S.Kalpana, Karur V. JCIT, Trichy

ITA 2728/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86287 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: K RAVI
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI .. , , BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.2728/MDS/2014. ( ! / ASSESSMENT YEAR : 2010-2011) S. KALPANA, PROPRIETRIX OF M/S. SHOKIKAA IMPEX, NO.17, ATHUR INDUSTRIAL ESTATE, VENNAIMALAI POST, KARUR 639 006. [PAN :BDKPK 4235K] ( /APPELLANT) VS. THE JOINT COMMISSIONER OF INCOME TAX, RANGE II, TRICHY. ( /RESPONDENT) ' # $ / APPELLANT BY : SHRI. K. RAVI, ADVOCATE %&' # $ / RESPONDENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. ' ( # )* /DATE OF HEARING : 05.02.2015. +,! # )* /DATE OF PRONOUNCEMENT : 05.02.2015. / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 13.08.2014 PASSED BY LD CIT(APPEALS), TIRUCHIRAPALL I AND IT RELATES TO I.T.A.NO.2728/MDS/2014. . :- 2 -: THE ASSESSMENT YEAR 2010-11. FOLLOWING GROUNDS ARE URGED IN THIS APPEAL:- (A) DISALLOWANCE MADE OUT OF LABOUR EXPENSES (B) DISALLOWANCE OF DEPRECIATION CLAIMED ON MACHINERY 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NO TICE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URE OF MOSQUITO NETS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED 10% OF LABOUR EXPENSES CLAIMED B Y THE ASSESSEE, SINCE HE FOUND THAT THE VOUCHERS PRODUCED IN SUPPOR T OF THE SAME WERE SELF MADE VOUCHERS. THE ASSESSEE ALSO AGREED F OR THE SAID ADDITION. FURTHER, IT WAS NOTICED THAT THE ASSESSE E HAS RECEIVED A LOAN OF ` 50.00 LAKHS FROM A SISTER CONCERN. ON EXAMINATION OF THE SAME, IT WAS FOUND THAT THE SAME REPRESENTS A VALUE OF MACHI NERY PURCHASED BY THE SAID SISTER CONCERN AND GIVEN TO THE ASSESSE E. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAS CLAIM ED DEPRECIATION THEREON. WHEN ENQUIRED, THE ASSESSEE SUBMITTED THA T IT HAS INCLUDED THE COST OF MACHINERY IN ITS FIXED ASSETS AND IT IS ONLY USING THE MACHINERY. ACCORDINGLY THE ASSESSEE SUBMITTED THAT IT HAS CLAIMED DEPRECIATION ON THE VALUE OF MACHINERY. HOWEVER, T HE ASSESSING OFFICER TOOK THE VIEW THAT THE SISTER CONCERN HAS G IVEN THE MACHINERY ON LOAN TO THE ASSESSEE AND HENCE THE ASSESSEE IS N OT ENTITLED FOR I.T.A.NO.2728/MDS/2014. . :- 3 -: DEPRECIATION THEREON. ACCORDINGLY HE DISALLOWED TH E DEPRECIATION CLAIMED ON THE VALUE OF THE MACHINERY. THE LD CIT( APPEALS) ALSO CONFIRMED BOTH THE DISALLOWANCES MADE BY THE ASSESS ING OFFICER. 3. WITH REGARD TO THE DISALLOWANCE MADE OUT OF LABOUR EXPENSES, WE NOTICE THAT THE LD CIT(APPEALS) HAS CONFIRMED TH E SAME ON THE REASONING THAT THE ASSESSEE HAD AGREED FOR THE SAID DISALLOWANCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ACCOR DINGLY, THE LD CIT(APPEALS) HELD THAT THE ASSESSEE COULD NOT BE CO NSIDERED AS AGGRIEVED BY THE SAID DISALLOWANCE. BEFORE US, THE LD A.R COULD NOT SHOW THAT THE SAID OBSERVATIONS MADE BY THE TAX AUT HORITIES WERE WRONG. SINCE THE ASSESSEE HAS AGREED FOR THE DISAL LOWANCE OF 10% OF LABOUR EXPENSES DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(AP PEALS) IN REJECTING THE GROUND OF THE ASSESSEE ON THIS ISSUE. 4. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF DEPRE CIATION ON THE MACHINERY. WE NOTICE THAT THE ASSESSING OFFICER HA S ENTERTAINED THE IMPRESSION THAT THE SISTER CONCERN IS THE OWNER OF THE MACHINERY AND IT HAS ONLY ALLOWED THE ASSESSEE TO USE THE SAME BY LE NDING THE MACHINERY. HOWEVER, THE CONTENTION OF THE ASSESSEE IS THAT THE MACHINERY WAS TAKEN OVER BY THE ASSESSEE AND THE VA LUE OF THE SAME I.T.A.NO.2728/MDS/2014. . :- 4 -: WAS DULY INCLUDED IN THE FIXED ASSETS BY SHOWING CO RRESPONDING AMOUNT AS LIABILITY PAYABLE TO THE SISTER CONCERN. THE SAID CONTENTION OF THE ASSESSEE EFFECTIVELY MEANS THAT THE ASSESSEE HAS PURCHASED THE MACHINERY BY BORROWING FUNDS FROM THE SISTER CONCER N, EVEN THOUGH THE SISTER CONCERN HAS FIRST PURCHASED THE MACHINER Y AND LATER GIVEN IT TO THE ASSESSEE. IN OUR CONSIDERED OPINION, IF THE ASSESSES HAS INCLUDED THE VALUE OF MACHINERY AS ITS FIXED ASSETS , THEN THE ASSESSEE SHOULD BE CONSIDERED AS THE OWNER ONLY. SINCE THE ASSESSEE ONLY HAS USED THE MACHINERY FOR ITS BUSINESS PURPOSE, DEPREC IATION SHOULD BE ALLOWED THEREON. SINCE THE ASSESSING OFFICER HAS F AILED TO EXAMINE THE BOOKS OF ACCOUNT TO EXAMINE THE ABOVE SAID FACT, WE ARE OF THE VIEW THAT THE SAME REQUIRES EXAMINATION AT HIS END. ACC ORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(APPEALS) ON THIS ISSUE AN D DIRECT THE ASSESSING OFFICER TO EXAMINE THE BOOKS OF ACCOUNT O F THE ASSESSEE AND ALLOW THE DEPRECIATION, IF THE ASSESSEE HAS SHOWN T HE MACHINERY AS ITS FIXED ASSET. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A.NO.2728/MDS/2014. . :- 5 -: PRONOUNCED ACCORDINGLY ON 05-02-2015 IN THE OPEN CO URT IN THE PRESENCE OF PARTIES AFTER THE CONCLUSION OF HEARING . SD/- ( ) (VIKAS AWASTHY) /JUDICIAL MEMBER SD/ - ( .. ) (B.R. BASKARAN) ' / ACCOUNTANT MEMBER 1 /DATED:05.02.2015. K.V 2 # %)3 4!) /COPY TO: 1. '/ APPELLANT 2. %&' / RESPONDENT 3. ' 5) ( )/CIT(A) 4. ' 5) /CIT 5. 67 %) 8 /DR 6. 79 :( /GF.