Jay Jalaram Quarry Works Pvt.Ltd., Baroda V. The ACIT.,Circle-1(2), Baroda

ITA 1547/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80273 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 06-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 02-06-2011
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , , , 0 00 0 0 00 0 ' ' ' ' , , , , #$ #$ #$ #$ # % # % # % # % BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 1547/AHD/2011 (ASSESSMENT YEAR 2005-06) JAY JALARAM QUARRY WORKS PVT. LTD. R.S. NO 140/A, TULSIGAM, TIMBA SAVLI ROAD, DIST. VADODARA-388710. PAN: AABCJ2206M VS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(2), BARODA. &'/ APPELLANT )*&' / RESPONDENT REVENUE BY : SHRI ROOPCHAND, SR. DR ASSESSEE(S) BY : SHRI MANISH J. SHAH, AR + , $/ // / DATE OF HEARING : 06/08/2014 -./ , $ / DATE OF PRONOUNCEM ENT: 14/08/2014 #0 #0 #0 #0/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, BARODA DAT ED 18.03.2011. 2. GROUND NO. 1 AND 2 OF THE APPEAL READ AS UNDER: 1.0 ON THE FACTS AND IN THE CIRCUMSTANCES OF YOUR APPELLANT'S CASE AND IN LAW, LEARNED COMMISSIONER OF INCOME TAX ITA NO. 1547/A/2011 JAY JALARAM QUARRY WORKS PVT. LTD., VADODARA AY 2005-06 - 2 - (APPEALS)-IV, BARODA ('ID. CIT(A)' IN SHORT) HAS ER RED IN RESTRICTING DISALLOWANCE TO THE EXTENT OF 15% IN RE SPECT OF VEHICLE PETROL AND REPAIRS & MAINTENANCE EXPENSES A ND DEPRECIATION ON VEHICLES ON WRONG PLEA THAT IT WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ID. CIT (A) HAS FURTHER ERRED IN NOT CONSIDERING DECISION BY THE HON'BLE ITAT, AHMEDABAD C BENCH (JURISDICTIONAL AUTHORITY) APPEAL NO. 1099 AN D 1187 IN CASE OF DY. COMMISSIONER OF INCOME TAX V/S GUJAR AT FILAMENTS LTD. 2.0 ON THE FACTS AND IN THE CIRCUMSTANCES OF YOUR A PPELLANT'S CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN RESTRI CTING DISALLOWANCE TO THE EXTENT OF 15% IN RESPECT OF TEL EPHONE EXPENSES ON WRONG PLEA THAT IT WAS NOT INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ID . CIT (A) HAS FURTHER ERRED IN NOT CONSIDERING DECISION B Y THE HON'BLE ITAT, AHMEDABAD C BENCH (JURISDICTIONAL AUTHORITY) APPEAL NO.1099 AND 1187 IN CASE OF DY. COMMISSIONER OF INCOME TAX V/S GUJARAT FILAMENTS LT D . 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER DISALLOWED ON ESTIMATE 20% OF THE EXPENSES INCURRED UNDER THE HEAD PETROL & VEHICLES EXPENSES AND TELE PHONE EXPENSES ON THE GROUND OF PERSONAL USE. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) RESTRICTED THE DISALLOWANCE AT 15% OF THE EXPENSES CLAIMED BY THE ASSESSEE. 5. THE CONTENTION OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE IS THAT THE DISALLOWANCE AT THE RATE OF 15% IS EXCE SSIVE AND OUGHT TO BE RESTRICTED AT THE RATE OF 10% OF THE EXPENSES INCUR RED. 6. THE DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTE D THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE IN ANY SERIOUS MANNER. ITA NO. 1547/A/2011 JAY JALARAM QUARRY WORKS PVT. LTD., VADODARA AY 2005-06 - 3 - 7. IN VIEW OF THE ABOVE SUBMISSIONS OF THE AUTHORI ZED REPRESENTATIVE OF THE ASSESSEE, THE ASSESSING OFFIC ER IS DIRECTED TO RESTRICT THE DISALLOWANCE OF EXPENSES UNDER THE HEAD PETROL & VEHICLES EXPENSES AND TELEPHONE EXPENSES AT THE RATE 10% OF THE EXPENDIT URE CLAIMED BY THE ASSESSEE. THUS, THIS GROUND OF APPEAL OF THE ASSES SEE IS PARTLY ALLOWED. 8. GROUND NO. 3 OF THE APPEAL READS AS UNDER: 3.0 ON THE FACTS AND IN THE CIRCUMSTANCES OF YOUR APPELLANTS CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLD ING DISALLOWANCE OF RS 78,429/- OUT OF REPAIRS AND MAINTENANCE EXPENSES OF PLANT AND MACHINERY ON WRON G PLEA THAT IN ABSENCE OF DOCUMENTARY EVIDENCE ON REC ORD, THE EXPENDITURE INCURRED IS IN THE NATURE OF CAPITA L EXPENDITURE. THE LD. CIT(A) HAS FURTHER ERRED IN N OT CONSIDERING CASE LAWS RELIED UPON BY YOUR APPELLANT . 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT UNDER THE HEAD REP AIRS & MAINTENANCE EXPENSES THE ASSESSEE CLAIMED EXPENDITURE OF RS 1, 04,572/- IN RESPECT OF THE FOLLOWING PURCHASES: S.N. ITEM PURCHASED BILL NO. & DATE VALUE 1 CROMPTON GREAVES MAKE ELECTRIC MOTOR SG/32/04-05 DTD. 08.05.2004 RS 19,860 2 CROMPTON GREAVES MAKE ELECTRIC MOTOR SG/276/04-05 DTD. 07.03.05 RS 2,940 3 FLOW SYSTEMS WIRE MESH FSL/75/2004-05 DTD. 12.06.2004 RS 56,888 4 FLOW SYSTEMS WIRE MESH FSL/174/04-05 DTD. 06.09.2004 RS 25,064 10. ACCORDING TO THE ASSESSING OFFICER, THE ABOVE EXPENDITURE WAS CAPITAL IN NATURE AND THEREFORE HE ALLOWED DEPRECIA TION ONLY IN RESPECT OF ABOVE AND COMPUTED DISALLOWANCE AT RS 78,429/-. ITA NO. 1547/A/2011 JAY JALARAM QUARRY WORKS PVT. LTD., VADODARA AY 2005-06 - 4 - 11. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APP EALS) OBSERVED THAT NO MATERIAL WAS BROUGHT BEFORE HIM TO SHOW THA T THE ABOVE ITEMS WERE NOT CAPABLE OF BEING USED AS INDEPENDENT MACHINERY AND CONSEQUENTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 12. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE COST OF PLANT AND MACHINERY USED BY THE ASSESSE E WAS OF RS 2 CRORES AND THEREFORE EXPENDITURE OF RS 78,429/- WAS OF THE NAT URE OF CURRENT REPAIRS AND THEREFORE THE REVENUE WAS NOT JUSTIFIED IN DISA LLOWING THE SAME. 13. THE DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 14. WE FIND THAT THE EXPENDITURE TREATED BY THE AS SESSING OFFICER AS CAPITAL IN NATURE WAS RS 1,04,572/- AND NOT RS 78,4 29/- AS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. FURTHER , IN THE OPINION MADE FROM THE QUANTUM OF EXPENDITURE, IT CANNOT BE DECID ED WHETHER THE EXPENDITURE WAS CAPITAL OR REVENUE IN NATURE. 15. BE THAT AS IT MAY. 16. WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BU SINESS OF QUARRY AND MANUFACTURING OF KAPCHI, GRIT, METAL AND DUST. THE EXPENDITURE OF RS 1,04,572/- CONSISTS OF PURCHASE OF ELECTRIC MOTORS OF RS 22,800/- AND PURCHASE OF WIRE MESH OF RS 81,952/-. IT IS OBSERV ED THAT WIRE MESH IS NOT AN INDEPENDENT MACHINE BUT IS USED AS A PART OF THE MACHINE IN THE LINE OF BUSINESS AND DOES NOT HAVE A LONG LIFE. THEREFORE, IN OUR CONSIDERED VIEW, THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN TREATIN G THE PURCHASE OF WIRE MESH OF RS 81,952/- AS INDEPENDENT MACHINE AND CONSEQUEN TLY CAPITAL EXPENDITURE. WE DIRECT THE ASSESSING OFFICER TO TR EAT RS 81,952/- AS REVENUE EXPENDITURE AND CONSEQUENTLY ALLOW THE SAME AS DEDUCTION AND ITA NO. 1547/A/2011 JAY JALARAM QUARRY WORKS PVT. LTD., VADODARA AY 2005-06 - 5 - THEREFORE TO WITHDRAW THE DEPRECIATION ALLOWED IN R ESPECT OF THE SAME. IN RESPECT OF BALANCE AMOUNT OF RS 22,800/- WHICH WAS INCURRED FOR PURCHASING ELECTRIC MOTORS, WE FIND THAT THE ASSESSEE HAS BROU GHT NO MATERIAL ON RECORD TO SHOW THAT THEY WERE NOT INDEPENDENT MACHINES OR DID NOT HAVE ENDURING LIFE IN THIS LINE OF BUSINESS. WE, THEREFORE, DO N OT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF LOWER AUTHORITIES IN R ESPECT OF THIS PART OF THE GROUND OF APPEAL. THUS, THIS GROUND OF APPEAL OF T HE ASSESSEE IS PARTLY ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 14 TH OF AUGUST, 2014 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 14/08/2014 GHANSHYAM MAURYA, SR. P.S. TRUE COPY #0 , )1 2#1/ #0 , )1 2#1/ #0 , )1 2#1/ #0 , )1 2#1// COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. )*&' / THE RESPONDENT. 3. 3 / CONCERNED CIT 4. 3() / THE CIT(A)-III, AHMEDABAD 5. 167 ) , , / DR, ITAT, AHMEDABAD 6. 78 9+ / GUARD FILE. #0 #0 #0 #0 / BY ORDER, : :: :/ // / ; ; ; ; ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD