URC Construction Pvt Ltd., Erode V. ACIT Circle 1, Erode

ITA 2687/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3549 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 19-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Depreciation; Tax effect; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.2687/CHNY/2018 ( [ [ / ASSESSMENT YEAR: 2013-14) M/S. URC CONSTRUCTION PVT. LTD., C/O. SHRI T.N. SEETHARAMAN, ADVOCATE, #384 (OLD NO.196), LLOYDS ROAD, CHENNAI 600 086. VS THE ACIT, CIRCLE, ERODE 638 001. PAN: A AACU2425Q ( /APPELLANT) ( /RESPONDENT) ./ I.T.A.NO.2828/CHNY/2018 ( [ [ / ASSESSMENT YEAR: 2013-14) THE ACIT, CIRCLE, ERODE 638 001. VS M/S. URC CONSTRUCTION PVT. LTD., C/O. SHRI T.N. SEETHARAMAN, ADVOCATE, #384 (OLD NO.196), LLOYDS ROAD, CHENNAI 600 086. PAN: AAACU2425Q ( /APPELLANT) ( /RESPONDENT) /ASSESSEE BY : SHRI T.N. SEETHARAMAN, ADVOCATE /REVENUE BY : SHRI AR.V. SREENIVASAN, JCIT /DATE OF HEARING : 18.02.2020 /DATE OF PRONOUNCEMENT : 03.03.2020 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : BOTH THE APPEAL OF THE ASSESSEE AND REVENUE ARE ARISING OUT OF THE VERY SAME ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 2 I.T.A. NOS. 2687 & 2828/CHNY/2018 3, COIMBATORE DATED 06.07.2018 AND PERTAINS TO THE ASSESSMENT YEAR 2013-14. THEREFORE, WE HEARD THE SAME TOGETHER AND DISPOSING OFF THE SAME BY THIS COMMON ORDER. 2. WHEN THE APPEAL IS TAKEN UP FOR HEARING, SHRI T.N. SEETHARAMAN, THE LD.COUNSEL FOR THE ASSESSEE AND SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE VERY FAIRLY BROUGHT TO THE NOTICE OF THE TRIBUNAL THAT THE TAX EFFECT IN THE DEPARTMENTS APPEAL IN ITA NO.2828/CHNY/2018 IS LESS THAN THE MONETARY LIMIT FIXED BY THE CBDT. THE CBDT HAS FIXED THE MONETARY LIMIT FOR FILING APPEAL BEFORE THIS TRIBUNAL. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE TAX EFFECT INVOLVED IN THE DEPARTMENTS APPEAL IS LESS THAN THE MONETARY LIMIT FIXED BY THE CBDT, THE DEPARTMENT CANNOT PURSUE THE APPEAL. IN OTHER WORDS, AS INSTRUCTED BY THE CBDT, THE DEPARTMENT HAS TO WITHDRAW THE APPEAL FILED BEFORE THIS TRIBUNAL. IN VIEW OF THE ABOVE, THE DEPARTMENTS APPEAL IN ITA NO.2828/CHNY/2018 STANDS DISMISSED. 3. NOW COMING TO THE ASSESSEES APPEAL, THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISALLOWANCE OF DEPRECIATION WITH REGARD TO COST OF MATERIAL USED FOR CONSTRUCTION OF TEMPORARY SHED, LABOUR CHARGES, ETC., ACCORDING TO THE LD.COUSEL FOR THE ASSESSEE, THE ASSESSEE IS IN THE 3 I.T.A. NOS. 2687 & 2828/CHNY/2018 BUSINESS OF CIVIL CONSTRUCTION. TEMPORARY SHED WAS PUT UP AT THE CONSTRUCTION SITE FOR EFFECTIVELY CARRYING ON THE BUSINESS OF CONSTRUCTION. SINCE IT IS TEMPORARY SHED, ACCORDING TO THE LD.COUNSEL, THE ASSESSEE IS ENTITLED FOR 100% DEPRECIATION IN RESPECT OF THE COST OF THE TEMPORARY SHED INCLUDING THE LABOUR CHARGES. HOWEVER THE SHED WAS USED FOR THE BUSINESS PURPOSE ONLY FOR LESS THAN 180 DAYS. THEREFORE, THE ASSESSEE ITSELF CLAIMED DEPRECIATION ONLY AT THE RATE OF 50%. HOWEVER THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. THE CIT(A) ALSO CONFIRMED THE DISALLOWANCE. REFERRING TO THE ORDER OF THE CIT(A), THE LD. COUNSEL SUBMITTED THAT THE COST OF THE MATERIAL USED FOR TEMPORARY SHED AND LABOUR CHARGES FOR CONSTRUCTION OF TEMPORARY SHED ALSO FORM A PART OF THE COST OF THE TEMPORARY SHED, THEREFORE ENTITLED FOR DEPRECIATION. THE LD.COUNSEL FURTHER SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE. 4. WE HEAD SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. ACCORDING TO THE LD.DR, THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE EXPENDITURE INCURRED FOR CONSTRUCTION OF TEMPORARY SHED BY PRODUCING NECESSARY MATERIALS. THEREFORE, THE 4 I.T.A. NOS. 2687 & 2828/CHNY/2018 CIT(A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5. HAVING HEARD THE LD.COUNSEL FOR THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE COST OF THE MATERIAL FOR CONSTRUCTION OF THE TEMPORARY SHED AND THE LABOUR CHARGES ALSO FORMS PART OF THE COST OF CONSTRUCTION OF THE TEMPORARY SHED. HOWEVER, THE DETAILS OF THE COST OF THE MATERIAL AND THE DETAILS OF THE LABOUR CHARGES ARE NOT AVAILABLE BEFORE THIS TRIBUNAL. THE LD.COUNSEL FOR THE ASSESSEE VERY FAIRLY SUBMITTED BEFORE THIS TRIBUNAL THAT THE ASSESSEE WILL PRODUCE ALL THE MATERIAL BEFORE THE ASSESSING OFFICER THEREFORE THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. IN VIEW OF THE ABOVE FACTS OF THE CASE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE OF DEPRECIATION WITH REGARD TO THE MATERIAL USED FOR CONSTRUCTION OF TEMPORARY SHED, LABOUR EXPENSES ARE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE MATTER IN THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 5 I.T.A. NOS. 2687 & 2828/CHNY/2018 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO.2828 OF 2018 IS DISMISSED AND THE ASSESSEES APPEAL IN ITA NO.2687 OF 2018 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 3 RD MARCH, 2020 AT CHENNAI. SD/- SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER ( . . . ) (N.R.S. GANESAN) / JUDICIAL MEMBER /CHENNAI, /DATED, THE 3 RD MARCH, 2020. RSR /COPY TO: 1. /ASSESSEE 2. /REVENUE 3. ( )/CIT(A) 4. /CIT 5. /DR 6. [ /GF