TCA. Nos. 833 & 835 of 2018 IN HIGH COURT OF JUDICATURE AT MADRAS DATED 04.03.2020 CORAM HONOURABLE MR. JUSTICE M. SATHYANARAYANAN AND HONOURABLE MR. JUSTICE ABDUL QUDDHOSE TCA. Nos. 833 & 835 of 2018 M/s. Ramco Industries Ltd. No.47, P.S.K Nagar, Rajapalaym-626117. Appellant in both appeals Versus Deputy Commissioner of Income Tax, Corporate Circle-2 Madurai. Respondent in both appeals COMMON PRAYER:- Tax Case Appeals filed under Section 260-A of Income Tax Act, 1961, to set aside orders of Tribunal in ITA. Nos. 1675/Chny/2017 Assessment Year 2012-13 and 1711/Chny/2017 Assessment Year 2012-13 dated 27.04.2018 and allow appeals. 1/12 http://www.judis.nic.in TCA. Nos. 833 & 835 of 2018 For Appellant in both Appeals : Mr. P. J. Rishikesh For Respondent in both Appeals : Mrs. V. Pushpa COMMON JUDGMENT [Judgment of Court was delivered by M.SATHYANARAYANAN,J.,] (1) By consent, both Tax Case Appeals are taken up together for final hearing and are disposed of by this common judgment. (2)The facts narrated in brief, for purpose of disposal of these appeals, are as follows:- 1. Assessee company is appellant herein and it is carrying on business of building products like asbestos etc., and it filed its return of income for Assessment Year 2012-13 on 21.09.2012 with returned income of Rs.38,22,56,810/- and same was processed under Section 143[1] of Income Tax Act, 1961, [in short ''the IT Act''] on 21.08.2014 and it was selected for scrutiny. notice under Section 143[2] of IT Act was issued on 08.08.2013 and thereafter, it was heard on various occasions. issue only pertains to claim of depreciation with regard to machineries used by appellant/assessee Company for Pollution Control Measures. 2/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 2. appellant/assessee Company before Assessing Officer, has produced Certificate of Chartered Engineer to claim depreciation of cent percent on ground that machineries used, are under operation for Pollution Control measures. However, Assessing Officer has disallowed claim of cent percent and 80% claim of depreciation and restricted to level of ordinary claim of 15% for first quarter as allowed under Income Tax Act and further depreciation has been allowed to extent of 20%, vide Assessment Order dated 31.03.2016. 3. appellant/assessee Company, aggrieved by Assessment Order, filed appeal before Commissioner of Income Tax [Appeals]-I, at Madurai [in short ''CIT [Appeals]''] and Appellate Authority, vide order dated 05.04.2017, dealt with claim of depreciation and affirmed order of Assessing Officer. 4. appellant/assessee Company, challenging legality of order passed by CIT [Appeals], filed further appeals in ITA.Nos.1675 & 1676/Chny/2017 and Revenue also filed appeals in ITA.Nos.1711 & 1903/Chny/2017 [for Assessment Years 2012-13 & 2103-14] before Income Tax Appellate Tribunal, ''B'' Bench, at Chennai [in short ''ITAT'']. 3/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 5. ITAT has passed common order dated 27.04.2018 and while dealing with issue relating to depreciation, after extracting relevant portion of order passed by CIT [Appeals], has placed reliance upon Google study in order to have idea about air pollution control equipments. ITAT, based on Google search study, had concluded as follows:- 7.From above, it is clear that Air Pollution Control devices or equipments, specified in depreciation table, supra, are series of devices which would prevent variety of different pollutants, both gaseous and solid, from entering atmosphere, mainly exhaust gases passing through Industrial stacks. These systems [in industrial parlance, group of integrated plant and machinery for independent sub-function], if they are installed in plant in exhaust pipes or stacks which led them to atmosphere, they would reduce air pollution significantly. However, from nature and functions of impugned equipments, as extracted from order of CIT[A], supra, Pneumatic conveying system is single deck vibrating screen for collection of foreign particles which is suitable for manual slitting and dumping of bags. Bag opening device and shredder is only 4/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 bag opening device, stirrers and cutting knife is nothing but machine, i.e., stirrer and cutting knife, Fabrication and Erection of silo tanks is nothing but silo fabricated for storage of cement and ABT Meter is nothing but electrical meter to take reading of electrical units and they are not part of any of Air Pollution Control Devices or systems or equipments, but like any other plant or machinery or tools or tank performing other functions and hence CIT[A] is correct in concluding that engineer is not correct in certifying them as dust collector system etc., and in confirming action of Assessing Officer in denying higher depreciation. Corresponding appeal grounds of assessee fail. 8.In result, assessee's appeal for AY 2012-13 is treated as partly allowed and appeal for AY 2013-14 is treated as allowed.'' 6. Assessee Company, aggrieved by impugned common order of ITAT, has filed present Tax Case Appeals and it was admitted/entertained on 27.11.2018 on following substantial questions of law :- 1) Whether Income Tax Appellate Tribunal is justified in relying on evidence, which was never part of its record? 2) Does not order of Income Tax Appellate 5/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 Tribunal violate principles of natural justice, when it has not afforded opportunity to this appellant to rebut fresh evidence, especially when said evidence based on 'google study' is reason for dismissing appeal of appellant? 3) Is not pulveriser, duct collector and ball mill, air pollution controlling equipment as per R-6-III- machinery and plant-3[viii][c] and hence, entitled for 100% depreciation? and 4) Whether equipments are air pollution control devices or systems, which are entitled for higher depreciation? (3)Mr.P.J.Rishikesh, learned counsel for appellant/assessee Company has invited attention of this Court to paragraph Nos.6 and 7 of impugned common order passed by ITAT and would submit that ITAT, in paragraph No.6, has extracted relevant portion of order passed by CIT [Appeals] and in order to reach conclusion that machineries used for pollution control measures are like any other plant or machinery or tools or tank performing other functions and thereby, confirmed findings of CIT [Appeals], is per se unsustainable for reason that for purpose of reaching said conclusion, primordial reliance has been placed upon Google study done by ITAT, that too, without putting either assessee or Revenue on notice. learned counsel for appellant/assessee Company has 6/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 also invited attention of this Court to provisions of Section 255 of IT Act, 1961 as well as Rules 18 and 29 of Income Tax [Appellate Tribunal] Rules, 1963 and would submit that substantial provision as well as subordinate legislation do not expressly exclude applicability of principles of natural justice and would further add that under sub-section [6] of Section 255 of IT Act ''the Appellate Tribunal shall, for purpose of discharging its functions, have all powers which are vested in Income Tax Authorities referred to in Section 131....'' . learned counsel, further drawing attention of this Court to Section 131, would submit that as per sub-section [1] of Section 131, authorities meant for purpose of Income Tax Act, have same powers as are vested in Court under Code of Civil Procedure, 1908, when trying suit in respect of following matter, viz., [a]discovery and inspection ; [b]enforcing attendance of any person, including any officer of banking company and examining him on oath ; [c]compelling production of books of account and other documents ; and [d] issuing commissions and assuming for sake of argument, report of Chartered Engineer produced before Assessing Officer which was also referred to by CIT [Appeals], lack necessary particulars 7/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 and opportunity should have been afforded to appellant/assessee to take out application for appointment of Expert Commission or Tribunal, suo motu appointed some other Expert to go into that aspect and without affording any opportunity, whatsoever, ITAT suo motu rendered its findings based upon Google study and therefore, prays for remanding of matters insofar as substantial questions of law Nos.1 and 2 are concerned. (4) Per contra, Mrs.V.Pushpa, learned Standing counsel appearing for respondent/Revenue has invited attention of this Court to Order of Assessment, Order passed by CIT [Appeals] as well as impugned common order passed by ITAT and would submit that Report of Chartered Engineer is bereft of any material particulars / details and authorities below as well as Tribunal had taken into consideration, Report of Chartered Engineer as well as bills pertain to purchase of said machineries and had rightly reached conclusion that machineries are not meant exclusively for pollution control measures and findings rendered are concurrent in nature and further, there are no substantial questions of law arise for adjudication in these appeals and prays for dismissal of same. 8/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 (5)This Court paid its best attention to rival submissions and also perused materials placed before it. (6)Sub-section [6] of Section 255 of Income Tax Act, 1961, in turn, refers to Section 131 of Act and under Sub-section [1] of Section 131 of Act, authorities have same powers that are vested in Court under Code of Civil Procedure, 1908 - details of which, have been enumerated in earlier paragraphs. (7)Rule 29 of Income Tax [Appellate Tribunal] Rules, 1963 also speaks about production of additional evidence and Rule 30 speaks about mode of taking additional evidence and it is relevant to extract same:- Rule 29:-Production of additional evidence before Tribunal:- parties to appeal shall not be entitled to produce additional evidence either oral or documentary before Tribunal, but if Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if income-tax authorities have decided case without giving sufficient opportunity to assessee to adduce evidence either on points specified by them or not specified by them, Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. 9/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 Rule 30-Mode of taking additional evidence:- Such document may be produced or such witness examined or such evidence adduced either before Tribunal or before such income-tax authority as Tribunal may direct. (8)A perusal and consideration of paragraph No.7 of impugned common order passed by ITAT would disclose that Tribunal, for reaching conclusion to confirm order of Assessing Officer, has also done its part by doing some research on Google Study. Admittedly, research done by ITAT in form of Google study was not put either to appellant/assessee Company or to said Revenue. As already pointed out by this Court in earlier paragraphs, in absence of any specific rule including applicability of natural justice, it is well settled position of law that adherence to principles of natural justice, is implied in any legislation. (9)As rightly pointed out by learned counsel for appellant/assessee with regard to study or research done by ITAT, appellant/assessee was not put on notice. Hence, on this sole ground, impugned common order warrants interference. (10)The Substantial Questions of Law Nos.1 and 2 are answered in affirmative and in favour of appellant/assessee Company. 10/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 (11)In result, Tax Case Appeals are PARTLY ALLOWED and impugned common order of ITAT insofar as ITA Nos.1675/Chny/2017 and 1711/Chny/2017 [Assessment Year 2012-13] are set aside and said appeals are remanded to Tribunal for fresh consideration and adjudication. (12)In light of said appeals are being remanded for fresh adjudication, there is no necessity to answer substantial questions of law Nos.3 and 4. Income Tax Appellate Tribunal, ''B'' Bench, Chennai, is directed to accord priority and dispose of ITA Nos.1675/Chny/2017 and 1711/Chny/2017 [Assessment Year 2012-13] as expeditiously as possible. No costs. [M.S.N.,J] [A.Q., J] 04.03.2020 AP Internet : Yes To 1.The Income Tax Appellate Tribunal ''B' Bench, Chennai. 2.The Deputy Commissioner of Income Tax, Corporate Circle-2 Madurai. 11/12 http://www.judis.nic.in TCA.Nos.833 & 835 of 2018 M.SATHYANARAYANAN, J., AND ABDUL QUDDHOSE, J., AP TCA.Nos.833 & 835 of 2018 04.03.2020 12/12 http://www.judis.nic.in Ramco Industries Ltd. v. Deputy Commissioner of Income-tax, Corporate Circle-2, Madurai