Gujarat Hi-Rel Controls Ltd., Ahmedabad V. The DY.CIT., S.R. -8, Ahmedabad

ITA 1883/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8961 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-09-2009
• Assessment Year: 1991-1992
• Appeal Filed On: 02-06-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: K I THAKKAR
• Keywords: Capital asset; Depreciation; Search and seizure; Revenue expenditure; Capital expenditure
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI H. L. KARWA, JM AND N. S. SAINI, AM) ITA NO.1883/AHD/2004 A. Y.: 1991-92 GUJARAT HI-REL CONTROLS LTD., B-52, CORPORATE HOUSE, NR. JUDGES BUNGALOWS, BODAKDEV, AHMEDABAD -15 PA NO.-- VS THE D. C. I. T., SR-8, AHMEDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI K. I. THAKKAR, AR DEPARTMENT BY SHRI M. C. PANDIT, DR O R D E R PER H. L. KARWA: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VIII, AHMEDABAD DAT ED 24-04-2004 RELATING TO ASSESSMENT YEAR 1991-92. 2. VIDE GROUND NO.1 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.95,566/- IN RESPECT OF FOREIGN TRAVELING, R & D CESS DEPOSIT TO R.B.I. AND DRAWING & DESIGN EXPENSES IN RESPECT OF TECHNICAL KNOW HOW FE ES. THE ASSESSEE CLAIMED DEDUCTION U/S 35AB OF THE INCOME TAX ACT, 1 961 (IN SHORT THE ACT). AS PER THIS SECTION THE ASSESSEE IS ENTITLED TO DEDUCTION EQUAL TO ONE SIXTH OF THE TOTAL EXPENSES INCURRED BY THE ASSESSE E ON TECHNICAL KNOW HOW. THE EXPENSES CLAIMED BY THE ASSESSEE AS PER TH E ASSESSMENT ORDER ARE AS UNDER: ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 2 1. AMOUNT PAID TO SQUARE D. CO. USA RS.36,22,013/ - AND CYBEREX INC. USA 2. R & D CESS DEPOSITED TO RBI, AHMEDABAD ON VARIOUS DATES RS. 1,80,685/- 3. FOREIGN TRAVELING EXPENSES RS. 3,36,296/- 4. DRAWING & DESIGN EXPENSES RS. 56,461/- GRAND TOTAL RS.41,95,450/- (CORRECT FIGURE IS RS.41,95,455/-) ACCORDING TO SECTION 35AB OF THE ACT READ WITH EXPL ANATION, ONLY LUMP SUM FEES PAID FOR TECHNICAL KNOW HOW IS TO BE TREAT ED AS PER EXPENDITURE QUALIFYING FOR DEDUCTION. THE AO, THEREFORE, ACCEPT ED THE PAYMENT MADE TO SQUARE D. CO. USA AND CYBEREX INC. USA AS ELIGIB LE FOR THE DEDUCTION. HE HELD THAT THE R & D CESS DEPOSITED TO RBI , FORE IGN TRAVELING EXPENSES AND DRAWING & DESIGN EXPENSES CANNOT BE TREATED AS LUMP SUM PAYMENT FOR TECHNICAL KNOW HOW AS UNDERSTOOD U/S 35AB OF T HE ACT. HE, THEREFORE, EXCLUDED THIS EXPENSES WHILE COMPUTING D EDUCTION U/S 35AB OF THE ACT AND DISALLOWED THE EXCESS CLAIM OF RS.95 ,566/-. 3. ON APPEAL, THE CIT(A) HELD AS UNDER: 5.4 THE CONTENTIONS RAISED HAVE BEEN CONSIDERED . I FIND THAT THE DECISION OF THE HONBLE SUPREME COUR T REPORTED AT 239 ITR 566 IS ON THE ISSUE OF DEDUCTION U/S. 80 J AND IS THEREFORE NOT RELEVANT FOR DECIDING THE GROUNDS OF APPEAL. SIMILARLY, I FIND THAT THE DECISION OF THE HONBLE GUJARAT HIGH COURT REPORTED AT 220 ITR 153 IS WITH REFERENCE TO THE CLAIM U/S. 37 AND DOES NOT REFER TO DEDUCTION U/S. 35AB. THIS DECISION ALSO WILL THEREFORE NOT BE RELEVANT FOR DE CIDING THE ISSUE. SINCE U/S. 35AB A SPECIFIC PROVISION HAS BEE N MADE FOR ALLOWING DEDUCTIONS TO THE ASSESSEE, THE GENERAL PR OVISION OF SECTION 37(1) OR ANY OTHER PROVISION WOULD NOT BE R ELEVANT FOR THE ISSUE. 5.5 SECTION 35AB PROVIDES THAT IF ANY LUMP SUM CONSIDERATION IS PAID FOR ACQUIRING ANY KNOW HOW FO R USE FOR THE PURPOSE OF BUSINESS, 1/6 TH OF THE AMOUNT PAID SHALL BE ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 3 DEDUCTED IN COMPUTING THE PROFITS AND GAINS OF THE BUSINESS FOR THE CONCERNED ASSESSMENT YEAR. AS PER THE EXPLA NATION TO THE SECTION KNOW HOW MEANS ANY INDUSTRIAL INFORMA TION OR TECHNIQUE LIKELY TO ASSIST IN THE MANUFACTURE OR PR OCESSING OF GOODS ETC. IT IS CLEAR FROM THIS SECTION THAT THE L UMP-SUM PAYMENT WHICH HAS BEEN MADE FOR ACQUIRING THE INFOR MATION OR TECHNIQUE ONLY WOULD QUALIFY FOR THE DEDUCTION U /S. 35AB. OTHER EXPENSES NAMELY EXPENSES ON FOREIGN TRAVELING , EXPENSES ON DESIGNS AND DRAWINGS AND R & D CESS DEP OSITED TO RBI IN THIS CONNECTION WOULD NOT QUALIFY FOR THE DEDUCTION AS THEY ARE NOT CONSIDERATION PAID FOR ACQUIRING KN OW-HOW. THE A. O. WAS JUSTIFIED IN DISALLOWING THE CLAIM OF THE APPELLANT COMPANY WITH REFERENCE TO THE R & D CESS DEPOSITED WITH RBI, TRAVELING EXPENSES AND EXPENSES ON DRAWIN GS AND DESIGNS. THE ACTION OF THE A. O. IS UPHELD AND THIS GROUND IS REJECTED. 5.6 THE ALTERNATIVE ARGUMENT OF THE LD. COUNSEL I S THAT THE EXPENSES ON TRAVELING, R & D AND DRAWINGS AND DESIGNS SHOULD BE CONSIDERED AS REVENUE EXPENSES AS PER PROVISION OF SECTION 37. I AM AFRAID THE ALTERNATIV E ARGUMENT OF THE LD. COUNSEL CANNOT BE ACCEPTED AT THIS STAGE. T HE PRESENT APPEAL PROCEEDINGS ARE LIMITED TO THE DIRECTIONS IS SUED BY THE HONBLE ITAT. THE HONBLE ITAT HAS NOT GIVEN ANY IN DICATION IN THE APPELLATE ORDER THAT ON THIS GROUND THE ALTE RNATIVE ARGUMENT FOR TREATING THE EXPENSES AS REVENUE EXPEN DITURE SHOULD BE CONSIDERED. IN VIEW OF THE ORDER OF THE H ONBLE ITAT, I AM UNABLE TO CONSIDER THE ALTERNATIVE ARGUMENT GI VEN BY THE LD. COUNSEL DURING THE PRESENT APPEAL PROCEEDINGS A ND THE SAME ARE REJECTED. 4. BEFORE US, SHRI K. I. THAKKAR, LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE EXPENDITURE ON DRAWING AND DESIG N AND FOREIGN TRAVEL WERE INCURRED FOR THE PURPOSE OF TECHNICAL KNOW HOW AND WAS THEREFORE, PART AND PARCEL OF EXPENSES RELATED TO TECHNICAL KN OW HOW. ALTERNATIVELY, IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASS ESSEE THAT IF IT IS HELD THAT THE ABOVE EXPENDITURE DOES NOT QUALIFY FOR DED UCTION U/S 35AB OF THE ACT IT SHOULD BE CONSIDERED AS REVENUE EXPENDIT URE FOR THE PURPOSE OF BUSINESS AS THE EXPENSES OF TRAVELING AND DRAWING A ND DESIGN WAS INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSE E. ON THE OTHER HAND, ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 4 SHRI M. C. PANDIT, LEARNED DR HEAVILY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIE W, THE CIT(A) HAS CORRECTLY OBSERVED THAT SECTION 35AB OF THE ACT PRO VIDES THAT THE LUMP SUM PAYMENT WHICH HAS BEEN MADE FOR ACQUIRING INFOR MATION OR TECHNICAL KNOW HOW ONLY WERE QUALIFIED FOR DEDUCTIO N. THE EXPENSES INCURRED BY THE ASSESSEE ON FOREIGN TRAVEL, EXPENSE S ON DESIGN AND DRAWING AND R & D CESS DEPOSITED TO RBI, IN THIS C ONNECTION, WOULD NOT QUALIFY FOR DEDUCTION AS THEY WERE NOT CONSIDERED P AID FOR ACQUIRING TECHNICAL KNOW HOW. 6. AS REGARDS THE ALTERNATIVE ARGUMENTS OF THE LEAR NED COUNSEL FOR THE ASSESSEE THAT THE EXPENSES ON FOREIGN TRAVELING, R & D CESS DEPOSITED TO RBI AND DRAWING AND DESIGN SHOULD BE CONSIDERED AS REVENUE EXPENDITURE AS PER THE PROVISIONS OF SECTION 37 OF THE ACT, IN OUR VIEW, THE CIT(A) HAS CORRECTLY REJECTED THIS ALTERNATIVE ARGUMENT OF THE ASSESSEE, BECAUSE IN THE FIRST INNINGS THE TRIBUNAL HAS NOT GIVEN ANY INDICATION IN THE APPELLATE ORDER THAT ON THIS GROU ND THAT THE ALTERNATIVE ARGUMENT FOR TREATING THE EXPENSES AS REVENUE EXPEN DITURE SHOULD BE CONSIDERED. IN VIEW OF THE ORDER OF THE TRIBUNAL DA TED 31-01-2002 PASSED IN ITA NO.4150/AHD/1995, THE CIT(A) WAS JUSTIFIED I N REJECTING THE ALTERNATIVE GROUND OF THE ASSESSEE. ACCORDINGLY, WE DO NOT SEE ANY MERITS IN THIS GROUND OF APPEAL AND THE SAME IS HEREBY DIS MISSED. 7. GROUND NO. 2 OF THE APPEAL RELATES TO DISALLOWAN CE OF RS.14,100/- PAID AS IMPORT LICENSE FEES TO THE DIRECTOR GENERAL OF FOREIGN TRADE, GOVERNMENT OF INDIA. 8. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS THE FEES PAID EVERY TIME WHEN REQUIREMENT FOR LI CENSE IS MADE AND IT IS ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 5 REVENUE EXPENDITURE. HE, THEREFORE, SUBMITTED THAT THE SAME MAY BE ALLOWED. ON THE OTHER HAND, THE LEARNED DR SUBMITTE D THAT AFTER PAYMENT OF FEES, THE ASSESSEE COMPANY HAD OBTAINED RIGHT TO IMPORT GOODS. BY INCURRING THE EXPENDITURE, THE ASSESSEE H AS OBTAINED A PERMANENT RIGHT OF ENDURING BENEFIT. HE, THEREFORE, SUBMITTED THAT THE NATURE OF EXPENDITURE IS NOT REVENUE AND IS REQUIRE D TO BE TREATED AS CAPITAL EXPENDITURE. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND MERITS IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE LEARNED DR COULD NOT CONTROVERT THIS FACT THAT THIS FEES PAID EVERY TIME WHEN REQUEST FOR LICENSE IS MADE. WE, THEREFORE, DO NOT FIND MER IT IN THIS CONTENTION OF THE REVENUE THAT THE ASSESSEE COMPANY HAS OBTAINED A PERMANENT RIGHT OF ENDURING BENEFIT. ACCORDINGLY, WE ALLOW THIS GRO UND OF APPEAL. 10. GROUND NO.3 OF THE APPEAL IS DIRECTED AGAINST T HE ACTION OF THE CIT(A) IN CONFIRMING DISALLOWANCE OF COMMISSION OF RS.10,350/- PAID TO M/S. JOSEL CORPORATION. 11. WE HAVE HEARD THE RIVAL SUBMISSION. WE FIND THA T THE CIT(A) HAS CORRECTLY STATED THAT THE ASSESSEE COULD NOT FILE T HE CONFIRMATION OF ONE OF THE PARTIES I.E. M/S. JOSEL CORPORATION. HE, THEREF ORE, HELD THAT SINCE THE CONFIRMATION HAS NOT BEEN FILED, THE CONTENTION OF THE ASSESSEE COMPANY REGARDING GENUINENESS AND BUSINESS PURPOSE OF THE C OMMISSION TO THIS PARTY IS NOT ACCEPTABLE. HOWEVER, THE CIT(A) HAS AL LOWED BALANCE AMOUNT OF RS.3,22,918/-. AT THIS STAGE ALSO, NO EVIDENCE W AS PRODUCED TO SHOW THAT THE SERVICES HAVE BEEN RENDERED BY THE ABOVE P ARTY. IN OUR CONSIDERED VIEW, MERE PAYMENT BY ACCOUNT PAYEE CHEQ UE IS NOT SUFFICIENT. THE ONUS WAS ON THE ASSESSEE TO PROVE T HAT THE ABOVE PARTY HAS RENDERED THE SERVICES. IN THE ABSENCE OF SUCH E VIDENCE, WE UPHOLD THE ORDER OF THE CIT(A). ACCORDINGLY, WE DISMISS TH IS GROUND OF APPEAL OF THE ASSESSEE. ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 6 12. GROUND NO.4 OF THE APPEAL IS DIRECTED AGAINST T HE ACTION OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.4,58,75 4/- PAID TO SISTER CONCERN. DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE HAD CLAIMED THAT IT HAD PAID THE FOLLOWING AMOUNTS TO ITS SISTE R CONCERN, NAMELY - 1. HIREL POWER 50 PER CENT OF AMOUNT OF BOMBAY OFFICE MARKETING, OPERATING AND TRAVELING EXPENSES RS. 2,47,705/- 2. CHARGES FOR SERVICES RENDERED BY THEIR EMPLOYEES FOR MARKETING DEVELOPMENT RS. 2,11,029/ TOTAL RS. 4,58,734/- THE AO DISALLOWED THE ABOVE AMOUNT STATING THAT THE RE WAS NO PROOF REGARDING SERVICES RENDERED BY THE ASSOCIATE CONCER N AT BOMBAY. 13. BEFORE THE CIT(A), THE ASSESSEE CLAIMED THAT TH E DETAILS OF SERVICES RENDERED BY HIREL POWER FOR VARIOUS CUSTOMERS WERE SUBMITTED. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. IN T HE REMAND REPORT SUBMITTED BY THE AO, IT HAS BEEN STATED THAT THERE IS NO LINK BETWEEN THE EXPENDITURE INCURRED AND THE BUSINESS PURPOSE OF TH E ASSESSEE COMPANY. FROM THE DETAILS SUBMITTED BY THE ASSESSEE , THE CIT(A) FOUND THAT THE ACTUAL NATURE OF THE WORK DONE WAS NOT CLE AR FROM THE SAID DETAILS. HE FURTHER OBSERVED THAT IT IS ALSO NOT CL EAR WHETHER THE SAID WORK WAS FOR THE BUSINESS PURPOSE OF THE ASSESSEE C OMPANY. THE CIT(A) HAS ALSO STATED THAT THE ASSESSEE COMPANY HAS NOT G IVEN ANY PROOF OF THE ALLEGED SERVICES RENDERED BY IT. HE FURTHER OBSERVE D THAT DURING THE APPELLATE PROCEEDINGS BEFORE HIM, THE LEARNED COUNS EL FOR THE ASSESSEE WAS NOT IN A POSITION TO MAKE AVAILABLE ANY PROOF O R MATERIAL TO SHOW THAT CERTAIN EXPENSES WERE INCURRED BY THE ASSOCIAT E CONCERN ON BEHALF OF THE ASSESSEE COMPANY FOR ITS BUSINESS. HE FURTHER O BSERVED THAT NO MATERIAL IN THE FORM OF CONFIRMATION LETTERS OR ANY OTHER MATERIAL HAS ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 7 BEEN AVAILABLE TO HIM. THE CIT(A) THEREFORE, HELD T HAT I AM UNABLE TO INFER THAT THE EXPENSES INCURRED BY THE ASSOCIATE C ONCERN WAS FOR THE BUSINESS PURPOSE OF THE ASSESSEE COMPANY. 14. AFTER HEARING THE LEARNED REPRESENTATIVES OF BO TH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE CIT(A ) ON THIS ISSUE. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSOCIATE CO NCERN HAS RENDERED ANY SERVICES TO THE ASSESSEE COMPANY. THE ASSESSEE HAS ALSO NOT FILED ANY CONFIRMATION LETTER FROM THE ASSOCIATE CONCERN IN ORDER TO PROVE THE ASSESSEES CLAIM. THUS, CONSIDERING THE ENTIRE FACT S AND CIRCUMSTANCES OF THE PRESENT CASE, WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE CIT(A) AND ACCORDINGLY WE DISMISS THE GROUND. 15. GROUND NO.5 OF THE APPEAL IS DIRECTED AGAINST T HE ACTION OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF TELEPHONE EXPENSES OF RS.656/- IN RESPECT OF TELEPHONE INSTALLED AT THE RESIDENCE OF THE WORKS MANAGER. 16. AFTER HEARING THE LEARNED REPRESENTATIVES OF BO TH THE SIDES, WE ARE OF THE OPINION THAT THERE WAS NOT JUSTIFICATION IN MAKING THE DISALLOWANCE OF TELEPHONE EXPENSES OF RS.656/- IN RESPECT OF TEL EPHONE INSTALLED AT THE RESIDENCE OF THE WORKS MANAGER. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENSES WERE INCURRED FOR THE P URPOSE OF BUSINESS AND HE FURTHER SUBMITTED THAT DISALLOWANCE HAS BEEN MADE BY THE AO DUE TO NON-BUSINESS AND PERSONAL USE OF THE TELEPHO NE. HOWEVER, THE AO HAS NOT POINTED OUT ANY SINGLE INSTANCE WHEN THE TE LEPHONE WAS USED FOR NON-BUSINESS PURPOSES. IN OUR VIEW, THERE IS MERIT IN THE ABOVE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND ACCORDINGLY WE DELETE THE ADDITION. 17. GROUND NO.6 IS DIRECTED AGAINST THE ACTION OF T HE CIT(A) IN CONFIRMING DISALLOWANCE OF RS.41,752/- BEING PAYMEN T MADE TO THE BANK IN RESPECT OF FOREIGN EXCHANGE DIFFERENCE. ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 8 18. AT THE TIME OF HEARING OF THE APPEAL, THE LEARN ED COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL AND AC CORDINGLY WE DISMISS THE SAME AS NOT PRESSED. 19. GROUND NO.7 OF THE APPEAL IS DIRECTED AGAINST T HE ACTION OF THE CIT(A) IN REJECTING THE CLAIM OF DEPRECIATION IN RE SPECT OF EXPENSES INCURRED BY G.I.I.C., A CO-PROMOTER WHO SPENT THE A MOUNT OF RS.44,742/- PRIOR TO COMMENCEMENT, WHICH HAS BEEN GOT CAPITALIS ED. THE ASSESSEE CLAIMED G.I. I. C. PROJECT EXPENSES AT RS.44,742/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS NO DETAIL REGARDING NATURE A ND PROOF OF THE ABOVE EXPENSES WAS SUBMITTED BY THE ASSESSEE COMPAN Y. THE AO, THEREFORE, DISALLOWED THE DEPRECIATION OF RS.11,185 /- ON THE ABOVE EXPENSES @25%. 20. ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANC E OF DEPRECIATION OF RS. 11,185/- OBSERVING AS UNDER: 12.2 DURING THE APPEAL HEARING, THE LD. COUNSEL F OR THE APPELLANT WAS NOT ABLE TO SUBMIT ANY DETAILS REGARD ING GIIC PROJECT EXPENSES OF RS.44,742-00. THE NATURE OF THE EXPENSES HAVE NOT BEEN MADE AVAILABLE. IT IS THEREFORE NOT P OSSIBLE TO VERIFY WHETHER THE EXPENSES HAVE BEEN INCURRED FOR THE PURPOSE OF PLANT AND MACHINERY OR FOR CREATING ANY CAPITAL ASSET FOR THE PURPOSE OF BUSINESS. AS SUCH IT IS NO T POSSIBLE TO ACCEPT THE CLAIM OF THE APPELLANT COMPANY THAT DEPR ECIATION IS ALLOWABLE ON THE ABOVE EXPENSES. THE DISALLOWANCE O F DEPRECIATION OF RS.11,185/- IS THEREFORE CONFIRMED . 21. AFTER HEARING THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE CIT(A ) ON THIS ISSUE. THE ASSESSEE FAILED TO SUBMIT ANY DETAILS REGARDING G.I . I. C. PROJECT EXPENSES OF RS.44,742/-. IN THE ABSENCE OF SUCH DETAILS THE AUTHORITIES BELOW WERE JUSTIFIED IN HOLDING THAT IT WAS NOT POSSIBLE TO VE RIFY WHETHER THE EXPENSES HAVE BEEN INCURRED FOR PURCHASE OF PLANT A ND MACHINERY OR FOR CREATING ANY CAPITAL ASSET FOR THE PURPOSE OF BUSIN ESS. IN THAT VIEW OF THE ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 9 MATTER, THE LOWER AUTHORITIES WERE JUSTIFIED IN REJ ECTING THE CLAIM OF THE ASSESSEE COMPANY. ACCORDINGLY, WE REJECT THIS GROUN D OF APPEAL. 22. GROUND NO.8 OF THE APPEAL IS DIRECTED AGAINST T HE ACTION OF THE CIT(A) IN CONFIRMING THE NON-GRANTING THE DEDUCTION IN RESPECT OF ASSETS COSTING BELOW RS. 5,000/-. 23. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EXPENDITURE BEING ALLOWABLE THE SAME SHOULD HAVE BEEN ALLOWED. HE, THEREFORE, SUBMITTED THAT THE SAME MAY BE ALLOWED. 24. WE HAVE HEARD THE PARTIES. WE FIND THAT THE ASS ESSEE CLAIMED DEPRECIATION @100% FOR RS.73,524/- ON THE ASSETS CO STING BELOW RS.5,000/-. THE AO FOUND AFTER PERUSAL OF THE DETAI LS AND BILLS OF PURCHASE OF THE ASSETS THAT THE FOLLOWING ASSETS WE RE NOT COSTING BELOW RS.5,000/- AND THE ASSETS WERE NOT ENTITLED TO DEPR ECIATION @100%: (I) POLYBOARD ANTI MOUNTING MOTOR 11,650 1 ITEM (II) STRUCTURE FOR MOTOR 6,321 1 ITEM (III) CASH PURCHASE OF ITEM FROM TECH FLOW 5,837 1 ITEM (IV) CROMPTON 15 H.P. MOTOR & PUMP 5,272 1 ITEM 30,060 25. ON APPEAL, THE CIT(A) HELD AS UNDER: 12.3 SIMILARLY, AS DISCUSSED ABOVE, THE A. O. HAS MADE OUT A CASE THAT THE ABOVE EXPENSES OF RS.30,080-00 DID NO T RELATE TO ASSETS WHOSE COST WAS BELOW RS.5,000-00. AS PER THE DETAILS GIVEN THE COST OF EACH UNIT WAS MORE THAN RS.5,000- 00. DURING THE APPEAL HEARING THE LD. COUNSEL FOR THE APPELLAN T WAS NOT ABLE TO PRODUCE BEFORE ME ANY MATERIAL TO CONTROVER T THE FACTS RECORDED IN THE ASSESSMENT ORDER. THE ACTION OF THE A. O. IS THEREFORE UPHELD AND THIS GROUND IS REJECTED. ITA NO.1883/AHD/2004 GUJARAT HI-REL CONTROLS LTD. 10 26. AFTER HEARING THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE CIT(A ) ON THIS ISSUE. THERE IS NO MATERIAL ON RECORD TO CONTROVERT THE FACTS RECOR DED IN THE ORDER OF THE LOWER AUTHORITIES. IN THAT VIEW OF THE MATTER, WE U PHOLD THE ORDER OF THE CIT(A) AND REJECT THE GROUND RAISED BY THE ASSESSEE . 27 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18-09 -2009 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (H. L. KARWA) JUDICIAL MEMBER DATE : 18-09-2009 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD