ACIT,Central Cir,1, Nashik, Nashik V. M/s Ashoka Buildicon Ltd, Nashik

ITA 2317/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5895 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 23-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: SHEETAL M GADIA
• Keywords: Depreciation
• Section: 43B; 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.2317/PN/2012 (ASSESSMENT YEAR : 2005-06) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I, NASHIK. . APPELLANT VS. M/S ASHOKA BUILDCON LTD., ASHOKA HOUSE, ASHOKA MARG, VADALA, NASHIK. PAN : AABCA9292J . RESPONDENT DEPARTMENT BY : SHRI P. L. PATHADE ASSESSEE BY : SMT. SHEETAL M. GADIA DATE OF HEARING : 08-01-2014 DATE OF PRONOUNCEMENT : 28-01-2014 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK DAT ED 11.09.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.12.2007 PAS SED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION UNDER SECTION 32(I)(II) @ 25% OF RS 9, 37,42,685/- TO THE ASSESSEE WHILE WITHDRAWING THE DEDUCTION OF RS 7,33 ,36,186/- ALLOWED BY THE ASSESSING OFFICER BY SPREADING OVER THE CONSTRUCTIO N COST OF INFRASTRUCTURE FACILITY OVER THE TOLL COLLECTION PERIOD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT RIGHT TO C OLLECT TOLL IS AN INTANGIBLE ASSET UNDER SECTION 32(I)(II) OF THE ACT AND THE AS SESSEE IS THEREFORE ELIGIBLE FOR DEDUCTION UNDER SECTION 32(I)(II) OF THE ACT. ITA NO.2317/PN/2012 A.Y. 2005-06 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNPAID EMPLOYEES CONTRIBUTION TO EPF WITHOUT APPRECIATING THAT SECTION 36(I)(VA) R.W.S. 2(24)(X) MAKES NO ALLOWANCE FOR DEDUCTION IF NOT PAID WITHIN THE DUE DATE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF THE ESTIMATED PERSONAL ELEMENTS IN THE USE OF TELEPHON E, TRAVEL AND VEHICLE EXPENSES WITHOUT APPRECIATING THAT THE ASSESSEE NEV ER MAINTAINED OR SUBMITTED ANY EVIDENCE TO FULLY SUPPORT THE CLAIM O F EXPENSES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ADMITTING ADDITIONAL GR OUND OF APPEAL THAT DEDUCTION UNDER SECTION 35DD OF THE ACT FOR RS 23,0 0,000/- BE ALLOWED TO THE ASSESSEE ALTHOUGH THERE WAS NO SUCH CLAIM IN THE OR IGINAL RETURN OF INCOME. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ADMITTING ADDITIONAL GR OUNDS OF APPEAL THAT THE DEDUCTION UNDER SECTION 35DD OF RS 23,00,000/- BE A LLOWED WHEN THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD V/S C IT (284 ITR 323) HAD HELD THAT NO DEDUCTION CAN BE ALLOWED, WHICH HAD NO T BEEN CLAIMED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING DEDUCTION UNDE R SECTION 35DD OF RS 23,00,000/-, WHEN THE PAYMENT WAS TOWARDS 'DUTY' AN D WAS COVERED BY THE PROVISION OF SECTION 43B OF THE ACT. 8. THE ORDER OF THE LEARNED CIT(A), NASHIK MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 9. APPELLANT CRAVES, LEAVES TO ADD, AMEND/ALTER/AME ND ANY GROUNDS OF APPEAL. 3. IN BRIEF, THE RELEVANT FACTS OF THE CASE ARE THA T THE RESPONDENT-ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, T RADING OF CONSTRUCTION MATERIAL, DEVELOPING AND MAINTAINING INFRASTRUCTURE FACILITY AND HIRING OF MACHINERY EQUIPMENTS, VEHICLES AND ASSETS. FOR THE ASSESSMENT YEAR 2005- 06 IT FILED A RETURN OF INCOME DECLARING TOTAL INCO ME OF RS.1,30,96,330/- AS PER THE NORMAL TAX PROVISIONS AND SINCE THE TAX LIABILI TY U/S 115JB OF THE ACT WAS HIGHER, THE TAXES WERE ACCORDINGLY PAID. THE RETUR N OF INCOME FILED WAS SELECTED FOR SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WHEREBY THE TOTAL INCOME WAS ASSESSED AT RS.6,05,87,196/- AFTER MAKIN G CERTAIN DISALLOWANCES/ADDITIONS AND SINCE THE TAX PAYABLE O N THE ASSESSED INCOME UNDER THE NORMAL TAX PROVISIONS WAS MORE THAN TAX P AYABLE U/S 115JB OF THE ACT, THE TOTAL INCOME HAS BEEN DETERMINED AT RS.6,0 5,87,196/-. THE VARIOUS DISALLOWANCES/ADDITIONS MADE BY THE ASSESSING OFFIC ER WERE CARRIED IN APPEAL BEFORE THE CIT(A) WHO HAS ALLOWED PARTIAL RELIEF TO THE ASSESSEE. AGAINST SUCH ITA NO.2317/PN/2012 A.Y. 2005-06 ACTION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE U S ON THE AFORESTATED GROUNDS OF APPEAL. 4. IN GROUNDS OF APPEAL NOS. 1 AND 2, THE ISSUE REL ATES TO ASSESSEES CLAIM FOR DEPRECIATION U/S 32(1)(II) OF THE ACT ON THE INFRASTRUCTURE CONSTRUCTION COST CAPITALIZED UNDER THE HEAD RIGHT TO COLLECT T OLL. THE ASSESSEE BUILDS VARIOUS INFRASTRUCTURE FACILITIES INVOLVING DEVELOP MENT, OPERATION AND MAINTENANCE OF ROADS/BRIDGES ON BUILD, OPERATE AND TRANSFER (BOT) BASIS. ON THE EXPENDITURE INCURRED ON COST OF CONSTRUCTION OF SUCH INFRASTRUCTURE FACILITY, ASSESSEE CLAIMED DEPRECIATION @ 25% AMOUN TING TO RS.9,37,42,685/- IN TERMS OF SECTION 32(1)(II) OF THE ACT TREATING S UCH LICENSE/RIGHT TO COLLECT TOLL AS AN INTANGIBLE ASSET. THE ASSESSING OFFICER DISA LLOWED THE CLAIM AND INSTEAD ALLOWED DEDUCTION FOR THE PROPORTIONATE COS T OF CONSTRUCTION OF THE INFRASTRUCTURE FACILITY, SPREAD OVER THE TOLL COLLE CTION PERIODS. THE CIT(A), HOWEVER, FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 VIDE ITA NO.1302/PN/2009 DA TED 20.03.2012 ALLOWED THE CLAIM OF THE ASSESSEE FOR DEPRECIATION U/S 32(1)(II) OF THE ACT. AGGRIEVED WITH THE SAID ACTION OF THE CIT(A), REVEN UE IS IN APPEAL BEFORE US. 5. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT T HE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 (SUPRA) AS WELL AS ASSESSMENT YEAR 2007-08 IN ITA NO.945/PM/20 11 DATED 30.07.2012 ARE IN FAVOUR OF THE ASSESSEE, WHICH CONTINUE TO HO LD THE FIELD AND HAVE NOT BEEN ALTERED BY ANY HIGHER AUTHORITY. AS A RESULT, GROUND OF APPEAL NOS. 1 AND 2 RAISED BY THE REVENUE ARE DISMISSED IN VIEW O F THE AFORESAID PRECEDENT. 6. IN GROUND OF APPEAL NO. 3, THE ISSUE RELATES TO THE DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO EPF OF RS.4,85,379/- U/S 36(I)(VA) R.W.S. 2(24)(X) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE IMPU GNED AMOUNT ON THE GROUND THAT SUCH EMPLOYEES CONTRIBUTION TOWARDS PF WAS PAID BEYOND THE ITA NO.2317/PN/2012 A.Y. 2005-06 DUE DATES PRESCRIBED UNDER THE PF REGULATIONS. HOW EVER, AS THE SAID AMOUNTS WERE DULY DEPOSITED BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME PRESCRIBED U/S 139(1) OF THE ACT, THE CIT(A) DELETED THE DISALLOWANCE FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSES SEES OWN CASE FOR ASSESSMENT YEAR 2006-07 VIDE ITA NO.378/PN/2010 DAT ED 30.09.2011. IN VIEW OF THE AFORESAID PRECEDENT, THE ACTION OF THE CIT(A) IS HEREBY AFFIRMED AND THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS DISMISSED. 7. IN GROUND OF APPEAL NO.4, THE ISSUE RELATES TO D ISALLOWANCE OF RS.20,000/- EACH MADE OUT OF EXPENSES ON TELEPHONE, TRAVEL AND VEHICLES ON AN AD-HOC BASIS BY THE ASSESSING OFFICER ON THE PLEA OF PERS ONAL ELEMENT. THE CIT(A) HAS DELETED SUCH AD-HOC DISALLOWANCES IN THE ABSENCE OF ANY SPECIFIC EVIDENCE OF PERSONAL USE AND ALSO CONSIDER ING THAT THE ASSESSEE IS A CORPORATE ENTITY, WHICH IS A LEGAL ENTITY SEPARATE THAN ITS MANAGERIAL PERSONNEL AND THERE CANNOT BE ANY PERSONAL ELEMENT IN THE EXP ENDITURES CLAIMED BY A CORPORATE ENTITY. 8. AFTER CONSIDERING THE ORDERS OF THE AUTHORITIES BELOW, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) INASMUCH AS DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER MERELY ON THE BASIS OF SUR MISES AND CONJECTURES. IN THE ABSENCE OF ANY SPECIFIC EVIDENCE OF PERSONAL OR NON-BUSINESS USE, AD-HOC DISALLOWANCES ARE NOT MAINTAINABLE. THUS, THE ORDE R OF THE CIT(A) IS HEREBY AFFIRMED AND REVENUE FAILS ON THE GROUND OF APPEAL NO. 4 ALSO. 9. IN GROUNDS OF APPEAL NOS. 5 TO 7, ISSUE RELATES TO THE ACTION OF THE CIT(A) IN ALLOWING ASSESSEES CLAIM FOR DEDUCTION U /S 35DD OF THE ACT FOR RS.23,00,000/-. BY WAY OF GROUND OF APPEAL NOS. 5 AND 6, THE PLEA OF THE REVENUE IS THAT THE CIT(A) ERRED IN ADMITTING SUCH CLAIM OF DEDUCTION WHICH WAS NOT MADE IN THE RETURN OF INCOME FILED BY THE A SSESSEE. NOTABLY, SUCH A CLAIM WAS NOT MADE IN THE RETURN OF INCOME BUT WAS PREFERRED BY THE ASSESSEE ITA NO.2317/PN/2012 A.Y. 2005-06 IN THE COURSE OF ASSESSMENT PROCEEDINGS BY WAY OF A WRITTEN COMMUNICATION DATED 07.12.2007. THE ASSESSING OFFICER REJECTED T HE CLAIM OF THE ASSESSEE ON THE GROUND THAT IN VIEW OF THE JUDGMENT OF THE H ONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA VS. CIT, 284 ITR 323 (SC) SUCH A CLAIM COULD NOT BE CONSIDERED AS IT WAS NOT MADE IN THE RETURN OF INCO ME. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND RAISED A N ADDITIONAL GROUND OF APPEAL CLAIMING DEDUCTION U/S 35DD OF THE ACT OF RS .23,00,000/-. THE CIT(A) ADMITTED THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CI T VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (2012) 349 ITR 336 (BOM). 10. ON THIS ASPECT, THE ONLY POINT RAISED BY THE RE VENUE IS THAT THE ADDITIONAL GROUND OF APPEAL COULD NOT BE ADMITTED B Y THE CIT(A) AS THE CLAIM WAS NOT MADE IN THE RETURN OF INCOME FILED BY THE A SSESSEE AND IN SUPPORT RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. (SUPRA). 11. IN OUR CONSIDERED OPINION, THE ACTION OF THE CI T(A) IN ADMITTING THE AFORESAID GROUND OF APPEAL CANNOT BE FAULTED FOLLOW ING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BR OKERS AND SHAREHOLDERS PVT. LTD. (SUPRA). AS PER THE HONBLE BOMBAY HIGH COURT, AN ASSESSEE IS ENTITLED TO RAISE BEFORE THE APPELLATE AUTHORITIES ADDITIONAL GROUNDS IN TERMS OF ADDITIONAL CLAIMS NOT MADE IN THE RETURN FILED BY I T. IN HOLDING SO, THE HONBLE BOMBAY HIGH COURT HAD DULY CONSIDERED THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. (SUP RA), WHICH HAS BEEN RELIED BY THE REVENUE BEFORE US, AND THEREFORE, WE FIND NO ERROR IN THE PART OF THE CIT(A) IN ADMITTING THE IMPUGNED ADDITIONAL GROUND OF APPEAL BASED ON THE PARITY OF REASONING LAID DOWN BY THE HONBLE HIGH C OURT IN THE CASE OF PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (SUPRA). ACCORDI NGLY, GROUND OF APPEAL NOS. 5 AND 6 ARE DISMISSED. ITA NO.2317/PN/2012 A.Y. 2005-06 12. IN THE LAST GROUND OF APPEAL, THE PLEA OF THE R EVENUE IS THAT THE CIT(A) ERRED IN ALLOWING THE ASSESSEES CLAIM FOR DEDUCTIO N U/S35DD OF THE ACT. THE SAID CLAIM RELATES TO 1/5 EXPENSES OF STAMP DUTY PA YABLE ON AMALGAMATION WHICH HAS BEEN CLAIMED AS DEDUCTIBLE IN TERMS OF SE CTION 35DD OF THE ACT. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE ASSESSEES OW N CASE FOR ASSESSMENT YEAR 2006-07 (SUPRA). 13. THE PRECEDENT RELIED UPON BY THE CIT(A) CONTINU ES TO HOLD THE FIELD AS NONE OF THE PARTIES HAVE ASSERTED THAT THE SAME HAS BEEN ALTERED BY ANY HIGHER AUTHORITY. THEREFORE, THE ORDER OF THE CIT( A), WHICH IS BASED ON THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 (SUPRA), IS HEREBY AFFIRMED AND THE REVENUE HAS TO FAIL ON THIS GROUND. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 28 TH JANUARY, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE CIT-II, NASHIK; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE