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M/s Sujana Towers Ltd. Versus Asst. Commissioner of Income-tax, Circle 3 (1) , Hyd.

2018 (1) TMI 594 - ITAT HYDERABAD

Revision u/s 263 - Held that:- It is observed that the assessee brought to the notice of the CIT that in respect of group concern M/s Sujana Metal Products, similar depreciation claim was allowed by the AO when the CIT set aside the issue to him for examination, but, in the given case, the CIT ignored the submissions of the assessee. In the present case, the learned Assessing Officer after duly considering the explanation and information filed in response to the notice issued u/s. 143(2) of the .....

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assed by AO is erroneous and also it is prejudicial to the interests of revenue. Mere set-aside without proper findings by him will be illegal and without proper jurisdiction. Therefore, we restore the order of AO passed u/s 143(3) of the Act - Decided in favour of assessee. - ITA No. 79/Hyd/2014 - Dated:- 10-1-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member Assessee by : Shri P. Murali Mohan Rao Revenue by : Shri J. Siri Kumar ORDER Per S. Rifaur Rahman .....

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sessee for giving effect to the directions of the CIT dated 02/12/2013, the assessee filed the appeal belatedly against the order of CIT u/s 263. Considering the submissions of the assessee and the objection of the ld. DR, we hereby condone the delay as the assessee was prevented by reasonable cause in not filing the appeal within the stipulated time. 3. Briefly the facts of the case are, the assessee is a Company engaged in the manufacture of Iron and steel products, Telecom Products and Power .....

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es were noted: (i) The assessee has claimed depreciation on plant & machinery to the extent of ₹ 47,11,30,766 @ 80%. This higher rate of depredation i.e, 80% is allowable to an undertaking engaged in generating power or to plant & machinery which is an energy saving devise, The assessee company is engaged in manufacture of iron and steel products, transmission towers and power transmission towers and hence is not entitled to depreciation on plant & machinery @ 80%. (ii) It was .....

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Subsequently, the CIT issued a fresh notice on 28.2.2013 fixing the hearing on 6.3.2013. In response to the notices issued, the assessee has made a written submission on 23.1.2013. As regards the first issue, the assessee has stated as under: "The company is engaged in the manufacture of iron and steel products mainly useful for towers and tower parts for telecom and power Industries. The basic components of these towers are made up of iron and steel which is manufactured in-house in a ste .....

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ting in furnace. Chilled rolls are rolling mill rolls and are an integral part of the rolling process of iron and steel and are used to trim and resize the heated large billets and blooms to commercial sizes. As a part of the process, the heated billets and blooms are passed through the rolling mill rolls which are fixed into mill stands and rotate at high speeds and therefore are classified as plant & machinery. As the company is engaged in the rerolling of iron and steel products, the comp .....

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depreciation is enclosed for your immediate reference. Therefore, the claim of the company is justified. It is further submitted that when a similar issue arose in respect of group concern M/s Sujana Metal Products, the AO examined the eligibility of the depreciation claim at your instructions vide proceedings No. F.No. CITIII/ Revision/263(33)/2011-12 dt. 29/03/2012 and the officer has confirmed the eligibility of deprecation in para 10 of his assessment order. A copy of the order dated 17/01/2 .....

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al invoice account (i.e. net purchase price plus excise) will be credited to suppliers account (as the supplier has paid excise and his invoice is inclusive of excise paid by him on materials supplied). When duty is debited in Input Cenvat Credit Account towards payment of duty on final product, Excise duty paid on final products account should be debited and Cenvat Credit Receivable (input) account should be credited. If there is debit balance at the end of year in Cenvat account, it means that .....

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at credit is shown on the asset side of the balance sheet. The assessee had relied on the following decisions: 1. CIT Vs. Indo Nippon Chemicals Co. Ltd., [2003] 261 ITR 275. 2. Indian Petrochemicals Corp Otd. Vs. Department of Income Tax vide ITA No. 664 & 665/Ahd/2008, order dated 29/06/2012. 6. After considering the submissions of the assessee, the CIT observed as under: 6. As regards the claim for depreciation, the assessee is relying on item 8(vii) of Appendix - I, Part - A, which gives .....

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r ₹ 24,25,84,899 only, while plant and machinery amounting to ₹ 28,25,35,757 purchased during the year is stated to be air pollution control equipment and water pollution treatment equipment purchased from M/s Omicron Bio Genesis Ltd. and M/s Futuretech Industries Ltd. As per the schedule for depreciation, air pollution control equipment are entitled to 100% depreciation whereas the assessee has claimed only 80% depreciation. The AO has not carried out any enquiry so as to confirm wh .....

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revenue. The assessment order is set aside with direction to the AO to verify whether MS chilled bars and rolling mill rolls are the same thing and also whether the air pollution control equipment and water pollution treatment equipment purchased by the assessee is one which is entitled to higher rate of depreciation and that such air pollution and water pollution equipment was installed within time at the factory premises of the assessee. 6.1 As regards the issue of CENVAT credit, the CIT obse .....

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cordingly, he set aside the order of the AO. 7. Aggrieved, the assessee is in appeal before us raising the following grounds of appeal: 1. The order of the Ld. CIT is erroneous both on facts and in law. 2. The Ld. CIT erred in passing the order u/s 263 because the Assessment order passed by the AO was after application of mind with respect to the provisions stated in the act, thus the order passed cannot be treated as erroneous. 3. For that in the facts and circumstances of the case, the order u .....

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itions being satisfied i.e. order passed is erroneous and prejudicial to the interests of revenue. 6. The Ld. CIT erred in passing the order u/s.263 with a direction to set aside the assessment order passed dated 28.12.2010 for enquiries regarding depreciation on plant and machinery and unutilized CENVAT credit. 7. The Ld. CIT erred in disallowing the claim of additional depreciation by stating that higher allowable to the assessee company. 8. The Ld. CIT erred in passing the order u/s.263 with .....

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item 8(vii) of the depreciation table of the Income Tax Act, 1961. 11.The Ld. CIT ought to have appreciated the fact that the assessee is into the business of manufacturing of transmission towers and the additional depreciation claim on Plant and machinery is as per the provisions of the Income Tax Act,1961.. 12. The Ld. CIT erred in not considering the fact that when a similar issue arose in respect of assessee's group concern, the AO examined the eligibility of the depreciation claim and p .....

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lusion that the treatment adopted by the assessee in respect of unavailed CENVAT credit was correct and as per law. 16. The Ld. CIT has erred in exercising powers beyond the notice issued with a view to starting fishing and roving enquiries in the order passed. 17. The assessee may add, alter or modify any other point to the Grounds of appeal at any time before or at the time of hearing of the appeal. 8. Ld. AR submitted that ld. CIT erred in passing the order u/s 263 because the AO has passed a .....

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Delhi) 4. New Cyberabad City Projects Vs. ITO, 33 Taxman 280 (ITAT Hyd.) 9. Ld. DR, on the other hand, relied on the order of CIT. 10. Considered the rival submissions and perused the material facts on record. It is observed that the assessee brought to the notice of the CIT that in respect of group concern M/s Sujana Metal Products, similar depreciation claim was allowed by the AO when the CIT set aside the issue to him for examination, but, in the given case, the CIT ignored the submissions of .....

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passed therein by the Income-tax Officer is 'erroneous in so far as it is prejudicial to the interests of the Revenue'. It is not an arbitrary or unchartered power; it can be exercised only on fulfilment of the requirements laid down by 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 mate .....

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that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasijudicial controversies as it must in other spheres of human activity. (Parashuram Pottery Works Co. Ltd. v. ITO [1977) 106 ITR 1 (SC) at page 10). 14. From the provisions of section 263(1) it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax officer acting in accordance with law makes a ce .....

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to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the assessment made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine .....

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