SRI H L SURESH KUMAR,BANGALORE vs. THE INCOME TAX OFFICER WARD-6(3)(3), BANGALORE

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ITA 1597/BANG/2017Status: DisposedITAT Bangalore01 December 2017AY 2008-094 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the absence of a detailed working for the depreciation claim prevented a proper examination. To ensure justice, the matter was restored to the CIT(A) for a fresh decision after the assessee provides the complete depreciation working.

What were the facts?

The assessee claimed depreciation on plant, machinery, and structures leased out to another company. The CIT(A) upheld the assessment of hire charges under 'Other Sources' and disallowed the depreciation claim. The assessee argued that the CIT(A)'s observation about depreciation on chicks was a typing error.

What were the issues?

The primary issue was the allowability of depreciation on leased assets and whether the hire charges should be assessed under 'Other Sources'. A secondary issue was the lack of proper working for the depreciation claim.

Which sections of the Income-tax Act were involved?

Section 32,Section 56,Section 57(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE

Before: SHRI ARUN KUMAR GARODIA

For Appellant: Shri V. Srinivasan, Advocate
For Respondent: Shri M. Rajasekhar, Addl. CIT
Hearing: 29.11.2017Pronounced: 01.12.2017

O R D E R Per Shri A.K. Garodia, Accountant Member; Both these appeals are filed by the assessee which are directed against the combined order of CIT(A)-6, Bangalore dated 31.01.2017 for Assessment Years 2008-09 and 2009-10.

2.

Both the appeals were heard together and are being disposed of by way of this common order for the sake of convenience. The grounds raised are as under.

Grounds raised for Assessment Year 2008-09 in “1.The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2.The learned CIT[A] is not justified in upholding the assessment of hire charges received by the appellant from M/s. KHADKESHWARA HATCHERIES PVT.LTD under the head & 1597/Bang/2017 Page 2 of 4 "OTHER SOURCES" and thereby disallowing the depreciation of Rs. 10,00,963/- claimed on Plant and Machinery and Structures provided by the appellant under the facts and in the circumstances of the appellant's case. 3.Without prejudice to the above, the learned CIT[A] is not justified in upholding the disallowance of depreciation amounting to Rs. 10,00,963/-claimed by the appellant on Plant and Machinery and Structures leased out by the appellant to M/s. Khadkeshwara Hatcheries Private Limited, which is also allowable u/s 57[iii] of the Act under the facts and in the circumstances of the appellant's case. 4.The learned CIT[A] is not justified in sustaining the addition of Rs.4,00,000/- considered as unexplained payments made by the appellant without appreciating that the entire payments made by the appellant were recorded in the books of accounts and hence the same cannot be considered as unexplained under the facts and in the circumstances of the appellant's case. 5.For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees aspart of the costs.”

Grounds raised for Assessment Year 2009-10 in “1.The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2.The learned CIT[A] is not justified in upholding the assessment of hire charges received by the appellant from M/s. KHADKESHWARA HATCHERIES PVT.LTD under the head "OTHER SOURCES" and thereby disallowing the depreciation of Rs. 18,68,656/- claimed on Plant and Machinery and Structures provided by the appellant under the facts and in the circumstances of the appellant's case. 3.Without prejudice to the above, the learned CIT[A] is not justified in upholding the disallowance of depreciation amounting to Rs. 18,68,656/-claimed by the appellant on Plant and Machinery and Structures leased out by the appellant to M/s. Khadkeshwara Hatcheries Private Limited, which is also allowable u/s 57[iii] of the Act under the facts and in the circumstances of the appellant's case. 4.For the above and other grounds that may be urged at the & 1597/Bang/2017 Page 3 of 4 time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”

3.

It was submitted by ld. AR of assessee that in Para no. 11 of his order, it is noted by CIT (A) that in respect of cases falling under clauses (ii) and (iii) of sub section (2) of section 56, deduction u/s. 32 has to be allowed. But in the next para i.e. 12, he has held that the depreciation cannot be allowed on chicks. He submitted that this noting of CIT(A) that depreciation is not allowable on chicks is a typing mistake. At this juncture, the bench wanted to know the working of assessee’s claim for depreciation. In reply, he submitted that no such working was made available before the authorities below. He also submitted that the balance sheet as on 31.03.2008 is available on page no. 4 of the paper book and the same for year ending on 31.03.2009 is available on page no. 16 of paper book. The bench observed that on page no. 4 of the paper book, the consolidated amount of depreciation is claimed but the working is not available as to how much for each asset is being claimed. Similarly in Assessment Year 2009-10, no such working is available. It was also submitted by ld. AR of assessee that in the interest of justice, the matter may be restored back to the file of CIT(A) for fresh decision and if it is done then the assessee will provide complete working of depreciation claimed for both years. The ld. DR of revenue submitted that sufficient opportunity was provided by AO and CIT(A) and therefore, no further opportunity should be provided and the appeals of the assessee should be dismissed.

4.

I have considered the rival submissions. I find that in the absence of working of the assessee’s claim for depreciation, the issue regarding allowability of depreciation cannot be examined and decided in proper manner. Such working has not been made available before the AO, CIT(A) and before me. But still in the interest of justice, I feel it proper to restore back this matter to the file of CIT(A) for fresh decision. I order accordingly. I want to make it clear that the assessee has to furnish complete working in respect of assessee’s claim for depreciation in both the years and thereafter, the CIT (A) should decide the & 1597/Bang/2017 Page 4 of 4 issue afresh by way of a speaking and reason order after providing adequate opportunity of being heard to both sides.

5.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.

Order pronounced in the open court on the date mentioned on the caption page.

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