Court No. - 37
Case :- INCOME TAX APPEAL No. - 758 of 2007
Appellant :- Commissioner Of Income Tax And Another
Respondent :- M/S Jindal Polyester Ltd.
Counsel for Appellant :- A.N.Mahajan (Sc)
Hon'ble Tarun Agarwala,J.
Hon'ble Surya Prakash Kesarwani,J.
Heard Sri Shubham Agrawal, learned counsel for the
appellant and Sri Rupesh Jain along with Sri R.S. Agarwal, the
learned counsel for respondent.
The present appeal is for assessment year 1996-97. The
assessee deals in manufacture of polyester yarn chips and other
activities and had set up three new units during period
relevant to assessment year 1996-97. One of units was
established at Nasik, which manufactured polyester chips. The
second unit was also established at Nasik, which manufactured
poly films and third unit was set up in Silvasa, which was
engaged in photo processing. assessee filed return showing
a loss, which was not accepted and assessment order was
passed on 31st March, 1999 disallowing depreciation
claimed by assessee on ground that plants were not
fully installed at Nasik and were also not put to use and were not
ready for production. Assessing Officer held that the
assessee was not entitled to claim deduction on depreciation for
the Poly chips plant at Nasik and Bopet poly film plant at Nasik.
The Assessing Officer also disallowed foreign travelling
expenses amounting to Rs.14,91,651/- incurred in respect of 34
persons on ground that tax audit report did not mention
the names of persons and, therefore, genuineness of the
expenses incurred by assessee was doubted. Assessing
Officer also disallowed payment of commission amounting
to Rs.77,74,517/-. assessee, being aggrieved, filed an
appeal, which was allowed and aforesaid disallowances were
set aside. revenue, thereafter, carried out matter to the
Tribunal, which was dismissed. department, being
aggrieved, has filed present appeal under Section 260A of
the Income Tax Act.
On question of depreciation, sole ground for disallowing
the claim by Assessing Officer was that assessee could
not prove that he had started production and that excise
documents produced were only photocopies and were not the
original and, therefore, reliance could be placed on these
documents. Tribunal after considering evidence found
that assessee had started production of poly chips plant at
Nasik on 29th March, 1996 and operated plant during the
relevant previous year, which was borne out from excise
records and raw material purchased and consumed by the
assessee. Tribunal had further given finding that excise
records were verified by excise authorities and the
genuineness of those documents could not be doubted.
In Commissioner of Income Tax Vs. Mentha and Allied
Products, 2010 (236) CTR 329 Division Bench of this Court
held that assessee was entitled to claim depreciation on plant
and machinery, even though it was used during year for trial
production. Once finding has been given by Tribunal that
the assessee has operated plant during relevant previous
year, assessee became entitled for depreciation and was
rightly allowed by first appellate authority. finding
arrived at is based on findings of fact and, consequently, no
substantial question of law arises.
In Commissioner of Income Tax Vs. Swarup Vegetable
Products India Ltd., 2005 (277) ITR 60, Division Bench of
this Court held that assessee was entitled for depreciation
even where plant or machinery was kept ready for use but
was not actually used during accounting year.
Similarly, in Machinery Manufactures Corporation Ltd. Vs.
CIT, 31 ITR 203, Bombay High Court observed that the
expression "used" in Section 10(2)(vi) of Indian Income Tax
Act, 1922, which corresponds to Section 32 of Act has to be
given to be wider meaning, which expression includes passive
as well as active user. Bombay High Court held that even
though machinery was not in use or was kept idle,
nonetheless, assessee was entitled for depreciation and the
expression "used" cannot be strictly construed and has to be
given wider meaning. Similar view was again reiterated by the
Delhi High Court CIT Vs. Refrigeration and Allied Industries
Ltd., 2001 9247) ITR 12.
The Assessing Officer has disallowed sum of Rs.14,91,651/- in
respect of foreign travelling expenses on 34 persons on basis
of tax audit report on ground that names of persons,
who had travelled were not given. On this ground, Assessing
Officer doubted genuineness of expenditure and
disallowed amount. Tribunal found that names of the
34 persons were placed before first appellate authority,
which was examined and accepted and no adverse material was
found by departmental representative. Tribunal found
that 34 persons, who had travelled were dealers and distributors
of assessee and such trip was organized to promote the
business of assessee and, therefore, was entitled for such
allowance. This being finding of fact, which is not perverse,
we are of opinion that no substantial question of law arises.
On question of disallowance of Rs.77,74,507/- towards
commission, Tribunal found that cheques were paid to
commission agents, who in turn, were regular income tax
assessees'. We are of opinion that when genuineness of the
payments was not doubted by department, assessee was
entitled to claim such allowance as business expenditure, which
could not be disallowed on ground that expenditure on
the commission in year in question had increased as
compared to expenditure incurred in previous year.
In light of aforesaid, we do not find any substantial
question of law arises for consideration. appeal fails and is
Order Date :- 29.9.2015
(Surya Prakash Kesarwani, J.) (Tarun Agarwala, J.)
Commissioner Of Income Tax And Another v. M/S Jindal Polyester Ltd