Swiss Glascoat Equipments Ltd., Anand V. The ACIT., Anand Circle, Anand

ITA 2450/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9249 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-07-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 28-11-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: S N DIVETIA
• Keywords: Depreciation; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.2450/AHD/2005 ASSESSMENT YEAR:2002-03 DATE OF HEARING:16.7.09 DRAFTED:17.7.09 SWISS GLASCOAT EQUIPMENTS LTD., G.I.D.C., VITTHAL UDHVOGNAGAR PAN NO.AAALG0094G V/S . THE ASST. COMMISSIONER OF INCOME TAX, ANAND CIRCLE, ANAND (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S.N. DIVETIA RESPONDENT BY:- SMT. NEETA SHAH, SR.DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, BARODA IN APPEAL NO. CAB/I V-A/17/05-06 DATED 19-09- 2005. THE ASSESSMENT WAS FRAMED BY THE ASST. COMMI SSIONER OF INCOME-TAX(OSD) ANAND CIRCLE, ANAND U/S. 143(3) OF THE INCOME-TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 14-03-2005 FOR T HE ASSESSMENT YEAR 2002-03. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AS REGARDS TO THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF PETROL EXPENSE S. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1 :- 1. THE LEARNED C.I.T. (APPEALS)-IV, BARODA ERRED I N LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.62,515/- TOWARDS PETROL E XPS. MADE BY ACIT, ANAND CIRCLE, ANAND. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE STATE D THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF JURISDICTIONAL HIGH COUR T IN THE CASE OF SAYAJI IRON AND ENGG. CO. V. CIT (2002) 253 ITR 749 (GUJ). THE LD. DEPARTMENTAL REP RESENTATIVE ITA NO.2450 /AHD/2005 A.Y. 2002-03 SGE LTD. V. ACIT, ANAND CIR ,ANAND PAGE 2 HAS ALSO NOT OBJECTED IN CASE THE ISSUE IS SET ASID E TO THE FILE OF ASSESSING OFFICER TO BE DECIDED IN TERMS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAYAJI IRON AND ENGG. CO. (SUPRA). ACCORDINGLY, WE SET ASIDE THIS ISSUE TO T HE FILE OF AO TO DECIDE AS INDICATED ABOVE AND THIS ISSUE OF THE ASSESSEES AP PEAL IS ALLOWED FOR STATISTICAL PURPOSES. 4. THE NEXT ISSUE AS REGARDS TO THE DISALLOWANCE OF OFFICE EXPENSES. 5. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE HAS N OT PRESSED THIS ISSUE, HENCE, WE DISMISS THE SAME AS NOT PRESSED. 6. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.32,735/- ON ACCOU NT OF CASUAL LABOUR CHARGES. 7. AFTER HEARING THE RIVAL CONTENTIONS AND GOING TH ROUGH THE CASE RECORDS, WE FIND THAT DISALLOWANCE OF THESE EXPENSES WERE MADE AS THEY ARE PERTAINING TO PRIOR PERIOD. BUT WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED THESE EXPENSES AS THEY PERTAINS TO THE AMOUNT OF BONUS PAID TO THE CA SUAL WORKERS, WHO ARE NOT ON ROLL OF THE ASSESSEE-COMPANY. THE MANAGEMENT HAD TAKEN T HE DECISION TO PAY THE BONUS EVEN TO THE CASUAL WORKERS THOUGH NO PROVISIO N WAS MADE IN THE EARLIER YEAR. THE LIABILITY OF THE EXPENSE AROSE IN THE YEAR UNDE R CONSIDERATION, HENCE IT WAS RIGHTLY CLAIMED. ACCORDINGLY WE ALLOW CLAIM OF THE ASSESSEE AND THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 8. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF RS.3,600/- U/S.80HHC BY THE ASSESSING OFFICER. 9. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THIS ISSUE, HENCE, WE DISMISS THIS ISSUE AS NOT PRESSED. THIS ISSUE OF THE ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. 10. THE ADDITIONAL ISSUE RAISED BY THE ASSESSEE BY WAY OF ADDITIONAL GROUND IS AS REGARDS TO THE DISALLOWANCE OF DEPRECIATION ON THE CAPITALIZATION OF EXPENSES OUT OF REPAIR AND MAINTENANCE EXPENSES. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND:- ITA NO.2450 /AHD/2005 A.Y. 2002-03 SGE LTD. V. ACIT, ANAND CIR ,ANAND PAGE 3 THAT TO ALLOW DEPRECIATION ON CAPITALIZATION OF EXPEN SES OUT OF REPAIR AND MAINTENANCE EXPENSES MADE BY THE LEARNED ASSESSING OFFICER. 11. WE FIND THAT THE ASSESSEE-COMPANY ENGAGED IN THE B USINESS OF MANUFACTURING OF GLASS LINED PROCESSING EQUIPMENTS, SUCH AS. REACTORS, STORAGE TANKS, DISTI LLATION COLUMNS, AGITATORS, PIPES AND PIPE FITTINGS USED IN CHEMICAL, PHARMACEUTICAL, PESTICI DES & FOOD PROCESSING INDUSTRIES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS INCURRED EXPENSES FOR REPAIRING & MAINTENANCE, ON ACCOUNT OF CONSTRUCTION OF SHED AND BUILDING, WHICH SH OW THAT THE ASSESSEE HAS CLAIMED RS.5,36,535/- UNDER THE HEAD CIVIL WORKS FOR ADDITION AND ALTERNATION WORK OF EXISTING SHED. VERIFICATION OF THE DETAILS PRODUCED SHOWS THAT THE ITEM S ARE CAPITAL IN NATURE AS THEY ARE FOR NEW ADDITION TO SHED THEREFORE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE AS CAPITAL EXPENSES. THE DEPRECIATION WILL BE ALLOWED ON COMPLE TION OF THE SHED AS THE EXPENSES SHOWN AS INCURRED HERE ARE ONLY FOR THE CAPITAL WORK UP TO THE PLINTH AREA. WE FIND THAT ALTERNATIVE CLAIM OF TH E ASSESSEE WAS MADE THAT DEPRECIATION SHOULD BE ALLOWED ON THE SAME. WE FURTHER FIND THAT THE ASSESSING OFFICER HAS NOTED THAT THE DEPRECIATION WILL BE ALLOWED ON COMPLETION OF SHED ONLY FOR THE CAPITAL WORK UP TO THE PLINTH. THIS ISSUE REQUIRES RE-VE RIFICATION AT THE LEVEL OF THE ASSESSING OFFICER IN CASE ASSESSEE HAS COMPLETED THE WORK, THE AO WILL ALLOW THE CLAIM OF THE ASSESSEE AS REGARDS TO DEPRECIATION TO THE ASSESSEE BUT IN CASE THE WORK IS NOT COMPLETED DURING THE YEAR THEN THE ASSESSEE WILL NOT ALLOW THE DEPRECIATION. THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28/08/2009 SD/ SD/ (P.K.BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED :28/08/2009 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IV, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD