in the Fixed Assets during the Asst. Year 2007-08 is of ₹ 9,73,87,819/-. This stands established from the published audited accounts, which are fi .....

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the amount of purchase explained by the appellant company. On the basis of the details filed, purchases from these two parties i.e. from Collective Marketing Pvt. Ltd. is given in a summary form totaling to ₹ 83,28,336/-. Complete copy of bills of all these purchases which are on different dates mentioning the description, quantity, rate etc. are filed from Page 30 to 49. Similarly, total purchases from D & H Enterprises is given in Summary form of ₹ 42,24,952/- and copies of al .....

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terials and after doing necessary fabrication supplied to the assessee company these assets stands discharged. The assessee company has also filed copy of the account of the assessee company in the audited books of Collective Marketing Pvt. Ltd. on Page 73 to 75 wherein various suppliers and sources of the said company, loans taken by it including term loan, cash credit etc. from UCo. Bank are appearing. This proves the numerous transactions the said Collective Marketing Pvt. Ltd. had undergone .....

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ne through all these copies of the bank account, copy of the bills being purchase bills by the said Collective Marketing Pvt. Ltd., copies of the assessee's account with Collective Marketing Pvt. Ltd. and have also verified the account payee cheque payments made by the assessee company to the said supplier. Purchase bill of the assessee company, i.e. sales bills of Collective marketing Pvt. Ltd. clearly states the name and address of the said company, its GST and CST Nos. and complete descri .....

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nt has given all details in the Paper book as stated above. In view of this the purchases from this company are also not bogus. Over and above, in the additional evidences the assessee company has filed copies of loan sanctioned letter of UCO Bank at Page 99 to 106 of the Paper book, who had sanctioned a fresh Term Loan of ₹ 625 Lacs for setting up of new furnace of 4MT and one rolling mill of 16 inches to increase the capacity of the existing plant and machineries and also increased worki .....

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-Economic Consultants Pvt. Ltd. as on 21st May, 2008 filed on Paper book page 127 to 163 in which the Valuer also has certified the existence and verification of all these assets. 15. My view gets further strengthen from the copies of the audited accounts, wherein the auditors in their Auditors Report appearing on Page 12 of the Paper book have confirmed that the assessee company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. .....

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ernal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets etc,. I see no doubt or suspicion with regard to treating the Fixed assets as bogus. The Assessing Officer has not brought any material or evidence except mentioning that purchases appear to be doubtful particularly on the ground that suppliers have shown very little income or have withdrawn the cash after the receipt of the payments. In my view the ass .....

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ion thereof. The addition made of disallowing depreciation and additional depreciation on these assets of ₹ 75,89,298/- is therefore deleted." 4. We have heard both the parties and perused the case file. The Revenue seeks to restore the entire disallowance of depreciation and additional depreciation qua fixed assets purchased from M/s. Collective Marketing Pvt. Ltd. and M/s. D & H Enterprise (supra). Relevant facts already stand narrated in the preceding paragraph. The Assessing O .....

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nvoices, books, sources of the suppliers company, their loans taken, cash credits, bank statements, confirmations, mode of payment by want of account payee cheques, income tax details etc. have been taken into consideration for accepting assessee's claim. The Revenue fails in rebutting the above stated conclusion under challenge by way of reference to paper book on record comprising of all these necessary details. We accordingly affirm the CIT(A)'s finding under challenge. The Revenue .....

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e same stating use of these assets for less than 180 days in the relevant previous year. The Assessing Officer sought for necessary details of transportation, delivery and "put to use" of these rolls. He quoted assessee's failure in filing the same. This lead to disallowance of depreciation of ₹ 50,66,381/- and additional depreciation of ₹ 12,66,595/- on the above stated rolls being made in the assessment order in question. 6. The assessee appears to have filed addition .....

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from Tirupati Industries on Page 166 to 168. All these three bills from the supplier clearly mentions the Bill No., date, Assessee Company's name, name of the transporter, details like Packages, description and quantity of Rough Forged Blanks for Rolls. These Rolls were received at Factory premises on 22nd March, 2007 stands verified from the copies of the Lorry Receipt, i.e. Delivery Memo and bill of Rajkot Golden Transport Corporation, who had picked up the goods on 16th March, 2007 from t .....

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he Lorry Receipt, i.e. as per the goods delivered by the Transporter to the assessee company. The Assessing Officer and Additional C.I.T. in the Remand Report have commented that the said Engineer is merely certifying that the rolling mills are installed and used for the production and the certificate nowhere mentions the date of put to use in the certificate and therefore it was contended that no reliance be placed on such certificate. 18. I have carefully gone through the detailed submission, .....

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