Sh. Sanjeev Malhotra, Ludhiana V. ITO, Ludhiana

ITA 124/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57653 (ITAT-CHANDIGARH)
• Duration Of Justice: 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 01-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K MUKHI
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH SMC CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT ITA NO. 124/CHD/2012 ASSESSMENT YEAR: 2005-06 SHRI SANJEEV MALHOTRA, V ITO, WARD III (3), 130-D, KICHLU NAGAR, LUDHIANA. OPP. PAU GATE 6, LUDHIANA. PAN: ACHPM-4381P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.K.MUKHI RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 19.03.2012 DATE OF PRONOUNCEMENT : 19.03.2012 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-II LUDHIANA DATED 17.11.2011 RELATI NG TO ASSESSMENT YEAR 2005-06. 2. VIDE GROUND NOS. 1 TO 3 OF THE APPEAL, THE ASSES SEE HAS CHALLENGED THE ACTION OF CIT(A) IN CONFIRMING THE A DDITION OF RS.34,600/- MADE ON ACCOUNT OF DIFFERENCE IN VALUE OF BOILER. DURING ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE CLAIMED ADDITION OF BOILER OF RS.4,18,153/ - INSTEAD OF RS.3,83,553/-. THE AO CALLED FOR CONCERNED PURCHAS E BILLS. THE ASSESSEE FILED SOME OF THE BILLS. THE AO REQUI RED THE ASSESSEE TO EXPLAIN THE DIFFERENCE BUT NO EXPLANATI ON WAS OFFERED FROM HIS PART. THE AO, THEREFORE, DISALLOW ED THE DIFFERENCE OF RS.34,600/- AND ADDED BACK THE SAME TO THE ASSESSEE'S INCOME. ON APPEAL, THE CIT(A) CONFIRMED THE 2 ADDITION OF RS.34,600/- AND HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AT LENGTH AND HAVE ALSO PERUSED THE MATERIALS AVAILABL E ON RECORD. SHRI S.K.MUKHI, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE PURCHASED AND GOT INSTALLED BOILER DURING THE YEAR UNDER CONSIDERATION. THE TOTAL COST, AS PER THE SC HEDULE OF FIXED ASSETS, ATTACHED TO THE AUDITED BALANCE SHEET WAS RS.4,18,153/- AS SHOWN BY THE ASSESSEE. HE, THEREFO RE, MADE AN ADDITION OF RS.34,600/- BEING THE DIFFERENCE IN THE TWO FIGURES. ACCORDING TO SHRI S.K.MUKHI, LD. COUNSEL FOR THE AS SESSEE, THERE WERE TWO SEPARATE ACCOUNTS IN THE LEDGER, AS UNDER : OPENING BALANCE ADDITION CLOSING BALANCE ----------------------- -------------- --- ---------- BOILER 292869.50 383553.00 676423.00 BOILER FOUNDATION 34600.00 34600.00 & INSTALLATION 4. SHRI S.K.MUKHI, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT BOTH THE ACCOUNTS RELATED TO BOILER. AS SUCH, WHILE FINALIZING THE AUDITED BALANCE-SHEET, THE TWO ACCOU NTS WERE AMALGAMATED AND TAKEN TOGETHER IN BOILER ACCOUNT. A S A RESULT, BOTH ADDITIONS OF RS.3,83,553/- + RS.34,600/- WERE SHOWN IN BOILER AND NO SEPARATE ADDITIONS WERE SHOWN IN BOI LER FOUNDATION AND INSTALLATION. IN MY OPINION, WHEN THE TWO ACCOUNTS ARE CONSIDERED TOGETHER, THERE IS NO DIFFE RENCE. HENCE, THERE IS NO JUSTIFICATION IN MAKING THE ADDITION OF RS.34,600/-. IT SEEMS THAT THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE SUM OF RS.34,600/- HAD BEEN DEBITED IN LEDGER U NDER A DIFFERENT HEAD AND IN THE BALANCE SHEET EXPENSES ON ACQUISITION 3 OF BOILER AND FOR ITS FOUNDATION ETC. HAD BEEN COMB INED TOGETHER, STATEMENT OF BOTH THE ACCOUNTS WERE FILED BEFORE THE AO, AND THE ALLEGED DIFFERENCE OF RS.34,600/- WAS, IN FACT, NOT THERE. 5. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE, THERE IS NO JUSTIFICATION IN MAKING T HE ADDITION. ACCORDINGLY, I DELETE THE ADDITION OF RS.34,600/- A ND ALLOW GROUND NOS.1 TO 3 OF THE APPEAL. 6. GROUND NO. 4 & 5 OF THE APPEAL READ AS UNDER : 4. THAT THE CIT(A) HAS ERRED IN LAW AND ON THE FACT S OF THE CASE IN SUSTAINING THE FOLLOWING DISALLOWANC ES : OUT OF CAR EXPENSES (INCL CAR INSURANCE) 8544/- OUT OF TELEPHONE EXPENDITURE 3668/- OUT OF CAR DEPRECIATION 15500/- OUT OF DEPRECIATION ON BOILER 4325/- AND THE DISALLOWANCES ARE, IN ANY OTHER CASE, UNJUS T AND TOO EXCESSIVE. 5. THAT THE CIT(A) HAS FAILED TO APPRECIATE THAT WH ILE CLAIMING DEPRECIATION THE APPELLANT HAD HIMSELF DISALLOWED 1/10 TH (I.E. 10804/-) OUT OF CAR DEPRECIATION WHICH OUGHT TO BE REDUCED FROM TOTAL DISALLOWANCE OF RS.15500/- MADE BY AO. 7. WHILE FRAMING THE ASSESSMENT, THE AO DISALLOWED 1/6 TH OF THE EXPENSES ON ACCOUNT OF PERSONAL USE OF CAR, WHICH COMES TO RS.8,544/-. IN FURTHER APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE. 8. I HAVE HEARD THE RIVAL SUBMISSIONS. IT IS NOTIC ED THAT THE ASSESSEE HAD CLAIMED CAR EXPENSES AT RS.51,248/-. T HE AO DISALLOWED RS.8,544/- BEING 1/6 TH OF THE EXPENSES ON ACCOUNT OF PERSONAL USE OF CAR. I MY OPINION, THE DISALLOW ANCE MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS ON HIGHER SIDE. IN 4 THE INTEREST OF JUSTICE, IT WOULD BE FAIR TO DISALL OW 1/10 TH OUT OF CAR EXPENSES. THE AO IS DIRECTED TO GIVE THE RE LIEF ACCORDINGLY. 8.1 THE ASSESSEE CLAIMED TELEPHONE EXPENSES AT RS.36,679/- AND THE AO DISALLOWED RS.3,668/- BEING 1/10 TH OF THE EXPENSES. THE CIT(A) CONFIRMED THE ORDER OF AO ON THIS ISSUE. 8.2 AFTER HEARING THE LD. REPRESENTATIVES OF BOT H THE PARTIES, I HOLD THAT 1/10 TH DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS REASONABLE AND THEREFORE , THE DISALLOWANCE OF RS.3,668/- OUT OF TELEPHONE EXPENSE S IS CONFIRMED. 8.3 DURING THE ASSESSMENT YEAR, THE ASSESSEE CLA IMED DEPRECIATION ON CAR. THE AO DISALLOWED 1/6 TH I.E. RS.15,500/- . SHRI S.K.MUKHI, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE HIMSELF HAS DISALLOWED 1/10 TH I.E. RS.10,804/- OUT OF CAR DEPRECIATION. THERE IS NO MATERIAL ON RE CORD TO CONTROVERT THE ABOVE CONTENTION OF SHRI S.K.MUKHI, LD. COUNSEL FOR THE ASSESSEE. IN THAT VIEW OF THE MATTER, I HO LD THAT NO DISALLOWANCE OUT OF CAR DEPRECIATION IS CALLED FOR. CONSEQUENTLY. ADDITION OF RS.15,500/- MADE BY THE A O IS DELETED. 8.4 WHILE FRAMING THE ASSESSMENT, AO ALSO DISALLO WED RS.4,325/- ON ACCOUNT OF DIFFERENCE IN THE VALUE OF BOILER. THE ASSESSEE HAS CLAIMED DEPRECIATION ON ACCOUNT OF BOI LER AT RS.4,18,153/-, WHEREAS AS PER LEDGER, THE ADDITION CAME TO RS.3,83,553/-. ACCORDING TO AO, THE TOTAL WDV OF T HE BOILER CAME TO RS.6,76,423/- AS AGAINST RS.7,11,022/- CLAI MED. THE 5 AO WORKED OUT THE DEPRECIATION AT RS.84,552/- INSTE AD OF RS.88,877/- CLAIMED BY THE ASSESSEE. HE, THEREFORE , DISALLOWED THE DIFFERENCE OF RS.4,325/- ON ACCOUNT OF DEPRECIATION. 5. ON APPEAL, CIT(A) CONFIRMED THE DISALLOWANCE OF RS.4,325/-. 6. AFTER HEARING LD. REPRESENTATIVES, I HOLD THAT T HERE WAS NO JUSTIFICATION IN MAKING THE DISALLOWANCE OF RS.4 ,325/- OUT OF DEPRECIATION ON BOILER. WHILE DECIDING GROUND N O.1 TO 3 OF THE APPEAL, I HAVE ALREADY HELD THAT THERE WAS NO J USTIFICATION IN MAKING ADDITION OF RS.34,600/- ON BALANCE DIFFER ENCE IN VALUE OF BOILER. IN THAT VIEW OF THE MATTER, THERE WAS NO JUSTIFICATION IN MAKING DISALLOWANCE OUT OF DEPRECI ATION ON BOILER. CONSEQUENTLY, I DELETE ADDITION OF RS.4,325 /-. 7. IN THE RESULT, APPEAL IS ALLOWED PARTLY, AS INDI CATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH,2012. SD/- ( H.L.KARWA ) VICE PRESIDENT DATED: 19 TH MARCH,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH