HIRA POWER AND STEELS LTD,. URLA,RAIPUR vs. ACIT, CENTRAL CIRCLE-2, RAIPUR, RAIPUR

I have heard the submissions of the parties herein and perused the materials available on record. Firstly, on the issue of disallowance i.e. 30% of disallowance on account of depreciation, the Ld. Counsel for the assessee had relied on various judicial pronouncements which appears in his written submission. It was submitted by the Ld. Counsel that there cannot be any personal usage issue so far as company is concerned. However, the definition of ‘person’ in the Act itself includes the company and that it is no more “Res-Integra” that in order to ascertain rights and liabilities, time and again the Hon’ble Courts have lifted the corporate veil to understand the nature and scenario of the liability. Therefore, argument of the Ld. Counsel cannot be accepted on the ground that since it is a limited company, therefore, there cannot be personal liability fixed on such artificial entity on the ground of personal usage. The fact remains

At the same time, a part of the submissions of the Ld. Counsel is accepted that the assessee being limited company is subject to several audits and controls and each bill presented is properly vouched at different levels of the internal control and at the same time, log book is also maintained by the assessee. The Ld. Sr. DR failed to bring on record any evidence contrary to the submissions placed on record by the Ld. Counsel for the assessee. The Ld. Sr. DR could not establish that the findings of the A.O was correct and that there was no log book maintained by the assessee. That in absence of any such findings by the Department, in absence of any adverse material on record against the assessee by the Department, the submissions of the Ld. Counsel is therefore, accepted. That when log book has been maintained by the assessee, when every bills are audited which is in fact common parameter for a limited company and at the same time, since the Department has failed to bring any specific reasons, for such disallowance, hence, such disallowance is held to be arbitrary, bad in law and accordingly, the A.O is directed to delete the 8 Hira Power and Steels Limited Vs. ACIT, Central Circle-2, Raipur (C.G.)

The Ld. Sr. DR supported the findings of the Revenue Authorities, however, could not refute these facts on record.

That the said circulars (supra) are binding on the Revenue Authorities and once, the parameters of such donations are well within the ambit of the afore-stated circulars, in such scenario, the A.O ceases to possess any valid inherent jurisdiction to make any disallowance. Hence, the A.O is directed to delete additions from the hands of the assessee while providing appeal effect of this order. Thus, Ground of appeal No.2 of the assessee is allowed.

In the result, appeal of the assessee is partly allowed as per aforesaid terms.