ACIT, UDAIPUR V. M/s. K.K. Enterprises, UDAIPUR

ITA 217/JODH/2012

• Counselvise Citation: 21723314 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Depreciation
• Section: 154

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NOS.217/JODH/2012 & 270/JU/2009 (A.YS. 2008-09 & 2005-06) ACIT, VS. M/S. K.K. ENTERPRISES, CIRCLE-2, SHREE NIKETAN, 380, UDAIPUR. ASHOK NAGAR, UDAIPUR. PAN NO. AADFK 9054 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRI AMIT KOTHARI, SHRI G.K. GARGIEYA & SHRI SARVESH BALDI DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 12/11/2013. DATE OF PRONOUNCEMENT : 20/11/2013. O R D E R PER N.K.SAINI, A.M THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE SEPARATE ORDERS DATED 14/03/2012 & 20/02/2009 FOR T HE A.YS. 2008-09 & 2005-06 RESPECTIVELY PASSED BY THE LD. CIT (A), UDA IPUR. SINCE THE ISSUES INVOLVED ARE COMMON AND THE APPEALS WERE HEARD TOGE THER, SO, THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 2 2. FIRST WE WILL DEAL WITH I.T.A.NO. 217/JODH/2012. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LD CIT(A) HAS ERRED IN 1. DELETING DISALLOWANCE OF DEPRECIATION OF RS. 18,47 ,653/- CLAIMED ON DUMPERS. 2. DELETING DISALLOWANCE OF DEPRECIATION OF RS. 59,81 5/- CLAIMED ON TANKERS. 3. DELETING DISALLOWANCE OF DEPRECIATION OF RS. 39,04 ,407/- CLAIMED ON WIND MILL. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DEL ETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 3. THE FIRST ISSUE IN THIS APPEAL RELATES TO THE DEL ETION OF DISALLOWANCE OF DEPRECIATION OF RS. 18,47,653/- CLAIMED ON DUMPE RS. 4. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE CLAIMED DEPRECIATION @ 30% ON DUMPERS, WHICH WERE G IVEN ON HIRE TO SISTER CONCERN NAMELY SHREE LOGISTICS PVT. LTD. TH E ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AND ALLOWED DEPR ECIATION @ 15% ONLY, BY HOLDING THAT THE TIPPERS AND DUMPERS WERE NOT TR ANSPORT VEHICLES. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LEARNED CIT(A), WHO ALLOWED THE CLAIM BY OBSERVING IN PARA 2.3 OF THE IMPUGNED ORDER, WHICH READS AS UNDER:- 3 2.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AS WELL AS THE ASSESSMENT ORDER. IT IS SEEN THAT THE ISSUE REQUIRE D TO BE DECIDED IS WHETHER THE DEPRECIATION IS ALLOWABLE AT THE RATE O F 30% IN THE CASE OF TIPPERS/DUMPERS AS PER APPENDIX 1 AS CLAIMED BY THE APPELLANT OR DEPRECIATION IS TO BE ALLOWED AT THE RATE OF L5%. T HE A.O'S MAIN CONTENTION IS THAT TIPPERS CANNOT BE CALLED FOR MOTOR LORIES A S THE MOTOR LORRY IS THE MOTOR VEHICLES HAVING CAPACITY AND CAPABILITY FOR C ARRYING THE GOODS. SO, IT SHOULD BE A TRANSPORT VEHICLE TO CLAIM HIGHER RATE OF DEPRECIATION WHILE THE TIPPERS/DUMPERS ARE NOT TRANSPORT VEHICLE AND ARE C ONSTRUCTION EQUIPMENTS. THE ISSUE HAS BEEN DECIDED IN THE CASE OF M/S. SAYEED IQBAL IN ITA N0.39/JU/2009 FOR ASSESSMENT YEAR 2005-06 WHERE AFTER REFERRING TO THE DEFINITION OF MOTOR VEHICLE UNDER SECTION2(28)O F MOTOR VEHICLE ACT AND DEFINITION OF HEAVY GOODS VEHICLE UNDER SECTION 2(1 6) OF THE SAID ACT, THE HONOURABLE TRIBUNAL HAS CONSIDERED THE VARIOUS DECI SION ON THE ISSUE SPECIALLY THAT OF HONOURABLE ANDRA PRADESH HIGH COU RT IN THE CASE OF CIT VS. A.M. CONSTRUCTION 238 ITR 775 (AP),HONOURABLE HIGH COURL OF GUJARAT IN THE CASE OF CIT VS. SHIV CONSTRUCTIONS 165 ITR 159 (GUJ ) AND IN THE CASE OF GUJCO CARRIERS VS. CIT L22 TAXMAN 206 AND HELD THAT TIPPE RS ARE ELIGIBLE FOR HIGHER DEPRECIATION AT THE RATE OF 40% AS AGAINST 25% ALLO WED BY THE A.O. TREATING THEM TO BE PLANT AND MACHINERY. AS FAR AS ON THE DECISION IN THE CASE OF CIT VS. A .R. ENTERPRISES PVT. LTD. (SUPRA) IS CONCERNED, IT MAY BE MENTIONED THAT THE ABOVE DECISION WAS GIVEN IN THE CONTEXT OF DISALLOWANCE OF INVESTMENT ALLOWANCE UNDER SECTION 32A OF THE ACT WHICH ENVISAGES THAT INVESTMENT ALLO WANCE IS NOT ALLOWABLE FOR 'ROAD TRANSPORT VEHICLE'. ACCORDINGLY, INVESTME NT ALLOWANCE ON CONSTRUCTION EQUIPMENT VEHICLES WAS UPHELD. IN THE SAME DECISION, IT HAS BEEN HELD AS UNDER:- 'IT IS CLEAR FROM THE PERUSAL OF THE ABOVE DEFINITI ON UNDER THE ACT AND THE RULES THAT VEHICLE OF SPECIAL NATURE LIKE DUMPE RS, TIPPERS AND EXCAVATORS ARE NON TRANSPORT VEHICLE BUT THEY ARE M OTOR VEHICLE WITHIN THE DEFINITION OF SECTION 2(28), OF THE ACT. DIS-EN TITLEMENT OF INVESTMENT ALLOWANCE UNDER SECTION32AOF THE ACT IS FOR THE ROAD TRANSPORT VEHICLES AND NOT ON ALL MOTOR VEHICLE INC LUDING 'CONSTRUCTION EQUIPMENT VEHICLES' WHICH ARE 'NON - TRANSPORT VEHI CLES. THIS MAKES IT CLEAR THAT TIPPERS ARE MOTOR VEHICLE BUT ARE NOT ROAD RANSPORT VEHICLE. 4 IN THIS CONTEXT, AS MENTIONED IN THE ORDER OF THE TRIBUNAL REFERRED TO SUPRA, REFERRED TO DECISION IN THE CASE OF GUJCO CA RRIERS VS. CIT 122 TAXMAN 206(GUJ) WHERE IT HAS BEEN MADE CLEAR THAT 'LORRIES ' 0R 'TRUCK' WOULD MEAN NOT ONLY THE MOTOR VEHICLE DESIGNED TO CARRY FREIGH T OR GOODS BUT ALSO TO PERFORM SPECIAL SERVICES LIKE FIRE FIGHTING ETC,. F URTHER, IT HAS BEEN MENTIONED THAT MOTOR VEHICLE LIKE FIRE TRUCKS, FORK LIFT TRUCKS AND CRANE TRUCKS ETC, WHICH DESIGNED FOR SPECIAL SERVICES FAL L WITHIN THE CATEGORY OF 'MOTOR TRUCKS' (ALSO CALLED MOTOR LORIES.) SO, THE A.O'S CONCLUSION THAT ONLY TRANSPORT VEHICLE HAVING CAPACITY FOR CARRYING GOOD S OR OTHER ITEMS CAN BE TREATED AS MOTOR LORRIES IS NOT SUSTAINABLE. THE A.O HAS FURTHER MENTIONED THAT THE ASSESSEE I S NOT IN THE BUSINESS OF RUNNING THE MOTOR BUSINESS /MOTOR LORRI ES ON HIRE AND THE PRIMARY BUSINESS OF THE ASSESSEE IS TRADING IN PSF. FROM THE FACTS, IT IS APPARENT THAT THE ASSESSEE HAS CARRIED OUT THE BUSI NESS OF RUNNING THE SAID VEHICLES ON HIRE AND HAS SHOWN HIRE RECEIPTS OF RS. 98,49,780 WHICH HAS BEEN TAXED BY THE A.O. IN SUCH CASES, PREDOMINANT U SE OF THE VEHICLE IS RELEVANT. AS THE SAID TIPPERS/DUMPERS WERE PRIMARIL Y USED FOR BUSINESS OF HIRING , IT CANNOT BE SAID THAT THE ASSESSEE HAS NO T CARRIED OUT THIS BUSINESS. IN THIS CONTEXT, IN THE CASE OF CIT VS. MANJEET STO NE CO.(RAJ.) 190 LTR 183 IT HAS BEEN HELD THAT THE TRUCKS PRIMARILY USED FOR AS SESSEE'S OWN BUSINESS AND OCCASIONALLY LET OUT ON HIRE WILL NOT FALL UNDE R THE ENTRY III(II) OF HIGHER DEPRECATION . AS A COROLLARY, FROM THIS DECISION IT IS APPARENT THAT WHERE ASSET HAS PRIMARILY BEEN USED FOR HIRING, IN ABSENC E OF ANY CONTRARY EVIDENCE TO THIS EFFECT, THE CONTENTION OF APPELLAN T IS ACCEPTABLE. IN VIEW OF ABOVE DISCUSSION, IT IS HELD THAT THE ASSESSEE IS E LIGIBLE FOR DEPRECIATION AT THE HIGHER RATE OF 30% AS CLAIMED AND THE DISALLOWA NCE OF DEPRECIATION MADE BY THE A.O, ON THIS ACCOUNT IS DELETED AND THI S GROUND OF APPEAL IS ALLOWED. NOW THE DEPARTMENT IS IN APPEAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET STATED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 23/10/2013 PASSED BY THIS BENCH OF THE ITAT IN I.T. A.NO. 191/JODH/2013 5 IN THE CASE OF ITO, WARD-1(2) VS. M/S. ALFA EARTHMOVERS . COPY OF THE SAID ORDER WAS FURNISHED. 7. LEARNED CIT D.R. ALTHOUGH SUPPORTED THE ORDER OF TH E ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE AFORESAID CON TENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE AFORESAID REFERRED TO ORDER DATED 23/10/2013, WHEREIN EARLIER DECISION DATED 10/07/2013 IN I.T.A.NO. 135/JODH/201 3 FOR THE A.Y. 2007- 08 IN THE CASE OF ITO, WARD-1(4), UDAIPUR VS. M/S. KESHRIYAJI MINERAL S PVT. LTD . HAS BEEN FOLLOWED AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 6 OF THE SAID ORDER, WHICH READS AS UNDER:- 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IT IS NOTICED THAT THE PRESENT ISSUE IS SQUARELY COVERED VIDE ORDER DA TED 10/07/2013 PASSED BY THIS BENCH OF THE I.T.A.T. IN THE CASE OF ITO, U DAIPUR VS. M/S. KESHRIYAJI MINERALS PVT. LTD. UDAIPUR (SUPRA), WHEREIN THE REL EVANT OBSERVATIONS ARE GIVEN IN PARA 7 TO 10, WHICH ARE REPRODUCED VERBATI M AS UNDER:- 7. THE NEXT ISSUE, VIDE GROUND NO. 2, RELATES TO T HE DELETION OF DISALLOWANCE OF RS.1,41,298/- ON ACCOUNT OF EXCESS DEPRECIATION ON DUMPERS. 8. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT 6 THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS.2,82,59 7/- @30% ON THE DUMPERS WHILE THE ALLOWABLE RATE OF DEPRECIATIO N WAS ONLY 15%. WHEN ASKED TO JUSTIFY THE SAME, THE ASSESSEE S UBMITTED AS UNDER: '1. THE DEPRECIATION OF DUMPER IS CLAIMED @30% CO NSIDERING THEIR MOTOR LORRIES USED IN A BUSINESS OF RUNNING T HEM ON HIRE. THE DUMPERS ARE USED TO TRANSPORT THE MATERIAL ONLY AND ALSO IT SATISFIED THE DEFINITION OF MOTOR VEHICLE ACT. THE DUMPERS ARE ALSO REGISTERED UNDER THE MOTOR VEHICLE ACT, THE PH OTOCOPIES OF REGISTRATION CERTIFICATES ARE ALREADY SUBMITTED.' 8.1 HOWEVER, THE ASSESSING OFFICER DID NOT FIND ME RIT IN THE SUBMISSIONS OF THE ASSESSEE BY OBSERVING THAT TIPPE RS WERE NON- TRANSPORT VEHICLES ALTHOUGH REGISTERED UNDER MOTOR VEHICLE ACT. HE FURTHER OBSERVED THAT THE DEPRECIATION @30% WAS AVAILABLE TO THE VEHICLES WHICH ARE IN THE NATURE OF LORRY HA VING CAPACITY AND CAPABILITY FOR CARRYING ON GOODS OR OTHER ITEMS . HE FURTHER STATED THAT THE DUMPER COMES WITHIN THE EXPRESSION OF EARTH MOVING MACHINERY. THE RELIANCE WAS PLACED ON THE DE CISION OF HON'BLE GUWAHATI HIGH COURT IN THE CASE OF CIT VS. SIBSON CONSTRUCTION COMPANY 221 ITR 468 (GAUHATI). THE ASS ESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE WAS NOT IN THE BUSINESS OF RUNNING THE MOTOR BUSES/MOTOR LORRIES ON HIRE AN D THE HIRING BUSINESS OF THE ASSESSEE WAS WITH REGARD TO THE PLA NT & MACHINERY PERTAINING TO THE MARBLE BUSINESS RATHER THAN THE BUSINESS OF RUNNING MOTOR BUSES/MOTOR LORRIES ON HI RE ON WHICH 30% DEPRECIATION WAS ALLOWED. THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS ENTITLED FOR DEPRECIATION @15% AND THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: (I) CIT VS. SARDAR STONES 215 ITR 350 (RAJ) (II) CIT VS. AR ENTERPRISES P. LTD. IN DBIT NO. 7 7/2002 DATED 06/09/2007 9. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED AS UNDER: OUR HUMBLE SUBMISSION ON THE SECOND POINT OF THE APPEAL IS THAT THE APPELLANT IS ALSO HAVING BUSINESS OF HIRIN G OF MINING MACHINERIES AND EQUIPMENTS. THE DUMPERS ALSO USED F OR 7 TRANSPORT VEHICLE ACT. HENCE THE DEPRECIATION CLAIM ED MAY BE ALLOWED. 9.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE, OBSERVED THAT THE ISSUE OF ALLOWABILITY O F DEPRECIATION ON DUMPER/ TIPPER AT THE RATE ON WHICH DEPRECIATION WAS ALLOWABLE ON TRANSPORT VEHICLE HAD BEEN EXAMINED BY THE JURISDICTIONAL TRIBUNAL IN THE CASE OF SAYEED IQBAL IN ITA NO.39/JU/2009 FOR THE ASSESSMENT YEAR 2005-06. THE LEARNED CIT(A), BY FOLLOWING THE DECISION OF THE ITAT JODHP UR BENCH, ALLOWED THE CLAIM OF THE ASSESSEE AND HELD THAT THE ASSESSEE WAS ELIGIBLE FOR CLAIMING DEPRECIATION AT THE SAME RATE AT WHICH DEPRECIATION WAS ALLOWABLE ON MOTOR LORRIES. NOW THE DEPARTMENT IS IN APPEAL. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE IT APPEARS THAT LEARNED CIT(A) HAS ALL OWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE JU RISDICTIONAL TRIBUNAL AND NOTHING IS BROUGHT ON RECORD THAT THE DECISION OF THE ITAT JODHPUR BENCH RELIED BY THE LEARNED CIT(A) , HAVING SIMILAR FACTS, HAD BEEN REVERSED BY THE HIGHER FORU M. WE, THEREFORE, DO NOT SEE ANY MERIT IN THIS GROUND OF T HE DEPARTMENTAL APPEAL. 9. SINCE, THE FACTS INVOLVED IN THE PRESENT CASE ARE S IMILAR TO THE FACTS OF THE AFORESAID REFERRED TO CASE, SO BY RESPECTFUL LY FOLLOWING THE SAID ORDER DATED 23/10/2013 IN THE CASE OF ITO, WARD-1(2 ) VS. M/S. ALFA EARTHMOVERS (SUPRA), WE DO NOT SEE ANY MERIT IN THI S GROUND OF THE DEPARTMENTAL APPEAL. 10. VIDE GROUND NO.2, THE GRIEVANCE OF THE DEPARTMENT R ELATES TO THE DELETION OF DISALLOWANCE OF DEPRECIATION OF RS. 59, 815/- CLAIMED ON TANKERS. 8 11. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE RECEIVED DISCOUNT OF RS. 11,01,000/- ON TANKERS WHI CH WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND ACCORDINGLY BY PAS SING ORDER UNDER SECTION 154 OF THE I.T. ACT, 1961 (HEREINAFTER REFE RRED TO AS ACT, IN SHORT) DATED 15/02/2007 DEPRECATION OF RS. 4,09,200 /- CLAIMED IN THE INFLATED COST WAS DISALLOWED AND AS COROLLARY TO TH E ABOVE FACT, THE OPENING WDV OF THE TANKERS STOOD INCREASED BY RS. 1 ,49,537/- AS ON 01/04/2007. SO, THE DEPRECIATION @ 40% ON THE ABOV E SAID AMOUNT, I.E. RS. 59,815/- WAS DISALLOWED. 12. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LEARNED CIT(A) AND MADE THE FOLLOWING SUBMISSIONS:- 'FOR THE A.Y. 2004-05 THE ASSESSEE HAD PREFERRED AN APPEAL AGAINST THE ORDER OF THE A.O. THE DISALLOWANCE OF RS. 4,09,200 ON ACCOUNT OF DEPRECIATION ON RS.11,01,000 SUBSEQUENTLY THE APPEA L IS ALLOWED VIDE YOUR ORDER DATED 20,02.2009, THIS GROUND HAS BEEN DECIDE D VIDE ORDER DATED20,02,2009 IN APPEAL N0.512/2006-07 FOR ASSESS MENT YEAR 2004-05 IN THE CASE OF THE APPELLANT, THAT THE A.0. WAS NOT JU STIFIED IN MAKING THE ADDITION OF RS.11,01,000 AS THE APPELLANT HAS SHOWN THE DISCOUNT RECEIPT OF RS,11,01,000 IN THE ASSESSMENT YEAR 2007-08. AS THE APPELLANT HAS SHOWN THE RECEIPT AS INCOME, THE QUESTION OF REDUCING THE WDV DOES NOT ARISE. FURTHER, AS THE A.0, HAS MADE ADDITION OF RS.11,01, 000 AS DISCOUNT RECEIPT AS INCOME IN THE A.Y, 2004-05,THEN ALSO THE QUESTIO N OF REDUCING THE WDV DOES NOT ARISE. THEREFORE THE DISALLOWANCE MADE BY THE A.O. IN THE YEAR UNDER CONSIDERATION WAS DELETED. 9 IN VIEW OF THE ABOVE FACTS THE DISALLOWANCE OF RS,5 9,815/- ON ACCOUNT OF DEPRECIATION ON TANKER IS NOT JUSTIFIED AND DESERVE S TO BE DELETED. 13. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE DISALLOWANCE BY OBSERVING IN PARA 3.3 O F THE IMPUGNED ORDER, WHICH READS AS UNDER:- 3.3. IT IS SEEN THAT SIMILAR ISSUE HAS BEEN CONSID ERED BY THE LEARNED DCIT (A) IN ASSESSMENT YEAR 2007-08 AND DEPRECIATION HAS BEEN ALLOWED HOLDING AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED A/ R. VIS-A-VIS THE FINDINGS OF THE A.O. GIVEN IN THE ASSESSMENT ORDER, FROM THE FINDINGS OF THE A.O. IT APPEARS THAT THE A.O. HAS MADE THE ADDITION ON THE BASIS OF THE DISALLOWANCE MADE IN THE ASSESSMENT YEAR 2004-05. SINCE THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT IN THE ASST T. YEAR 2004-05 VIDE APPELLATE ORDER DATED 20.02.2009 IN APPEAL N0. 512/ 2006-07, FOR THE DETAILED REASON GIVEN THEREIN AND SINCE THE DISALLO WANCE/ADDITIONS HAVE BEEN BASED ON THE SAME ISSUE, THE DISALLOWANCE MADE DURING THE YEAR UNDER APPEAL IS LIABLE TO BE DELETED AND I ORDER AC CORDINGLY. AS THE FACTS BEING THE SAME AS LAST YEAR, THE DISAL LOWANCE MADE OF RS.59,815 IS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 14. LEARNED CIT D.R. ALTHOUGH SUPPORTED THE ORDER OF TH E ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE FINDINGS GIVE N BY THE LEARNED CIT(A) THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFF ICER ON THE BASIS OF DISALLOWANCE IN THE A.Y. 2004-05, WHICH WAS DELETED BY DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. THEREFORE, THE DISALLOW ANCE MADE DURING THE 10 YEAR WAS LIABLE TO BE DELETED. WE, THEREFORE, DO N OT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 15. THE NEXT ISSUE VIDE GROUND NO.3 RELATES TO THE DISA LLOWANCE OF DEPRECIATION OF RS. 39,04,407/- CLAIMED ON WIND MIL L. 16. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSEE HAD CLAIMED DEPRECIATION @ 80% ON THE WIND MILL INSTALL ED THROUGH M/S. SUZLON ENERGY LTD., HOWEVER, THE ASSESSING OFFICER ALLOWED THE DEPRECIATION @ 10% ON THE CIVIL WORK AND FOUNDATION AND @ 15% ON ELECTRICAL ITEMS WHILE NO DEPRECIATION WAS ALLOWED ON THE EVACUATION CHARGES. 17. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A), WHO DELETED THE DISALLOWANCE MADE BY THE AS SESSING OFFICER BY FOLLOWING THE DECISION OF HIS PREDECESSOR DATED 19/ 04/2010 FOR THE A.Y. 2007-08 IN ASSESSEES OWN CASE, WHEREIN CLAIM OF TH E ASSESSEE WAS ALLOWED BY FOLLOWING THE DECISION OF THE ITAT IN I. T.A.NO. 745/JP/2007 IN ASSESSEES OWN CASE VIDE ORDER DATED 18/07/2008. NOW THE ASSESSEE IS IN APPEAL. 11 18. LEARNED CIT D.R. SUPPORTED THE ORDER OF THE ASSESS ING OFFICER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 20/09/2012 IN ASSESSEES OWN CASE IN I.T.A.NO. 438/JU/2010 FOR T HE A.Y. 2007-08. COPY OF THE SAID ORDER WAS FURNISHED, WHICH IS PLAC ED ON RECORD. 19. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND THE MATERIAL AVAILABLE ON THE RECORD, IT IS NOTICED THA T AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS ALREADY BEEN ADJUDICATED B Y THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2007-0 8 IN I.T.A.NO. 438/JU/2010 VIDE ORDER DATED 20/09/2012, WHEREIN TH E RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 24, WHICH READS AS UNDER:- 24. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND MATERIAL AVAILABLE ON RECORD, WE ARE OF THE OPINION THAT THE LD CIT(A) HAS PASSED A JUST ORDER WHICH IS IN CONSONANCE WIT H THE EARLIER ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF DCIT, BHILWARA VS M/S SARVODAYA SUITINGS PVT LTD, BHILWARA (SUPRA). IN TH E INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE INSTALLED A WINDMI LL. FOR INSTALLING A WINDMILL, CIVIL WORK & FOUNDATION WAS DONE BY INCUR RING AN EXPENDITURE OF RS. 34,60,760/-, WITHOUT DOING THE C IVIL CONSTRUCTION WORK INCLUDING FOUNDATION WORK, IT WAS NOT POSSIBLE TO INSTALL THE WINDMILL. SIMILARLY, THE ELECTRIC ITEMS, COMPONENT AND INSTALLATION WERE NECESSARY FOR THE WINDMILL, BECAUSE IN THE ABS ENCE OF THESE COMPONENTS AND ELECTRIC ITEMS IT WAS NOT POSSIBLE F OR THE WINDMILL TO PRODUCE ELECTRICITY. THEREFORE, IT WAS ALSO AN INT EGRAL PART OF THE WINDMILL. IN THE INSTANT CASE, THE ASSESSEE PAID A SUM OF RS. 31,25,000/- TO M/S SUZLON ENERGY LTD THROUGH WHOM T HE WINDMILL 12 WAS INSTALLED. THE SAID PAYMENT WAS NON-REFUNDABLE. THE SAID EXPENDITURE WAS MADE FOR THE INSTALLATION OF THE WI NDMILL AND IF THERE WAS NO SUCH WINDMILL INSTALLATION, THE ASSESS EE COULD NOT HAVE INCURRED SUCH EXPENSES, THEREFORE, EXPENDITURE INC URRED ON COMMON POWER EVACUATION WAS DIRECTLY RELATED TO THE WINDMI LL AND THE ASSESSEE WAS ENTITLED FOR HIGHER DEPRECIATION. WE, THEREFORE, CONSIDERING THE TOTALITY OF FACTS DO NOT SEE ANY IN FIRMITY IN THE ORDER OF LD CIT(A) ON THIS ISSUE. 20. AS THE FACTS FOR THE ASSESSMENT YEAR UNDER CONSIDER ATION ARE SIMILAR TO THE FACTS INVOLVED IN THE ASSESSMENT YEAR 2007-0 8, SO BY RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 20/ 09/2012 FOR THE A.Y. 2007-08 IN THE ASSESSEES OWN CASE, WE DO NOT SEE A NY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 21. NOW WE WILL DEAL WITH THE APPEAL IN I.T.A.NO. 270/J U/2009 FOR THE A.Y. 2005-06. THE FOLLOWING GROUNDS HAVE BEEN RAISE D IN THIS APPEAL:- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN:- 1. DELETING THE DISALLOWANCE OF RS. 16,27,289/- IN RESPECT OF DUMPERS TREATING THE DUMPERS AS CONSTRUCTION EQUIPMENTS. 2. DELETING THE DISALLOWANCE DEPRECIATION ON TANKER S AMOUNTING TO RS. 2,76,720/-. 3. DELETING THE DISALLOWANCE OF RS. 2,52,000/- OUT OF SALARY PAID TO PARTNER SHRI K.G. GATTANI. 4. PROVIDING RELIEF OF RS. 54,468/- OUT OF TOTAL DI SALLOWANCE OF RS. 90,000/- ON ACCOUNT OF TELEPHONE EXPENSES. 5. PROVIDING RELIEF OF RS. 69,405/- OUT OF TOTAL DI SALLOWANCE OF RS. 1,00,235/- ON ACCOUNT OF ELECTRICITY EXPENSES. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DEL ETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 13 22. AS REGARDS TO THE ISSUES RAISED VIDE GROUNDS NOS. 1 & 2, IT WAS COMMON CONTENTION OF BOTH THE PARTIES THAT THE FACT S RELATING TO THESE ISSUES ARE SIMILAR TO THE FACTS INVOLVED IN THE A.Y . 2008-09 IN I.T.A.NO. 217/JODH/2012 (SUPRA). WE, THEREFORE, HOLD THAT OU R FINDINGS GIVEN IN FORMER PART OF THIS ORDER WHILE DECIDING THE SIMILA R ISSUES IN THE APPEAL IN I.T.A.NO. 217/JODH/2012 SHALL APPLY MUTATIS MUTANDIS FOR THIS ASSESSMENT YEAR ALSO. 23. THE NEXT ISSUE VIDE GROUND NO.3 RELATES TO THE DELE TION OF DISALLOWANCE OF RS. 2,52,000/- MADE BY THE ASSESSIN G OFFICER OUT OF SALARY PAID TO SHRI K.G. GATTANI. 24. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD PAID A SUM OF RS. 2,52,000/- TO SHRI K.G. GATTA NI AS SALARY AND ASKED THE ASSESSEE TO JUSTIFY THE SALARY PAID ALONG WITH THE NATURE OF DUTIES ASSIGNED TO HIM. IN RESPONSE TO THAT, THE ASSESSEE SUBMITTED THAT SALARY PERTAINED TO HIS DESIGNATION AS MANAGING PARTNER. THE ASSESSING OFFICER POINTED OUT THAT IN THE PARTNERSHIP DEED, NO SUCH S ALARY TO SHRI K.G. GATTANI WAS MENTIONED. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE 14 POSITION, IT WAS SUBMITTED THAT THE SALARY WAS PAID TO SHRI K.G. GATTANI IN THE CAPACITY OF EMPLOYEE AND NOT AS PARTNER. THE A SSESSING OFFICER DISALLOWED THE SALARY BY OBSERVING THAT SHRI K.G. G ATTANI HUF WAS ONE OF THE PARTNER AND REPRESENTED BY SHRI K.G. GATTANI, K ARTA OF SAID HUF IN REPRESENTATIVE CAPACITY. THE ASSESSING OFFICER FUR THER OBSERVED THAT NO SALARY WAS ALLOWABLE AS PER THE PROVISIONS OF SECTI ON 40(B) OF THE ACT, WHICH WAS NOT AUTHORIZED BY OR WHICH WAS NOT IN ACC ORDANCE WITH THE TERMS AND CONDITIONS OF PARTNERSHIP DEED. HE FURTH ER OBSERVED THAT SHRI K.G. GATTANI AS AN INDIVIDUAL AND AS A REPRESENTATI VE KARTA OF K.G. GATTANI HUF WAS ONE AND SAME. HE THEREFORE DISALLO WED THE SALARY PAID TO SHRI K.G. GATTANI. 25. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE SALARY WAS PAID TO SH RI K.G.GATTANI IN HIS INDIVIDUAL CAPACITY AND NOT AS REPRESENTATIVE OF K. G. GATTANI HUF. IT WAS FURTHER STATED THAT SHRI K.G. GATTANI WAS NOT DRAWI NG SALARY FROM ANY OTHER CONCERN AND WAS DEVOTING WHOLE TIME TO THE BU SINESS OF THE ASSESSEE-FIRM AND THAT THE SAID SALARY PAID TO HIM WAS ASSESSED IN HIS INDIVIDUAL CAPACITY. ASSESSEE PLACED RELIANCE ON T HE VARIOUS JUDICIAL PRONOUNCEMENTS, WHICH ARE MENTIONED BY THE LEARNED CIT(A) AT PAGES 11 TO 16 OF THE IMPUGNED ORDER. 15 LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE HELD THAT THE ASSESSEE RIGHTLY PAID THE SALARY TO S HRI S.G. GATTANI FOR PERSONAL SERVICES RENDERED AND HAD SHOWN RECEIPT OF SALARY IN HIS INDIVIDUAL CAPACITY AND ASSESSED AS SUCH. NOW THE D EPARTMENT IS IN APPEAL. 26. LEARNED CIT D.R. SUPPORTED THE ORDER OF THE ASSESSI NG OFFICER WHILE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THI S ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS BENC H OF THE TRIBUNAL IN THE CASE OF ITO VS. NATIONAL AUTOMOBILES (2005) 93 TTJ (JD) 641 , WHEREIN IT HAS BEEN HELD THAT SALARY PAID TO WORKING PARTNERS IS ALLOWABLE THOUGH THEY ARE PARTNERS IN THE CAPACITY OF KARTAS OF THEI R HUF AND NOT AS INDIVIDUAL. WE, THEREFORE, DO NOT SEE ANY INFIRMI TY IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 27. THE NEXT ISSUE VIDE GROUND NO.4 RELATES TO THE DELE TION OF DISALLOWANCE OF RS. 54,468/- OUT OF TOTAL DISALLOWA NCE OF RS.90,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF TELEPHO NE EXPENSES. 28. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSEE CLAIMED TELEPHONE EXPENSES OF RS. 2,28,770/-, WHICH INCLUDE D RS. 70,532/- 16 PERTAINING TO THE MOBILE TELEPHONE EXPENSES. HOWEV ER, THE ASSESSING OFFICER DISALLOWED A SUM OF RS. 90,000/- ON ACCOUNT OF PERSONAL USE. 29. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE TELEPHONE EXPENSES INCLUDED RS. 60,000/- PERTAINING TO MOBILE BILL OF SHRI SUNIL GATTANI, WH O LOOKED AFTER MUMBAI AND DELHI OFFICES AND THE EXPENSES INCURRED WERE EX CLUSIVELY FOR THE PURPOSE OF BUSINESS, WHICH REQUIRED EXTENSIVE USE O F THE TELEPHONE. LEARNED CIT(A) OBSERVED THAT THE ASSESSEE HAD NOT G IVEN ANY EXPLANATION WITH REGARD TO TELEPHONE EXPENSES AMOUNTING TO RS. 10,532/- RELATING TO M/S. GATTANI RESORTS PVT. LTD. AND ALSO COULD NOT G IVE ANY EXPLANATION IN RESPECT OF PAYMENT OF RS. 25,000/- TO SHRI SUNIL GA TTANI. HE, THEREFORE, SUSTAINED THE DISALLOWANCE OF RS. 35,532/- AND DELE TED THE REMAINING DISALLOWANCE. NOW THE DEPARTMENT IS IN APPEAL. 30. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LEARNED CIT(A) HAS GIVEN THE CATEGORICAL FINDINGS THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS ON HIGHER SIDE AND THAT THE ASSESSEE COULD NOT GIVE EXPLANATION 17 RELATING TO RS. 35,532/-, WHICH HE TREATED AS PERSO NAL IN NATURE AND ACCORDINGLY, RESTRICTED THE DISALLOWANCE TO RS. 35, 532/-. SINCE, NOTHING CONTRARY TO THE FINDINGS OF THE LEARNED CIT(A) IS B ROUGHT ON RECORD, WE THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A) ON THIS ISSUE. 31. THE NEXT ISSUE VIDE GROUND NO.5 RELATES TO THE RELI EF OF RS. 69,405/- OUT OF TOTAL DISALLOWANCE OF RS. 1,00,235/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ELECTRICITY CHARGES. 32. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE DEBITED RS. 8,415/-, RS. 9,819/-, RS. 7,133/- AND R S. 5,463/- TOTALLING TO RS. 30,830/- RELATING TO ELECTRIC BILL OF THE HOUSE OF SMT. KAUSHALYA GATTANI. HE ALSO NOTICED THAT AN AMOUNT OF RS. 69, 405/- WAS PAID ON 02/04/2004 ON ACCOUNT OF ELECTRICITY DEMAND AND THE SPECIFIC DETAILS WERE NOT AVAILABLE. HE THEREFORE, DISALLOWED A SUM OF RS. 1,00,235/-. 33. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSEE IS HAVING IT S OFFICE AT SHREE NIKETAN, 380, ASHOK NAGAR, UDAIPUR, WHICH IS IN THE NAME OF SMT. 18 KAUSHALYA GATTANI, BUT THE EXPENSES INCURRED WERE S OLELY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT WAS FURTHER STATED THAT THE ASSESSEE CONSTRUCTED A NEW HOUSE AT HARIDAS JI KI MAGRI, UDA IPUR AND PAID A SUM OF RS. 69,405/- TOWARDS THE NEW CONNECTION CHARGES FOR OFFICE, BUT SAID CHARGES DID NOT PERTAIN TO INSTALLATION OF TRANSFOR MER OR LYING OF CABLES, WHICH HAD ALREADY BEEN CAPITALIZED. THEREFORE, THE EXPENSES IN QUESTION WERE PURELY REVENUE IN NATURE. 34. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD NOT FURNISHED ANY EV IDENCE IN RESPECT OF ELECTRICITY EXPENSES RELATING TO A-3, ASHOK NAGAR, UDAIPUR AMOUNTING TO RS. 30,830/-, HE FURTHER OBSERVED THAT THE ASSESSEE HAD INCURRED RS. 69,405/- AS NEW CONNECTION CHARGES TO THE ELECTRICI TY DEPARTMENT IN THE YEAR 2004, WHICH WERE ALLOWABLE AS REVENUE EXPENDIT URE. LEARNED CIT(A), ACCORDINGLY, DELETED THE ADDITION OF RS. 69 ,405/- AND SUSTAINED THE REMAINING ADDITION OF RS. 30,830/-. NOW THE DE PARTMENT IS IN APPEAL. 35. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES, IT APPEARS THAT THE LEARNED CIT(A) SUSTAINED THE ADDITION FOR WHICH NO EVIDENCE WAS FURNISHED BY THE ASSESSEE AND ALLOWED THE RELIEF IN RESPECT OF AMOUNT 19 RELATING TO THE BUSINESS OF THE ASSESSEE FOR WHICH PROPER EXPLANATION AND EVIDENCES WERE PRODUCED. WE, THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A) O N THIS ISSUE. 36 . IN THE RESULT, APPEALS OF THE DEPARTMENT ARE DISM ISSED. (ORDER PRONOUNCED IN THE COURT ON 20 TH NOVEMBER, 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH NOVEMBER , 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.