At, Income Tax Appellate Tribunal Rajkot
By, THE HONOURABLE MR. WASEEM AHMED
By, ACCOUNTANT MEMBER & THE HONOURABLE MS. MADHUMITA ROY
By, JUDICIAL MEMBER
For the Appellant: D.M. Rindani, AR. For the Respondent: Pravin Varma, Sr.DR.
Madhumita Roy, JM:
1. The instant appeal has been filed before us by the assessee against the order dated 01.01.2016 passed by the Commissioner of Income Tax(Appeals)-7, Ahmedabad [Ld.CIT(A) in short] for Assessment Year (AY) 2011-12 arising out of the order dated 20.03.2014 passed by the ACIT, Surendranagar Circle, Surendranagar.
2. The Ld. AR has not been pressed ground No.1 and therefore the same is rejected as such.
3. The second ground of appeal pertains to in alternatively not granting depreciation on same machinery u/s.32 of the Act. The case of the assessee is this that they have prayed for depreciation before the Ld. Assessing Officer (AO) on the basis of the expenses incurred during the AY 2011-12 which was denied by the authorities below.
4. The Ld.AR also taken us to paragraph No.6.6 of the order passed by the AO in support of his arguments which is as follows:
"6.6. The assessee was asked to explain the nature of activities carried out by it and file evidence of the same. The assessee could not furnish any documentary evidence regarding expenses incurred in respect of scientific research except copies of purchase bills of machineries purchase during the year. It was claimed that the expenses were incurred for improvement of quality of production and manufacturing of new drugs. There appears to be no force in the contention of the assessee as such expenditure is not incurred in 'relation to any business of assessee.' Moreover, it is noticed that the expenses incurred have been shown in fixed assets and the assessee has claimed depreciation on the same. Where deduction has been claimed for the cost of the assets u/s.35, the assessee is not entitled to deduction for depreciation u/s.32. [Escorts limited v/s. Union of India (1993) 199 ITR 43(SC) and CIT vs. Hico Products Pvt.Ltd. (2001) 247 ITR 797 (SC)]."
5. On the contrary, the Ld.Representative of the Revenue contended before us that the depreciation claimed u/s.32 of the Act by the assessee was allowed by the CIT(A). This is admittedly a disputed question of fact which is required to be decided by the authorities below.
6. We have heard the Ld.Representatives of the respective parties and perused the relevant documents available on record. Taking into consideration the arguments made by the parties we are of the view that the issue be referred to the file of Ld. AO to ascertain and/or verify whether the assessee has asked for depreciation u/s.32 of the Act. In the event if it is found that a depreciation is being claimed by the assessee before the Ld.AO, the same shall be dealt with in accordance with law. We, however, make it clear that we are not making any observation on this particular issue involved on merit. The AO is directed to pass the
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order without being influenced by the observation made by us above. However, the assessee must be given a reasonable opportunity of hearing by the AO while disposing of this issue in accordance with law. 7. In the result, assessee's appeal is partly allowed for statistical purposes.