ACIT, Faridabad V. M/s Oswal Electricals, Faridabad

ITA 1967/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3659 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMY SHYAMA S BANSIA
• Assessee Lawyers: R R MAURYA; SSH S D KAPI LA
• Keywords: Depreciation; Tax effect; Revenue expenditure; Capital expenditure
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T. A. NO.1967 & 1968/DEL/2011 ASSESSMENT YEARS : 2005-06 & 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX, M/S. OSWAL ELEC TRICALS, CENTRAL CIRCLE-I, FARIDABAD. VS. PLOT NO.49, INDL. AREA, NIT, FARIDABAD. PAN: AAAFO1636Q (APPELLANT) (RESPONDENT ) APPELLANT BY: SMY. SHYAMA S. BANSIA, CIT-DR. RESPONDENT BY: S/SH. S.D. KAPI LA & R.R. MAURYA, ADVOCATES O R D E R PER BENCH: THESE TWO APPEALS FILED BY THE REVENUE AGAINST TWO SEPARATE ORDERS, BOTH DATED 28.01.2011 PASSED BY THE LEARNED COMMISS IONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE BY TH E ASSESSING OFFICER UNDER SEC. 153A READ WITH SECTION 143(3) OF THE INC OME-TAX ACT, 1961 (THE ACT), FOR THE ASSESSMENT YEARS 2005-06 AND 2006-200 7 RESPECTIVELY. 2. IN THE ASSESSMENT YEAR 2005-06, THE ONLY GROUND RAISED BY THE REVENUE IS AGAINST THE CIT(A)S ORDER IN DELETING T HE ADDITION OF 2 RS.9,29,795/- INCURRED BY THE ASSESSEE TOWARDS PURC HASE OF DYES BY TREATING THE SAME TO BE IN THE NATURE OF REVENUE EXPENDITURE . 3. IN THE ASSESSMENT YEAR 2006-07 THE IDENTICAL GRO UND HAS BEEN RAISED IN RESPECT OF EXPENDITURE OF RS.4,97,100/- TOWARDS PURCHASE OF DYES. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. 5. IN THE ASSESSMENT YEAR 2005-06 THE AO DISALLOWED THE ASSESSEES CLAIM OF EXPENDITURE OF RS.9,29,795/- ON ACCOUNT OF PURCHASE OF DYES BY TREATING THE SAME TO BE IN THE NATURE OF CAPITAL EX PENDITURE. HOWEVER, THE AO ALLOWED DEPRECIATION OF RS.2,32,449/-. THE NET DISALLOWANCE WAS THUS OF RS.6,97,346/-, WHICH HAS BEEN ALLOWED BY THE CIT(A) BY TREATING THE EXPENDITURE TO BE OF REVENUE IN NATURE. 6. IN THE ASSESSMENT YEAR 2006-07, THE AO DISALLOWE D THE SUM OF RS.4,97,100/- BY TREATING THE SAME TO BE IN THE NAT URE OF CAPITAL EXPENDITURE. HOWEVER, THE AO ALLOWED DEPRECIATION OF RS.1,24,275 /-. THE ASSESSING OFFICER ALSO ALLOWED DEPRECIATION ON THE WDV OF ASS ETS CAPITALIZED IN ASSESSMENT YEAR 2005-06 TO THE EXTENT OF RS.1,04,60 2/-. THUS, TOTAL DEPRECATION ALLOWED BY THE AO WAS OF RS.2,28,877/-. THE NET DISALLOWANCE MADE BY THE AO COMES TO RS.2,68,223/-, WHICH HAS BE EN ALLOWED BY THE CIT(A) BY TREATING THE SAME TO BE OF REVENUE IN NAT URE. 3 7. THUS, THE NET AMOUNT ALLOWED BY THE CIT(A) COMES TO RS.6,97,346/- IN THE ASSESSMENT YEAR 2005-06, AND RS.2,68,223/- I N THE ASSESSMENT YEAR 2006-07. THE TAX EFFECT INCLUDING SURCHARGE AND ED UCATION CESS ON RS.6,97, 346/- AND RS.2,68,223/- COMES TO RS.2,55,176 AND RS .90,784/- RESPECTIVELY. AS PER THE INSTRUCTION NO.3 OF 2011 DATED 9 TH FEBRUARY,2011, THE CENTRAL BOARD OF DIRECT TAXES (CBDT) HAS INSTRUCTED THE AUT HORITIES NOT TO FILE ANY APPEAL BEFORE THE INCOME-TAX APPELLATE TRIBUNAL IF THE TAX EFFECT IS BELOW RS.3,00,000/-. THESE APPEALS HAVE BEEN FILED ON 20 TH APRIL, 2011 AFTER THE RECENT CIRCULAR CAME INTO EFFECT. THEREFORE, IN TH E LIGHT OF THE BOARDS CIRCULAR, THESE TWO APPEALS ARE FOUND TO BE NOT MAI NTAINABLE. WE, THEREFORE, DISMISS THESE TWO DEPARTMENTAL APPEALS AS NOT MAINT AINABLE. 8. IN THE RESULT, THESE TWO APPEALS ARE DISMISSED A S NOTED ABOVE. 9. THIS DECISION WAS PRONOUNCED IMMEDIATELY AFTER T HE HEARING WAS OVER ON 20 TH JUNE, 2011. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH JUNE, 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.