Oswal Woollen Mills Ltd vs Commissioner Of Income Tax
2024 Latest Caselaw 13707 P&H

Punjab-Haryana High Court

Oswal Woollen Mills Ltd vs Commissioner Of Income Tax on 6 August, 2024

Author: Sanjeev Prakash Sharma

Bench: Sanjeev Prakash Sharma

                                 Neutral Citation No:=2024:PHHC:100989-DB




207          IN THE HIGH COURT OF PUNJAB AND HARYANA
                         AT CHANDIGARH

                                               ITA-111-2003 (O&M)
                                               Date of Decision: 06.08.2024


Oswal Woollen Mills Ltd.                                      ...Appellant

                                       V/S

Commissioner of Income Tax (Central), Ludhiana                 ...Respondent


CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
       HON'BLE MR. JUSTICE SANJAY VASHISTH

Present      Mr. B.M. Monga, Advocate and
             Mr. Rohit Kaura, Advocate
             for the appellant.

             Mr. Ranvijay Singh, Sr. Standing Counsel for the respondent.
                  ***
SANJEEV PRAKASH SHARMA, J.(Oral)

1. This appeal was admitted on 09.02.2004, but no substantial

question of law was framed by the Court.

2. Learned counsel for the appellant submits that the following

substantial questions of law arise for consideration of this Court:-

"3. Whether on the facts and circumstances of the case the claim

of depreciation of assessee in respect of plant and machinery

which were kept ready for use was sustainable in the light of

decision given by learned Tribunal in earlier year as well as the

view expressed by this Hon'ble Court rendered in the case of

CIT vs. Pepsu Road Transport Corporation ?

4. Whether on the facts and circumstances of the case the

tribunal was right in setting aside the order of learned CIT (A) in

respect of addition of Rs.4,53,442/- on account of revenue

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Neutral Citation No:=2024:PHHC:100989-DB ITA-111-2003 2003 (O&M)

expenditure incurred in the units where no manufacturing

activity was done ?

3. Learned counsel submits that the substantial questions of law as

noticed above are no more res-integra and stand finally adjudicated in te terms rms

of the decision of this Court in CIT vs. PEPS PEPSU Road Transport Corporation

[2002] 121 Taxman 232 (Punjab & Haryana HC) and the same has been

followed consistently by this Court in following cases:

cases:-

1. CIT (Central) Ludhiana vs. Nahar Exports Ltd. [2007] 163

Taxman 518 (Punjab and Haryana HC).

2. CIT vs. Oswal Agro Mills Ltd. [2011] 197 Taxman 25

(Delhi(.

3. National Thermal Power Corp. Ltd. vs. CIT [2012] 28

Taxman 89 (Delhi).

4. CIT-1, 1, Chennai vs. Chennai Petroleum Corporation Ltd.

[2013] 37 Taxman 332 (Madras).

4. Learned counsel appearing for the revenue submits that largely

the questions have been decided in favour of the assessee but this Court may

examine the facts of the present case as to whether the claim for depreciation

would be allowed in favour of the assessee in respect of plant and machinery

(units) which was never put to use during the year at all all, ass has been observed

by the Assessing Officer since they were not put to use at all, it would be

wrongful to grant depreciation benefit to the assessee.

5. In Nahar Exports Ltd. (supra), this Court by relying upon the

CIT vs. Pepsu Road Transport Corporation (supra), made the following

observations:--

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"During the course of assessment proceedings, the Assessing "During

Officer disallowed depreciation claimed by the ass assessee essee on

investment made in the garment unit on the ground that the

machinery so set up was not used. In appeal, the order passed by

the Assessing Officer, disallowing the claim of depreciation,

was upheld. However, in further appeal before the Tribunal, tthe he

claim made by the assessee was accepted relying upon the

judgment of this Court in CIT v. Pepsu Road Transport C Corpn rpn

[2002] 121 Taxman 232. While accepting the claim, the tribunal

observed that the machinery was kept ready for use and was in

fact actually actually used by the assessee during the last two years when

the assessee had received orders from foreign customers for the

supply of garments. The same could not be used during the year

in question on account of non-receipt non receipt of orders.

4. Learned counsel for the the revenue submitted that unless the

machinery is actually used, no depreciation should be allowed.

However, we find that similar contention was considered by this

Court in Pepsu Road Transport Corpn. (supra) wherein it was

held that even where the machine machinery ry is kept ready for use and

could not be put to use, the assessee would be entitled to

depreciation as everything ages with the passage of time and

even if the machinery is kept ready for use, there is a normal

depreciation of value. Accordingly, the ques question tion being covered

by the judgment of this Court, we answer the same against the

revenue and in favour of the assessee."

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6. In view of above we find that the plant and machinery (unit)

which were kept ready for use but could not be used, would not fall in

different categories and the benefit of claim for depreciation would be

available to the assessee.

assessee

7. Accordingly, the the order passed by the CIT (Appeals) in respect of

addition of Rs.4,53,442/-

Rs.4,53,44 on account of revenue expenditure is upheld. The

appeal iss accordingly allowed.

8. All pending misc. application(s) also stand disposed of.

(SANJEEV PRAKASH SHARMA) JUDGE

(SANJAY VASHISTH) JUDGE 06.08.2024 rajesh

1. Whether speaking/reasoned? : Yes/No

2. Whether reportable? : Yes/No

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