Iqbal Construction co., V. DCIT,

ITA 1378/DEL/2002

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9966 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 30-07-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 15-04-2002
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Keywords: Depreciation; TDS
• Section: 40A(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL I.T.A.NO. 1378(DEL)/2002 ASSESSMENT YEAR: 1998-99 M/S IQBAL CONSTRUCTION DY.COMMISSIONER OF INCOME COMPANY, C/O R.K. JINDAL & CO., VS. TAX, CIRCL E 13(1), NEW DELHI. R2/240, RAJ NAGAR, GHAZIABAD-201002. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SMT. PRATIMA KAUSHIK, CIT DR ORDER PER K.G. BANSAL : AM IN THIS CASE, THE TRIBUNAL HAD PASSED THE OR DER ON 19.10.2005, IN WHICH THE APPEAL OF THE ASSESSEE WAS DISMISS ED IN LIMINE FOR NON- PROSECUTION. ON THE APPLICATION OF THE ASSES SEE, THE ORDER WAS RECALLED ON 30.4.2009 FOR DECIDING THE APPEAL ON MERITS . THE CASE WAS FIXED FOR HEARING ON 30.7.2009, WHEN NONE ATTENDED ON BEHALF OF THE ASSESSEE, BUT THE LEARNED DR EXPLAINED THE FACTS OF THE CASE. THE APPEAL IS DECIDED ON MERITS ON THE BASIS OF F ACTS ON RECORD AND THE SUBMISSIONS MADE BEFORE US. ITA NO. 1378(DEL)/2002 2 2. GROUND NO. 1, BEING GENERAL IN NATURE, DOES NOT REQUIRE ANY DECISION FROM US. 3. GROUND NO. 2 IS AGAINST DISALLOWANCE OF 20% OF THE CASH EXPENDITURE CAUGHT WITHIN THE MISCHIEF OF SECT ION 40A(3). THE FINDINGS OF THE LEARNED CIT(APPEALS) IN THE MATTER ON PA GE 2 OF HIS ORDER, WERE AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE. SECTION 40A(3) AFTER THE AMENDMENT W.E.F. 1.4.1996 MAKES A F LAT DISALLOWANCE AT THE RATE OF 20% ON ALL CASH PAYMENTS EXCEEDING RS. 20,000/-. ONLY SOME SPECIFIC E XEMPTION HAVE BEEN GIVEN UNDER THE RULE AND UNLESS THE ASS ESSEE SHOWS THAT THE CASH PAYMENTS ARE COVERED UNDER THESE EXCEPTIONS, THE DISALLOWANCE ON THE PART OF THE ASSESSING OFFICER IS MANDATORY BY LAW. IN VIEW OF THE FACTS BEFORE ME AND THE SPECIFIC OPPORTUNITY GIVEN TO THE APPELLANT TO SHOW HOW THESE CASH PAYMENTS WERE UNDER TH IS EXEMPTED CATEGORY AND THE INABILITY OF THE ASSESSEE T O DO SO, A DISALLOWANCE OF RS. 1,60,903/- UNDER SECTION 40A(3) IS CONFIRMED. 3.1 THE CASE OF THE ASSESSEE WAS BASED UPON RESIDUARY CLAUSE (J) OF RULE 6DD, AND SECTION 40A(3) UNDER WHICH THE RULE WAS FRAMED. THE SECTION WAS AMENDED BY FINANCE (NO. 2) ACT, 1996, WITH EFFECT FROM 1.4.1997, UNDER WHICH 20% OF SUCH EX PENDITURE WAS NOT TO BE ALLOWED AS A DEDUCTION. IN VIEW OF THE AFORE SAID AMENDMENT, RULE 6DD WAS ALSO AMENDED WHICH PROVIDED FOR EXCEPTIONS TO THE AFORESAID RULE ITA NO. 1378(DEL)/2002 3 ENACTED IN SECTION 40A(3). IT WAS FOUND THAT THE CASE OF THE ASSESSEE WAS NOT COVERED UNDER ANY EXCEPTION. WE AGREE WITH THE LEARNED CIT(APPEALS) ON THESE FINDINGS. THEREFOR E, THERE IS NO REASON FOR US TO MAKE ANY AMENDMENT IN HIS ORDER. TH US, THIS GROUND IS DISMISSED. 4. GROUND NO. 3 IS FOR NON-ALLOWANCE OF THE CR EDIT FOR TDS MADE FROM THE MOBILIZATION ADVANCE OF RS. 92,995/-, ON THE GROUND THAT THE ADVANCE WAS NOT OFFERED FOR TAXATION IN THIS Y EAR. THE FINDINGS OF THE LEARNED CIT(APPEALS) IN THIS MATTER, RECORDED ON PAGE 2, ARE AS UNDER:- I HAVE CONSIDERED THE POSITION OF LAW. UNDER SECTION 203, IT IS DUTY OF THE PERSON DEDUCTING THE TAX TO IS SUE CERTIFICATE THAT SUCH TAX ON A PAYMENT OF THE SUM MENT IONED HAD BEEN DEDUCTED. THIS CERTIFICATE ONLY INFORMS THE AMOUNT OF TAX WHICH HAD BEEN DEDUCTED AND THE AMOUNT OF PAYMENT ON WHICH THIS TAX HAS BEEN DEDUCTED. ON T HE OTHER HAND, SECTION 199 SPECIFICALLY EXPLAINS WHEN THE CREDIT FOR THIS TAX, WHICH HAS BEEN DEDUCTED, SHALL BE ALLOWED . IT HAS BEEN MENTIONED IN THIS SECTION THAT CREDIT FOR TAX DEDUCTED AS PER CERTIFICATE UNDER SECTION 2 03 SHALL BE GIVEN ONLY IN THAT ASSESSMENT YEAR FOR WHICH I NCOME IS ASSESSABLE. BECAUSE OF THIS CLEAR PROVISION, T HE ASSESSING OFFICER WAS JUSTIFIED IN NOT ALLOWING CREDIT FOR TDS BECAUSE THE ASSESSEE HAD NOT SHOWN THE ADVAN CE RECEIVED BY IT AS INCOME FOR THIS ASSESSMENT YEAR. ITA NO. 1378(DEL)/2002 4 4.1 WE HAVE CONSIDERED THIS MATTER ALSO. WE FI ND THAT THE ORDER OF THE LEARNED CIT(APPEALS) IS IN CONFORMITY WITH S TATUTORY PROVISIONS CONTAINED IN SECTION 199, WHERE IT IS PRO VIDED THAT THE CREDIT SHALL BE GIVEN FOR THE TAX DEDUCTED AT SOURCE ON PROD UCTION OF CERTIFICATE U/S 203 IN THE ASSESSMENT MADE UNDER THIS ACT F OR THE ASSESSMENT YEAR IN WHICH SUCH INCOME IS ASSESSABLE. THE ASSES SEE HAS HIMSELF NOT INCLUDED THIS INCOME AS IT WAS MERELY AN AD VANCE. THEREFORE, IT IS CLEAR THAT THE INCOME IS ASSESSABLE IN A SUB SEQUENT YEAR. ACCORDINGLY, DEDUCTION CANNOT BE GRANTED FROM TAX ON TH E TDS MADE FROM THE ADVANCE. THEREFORE, THIS GROUND IS ALSO DISMI SSED. 5. GROUND NO. 4 IS AGAINST RESTRICTION OF THE DEPRECIATION ALLOWANCE TO 50% OF THE NORMAL DEPRECIATION IN RESPECT O F TEMPORARY LABOUR HUT AND TANKER ON THE GROUND THAT THESE ASSETS WERE USED IN THE BUSINESS FOR LESS THAN 180 DAYS. THE FINDINGS OF TH E LEARNED CIT(APPEALS) ARE CONTAINED ON PAGE 3 OF THE ORDER, WHICH READ AS UNDER:- I HAVE LOOKED INTO THE FACTS OF THIS CASE . THE LAW IS NOT IN FAVOUR OF THE ASSESSEE ON THIS ISSUE. IT PROVIDES THAT WHEREVER THE ASSETS IS USED FOR LESS TH AN 180 DAYS, ONLY 50% OF THE ALLOWABLE DEPRECIATION WILL B E CHARGED AS EXPENDITURE. HERE ALTHOUGH THE TEMPORARY LABOU R HUTS WOULD BE ENTITLED TO 100% DEPRECIATION BUT SI NCE THEY HAVE ITA NO. 1378(DEL)/2002 5 BEEN IN EXISTENCE FOR LESS THAN 180 DAYS, T HE LAW PROVIDES ONLY 50% OF THE DEPRECIATION TO BE ALLOWED. A S SUCH, THE CONTENTION OF THE APPELLANT IS REJECTED. THE APP ELLANT HAD ALSO ARGUED ON THE DEPRECIATION NOT ALLOWED ON TANKER BUT IN APPEAL THIS WAS NOT CONTESTED. ACTION OF TH E ASSESSING OFFICER IS, THEREFORE, UPHELD. 5.1 WE HAVE CONSIDERED THIS MATTER ALSO. SECO ND PROVISO TO SUB- SECTION (1) OF SECTION 32 CONTAINS A PROVI SION TO THE EFFECT THAT WHERE AN ASSET IS ACQUIRED DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSE OF BUSINESS FOR LESS THAN 180 DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UNDER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO 50% OF THE AMOUNT CALCULATED AT T HE PRESCRIBED PERCENTAGE. WE FIND THAT THE LEARNED CIT(APPEALS) HAS CORRE CTLY APPLIED THIS PROVISO WHILE RESTRICTING THE ALLOWANCE OF D EPRECIATION TO 50% OF THE AMOUNT CALCULATED AT PRESCRIBED PERCENTAGE. T HUS, THIS GROUND IS ALSO DISMISSED. 6. GROUND NO. 5 IS AGAINST DISALLOWANCE OF 1/ 6 TH OF TELEPHONE EXPENSES AND 1/6 TH OF THE DEPRECIATION AND RUNNING AND MAINTENANCE EXPENDITURE OF THE MOTOR CAR. HAVING REGARD TO THE FACTS OF THE CASE AND THE FINDINGS OF THE LOWER AUTHORITIES, WE FIND THAT NO SUBSTANTIAL CASE HAS BEEN MADE OUT FOR PART DISALLOWANCE OF THE EXPENDITURE. ITA NO. 1378(DEL)/2002 6 THEREFORE, THE EXPENDITURE AND THE DEPRECIATI ON IS ALLOWED AS CLAIMED BY THE ASSESSEE. THUS, THIS GROUND IS ALLO WED. 7. GROUND NO. 6, BEING RESIDUARY IN NATURE, DO ES NOT REQUIRE ANY DECISION FROM US. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLO WED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2009. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 7 TH AUGUST, 2009. SP SATIA COPY OF THE ORDER FORWARDED TO:- IQBAL CONSTRUCTION COMPANY, GHAZIABAD. DY. CIT, CIRCLE 13(1), NEW DELHI. CIT CIT(A) THE DR, ITAT, NEW DELHI. ASSISTANT REGIST RAR.