PMC Project (Inda) Pvt.Ltd., Ahmedabad V. The ACIT., Circle-5,, Ahmedabad

CO 165/AHD/2012

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2600 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 03-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I R. P. TOLANI , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, CIR - 5, AHMEDABAD (APPELLANT) VS M/S. PMC PROJECTS (INDIA) PVT. LTD. 9 TH FLOOR, SHIKHAR, MITHAKHALI SIX ROADS, NAVRANGPURA, AHMEDABAD - 380009 PAN: AADCP5841L (RESPONDENT /CROSS OBJECTOR ) REVENUE BY : S H RI JAMES KURIAN , SR. D . R. ASSESSEE BY: S H RI S.N. SOPARKAR & SHRI P. M. MEHTA , A.R. DATE OF HEARING : 29 - 11 - 2 016 DATE OF PRONO UNCEMENT : 23 - 12 - 2 016 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL AND ASSESSEE S CROSS OBJECTION FOR A.Y. 2006 - 07 , AR I SE FROM ORDER OF THE CIT(A) - I X, AHMEDABAD DATED 31 - 05 - 2012 IN APPEAL NO. CIT(A) - XI/ 4 59 / ACIT. CIR - 5/11 - 12 , IN PROCEEDINGS I T A NO . 1731 & CO NO. 165 / A HD/20 12 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 2 UND ER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - I) THE COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCEOFRS.1,86,73,151/ - M ADE ON ACCOUNT OF SUPPRESSION OF RECEIPTS. II) THE COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.67,63,994/ - MADE ON ACCOUNT OF CAPITAL EXPENDITURE CLAIMED AS REVENUE EXPENDITURE BY THE ASSESSEE. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF CROSS OBJECTION: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED C.I.T(A) ERRED IN REJECTING THE RELEVANT GROUND OF APPEAL RAISED BY THE ASSESSEE COMPANY BEFORE HIM CHALLENGING THE VALIDITY OF THE PROCEEDINGS INITIATED U/S. 147 OF THE I.T. ACT. 4 . IN THIS CASE, THE RETURN OF INCOME DECLARING INCOME OF RS. 46 , 74 , 700/ - WAS FILED ON 30 TH DECEMBER, 2008. THE ASSESSMENT U/S. 143(3) WAS FINALIZED ON 30 TH DECEMBER, 2008 DETERMINING THE TOTAL INCOM E OF RS. 59,48,870/ - . SUBSEQUENTLY , THE ASSESSING O FFICER NOTICED THAT THERE WAS ESCAPEMENT OF INCOME AND REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S. 148 OF THE ACT ON 4 TH MARCH, 2011. THEREAFTER, THE ASSESSEE APPLIED FOR COPY OF REASON RECORDED U/S. 147 OF THE ACT, THE SAME WAS SUPPLIED TO THE ASSESSEE. THE OBJECTION RAISED BY T HE ASSESSEE WAS ALSO DISPOSED OF VIDE LATTER DATED 10 - 10 - 2011 BY THE ASSESSING O FFICER. 5 ADDITION ON ACCOUNT OF RECEIPT I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 3 THE ASSESSING O FFICER STATED THAT THE ASSESSE COMPA NY HAD RECEIVED TOTAL AMOUNT OF RS. 20,17,43,228/ - AS PER TDS CERTIFICATE , H OWEVER, THE ASSESSEE COMPANY HAS CREDITED RS. 18,30,70,112/ - IN THE P & L A/C. THE ASSESSING OFFICER WAS OF THE VIEW THAT AS PER PROVISION OF SECTION 199 OF THE ACT THE ENTIRE RE CEIPT AS PER TDS CERTIFICATE TO BE ACCOUNTED FOR. THE ASSESSING O FFICER OBSERVED THAT THERE WAS A ESCAPEMENT OF INCOME ON FAILURE OF THE ASSESSEE TO ACCOUNT FOR THE ENTIRE RECEIPT AS PER THE TDS CERTIFICATE . IN RESPONSE TO THE OBJECTION, THE ASSESSEE COMP ANY HAS SUBMITTED THAT COMPANY HAS CORRECTLY DISCLOSED THE DREDGING INCOME OF RS. 18,30,70,112/ - IN THE P & L A/C. A ND THE SAID DIFFERENCE OF RS. 1,86,73,151/ - WAS ON ACCOUNT OF SERVICE TAX AND EDUCATION CESS CHARGED ON DREDGING INCOME WHICH WAS CREDITED TO SEPARATE SERVICE TAX ACCOUNT AND EDUCATIONAL CESS ON SERVICE TAX . THE ASSESSING O FFICER HAS NOT ACCEPTED THE REPLY OF THE ASSESSEE STATING THAT AS PER PROVISION OF SECTION 199 OF THE IT ACT, THE ASSESSEE SHOULD HAVE CREDITED THE ENTIRE RECEIPT AS PER TDS CERTIFICATE. THEREFORE, THE HAS ADDED THE D IFFEREN CE AMOUNT OF RS. 1 ,86,73,118 / - TO THE TOTAL INCOME OF THE ASSESSEE. 6 . AGGRIEVED AGAINST THE IMPUGNED ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME T AX(A). THE LD. COMMISSIONER OF INCOME TAX(A) DELETED THE ADDITION OF RS. 1 , 86 , 73 , 118/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCES IN TDS CERTIFICATE. THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 4 3.2 I HAVE C AREFULLY CONSIDERED RIVAL SUBMISSIONS. I HAVE ALSO PERUSED VARIOUS EVIDENCES FURNISHED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. IT IS SEEN THAT THE APPELLANT RECEIVED DREDGING CHARGES OF RS. 20,17,43,228/ - . THIS FIGURE IS/VERIFIABLE WITH THE TDS CERTIFICATES. THIS RECEIPT INCLUDES RECEIPT TOWARDS DREDGING CHARGES OF RS. 18,30,70,112/ - AND TOWARDS SERVICE TAX LIABILITY OF RS.1,86,73,151/ - . THE TDS HAS BEEN DEDUCTED ON THE TOTAL PAYMENTS MADE BY THE CONTRACTEE OF RS . 20,17,43,228/ - . THE PERUSAL OF ACCOUNTS FURTHER REVEALS THAT RECEIPT TOWARDS SERVICE TAX WAS TAKEN IN SEPARATE ACCOUNT AND REFLECTED IN THE BALANCE SHEET. THE NET DREDGING CHARGES OF RS. 18,30,70,112/ - WAS DECLARED AS TAXABLE RECEIPT UNDER THE HEAD DREDG ING CHARGES. THE A.O. IS OF THE VIEW THAT THE TAXABLE RECEIPT IS RS. 20,17,43,228/ - 3.3 PERUSAL OF RECORDS FURTHER REVEALS THAT THIS ISSUE WAS INVESTIGATED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE ACCOUNTING POLICY ADOPTED BY THE APPELLANT WAS ACCEPTED. DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS THE APPELLANT FILED COPY OF RECONCILIATION CHART WHEREIN THE DREDGING INCOME HAS BEEN RECOGNIZED TO THE EXTENT OF RS.18,10,70,112/ - AND THE RECEIPT TOWARDS SERVICE TAX HAS BEEN D ECLARED AT RS.1,86,73,151/ - . SINCE THE SERVICE TAX IS TO BE PAID TO THE CENTRAL GOVT. AND ACCORDINGLY THIS IS NOT AN INCOME IN THE HANDS OF THE APPELLANT. IN VIEW OF THIS THE TREATMENT GIVEN TO SERVICE TAX IS AS PER THE STANDARD ACCOUNTING PRACTICE. THE AP PELLANT HAS FURTHER GIVEN DETAILS OF SERVICE TAX PAYABLE ACCOUNT. PERUSAL OF THIS ACCOUNT REVEALS THAT SERVICE TAX OF RS. 1,86,73,151/ - WAS PAID TO THE ACCOUNT OF CENTRAL GOVT. DURING THE YEAR UNDER CONSIDERATION ITSELF. IN THIS REGARD THE APPELLANT HAS F U RNISHED COPIES OF CHALLAN VIDE WHICH PAYMENT WAS MADE TO THE GOVT. ACCOUN T. PART OF THIS LIABILITY WAS DISCHARGED AS ADJUSTMENT AGAINST CENVAT CREDIT AVAILABLE TO THE APPELLANT COMPANY. THIS ADJUSTMENT HAS ALSO BEEN MADE AS PER SERVICE TAX ACT. THE END RESULT IS THAT AT THE END OF THE CURRENT ASSESSMENT YEAR THERE WAS NO SERVICE TAX PAYABLE OR THE ENTIRE SERVICE TAX RECEIVED BY THE APPELLANT WAS PAID TO THE GOVT. ACCOUNT. THIS WAY PROVISIONS OF SEC.43B WILL ALSO NOT BE APPLICABLE IN THE CASE OF APPELLAN T. IN VIEW OF ABOVE FACTS, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS CORRECTLY ACCOUNTED FOR SERVICE TAX RECEIPTS OF RS.1,86,73,151/ - AND ADDITION ON THIS ACCOUNT IS UNWARRANTED. IN VIEW OF THIS, ADDITION OF RS.1,86,73,118/ - IS ORDERED TO BE DELET ED. THESE GROUNDS OF APPEALS ARE ALLOWED. I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 5 7 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER ON THE ISSUE OF TREATING THE ENTIRE RECEIPT AS PER TDS CERTIFICATE AS INCOME OF THE ASSESSEE. ON THE OTHER HAND, THE LD. A.R. RELIED ON THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A). 8 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT ASSESSEE HAD RECEIVED DREDGING CHARGES OF RS. 20,17,43,228/ - INCLUDING SERVICE TAX LIAB ILITY OF RS. 1,86,73,151/ - AND SERVICE TAX LIABILITY WAS CREDITED TO THE SERVICE TAX ACCOUNT TO BE PAID TO THE CENTRAL GOVERNMENT AND THIS WAS NOT THE INCOME IN THE HANDS OF THE ASSESSEE. WE OBSERVED THAT UNWARRANTED ADDITION WAS MADE BY THE ASSESSING OFF ICER ON THIS ISSUE, THEREFORE , WE UPHOLD THE DECISION OF LD. CIT(A) . THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 9 . REGARDING ADDITIO N MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE ON REVENUE EXPENDITURE, THE LD. COMMISSIONER OF INCOME TAX(A) HAS ALLOWED THIS GROUND OF APPEAL OF ASSESSEE. THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - 4.2 1 HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. I HAVE ALSO PERUSED VARIOUS FACTS, VARIOUS EVIDENCES SUBMITTED BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. PERUSAL OF THE RETURN OF INCOME REVEALS THAT THE APPELLANT HAS PURCHASE DREDGER COSTING RS.29.53 CRORES IN JULY, 2005. THE DREDGER STARTED FUNCTIONING WITH EFFECT FROM 31.8.2005 . SINCE THE DREDGER IS STARTED FUNCTIONING BEFORE 30/9/2007, ACCORDINGLY, THE APPELLANT CLAIMED DEPRECIATION ON THE DREDGER FOR FULL YEAR AND THE I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 6 SAME WAS ALLOWED DURING THE ASSESSMENT PROCEEDINGS. TO BE PRECISE THE APPELLANT HAS CLAIMED DEPRECIATION OF RS . 5,89,75,081/ - FOR FULL YEAR ON THE WDV OF DREDGER OF RS.29,52,87,386/ - . THESE FACTS MAKES IT VERY CLEAR THAT THE DREDGER STARTED FUNCTIONING FROM THE MONTH OF SEPTEMBER, 2006 ONWARDS. PERUSAL OF IMPUGNED EXPENSES REVEALS THAT THE SAME WAS INCURRED IN THE MONTH OF DEC, 2005, FEB. 2006 AND MARCH, 2006. THUS THE EXPENSES WERE INCURRED AFTER THE COMMISSIONING OF DREDGER. THESE FACTS INDICATE THAT THESE EXPENSES WERE INCURRED FOR REPAIR AND MAINTENANCE OF DREDGER AND THE SAME SHOULD BE TREATED AS REPAIR AND MA INTENANCE EXPENSES. SECONDLY, THERE IS NOTHING ON RECORD TO INDICATE THAT BY THE PURCHASE OF RUBBER HOSE AND OTHER PIPE LINES AND ITS INSTALLATION HAS NOT INCREASED EITHER THE CAPACITY OF THE DREDGER OR THE LIFE OF THE DREDGER. THESE EXPENSES FORMS PART OF REGULAR REPAIR AND REPLACEMENT OF DREDGER AS THE RUBBER HOSE SUFFERS WITH DAMAGES OR BLOCKAGES. IT IS ALSO A MATTER OF FACT THAT SIMILAR EXPENSES HAVE BEEN CLAIMED BY THE APPELLANT IN THE SUBSEQUENT YEARS ALSO. TO BE PRECISE IN THE F.Y.2006 - 07 THE APPELLA NT HAS CLAIMED AN EXPENSE OF 530 LACS FOR PURCHASE OF RUBBER HOSES AND OTHER ALLIED SPARES. IN THE F.Y.07 - 08 AGAIN THE APPELLANT HAS CLAIMED EXPENSES OF RS.107.53 LACS. THESE EXPENSES WERE ALLOWED TO THE APPELLANT. THESE FACTS FURTHER REINFORCE THE CONCLUS ION THAT THESE ARE REGULAR REPAIR AND REPLACEMENT EXPENSES WHICH IS INCURRED IN THE DAY TO DAY OPERATION OF THE DREDGER. SINCE THESE EXPENSES ARE INCURRED AFTER THE INSTALLATION OF DREDGER AND THESE EXPENSES ARE ROUTINE REPAIR AND MAINTENANCE EXPENSES, ACC ORDINGLY, 1 AM OF THE FIRM VIEW THAT APPELLANT IS ENTITLED TO CLAIM EXPENSES OF RS. 84,54,743/ - AS REPAIR & MAINTENANCE EXPENSES. ACCORDINGLY, ADDITION OF RS. 67,63,994/ - MADE BY THE A.O. IS UNTENABLE AND THE SAME IS ORDERED TO BE DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 10 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER ON THE ISSUE OF TREATING THE ENTIRE RECEIPT AS PER TDS CERTIFICATE AS INCOME OF THE ASSESSEE. ON THE OTHER HAND, THE LD. A.R. RELIED ON THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A). I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 7 11 . DISALLOWANCE ON REVENUE EXPENDITURE THE ASSESSING O FFICER HAS STATED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS CLAIMED MISCELLANEOUS EXPENDITURE OF RS. 7.58 CR ORES. HE FURTHER STATED THAT THIS MISCELLANEOUS EXPENDITURE INCLUDED THE EXPENDITURE OF RS. 84,54 ,743 / ( RS. 65,28,780/DREDGER DELIVERY HO SE - 02 + RS. 19,28,963/ - BEING PIPELINE FABRICATION - D REDGER) WHICH ASSESSING OFFICER CONSIDERED TO BE CAPITAL EXPENDI TURE . THE ASSESSING OFFICER ASKED THE ASSESSEE WHY THESE EXPENDITURES SHOULD NOT BE DISALLOWED ON ACCOUNT OF BEING CLAIMED AS REVENUE EXPENDITURE. IN THIS CONNECTION THE ASSESSEE SUBMITTED THAT COMPANY HAD IMPORTED DREDGER S OF R S. 29 , 52 , 87 , 386/ - ALONG WITH SET OF SPARE PARTS WHICH WAS CAPITALIZED AND PUT TO USE ON 31 ST AUGUST, 2005. HE FURTHER STATED THAT ALL THE EXPENSES RELATED TO DREDGER INCLUDING SPARE PARTS VIZ. HOUSE PIP, BOOSTER STATION ETC. RECEIVED ALONG WITH DREDGER FROM SUPPLIER PUT TO USE DATE I.E.31.08.2005 AND CAPITALIZED AS PER AS - 10. THE ASSESSING O FFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND STATED THAT NA TURE OF EXPENDITURE WAS CAPITAL EXPENDITURE AND NOT ALLOWABLE AS REVENUE EXPENDITURE . HOWEVER , THE ASSESSING OFFICER HAD ALLOWED 20% DEPRECIATION OF RS. 16,90,948/ - OUT OF TOTAL EXPENDITURE OF RS. 84 , 54 , 743 / - AND ADDED REMAINING AMOUNT OF RS. 67 , 63 , 994/ - TO THE TOTAL INCOME OF THE ASSESSEE. 12 . REGARDING ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE O N REVENUE EXPENDITURE, THE LD. COMMISSIONER OF I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 8 INCOME TAX(A) HAS ALLOWED THIS GROUND OF APPEAL OF ASSESSEE. THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - 4.2 1 HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. I HAVE ALSO PERUSED VARIOUS FACTS, VARIOUS EVIDENCES SU BMITTED BY THE APPELL ANT DURI NG ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. PERUSAL OF THE RETURN OF INCOME REVEALS THAT THE APPELLANT HAS PURCHASE DREDGER COSTING RS.29.53 CRORES IN JULY, 2005. THE D REDGER STARTED FUNCTIONING WITH EFFECT FROM 31.8.2005. SINCE THE DREDGER IS STARTED FUNCTIONING BEF ORE 30/9/2007, ACCORDINGLY, THE APPELLANT CLAIMED DEPRECIATION ON THE DREDGER FOR FULL YEAR AND THE SAME WAS ALLOWED DURING THE ASSESSMENT PROCEEDINGS. TO BE PRECISE THE APPELLANT HAS CLAIMED DEPRECIATION OF RS. 5,89,75,081/ - FOR FULL YEAR ON THE WDV OF DREDGER OF RS.29,52,87,386/ - . THESE FACTS MAKES IT VERY CLEAR THAT THE DREDGER STARTED FUNCTIONING FROM THE MONTH OF SEPTEMBER, 2006 ONWARDS. PERUSAL OF IMPUGN ED EXPENSES REVEALS THAT THE SAME WAS INCURRED IN THE MONTH OF DEC, 2005, FEB. 2006 AND MARCH, 2006. THUS THE EXPENSES WERE INCURRED AFTER THE COMMISSIONING OF DREDGER. THESE FACTS INDICATE THAT THESE EXPENSES WERE INCURRED FOR REPAIR AND MAINTENANCE OF DR EDGER AND THE SAME SHOULD BE TREATED AS REPAIR AND MAINTENANCE EXPENSES. SECONDLY, THERE IS NOTHING ON RECORD TO INDICATE THAT BY THE PURCHASE OF RUBBER HOSE AND OTHER PIPE LINES AND ITS INSTALLATION HAS NOT INCREASED EITHER THE CAPACITY OF THE DREDGER OR THE LIFE OF THE DREDGER. THESE EXPENSES FORMS PART OF REGULAR REPAIR AND REPLACEMENT OF DREDGER AS THE RUBBER HOSE SUFFERS WITH DAMAGES OR BLOCKAGES. IT IS ALSO A MATTER OF FACT THAT SIMILAR EXPENSES HAVE BEEN CLAIMED BY THE APPELLANT IN THE SUBSEQUENT YEA RS ALSO. TO BE PRECISE IN THE F.Y.2006 - 07 THE APPELLANT HAS CLAIMED AN EXPENSE OF 530 LACS FOR PURCHASE OF RUBBER HOSES AND OTHER ALLIED SPARES. IN THE F.Y.07 - 08 AGAIN THE APPELLANT HAS CLAIMED EXPENSES OF RS.107.53 LACS. THESE EXPENSES WERE ALLOWED TO THE APPELLANT. THESE FACTS FURTHER REINFORCE THE CONCLUSION THAT THESE ARE REGULAR REPAIR AND REPLACEMENT EXPENSES WHICH IS INCURRED IN THE DAY TO DAY OPERATION OF THE DREDGER. SINCE THESE EXPENSES ARE INCURRED AFTER THE INSTALLATION OF DREDGER AND THESE EXPE NSES ARE ROUTINE REPAIR AND MAINTENANCE EXPENSES, ACCORDINGLY, 1 AM OF THE FIRM VIEW THAT APPELLANT IS ENTITLED TO CLAIM EXPENSES OF RS. 84,54,743/ - AS REPAIR & MAINTENANCE EXPENSES. ACCORDINGLY, ADDITION OF RS. 67,63,994/ - I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 9 MADE BY THE A.O. IS UNTENABLE AN D THE SAME IS ORDERED TO BE DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 13 . DURING THE COURSE OF APPELLATE PROCEEDING BEFORE US THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. ON THE HAND THE LD.COUNSEL SUPPORTED THE ORDER OF THE LD. CIT(A) . W E HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. 14 . W E FIND THAT THE ASSESSEE HA D PURCHASED DREDGER COSTING RS. 29 ,52,87,386 / - IN JULY, 2005. THE DREDGER STARED FUNCTIONING W.E.F. 31 ST AUGUST, 2005 . SINCE THE DREDGER HAD STARTED FUNCTIO NING BEFORE 30 TH SEPTEMBER, 2005. SO, THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE DREDGER FOR FULL YEAR AND THE SAME WAS ALLOWED DURING THE ASSESSMENT PROCEEDINGS. THE DR EDGER CONTINUOUSLY MOVE FROM ONE DISTANCE TO ANOTHER AND THE DREDGER HOUSE PIPE AND DREDGER PIPELINE EXPENSES WERE INCURRED FOR THE PURPOSE OF OPERATION OF DREDGER. THESE FACTS INDICATE THAT THE EXPENSES WERE INCURRED FOR REPAIR AND MAINTENANCE OF DREDGE. WE OBSERVED THAT THE SIMILAR KINDS OF EXPENSES WERE CLAIMED BY THE ASSESSEE IN THE SUBSEQUENT YEARS ALSO. WE FIND THAT THESE EXPENSES ARE INCURRED IN CONNECTION WITH REGULAR REPAIR AND REPLACEMENT FOR OPERATING OF THE DREDGER. IN VIEW OF TH ESE FACTS AND FINDINGS, WE CONSIDERED THAT LD. COMMISSIONER OF INCOME TAX(A) RIGHTLY STATED THAT THESE EXPENDITURES WERE INCURRED AFTER INSTALLATION OF DREDGER AND THESE EXPENSES WERE ROUTINE NATURE OF EXPENSE, THEREFORE, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A) IN DELETING THE ADDITION MADE BY THE ASSESSING O FFICER. I.T.A NO. 1731 & CO 165 /AHD/20 12 A.Y. 2006 - 07 PAGE NO A CIT VS. M/S. PMC PROJECTS (INDIA) PVT. LTD. 10 15. IN THE RES ULT THE APPEAL OF THE REVENUE IS DISMISSED. 16. THE CO OF THE ASSESSEE HAS NOT BEEN PRESSED AT THE TIME OF HEARING. SO, THE SAME IS DISMISSED AS NOT PRESSED . ORDER PR ONOUNCED IN THE OPEN C OURT ON 23 - 12 - 201 6 SD/ - SD/ - ( R. P. TOLANI ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 2 3 /12 /2016 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,