M/S. BANIK METAL INDUSTRIES PVT. LTD.,KOLKATA vs. ITO, WARD-1(2), KOLKATA, KOLKATA

This appeal by assessee is arising out of order of CIT(A)-XIV, Kolkata vide Appeal No. 222/CIT(A)-XIV/Kol/11-12 dated 14.02.2014. Assessment was framed by ITO, Wd-1(2), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2005-06 vide his order dated 31.12.2007.

At the outset, it is seen that this appeal by assessee is barred by limitation by 190 days and assessee has filed condonation petition stating the reason that his earlier Chartered Accountant was looking after the taxation matter advised against filing of appeal but when the company approached the present counsel, on his advice the appeal was immediately filed with delay condonation petition. On the other hand, the Ld. Sr. DR objected to condonation of delay being a long delay i.e. of 190 days. I find that this appeal was not filed on the wrong advice of the counsel and after change in counsel appeal was filed properly. I find that the cause is reasonable and accordingly, I condone the delay and admit the appeal. 3. The first issue in this appeal of assessee is against the order of CIT(A) confirming the action of AO in making disallowance of payment of excise duty u/s. 43B of the Act amounting to Rs.7,79,887/-. 4. I have heard rival submissions and gone through the facts and circumstances of the case. At the outset, it is seen that this excise duty amounting to Rs.7,79,887/- was paid through CENVAT credit register. The assessee has produced the copies of TR-6 challan and CENVAT challans in its paper book, which proves that the excise duty comprises of Rs.7,65,203/- and education cess of Rs.13,345/- on this excise duty, which comes to Rs.7,78,548/-. The assessee has paid this amount through CENVAT register. Once the CENVAT credit is available to the 2 Banik Metal Industries P. Ltd., AY 2005-06 assessee and paid through TR-6 challan and CENVAT Challans, these are sustained to be payment made within the due dates in term of section 43B of the Act. Accordingly, I am of the view that the AO as well as CIT(A) has erred in making this addition without going into the facts of the case. Accordingly, I delete the addition and allow this issue of assessee’s appeal.

The next issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in making disallowance by invoking the provisions of section 40A(3) of the Act amounting to Rs.1,29,580/- being incurred on electrical installation.

I have heard rival submissions and gone through facts and circumstances of the case. I find from the facts of the case that the assessee has incurred expenditure in purchase of electrical installation, equipments amounting to Rs.6,47,900/- in cash. The AO accordingly, added back a sum of Rs.1,29,580/- by invoking the provisions of section 40A(3) of the Act. The CIT(A) also confirmed the action of AO. I find from the facts of the case that assessee has made payment of Rs.2,20,400/- for purchase of fittings of various electronic items from Gosai Electromake India vide their Bill No. 115/2004-05 dated 28.01.2005 and a further payment of Rs.4,27,500/- was made on account of purchases of various electronics item from M/s. Asish Electrical India vide their bill no. 55/25 dated 25.01.2005. Ld. Counsel for the assessee now before me stated that these amounts are capitalized and reflected in Schedule “D” of details of fixed assets maintained as per Companies Act and also under the Income-tax Act. According to assessee, these were never claimed as revenue expenditure rather these were capitalized and are part of Balance Sheet being fixed assets. On query from the Bench, ld. Sr. DR could not answer this and/or could not controvert the argument of Ld. Counsel. After hearing both the sides and perusing the material available on record, I find that this amount as canvassed by Ld. Counsel for the assessee, these are capitalized in the Balance Sheet and these are part of depreciation chart. Once the items are capitalized and expenditure is made on capital goods, no disallowance can be made by invoking the provisions of section 40A(3) of the Act. Accordingly, I delete the addition and reverse the orders of the lower authorities on this issue.

The next issue in this appeal of the assessee is against the order of CIT(A) confirming the action of the AO in making disallowance of rent expenses of Rs.1,08,000/-.

I have heard rival submissions and gone through facts and circumstances of the case. I find that the AO as well as CIT(A) made disallowance of rent paid for the reason that according to them the rent paid is only Rs.4,000/- for the year ending 31.03.2004 but for the year ending