M/S. Krishan Kumar Sud v. Commissioner Of Income Tax-Ii, Amritsar

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No. 267 of 2014Date of Decision:- 13.05.2015 M/s. Krishan Kumar Sud vs. ......Appellant(s) Commissioner of Income Tax-II, Amritsar ......Respondent(s) CORAM:- HON'BLE MR. JUSTICE S.J. VAZIFDAR,ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE G.S.SANDHAWALIA Present:-Mr. Ravi Shankar, Advocate,for the appellant. Mr. Denesh Goyal, Advocate,for the respondent. S.J. VAZIFDAR, A.C.J. (Oral) 1.This is an appeal against the order of the Income Tax AppellateTribunal dated 14.01.2014 allowing the respondent's/revenue's appealagainst the order of the Commissioner of Income Tax (Appeals) which, inturn, had set aside the order of the Assessing Officer refusing to grantdepreciation in respect of plant and machinery. 2.The appeal is admitted on the following substantial question of law:- “ii.“Whether under the given facts andcircumstances of the case, the Tribunal is justified inreversing the order of CIT (A) allowing the claim ofdepreciation when it is allowable as per circular of theCBDT and Judgments (Supra), because use ofmachinery in the earlier years had been accepted”? 3.The matter pertains to the assessment year 2006-07. Weproceed on the basis that the Assessing Officer estimated the net profits ofthe appellant at 7% of gross receipts. The CIT (Appeals) reduced this to 4%. Thereafter, the CIT (Appeals) allowed depreciation on the plant andmachinery. 4.The Tribunal, however, held that the assessee had not broughton record that the assets purchased by them had been put to use during theimpugned year. This finding is contrary to the record. It is pertinent to notethat in the order of the CIT (Appeals) itself, it is expressly stated that thedepreciation was allowable since complete and full particulars of the writtendown value as carried forward from earlier years was available on record.Even the Assessing Officer had not held that the assets had not been put touse during the assessment year in question i.e. 2006-07. The finding is,therefore, perverse. 5.It was contended that the provisions of Section 44AD of theIncome Tax Act, 1961 (in short 'the Act') apply to the present case. 6.It is pertinent to note, however, that neither the AssessingOfficer nor the CIT (Appeals) nor the Tribunal proceeded under Section44AD of the Act. This is clear from the fact that whereas Section 44ADrequires a rate of 8% to be applied, the Assessing Officer himself hadapplied the rate of 7%. Even the CIT (Appeals) applied the rate of 4%. TheTribunal also did not proceed on the basis that Section 44AD of the Act wasapplicable to the present case. The argument is, therefore, rejected. 7. The appeal is allowed. The question of law is decided infavour of the appellant/assessee. The order of the CIT (Appeals) is restoredso far as question no. 2 is concerned regarding depreciation. (S.J. VAZIFDAR) ACTING CHIEF JUSTICE (G.S. SANDHAWALIA) JUDGE