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TMI Blog2017 (3) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... in the lower appellate proceedings. The assessee's latter appeal raises a sole substantive ground arising from similar allocation of expenditure resulting in disallowance of Rs. 60,05,017/- made by both the lower authorities in assessment year 2010-11. 3. We come to assessee's first substantive ground raising the issue of additional depreciation. This assessee is a excavation work contractor. It claimed additional depreciation amount in question of Rs. 67,20,175/- on new plant and machinery added during the relevant previous year as deployed at the Gujarat Mineral Development Corporation (GMDC) and Rajasthan's State Mines and Minerals (RSMM), Lignite Mines at Tadkeshwar and Barmer ; respectively. The assessee's case was that it was manufacturing /producing an article or thing as contemplated under the above deduction provision. The Assessing Officer observed in assessment order dated 21.12.2011 that the assesse's role in mining is basically that of a contractor executing contract work of removal of over burden and extraction of lignite from the above two corporations' mines. He appears to have further rejected assessee's contention based on hon'ble apex court's decision in CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of production and therefore entitled to additional depreciation. 3.5. I have considered the facts of the matter. It is seen that the decision of the Gujarat High Court relied on by the ld. A.R. was reversed by the Hon'ble Supreme Court. The Supreme Court in the, case of CIT vs. M/s.General Contract Co. in its order dtd. 11.09.2012 in Civil Appeal No.3207 of 2007 held as under:- "A short question 'which arises for determination in this civil appeal is, whether the assessee was entitled to investment allowance under Section 32A (2) (b) of the Income Tax Act, 1961 ? Section 32A(2)(b) of Income Tax Act, 1961, as it stood at the relevant time, has been extensively quoted in the Order of the Assessing Officer (see Page 37 of the paper Book). The Assessing Officer came to the conclusion that the assessee claimed to be in the business of mining; the only activity undertaken by it was removal of overburden/earth excavation work carried out for facilitating mining at lignite project site at Rajpardi and Pandhro; and that the assessee was merely a labour contractor. These findings of fact have been up held by the Income Tax Appellate Tribunal and they have not even been di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We proceed further to adjudicate the above framed question and notice first of all that the assessee has undisputedly employed various heavy duty machineries of motor grading, dozing, excavation etc. in the relevant previous years. Pages 1 to 32 of the paper book contain assessee's agreements entered with the above two mining corporations. First one is assessee's agreement with the Gujarat Mineral Development Corporation. Page 2 specifically states that assessee's scope of work includes mining of lignite and loading of consumer trucks there with after employing hydrolic excavator and other equipments. It is further supposed to remove over burden arising from the said activity. The assessee admittedly is reimbursed on tonnage basis. The fact however remains that this payment structure is not relevant s we are dealing with nature of assessee's activity. This former agreement makes it clear that the assessee itself is engaged in mining activity so as to be called a producer of the ore in question. It is further revealed from assessee's latter agreement with the Rajasthan Mines & Minerals that the situation is no different since the assessee has to excavate lignite ore after deploying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... administration expenses were to be reduced from the income; appellant had reduced only AMC charges of Rs. 12,30,966/- while computing the deduction; however, the depreciation as per I.T. Act, interest and common expenses were not deducted; the expenses narrated at para-4.4 of the assessment order were common expenses not attributable fully to any particular activity of the assessee; the turnover of the appellant from mining contracts was Rs. 4283.10 lacs and the turnover of the wind mill was Rs. 72.08 lacs accordingly 1.655% of the common expenses of Rs. 78,28,687/- which worked out to Rs. 1,29,565/- was being allocated to the wind mill; similarly appellant had paid interest of Rs. 1,07,53,349/- on the amounts borrowed for the wind mills and for other business activities; since the appellant failed to give necessary particulars, the loan taken for the wind mill was taken at Rs. 5 crores (out of the total secured loans of Rs. 15,31,33,038/- as on 31.03.2009); accordingly, 32.6% of the interest paid which worked out to Rs. 35,05,591/- was being allocated to the wind mill activity and A the sum of Rs. 47,17,803/- being depreciation (Rs.10,82,646/-), common expenses (Rs.1,29,565/-) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rs. 1,29,565/- are upheld. Disallowance of Rs. 35,05,591/- is directed to be re-worked after verification. These grounds of appeal are treated as; partly allowed. 10. We have heard rival submissions. Shri Soparkar states at the outset that the assessee in any case is not raising the issues of interest and depreciation (supra). We proceed in this backdrop to notice that the assessee has been maintaining separate books of its two businesses throughout as duly audited as per this statutory provisions. It has further entered into annual maintenance contract with the windmill installment companies so far as its former business is concerned. There is no evidence in the case file indicating that the assessee has either way diverted expenditure of one business towards the other one i.e. from windmill to mining and vice versa. The Assessing Officer rather appears to have adopted prorate turnover figures to arrive at the impugned allocation. We notice that such a course of action already stands reversed by various tribunal's decisions. For instance, [2012] 23 taxmann.com 301 (Jodhpur-tribunal) ACIT vs. P I Industries deleting similar allocation / apportionment of expenses made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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