Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SHRI G. D. AGRAWAL & SHRI CHANDRA MOHAN GARG
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal has been filed by the Revenue against the order of the CIT(A)-XVII, New Delhi dated 18/07/2014 for Assessment Year 2011-12.
The grounds raised by the Revenue read as follows:-
“1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.26,39,405/- made by the AO ignoring the fact that the asset purchased are clearly capital asset and the AO has also mentioned the reasons for treating the parts of power plant as capital expenses with respect to quantum of the expenses.
2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 16,70,000/- made by the AO on account of disallowance of prior period expenses ignoring the fact that the above expenses are not solely for the year under consideration.
On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.4,91,714/- on account of disallowance u/s 37 and 38(2) by not appreciating the fact that the assessee company has failed to produce the log book which is the only authentic document which can show/record the uses of vehicles for business purposes.
On the facts and circumstances of the case, the appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal.”
3. Ground No.1 Apropos Ground No.1, the Ld. Senior Departmental Representative submitted that the Ld.CIT(A) has erred an deleting the addition of Rs.26,39,405/- made by the A.O by ignoring the fact that the assessee has purchased asset of capital nature and A.O has given a clear finding and reasoning for treating the parts of power plant as capital expenses with respect to quantum of expenses.
4. The Ld. AR strongly supported the First Appellate Order and submitted that rightly the Ld.CIT(A) has rightly granted relief to the assessee as the appellant has given all the details of parts which were purchased to keep the machinery in running order and the expenditure was of Revenue which cannot be termed as capital expenditure.
On careful consideration of rival submissions and perusal of relevant Para 5.2 of the First Appellate Order we are satisfied with the findings arrived by the Ld.CIT(A) that the nature of work of appellant involved as work with Chemicals, Acids etc and thus substantial amount have to be incurred for replacing of part for plant and machinery. The Ld.CIT(A) further recorded a finding that the appellant has given all details of parts which were purchase to keep the machinery in running order and the amount has been spent on purchase of various parts for the machinery. It was also observed that no machinery has been purchased which can be said to have enduring benefit, therefore, the expenditure incurred and claimed by the assessee was of revenue in nature and not capital expenditure. Thus, in our considered opinion, the First Appellate Authority was right and demolishing the action of the A.O and in granting relief to the assessee. Accordingly, Ground No.1 of the Revenue is dismissed.
GROUND NO.2 Apropos Ground No.2, the Ld. Departmental Representative submitted that the Ld.CIT(A) has erred and deleting the addition of Rs.16,17,000/- made by the A.O on account of disallowance of prior period expenses ignoring the fact that impugned expenses were not solely for the year under consideration.
The Ld. AR submitted that the payment has been made in compliance with the order of the Hon'ble High Court dated 10/12/2010 wherein it was held that the appellant is liable to pay cess, therefore, the liability was crystallized during the year under consideration i.e Assessment Year 2011-12.
On careful consideration of above rival submissions and perusal of the relevant part 6.2 of the First Appellate Order we note that payment of cess from May 1999 to May 2007 has been made by the assessee to comply with the judgment of Hon'ble Supreme Court dated 10/12/2010 wherein liability of pay cess on the assessee was confirmed by Hon’ble Apex Court. Therefore, due to these reasons liability was crystallized during Financial Year 2010- 11 pertaining to Assessment Year 2011-12. Hence, we are unable to see any valid reason to interfere with the conclusion arrived by the Ld.CIT (A) and thus, we are uphold the same. Consequently, Ground No. 2 of the Revenue being devoid of merits is dismissed.
GROUND NO.3 The Ld. Departmental Representative submitted that the CIT(A) has erred and deleting the amount of Rs.4,91,714/- by ignoring the fact that the company has failed to produce log book which is only authentic document which can show and established the uses of vehicle for the business purposes of the assessee company.
The Ld. AR vehemently pointed out that in the case of a company persona uses cannot be alleged in view of the decision of Hon’ble Delhi High Court reported as 197 Taxman.com 25 (Delhi).
On careful consideration of our rival submission, we are of the view that no disallowance can be made on account of personal use in the case of a company, especially when the A.O has not been able to make the addition of sound basis. The A.O proceeded to make disallowance without verifying the relevant vouchers/bills and without examining the log books in a right perspective. Therefore, he Ld.CIT(A) was right in dismissing the addition. Accordingly, Ground No.3 of the Revenue is also dismissed.
In the result, the appeal is dismissed on all three grounds.