Manchukonda Prakasham & Co., Hyderabad V. Addl.CIT, Range-6, Hyderabad

ITA 1812/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66095 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 21-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G GYANA PRAKASH
• Assessee Lawyers: A V RAGHURAM
• Keywords: Depreciation; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1812/HYD/2011 ASSESSMENT YEAR : 2008-09 MANCHUKONDA PRAKASHAM & CO., HYDERABAD. PAN: AADFM 0073 G .... APPELLANT VS. ADDL. CIT,RANGE-6, HYDERABAD. RESPONDENT APPELLANT BY : SHRI A.V.RAGHURAM RESPONDENT BY : SHRI G. GYANA PRAKASH DATE OF HEARING : 06-06-2012 DATE OF PRONOUNCEMENT : 03-08-2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER DATED 30-8-2011 OF CIT (A)-IV, HYDERABAD PASSED IN ITA NO .202/ADDL.CIT,R- 6/CIT(A)-IV/2010-11 AND IT PERTAINS TO THE ASSESSME NT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED 13 GROUNDS IN THIS APP EAL. GROUND NOS. 1 AND 13 ARE GENERAL IN NATURE AND THEY DO NOT REQUIRE ANY A DJUDICATION. LEARNED AR FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT FACTS INV OLVED AND GROUNDS RAISED IN THE APPEAL ARE IDENTICAL TO ASSESSEES APPEAL IN IT A NO.1073/HYD/10. HENCE THE DECISION TAKEN THERE WILL ALSO APPLY TO THIS APPEAL . LEARNED DR ALSO AGREES WITH SUCH SUBMISSION OF LD. AR. 2 ITA NO. 1812 OF 2011 MANCHUKONDA PRAKASHAM & CO., HYD. 3. GROUND NOS. 2 TO 4 ARE SIMILAR TO GROUNDS NOS. 2 TO 5 RAISED IN ITA NO.1073/HYD/2010 PERTAINING TO ASSESSMENT YEAR 2007 -08 IN THE CASE OF THE SAME ASSESSEE WHICH RELATE TO ADDITION OF RS.10 LAK HS ON ACCOUNT OF UNVERIFIABLE NATURE OF EXPENDITURE CLAIMED TOWARDS PURCHASE OF M ETAL, SAND, TRANSPORTATION ETC., IN ITS PROFIT & LOSS A/C. THE TRIBUNAL HELD A S FOLLOWS ON SIMILAR ISSUE: WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ORDER SHEET ENTRY DATED 11-12-2009, A COPY OF WHICH WAS PRODUCED BEFORE US IS EXTRACTED HEREUNDER FOR READY REFERENCE:- 11-12-2009:- SHRI M. PRAKASHAM AND SHRI B. NARASING RAO ATTENDED . IT IS SEEN THAT CERTAIN EXPENSES ARE UNTOUCHED OR NON VERIFIABLE HE NCE ADDITION OF RS.25 LAKHS IS PROPOSED TO COVER UP LEAKAGE OF REVENUE ON THIS ACCOUNT. CASE DISCUSSED. SD/- AR OF THE ASSESSEE DT. 11-12-2009 ON GOING THROUGH THE ORDER SHEET ENTRY, IT IS QUITE CLEAR THAT IT DOES NOT REVEAL ANY CONSENT BY THE AR OF THE ASSESSEE TO THE PROPOSED ADDITION. MERE SIGNING OF ORDER SHEET BY THE AR OF THE ASSESS EE WOULD NOT AMOUNT TO TACIT APPROVAL OF ADDITION PROPOSED BY THE AO. HOWEVER, FROM THE DOCUMENT PRODUCED BEFORE US, IT IS SEEN THAT PURC HASES OF METAL AND SAND ETC., ARE SUPPORTED BY SELF MADE VOUCHERS ONLY . THEREFORE, ASSESSEES CLAIM OF EXPENDITURE UNDER THIS HEAD CAN NOT BE ACCEPTED FULLY. CONSIDERING THE VOLUME OF TURNOVER AND NATURE OF EX PENSES CLAIMED, IT WILL BE REASONABLE TO RESTRICT THE DISALLOWANCE TO RS.20 LAKHS. HENCE, THIS GROUND IS PARTLY ALLOWED. IN VIEW OF THE ABOVE, CONSIDERING THE VOLUME OF TU RNOVER AND NATURE OF EXPENSES CLAIMED, IT WILL BE REASONABLE TO RESTRICT THE DISALLOWANCE TO RS.8,00,000/-. HENCE THIS ISSUE IS ALLOWED IN PART . 4. GROUND NOS. 5,6,7 AND 8 ARE SIMILAR TO GROUND N OS. 6,7,8 AND 9 RAISED IN ITA NO.1079/HYD/2010 (SUPRA)., WHICH RELATE TO DISA LLOWANCE OF 100% DEPRECIATION CLAIMED ON TEMPORARY STRUCTURES, PLATF ORMS WITH FOUNDATION. WE FIND THAT THE TRIBUNAL HAS DECIDED THE SIMILAR ISSU E IN THE ASSESSEEES OWN CASE 3 ITA NO. 1812 OF 2011 MANCHUKONDA PRAKASHAM & CO., HYD. FOR THE PRECEDING ASSESSMENT YEAR 2007-8 WHEREIN T HE TRIBUNAL HELD AS FOLLOWS:- WE HAVE EXAMINED THE ADDITIONAL EVIDENCE IN THE SHA PE OF PHOTOGRAPHS WHICH ARE AT PAGES 23 TO 30 OF THE PAPE R BOOK. FROM THE PHOTOGRAPHS, STRUCTURES APPEAR TO BE TEMPORARY IN NATURE. HOWEVER, WHETHER THESE WERE THE SAME STRUCTURES ON WHICH THE ASSESSEE HAS CLAIMED DEPRECIATION, REQUIRES INVESTI GATION. WE THEREFORE SET ASIDE THIS ISSUE TO THE FILE OF THE A O WHO SHALL ENQUIRE INTO THE MATTER AND FIND OUT WHETHER THE CL AIM OF THE ASSESSEE IS CORRECT OR NOT. IF ULTIMATELY THE STRU CTURE AS WELL AS ANCHORING FOUNDATION IS FOUND TO BE TEMPORARY IN NA TURE, THEN THE ASSESSEES CLAIM IS TO BE ALLOWED. FOLLOWING THE ABOVE REASONING GIVEN BY THE ITAT IN ITA NO.1073/HYD/2010 DATED 28-6-2012 IN THE CASE OF SAME ASSESSEE, WE ALLOW THE CLAIM OF THE ASSESSEE ON THIS ISSUE. 5. GROUND NO. 9 RAISED IN THIS APPEAL IS SIMILAR T O GROUND NO.10 RAISED BY THE ASSESSEE FOR THE PRECEDING ASSESSMENT YEAR IN I TA NO.1073/HYD/2010 (SUPRA) WHICH RELATES TO THE CLAIM OF DEPRECIATION ON MOULDS AT 30% WHICH WAS DISALLOWED BY THE AO. THE AO DISALLOWED CLAIM OF DEPR ECIATION CLAIMED AT 30% ON MOULDS ON THE GROUNDS THAT THE MOULDS WERE USED IN RUBBER OR PLASTIC GOODS FACTORIES ARE ONLY ELIGIBLE FOR DEPRECIATION AT 30% . THE AO ALLOWED DEPRECIATION AT 15% BY KEEPING IT WITHIN THE BLOCK OF PLANT AND MACHINERY. THE CIT (A) ALSO SUSTAINED THE ORDER OF THE AO BY OBSERVING THAT DEP RECIATION AT 30% ON MOULDS IS ALLOWABLE ONLY IN CASE OF RUBBER AND PLASTIC GOO DS FACTORIES. THE TRIBUNAL VIDE ITS ORDER DATED 28-6-2010 IN ASSESSEES OWN CASE IN ITA NO.1073/HYD/2010 (SUPRA) HELD AS FOLLOWS:- THE LEARNED AR SUBMITTED BEFORE US THAT THE WEAR A ND TEAR OF MOULDS IN CASE OF THE ASSESSEE ARE ALSO THE SAME AS IN CASE OF MOULDS USED IN RUBBER AND PLASTIC GOODS FACTORIES. THEREFORE, DEPRECIATION AT 30% SHOULD BE ALLOWED. IN SUPPORT OF HIS 4 ITA NO. 1812 OF 2011 MANCHUKONDA PRAKASHAM & CO., HYD. CONTENTION, THE ASSESSEE RELIED UPON A DECISION OF ITAT, HYDERABAD BENCH IN THE CASE OF M/S EARTH PAYERS (H YD) PVT. LTD. VS. DCIT, CIR-2(2), HYDERABAD IITA NO.1200/HYD/2009 DATED 29- 12-2009. AFTER GOING THROUGH THE SAID ORDER, IT IS SEEN IN THAT CASE, THE ASSESSEE WAS ABLE TO PROVE WITH SUPPORTI NG EVIDENCE THAT THE MOULDS PURCHASED BY THE ASSESSEE HAD A LIF E OF 50 TO 100 DAYS ONLY. THEREFORE, IT WAS ALLOWED AS REVENUE EX PENDITURE. ON APPEAL BEFORE US, THE ASSESSEE IS ABLE TO PROVE SUC H FACT WITH SUPPORTING EVIDENCE. DEPRECIATION AT 30% BEING CON FINED TO MOULDS USED IN RUBBER AND PLASTIC GOODS FACTORIES C ANNOT BE MADE APPLICABLE TO THE ASSESSEE. THE GROUND RAISED BY T HE ASSESSEE IS THEREFORE REJECTED. FOLLOWING THE ABOVE, WE REJECT THE GROUND RAISED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 6. GROUND NO.10 RAISED IN THIS APPEAL IS SIMILAR TO GROUND NO.11 RAISED BY THE SAME ASSESSEE FOR THE PRECEDING ASSESSMENT YEAR I.E. 2007-08 IN ITA NO.1073/HYD/2010 (SUPRA) WHICH RELATES TO DISALLOWA NCE OF CLAIM OF DEPRECIATION AT THE RATE OF 30% ON TRUCKS. THE TRIBUNAL HELD O N THIS ISSUE IN THE CASE OF THE SAME ASSESSEE FOR ASSESSMENT YEAR 2007-08 (SUPRA) H ELD AS UNDER:- WE HAVE HEARD RIVAL CONTENTIONS ON THE ISSUE. TH E WORD HIRE HAS NOT BEEN DEFINED IN THE ACT. THE DICTIONARY ME ANING OF HIRE MEANS COMPENSATION FOR THE USE OF THING OR FOR LAB OUR OR SERVICES. FROM THE AFORESAID MEANING OF WORD HIR E, IT IS QUITE CLEAR THAT EVEN IN CASE OF GOODS HAVING TRANSPORTED FROM ONE PLACE TO ANOTHER FOR CONSIDERATION, IT HAS TO BE HELD TH AT THE VEHICLE HAS BEEN GIVEN ON HIRE FOR TRANSPORTING GOODS OF THE CU STOMER. SINCE IN THE PRESENT CASE, IT HAS BEEN FOUND ON RECORD TH AT THE TRUCKS WERE EXCLUSIVELY USED FOR TRANSPORTATION OF GOODS OF THE CUSTOMERS ON RECEIPT OF TRANSPORTATION CHARGES, IT CAN BE SAID THAT THE TRUCKS HAVE BEEN GIVEN ON HIRE TO THE CUSTOMERS AND AS SUCH IS 5 ITA NO. 1812 OF 2011 MANCHUKONDA PRAKASHAM & CO., HYD. ELIGIBLE FOR DEPRECIATION AT THE RATE OF 30%. IN VIEW OF THE ABOVE, THIS GROUND OF THE ASSESSEE IS ALLOWED. FOLLOWING THE ABOVE REASONING, THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS ACCORDINGLY ALLOWED. 7. GROUND NO.11 IS SIMILAR TO THE GROUND NO.12 RAIS ED BY THE ASSESSEE IN ITA 1073/HYD/2010 DATED 28-6-2012 (SUPRA) WHICH RELATES TO THE CLAIM OF DEPRECIATION AT 80% ON VIBRATOR. THE TRIBUNAL HELD IN THE ABOVEMENTIONED ORDER AS UNDER: THE AO DISALLOWED THE CLAIM OF DEPRECIATION ON VIB RATOR AT THE RATE OF 80% ON THE GROUND THAT VIBRATORS ARE PURCHA SED AFTER 1- 10-2006 AND THEREFORE THE APPLICABLE RATE OF DEPREC IATION IS 7.5%. THE LEARNED AR FOR THE ASSESSEE SUBMITTED BEFORE U S THAT THE AO AS WELL AS CIT (A) FAILED TO CONSIDER THE FA CT THAT THE VIBRATOR WAS PART AND PARCEL OF AUTOMATIC POWER FAC TOR CONTROLLERS, THEN DEPRECIATION AT HIGHER RATE OF 80% NEEDS TO BE CONSIDERED. SINCE THIS MATTER HAS NOT BEEN PROPERLY CONSIDERED BY THE AO AS WELL AS CIT (A), WE FEEL IT JUST TO RESTORE THIS I SSUE BACK TO THE FILE OF THE AO WHO SHALL EXAMINE THE CLAIM OF THE ASSESS EE AND ALLOW DEPRECIATION ACCORDINGLY. HENCE THIS GROUND IS ALLO WED FOR STATISTICAL PURPOSE. IN VIEW OF THE ABOVE, THIS GROUND OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.12 RAISED IN THIS APPEAL IS SIMILAR TO THE GROUND NO. 13 RAISED IN ITA NO.1073/HYD/2010 (SUPRA) WHICH RELATES TO DIS ALLOWANCE OF CLAIM OF DEPRECIATION AT 60% IN RESPECT OF FAX MACHINERY. I T IS SEEN FROM THE ASSESSMENT ORDER THAT THE AO HAS ALLOWED DEPRECIATION ON FAX M ACHINERY AT 15% WHICH HAS BEEN CONFIRMED BY THE CIT (A). WE FIND THE CLAIM OF DEPRECIATION AT 60% IS NOT IN ACCORDANCE WITH RULE 5 OF INCOME-TAX RULES. WE T HEREFORE SUSTAIN THE 6 ITA NO. 1812 OF 2011 MANCHUKONDA PRAKASHAM & CO., HYD. DISALLOWANCE OF DEPRECIATION CLAIMED AT 60% AND UPH OLD THE ORDER OF AO. IN VIEW OF THE ABOVE, THIS GROUND OF THE ASSESSEE IS REJECT ED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED IN PART AS INDICATED ABOVE. ORDER PRONOUNCED IN THE COURT ON 3- 8-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 3 RD AUGUST, 2012. COPY FORWARDED TO: 1. C/O B. NARASING RAO & CO., CAS, PLOT NO.554, ROAD N O.92, JUBILEE HILLS, HYDERABAD. 2. ACIT, CC-3, HYSDEDRABAD. 3. THE CIT(A)-I, HYDERABAD. 4. THE CIT CONCERNED, HYDERABAD. 5. THE DR, ITAT, HYDERABAD JMR* 7 ITA NO. 1812 OF 2011 MANCHUKONDA PRAKASHAM & CO., HYD.