LAXMANAN NARAYANAN,CHENNAI vs. ITO, CW-7(1), CHENNAI

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 & ITA No.3528/Chny/2018 :: 2 ::

ITA No.172/Chny/2019 for the AY 2010-11:

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:

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.

From my reading of relevant depreciation rules additional depreciation is allowable on windmill purchase as such the claim be protected.

Advertisement expenditure: Rs.8,24,341/- was paid to Doordarshan, Government of India undertaking for which TDS provisions does not apply.

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

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(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.

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.

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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.

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

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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.

for the AY 2010-11 is partly allowed for statistical purposes.

ITA No.3528/Chny/2018 for the AY 2012-13:

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.

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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.

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

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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.

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

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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.

for the AY 2012-13 is partly allowed for statistical purposes.

for the AY 2010-11 & ITA No.3528/Chny/2018 for the AY 2012-13 are partly

allowed for statistical purposes.

Order pronounced on the 24th day of February, 2023, in Chennai.

Sd/- Sd/- (वी. दुगा� राव) (मंजूनाथा. जी) (MANJUNATHA.G) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 24th February, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�/CIT 2. ��यथ�/Respondent 5. िवभागीय �ितिनिध/DR 3. आयकर आयु� (अपील)/CIT(A) 6. गाड� फाईल/GF