The DCITC.C.-1, Baroda V. M/s. Laxmi Pulse Rice & Roller Flour Mills, Dahod

ITA 2804/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67586 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 29-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Keywords: Depreciation; Rule of consistency; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA, VP AND SHRI A. K. GARODIA , AM) ITA NO.2804/AHD/2010 (AY: 2008-09) THE D. C. I. T., CENTRAL CIRCLE-1, 6 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS, CHAKALIA ROAD, DAHOD, P. A. NO. AAAFL 8768 N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. C. MATHEWS, SR. DR RESPONDENT BY SHRI SUNIL TALATI, AR DATE OF HEARING: 29-08-2013 DATE OF PRONOUNCEMENT: 03-09-2013 ORDER PER A. K. GARODIA : THIS IS A REVENUES APPEAL DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A) IV, AHMEDABAD DATED 19 -07-2010, FOR THE ASSESSMENT YEAR 2008-09. 2. GROUND NO.1 OF THE APPEAL IS AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS AND C IRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.7,07,607/- ON ACCOUNT OF DISALLOWANCE OF 10% OF THE CASH DISCOUNT AND VAT AV EXPENSES. 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD CLAIME D DEDUCTION OF RS.70,06,075/- UNDER THE HEAD CASH DISCOUNT AND VAT AV. THE AO NOTED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. IN T HE ASSESSMENT YEAR 2007-08, 10% OF SUCH EXPENSES WERE DISALLOWED ON THIS BASIS THAT THE ASSESSEE COULD NOT ESTABLISH DIRECT RELATION OF THE EXPENDITURE WITH S ALES AND ALSO COULD NOT PROVIDE THE NAME AND ADDRESSES OF THE PURCHASERS TO WHOM DI SCOUNT ETC. WERE GIVEN AND THE GENUINENESS OF THE DISCOUNT/EXPENSES. IN T HAT YEAR, 10% OF THE EXPENDITURE WAS DISALLOWED ON ESTIMATION BASIS AND ON THE SAME LINE, IN THE IT A NO.2804/AHD/2010 (AY- 2008-09) DCIT, CC-1, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS 2 PRESENT YEAR ALSO, SIMILAR DISALLOWANCE OF 10% WAS MADE AND THE DISALLOWANCE WAS WORKED OUT TO RS.7,00,607/-. BEING AGGRIEVED, T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO HAS DELETED THIS DISALLOWANCE ON THE BASIS THAT IN THE ASSESSMENT YEAR 2007-08 ALSO, SIMILAR DISALLOWANCE WAS DELETED AS PER THE ORDER DATED 20-10-2009. NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR FOR THE REVENUE SUPPORTED THE ASS ESSMENT ORDER. HE ALSO SUBMITTED THAT IN THE ASSESSMENT YEAR 2007-08, APPEAL WAS FILED BY THE REVENUE BEFORE THE TRIBUNAL BUT THE SAME WAS DISMIS SED IN LIMINE BECAUSE OF LOW TAX EFFECT IN ITA NO.156/AHD/2010 DATED 06-07-2 012. HE ALSO SUBMITTED THAT COPY OF THE TRIBUNAL ORDER IS AVAILABLE ON PAGES 18 TO 19 OF THE PAPER BOOK SUBMITTED BY THE ASSESSEE. HE ALSO SUBMITTED THAT T HE DETAILS OF CASH DISCOUNT IS AVAILABLE ON PAGE 20 OF THE PAPER BOOK AND FROM THE SAME, IT CAN BE SEEN THAT ONLY MONTH-WISE FIGURES ARE GIVEN WITHOUT ANY FURTH ER DETAILS OR DESCRIPTION. HE PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE KERA LA HIGH COURT RENDERED IN THE CASE OF UNITED FILM EXHIBITORS VS CIT REPORTED IN 3 16 ITR 432 (KER). HE ALSO PLACED RELIANCE ON THE DECISION OF AUTHORITY FOR AD VANCE RULINGS RENDERED IN THE CASE OF YONGNAM ENGINEERING AND CONSTRUCTION (PTE) LTD. REPORTED IN 321 ITR 442 (AAR). HE ALSO PLACED RELIANCE ON THE TRIBUNAL DECISION RENDERED IN THE CASE OF DCIT VS NIKO RESOURCES LTD. REPORTED IN 123 TTJ 310. 5. AS AGAINST THIS, THE LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A). HE ALSO SUBMITTED THAT IN THE ASSES SMENT YEAR 2004-05, 2005-06 AND 2006-07 ALSO, SIMILAR DISALLOWANCE WAS MADE BY THE AO WHICH WERE DELETED BY THE LEARNED CIT(A) AS PER THE APPELLATE ORDERS A VAILABLE IN THE PAPER BOOK ON PAGES 8 TO 17 OF THE PAPER BOOK AND NO APPEAL WAS F ILED BY THE DEPARTMENT FOR THOSE THREE YEARS AND FOR THE FIRST TIME, THIS ISSU E HAS BEEN RAISED BY THE DEPARTMENT IN THE APPEAL FILED BY THE DEPARTMENT. REGARDING THE DETAILS OF DISCOUNT/VATAV, IT WAS SUBMITTED THAT THIS DISCOUNT WAS ALLOWED TO HUNDREDS OF CUSTOMERS IN VERY SMALL AMOUNT IN EACH CASE AND, TH EREFORE ITS DETAILS WERE VOLUMINOUS AND, THEREFORE, THESE DETAILS ARE NOT MA DE AVAILABLE IN THE PAPER IT A NO.2804/AHD/2010 (AY- 2008-09) DCIT, CC-1, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS 3 BOOK. REGARDING RELIANCE PLACED BY THE LEARNED DR F OR THE REVENUE ON VARIOUS JUDICIAL PRONOUNCEMENTS, HE SUBMITTED THAT NONE OF THESE IS APPLICABLE IN THE FACTS OF THE PRESENT CASE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW AND THE JUDGMENTS CITED BY THE LEARNED DR FOR THE REVENUE. WHEN WE EXAMINE THE DECISION GIVEN BY THE LEARNED CIT(A) IN ASSESSMENT YEAR 2004-05 AS PER THE ORDER OF THE LEARNED CIT(A) DATED 20-10-2009 APPEAR ING ON PAGES 8 TO 14 OF THE PAPER BOOK, IN THAT YEAR, THIS FINDING WAS GIVEN BY THE LEARNED CIT(A) THAT HE HAD EXAMINED THE SAMPLE COPIES OF THE VOUCHERS MAINTAIN ED BY THE ASSESSEE AND FOUND NOTHING WRONG. HE HAS ALSO GIVEN A FINDING TH AT THE EXPENSES WERE FULLY SUPPORTED BY VOUCHERS AND THE AO HAD NOT DISPUTED T HIS FACT. SIMILARLY, IN THE ASSESSMENT YEAR 2005-06 ALSO, THIS DISALLOWANCE WAS DELETED BY THE LEARNED CIT(A) ON THIS BASIS THAT NO SUCH DISALLOWANCE IS J USTIFIED WHERE THE EXPENSES ARE SUPPORTED BY VOUCHERS. THE ORDER OF THE LEARNED CIT(A) FOR THE ASSESSMENT YEAR 2006-07 IS NOT AVAILABLE IN THE PAPER BOOK ALT HOUGH SO MENTIONED IN THE INDEX OF THE PAPER BOOK. NOW, WE EXAMINE THE FINDIN G GIVEN BY THE LEARNED CIT(A) IN THE PRESENT YEAR. IN THE PRESENT YEAR, TH E LEARNED CIT(A) HAS REFERRED TO THE ORDER OF THE LEARNED CIT(A) IN THE ASSESSMENT Y EAR 2007-08 BEING ORDER DATED 20-10-2009 BUT THE COPY OF THIS ORDER OF THE LEARNED CIT(A) FOR THE ASSESSMENT YEAR 2007-08 IS NOT BROUGHT ON RECORD BE FORE US. THERE IS NO FINDING GIVEN BY THE LEARNED CIT(A) IN THE PRESENT YEAR THA T ANY VOUCHERS WERE EXAMINED BY HIM EVEN ON SAMPLE BASIS. THERE IS NO F INDING OF THE LEARNED CIT(A) ON THIS ASPECT ALSO THAT THE EXPENSES ARE FULLY SUP PORTED BY ANY VOUCHER. IN THE PRESENT YEAR, IT IS NOTED BY THE AO THAT NAME AND A DDRESSES OF THE PURCHASERS TO WHOM DISCOUNT ETC. WERE GIVEN AND GENUINENESS OF TH E DISCOUNT/EXPENSES WERE NOT BROUGHT ON RECORD BY THE ASSESSEE. IN THE LIGHT OF THESE FACTS, IT IS SEEN THAT THE FACTS IN THE PRESENT YEAR ARE DIFFERENT FROM TH E FACTS IN ASSESSMENT YEAR 2004-05 AND 2005-06 AND, THEREFORE, THE DECISION OF THE LEARNED CIT(A) CANNOT BE UPHELD ON THE BASIS OF PRINCIPLE OF CONSISTENCY . AS PER THE DETAILS AVAILABLE ON IT A NO.2804/AHD/2010 (AY- 2008-09) DCIT, CC-1, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS 4 PAGE 20 OF THE PAPER BOOK, WE FIND THAT THE TOTAL A MOUNT DEBITED UNDER THE HEAD CASH DISCOUNT IS OF RS.72.83 LACS AND THE CREDIT UN DER THAT HEAD IS OF RS.3.32 LACS. APART FROM THAT, A DEBIT OF RS.0.55 LACS IS O N ACCOUNT OF RATE DIFFERENCE AND TOTAL NET DEBIT IS OF RS.70.06 LACS. FOR SUCH HUGE AMOUNT OF CLAIM OF THE ASSESSEE REGARDING NET CASH DISCOUNT, THE ASSESSEE SHOULD HAVE FURNISHED AT LEAST THE NAME AND ADDRESSES OF THOSE PARTIES TO WH OM MAJOR AMOUNT WAS ALLOWED AS DISCOUNT. IN THE ABSENCE OF ANY DETAILS REGARDING NAME AND ADDRESSES OF THE PERSONS TO WHOM SUCH DISCOUNT WAS ALLOWED, IT IS ALWAYS POSSIBLE THAT THERE MAY BE SOME INSTANCE OF WRITE O FF OF THE DISCOUNT IN RESPECT OF ADVANCES FOR CAPITAL GOODS ETC. OR EVEN LOANS ETC. AND, THEREFORE, SOME DISALLOWANCE IS JUSTIFIED ON ACCOUNT OF THIS FAILUR E OF THE ASSESSEE TO FURNISH REASONABLE DETAILS FOR SUCH A HUGE CLAIM OF EXPENDI TURE OF MORE THAN RS.70 LACS APPROXIMATELY. THE DISALLOWANCE MADE BY THE AO IS T O THE EXTENT OF 10% OF SUCH CLAIM BUT WE FEEL THAT IN THE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE, ENDS OF JUSTICE WOULD MEET IF SUCH DISALLOWANCE IS RESTRICT ED TO 5% OF THE TOTAL SUCH CLAIM OF RS.70 LACS APPROXIMATELY. HENCE, WE CONFIRM THE DISALLOWANCE OF RS.3.50 LACS AND DELETE THE BALANCE DISALLOWANCE. THIS GROUND OF APPEAL OF THE REVENUE IS PARTLY ALLOWED. 7. GROUND NO.2 OF THE APPEAL OF THE REVENUE IS AS U NDER:- 2. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND FAC TS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.5,92,340/- BEING THE EXPENSES OF CAPITAL NATURE AS AGAINST THE CLAIM OF THE ASSESSEE FOR REVENUE EXPENSES DEBI TED UNDER THE HEAD BUILDING REPAIRING EXPENSES. 8. THE LEARNED DR FOR THE REVENUE SUPPORTED THE ASS ESSMENT ORDER; WHEREAS THE LEARNED AR OF THE ASSESSEE SUPPORTED TH E ORDER OF THE LEARNED CIT(A). IT WAS ALSO THE ARGUMENT OF THE LEARNED DR FOR THE REVENUE THAT THE DETAILS OF SUCH REPAIRING EXPENSES ARE AVAILABLE ON PAGES 66 TO 67 OF THE PAPER BOOK OUT OF WHICH MAJOR AMOUNT WAS SPENT IN THE MON TH OF MARCH, 2008 OF RS.4,83,085/- OUT OF TOTAL EXPENDITURE OF RS.5,92,3 40/-. HE FURTHER SUBMITTED THAT ON PAGES 130 TO 134 OF THE PAPER BOOK ARE THE DETAI LS REGARDING EXPENDITURE IT A NO.2804/AHD/2010 (AY- 2008-09) DCIT, CC-1, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS 5 INCURRED BY THE ASSESSEE IN RESPECT OF CONSTRUCTION OF NEW MILL BUILDING. HE SUBMITTED THAT MAJOR FOUR ITEMS OF EXPENDITURE INCU RRED AND INCLUDED IN REPAIRING EXPENDITURE WAS ON ACCOUNT OF EXPENSES IN RESPECT O F KOTA STONE, CEMENT, COLOUR BILLS AND PAINTS ETC. HE FURTHER SUBMITTED T HAT IN THE DETAILS REGARDING ADDITION TO BUILDING, THERE IS NO EXPENDITURE INCLU DED ON ACCOUNT OF THESE FOUR ITEMS AND THEREFORE, IT IS QUITE POSSIBLE THAT THOS E FOUR EXPENSES WERE IN FACT RELATED TO NEW MILL BUILDING BUT WERE DEBITED IN RE PAIRING EXPENDITURE. IN REPLY TO THESE ARGUMENTS, IT WAS THE SUBMISSION OF THE LEARN ED AR OF THE ASSESSEE THAT THOSE EXPENSES WERE ALSO INCLUDED IN THE DETAILS OF ADDITION TO BUILDING AND, THEREFORE ADDITION MADE BY THE AO IS RIGHTLY DELETE D BY THE LEARNED CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THE MAIN BASIS OF MAKING THIS ADDITION BY THE AO WAS THIS THAT THE SE EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD BUILDING REPAIRING CHARGES WERE IN FACT RELATED TO NEW BUILDING AND, THEREFORE, SHOULD BE CAPITALIZED. THE ARGUMENT OF THE LEARNED DR FOR THE REVENUE WAS ALSO SAME THAT THE MAIN EXPENDI TURE INCLUDED IN REPAIRING EXPENSES IS ON ACCOUNT OF COLOURS, CEMENT AND KOTA STONE ETC. AND NO SUCH EXPENSE WAS INCLUDED IN THE DETAILS REGARDING ADDIT ION TO BUILDING. WHEN WE EXAMINE THE DETAILS OF ADDITION TO BUILDING, WE FIN D THAT IT INCLUDES EXPENDITURE ON ACCOUNT OF LABOUR CHARGES FOR FITTING OF KOTA STONE ON SEVERAL DATES BUT, THERE IS NO AMOUNT IN RESPECT OF COST OF KOTA STONE INCLUDED IN THE DETAILS FOR CONSTRUCTION OF NEW BUILDING AND THE EXPENDITURE ON ACCOUNT OF K OTA STONE IS APPEARING IN THE DETAILS FOR REPAIRING EXPENDITURE ALONG WITH COST O F CEMENT. BUT IN THE REPAIRING EXPENDITURE THERE IS NO EXPENSES ON ACCOUNT OF LABO UR CHARGES FOR FITTING OF KOTA STONE EXCEPT AN AMOUNT OF RS.13,662/- ON 19-03-2008 . FOR THIS ENTRY ALSO, THE NARRATION IS IN MILL KOTA STONE FEETING MAJOORI PA ID. THIS SHOWS THAT THE EXPENSES IS FOR NEW MILL BUILDING. OTHER LABOUR CHA RGES INCLUDED IN REPAIRING EXPENSES ARE RS.17,245/-,RS.15064/- AND RS.27,245/-. IN THE NARRATION OF ALL THESE ENTRIES, IT IS STATED THAT MILL CONSTRUCTION WORK MAJOORI PAID. THESE DETAILS OF REPAIRING ALSO INCLUDED AN AMOUNT OF RS.1,00,592/- AS ON 30-03-200 8 FOR PLY WOOD & SUNMICA WITH NO BILL FOR LABOUR CHARGES FOR USING THESE PLY WOOD & SUNMICA. THERE IS NO IT A NO.2804/AHD/2010 (AY- 2008-09) DCIT, CC-1, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS 6 EXPLANATION ABOUT HOW AND WHEN THE SAME WAS USED FO R REPAIRING. IT MAY BE THAT THESE MATERIALS ARE LYING UNUSED ON 31-03-2008 AND THEN ALSO IT IS NOT ALLOWABLE AS EXPENDITURE AND EVEN DEPRECIATION IS ALSO NOT AL LOWABLE THEREON AS HAS BEN ALLOWED BY THE AO. SIMILARLY, THERE IS NO EXPENSE I NCLUDED IN THE FACTORY NEW BUILDING CONSTRUCTION ON ACCOUNT OF COLOURS AND PAI NTS ETC.; WHEREAS THE SAME ARE INCLUDED IN BUILDING REPAIRING EXPENSES. HENCE, WE FIND FORCE IN THE STAND TAKEN BY THE AO THAT THESE EXPENSES INCLUDED UNDER THE HEAD REPAIRING EXPENSES OF BUILDING ARE AT LEAST PARTLY RELATED TO NEW MILL BUILDING CONSTRUCTION EXPENSES. THE BASIS FOR DELETION OF THIS DISALLOWAN CE AS PER THE ORDER OF THE LEARNED CIT(A) IS THIS THAT THE EXPENSES ARE SUPPOR TED BY BILLS AND VOUCHERS AND THE BOOKS OF ACCOUNTS ARE AUDITED AND THE AUDITOR H AS NOT MADE ANY ADVERSE REMARK. IN THIS REGARD, WE WOULD LIKE TO OBSERVE TH AT THIS IS NOT THE CASE OF THE AO THAT THESE EXPENSES ARE BOGUS AND NOT SUPPORTED BY BILLS AND VOUCHERS. THE CASE OF THE AO IS THIS THAT THESE EXPENSES HAVE BEE N INCURRED FOR CONSTRUCTION OF NEW BUILDING AND NOT FOR ANY REPAIRING. THEREFORE, THIS BASIS GIVEN BY THE LEARNED CIT(A) FOR DELETING THIS DISALLOWANCE IS NOT APPROP RIATE. IN ADDITION TO THIS, THIS HAS BEEN THE ARGUMENT OF THE LEARNED CIT(A) THAT BO OKS OF ACCOUNTS ARE AUDITED AND THE AUDITORS HAVE NOT MADE ANY ADVERSE REMARKS. THIS ALSO IS NOT TAKING US ANYWHERE BECAUSE THE AUDITORS WERE ALSO NOT PRESENT WHEN THESE EXPENDITURE WERE INCURRED AND THE ITEMS WERE UTILIZED BY THE AS SESSEE TO GIVE A FINDING EITHER WAY THAT THE ITEMS WERE UTILIZED FOR REPAIRING PURP OSE OR FOR CONSTRUCTION OF NEW MILL BUILDING AND, THEREFORE, THIS BASIS GIVEN BY T HE LEARNED CIT(A) IS ALSO NOT CONCLUSIVE TO HOLD THAT THE DISALLOWANCE MADE BY TH E AO IS NOT JUSTIFIED. WE HAVE EXAMINED THE FACTS AND FOUND THAT WHILE THE ASSESSE E HAS CLAIMED EXPENSES FOR FITTING OF KOTA STONE ON VARIOUS DATES IN RESPECT O F CONSTRUCTION OF NEW MILL BUILDING, BUT NO EXPENDITURE IS INCURRED IN RESPECT OF PURCHASE OF KOTA STONE AND SUCH EXPENDITURE FOR PURCHASE OF KOTA STONE IS INCL UDED IN BUILDING REPAIRING EXPENDITURE WITHOUT INCLUDING ANY LABOUR CHARGES ON THAT ACCOUNT. THIS SUPPORTS THE STAND TAKEN BY THE AO THAT THESE EXPENSES WERE IN FACT INCURRED FOR CONSTRUCTION OF NEW MILL BUILDING AND NOT FOR ANY R EPAIRING PURPOSE. SIMILARLY, THE DETAILS REGARDING CONSTRUCTION OF NEW BUILDING AS A VAILABLE IN THE PAPER BOOK IT A NO.2804/AHD/2010 (AY- 2008-09) DCIT, CC-1, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS 7 HAVE NOT INCLUDED ANY EXPENDITURE ON ACCOUNT OF COL OURS AND PAINTS. THE BUILDING IS COMPLETED IN THE PRESENT YEAR BECAUSE DEPRECIATI ON IS DULY ALLOWED BY THE AO WITH REGARD TO SUCH NEW MILL BUILDING, THEN HOW IT CAN BE EXPECTED THAT NO EXPENDITURE IN RESPECT OF COLOUR AND PAINTS ETC. WE RE INCURRED FOR THIS NEW MILL BUILDING AND SUCH EXPENDITURE INCLUDED IN THE DETAI LS OF BUILDING REPAIRING IS NOT IN FACT RELATED TO CONSTRUCTION OF NEW MILL BUILDING. IN THE LIGHT OF THESE FACTS AND DISCUSSIONS ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE DELETION OF THIS DISALLOWANCE BY THE LEARNED CIT(A) IS NOT ON A VALI D BASIS. WE FIND THAT OUT OF TOTAL AMOUNT OF SUCH EXPENDITURE CLAIMED BY THE ASS ESSEE UNDER THE HEAD BUILDING REPAIRING OF RS.5,92,340/-, THE AO HAD ALSO ALLOWED DEPRECIATION TO THE ASSESSEE @10% AND MADE NET DISALLOWANCE OF RS.5,33, 106/- AND HENCE, NO DIRECTION IS REQUIRED FOR ALLOWING DEPRECIATION FOR SUCH DISALLOWANCE. WE FEEL THAT A PART OF THE EXPENSES INCLUDED BY THE ASSESSEE UND ER THE HEAD BUILDING REPAIRING MAY BE FOR BUILDING REPAIRING AND, THERE FORE, WE HOLD THAT INTEREST OF JUSTICE WOULD BE MET IF 50% OF SUCH EXPENDITURE IS HELD TO BE BUILDING REPAIRING EXPENSES AND ONLY 50% IS CAPITALIZED. WE HOLD ACCOR DINGLY. THIS GROUND OF APPEAL OF THE REVENUE IS PARTLY ALLOWED. 10. GROUND NO.3 OF THE APPEAL OF THE REVENUE IS AS UNDER:- 3. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.34,496/- ON ACCOUNT OF DISALLOWANCE OF 10% OF DA LALI (COMMISSION) EXPENSES. 11. THE LEARNED DR FOR THE REVENUE SUPPORTED THE AS SESSMENT ORDER AND THE LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF T HE LEARNED CIT(A). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THIS DISALLOWANCE WAS MADE BY THE AO ON THE BASIS OF THE ASSESSMENT O RDER FOR THE ASSESSMENT YEAR 2007-08 AND THE SAME WAS DELETED BY THE LEARNE D CIT(A) ON THE BASIS OF THE ORDER OF THE LEARNED CIT(A) FOR THE SAME ASSESS MENT YEAR I.E. 2007-08. THE DETAILS OF THESE EXPENSES ARE AVAILABLE ON PAGE 21 OF THE PAPER BOOK FOR THE CURRENT YEAR AS WELL AS FOR THE PRECEDING TWO ASSES SMENT YEARS. IN THE PRESENT IT A NO.2804/AHD/2010 (AY- 2008-09) DCIT, CC-1, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS 8 YEAR, TOTAL OF SUCH EXPENDITURE ARE FOR RS.3.75 LAC S AS AGAINST RS.2.79 LACS IN THE ASSESSMENT YEAR 2007-08 AND RS.1.62 LACS IN THE ASS ESSMENT YEAR 2006-07. THE JUMP IN DALALI EXPENSES IN THE PRESENT YEAR IS PARTICULARLY VERY HIGH IN RESPECT OF SALES AT RS.2.45 LACS IN THE PRESENT YEA R AS COMPARED TO RS.1.23 LACS IN THE ASSESSMENT YEAR 2007-08 AND RS.0.28 LACS IN THE ASSESSMENT YEAR 2006- 07. ON PAGE 22 OF THE PAPER BOOK, THE ASSESSEE HAS GIVEN THE COMPARISON CHART OF THE DALALI EXPENSES ON SALES IN TERMS OF PERCENT AGE OF TURNOVER FROM THE ASSESSMENT YEAR 2001-02 TO 2008-09 I. E. THE PRESEN T ASSESSMENT YEAR. SUCH PERCENTAGE IS 0.0561% IN THE PRESENT YEAR AS COMPAR ED TO 0.0284% IN THE ASSESSMENT YEAR 2007-08 WHICH IS ALMOST DOUBLE. IN ALL EARLIER YEARS I.E. ASSESSMENT YEARS 2004-05 TO 2006-07, SUCH PERCENTAG ES WERE EVEN LOWER. IN THE ASSESSMENT YEAR 2005-06, NO SUCH EXPENDITURE WA S INCURRED ALTHOUGH THE TURNOVER FOR THAT YEAR WAS RS.32.65 CORES AS AGAINS T THE TURNOVER OF RS.47.42 CRORES IN THE PRESENT YEAR. IN VIEW OF THIS ABSURD INCREASE IN PAYMENT OF DALALI ON SALES IN TERMS OF PERCENTAGE OF TURNOVER FROM 0.028 4% IN THE ASSESSMENT YEAR 2007-08 TO 0.0516% IN THE PRESENT YEAR, WE FEEL THA T THE DISALLOWANCE OF SMALL AMOUNT OF RS.37,496/- MADE BY THE AO IS VERY MUCH R EASONABLE AND THE ORDER OF THE LEARNED CIT(A) REGARDING DELETION OF THE SAME I S NOT SUSTAINABLE. WE, THEREFORE, REVERSE THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE AO. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03-09-2013. SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (A. K. GARODIA) ACCOUNTANT MEMBER LAKSHMIKANTA DEKA/- IT A NO.2804/AHD/2010 (AY- 2008-09) DCIT, CC-1, BARODA VS M/S. LAXMI PULSE RICE & ROLLER FLOUR MILLS 9 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 30-08-2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 02-09-2013 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: