D.C.I.T Cir - 1,kolata, Kolkata V. M/s Parijat Vyapaar Pvt. Ltd., Kolkata

ITA 2241/KOL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1479 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 12-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHERJEE
• Assessee Lawyers: SUBASH AGARWALA
• Keywords: Depreciation; Additional evidence; Non-deduction of tax; Corroborative evidences
• Section: 143(3); 194C

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2241-2242/KOL/2013 ASSESSMENT YEARS:2008-09 & 2009-10 DCIT, CIRCLE-1, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 / V/S . M/S PARIJAT VYAPAAR PVT. LTD.,12A, N.S. ROAD, 5 TH FLOOR, KOLKATA-700001 [ PAN NO.AADCP 0161 H ] /APPELLANT .. /RESPONDENT / /BY ASSESSEE SHRI SUBASH AGARWALA, ADVOCATE ' /BY REVENUE SHRI ARINDAM BHATTACHERJEE, ADDL. CIT-DR /DATE OF HEARING 29-01-2018 /DATE OF PRONOUNCEMENT 19-02-2018 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS BY THE REVENUE ARE DIRECTED AGAINST TH E DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, KOLKATA OF EVEN DATE I.E. 10.05.2013. ASSESSMENTS WERE FRAMED BY DCIT, CIRCLE-1, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VI DE THEIR ORDERS DATED 15.12.2010 &29.12.2011 FOR ASSESSMENT YEARS 2008-09 & 2009-10. BOTH APPEALS ARE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 2 SHRI ARINDAM BHATTACHERJEE LD. DEPARTMENTAL REPRES ENTATIVE APPEARED ON BEHALF OF REVENUE AND SHRI SUBASH AGARWAL, LD. ADVOCATE APPEA RED ON BEHALF OF ASSESSEE. WE FIRST TAKE UP APPEAL OF REVENUE IN ITA NO.2241/K OL/2013 RELATING TO AY 2008-09. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE ON PURCHASE OF T YRES FOR RS.5,91,642/-/ AND IN ALLOWING DEPRECIATION ON ADDITION TO FIXED ASSET S FOR RS.13,67,889/-. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS ERRED IN ALLOWING DEPRECIATION OF RS.87,45,827/- @ 30% BLOCK ON DUMPERS AND DRIPPERS AS AGAINST DEPRECIATION @ 15% BLOCK ALLOWE D BY THE AO. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER/OR AMEND ANY OF THE GROUNDS OF APPEAL DURING THE COURSE OF HEARING. 3. FIRST ISSUE RAISED BY REVENUE IN GROUND NO.1 IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER FOR 5,91,642/- ON ACCOUNT OF PURCHASE OF TYRES AS WELL AS DEPRECIATION ON FIXED ASSETS OF 13,67,889/-. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IN THE PR ESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN BUSINESS OF EARTH MOVING ACT IVITIES AND CONSTRUCTION ACTIVITIES. THE ASSESSEE IN THE YEAR UNDER CONSIDER ATION HAS MADE ADDITION MADE IN THE FIXED ASSETS IN THE FORM OF TYRES / OTHER ACCESSORI ES OF DUMPER & EXCAVATORS. THESE ASSETS WERE CATEGORIZED UNDER THE BLOCK PLANT & MA CHINERY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER ASKED THE ASSESSEE TO FILE THE SUPPORTING EVIDENCE FOR THE ADDITION MADE TO THE FIXED ASSETS. BUT THE ASSESSEE FAILED TO DO SO IN RESPECT OF ONE PARTY, NAMELY, M/S TYRE ARCADE. THE AO ON PERUSAL OF LEDGER ACCOUNT OF M/S TYRE ARC ADE OBSERVED THAT THE CLOSING BALANCE SHOWN BY ASSESSEE WAS AT 13,91,688/- WHEREAS THE OPENING BALANCE WAS SHOWN FOR 1,09,99,459/-. THUS, AO OBSERVED THE DIFFERENCE IN THE ACCOUNT OF M/S TYRE ARCADE BETWEEN OPENING AND CLOSING BALANCE. ON QUESTIONED ABOUT THE DIFFERENCE IN THE OPENING & CLOSING BALANCE, THE AS SESSEE FAILED TO EXPLAIN. ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 3 THE AO FURTHER OBSERVED THAT PAYMENT MADE BY ASSESS EE TO M/S TYRES ARCADE WERE RETURNED BY THE BANK NAMELY, BANK OF INDIA. THE ASS ESSEE ALSO FAILED TO JUSTIFY WHETHER THE PAYMENT WAS SUBSEQUENTLY MADE TO M/S TY RE ARCADE. THE AO ALSO OBSERVED THAT OUT OF THE TOTAL PURCHASE S OF RS. 19,59,531.00 FROM M/S TYRE ARCADE, A SUM OF RS. 5,91,642.00 WAS INCURRED ON REVENUE ACCOUNT & THE BALANCE OF RS. 11,30,838.00 WAS CAPITALIZED. ACCORD INGLY, ASSESSING OFFICER DISALLOWED THE EXPENSES INCURRED BY ASSESSEE ON REV ENUE ACCOUNT WHICH IS COMING FOR 5,91,642/- AND ADDED TO THE TOTAL INCOME OF ASSESSE E. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT TOTAL PURCHASE MAD E FROM M/S TYRE ARCADE DURING THE YEAR STOOD OF 14,16,688/- ONLY. OUT OF SUCH PURCHASE AN AMOUNT OF 13,67,889/- WAS CAPITALIZED DURING THE YEAR AND BALANCE OF 48,7 89/- WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT. BUT AO HAS WRONGLY TAKEN THE AMOUNT O F 19,59,531/- AS TOTAL PURCHASE FROM M/S TYRE ARCADE. THE CHEQUE PAYMENTS MADE TO M/S TYRES ARCADE WERE N OT CLEARED BY THE BANK DUE TO INSUFFICIENCY OF FUND. THEREFORE THE CHEQUES WERE R ETURNED BY BANK BUT THE REASON FOR DISHONOR OF THE CHEQUE CANNOT BE BASIS FOR MAKING T HE DISALLOWANCE OF THE EXPENSES. IN FACT, THE AO HAS NOT MADE THE DISALLOWANCE ON TH E GROUND OF NON-PRODUCTION OF EVIDENCE. AS SUCH, ALL THE EVIDENCES WERE DULY FILE D BEFORE AO. LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 2.3 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ALSO THE SUBMISSION OF THEE LD . A/R. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE LD. A/R HAS EXPLAINE D THAT THE APPELLANT HAD PURCHASED TYRES FOR RS.14,16,688/- FROM M/S TYRE AR CADE DURING THE YEAR. OUT OF THE SAID PURCHASE, THE AMOUNT OF RS.13,67,889/- WAS CAPITALIZED & SHOWN AS FIXED ASSETS AND THE REMAINING AMOUNT OF RS.48,789/ - WAS DEBITED TO THE P & L A/C AS EXPENSES FOR SPARE. DURING THE COURSE OF THE SCRUTINY AM, THE APPELLANT HAD SUBMITTED THE SUPPORTING BILLS AS WELL S THE LE DGER COPY OF M/S TYRE ARCADE BEFORE THE AO. HOWEVER, THE AO HAS TREATED THE ENTI RE PURCHASES FROM TYRE ARCADE AS BOGUS. THE LD. A/R HAS STATED THAT THE AO HAS ALSO WRONGLY TAKEN THE PURCHASE VALUE AS RS.19,59,531/- INSTEAD OF THE CORRECT FIGURE OF R.14,16,688/-. THE AO HAS TREATED THE PURCHASES FRO M M/S TYRE ARCADE AS BOGUS ON THE GROUND THAT THE CHEQUES WERE DISHONOUE D. THE LD. A/R HAS EXPLAINED THAT THE DISHONOUR OF CHEQUES CANNOT BE A SOUND GROUND FOR TREATING THE PURCHASES S BOGUS. THE LD. A/R HAS FURTHER EXPL AINED THAT THE APPELLANT ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 4 COMPANY WAS SHORT OF LIQUID FU9NDS AND THE CHEQUES WERE NOT HONOURED BY THE BANK FOR INSUFFICIENT BALANCES AVAILABLE IN ITS ACC OUNTS. THE LD A/R HAS FURTHER CLARIFIED THAT FRESH CHEQUES WERE ISSUED TO M/S TYR E ARCADE IN SUBSEQUENT YEAR AND THE DEBTS FOR THE SAID PURCHASES WERE LIQUIDATE D. CONSIDERING THE FACTS OF THE CASE, I AM OF THE OPINION THAT THE AO HAS TREAT ED THE PURCHASES AMOUNTING TO RS.19,59,531/- AS BOGUS BASED ON CONJECTURES AND SURMISES. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION OF R.5,91 ,642/- ON ACCOUNT OF TRANSACTIONS WITH M/S TYRE ARCADE. THE AO IS FU9RTH ER DIRECTED TO ALLOW DEPRECIATION ON THE REMAINING PURCHASE OF RS.13,67, 889/- IN RESPECT TO THE ADDITION TO FIXED ASSETS FROM THE SAID PARTY. THIS GROUND OF APPEAL IS ALLOWED. THE REVENUE, BEING AGGRIEVE, IS IN APPEAL BEFORE US . 6. BEFORE US LD. DR VEHEMENTLY RELIED ON THE ORDER OF AO WHEREAS LD. AR FILED PAPER BOOK WHICH IS CONSIST OF PAGES 1 TO 44 AND DR EW OUR ATTENTION ON PAGS 12 TO 17 OF THE PAPER BOOK WHERE THE LEDGER COPY OF M/S TYRE ARCADE PERTAINING TO AYS 2008- 09 TO 2010-11 WAS PLACED. FROM THE COPY OF SAID LED GER IT WAS DEMONSTRATED THAT THE PAYMENT WAS SUBSEQUENTLY MADE TO M/S TYRE ARCADE. H E RELIED ON THE ORDER OF LD. CIT(A) AND STATED THAT ISSUE MAY BE DECIDED ON MERI T. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE SIDE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE DISALL OWANCE WAS MADE BY THE AO ON THE GROUND THAT THE CHEQUE ISSUED TO THE PARTY WAS RETU RNED BACK ON ACCOUNT OF INSUFFICIENT FUND IN THE BANK ACCOUNT OF THE ASSESSEE. THE AO WH ILE MAKING SUCH DISALLOWANCE HAS TAKEN THE AMOUNT OF TOTAL PURCHASE OF 19,43,531/- WHEREAS AS PER ASSESSEE CORRECT FIGURE IS OF 14,16,688/- ONLY. OUT OF THE SAID AMOUNT A SUM OF 48,789/- WAS ONLY CLAIMED AS REVENUE EXPENSES. HOWEVER, AO HAS MADE T HE DISALLOWANCE OF 5,91,642/- . ON PERUSAL OF THE ORDER OF THE AO AND LEDGER COPY O F M/S TYRE ARCADE, WE FIND THAT THE FACTS OF THE CASE ARE IN DISPUTE AS DETAILED UN DER : 1. OPENING CREDIT BALANCE AS PER THE ASSESSEE IS RS. 1 6,58,705.00 WHEREAS THE AO MENTIONS CREDIT BALANCE OF RS. 1,09,99,459.00. 2. PURCHASES DURING THE YEAR SHOWN BY THE ASSESSEE FRO M M/S TYRE ARCADE ARE OF RS. 14,16,688.00 WHEREAS THE AO CLAIMS PURCHASES FROM M/S TYRE ARCADE BY THE ASSESSEE COMES FOR RS. 19,43,531.00 O NLY. 3. THE ASSESSEE CLAIMED TO HAVE CAPITALIZED A SUM OF R S. 13,67,889.00 OUT OF THE TOTAL PURCHASE OF RS. 14,16,688.00 AND THE BALA NCE OF RS. 48,789.00 WAS ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 5 CLAIMED AS REVENUE EXPENSES. WHEREAS AS PER THE AO THE AMOUNT CAPITALIZED IS OF RS. 11,30,838.00 ONLY OUT OF THE TOTAL PURCHASES OF RS. 19,59,531.00 AND THE BALANCE OF RS. 5,91,642.00. (N OTE THE SUM OF RS. 11,30,838.00 & 5,91,642.00 DO NOT MATCH WITH THE AM OUNT OF RS. 19,59,531.00). WE NOTE THAT THE COPY OF THE LEDGER OF M/S TYRE ARC ADE WAS AVAILABLE BEFORE THE AO AND NO DEFECT WAS REPORTED IN THE COPY OF LEDGER. T HUS IN OUR CONSIDERED VIEW THE FINDING OF THE AO DEPENDS ON THE WRONG ASSUMPTION O F FACTS IT DOES NOT REPRESENT THE CORRECT AMOUNT IN VIEW OF THE FACT AS DISCUSSED ABO VE. THUS, WE ARE OF THE OPINION, THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE. THE LD. DR HAS ALSO NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDINGS OF LD. CIT-A. IN THE LIGHT OF ABOVE REASONING, WE HOLD THAT THE ORDER OF THE LD. CIT(A) IS CORRECT AN D IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. WE HOLD ACCORDINGLY. CO NSEQUENTLY, REVENUES GROUND IS DISMISSED. 8. NEXT ISSUE RAISED BY REVENUE IN GROUND NO.2 IS T HAT LD. CIT(A) ERRED IN ALLOWING DEPRECIATION ON DUMPERS AND TRIPPERS @ 30% WHEREAS AO CALCULATED THE DEPRECIATION @ 15%. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO CALCULATED THE DEPRECIATION @ 15% AS DUMPERS AND TRIPPERS WHEREAS ASSESSEE CLAI MED DEPRECIATION @ 30%. THUS, AO DISALLOWED EXCESS DEPRECIATION AS CLAIMED BY ASS ESSEE AND ADDED IT TO THE TOTAL INCOME OF ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO REVERSED THE ORDER OF AO AND GRANTED DEPRECIATION @ 30% BY OBSER VING AS UNDER:- 3.3 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER IN THE AM ORDER AND ALSO THE SUBMISSIONS OF THE LD. A/R. T HE LD. A/R HAS EXPLAINED THAT THE APPELLANT HAS CLAIMED THE DEPRECIATION OF RS.87,45,827/- @ 30% ON DUMPERS AND TIPPERS WHICH ARE BEING USED IN THE BUS INESS OF RUNNING THEM ON HIRE. THE APPELLANT HAS ALSO CLAIMED THE DEPRECIATI ON OF RS.28,17,935/- @ 30% ON PAYLOADERS WHICH ARE ALSO BEING USED IN THE BUSI NESS OF RUNNING THEM ON HIRE. AS PENALTY THE OXFORD ADVANCED LEARNERSS DIC TIONARY THE WORD TIPPER MEANS A LORRY / TUCK WITH A CONTAINER PART THAT CAN BE MO VED INTO A SLOPING POSITION SO THAT IT LOAD CAN SLIDE OFF AT T HE BACK .. A DUMPER IS A VEHICLE FOR CARRYING BULK MATERIALS. IN THE CASE OF GUJCO CARRIERS VS. CIT (SUPRA) , THE HON'BLE HIGH COURT OF GUJARAT HAS HEL D THAT THE LORRY OR TRUCK WOULD, THEREFORE, MEAN NOT ONLY ANY MOTOR VEHICLE D ESIGNED TO CARRY FREIGHT ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 6 OR GOODS BUT ALSO TO PERFORM SPECIAL SERVICES LIKE FIRE FIGHTING. IN THE CASE OF CIT VS. RAKESH JAIN (SUPRA), THE HON'BLE HIGH COURT OF PUNJAB & HARYANA HAS UPHELD THE ORDER OF THE ITAT THAT THE TIPPERS W OULD BE COVERED BY THE EXPRESSION COMMERCIAL VEHICLE AS TIPPERS ARE REGISTERED UNDER THE MOTOR VEHICLES ACT, 1988. IN THE CASE OF SHIV CONSTRUCTI ON CO. VS. CIT (SUPRA), THE HON'BLE HIGH COURT OF GUJARAT HAS HELD THAT THE DUM PERS ARE MOTOR LORRIES / ROAD TRANSPORT VEHICLES AND ENTITLED TO DEPRECIATIO N @ 30% UNDER THE GROUP D(9) OF ITEM III OF PART I OF THE DEPRECIATION SCHE DULE ATTACHED TO THE INCOME- TAX RULES, 1962 AS APPLICABLE FOR AY 1974-75 AND 19 75-76. IN THE PRESENT CASE, THE TIPPERS AND DUMPERS ARE USED FOR THE PURPOSE OF THE BUSINESS OF RUNNING THEM ON HIRE. RESPECTFULLY FOLLOWING THE DECISION O F THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF SHIV CONSTRUCTION CO. VS. C IT (SUPRA) AND ALSO THE DECISION OF THE HON'BLE HIGH COURT OF PUNJAB & HARY ANA IN THE CASE OF CIT VS. RAKESH JAIN (SUPRA), THE AO IS DIRECTED TO TREA T THE TIPPERS AND DUMPERS AS MOTOR LORRIES / ROAD TRANSPORT VEHICLES AND ALLOW D EPRECIATION @ 30% UNDER THE GROUP 3(II) OF THE ITEM III OF THE PART A OF TH E APPENDIX I TO THE INCOME-TAX RULES 1962 AS APPLICABLE FOR AY 2008-09. A PAY LOAD ER IS A HEAVY EQUIPMENT WHICH IS USED TO LOAD MATERIALS SUCH AS DEBRIS, ROC K, SAND, LOGS AND OTHER RAW MATERIALS INTO A TIPPER / DUMPER OR RAILCAR. CONSID ERING THE FUNCTIONAL TEST, THE PAY LOADER CANNOT BE TREATED AS MOTOR LORRY. ACCORD INGLY, RESTRICTING THE DEPRECIATION ON PAY LOADERS @ 15% INSTEAD OF 30% IS CONFIRMED. HOWEVER, THE AO IS DIRECTED TORE-COMPUTE THE WDV OF THE PAY LOAD ERS AS ON 31.03.2008 AFTER ALLOWING DEPRECIATION @ 15% ON IT. THIS GROUN D OF APPEAL IS PARTLY ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 11. BEFORE US BOTH PARTY RELIED ON THE ORDER OF AUT HORITIES BELOW AS FAVORABLE TO THEM. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, LD. AR FOR THE ASSESSEE PLEADED THAT IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSES SEE BY THE HON'BLE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.1296/KOL/2015 FOR A.Y. 2010-11 DATED 18.10.2017, THE LD. DR FAIRLY AGREED THAT THE ISSUE INVOLVED IS COVERED IN FAVOUR OF ASSESSEE. WE REPRODUCED THE SAME FOR THE SAKE OF CLARITY:- 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE AND CAREFULLY PERUSED THE MATERIAL AVAILAB LE ON RECORD. WE NOTE THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 30% ON DUMPER A ND TIPPER. IN EARLIER TWO ASSESSMENT YEARS THE ASSESSEE ALSO CLAIMED DEPRECIA TION @ 30% WHICH WAS NOT ALLOWED BY THE REVENUE AUTHORITY. BASED ON THE SAME FACTS AND CIRCUMSTANCES, THE AO DISALLOWED 15% EXCESS DEPRECIATION IN THIS YEAR. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO DIRE CTED THE AO TO ALLOW DEPRECIATION @ 30% ON DUMPER AND TIPPER BY FOLLOWING VARIOUS JUD GMENTS OF HON'BLE GUJARAT ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 7 HIGH COURT AND HON'BLE PUNJAB & HARYANA HIGH COURT. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE US. WE NOTE THAT THE ISSUE IS SQUA RELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE KARNATAKA HIGH COURT THE CASE OF CIT VS. MAHALING SETTY & CO. (1992) 195 ITR 526 (KAR) , WHE REIN THE HON'BIE HIGH COURT HAS HELD AS UNDER: 'INVESTMENT ALLOWANCE - ELIGIBILITY FOR ALLOWANCE - MACHINERY MUST BE OWNED AND WHOLLY USED FOR PURPOSES OF BUSINESS - PURPOSE OF BUSINESS INCLUDES EVERY ACTIVITY NECESSARY TO CARRY ON BUSINESS - BUSINESS OF CONSTRUCTION WORK - DUMPERS AND TIPPERS USED TO LIFT EARTH AND TRANSPORT SAME - RESULT IN PRODUCTION OF AN ARTICLE OR THING - ARE MACHINERY EN71TLED TO INVESTMENT ALLOWANCE - 'THINGS', 'ARTIC LES', MEANING OF - INCOME-TAX ACT, 1961, SECTION 32A THE WORD 'THING' IS SHOWN IN EARL JOWITT'S DICTIONA RY AS MEANING 'THE SUBJECT OF DOMINION OR PROPERTY AS DISTINGUISHED FROM PERSO NS'. THERE ARE THREE THINGS: THINGS REAL OR IMMOVABLE, COMPREHENDING LAN DS, TENEMENTS AND HEREDITAMENTS; THINGS PERSONAL OR MOVABLE, COMPREHE NDING GOODS AND CHATTELS, AND THINGS MIXED; PARTAKING OF THE CHARACTERISTICS OF THE FORMER TWO, AS A TITLE DEED. THE CIVIL LAW DIVIDED THINGS INTO CORPOREAL A ND INCORPOREAL. THE INCORPOREAL ITEMS LIKE DEBTS WOULD BE THINGS. THERE FORE, THE WORD ' THINGS ' COMPREHENDS INCORPOREAL ASSETS ALSO. THE TERM 'ARTICLE' IS NOT CONFINED TO MOVABLE PROPE RTY ONLY UNDER SECTION 32A OF THE INCOME- TAX ACT, 1961. INVESTMENT ALLOWANCE IS GRANTED, INTER ALIA, IN RESPECT OF MACHINERY OR PLANT SPECIFIED IN SUB-SECT ION (2) OF SECTION 32A WHICH IS OWNED BY THE ASSESSEE AND IS WHOLLY USED F OR THE PURPOSE OF BUSINESS CARRIED ON BY THE ASSESSEE. THE PURPOSE OF BUSINESS INCLUDES EVERY ACTIVITY WHICH IS NECESSARY TO CARRY ON THE BUSINESS. IT IS NOT THE FINAL TOUCHES INVOLVED IN A CONSTRUCTION WORK THAT RESULT IN THE CARRYING ON OF THE BUSINESS. THE VARIOUS ACTIVITIES FROM THE BEGINNING TO THE END WI LL BE PART OF THE BUSINESS. MACHINE USED IN THE BUSINESS OF CONSTRUCTION IS ELI GIBLE FOR INVESTMENT ALLOWANCE AS IS CLEAR FROM SECTION 32A(2)(B)(III). THE PHRASE 'THE BUSINESS OF CONSTRUCTION IS WIDE AND, NORMALLY, A BUSINESS OF C ONSTRUCTION INVOLVES CONSTRUCTION OF BUILDINGS, DAMS, ROADS, CHANNELS, E TC. MACHINERY WHICH IS NECESSARY FOR BUSINESS OF CONSTRUCTION INVOLVING SE VERAL ACTIVITIES CANNOT BE HELD AS NOT CONTEMPLATED BY PARLIAMENT AS COVERED F OR THE PURPOSE OF INVESTMENT ALLOWANCE. THE WORDS AND PHRASES USED IN A STATUTE WILL HAVE T O BE UNDERSTOOD IN THE CONTEXT IN WHICH THEY ARE USED. CLAUSE (B) IN THE S ECOND PROVISO TO SECTION 32A HAS TO BE READ IN THE SETTING IN WHICH OTHER CL AUSES (A), (C) AND (D) ARE USED. SPECIALLY, CLAUSES (A) AND (B) IN THE SECOND PROVISO MAKE IT CLEAR THAT EXCLUSION FROM THE PROVISION IS ONLY IN RESPECT OF THE MACHINERY OR PLANT OR APPLIANCES CONNECTED WITH THE ADMINISTRATIVE PART O F THE BUSINESS, I.E., THOSE USED IN THE OFFICE PREMISES OR RESIDENTIAL ACCOMMOD ATION OF THE ASSESSEE. NATURALLY, ROAD TRANSPORT VEHICLES REFERRED TO THER EIN WILL HAVE TO BE SUCH VEHICLES WHICH ARE MADE TO CARRY THE EMPLOYEES TO T HE OFFICE AND BACK HOME. ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 8 THE WORDS ' ROAD TRANSPORT VEHICLES ' INCLUDE VEHICLES LIKE OMNIBUSES, CARS, ETC., AND NOT DUMPERS AND TIPPERS WHICH ARE DIRECTL Y USED IN THE ACTIVITY OF THE BUSINESS, ET THE PLACE WHERE THE BUSINESS IS ACTUAL LY CARRIED ON. DUMPERS AND TIPPERS ARE ESSENTIALLY MACHINERY USED TO CARRY ON A CONSTRUCTION WORK. THEREFORE, THE USE OF DUMPERS AND TIPPERS FOR THE P URPOSE OF BUSINESS OF CONSTRUCTION, I.E., USED TO LIFT EARTH AND TRANSPOR T THE SAME, RESULTS IN THE PRODUCTION OF AN ARTICLE OR THING AND SUCH MACHINER Y IS ENTITLED TO INVESTMENT ALLOWANCE UNDER SECTION 32A OF THE ACT. THE ISSUE BEFORE US HAS BEEN ANSWERED BY THE HON'BL E HIGH COURT OF KARNATAKA (SUPRA), SO WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN ALLOWING DEPRECIATION @ 30% ON DUMPER AND TIPPER. THEREFORE, WE UPHOLD THE SAME. THIS APPEAL OF REVENUE IS DISMISSE D. ACCORDINGLY, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL WE DECLINE TO INTERFERE WITH THE ORDE R PASSED BY THE LD. CIT(A) ON THIS ACCOUNT AND ACCORDINGLY THE GROUND TAKEN BY REVENUE IS REGRETTED. 13. LAST ISSUE IS GENERAL AND DOES NOT REQUIRE ANY SEPARATE ORDER. 14. IN THE RESULT, REVENUES APPEAL IS DISMISSED. COMING TO ITA NO.2242/KOL/2013 FOR A.Y. 09-10 . 15. GROUNDS RAISED BY REVENUE AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN ALLOWING DEPRECIATION OF RS.74,02,051/- @ 30% ON DUMPERS AND TIPPERS AS AGAINST DEPRECIATION @ 15% ALLOWED BY TH E AO. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) IS NOT JUSTIFIED IN LAW IN ALLOWING THE ASSESSEES APPEAL BY ADMITTING FRESH EVIDENCE PRODUCED BEFORE HIM IN CONTRAVENTION OF RULE 46A OF THE IT RULES REGARDING THE DELETION OF ADDITION U/S.40(A)(IA) REGARDING NO N DEDUCTION OF TAX U/S. 194C. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER/OR AMEND ANY OF THE GROUNDS OF APPEAL DURING THE COURSE OF HEARING. 16. FIRST ISSUE RAISED BY REVENUE IN GROUND NO.1 IS THAT LD. CIT(A) ERRED IN ALLOWING DEPRECIATION ON DUMPERS AND TIPPERS @ 30% OF 74,02,051/- AS AGAINST DEPRECIATION ALLOWED BY AO @ 15%. 17. IT IS RELEVANT TO OBSERVE HERE THAT THE FACT IN ISSUE NO.1 OF THIS APPEAL IS SIMILAR TO THE FACTS IN ITA NO.2241/KOL/2013 FOR A.Y. 2008- 09 OF REVENUES APPEAL AND THE FINDINGS GIVEN IN ITA NO.2241/KOL/2013 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. CONSEQUENTLY, REVENUES GROUND IS DISMISSED. ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 9 18. NEXT ISSUE RAISED BY REVENUE IN GROUND NO.2 IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF NON-DEDUCTION OF TAX DEDUCTED AT SOURCE (TDS) U/S. 194C R.W.S 40(A)(IA) OF THE A CT ON THE BASIS OF ADDITIONAL EVIDENCE. 19. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS CLAIMED TRANSPORTATION CHARGES OF 1,42,033/- WITHOUT DEDUCTING THE TDS U/S. 194C R.W.S. 40(A)(IA) OF THE ACT. ON CONFRONTATION, THE ASSESSEE FAILED TO FILE NECESSARY EXPLANATION. THEREFORE, AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 20. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT IN NONE OF THE CAS E PAYMENT IS EXCEEDING THE LIMIT AS SPECIFIED U/S. 194C OF THE ACT. AS SUCH, THERE WAS NO LIABILITY FOR DEDUCTING TDS. HOWEVER, LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF ASSESSEE DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 3.3 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE O IN THE ASSESSMENT ORDER AND ALSO THE SUBMISSION OF THE LD. A/R. DURIN G THE COURSE OF THE APPELLATE PROCEEDINGS, THE LD. A/R HAS EXPLAINED TH AT NONE OF THE PAYMENTS EXCEEDED THE LIMITS SPECIFIED U/S. 194C FOR DEDUCIN G TD AND THE APPELLANT COMPANY WAS NOT LIABLE TO DEDUCT ANY TDS FROM THE T RANSPORTATION CHARGE OF RS.1,42,033/- DEBITED IN P & L A/C/. CONSIDERING TH E FACTS OF THE CASE, I AM OF THE OPINION THAT THE PROVISIONS OF SECTION 40(A)(IA ) ARE NOT APPLICABLE IN THIS CASE. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.1,42,033/- U/S. 40(A)(IA) FOR NON-DEDUCTION OF TDS FROM TRANSPORTAT ION CHARGE. THIS GROUND OF APPEAL IS ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 21. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 22. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, WE FIND THAT THE LEDGER OF TRANSPORTATION CHARGES IS PLACED ON PAGES 24 TO 33 OF THE PAPER AND IT IS OBSERVED THAT THE PAYMENT IS NOT EXCEEDING THE LIMITS AS SPECIFIE D U/S. 194C OF THE ACT. THEREFORE, IN OUR CONSIDERED VIEW, ASSESSEE IS NOT LIABLE TO DEDU CT THE TDS U/S. 194C OF THE ACT. IN THE BACKGROUND OF THE ABOVE DISCUSSIONS AND PRECEDE NT WE DO NOT FIND ANY INFIRMITY IN ITA NO.2241-42/KOL/2013 A/YS 0 8-09 & 09-10 DCIT CIR-1, KOL. VS. M/S PARAJIT VYAPAA R PVT. LTD. PAGE 10 THE ORDER OF LD. CIT(A) AND ACCORDINGLY WE UPHOLD T HE SAME. THIS GROUND OF REVENUE IS DISMISSED. 23. LAST GROUND IS GENERAL AND DOES NOT CALL FOR AN Y ADJUDICATION. 24. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 25. IN COMBINE RESULT, BOTH APPEAL OF REVENUE STAND DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 19/01/2018 SD/- SD/- ( ) ') ( ') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S + - 19/01/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S PARJAT VYAPAAR PVT. LTD. 12A, N.S. RO AD, 5 TH FL. KOLKATA-001 2. ' /REVENUE-DCIT, CIRCLE-1, P-7, CHOWRINGHEE SQ. KOLKA TA-69 3. . / / CONCERNED CIT 4. / - / CIT (A) 5. 0 )). , . / DR, ITAT, KOLKATA 6. 4 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO .,