Deputy Commissioner of Income-tax, V. Ajanta Infrastructure Pvt. Ltd., Aurangabad

ITA 1349/PUN/2016

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax, Central Circle-2, Nashik against M/s. Ajanta Infrastructure Pvt. Ltd. concerning the assessment year 2011-12. The appeal challenged the CIT(A)'s order which had allowed certain deductions and disallowed others which the Assessing Officer had initially disallowed. The main issues revolved around the allowance of interest expenses on non-business purposes, disallowance of expenses related to property purchases, and the claim of depreciation on vehicles not owned by the company. The Tribunal examined each ground of appeal, referencing relevant sections of the Income Tax Act and previous judicial decisions, ultimately affirming the CIT(A)'s decision.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 137861 (ITAT-PUNE)
• Duration Of Justice: 1889 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2022
• Appeal Filed By: Department
• Order Result: DismissedDismissed
• Bench Allotted: A
• Next Hearing Date: 06-12-2022
• Assessment Year: misc
• Appeal Filed On: 16-07-0133
• Other Referred Cases: TRF Ltd. vs. CIT [2010] 323 ITR 397 (SC), Mysore Minerals [1999] 239 ITR 775 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional evidence; Cost of acquisition; Bad and doubtful debts
• Section: 32; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “A” : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER I.T.A No.1349/PUN/2016 Assessment Year 2011-12 DCIT, Central Circle-2, 3 rd Floor, Kendriya Rajaswa Bhavan, Gadkari Chowk, Old Agra Road, Nashik. vs M/s. Ajanta Infrastructure Pvt. Ltd., API Compound, M.I.D.C. Chikalthana, Aurangabad. PAN AAECA7855J Appellant Respondent Revenue by : Shri Ramnath P. Murkunde Assessee by : Smt. Deepa Khare Date of hearing : 07.12.2022 Date of pronouncement : 23.12.2022 ORDER PER SATBEER SINGH GODARA, J.M. : This Revenue’s appeal for A.Y. 2011-12 arise against the CIT(A)-1, Aurangabad’s order dated 08.03.2016, passed in case No.ABD/CIT(A)/486/2013-14, in proceedings under section 143(3) of the Income Tax Act, 1961 [“In short Act”]. 2. Heard both the parties. Case file perused. 3. The Revenue raises the following substantive grounds in the instant appeal : I. “On the facts and the circumstances of the case, the Ld. CIT(A) is correct in allowing the interest expenses to the 2 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. tune of Rs.2,07,73,671/- added by the AO as agreed by assessee, when the amount on which interest expenses are claimed are forwarded for non-business purpose. The Ld. CIT(A) did so without even calling for remand report and entertained additional evidences. II. On the facts and the circumstances of the case, whether the Ld. CIT(A) is correct in deleting the expenses of Rs.45,22,884/- disallowed by the A.O when it has been established by the A.O in the assessment order that such expenses relate to the purchase of properties which have not been purchased during the year and hence could have utmost been capitalized. III. On the facts and circumstances of the case, whether the Ld. CIT(A) is justified in allowing the depreciation of Rs.9,95,762/- on the vehicles, which are not owned by the company, without considering that section 32 of the Income Tax Act, 1961 has strictly stipulated that the ownership of vehicle is must before claiming of depreciation. IV. On the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the interest expenses of Rs.7,40,661/- on the vehicles not owned by the company. 3 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. V. On the facts and circumstances of the case, the decision of the Ld. CIT(A) is against the interest of revenue to allow the claim of bad debts amounting to Rs.1,75,47,667/- without considering that these debts are not related to receipts offered in the current year or earlier years. VI. On the facts and circumstances of the case, whether the Ld. CIT(A) is justified in allowing the expenditure relating to the registration fee and stamp duty fee amounting to Rs.47,22,150/- when the same can be capitalised against the property for which expenses has incurred. VII. On the facts and circumstances of the case, Whether it is justified on the part of the Ld. CIT(A) to allow the appeal of the assessee on those additions/disallowances which have been made on agreed basis VIII. The Appellant craves to add, alter, modify, delete and amend any of the above grounds as per the circumstances of the case.” 4. It emerges during the course of hearing that the Revenue’s I and VI substantive grounds raise identical pleadings that the impugned disallowance u/s.36(1)(iii) qua the assessee’s interest claim of Rs.2,07,73,671/- and registration/stamp charges of Rs.47,22,150/-, had indeed 4 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. been made by the Assessing Officer on “agreed” basis and therefore, the same ought to have been affirmed by the CIT(A). We note in this factual backdrop that the CIT(A)'s detailed lower appellate discussion qua the instant former issue reads as follows : 5 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 6 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 7 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 5. We now advert to the Revenue’s foregoing substantive arguments. It emerges from a perusal of pages 4 and 5 of the assessment order dated 10.03.2014 that assessee in fact had nowhere given its consent in respect of the impugned disallowance. It rather claimed “capitalization” of the corresponding interest pertaining to the alleged interest 8 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. free advances with a further plea that the same had been invested for the purpose of purchasing properties in future only. Ms. Khare has also filed on record complete copy of the said letter dated 28.01.2014 wherein no such blanket agreement emerges as it is projected at the Revenue’s behest. Faced with the situation, we reject the Revenue’s instant first and foremost sole substantive ground seeking to revive section 36(1)(iii) interest disallowance of Rs.2,07,73,671/-. 6. The outcome of the Revenue’s VI sole substantive ground is also found to be no different when the assessee had made similar request of capitalization of the impugned registration fee and stamp duty charges than giving it’s consent for blanket disallowance in the relevant previous year. We thus affirm the CIT(A)'s detailed discussion regarding the Revenue’s I and VI substantive grounds. Rejected accordingly. 7. We now advert to the Revenue’s II substantive ground seeking to revive assessee’s expenditure claim of disallowance of Rs.45,22,884/- made by the Assessing Officer and deleted in the Ld. CIT(A)'s detailed discussion as follows : 9 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 10 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 7.1. It has come on record that not only the assessee had itself disallowed 30% of the total claim of Rs.75,38,139/- coming to Rs.22,61,441/- as personal in nature but also Assessing Officer disallowed a further equal figure, coming to Rs.45,22,884/- without any rhyme or reason. 7.2. Learned DR could hardly dispute that the assessee’s corresponding five claims of food/hotel/ telephone/vehicle repair/maintenance and medical heads had been duly accepted in principle since we are dealing with estimated and not wholesome disallowance. 7.3. Faced with the situation, we do not see any justification on the Assessing Officer’s part in reiterating the impugned disallowance before us. The CIT(A)'s foregoing detailed discussion deleting the impugned disallowance is confirmed therefore. 11 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 8. The Revenue’s III and IV substantive grounds challenge correctness of the CIT(A)'s detailed discussion granting depreciation and interest deductions of Rs.9,95,762/- and Rs.7,40,661/-, respectively to the assessee as against the Assessing Officer’s action rejecting the same in the course of assessment. The Revenue vehemently argued in support of the assessment findings that assessee is neither entitled for claiming impugned depreciation nor these interest expenses once the vehicles in question had been purchased in the names of it’s directors only. 8.1. All these Revenue’s arguments fail to impress upon us. Learned authorised representative took us to the assessee’s depreciation schedule page-116 in the balance sheet wherein no addition in the corresponding motor vehicle assets block has been found to have been made in the relevant previous year. That being the case, we quote sec.43(6)(b) that “written down value” in such an instance would be the actual cost of acquisition of the assets less all the actually allowed depreciation in the preceding assessment years. The CIT(A)'s detailed discussion appears to have followed hon’ble apex court’s landmark decision in Mysore Minerals [1999] 239 ITR 775 (SC) that what matters 12 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. in such a claim of depreciation is the concerned assessee’s dominion and control over the asset than the actual ownership thereof as it is claim at the Revenue’s behest before us. We thus uphold the CIT(A)'s detailed discussion granting the impugned depreciation relief to the assessee to the tune of Rs.9,95,762/-. 9. Coming the later interest limb disallowance of Rs.7,40,661/- claimed by the assessee, the very reasoning follows since this taxpayer only had been seeing the cost of these motor cars all along once the assets are recorded in it’s balance-sheet. The Revenue’s instant IV and V substantive grounds are rejected accordingly. 10. Lastly comes bad debts disallowance issue of Rs.1,75,47,667/- made by the Assessing Officer and deleted in the CIT(A)'s detailed discussion as follows : 13 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 14 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 15 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 16 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 17 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 18 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. 11. We have given our thoughtful consideration to vehement rival stands against and in support of the impugned disallowance. We made it clear that this is not 19 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. even Assessing Officer’s case that the assessee’s impugned bad debts claim does not pertain to the amounts actually written off as such in the corresponding ledger accounts or it had not recognized the income therefrom in the past. All what the Assessing Officer has done is to simply conclude that the assessee had not filed the relevant details in respect of it’s claim, which in-turn, stands reversed in the CIT(A)'s foregoing detailed discussion. We thus quote hon’ble apex court’s landmark decision in TRF Ltd., vs. CIT [2010] 323 ITR 397 (SC) and conclude that the assessee has duly satisfied all the conditions of the impugned bad debt claim. This Revenue’s V substantive ground is also declined. 12. No other ground or arguments has been raised before us. 13. This Revenue’s appeal is dismissed. Order pronounced in the open Court on 23 rd December, 2022. Sd/- Sd/- (DR. DIPAK P. RIPOTE) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 23 rd December, 2022 VBP/- 20 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5 . DR, ITAT, “A” Bench, Pune. 6. Guard File. BY ORDER, // TRUE COPY // Senior Private Secretary ITAT, Pune.