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Income Tax Appellate Tribunal, KOLKATA BENCH “C”, KOLKATA
Before: SHRI RAJESH KUMAR, HON’BLE & SHRI SONJOY SARMA, HON’BLE
O R D E R
PER RAJESH KUMAR, AM:
This appeal of the assessee for the assessment year 2014-15 is directed against the order dated 06.02.2023 passed by the ld. Commissioner of Income-tax Appeals, NFAC, Delhi [hereinafter referred to as ‘the ld. CIT(A)’].
The common issue raised in ground no. 2 and 3 is against the order of ld. CIT(A) confirming the disallowance on account of depreciation amounting to Rs. 3,93,185/- as made by the AO by reducing the rate of depreciation from 30% to 15% on trucks operated by the assesse in its business.
The facts in brief are that during assessment proceeding, the AO observed that the assessee has claimed depreciation @ 30% on the trucks which are owned by the assessee and used for supplying the goods/materials and the said claim was Rs. 7,86,369/-. According to the AO, the assessee is entitled for depreciation @ 15%
2 Jaks Plast Products Pvt. Ltd. A.Y. 2013-14 as against 30% claimed by the assessee on the ground that assessee’s is transporting goods manufactured by the assessee to various customers. Accordingly, the AO disallowed and added back Rs. 3,93,185/- to the income of the assessee.
In the appellate proceeding, the ld. CIT(A) dismissed the appeal of the assessee by rejecting his plea that price charged for the goods supplied to the customers is a composite price inclusive of freight charges. The ld. counsel for the assessee submitted that the issue is squarely covered in favour of the assessee by the decision passed by predecessor CIT(A) for A.Y. 2012-13 wherein the issue was allowed by directing the AO to allow depreciation @30% and thus the plea of the assessee that price charged for supply of material is composite and is inclusive of freight for supplying goods was accepted. The ld. AR further submitted that the said order has attained finality as no appeal was filed before the Tribunal against the said order. The ld. DR, on the other hand, relied on the authorities below. Thus undisputedly in assessee’s own case in A.Y. 2012-13, the ld CIT(A) has allowed the issue in favour of the assessee against which no further appeal has been preferred before the Tribunal. Accordingly in the instant year also we accept the contention of the assesse qua the price charged is composite price for supply of material as well as towards freight/higher charge. Therefore, the appeal of the assessee is allowed by setting aside the order of CIT(A) and directing the AO allow depreciation @30%. However, ground no. 2 & 3 are allowed.
The issue raised in ground no. 4 is against the confirmation of disallowance of Rs. 1,37,247/- by ld. CIT(A) as made by the AO u/s 40(A)(3) of the Act.
3 Jaks Plast Products Pvt. Ltd. A.Y. 2013-14 6. The facts in brief are that the assessee has incurred Rs. 1,37,247/- on petty payments to labour for carrying out repair works etc. The AO found that the expenses were incurred in cash in in excess of Rs. 20,000/- in contravention of section 40A(3) of the Act and consequently disallowed and added the same to the income of the assessee. In the appellate proceeding, CIT(A) dismissed the appeal by observing that assessee has failed to establish the genuineness of the payments made in cash sans addresses of the payees and also failing to prove that these expenses were incurred out of business expediency. We have examined the records produced by the assessee in the form of vouchers which were duly signed by recipients and also state the nature of work done and were duly authorized by the company manager and director of the company. We also observe that the individual voucher does not exceed Rs. 20,000/- in all cases of payments. The photocopies of these vouchers are placed at page from 58 to 62 of the paper book. Thus the case of the AO that those payments are in excess of Rs. 20,000/- in terms of section 40A(3) of the Act is wrong and so far as the dismissal of appeal of ld. CIT(A) is concerned, the ld. CIT(A) has again gone into altogether different direction by holding that genuineness and commercial expediency were not proved.
After hearing the rival contentions and perusing the facts on record, we are of the view that the order passed by the ld. CIT(A) appears to be on a total opposite direction than what the case of the AO was. The AO has observed in the assessment order that payments were made in Rs. 20,000/- in violation of section 40A(3) of the Act whereas the ld. CIT(A) has brought in section 37 of the Act to justify the addition. In our view, the assessee has incurred expenses and made payments below of Rs. 20,000/- in each
4 Jaks Plast Products Pvt. Ltd. A.Y. 2013-14 individual case which were incurred for the purpose of carrying out repairs to the factory building. We note that the profit returned during the year was Rs. 1,77,57,310/- whereas the turnover of the assessee during the year was more 50 crores. Therefore, even looking from the reasonability, materiality angle and practical perspective of the issue, we do not think the disallowance of is justified. Considering of these facts and circumstances of the case, we are inclined to set aside the order of ld. CIT(A) and direct the AO to delete the disallowance of Rs. 1,37,247/-. Other grounds are general in nature and need not to be adjudicated.