ORDER
S.L. Peeran, Member (J)
1. This stay application and the appeal are taken up together for disposal as the issue lies in a short compass.
2. In the impugned order, the Commissioner (Appeals) has noted that during the financial year 1995-96, the appellants; had received Ring Spinning frame and one Pneumafil Unit and availed Modvat credit on duty of an amount of Rs. 1,38,189 under RG 23C Part II. They had also filed a declaration seeking depreciation under the Income tax Act. As they had simultaneously availed both the benefits, therefore the department initiated recovery proceedings. Ultimately, the impugned order has been passed directing the appellants to reverse the credit or pay the amount to the department. The Ld. Counsel submits that they have not availed income tax depreciation. They also filed revised declaration before the Dy. Commissioner of Income tax and bringing to his notice about the availability of Modvat credit by them. In the order passed by the Assistant Commissioner Income tax, Circle, I Erode he has noted that appellants had filed Modvat claim of Rs. 1,38,189 therefore he has not granted the depreciation. He submits that on similar issues, this Bench has passed an order of remand for de novo consideration in view of fresh orders obtained by the appellants from the Assistant Commissioner of the Income tax. He refers to the Final Order No. 1928/2001 dt. 9.11.2001 and the Final Order Nos. 187-188/2002 dt. 31.1.2002. He seeks for remand of the matter so that they are in a position to satisfy the department that they had not availed of the Income tax depreciation. The Ld. DR perused the final orders of this Tribunal and leaves the matter to the discretion of the Bench.
3. On a careful consideration, we notice that this Tribunal in the case of M/s. K.V. Mills v. CCE, Coimbatore vide Final Order No. 1928/2001 has already remanded the case to the Commissioner (Appeals) to reconsider the provisions of Income tax Act and accounting practice followed by the appellants after giving reasonable opportunity of hearing to them. Similar order has been passed in the case of GTV Spinners Ltd., M/s. BTP India Ltd. v. CCE, vide Final Order Nos. 187 & 188/2002 dt. 31.1.2002. The para 4 of the final order in GTV Spinners Ltd. is extracted herein below:
4. After hearing both the sides we are of the considered opinion that the matter requires fresh appreciation of facts in the light of the judgment rendered by the co-ordinate Bench in the case of Terna Shetkari Sahakari Sakhar Karakhana Ltd. v. CCE (supra) in which it has been held that if the revised Returns are filed excluding that part of value and accepted by the Income tax Department, mere filing of return claiming depreciation on total value is not sufficient to disallow Modvat credit, particularly, in view of wordings of Rule 57 R(5) and the amendment to Section 43(1) of the Income Tax Act made in 1998 with effect from 1.4.94. Unless depreciation is allowed by Income tax department, credit is not to be denied though claimed in the return by the assessee. Therefore, both the appeals are remanded back to the lower adjudicating authority. The adjudicating authority shall examine whether depreciation claimed on revenue expenditure under Section 32 of the Income tax Act would be a bar to claim the Modvat credit in view of the wordings of Rule 57R(5) of the rules ibid and the amendment to Section 43(1) of the income tax Act 1961 made in 1998, with effect from 1.4.94. We, therefore, direct the original authority to reconsider the depreciation as contended by the Ld. Counsels after affording an opportunity to the appellants to produce all the documents in support of their case. The appeals are allowed by way of remand. Ordered accordingly.
Following the ratio of these above quoted orders, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) for de novo consideration in the light of the directions already given by this Bench in the cases cited (supra). This appeal is allowed by way of remand to the Commissioner (Appeals) for de novo consideration. Stay application is disposed of accordingly.