The ACIT, Circle-5, Ahmedabad V. Nitin Construction Pvt.Ltd., Ahmedabad

ITA 2325/AHD/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0502 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-12-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 30-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: M G PATEL; A N SHAH
• Keywords: Depreciation; Opportunity of being heard; Cost of acquisition; Capital expenditure
• Section: 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 2325/AHD/2009 ASSESSMENT YEARS :2000-01 DY. CIT, CIRCLE-5, AHMEDABAD V/S . M/S. NITIN CONSTRUCTION PVT. LTD. 2 ND FLOOR, NAVNEET PLAZA, NR. MUNICIPAL MARKET, C.G. ROAD, NAVRANGPURA, AHMADABAD PAN NO. A A A CN5349J (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI Y.P. VERMA, SR. DR /BY RESPONDENT SHRI M.G. PATEL & SMT. A. N. SHAH /DATE OF HEARING 20.12.2012 /DATE OF PRONOUNCEMENT 22.02.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF CIT(A)-XI, AHMEDABAD, DATED 19.05 .2009 FOR A.Y. 2000-01. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (A) XI, AH MADABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES OF RS. 15,34,845/-. ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 2 2. THE LD. COMMISSIONER OF INCOME TAX (A) XI, AHM ADABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF DISALLOWANCE ON INTEREST ON PURCHASE OF MACHINERY OF RS.20,96,60 0/-. 3. THE LD. COMMISSIONER OF INCOME TAX (A) XI, AHM ADABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF DISALLOWANCE OF ADVERTISEMENT EXPENSES OF RS.36,000/- TREATED AS OF DONATION IN NATURE. 4. THE LD. COMMISSIONER OF INCOME TAX (A) XI, AHM ADABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF CLAIM OF DEPRECIATION OF RS.24,39,000/-. 2. THE ASSESSEE IS A GOVERNMENT CONTRACTOR AND CARR YING OUT THE VARIOUS TYPES OF CIVIL CONTRACT. DURING THE YEAR UNDER CON SIDERATION, THE ASSESSEE HAS SHOWN TOTAL CONTRACT RECEIPT OF RS.18,38,97,656/- W ITH GROSS PROFIT OF RS.3,24,81,195/- WHICH IN TERMS OF PERCENTAGE WORKE D OUT TO 17.66% WHEREAS IN THE IMMEDIATELY PRECEDING YEAR TOTAL SUCH RECEIP TS WERE DISCLOSED AT RS.13,65,11,551/- WITH GROSS PROFIT OF RS.1,75,31,9 51/- I.E. 12.84%. DURING THE YEAR, THE ASSESSEE HAD GIVEN CERTAIN CONTRACT W ORK ON SUB-LET AS IN THE PAST. 3. THE FIRST GROUND OF APPEAL OF THE REVENUE IS AGA INST DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTERES T EXPENSES OF RS.15,34,845/-. THE A.O. OBSERVED THAT THE APPELLA NT HAD PAID HUGE INTEREST OF RS.1,85,89,109/- TO BANK AND VARIOUS DEPOSITORS. HOWEVER, AT THE SAME TIME IT HAD NOT CHARGED ANY INTEREST FROM THE NUMBE R OF PARTIES ON LOANS/ADVANCES GIVEN TO THEM. LD. A.O. GAVE REASON ABLE OPPORTUNITY OF BEING ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 3 HEARD, WHICH HAD NOT BEEN CONVINCING TO THE A.O. T HEREFORE, AFTER ANALYZING ALL THE EVIDENCES AND FACT IN THE CASE, HE MADE ADD ITION OF RS.15,34,845/-. 4. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE CIT(A), WHO HAD DELETED THE ADDITION ON THE GROUND THAT APPELLANT HAD OBTAINED LOANS FROM VARIOUS BANKS AS WELL AS FROM MADHAVPURA MERCANTILE CO.OP. BANK LTD. THE LOANS WERE STATED TO HAVE BEEN GIVEN BY THE APPELLANT FROM THE ACCOUNT OF PUNJAB NATIONAL BANK (PNB) WAS OUT OF BUSINESS FUNDS AVAILABLE IN THE SAID BANK. AS REGA RDS THE AMOUNT OF RS.1.5 CRORE WHICH WAS DEPOSITED BY THE APPELLANT IN PNB B Y WAY OF WITHDRAWING FROM THE LOAN ACCOUNT WITH MADHAVPURA MERCANTILE CO .OP. BANK LTD. WHICH HAD BEEN USED BY THE APPELLANT FOR PAYMENT OF TRADI NG LIABILITIES OR FOR PAYMENT BY WAY OF LOANS WHEREIN THE APPELLANT HAD C HARGED INTEREST. THEREFORE, IT WAS HELD BY HIM THAT LOAN TAKEN BY TH E APPELLANT AT RS.1.5 CRORE, WAS NOT USED BY THE APPELLANT FOR ADVANCING THE LOA N. THEREFORE, HE DELETED THE ADDITION OF RS.10,09,691/-. SIMILARLY ADVANCES GIVEN AS PER PAGE NO.4 FOR THESE PARTIES WERE HELD TO BE GIVEN BY THE APPELLAN T TO SUB-CONTRACTOR FOR CONTRACT WORK WHO WAS CARRYING ON SUB-CONTRACT WORK ON BEHALF OF THE APPELLANT COMPANY. IT HAS BEEN OBSERVED THAT THERE WERE CREDIT BALANCES IN THEIR ACCOUNTS AT THE END OF THE YEAR BY WAY OF AMO UNTS OUTSTANDING FOR WORK DONE BY THEM. HE FOUND THAT THESE ADVANCES WERE WH OLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. THUS, THE REMAINING ADDITION OF RS.5,25,154/- IS DELETED. 5. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHE MENTLY RELIED ON THE ORDER OF THE A.O. AND ARGUED THAT NO INTERE ST HAS BEEN CHARGED BY THE ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 4 APPELLANT ON 11 PARTIES AS PER SCHEDULE-A ON PAGE N O.3 AND SCHEDULE-B ON PAGE NO.4. THERE WAS NO BUSINESS EXPEDIENCY TO ADV ANCE THE FUND TO THEM. THUS, HE REQUESTED TO CONFIRM THE ORDER OF THE A.O. AT THE OUTSET, LD. COUNSEL FOR THE APPELLANT VEHEMENTLY RELIED ON THE ORDER OF THE CIT(A) AND IN CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. [2009] 31 3 ITR 340 (BOM), FOR PRESUMPTION ON INTEREST FREE FUND. HE ALSO DRAWN O UR ATTENTION ON PAPER BOOK FROM SERIAL NO.79 TO 91 AND IT WAS CONTENDED THAT I N SOME OF THE PARTIES ACCOUNTS, OPENING BALANCES ARE GIVEN. NO FRESH ADV ANCES HAD BEEN GIVEN. ALL PAYMENTS HAVE BEEN MADE FROM THE PNB ACCOUNT TO THESE PARTIES WHICH WERE PAID FOR TRADING LIABILITY. THUS, HE PRAYED F OR UPHOLDING THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE APPELLANT HAD TAKEN LOAN OF RS.1.5 CRO RE FROM MADHAVPURA MERCANTILE CO.OP. BANK LTD. AND DEPOSITED IN PNB. THE WITHDRAWAL MADE FORM THE PNB ACCOUNTS WERE USED FOR THE BUSINESS PU RPOSES ONLY. NO INTEREST FREE ADVANCES HAD BEEN GIVEN BY THE APPELLANT FROM PNB ACCOUNT. THUS, THERE IS NO NEXUS BETWEEN LOAN TAKEN AND ADVANCES G IVEN. FURTHER, ADVANCES AS PER ANNEXURE-B FOR THESE PARTIES, ARE ADVANCES W ERE GIVEN TO THE SUB- CONTRACTOR FOR WHICH COPY OF ACCOUNTS HAS BEEN ENCL OSED ON PAGE NOS.158 TO 213, WHICH SHOWS THAT THESE ADVANCES WERE GIVEN FOR CONTRACT WORK. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A). TH E REVENUES APPEAL ON THIS GROUND IS DISMISSED. ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 5 7. GROUND NOS. 2 & 4 ARE AGAINST DISALLOWANCE OF IN TEREST ON PURCHASE OF MACHINERY AT RS.20,96,600/- AND DISALLOWANCE ON DEP RECIATION OF RS.24,39,000/- RESPECTIVELY. THE A.O. OBSERVED THA T THE APPELLANT HAD SHOWN FIVE NEW TATA DUMPER AND CLAIMED DEPRECIATION ON IT . THE DETAILS OF THESE DUMPERS ARE AS UNDER: SR. NO . DESCRIPTION OF DUMPER DATE OF PURCHASE COST OF ASSET 1. 4 NEW TATA DUMPER 31.8.99 RS.22,94,652 2. 1 NEW TATA DUMPER 11.9.99 RS. 5,73,663 ON THESE NEW TATAT DUMPERS THE FOLLOWING EQUIPMENTS WERE ADDED AND THE EXPENSES WERE STATED TO BE INCURRED AS UNDER: DT. OF EQUIPMENT AMOUNT OF EXP. ADDED. NEW TATA DUMPER 13.10.99 RS.1,49,640 NEW TATA DUMPER 15.11.99 RS. 26,200 NEW TATA DUMPER 8.11.99 RS. 26,200 NEW TATA DUMPER 16.11.99 RS.1,45,600 THE A.O. OBSERVED THAT DUMPER PURCHASE COULD NOT BE UTILIZED THAT MACHINERY INSTALLED THERE UPON AND THE ABOVE SAID MACHINERY W AS INSTALLED ONLY IN THE MONTHS OF OCTOBER AND NOVEMBER. THEREFORE, THESE D UMPERS COULD NOT BE UTILIZED FOR MORE THAN 180 DAYS. THE LD. A.O. GAV E REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. HE FURTHER HELD THAT TH E PURCHASE AMOUNT OF RS.5,73,603/- WAS FOR CHASIS AND THEREAFTER ASSESSE E HAD FITTED WITH ESPEA EARTH EQUIPMENT AND MADE FURTHER EXPENSES OF RS.1,1 5,880/-. HOWEVER, ON ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 6 VERIFICATION OF BILLS, IT WAS FOUND THAT THE ASSESS EE HAD FITTED ABOVE MACHINERY IN THE CASE OF ONLY THREE DUMPERS. IN THE REMAININ G TWO NEW DUMPERS ONLY CHASIS WERE PURCHASED AND NO ESPEA EARTH EQUIPMENT WERE FITTED. THUS, TWO NEW TATA DUMPERS COULD NOT BE UTILIZED WITHOUT THES E MACHINERIES. THE ASSESSEE HAD NOT RESPONDENT AGAINST THE QUERY. THU S, HE DISALLOWED THE DEPRECIATION ON TWO DUMPERS. THE A.O. FURTHER ASKE D TO APPELLANT TO FURNISH THE COPY OF BILLS OF ACQUISITION OF ALL THE ASSETS ON WHICH DEPRECIATION HAD BEEN CLAIMED DURING THE YEAR. THE DETAILS OF THE MACHIN ERY PURCHASED WERE AS UNDER: (1) BITUMINIOUS SPRAYERS RS. 1,80,000 (2) POCKLAIN RS. 63,00,000 (3) TIPPER RS. 10,50,000 (4) WATER TANKER RS.20,00,000 TOTAL RS. 95,30,000 VIDE LETTER DTD. 28.02.2003, THE APPELLANT WAS A SKED TO PROVE THE OWNERSHIP BY FILING PURCHASE BILLS, RTO B OOKS, VALUATION OF MACHINERY IF IT IS PURCHASED OLD MACHINES BUT THE A SSESSEE DID NOT FURNISH THE DETAILS BUT CLAIMED THAT ALL THE BILLS HAVE BEEN SU BMITTED AND ENCLOSED ALONGWITH THE RETURN FOR A.Y. 1999-2000. THE A.O. VERIFIED THE EARLIER RETURN AND FOUND AS UNDER: SR. NO. DESCRIPTION OF ASSETS FROM WHOM PURCHASED DATE OF PURCHAS E AMOUNT OF PURCHASE REMARKS (1) (2) (3) (4) (5) (6) 1. BITUMINIOUS DUNGARRAM 15/3/99 RS. 1,80,000 RECEIPT ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 7 SPRAYER MACHINERY NO.3 JORARAM PATEL P.O. PALEJ, TAL. BHARUCH WAS GIVEN AS ADVANCE RECEIVED FOR SALE 2. POCKLAIN NO.3 BABUBHAI RANGABHAI ROT P.O. SITPON, TAL. BHARUCH 27/3/99 RS. 63,00,000 -DO- 3. TIPPER NO.3 BHAGWANBHAI N. GOHEL P.O. KALIKA, TAL. BHARUCH 01/03/99 RS.10,50,000 -DO- 4. WATER TANKER NO.4 GOKULSINGH RATHOD P.O. NARESHWAL TAL. BHARUCH 28/03/99 RS. 20,00,000 -DO- THE RECEIPTS, PRODUCED ON LETTER-PAD OF THE PERSONS WHO STATED TO BE SOLD THESE ASSETS. HOWEVER, THESE WERE NOT BILLS. IN A DDITION TO THE ABOVE, THE RECEIPTS PREPARED FOR CONSIDERATION RECEIVED AS ADV ANCE TOWARDS SALES- CONSIDERATION. THESE WERE NOT FINAL SALE BILLS. N O SALES TAX APPEARS TO HAVE BEEN PAID ON THESE SALES. NO OTHER DETAILS LIKE MA CHINE NUMBER, RTO REGISTRATION NUMBER WHEREVER IT IS APPLICABLE HAD B EEN FURNISHED. THUS, THE APPELLANT DID NOT ESTABLISH ITS OWNERSHIP. THE AMO UNTS STANDING IN THE BALANCE SHEET ARE, THEREFORE, MERELY AN ADVANCES MA DE TO THE PARTIES. NO PROOF OF POSSESSION AND OWNERSHIP OF THE MACHINERY, TANKER ETC. PRODUCED OR FURNISHED. ACCORDINGLY, THE APPELLANT DID NOT OWN THE MACHINERY AND ALSO NOT UTILIZED FOR BUSINESS PURPOSES. THUS, HE DISALLOWE D THE DEPRECIATION ON THESE MACHINES. ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 8 8. SIMILARLY, HE DISALLOWED THE INTEREST OF RS.20,9 6,600/- ON INVESTMENT IN MACHINERY SHOWN BY OBSERVING THAT THE APPELLANT DID NOT PRODUCE THE PURCHASE BILL OF THESE MACHINERIES. IT WAS ONLY AR GUED THAT ALL THE BILLS HAVE BEEN SUBMITTED ALONGWITH THE RETURN 99-00. THIS EV IDENCE, IT WAS FOUND THAT THESE RECEIPTS WERE ON LETTER PAD OF VARIOUS PERSON S STATED TO BE SOLD THE ASSETS AND THIS CANNOT BE SAID AS SALE BILL. NO SA LES TAX APPEAR TO BE PAID ON THESE SALES. NO OTHER DETAILS LIKE MACHINE NUMBER, RTO REGISTRATION NUMBER ETC. WHEREVER IT IS APPLICABLE HAD BEEN FURNISHED. FOR VERIFICATION OF THESE TRANSACTIONS SHRI GOKULSINGH RATHOD, SELLER OF FOUR TANKERS PRODUCED BEFORE THE A.O. HE HAD BEEN EXAMINED ON OATH. THE A.O. F OUND THAT THE OWNER OF SUCH TANKERS EVEN THEN HE DID NOT KNOW THE REGISTRA TION NO. OF THE TANKERS. HE HAD STATED THAT HE HAD RECEIVED THESE TANKERS FROM DELHI BASED COMPANY WHO HAD GIVEN THIS INCONSIDERATION OF HIS LABOUR BILLS. SHRI GOKULSINGH RATHOD IS NOT ASSESSED TO TAX AND DOING ONLY EARTH REMOVING W ORK WITH HIS ONLY 1 TRACTOR. THE AMOUNT HAS BEEN SHOWN AS ADVANCE AND PAYMENT MA DE IN CASH. THUS, HE FOUND THIS TRANSACTION IS BOGUS. ACCORDINGLY, H E DISALLOWED THE INTEREST AT RS.24,39,000/-, TOTAL INVESTMENT OF RS.95,30,000/- OUT OF INTEREST PAID. 9. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A), WHO HAD ALLOWED THE APPEA L AND ALSO HELD THAT EXPENDITURE ON DIESEL AND OIL AT RS.81,79,575/- HAD NOT BEEN DISPUTED BY THE A.O. THUS, HE FOUND THESE TRANSACTIONS GENUINE. 10. NOW THE REVENUE IS BEFORE US. LD. D.R. VEHEMEN TLY ARGUED THAT THESE MACHINERIES ALLEGED TO BE PURCHASED DIRECTLY FROM V ARIOUS PERSONS. HE ALSO ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 9 DRAWN OUR ATTENTION ON PAPER BOOK SUBMITTED BY THE APPELLANT AT SERIAL NO. 118 TO 128. PAGE NO.118 OF PAPER BOOK IS A COPY OF ACC OUNT FOR WATER TANKER PURCHASED FOR RS.20 LACS IN CASH VIDE BILL DATED 28 .03.1999 FROM GOKULSINGH RAHOD OF BHARUCH FOR WHICH ADVANCE MONEY HAD BEEN R ECEIVED BY HIM WHEREAS THE DATE OF PURCHASE HAS BEEN SHOWN 28.03.1 999 BUT ON BILL IT HAD BEEN SHOWN 28.03.1998. PAGE NO.121 IS A COPY OF AC COUNT OF PURCHASE OF TIPPER FROM SHRI BHAGWANBHAI GOHEL OF BHARUCH VIDE BILL DATED 01.03.99 FOR RS.10.5 LCAS IN CASH. PAGE NO.123 IS A COPY OF PUR CHASE OF BITUMINIOUS SPRAYER MACHINERY NO.3 FROM SHRI DUNGARRAM JORARAM PATEL OF BHARUCH FOR RS.1,80,000/- IN CASH VIDE BILL DATED 15.03.99. PA GE NO.126 IS A COPY OF ACCOUNT OF PURCHASE POCKLAND NOS.3 FROM BABUBHAI RA NGABHAI ROT OF BHARUCH FOR RS.63 LACS IN CASH VIDE BILL DATED 27.0 3.99. HE FURTHER ARGUED THAT ALL TRANSACTIONS WERE IN CASH. THE FOUR SELLE RS WERE NOT ASSESSED TO TAX UNDER THE INCOME TAX LAW. NO SALES TAX HAS BEEN CH ARGED ON SALE OF THE MACHINERY. THERE IS NO RTO PASS BOOK FOR ALL THE M ACHINERIES WHICH IS LEGAL REQUIREMENT TO USE THESE VEHICLES IN THE FIELD. TH E APPELLANT HAD PURCHASED EITHER THESE MACHINERIES IN 1997-1998 RELEVANT TO A .Y. 98-99 & IN A.Y. 98-99 RELEVANT TO A.Y. 99-00. WHY THE APPELLANT HAD SHOW N THESE MACHINERIES ADDITION IN THE YEAR UNDER CONSIDERATION, THE A.O. HAD REASON THAT THESE TRANSACTIONS ARE NOT GENUINE. NO SOURCE OF PAYMENT S HAS BEEN EXPLAINED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDING. TH E LD. CIT(A) HAD ALLOWED THE APPEAL WITHOUT GIVING ANY OPPORTUNITY TO THE A.O. AND WITHOUT VERIFYING THE GENUINENESS OF THE TRANSACTION. THUS, HE REQUE STED TO CONFIRM THE ADDITION MADE BY THE A.O. AT THE OUTSET, LD. A.R. VEHEMENTLY ARGUED THAT THE ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 10 PURCHASE BILLS OF ALL THE ASSETS WERE ENCLOSED WITH THE RETURN FOR A.Y. 99-00. HOWEVER, THE SAME WERE SHOWN AN ADDITION DURING THE YEAR. HE FURTHER ARGUED THAT THEY HAVE NUMBER OF SITE OF CONTRACT WH ERE NUMBER OF MACHINES ARE REQUIRED TO EXECUTE THE CONTRACT IN WITHIN TIME . HE ALSO DRAWN OUR ATTENTION ON PAGE NOS.244 AND 246 WHICH SHOW THAT A LL MACHINERIES WERE USED FOR THE PURPOSE OF BUSINESS. LD. A.R. HAS RELIED U PON THE DECISION OF CO- ORDINATE C BENCH, AHMADABAD IN CASE OF ITO VS. PRIYANK INFRASTRUCTURE PVT. LTD. IN ITA NO. 1953/AHD/2009 FOR A.Y. 2000-01, ON INTEREST EXPENDITURE AND DISALLOWANCE OF DEPRECIATION. THE CIT(A) HAD CONSI DERED ALL THE EVIDENCES BEFORE ALLOWING THE APPEAL IN FAVOUR OF THE APPELLA NT. THUS, HE REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THE MACHINERY PURCHASED FROM INDIVIDUAL ENTITIES WHO HAD NOT SHOWN ANY OWNERSHIP OF THESE MACHINERIES IN THE IR CAPACITY BY PRODUCING ANY RTO REGISTRATION PASS BOOK OR USING THESE MACHI NERIES IN EARLIER YEARS FOR THEIR OWN WORKS EITHER IN HIRING OR DOING ANY CONTR ACT WORK. THE A.O. ASKED TO PRODUCE ALL FOUR PERSONS FOR VERIFICATION. BUT THE APPELLANT HAD PRODUCED SHRI GOKULSINGH RAHOD WHO HAS EXAMINED BY THE A.O. ON OA TH. THE STATEMENT IS ALSO CONTRADICTORY THAT HE OWNED THIS TANKER FROM D ELHI BASED COMPANY. SHRI GOKULSINGH RAHOD IS HARDLY A SMALL MEANS OF PERSON WHO COULD NOT HAVE ANY CONTRACT IN DELHI BASED PARTIES. FURTHER, PURCHASE BILLS HAD NOT BEEN FURNISHED BEFORE THE A.O. THE VALUATION SHOWN IN THE SALE BI LL ALSO HAVE SERIOUS DOBTS WHICH HAS NOT BEEN CERTIFIED BY ANY GOVERNMENT APPR OVED VALUER. THE SAME WERE NOT ASSESSED TO TAX AND IT IS NOT CLEAR WHETHE R THEY HAVE CLAIMED ANY ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 11 DEPRECIATION ON IT OR NOT. WHAT WAS THE WRITTEN DO WN VALUE IN THE HANDS OF THE SELLER. THE OTHER THREE PERSONS HAD NOT BEEN PRODU CED BEFORE THE A.O. FOR VERIFICATION. FURTHER, PRESENT RTO REGISTRATION CE RTIFICATE HAD NOT BEEN SUBMITTED FOR VERIFICATION. IT IS A VIOLATION OF T HE MOTOR VEHICLES ACT AND ALSO INSURANCE ACT. ANY VIOLATION OF LAW AS HELD BY THE HONBLE APEX COURT IS NOT ALLOWED TO TAKE BENEFIT OF OTHER LAW. THUS, THE CI T(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION WITHOUT GIVING ANY BASIS. TH EREFORE, WE HAVE CONSIDERED VIEW THAT CIT(A) WAS NOT JUSTIFIED TO ALLOW THE APP EAL OF THE ASSESSEE. ACCORDINGLY, WE REVERSE THE ORDER OF THE CIT(A) ON DISALLOWANCE OF DEPRECIATION OF PLANT AND MACHINE OF RS.95.3 LACS, BUT THE DISALLOWANCE OF DEPRECIATION ON TWO NEW DUMPERS, THE EXPENSES OF ES PEA EARTH EQUIPMENT HAD BEEN DEBITED IN REPAIR ACCOUNT WHICH HAD BEEN V ERIFIED BY THE CIT(A). HE HAD DISALLOWED THE REPAIR EXPENSES BY RS.2,26,000/- AND AFTER CONSIDERING THE SAME HE DIRECTED THE A.O. TO ALLOW DEPRECIATION ON IT BEING CAPITAL EXPENDITURE. THUS, DEPRECIATION DISALLOWED BY THE A.O. ON TWO NEW DUMPERS AND ALLOWED BY THE CIT(A), IS CONFIRMED. HOWEVER, THE DISALLOWANCE ON INTEREST OF RS.20,96,600/- HAD NO DIRECT NEXUS WITH THE BORROWING DURING THE YEAR AS CLAIMED BY THE APPELLANT, THESE MACHINERIES WERE PURCHASED EITHER IN A.Y. 98-99 OR A.Y. 99-00. THE CASE LAW REFERRED BY THE APPELLANT IN CASE OF ITO VS. PRIYANK INFRASTRUCTURE PVT. LTD. (SUPRA) IS DISTINGUISHABLE. 12. GROUND NO.3 IS AGAINST DELETING THE ADDITION OF DISALLOWANCE OF ADVERTISEMENT EXPENSES OF RS.36,000/-. THE A.O. ST ATED THAT PAYMENT OF RS.36,000/- WERE HAVING NATURE OF DONATION AND NOTH ING TO DO WITH ASSESSEES BUSINESS. THE LD. A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ITA NO. 2325/AHD/09 A.Y. 00-01 PAGE 12 APPELLANT. NO RECEIPTS HAVE BEEN FILED BEFORE THE A.O. WITH 80G CERTIFICATE. THUS, HE MADE ADDITION OF RS.36,000/- LD. CIT(A) A LLOWED THE APPEAL BY OBSERVING THAT THESE ADVERTISEMENTS WERE MADE IN BR OACHERS AND SOUVENIRS. LD. SR. D.R. OPPOSED THE DELETION WHEREAS LD. A.R. DRAWN OUR ATTENTION ON THE BOARDS CIRCULAR NO.200 DATED 28 TH JUNE, 1976 (PAGE NOS. 214 & 215) AND CLAIMED THAT THIS EXPENDITURE IS ALLOWABLE. THESE PAYMENTS WERE MADE TO THE VARIOUS PARISHADS/UNIVERSITIES AND MADE ADVERTISEME NT THROUGH BROACHERS AND SOUVENIRS. THUS, WE CONFIRM THE ORDER OF THE C IT(A). 13. IN THE RESULT, THE REVENUES APPEAL IS PARTLY A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 22.02.2013 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;