M/s. Uni Kohtech Infrastructure Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1466/DEL/2017

AI Insights

The case involves M/s Uni Kohltech Infrastructure Pvt. Ltd., which appealed against the order of the CIT(A) disallowing certain expenses claimed in the Assessment Year 2011-12. The primary contention was regarding the disallowance of depreciation, interest on service tax, and other operating expenses totaling Rs. 41,67,126. The AO had disallowed these expenses on grounds that the assets were not used for business purposes and the company did not engage in any business activities during the year. The Tribunal found that the depreciation had been consistently claimed and allowed in previous years, and thus could not be disallowed without substantial reason. The Tribunal also noted that the issue of service tax payments needed further verification by the AO.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122025 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Next Hearing Date: 28-03-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2017
• Other Referred Cases: CIT vs Refrigeration & Allied Industry Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJESHWAR PAINLY
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G: NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.1466/Del/2017 Assessment Year: 2011-12 M/s Uni Kohltech Infrastructure Pvt. Ltd., B-8, Basement Floor, Ansal Tower, Nehru Place, New Delhi 110019 PAN AAACW 7337 H vs. The DCIT Circle 18(1), New Delhi (Appellant) (Respondent) For Assessee : Shri Rajeshwar Painly, Adv. For Revenue : Ms. Meenakshi Dohre, Sr DR Date of Hearing : 29.03.2023 Date of Pronouncement : 11.04.2023 ORDER PER CHANDRA MOHAN GARG, J.M. This appeal filed by the assessee is directed against the order dated 23.11.2016 of the Ld. CIT(A), New Delhi relating to Assessment Year 2011-12. ITA No.1466/Del/2017 Page 2 of 5 2. The sole effective ground of assessee read as follow:- 1. That the said case learned CIT(A) and Ld. Assessing Officer, the both has erred on facts and in law in making order in which the Ld. AO has disallowed expenses of Rs. 41,67,126/- as like Depreciation, Interest on service tax and other operating expenses. Whereas, it is allowable under the Act. 3. The learned counsel of the assessee submitted that the assessee is a Private Ltd. company and the assessee has to incur some expenditure on account of maintenance of his its legal existence, which has been disallowed by the AO; therefore, the amount of Rs. 41,67,126/- may kindly be allowed to the assessee. 4. Replying to the above, the learned Senior DR submitted that the assessee had claimed depreciation, but the assessee has not used the asset on which depreciation was claimed during the year under consideration; therefore, the AO rightly disallowed the depreciation. The learned Senior DR also submitted that the AO has already registered of company fees and audit fees amounting to Rs. 17, 743/- and the assessee carried out no business activity; therefore, the AO was rightly disallowed the amount of interest on service tax primarily expenses, consultancy expenses and legal ITA No.1466/Del/2017 Page 3 of 5 expenses along with small amounts of employee contribution and short and access. Therefore the disallowance made by the AO may kindly be upheld. 5. On careful consideration of the above rival submissions, we are of the considered view that it is not the case of the AO that the assessee is first time claiming the depreciation and the assets were not used for the purpose of business during the year under consideration. From the first appellate order, we further note that the Ld. CIT(A) has uphold the disallowance of depreciation by holding that the preposition relied by the assessee rendered by Hon’ble jurisdictional High Court of Delhi in the case of CIT vs Refrigeration & Allied Industry Ltd. is distinguishable as the appellant has not given any submission that the machinery was kept in good working condition so that it could be used at any moment. In our considered view, neither the assessee nor the Ld. CIT(A) has recorded a finding that the assessee claimed depreciation on the first time, and the plant & machinery on which depreciation was claimed was never put to use. In our considered view, when the assessee is claiming depreciation consistently, which was allowed to ITA No.1466/Del/2017 Page 4 of 5 it during the immediately preceding year, then the depreciation cannot be disallowed merely because that the assessee has not given any submission that machinery was kept in good working condition so that it could be used at any moment. The analogy adopted by the authorities below is not sustainable and bereft of merits therefore, the disallowance of deprecation to the assessee is not tenable, and thus we direct the AO to delete the same. 6. So far as interest on delayed service tax payment of Rs. 5,92,999/- is concerned this payment has been made by the assessee on account of delayed payment of service tax. This issue has been restored by the Ld. CIT(A) to the file of AO to verify the payment of original challans from the record and to allow accordingly. No further direction is required to be made in this regard and the AO is directed that the payment of service tax and interest thereon to verify after allowing due opportunity of hearing to the assessee and to adjudicate the issue in accordance with relevant provisions of the Act. 7. So far as other disallowances are concerned the learned counsel of the assessee has not made any sustainable arguments in ITA No.1466/Del/2017 Page 5 of 5 this regard. Accordingly, in view of foregoing discussion the AO is directed to delete the disallowance of depreciation. Issue of service and interest thereon is allowed for statistical purposes and thus disallowance is restricted to Rs. 59,373/- only. Accordingly, the sole ground of assessee is partly allowed. 8. In the result appeal of the assessee is partly allowed. Order pronounced in the open court on 11.04.2023. Sd/- Sd/- (PRADIP KUMAR KEDIA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 11 th April, 2023. NV/- Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR // By Order // Asstt. Registrar, ITAT, New Delhi