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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA.G, HON’BLE
आदेश / O R D E R PER MANJUNATHA. G, AM: These two appeals filed by the assessee are directed against separate, but identical orders of the Commissioner of Income Tax (Appeals)-7, Chennai, dated 31.10.2018 & 28.09.2018 and pertains to assessment years 2010-11 & 2012-13. Since, the facts are identical and issues are common, for the sake of convenience, these appeals are being heard together and disposed off, by this consolidated order.
ITA No.172/Chny/2019 & 2 ::
ITA No.172/Chny/2019 for the AY 2010-11:
2. The assessee has raised the following grounds of appeal:
The CIT appeal erred in confirming the order of the Assessing Officer with regards to matters mentioned above.
The CIT appeal erred in confirming the disallowance made by Assessing Officer as mentioned under:
Software Computer depreciation of Rs.34,65,130/-
The Assessee has purchased computer software for Rs.34,65,130/- Bills could not be produced at the time of hearing. Bills for software purchase are now available and are produced for verification.
Additional depreciation on windmill Rs.12,81,620/-
From my reading of relevant depreciation rules additional depreciation is allowable on windmill purchase as such the claim be protected.
3. TDS not deducted for expenditure Rs.15,24.526/-
Advertisement expenditure: Rs.8,24,341/- was paid to Doordarshan, Government of India undertaking for which TDS provisions does not apply.
4. TDS on Rent paid: Rent was paid to premises occupied by the assesse in various branches where rent paid did not exceed Rs.1,80,000/- Breakup of rent paid is given and wherever rent paid below Rs.1,80,000/- the disallowance same be deducted from rent payment Rs.6,70,185/-Agricultural Income Rs.1,90,000/-: Documentary evidence for agricultural income is produced and as such agricultural income be allowed. Agricultural income be treated as non-taxable.
The first issue that came up for our consideration from Ground No.1 of the assessee’s appeal is disallowance of depreciation on computer software for Rs.32,79,112/-. During the course of assessment proceedings, the AO noticed that the assessee has claimed 75% depreciation on computer software at Rs.36,48,665/-, although, the depreciation @60% is allowable as per Income Tax Act, 1961. Further, the assessee could able to produce bills for purchase of computer only for Rs.6,15,923/-. Therefore, the AO has allowed 60% depreciation on Rs.6,15,923/- and excess depreciation claimed over and above
ITA No.172/Chny/2019 & 3 ::
(Rs.36,48,665/- – Rs.3,69,533/-) Rs.32,79,122/- has been disallowed. On appeal, the Ld.CIT(A) confirmed the additions made by the AO.
3.1 We have heard both the parties, and perused the materials available on record. We find that the assessee could able to file evidences for purchase of computer software to the extent of Rs.6,15,923/- alone. Even before us, the Ld.Counsel for the assessee could not file any evidences.
However, requested to set aside the issue to the file of the AO to give one more opportunity to the assessee to produce necessary bills in support of purchase of computer software. We find that the assessee has not availed opportunity provided by the AO and the Ld.CIT(A) to justify its case for depreciation on computer software and such lapse even continued before us. Therefore, we are of the considered view that there is no reason to give one more opportunity to go back to the AO to justify its case and thus, we reject the arguments of the Ld.Counsel for the assessee and upheld the additions made by the AO towards disallowance of depreciation.
The next issue that came up for our consideration from Ground No.2 of the assessee’s appeal is disallowance of depreciation on windmill of Rs.12,81,620/-. The assessee has claimed 50% depreciation for energy saving device, whereas, the AO has allowed 40% depreciation on the ground that energy saving device purchased after 03.10.2009 is eligible for depreciation @40% but not @50% as claimed by the assessee.
ITA No.172/Chny/2019 & 4 ::
4.1 We have heard both the parties, perused the materials available on record. As per rate of depreciation, energy saving device being windmill, etc., are eligible for 40% depreciation before amendment to Section 32(1)(iia) of the Finance Act, 2012. In this case, as per available records, the assessee has purchased energy saving device after 03.10.2009 which is eligible for 40% depreciation but not 50%. The assessee could not justify claim at 50% depreciation with a date of purchase of asset and corresponding entry in the appendix. Therefore, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to sustain the additions made towards disallowance of depreciation and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee.
The next issue that came up for our consideration from Ground No.3 of the assessee’s appeal is disallowance of certain expenditure u/s.40(a)(ia) of the Act, for non-deduction of TDS under respective provisions of the Act.
The AO has disallowed advertisement expenses of Rs.8,24,341/-, audit fees of Rs.30,000/-, and rent paid Rs.6,70,185/- u/s.40 (a)(ia) of the Act, for non-deduction of TDS. The assessee claims that advertisement expenditure was paid to Doordarshan, Government of India undertaking for which TDS provision does not apply. However, disallowance of rent and audit fees, the assessee could not file any evidences.
5.1 We have heard both the parties, perused the materials available on record. In so far as payment to Doordarshan, Government of India
ITA No.172/Chny/2019 & 5 :: undertaking is concerned, if claim of the assessee is correct, then question of TDS on said payment does not arise. Therefore, we direct the AO to verify the claim of the assessee and decide the issue in accordance with law. As regards TDS on rent paid and audit fees, the assessee could not file any evidences to prove that TDS has been deducted on such payments and thus, we are of the considered view that there is no error in the reasons given by the AO to disallow audit fees and rent paid u/s.40(a)(ia) of the Act, and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee.
In the result, appeal filed by the assessee in for the AY 2010-11 is partly allowed for statistical purposes.
The assessee has raised the following grounds of appeal:
The CIT appeal erred in confirming the order of the Assessing Authority with regard to matters mentioned above.
The CIT Appeal erred in confirming the disallowance made by Assessing officer as mentioned under:
1) Depreciation on new assets purchased Rs.11,64,761/-
Vouchers for purchase of the new assets were produced before to AO and as such depreciation be allowed.
2) Advertisement Expenditure Rs.7,67,712/-
The Assessee has paid Rs.7,67,712 through bank account to All India Radio -Kodaikkanal Station. All India Radio is a government of India Undertaking no tax deduction is required. As payment was made through bank account, the claim of expenditure be protected.
3) Gift from Sister Rs.25,50,000/-
This sum has been received from the Assessee's sister through banking channel. The Assessee has already filed gift letter from the sister and as such that itself is a gift deed and so the credit entry in the books of accounts be accepted and addition of Income under other Sources deleted.
ITA No.172/Chny/2019 & 6 ::
The first issue that came up for our consideration from Ground No.1 of the assessee’s appeal is depreciation on new asset purchased at Rs.8,30,926/-. The assessee has claimed depreciation @ 50% on motor car as against 15% as allowed under the Act. The AO has disallowed excess depreciation claimed on motor car amounting to Rs.8,30,926/-. Apart from the above, the assessee had also claimed depreciation on computer software. However, no evidence has been filed. Therefore, the AO has disallowed depreciation claimed on new asset purchased.
8.1 We have heard both the parties, and perused the materials available on record. We find that even during the remand proceedings, the assessee could not furnish necessary evidences to prove the claim of purchase of new asset and even before us, no evidence has been filed to substantiate the claim of depreciation. Therefore, we are of the considered view that there is no error in the reasons given by the AO to disallow excess depreciation on new commercial vehicle and addition to computer software and thus, we reject the arguments of the assessee and sustained the additions made by the AO towards disallowance of depreciation.
The next issue that came up for our consideration from Ground No.2 of the assessee’s appeal is disallowance of advertisement expenditure of Rs.7,67,713/- u/s.40(a)(ia) of the Act, for failure to deduct TDS u/s.194C of the Act. It was the arguments of the assessee before the AO that payment made to All India Radio, Government of India undertaking does
ITA No.172/Chny/2019 & 7 :: not come under the purview of provisions of TDS. Therefore, no disallowance can be made u/s.40(a)(ia) of the Act.
9.1 Having heard both the sides, we find that if the claim of the assessee is correct, then, advertisement expenses disallowed u/s.40(a)(ia) of the Act, relates to payment made to All India Radio Kodaikkanal Station, does not come under the provisions of Sec.194C and consequently, no requirement of TDS. Therefore, the AO is directed to verify the claim of the assessee with relevant materials and in case, the AO found payment made to All India Radio under the head ‘advertisement expenses’, then, the AO is directed to delete the addition made u/s.40(a)(ia) of the Act.
The next issue that came up for our consideration from Ground No.3 of the assessee’s appeal is additions towards gift from sister amounting to Rs.25,50,000/-. The assessee claims to have received gift from sister who is an NRI and also claims to have filed confirmation letter from the donor.
It was the findings of the AO that the assessee could not file any evidences including status of the donor and their bank statement. Therefore, made addition towards gift claims to have been received from sister for Rs.25,50,000/-.
10.1 We have heard both the parties, and perused the materials available on record. Although, the assessee claims to have filed confirmation letter from the donor to prove the case, but no evidence has been filed to prove the status of the donor and also other details, including bank statement of the donor to prove genuineness of the gift received from sister. Even before
ITA No.172/Chny/2019 & 8 :: us, except making an oral statement, the Ld.Counsel for the assessee could not file any evidence to claim that the donor is an NRI and also said gift has been paid through proper banking channel. Therefore, we are of the considered view that there is no error in the reasons given by the AO to sustain the addition made towards gift claims to have been received from sister and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee.
In the result, appeal filed by the assessee in for the AY 2012-13 is partly allowed for statistical purposes.
In the result, appeal filed by the assessee in for the AY 2010-11 & AY 2012-13 are partly allowed for statistical purposes.
Order pronounced on the 24th day of February, 2023, in Chennai.