M/s. Shivam Construction Co, Distt. Muktsar. V. The Incomet-ax Officer, Muktsar

ITA 256/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8851 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Keywords: Depreciation; Revenue expenditure
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 256(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN: AAOFS7834F M/S. SHIVAM CONSTRUCTION CO. VS. INCOME TAX OFFICE R, MUKTSAR. WARD 2(II), MUKTSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. ASHWANI KUMAR, CA RESPONDENT BY: SH. S.S. KANWAL, DR DATE OF HEARING: 13/01/2016 DATE OF PRONOUNCEMENT: 16/02/2016 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), BATHINDA, DATED 21.02.2014 FOR THE ASSESSME NT YEAR 2009-10. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER: 1. THE LD. CIT(A) HAS GRAVELY ERRED IN LAW AND FAC TS IN UPHOLDING THE APPLICATION OF THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961. 2. THE LD. CIT(A) HAS GRAVELY ERRED IN LAW AND FACT S IN UPHOLDING THE ADHOC ADDITION OF RS.1,00,000/- ON ACCOUNT OF D EFICIENCY IN NET PROFIT RATIO. 3. THE LD. CIT(A) HAS GRAVELY ERRED IN LAW AND FACT S IN UPHOLDING THE DISALLOWANCE THE REVENUE EXPENDITURE UNDER THE HEAD REPAIR & MAINTENANCE AMOUNTING TO RS.3,50,145/-. 2. THE BRIEF FACTS AS NOTED FROM THE ASSESSMENT ORD ER ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR. DURING THE ASSESSME NT PROCEEDINGS, THE ITA NO.256(ASR)/2014 ASSESSMENT YEAR: 2009-10 2 AO OBSERVED VARIOUS DEFICIENCIES IN THE BOOKS OF A CCOUNT AND THEREFORE, REJECTED THE BOOKS OF ACCOUNT AND MADE TWO ADDITION S OF RS.3,00,000/- AND RS.3,50,145/-. WHILE MAKING THE FIRST ADDITION, THE AO OBSERVED THAT THE ASSESSEE HAD INCLUDED INTEREST INCOME ON F IXED DEPOSITS TO THE TUNE OF RS.3,08,208/- IN THE PROFIT & LOSS ACCOUNT WHICH, AS PER HIS OPINION WAS TAXABLE AS INCOME FROM OTHER SOURCES. H E FURTHER OBSERVED THAT THE ASSESSEE HAD DECLARED PROFIT ON SALE OF CA R TO THE TUNE OF RS.1,16,500/- IN ITS PROFIT & LOSS ACCOUNT. THEREFO RE, HE HELD THAT IF THESE TWO ITEMS WERE EXCLUDED, THE PROFIT DECLARED BY TH E ASSESSEE WILL QUITE BELOW AS COMPARED TO PROFIT STIPULATED UNDER SECTIO N 44AD OF THE ACT. THEREFORE, HE MADE AN ADDITION OF RS.3,00,000/- ON A LUMP-SUM BASIS. AS REGARDS THE SECOND ADDITION, THE AO OBSERVED TH AT THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS.3,89,048/- UNDER THE H EAD REPAIR & MAINTENANCE. THE AO HELD THESE EXPENSES TO BE IN NATURE OF CAPITAL EXPENSES AND THEREFORE, HE DISALLOWED THE SAME AND AFTER ALLOWING DEPRECIATION @ 10% MADE AN ADDITION OF RS.3,50,145/ -. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 3. THE LD. CIT(A) UPHELD THE REJECTION OF BOOKS OF ACCOUNT. HOWEVER, HE ALLOWED RELIEF OF RS. 2,00,000/- OUT OF LUMP-SU M ADDITION OF RS.3,00,000/-, WHEREAS HE UPHELD THE ADDITION OF RS .3,50,145/- ON ACCOUNT OF REPAIR AND MAINTENANCE. AGGRIEVED BY TH E ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.256(ASR)/2014 ASSESSMENT YEAR: 2009-10 3 4. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE NATURE OF BUSINESS OF THE ASSESSEE IS SUCH THAT SOM ETIMES COMPLETE VOUCHERS CANNOT BE MAINTAINED. HOWEVER, HE SUBMITTE D THAT OTHERWISE COMPLETE BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE AO, THEREFORE, ADDITION SUSTAINED BY THE LD. CIT(A) NEEDS TO BE DE LETED. AS REGARDS THE ADDITION SUSTAINED BY THE LD. CIT(A) ON ACCOUNT OF REPAIRS, THE LD. COUNSEL SUBMITTED THAT THE ADDITION HAS BEEN WRONGLY SUSTA INED BY THE LD. CIT(A). INVITING OUR ATTENTION TO THE BREAK-UP ITEM S UNDER THE HEAD REPAIR & MAINTENANCE, THE LD. COUNSEL SUBMITTED T HAT THAT THE NATURE OF EXPENSES ITSELF SUGGESTS THAT THEY ARE IN THE NATUR E OF REVENUE. 5. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT T HE MAINTENANCE OF BOOKS OF ACCOUNT IS COMPULSORY AS PER THE PROVISION S OF THE ACT AND NATURE OF BUSINESS OF THE ASSESSEE CANNOT DETERMIN E AS TO WHETHER ONE WILL HAVE TO MAINTAIN COMPLETE BOOKS OF ACCOUNT OR NOT AND SUBMITTED THAT THE LD. CIT(A) HAS ALREADY GIVEN SUBSTANTIAL R ELIEF TO THE ASSESSEE. AS REGARDS THE ADDITION ON ACCOUNT OF REPAIRS, THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW . 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE AO DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS HAD POINTED OUT VARIOUS DIS CREPANCIES IN THE ITA NO.256(ASR)/2014 ASSESSMENT YEAR: 2009-10 4 BOOKS OF ACCOUNT AND THEREFORE, THE LD. CIT(A) HAS RIGHTLY UPHELD THE REJECTION OF BOOKS OF ACCOUNT. IN VIEW OF THE ABOV E, GROUND NO.1 IS DISMISSED. 7. AS REGARDS GROUND NO.2 REGARDING SUSTAINING THE ADDITION OF RS.1,00,000/-, WE FIND THAT THE AO HAD POINTED OUT VARIOUS FACTORS FOR MAKING ADDITION OF RS.3,00,000/- WHICH THE LD. CIT( A) HAS RESTRICTED TO RS.1,00,000/-, WHICH WE FIND TO BE A REASONABLE ON E. WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDING LY, GROUND NO.2 IS ALSO DISMISSED. 8. AS REGARDS GROUND NO.3, WITH REGARD TO REPAIR & MAINTENANCE, WE FIND FROM THE NATURE OF ITEMS, AS NOTED BY THE LD. CIT(A) IN THE IMPUGNED ORDER THAT THE ITEMS ARE LIKE SARIA BRICKS, CEMENT ETC., AND ITS NATURE CANNOT BE SAID TO BE OF CAPITAL, KEEPING IN VIEW TH E FACT THAT THE AO HIMSELF HAS HELD THAT THERE IS NO BUILDING OR SUP ER-STRUCTURE REFLECTED IN THE BALANCE SHEET. THE EXPENSES AS CLAIMED BY THE A SSESSEE ARE REVENUE IN NATURE. IT HAS BEEN SPENT ON THE UP-KEEP OF VARI OUS MACHINERY UTILIZED IN ITS BUSINESS OF CIVIL CONSTRUCTION. MOREOVER, WE FIND THAT THE ASSESSEE HAS BEEN REGULARLY CLAIMING REPAIR & MAINTENANCE IN EARLIER YEARS ALMOST EQUAL TO SIMILAR AMOUNT AS IN THE YEAR UNDER CONSI DERATION. THEREFORE, WE ARE IN AGREEMENT WITH THE ARGUMENTS OF THE LD. C OUNSEL FOR THE ASSESSEE AND ACCORDINGLY, WE ALLOW GROUND NO.3 OF T HE APPEAL. ITA NO.256(ASR)/2014 ASSESSMENT YEAR: 2009-10 5 10. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE A SSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/02/201 6 SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: M/S.SHIVAM CONSTRUCTION CO.MUKTSAR 2. THE ITO, WARD 2(II), MUKTSAR. 3. THE CIT(A), 4. THE CIT, 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.