M/s Steel Tubes of India, v. The JCIT, (Asstt.) S. R. 2,

ITA 219/IND/2001 | 1997-1998
Pronouncement Date: 26-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 21922714 RSA 2001
Bench Indore
Appeal Number ITA 219/IND/2001
Duration Of Justice 8 year(s) 11 month(s) 3 day(s)
Appellant M/s Steel Tubes of India,
Respondent The JCIT, (Asstt.) S. R. 2,
Appeal Type Income Tax Appeal
Pronouncement Date 26-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 26-05-2010
Date Of Final Hearing 06-04-2010
Next Hearing Date 06-04-2010
Assessment Year 1997-1998
Appeal Filed On 22-06-2001
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NO.219/IND/2001 ASSESSMENT YEAR: 1997-98 M/S. STEEL TUBES OF INDIA LTD. INDORE (GIR NO. 18-115-CN-0724) APPELLANT VS JOINT COMMISSIONER OF INCOME TAX (ASSMT.) SPECIAL RANGE-II INDORE RESPONDENT AND ITA NO.222/IND/2001 ASSESSMENT YEAR: 1997-98 JOINT COMMISSIONER OF INCOME TAX (ASSMT.) SPECIAL RANGE-II INDORE APPELLANT VS M/S. STEEL TUBES OF INDIA LTD. INDORE (GIR NO. 18-115-CN-0724) RESPONDENT ASSESSEE BY : S/SHRI M.C. MEHTA & HITESH CHIMNANI CAS DEPARTMENT BY : SHRI K.K. SINGH CIT DR 2 O R D E R PER BENCH THESE ARE CROSS-APPEALS BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS)-I INDORE DATED 20.4.2001. FIRST WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE (ITA NO.219/IND/2001) WHEREI N FIRST GROUND RAISED IS THAT THE LEARNED COMMISSIONER OF INCOME-T AX (APPEALS) ERRED IN MAINTAINING DISALLOWANCE OF RS.15 LAKHS OU T OF TRAVELLING EXPENSES OF OTHERS CLAIMED AT RS.21 38 690/- (ALREA DY DISALLOWED U/S 6D RS.44 030/-) WHEN GENUINENESS OF THESE EXPENSES HAVE NOT BEEN DOUBTED. AT THE OUTSET THE LD. COUNSEL FOR THE ASS ESSEE CLAIMED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL VIDE ORDER IN ITA NO.360/IND/2005. THIS FA CTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. CIT DR. 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON THE FILE. IN VIEW OF THE ABOVE ASSERTION/ADMISSION WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE ORDER OF TRIBUNAL DATED 23.5.2008. 4. ON GROUND NO. 1 THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.5 39 489/- OUT OF RS.10 78 955/- ON ACCOUNT OF TRAVELING EXPENSES. THE ASSESSEE IN THE CROSS OBJECTION CHALLENGED THE PART 3 ADDITION OF RS. 5 39 478/- ON GROUND NO. 1. ACCORDING TO THE ASSESSMENT ORDER THE ASSESSEE HAD DEBITED A SUM OF RS.54 85 000/- OUT OF TOTAL TRAVELING EXPENSES WHICH CONSISTED OF RS.10 78 955/- AS TRAVELING EXPENSES ON OTHERS SUCH AS CONSULTANTS AUDITORS BANKERS ETC. HOWEVER AS THE ASSESSEE WAS NOT UNDER ANY CONTRACTUAL OBLIGATION TO INCUR SUCH EXPENSES ON BEHALF OF THESE PEOPLE AND COULD NOT ESTABLISH THAT IT WAS INCURRED FOR BUSINESS WHOLLY AND EXCLUSIVELY THE ENTIRE AMOUNT WAS DISALLOWED. IT WAS EXPLAINED THAT IN EARLIER YEARS THE ASSESSEE COULD NOT FILE DETAILS OF THIS ISSUE. HOWEVER IT WAS SUBMITTED BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THAT THE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES AND ALL THE DETAILS WERE FILED BEFORE THE ASSESSING OFFICER. IT WAS THEREFORE SUBMITTED THAT SINCE ALL THE DETAILS WERE FILED IN THIS YEAR THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT COMPLETE DETAILS OF TRAVELING EXPENSES AND SUPPORTING PAPERS WERE FILED BEFORE THE ASSESSING OFFICER AND THE SAME WERE ALSO FILED BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). IT WAS FURTHER SUBMITTED THAT THE OBSERVATIONS OF THE ASSESSING OFFICER ARE PATENTLY WRONG AS THE EXPENSES WERE INCURRED BY THE ASSESSEE TOWARDS TRAVELING OF CONSULTANTS AUDITORS BANK OFFICIALS AND CUSTOMERS DURING THE COURSE OF BUSINESS. THEREFORE THE SAME WERE ALLOWABLE AS REVENUE EXPENDITURE. IT WAS FURTHER SUBMITTED THAT SINCE ALL THE VOUCHERS WERE PRODUCED THEREFORE THE ASSESSING OFFICER SHOULD NOT HAVE IGNORED SUCH EVIDENCE. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO PIN-POINT ANY SINGLE DEFECT IN THE BOOKS OF ACCOUNTS OR IN THE VOUCHERS PRODUCED BEFORE HIM IN WHICH 4 NO DEFECT HAS BEEN POINTED OUT. THEREFORE AD HOC ADDITION IS UNJUSTIFIED. 5. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE DETAILS FURNISHED BEFORE HIM FOUND THAT IN MOST OF THE CASES NAMES OF PERSONS HAVE NOT BEEN STATED. IN THE REMARK COLUMN NATURE OF JOB RENDERS IS INCOMPLETE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THEREFORE FOUND THAT THE DETAILS SUBMITTED CANNOT BE SAID TO BE CONCLUSIVE PROOF THAT ENTIRE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO FOUND THAT IN EARLIER YEARS SUCH CLAIM WAS NOT SUPPORTED BY THE MATERIAL THEREFORE PART DISALLOWANCE WAS MADE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CONSIDERING THE SUBMISSIONS AND THE MATERIAL ON RECORD RESTRICTED THE DISALLOWANCE TO 50% OF THE TOTAL EXPENDITURE AND DELETED THE ADDITION OF 50%. THIS GROUND OF APPEAL OF THE ASSESSEE WAS THUS PARTLY ALLOWED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT DETAILS SUBMITTED IN THE PAPER BOOK AT PAGE 15 SHOW THAT SOME EXPENDITURE WAS INCURRED BUT THE ENTIRE VOUCHERS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN THE PRECEDING YEAR THE TRIBUNAL VIDE ORDER DATED 23.11.2007 PARTLY RESTRICTED THE ADDITION THEREFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 7. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PAGES 15 TO 18 OF THE PAPER BOOK ON WHICH ENTIRE DETAILS OF TRAVELING EXPENSES HAVE BEEN MENTIONED. 5 HE HAS ALSO REFERRED TO PAGES 19 TO 26 ON WHICH FURTHER DETAILS AND DATES VOUCHER NUMBER AND THE AMOUNT SPENT FOR BUSINESS PURPOSE HAVE BEEN MENTIONED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE PRECEDING YEAR THE DETAILS COULD NOT BE FILED THEREFORE PART ADDITION WAS MADE. HE SUBMITTED THAT HOWEVER IN THE PRESENT YEAR UNDER APPEAL THE ASSESSEE PRODUCED ALL THE DETAILS OF EXPENDITURE AND VOUCHERS OF THE TRAVELING EXPENSES WITH SUPPORTING EVIDENCE BEFORE THE AUTHORITIES BELOW WHICH FACT IS ALSO FOUND MENTIONED IN THE IMPUGNED ORDER. THE LEARNED COUNSEL FOR THE ASSESSEE ACCORDINGLY SUBMITTED THAT SINCE ALL THE DETAILS AND EVIDENCES WERE FURNISHED BEFORE THE AUTHORITIES BELOW THEREFORE THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL. THE LEARNED COUNSEL FOR THE ASSESSEE PRODUCED ALL THE BILLS AND VOUCHERS DURING THE COURSE OF HEARING FOR INSPECTION OF THE BENCH AND SUBMITTED THAT THE DETAILS WERE NOT FILED IN THE PAPER BOOK BEING THE SAME VOLUMINOUS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS A CASE OF THE COMPANY AND ALL THE EXPENDITURE IS MADE WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES AND THE GENUINENESS OF EXPENDITURE HAS NOT BEEN DOUBTED BY THE AUTHORITIES BELOW. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE ITAT CALCUTTA SPECIAL BENCH IN THE CASE OF JCIT V. ITC LIMITED; 115 TTJ (CAL. SPL.BENCH) 45 IN WHICH IT WAS HELD CONCLUSION : ASSESSEE COMPANY HAVING VARIOUS FACTORIES GODOWNS AND STOCK POINT APART FROM BRANCHES AND OFFICES AT VARIOUS LOCATIONS OF THE COUNTRY ENGAGING AUDITORS CONSULTANTS ADVISORS ETC. TRAVELING EXPENDITURE INCURRED ON THEM IN ORDER TO ENABLE THEM TO GIVE CONCLUSIVE AND AUTHENTIC REPORT TO MANAGEMENT WAS IN CONNECTION WITH ASSESSEES BUSINESS AND COULD NOT BE 6 DISALLOWED ONLY ON THE GROUND THAT THE SAME WAS INCURRED ON NON-EMPLOYEES. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE ORDER OF ITAT PUNE BENCH IN THE CASE OF COCA COLA INDIA LIMITED; 104 TTJ 254 IN WHICH IT WAS HELD CONCLUSION ASSESSEE HAVING FILED THE DETAILS OF MISCELLANEOUS EXPENSES BEFORE THE AO UNDER BROAD HEADS WHICH ARE IN THE NATURE OF REVENUE EXPENSES AND THE EXPENSES BEING OF MINOR AMOUNTS COMPARED TO OVERALL EXPENDITURE INCURRED BY THE ASSESSEE AD HOC DISALLOWANCE WAS NOT JUSTIFIED. 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD AND PERUSING THE FINDINGS OF THE AUTHORITIES BELOW WE ARE OF THE VIEW THAT THE ENTIRE DISALLOWANCE OF EXPENDITURE IS UNJUSTIFIED IN THE MATTER. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS UNDER NO OBLIGATION TO INCUR SUCH EXPENDITURE ON ACCOUNT OF TRAVELING BY CONSULTANTS AUDITORS BANK OFFICIALS AND CUSTOMERS ETC. THE ASSESSING OFFICER HAS HOWEVER NOT DISPUTED THE GENUINENESS OF EXPENDITURE. THE ASSESSEES CLAIM BEFORE THE AUTHORITIES BELOW WAS THAT THE TRAVELING EXPENSES HAVE BEEN INCURRED BY THE ABOVE PERSONS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER HAS NOT POINTED OUT AS TO HOW THE SAME WERE DISALLOWABLE IN NATURE. THE ABOVE PERSONS ARE SUPPOSED TO LOOK AFTER THE INTEREST OF THE ASSESSEE IN SMOOTH FUNCTIONING OF THE BUSINESS. THE ASSESSEE FURNISHED DETAILED EXPENDITURE ON THIS ISSUE GIVING DETAILS FOR THE PURPOSE OF TRAVELING FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE DETAILS MENTIONED AT PAGES 15 TO 18 AND THE REMARKS SHOWN AGAINST THE EXPENDITURE BRIEFLY SHOW THAT THE TRAVELING IS MADE BY THE ABOVE PERSONS FOR INSPECTION OF THE BUSINESS OF THE ASSESSEE STOCK AUDIT DEFENDING LEGAL CASES AND VISIT OF THE AUDITORS FOR THE PURPOSE OF 7 BUSINESS OF THE ASSESSEE. THE DETAILS OF AMOUNT NAME OF PERSON TICKET NUMBER ETC. ARE MENTIONED ALONGWITH VOUCHER NUMBER ALSO. IT IS NOT IN DISPUTE THAT ALL THE DETAILS WERE FILED ON ACCOUNT OF TRAVELING BEFORE THE AUTHORITIES BELOW THEREFORE THE ASSESSING OFFICER WITHOUT POINTING OUT ANY ERROR IN MAINTENANCE OF VOUCHERS ETC. AND WITHOUT ANY JUSTIFICATION MADE THE ADDITION. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THOUGH NOTED SPECIFICALLY IN THE APPELLATE ORDER THAT ALL THE DETAILS HAVE BEEN FURNISHED HAS POINTED OUT THAT SOME NAMES AND CORROBORATIVE EVIDENCES ARE NOT FILED. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS HOWEVER NOT POINTED OUT AS TO HOW THESE DETAILS WERE NOT MENTIONED IN WHICH PARTICULAR VOUCHER. IT THEREFORE APPEARS TO BE AD HOC ADDITION. THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE APPLICABLE TO THIS CASE. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION BECAUSE THE AMOUNT SPENT ON TRAVELING OF OTHERS IS SPENT BY THE ASSESSEE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 9. AS A RESULT THE DEPARTMENTAL APPEAL ON GROUND NO. 1 IS DISMISSED WHEREAS THE GROUND NO. 1 OF THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 3. IN THE LIGHT OF THE ABOVE AND THE FAIR ADMISSION FROM LD. REPRESENTATIVES FROM BOTH SIDES THAT THE IMPUGNED I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION T HEREFORE THIS GROUND OF THE ASSESSEE IS ALLOWED. IDENTICALLY ISSU E HAS ALSO BEEN 8 DISCUSSED BY THE BENCH IN ITA NO.526/IND/2007 AND 9 34/IND/99 ITA NO.5/IND/2000 ORDER DATED 18.12.2009. OUR DECISION WILL ALSO COVER GROUND NO.1 AND 2 OF T HE APPEAL OF THE REVENUE (ITA NO.222/IND/2001) ALSO CONSEQUE NTLY THE FIRST GROUND OF THE APPEAL OF THE ASSESSEE IS ALLOWED AND GROUND NO.1 & 2 OF THE APPEAL OF THE REVENUE ARE DISMISSED. 4. THE NEXT GROUND RAISED IS THAT THE LD. CIT(A) ER RED IN MAINTAINING DISALLOWANCE OF RS.14 464/- OUT OF CONF ERENCE AND SEMINAR EXPENSES DISALLOWED BY THE ASSESSING OFFICE R AT RS.94 464/- . THE SUBMISSION OF THE ASSESSEE IS THAT THE ENTIRE EXPENSES WERE INCURRED FOR BUSINESS PURPOSES. IT WAS ALSO CLAIMED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL DATED 18.12.2009. THIS FACTUAL MATRIX WAS ALSO CONS ENTED TO BE CORRECT BY THE LD. CIT DR. 5. IN VIEW OF THE ABOVE ASSERTION AND THE FAIR ADMI SSION FROM THE SIDE OF THE REVENUE WE ARE REPRODUCING HEREUNDER T HE RELEVANT PORTION FROM ORDER DATED 18.12.2009 (SUPRA) WHEREI N VIDE PARA 39 OF THE ORDER IT WAS HELD AS UNDER: 39. BOTH THE PARTIES AGREED THAT THIS ISSUE WAS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1995-96 AND 1998-99. THE PARTICULARS OF APPEALS ARE CITED SUPRA. THE LEARNED COUNSEL ALSO REFERRED TO PARAS 27 TO 32 OF THE TRIBUNALS ORDER FOR 1998-99 WHEREIN THE TRIBUNAL IN PARA 32 HAD HELD AS REPRODUCED IN PARA 19 9 HEREINABOVE. HENCE RESPECTFULLY FOLLOWING THE SAME WE ALLOW THIS GROUND OF THE ASSESSEE. 6. IN THE LIGHT OF THE ABOVE AND SPECIFICALLY THE ASSERTION/ADMISSION FROM BOTH SIDES THAT THE IMPUGN ED ISSUE IS COVERED THEREFORE THIS GROUND OF THE ASSESSEE IS ALSO ALLOWED AS THE EXPENSES WERE INCURRED FOR BUSINESS PURPOSES ONLY. THIS WILL ALSO COVER GROUND NO.6 OF APPEAL OF THE REVENUE THEREFORE THIS GROUND OF THE REVENUE IS DISMISSED. 7. THE NEXT GROUND PERTAINS TO DEDUCTION IN RESPECT OF DEFERRED SALES-TAX LIABILITY OF RS.1 35 32 010/- IN THIS YEA R AND DIRECTING THE ASSESSING OFFICER TO ALLOW THE SAID CLAIM FOR ASSES SMENT YEAR 2001- 02 BY PLACING RELIANCE UPON THE CBDT CIRCULAR NO.67 4. AT THE OUTSET IT WAS CLAIMED BY THE LD. COUNSEL FO R THE ASSESSEE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF TRIBUNAL (ITA NO.934/IND/1999 ORDER DATED 28.12.2009). THE ASSESSEE ALSO FURNISHED COPY OF THE ORDER. THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT. IN VIEW OF THE ABOVE WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE ORDER (SUPRA) AS CONTAINED IN PARA 33 ONWARDS: 33. GROUND NO. 9 READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO ALLOW THE 10 ASSESSEE DEDUCTION RS. 1 08 50 331/- BEING DEFERRED SALES TAX LIABILITY AFTER ASCERTAINING THE EXACT AM OUNT OF SALES TAX LIABILITY DEFERRED IN FINANCIAL YEAR 1995 -96 ON THE BASIS OF DOCUMENTARY EVIDENCES. 34. BOTH THE PARTIES AGREED THAT THIS ISSUE WAS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN C ASE FOR ASSESSMENT YEAR 1998-99 (CITED SUPRA) AND DREW OU R ATTENTION TO PARA 9 TO 14 OF THE SAID ORDER. WE F IND THAT IN ASSESSMENT YEAR 1998-99 THE TRIBUNAL HAD OCCA SION TO DEAL WITH THE IDENTICAL ISSUE. THE TRIBUNAL HE LD AS UNDER :- 12. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. 13. WE FIND THAT IN THE ASSESSMENT YEAR 2000-01 THE LD. CIT(A) HAD DELETED THE ADDITION OF RS. 20 90 000/- ON ACCOUNT OF DEFERRED SALES TAX LIABILITY BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF MAHESHWARI APPLIANCES PRIVATE LIMITED AS REPORTED IN 32 ITC 96 WHICH HAD BEEN CONFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT BY DISMISSING THE S.L.P. FILED BY THE REVENUE. THUS NOW THIS ISSUE HAS ATTAINED FINALITY AS PER THE FACTS ON RECORD. HENCE RESPECTFULLY FOLLOWING THE ABOVE RATIO WE ALLOW THIS GROUND OF THE ASSESSEE. 14. BEFORE PARTING WE MAY MENTION THAT THE LD. CIT(A) CONFIRMED THIS ADDITION IN VIEW OF THE DECISION OF THE INDORE BENCH OF THE TRIBUNAL IN SOME OTHER CASE. HOWEVER SINCE NOW THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE JURISDICTIONAL HIGH COURT AS STATED EARLIER. HENCE NO OTHER VIEWS ARE POSSIBLE. 35. THE FACTS ARE IDENTICAL HENCE RESPECTFULLY FOLLOWING THIS RATIO WE HOLD THAT THERE IS NO M ERIT IN THIS GROUND OF THE REVENUE. ACCORDINGLY THE SAME IS DISMISSED. 36. IN THE RESULT THE REVENUES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11 CONSEQUENTLY WE HAVE FOUND THAT IN THE AFORESAID O RDER ON THE IMPUGNED ISSUE THE APPEAL OF THE REVENUE WAS DISMI SSED THEREFORE THIS GROUND OF THE ASSESSEE IS ALLOWED. 8. THE NEXT GROUND PERTAINS TO SALES-TAX PENALTY OF RS.35 080/-. AT THE OUTSET THIS GROUND WAS NOT PRESSED BY THE L D. COUNSEL FOR THE ASSESSEE THEREFORE THIS GROUND IS DISMISSED AS NO T PRESSED. IN THE RESULT THIS APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED . 9. NOW WE SHALL TAKE UP APPEAL OF THE REVENUE (ITA NO.222/IND/2001). GROUNDS NO.1 2 & 6 OF THE REVENU E APPEAL HAVE ALREADY BEEN DISPOSED OF WHILE DEALING WITH THE APP EAL OF THE ASSESSEE (SUPRA). THE NEXT GROUND PERTAINS TO DELET ING THE ADDITION OF RS.60 04 902/- RS.6 94 009/- AND RS.68 035/- MADE ON ACCOUNT OF BELATED PAYMENT OF PROVIDENT FUND ON ACCOUNT OF ES IC AND MADE ON ACCOUNT OF PRESENTATION OF ARTICLES RESPECTIVEL Y. AT THE OUTSET IT WAS CLAIMED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION FOR ASSESSMENT YEAR 1996-97 VIDE ORDER DATED 18.12.2009 (PAGES 111 TO 112 OF THE PAPER BOOK). TH IS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. REPRESENTATI VE FOR THE REVENUE. IN VIEW OF THE ABOVE WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION: 12 14. GROUND NO. 4 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 47 41 371/- AND RS. 3 10 617/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF BELATED PAYMENT OF P. F. AND ESIC RESPECTIVELY. 15. BOTH THE PARTIES AGREED THAT THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER O F THE TRIBUNAL IN I.T.A.NOS. 1069/IND/2003 AND 38/IND/2 004 AND DREW OUR ATTENTION TO PARA 23 TO 26 OF THE SA ID ORDER. 16. THE FACTS ARE IDENTICAL AND HENCE WE HOLD T HAT THE PAYMENT HAS BEEN MADE WITHIN TIME. ACCORDINGL Y THIS GROUND OF THE REVENUE IS WITHOUT MERITS HEN CE DISMISSED. 17. GROUND NO.5 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 52 058/- MADE BY THE ASSESSING OFFICER ON ACCOUNT O F DISALLOWANCE OF PRESENTATION OF ARTICLES. 18. BOTH THE PARTIES AGREED THAT THIS ISSUE WA S COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN I.T.A.NOS. 1069/IND/2003 AND 38/IND/20 04 AND DREW OUR ATTENTION TO PARA 27 TO 32 OF THE SAI D ORDER. 19. WE FIND THAT THE TRIBUNAL IN ASSESSMENT YEAR 1998-99 HAVE HELD AS UNDER :- 31. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. 32. IT IS NOTED THAT INCURRENCE OF EXPENSES IS NOT IN DISPUTE AND NO SPECIFIC OBSERVATIONS HAVE BEEN GIVEN BY THE ASSESSING OFFICER IN REGARD TO PERSONAL EXPENSES BEING CLAIMED AS BUSINESS EXPENSES. HENCE HAVING REGARD TO 13 THE CUSTOMARY PRACTICES OF BUSINESS COMMUNITY OF GIVING GIFTS ON DIFFERENT OCCASIONS WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY DELETED THIS ADDITION. THUS THIS GROUND OF THE REVENUE IS DISMISSED. IN THE AFORESAID ORDER THE TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE CONSEQUENTLY THESE GROUNDS ARE ALSO DISMI SSED. 10. GROUND NO.8 PERTAINS TO DELETING THE INTEREST C HARGED U/S 234B & 234C OF THE ACT ON THE INCOME ASSESSED U/S 115JB OF RS.2 06 49 652/- AND RS.4 16 249/-. THE CRUX OF ARGUMENTS IS THAT THE ADVANCE TAX PROV ISIONS ARE NOT APPLICABLE ON TAX PAYABLE ON INCOME U/S 115JB F OR WHICH RELIANCE WAS PLACED UPON THE DECISION IN THE CASE O F QUALITY BISCUIT (284 ITR 434) (SC) AND THE DECISION IN BHOPAL MOTOR S BY HONBLE JURISDICTIONAL HIGH COURT. ON THE OTHER HAND THE L D. COUNSEL FOR THE REVENUE DEFENDED THE IMPUGNED ORDER. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. THE CLAIM OF THE ASSESSEE IS THAT SINCE THE ASSESSEE HAS FILED A LOSS RETURN IT WAS NOT HIT BY PROVISIONS OF ADVANC E TAX THEREFORE THERE IS NO FAULT ON THE PART OF THE ASSESSEE CONS EQUENTLY CHARGING OF INTEREST WAS ILLEGAL AND WRONG. HOWEVER THE LD. ASSESSING OFFICER CONVERTED THE RETURNED LOSS OF RS.1 64 46 901/- TO A PROFIT OF 14 RS.7 82 47 922/- AND CHARGED TAX ACCORDINGLY. THE L D. CIT(A) HAS DEALT WITH THIS ISSUE (GROUND NO.9 PAGE 23 PARA 2 7) BY TREATING THE INTEREST HAVING BEEN CHARGED ON THE INCOME ASSESSED AND TAX PAYABLE U/S 115JA AND DELETED THE CHARGING OF INTEREST BY P LACING RELIANCE UPON VARIOUS DECISIONS QUOTED AT PAGE 24 OF THE ORD ER. WITHOUT COMMENTING FURTHER IT IS SEEN THAT THERE WAS NO AS SESSMENT U/S 115JA AS REGULAR INCOME WAS MUCH HIGHER. ADMITTEDLY IT HAS NOT BEEN SPECIFICALLY DEALT WITH IN THE ASSESSMENT ORDE R AND MERELY HAS BEEN CHARGED. STILL WE ARE OF THE VIEW THAT THE CO NCLUSION DRAWN IN THE IMPUGNED ORDER THAT CHARGING OF INTEREST UNDER THE AFOREMENTIONED FACTS IS MANDATORY IN NATURE. THIS GROUND OF THE REVENUE IS THEREFORE ALLOWED. 12. THE GROUND NO.7 RAISED IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION @ 50% OF THE NORMAL RATE OF DEPRECIATI ON OF SPVG ON RS.6 93 15 000/-. 13. THE FACTS IN BRIEF ARE THAT THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION CLAIMED DEPRECIATION OF RS.6 93 15 0 00/- IN RESPECT OF SOLAR PHOTO VOLTAIC GENERATION PLANT (HEREINAFTER R EFERRED TO AS SPVG). SINCE AS PER THE ASSESSEE THE SPVG WAS I NSTALLED AND COMMISSIONED ON 30.3.1997 DEPRECIATION FOR HALF O F THE TOTAL VALUE 15 OF THE PLANT WAS CLAIMED. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS BILLS TOWARDS PURCHASE OF SPVG ISSUED BY M/S RENEWABLE ENGERY SYSTEMS LIMITED DELIVERY CHALLANS EXCISE GATE PASSES AND LRS WERE FURNISHED. A CERTIFICATE REGARD ING INSTALLATION OF SPVG IN THE CAMPUS OF THE ASSESSEE WAS ALSO SUBM ITTED. A REPORT DATED 8.10.1997 ISSUED B Y RESL TO THE EFFECT THAT THE SPVG HAS BEEN SYNCHRONIZED WITH THE DG SET OF THE ASSESSEE A ND WAS INSTALLED ON 30.3.1997 WAS ALSO FILED. VARIOUS OTHER CORRESPO NDENCE AND DOCUMENTS AS DETAINED IN THE ASSESSMENT ORDER WERE ALSO PRODUCED BEFORE THE ASSESSING OFFICER. IT WAS SUBMITTED BEF ORE THE ASSESSING OFFICER THAT THE EVIDENCE FURNISHED BEFORE HIM CLE ARLY ESTABLISHED THAT SPVG HAS BEEN INSTALLED AND COMMISSIONED BEFOR E 31ST MARCH 1997 AND THAT THE PAYMENT OF DUTY SUBSTANTIATED THE FACT THAT COMMERCIAL PRODUCTION HAD BEEN COMMENCED AND SUCH P RODUCTION HAD LED TO CHARGING OF STATUTORY DUTY BY MPEB. THE ASSESSING OFFICER IN VIEW OF THE FACTS STATED ABOVE SUBMISSIONS MADE BEFORE HIM AND THE JUDICIAL PRONOU NCEMENTS OBSERVED THAT AS PER THE PROVISIONS OF THE ACT D EPRECIATION IS ALLOWED TO THE ASSESSEES FOR OFFSETTING THE CHARGE ON PROFITS ON ACCOUNT OF WEAR AND TEAR OF THE ASSETS AND FOR EARN ING OF INCOME DURING THE YEAR. BUT IN THE INSTANT CASE THE ASSES SEE HAS USED THE PROVISIONS OF THE ACT AS A TOOL BY ENACTING A FORCE D COMMISSIONING 16 EVEN WITHOUT TAKING A TRIAL RUN WITH THE SOLE OBJE CTIVE TO EVADE DUE TAXES ON THE INCOME EARNED DURING THE YEAR UNDER C ONSIDERATION. HE ACCORDINGLY DISALLOWED THE DEPRECIATION CLAIME D BY THE ASSESSEE ON SPVG FOR THE FIRST HALF OF THE ACCOUNTING YEAR. FELT AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL B EFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPE ALS) IT WAS CONTENDED THAT THE INSTALLATION OF PLANT HAVING CAPACITY OF 239 KWP WAS COMPLETED ON 18.3.1997 AND THE EXECUTIVE EN GINEER INSPECTED THE SITE ON 26.3.1997 GIVING HIS OK REP ORT TO CHIEF ENGINEER BHOPAL WHO ISSUED CERTIFICATE ON 31.3.19 97 TO START THE POWER GENERATING SYSTEM. IT WAS CONTENDED THAT IN M ARCH 1997 600 KWP HAD BEEN GENERATED AND A DUTY AMOUNTING TO RS. 1474/- HAD ALSO BEEN PAID. THE ASSESSEE ALSO REFERRED TO THE INTERNAL CORRESPONDENCE BETWEEN VARIOUS TECHNICAL PERSONS OF THE ASSESSEE AS WELL AS OF SUPPLIER/INSTALLATION CONTRACTORS TO SHO W THAT SPVG PLANT HAD BEEN INSTALLED IN MARCH 1997 AND AS SOON AS IT WAS INSTALLED IT STARTED PRODUCTION OF ELECTRICITY AND THERE WAS NO NEED FOR ANY TRIAL RUN. THE ASSESSEE ALSO RELIED UPON VARIOUS JUDICIA L DECISIONS IN SUPPORT OF ITS CLAIM THAT THE WORD USED IN SECTIO N 32(1) INCLUDED BOTH PASSIAVE AND ACTIVE USER. 17 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) A FTER CONSIDERING THESE SUBMISSIONS OF THE ASSESSEE AS WE LL AS REFERRING TO THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 1996-97 ACCEPTED THE CLAIM OF THE ASSESSEE. THE RELEVANT FINDINGS OF TH E LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ARE REPRODUCED HEREUNDER :- IN VIEW OF AFORESAID DISCUSSION AS ALSO HAVING TAKEN INTO CONSIDERATION THE DETAILED WRITTEN AS WELL AS ORAL SUBMISSIONS PUT FORTH ON BEHALF OF THE APPELLANT COMPANY I AM OF THE VIEW THAT SPVG PLANT HAD ACTUALLY BEEN PUT TO USE IN THE MONTH OF MARCH 1997 AND THE ELECTRICITY GENERATED FROM SUCH A PLANT BEFORE CLOSE OF THE FY ON 31.3.97 STOOD AT 600 KWH. THE MEAGER QUANTITY OF ELECTRICITY GENERATED DURING THE YEAR WOULD NOT CONSTITUTE THE DECISIVE FACTOR IN THE ALLOWANCE OF DEPRECIATION ON SUCH PLANT. ONCE IT IS ESTABLISHED THAT THE PLANT WAS ACTUALLY PUT TO USE AND STARTED GENERATION OF ELECTRICITY BEING NON CONVENTIONAL SOURCE OF ENERGY THE APPELLANT COMPANY WOULD BE ENTITLED TO DEPRECIATION ON SUCH A PLANT @ 50% OF THE NORMAL RATE OF ENTITLEMENT. THE PROOF AND EVIDENCES SUBMITTED SHOWED THAT THE PLANTS AND OTHER COMPONENTS WERE TRANSPORTED FROM HYDERABAD TO THE SITRE WHERE SUCH PLANT WAS TO BE SET UP BEFORE THE END OF FEBRUARY 1997. A LARGE NUMBER OF CORRESPONDENCES FURNISHED GO A LONG WAY TO PROVE THAT SPVG PLANT STARTED GENERATION OF ELECTRICITY BEFORE THE CLOSE OF THE PREVIOUS YEAR ENDING ON 31.3.97. AS HAS BEEN DISCUSSED IN FOREGOING PARAGRAPH SEVERAL HIGH COURTS AND DIFFERENT BENCHES OF ITAT HAD TAKEN THE VIEW THAT IF THE PLANT IS SET UP AND READY FOR USE IN A PARTICULAR PREVIOUS YEAR DEPRECIATION ON SUCH PLANT CANNOT BE DENIED. IN THE CASE OF THE APPELLANT COMPANY HAVING 18 GONE THROUGH VARIOUS CORRESPONDENCES AND OTHER DOCUMENTARY EVIDENCES THE APPELLANT COMPANY HAS BEEN ABLE TO ESTABLISH THE FACT OF INSTALLATION OF SPVG PLANT AND COMMENCEMENT OF GENERATION OF ELECTRICITY FROM SUCH PLANT BEFORE THE RELEVANT PREVIOUS YEAR ENDED. I THEREFORE DIRECT THE AO TO ALLOW DEPRECIATION @ 50% OF THE NORMAL RATE OF DEPRECIATION AS HAS BEEN CLAIMED BY IT. AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) THE REVENUE IS IN APPEAL BEFORE US. THE LEARNED CIT DR NARRATED THE FACTS AND REFERRED TO PAGE 30 OF THE PAPER BOOK BEING INTERNAL CORRESPONDENCE BET WEEN THE SITE ENGINEERS OF THE COMPANY INSTALLING SUCH PLANT DATE D 21.3.1997 AND OTHER CONNECTED OFFICERS OF SUCH COMPANY WHEREIN IT HAD BEEN MENTIONED THAT SYNCHRONISING PANEL HAD NOT REACHED AND THEREFORE TO GET THE APPROVALS FROM THE CONCERNED AUTHORITIES WITHIN SUCH A SHORT TIME I.E. UPTO 31.3.1997 MAY NOT BE POSSIBLE WITHOUT INSTALLATION THEREOF. ON THIS BASIS THE CIT DR SU BMITTED THAT THE INSTALLATION OF SUCH PLANT WAS NOT COMPLETE. THE L EARNED CIT DR FURTHER REFERRED TO THE APPROVAL OF THE CHIEF ENGIN EER SITUATED AT BHOPAL GIVEN ON 31.3.1997. HENCE HE CONTENDED THA T HOW THIS PLANT COULD ACTUALLY BE USED SINCE THE APPROVAL WAS RECEI VED ON THE LAST DATE. IT WAS ALSO CONTENDED THAT IF THE APPROVAL OF THE CHIEF ENGINEER WAS OBTAINED ON 31 ST MARCH 1997 HOW THE PLANT COULD BE 19 COMMISSIONED ON 30 TH MARCH 1997 A DAY BEFORE. THE LEARNED CIT DR FURTHER REFERRED TO PAGE 34 OF THE PAPER BOOK CO NTAINING COPY OF LETTER DATED 8 TH MARCH 1997 WHEREIN THE SUPPLIER/CONTRACTOR HAD SOUGHT CONFIRMATION FROM THE COMPANY REGARDING COMM ISSIONING OF THE PLANT ON 30 TH MARCH 1997 WHICH WAS DULY CONFIRMED BY THE ASSESSEE COMPANY. HOWEVER AS PER THE LEARNED CIT DR THIS WAS AN AFTER-THOUGHT JUST TO SUPPORT THE CLAIM OF THE ASSE SSEE. THE LEARNED CIT DR FURTHER CONTENDED THAT NO EVIDENCE HAD BEEN FILED AS REGARD TO RECEIPT OF SYNCHRONIZING PANEL/INVERTERS HENCE THE ASSESSEES CLAIM FOR DEPRECIATION WAS NOT TO BE ALLOWED BECAUS E THE PLANT COULD NOT BE RUN WITHOUT SUCH EQUIPMENTS. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASS ESSED FIRSTLY NARRATED THE FACTS AND REITERATED THE SUBMISSIONS M ADE BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THERE AFTER THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INTERPRETATION OF THE LETTER DATED 21.3.1997 OF THE SELLER COMPANYS REPRESENTATIVE WAS ONLY DONE IN A HALF WAY I.E. SYNCHRONIZING PANEL AN D INVERTERS HAD NOT REACHED. HOWEVER IN THE VERY SAME LETTER IT HAD BEEN STATED THAT WITHOUT THIS THE INSPECTION COULD NOT BE DONE AND ON THE CONTRARY THE FACT WAS THAT ALL THE CONCERNED STATE GOVERNMENT AUTHORITIES INSPECTED THE SITE AND FINAL APPROVAL H AD ALSO BEEN OBTAINED ON 31.3.1997 HENCE IF THE FACTS WERE REA D AS A WHOLE THEN 20 THE ONLY INFERENCE WHICH COULD BE DRAWN WAS THAT SUCH SYNCHRONIZING PANELS HAD BEEN RECEIVED AND FITTED B EFORE THE INSPECTION ON 26.3.1997. IT WAS ALSO CONTENDED THA T NO SEPARATE DOCUMENTARY EVIDENCE WAS REQUIRED OR COULD BE PRODU CED BECAUSE IT WAS A CASE OF TURN KEY PROJECT AND ALL THE EVIDENCE S IN REGARD TO RECEIPT AND INSTALLATION WOULD BE WITH THE SELLER C OMPANY ONLY. HENCE FOR THIS REASON ALSO NO ADVERSE INFERENCE C OULD BE DRAWN AGAINST THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PAGE 33 OF THE PAPER BOOK CONTAINING COPY OF LETTER ISSUED BY THE SUPERINTENDING ENGINEER OF MP ELECTRICITY BOARD DAT ED 29.3.1997 WHEREIN IT WAS OBSERVED THAT THE AFORESAID SPVG WAS TO BE USED AS STAND-BY UNIT I.E. DURING EMERGENCY TO RUN PARALLEL TO THE BOARD SUPPLY HENCE AS PER THE GENERAL PERMISSION ISSUED ON 20 TH SEPTEMBER 1997 NO SPECIFIC APPROVAL WAS REQUIRED AND THEREFORE THE ASSESSEES FURTHER ACTIONS TO GET THE APPROVALS WHICH WERE GRANTED ON 31.3.1997 COULD NOT BE CONSIDERED AS LI MITING FACTOR OR AN EMBARGO ON THE ASSESSEE TO START PRODUCTION BEFO RE 31 ST MARCH 1997 AND THEREFORE LETTER DATED 8.10.1997 SPECIFY ING THE COMMISSIONING DATE AS 30 TH MARCH 1997 COULD NOT BE REJECTED OR CONSIDERED AS AN AFTER-THOUGHT. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT IT WAS A CASE OF STAND-BY UN IT AND FOR THAT REASON WITHOUT EVEN ACTUAL USER THE DEPRECIATION WAS ALLOWABLE ON 21 SUCH PLANT. FOR THIS PROPOSITION THE LEARNED COUN SEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF SPEED AUTOMOBILES AS REPORTED IN 32 ITC PAGE 537 AND IN THE CASE OF PREMIER INDUSTRIES LIMITED AS REPORT ED IN 10 ITJ PAGE 683. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REL IED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF VINDHYACHAL DISTILLERIES LIMITED; 272 ITR 583 FOR T HE PROPOSITION THAT THE WORD USED HAD TO BE UNDERSTOOD TO INCLUD E BOTH ACTIVE AS WELL AS PASSIVE USE. THE LEARNED COUNSEL FOR THE AS SESSEE FURTHER PLACED STRONG RELIANCE ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). 14. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. IT IS NOTED THAT SUCH PLANT IS A STAND BY UNIT. HEN CE IN VIEW OF THE SETTLED JUDICIAL PRINCIPLE RECOGNIZING THE ACTI VE AS WELL AS PASSIVE USE THE ASSESSEES CLAIM FOR DEPRECIATION IS PRIMA FACIE JUSTIFIED. AS REGARDS TO THE INSTALLATION OF THE PLANT IS CONCERN ED WE FIND THAT THE REVENUES ARGUMENT IS BASED ON AN INTERNAL CORRESPO NDENCE DATED 21 ST MARCH 1997 WHEREIN CERTAIN PARTS HAVE BEEN SPECI FIED AS REQUIRED. HOWEVER IN THAT LETTER ITSELF IT HAS BE EN MENTIONED THAT WITHOUT WHICH THE INSPECTION COULD NOT BE TAKEN UP. HOWEVER THE FACT IS THAT THE INSPECTION HAS BEEN DONE BEFORE 31 ST MARCH I.E. 26 TH 22 MARCH 1997 AND IN THAT INSPECTION REPORT THE PLA NT HAS BEEN FOUND TO BE INSTALLED. HENCE IT RESULTS IN TO AN INFEREN CE THAT SUCH PLANT HAD BEEN OBTAINED IN BETWEEN. WE ALSO FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT IT WAS A CASE OF TURN-KEY PROJECT AND BILL WAS RAISED AS A WHOLE AND RECEIPT OF SUCH PARTS WAS AN INSTANC E OF INTERNAL MATTER OF THE SUPPLIER COMPANY AND THEREFORE NO S PECIFIC DOCUMENTARY EVIDENCES COULD BE PRODUCED AND IN OUR OPINION RATHER THESE ARE NOT REQUIRED. WE ALSO FIND THAT AS PER THE EARLIER ORDER OF M.P. STATE ELECTRICITY BOARD WHERE THE PO WER WAS GENERATED BY A UNIT FOR SELF CONSUMPTION UP TO CERT AIN CAPACITY THERE WAS NO NECESSITY TO TAKE SPECIFIC APPROVALS FOR COM MISSIONING OF SUCH PLANT AND THE ASSESSEES FURTHER ACTIONS ARE I NSTANCES OF EXTRA PRECAUTIONS AND THEREFORE THE SAME CANNOT BE INFE RRED AGAINST THE ASSESSEE IN THE MANNER IN WHICH IT HAS BEEN DONE BY THE ASSESSING OFFICER. HAVING STATED SO WE ALSO FIND THAT THE AS SESSEE HAD ACTUALLY PAID STATUTORY CHARGES FOR GENERATION OF ELECTRICIT Y FROM THIS PLANT AND WE ARE IN AGREEMENT WITH THE FINDINGS OF THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT ACTUAL US ER CAN TAKE PLACE EVEN WITH SMALL QUANTITY OF POWER GENERATION PARTICULARLY WHEN NO MINIMUM QUANTITY HAS BEEN SPECIFIED IN THE ACT FOR SATISFYING THE CONDITION OF ACTUAL USER. THUS T HE ACTUAL USE OF SUCH PLANT CAN ALSO NOT BE DOUBTED. WE ARE FURTHER OF T HE VIEW THAT THE 23 ASSESSING OFFICERS ACTION IS MORE OR LESS IN THE R EALM OF SUSPICION OR ASSUMPTIONS ON THE FACE OF DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE TO SHOW THE INSTALLATION OF THE PLANT AS WELL AS USER THEREOF BEFORE 31 ST MARCH 1997. THE ALLOWANCE FOR NORMAL DEPRECIATION DOES NOT DEPEND UPON THE ACTUAL WORKIN G OF THE MACHINERY. IT IS SUFFICIENT IF THE MACHINERY IN QU ESTION IS EMPLOYED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS AND FOR NO OTHER BUSINESS AND IT IS KEPT BY HIM READY FOR ACTUAL USE IN THE P ROFIT MAKING APPARATUS THE MOMENT A NEED ARISES. THIS VIEW IS SU PPORTED BY THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF CAPITAL BUS SERVICES PRIVATE LIMITED V. CIT; 123 ITR 404 AND TH E HONBLE KERALA HIGH COURT IN FOREST INDUSTRIES TRAVANCORE V . CIT; 51 ITR 329 (KER). THE HONBLE GAUHATI HIGH COURT IN CIT V. INDIA TEA & TIMBER TRADING COMPANY; 221 ITR 857 EVEN WENT TO TH E EXTENT THAT THE EXPRESSION USED FOR THE PURPOSE OF SECTION 32 SHOULD HAVE A WIDER MEANING SO AS TO INCLUDE NOT ACTUAL BUT PA SSIVE USER ALSO. THE RATIO LAID DOWN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V.O.P. KHANNA &SONS; 140 ITR 558 FU RTHER SUPPORTS THE CASE OF THE ASSESSEE. THE ASSESSEE IS ALSO FORT IFIED BY THE DECISION OF THE HONBLE GUJRAT HIGH COURT IN THE CASE OF ACI T V. ASHIMA SYNTEX LIMITED; 251 ITR 133 IN WHICH IT WAS HELD TH AT EVEN TRIAL PRODUCTION AMOUNTS TO USE OF THE ASSET. THE DECISI ON FROM HONBLE 24 RAJASTHAN HIGH COURT IN CIT V. NAKODA METALS; 204 C TR (HON'BLE HIGH COURT OF RAJASTHAN) 514 WHEREIN IT WAS HELD T HAT WHETHER COMMERCIAL PRODUCTION HAS COMMENCED OR NOT IS NOT RELEVANT FOR ALLOWANCE OF DEPRECIATION ALSO SUPPORTS THE CASE OF THE ASSESSEE. THE RATIO WAS LAID DOWN IN THE CASE OF CIT V. UDAIP UR DISTILLERIES COMPANY LIMITED; 135 TAXMAN 487 (RAJ.) AND CIT V. B IRLA JUTE & INDUSTRIES LIMITED; 260 ITR 55 (CAL) ALSO SUPPORTS THE CASE OF THE ASSESSEE. THUS TAKING INTO CONSIDERATION THE ENT IRE FACTS OF THE CASE AND THE RATIO LAID DOWN IN THE AFORESAID JUDICIAL P RONOUNCEMENTS WE FIND NO INFIRMITY IN THE FINDINGS/CONCLUSION OF THE LD. CIT(A). ACCORDINGLY WE DISMISS THIS GROUND OF THE REVENUE. FINALLY THE ASSESSEES APPEAL AND THE REVENUES AP PEAL ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.5.2010. SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH MAY 2010 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE D/-