The DCIT(OSD)Range-1, Ahmedabad V. Corrtech International Pvt.Ltd., Ahmedabad

ITA 3076/AHD/2010

• Counselvise Citation: 307620514 RSA 2010
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 16-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G M CHAUHANSR
• Assessee Lawyers: G C PIPARA
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 142(1)

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI T.K. SHARMA, JM AND A. K. GARODIA, AM DY. CIT (OSD), RANGE-1, AHMEDABAD. VS. CORRTECH INTERNATIONAL (P) LTD., 22, DHARA CENTRE, VIJAY CHAR RASTA, NAVRANGPURA, AHMEDABAD. APPELLANT .. (RESPONDENT) APPELLANT BY : SHRI G. M. CHAUHAN,SR.DR RESPONDENT BY: SHRI G.C. PIPARA, AR DATE OF HEARING : 02/9/11 DATE OF PRONOUNCEMENT : 25/10/2011 O R D E R PER A. K. GARODIA, ACCOUNTANT MEMBER . THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)-VIII, AHMEDABAD, DATED 16/08/2010 FOR ASST. YEAR 2007-08. 2. GROUNDS RAISED BY THE REVENUE ARE AS UNDER :- (1) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.7,05,525/- ON ACCOUNT OF TREATMENT OF DEAD ST OCK EXPENSES AS CAPITAL EXPENSES. (2) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.79,41,759/- ON ACCOUNT OF TREATMENT OF LAND R ESTORATION EXPENSES AS CAPITAL EXPENSES. ITA NO.3076/AHD/2010 ASST. YEAR :2007-08 ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 2 (3) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.9,02,150/- ON ACCOUNT OF TREATMENT OF STAMP D UTY EXPENSES AS CAPITAL EXPENSES. (4) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.9,60,081/- ON ACCOUNT OF DISALLOWANCE OF DEPR ECIATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE AO ON PAGE 8 PARA 3 OF THE ASSESSMENT ORDER THAT ASSESSEE HAD DE BITED AN AMOUNT OF RS.7,05,525/- UNDER THE HEAD DEAD STOCK. ON PERUS AL OF LEDGER, IT IS SEEN THAT MOSTLY FURNITURE ITEM HAVE BEEN DEBITED IN THI S ACCOUNT. THE AO HELD THAT FURNITURE ITEMS ARE FIXED ASSET AND EXPENSES O N THESE ITEMS IS TO BE TREATED AS CAPITAL EXPENDITURE. THE AO ISSUED LETTE R ON 22/12/2009 ASKING THE ASSESSEE AS THE WHY THE DEAD STOCK SHOULD NOT B E TREATED AS CAPITAL EXPENDITURE AS THESE ITEMS ARE FURNITURE AND FIXTUR ES AND SHOULD HAVE BEEN TREATED AS FIXED ASSETS. 4. THE AO FURTHER NOTED THAT NO EXPLANATION WHATSOE VER WAS FURNISHED BY THE ASSESSEE DESPITE OPPORTUNITY PROVI DED DURING HEARING DATED 24/12/2009. THE AO DISALLOWED THE SAME TREATI NG THIS AS CAPITAL EXPENDITURE. THE AO MADE AN ADDITION OF RS.705,525/ - ON THIS ACCOUNT. 5. THE SECOND ISSUE IS ABOUT DELETION OF DISALLOWAN CE OF RS.79,41,759/-. THE FACTS REGARDING THIS ISSUE ARE THAT IT IS NOTED BY THE AO IN PARA 4 OF ASSESSMENT ORDER THAT ON PERUSAL OF DETAILS FILED BY THE ASSESSEE, IT IS SEEN THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 3 RS.79,41,759/- UNDER THE HEAD LAND & RESTORATION E XPENSES. IT IS OBSERVED BY THE AO THAT LAND & RESTORATION EXPENSES PROVIDE ENDURING BENEFIT TO THE ASSESSEE. HENCE THESE EXPENSES SHOUL D BE TREATED AS CAPITAL EXPENDITURE. THEREFORE VIDE ORDER SHEET ENTRY DATED 22/12/2009, THE ASSESSEE WAS ASKED AS TO WHY THE LAND AND RESTORATI ON EXPENSES SHOULD NOT BE TREATED AS CAPITAL EXPENDITURE. FOR THIS ALS O, NO EXPLANATION WHATSOEVER WAS FURNISHED BY THE ASSESSEE INSPITE OF OPPORTUNITY GIVEN. HENCE, THESE EXPENSES WERE ALSO DISALLOWED BY THE A O BY TREATING IT AS CAPITAL EXPENDITURE. 6. THE THIRD ISSUE RELATES TO DELETION OF ADDITION OF RS.9,02,150/-. THE AO IN PARA 5 AT PAGE 9 OF THE ASSESSMENT ORDER NOTE D THAT THE ASSESSEE HAS DEBITED MANY EXPENSES IN THE LEDGER OF STAMPS DUTY EXPENSES OUT OF WHICH AN AMOUNT OF RS.3,01,250/- IS SHOWN AS ICICI BANK AND RS.6,00,900/- IS SHOWN AS CASH. THE AO FURTHER NOTE D THAT SINCE NATURE OF THESE EXPENSES ARE NOT EXPLAINED IN THE ACCOUNT, TH E ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THIS STAMP DUTY EXPENSES OF RS .3,01,250/- AND RS.6,00,000/- SHOULD NOT BE TREATED AS CAPITAL EXPE NDITURE. IN REPLY IT WAS SUBMITTED BY THE ASSESSEE THAT THESE EXPENSES ARE R ELATED TO LOANS SANCTIONED BY THE BANK, BUT HE COULD NOT FURNISH EV IDENCE IN THIS REGARD. THE AO HELD THAT IN ABSENCE OF ANY EVIDENCE, THE EX PLANATION OF THE ASSESSEE CANNOT BE ACCEPTED. HE HELD THAT EVEN IF S TAMP DUTY IS RELATED TO ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 4 SANCTION OF LOAN, IT CANNOT BE TREATED AS REVENUE E XPENDITURE BECAUSE BENEFIT OF THE LOAN IS ENJOYED BY THE ASSESSEE OVER A LONG PERIOD OF TIME AND THEREFORE, SUCH EXPENSES CANNOT BE ACCEPTED AS REVENUE EXPENDITURE. HE HELD THAT THESE EXPENSES ARE CAPITAL EXPENSES AN D ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 7. REGARDING THE FOURTH ISSUE I.E. DELETION OF ADDI TION OF RS.9,60,081, THE BRIEF FACTS ARE THAT IT IS NOTED BY THE AO IN P ARA 8 AT PAGE 11 THAT ASSESSEE WAS ASKED TO PRODUCE EVIDENCE OF PURCHASE AND PUT TO USE OF ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED. THE AO NOTED THAT EVEN AFTER PROVIDING SEVERAL OPPORTUNITIES, NO EVIDENCE WAS FURNISHED. THE AO ISSUED NOTICE U/S 142(1) OF THE IT ACT ON 8/12/2009 ASKING THE ASSESSEE AS TO WHY DEPRECIATION CLAIMED SHOULD NOT BE DISALLOWE D AS NO EVIDENCES ARE FURNISHED BY THE ASSESSEE ABOUT PURCHASE AND PUT TO USE OF SOME ASSETS. THE ASSESSEE VIDE ITS REPLY DATED 30.12.2009 STATED THAT IN A FEW CASES, XEROX COPY OF PURCHASE BILLS COULD NOT BE SUBMITTED BECAUSE OF LACK OF TIME. THE ASSESSEE ALSO FURNISHED A CHART CONTAININ G DETAILS OF MISSING PURCHASE BILLS OF FIXED ASSETS AND ALLOWABLE DEPREC IATION ON IT, AS PER WHICH, DEPRECIATION CLAIMED BY THE ASSESSEE IS OF R S.9,60,081/-. THIS WAS DISALLOWED BY THE AO ON THE BASIS THAT THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE OF PURCHASE AND PUT TO USE OF THE ASSETS M ENTIONED IN ASSESSEES REPLY. ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 5 8. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL ON ALL THESE ISSUES BEFORE LD. CIT(A). THE LD. CIT(A) DELE TED ALL THESE DISALLOWANCES AND NOW THE REVENUE IS IN APPEAL BEFO RE US. 9. IT IS SUBMITTED BY THE LD. DR THAT THE AO HAS DI SCUSSED THAT WITH REGARD TO ALL THE FOUR ITEMS OF DISALLOWANCES, NO E XPLANATION/EVIDENCES WERE FURNISHED BEFORE THE AO AND HENCE, THE DISALLO WANCES WERE RIGHTLY MADE BY THE AO. HE ALSO SUBMITTED THAT EVEN IF SOME EVIDENCES WERE FURNISHED BEFORE LD. CIT(A), THE SAME AMOUNT TO ADD ITIONAL EVIDENCES WHICH SHOULD NOT BE ADMITTED BECAUSE SUFFICIENT OPP ORTUNITY WAS PROVIDED BY THE AO. HE SUBMITTED THAT LD. CIT(A) HA S NOT OBTAINED REMAND REPORT AND HENCE DELETION OF DISALLOWANCES I S NOT JUSTIFIED AND HENCE, THE ORDER OF THE LD. CIT(A) SHOULD BE REVERS ED AND THAT OF THE AO SHOULD BE RESTORED. 10. AS AGAINST THIS, THE LD. AR SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITTED THAT COPY OF LEDGER ACCOUNT OF DEAD STOCK EXPENSES IS AVAILABLE ON PAGES 142 TO 160 AND COPY OF LEDGER AC COUNTS OF LAND RESTORATION EXPENSES IS AVAILABLE AT PAGES 161 TO 1 67 OF THE PAPER BOOK. REGARDING LEDGER ACCOUNT OF STAMP DUTY EXPENSES, IT WAS SUBMITTED THAT IT IS AVAILABLE ON PAGES 168 TO 171 OF THE PAPER BO OK. ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 6 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. W E FIND THAT THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF DEAD STOC K HAD BEEN DELETED BY THE LD. CIT(A) OBSERVING THAT THE EXPENSES PERTA IN TO SPARES CONSUMED SUCH AS CHAIRS, TABLES, UTENSILS, TEMPORARY STRUCTU RES ETC. USED ON VARIOUS SITES OF THE ASSESSEE COMPANY. WHEN WE EXAMINE THE DETAILS OF DEAD STOCK EXPENSES WHICH ARE AVAILABLE ON PAGES 142 TO 160 OF THE PAPER BOOK, WE FIND THAT IT INCLUDES EVEN EXPENSES OF RS. 19,700/- INCURRED BY THE ASSESSEE AGAINST BILL FOR ONE SONY COLOUR TV AN D ONE KELVINATOR REFRIGERATOR ON 17.10.2006. WE ALSO FIND THAT PAYME NT OF RS.10,744/- HAS BEEN MADE FOR PURCHASE OF OFFICE TABLE ON 16/12/200 6, AN AMOUNT OF RS.12,300/- HAS BEEN PAID ON 22/12/2006 FOR PURCHAS E OF BATTERY 150 AMP FOR OFFICE, AN AMOUNT OF RS.10,000/- HAS BEEN P AID FOR PURCHASE OF ONE TELEVISION (CTV 21) FROM KATARA ENTERPRISES ON 22/12/2006, AND AN AMOUNT OF RS.35,000/- WAS DEBITED WITH THE NARRATIO N BEING AMOUNT PAYABLE TO PARTY AGAINST OUR SCRAP MATERIAL SELLING AS PER ATTACHED HEREWITH AND AGAIN ON 19.3.2007, AN AMOUNT OF RS.1 5,000/- WAS DEBITED WITH THE NARRATION BEING AMOUNT INCURRED TO PARTY AGAINST HIS EXP. AT SITE AS PER ATTACHED HEREWITH VOUCHER DT.21.02. AND RS. 38,050/- WAS DEBITED WITH SIMILAR NARRATION. THIS DISALLOWANCE WAS DELET ED BY THE LD. CIT(A) ON GENERAL BASIS THAT HE IS UNABLE TO AGREE WITH TH E AO THAT SUCH ITEMS WOULD RESULT IN BENEFIT OF ENDURING NATURE. CONSIDE RING THESE FACTS, WE ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 7 FEEL THAT THE DISALLOWANCE WAS RIGHTLY MADE BY THE AO AND THE ORDER OF LD. CIT(A) IS NOT SUSTAINABLE IN THE FACTS AND CIRCUMST ANCES OF THE CASE. EXPENSES INCURRED FOR PURCHASE OF TV, REFRIGERATOR, BATTERY AND OFFICE TABLE ETC. ARE TO BE CAPITALIZED AND THE SAME IS NO T ALLOWABLE AS REVENUE EXPENDITURE. HENCE GROUND NO.1 IS ALLOWED. 12. REGARDING GROUND NO.2, WE FIND THAT AO HAS TREA TED THE EXPENDITURE INCURRED OF RS.79,41,759/- BY THE ASSES SEE ON LAND RESTORATION AS CAPITAL EXPENSES. WE FIND THAT THE DISALLOWANCE WAS MADE BY THE AO ON THE BASIS THAT AFTER ISSUE OF SHOW CAUSE NOTICE BY HIM NO REPLY WAS SUBMITTED BY THE ASSESSEE BEFORE AO AS TO WHY THESE EXPENSES INCURRED BY THE ASSESSEE ON LAND RESTORATION BE NOT TREATED AS CAPITAL EXPENDITURE. THIS SHOWS THAT NO DETAIL WHATSOEVER OR EXPLANATION WAS FURNISHED BEFORE THE AO IN THIS REGARD. WE ALSO FIND THAT ASSESSEE H AS SUBMITTED THE DETAILS BEFORE LD. CIT(A) AND THE ISSUE WAS DECIDED BY SIMP LY ACCEPTING THE ARGUMENT OF THE LD. AR OF THE ASSESSEE WITHOUT EXAM INING THE DETAILS AND EVIDENCE AND WITHOUT OBTAINING ANY REMAND REPORT FR OM THE AO. WE ALSO FIND THAT THIS WAS AN ARGUMENT BEFORE THE LD. CIT(A ) THAT THE EXPENSES ARE INCURRED BY THE ASSESSEE FOR LAND LEVELING WHICH WE RE EXCAVATED IN THE COURSE OF LAYING PIPELINES. WE ALSO FIND THAT THE P ROFIT & LOSS ACCOUNT OF THE ASSESSEE IS APPEARING ON PAGE NO.95 OF THE PAPE R BOOK, AS PER WHICH, ASSESSEE HAS SHOWN INCOME FROM OPERATIONS OF RS.635 .159 LACS AND HAS ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 8 SHOWN INCREASE/(DECREASE) IN CLOSING STOCK OF RS.13 .047 LACS. THE DETAILS OF INCREASE/(DECREASE) IN STOCK ARE SHOWN IN SCHEDU LE AT PAGE 99 OF THE PAPER BOOK WHEREIN CLOSING STOCK WAS SHOWN AT RS.25 .950 LACS WHEREAS OPENING STOCK WAS SHOWN AT RS.12.902 LACS. NOW THE QUESTION IS AS TO WHETHER THE RECEIPT ON ACCOUNT OF LAYING OF PIPE LI NES IN RESPECT OF WHICH IT IS CLAIMED THAT THE LAND LEVELING EXPENSES WERE INCURRED HAVE BEEN SHOWN AS INCOME IN THE PRESENT YEAR OR NOT HAS NOT COME OUT FROM THE RECORD. THIS IS VERY IMPORTANT ASPECT BECAUSE IF TH E RECEIPTS ON THIS ACCOUNT ARE NOT DECLARED AS INCOME IN THE PRESENT Y EAR THEN EVEN IF IT IS ACCEPTED THAT THESE EXPENSES ARE IN CONNECTION WITH LAYING OF PIPE LINES, THE SAME HAS TO BE ADDED TO THE VALUE OF CLOSING ST OCK AND IT WILL NOT BE ALLOWABLE AS EXPENDITURE IN THE PRESENT YEAR. THERE IS NO FINDING OF LD. CIT(A) IN HIS ORDER ON THIS ASPECT. HENCE, WE FIND THAT THE ORDER OF LD. CIT(A) IS NOT SUSTAINABLE. CONSIDERING THE FACTS OF THE PRESENT CASE, WE FEEL THAT IN THE INTEREST OF JUSTICE, THIS MATTER S HOULD GO BACK TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION. WE ORDER ACCORDI NGLY. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. LD. CIT(A) SHOULD DECIDE THIS ISSUE AFRESH IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVI DING ADEQUATE OPPORTUNITY TO BOTH SIDES. 13. THE THIRD ISSUE AS PER GROUND NO.3 OF APPEAL IS REGARDING TREATMENT OF STAMP DUTY EXPENSES INCURRED BY THE ASSESSEE OF RS.9,02,150/-. THE ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 9 STAMP DUTY EXPENSES WERE TREATED AS CAPITAL EXPENDI TURE BY THE AO BECAUSE NO EXPLANATION WHATSOEVER WAS FURNISHED BY THE ASSESSEE IN SPITE OF ISSUE OF SHOW CAUSE NOTICE BY THE AO. THE DETAIL S OF THESE EXPENSES ARE AVAILABLE ON PAGES 168 TO 171 OF THE PAPER BOOK . AS PER THESE DETAILS, ON 21.11.2006, AN AMOUNT OF RS.3,01,250.00 HAS BEE N DEBITED WITH THE NARRATION BANK CHARGES AS PER ATTACHED ICICI BANK AND RS.6,00,900.00 HAS BEEN DEBITED ON 6.3.2007 WITH THE NARRATION BE ING AMOUNT PAID TO PARTY FOR THE STAMPING EXP. AS PER ATTACHED VOUCHER HEREWITH. HENCE WE FIND THAT EVEN IN THE PAPER BOOK, THERE IS NO MENTI ON WHATSOEVER REGARDING NATURE OF STAMP DUTY EXPENSES AND PARTIES OF THESE EXPENSES. THIS DISALLOWANCE WAS DELETED BY THE LD. CIT(A) ON THE BASIS THAT ON PERUSAL OF THE EVIDENCE FILED, IT IS SEEN THAT THE STAMP DUTY EXPENSES HAVE BEEN INCURRED FOR OBTAINING WORKING CAPITAL, TEMPOR ARY LOANS AND EXTENSION OF ALREADY EXISTING LOAN OF ICICI BANK. B UT THIS IS NOT CLEAR AS TO WHETHER LD. CIT(A) HAS EXAMINED THE EVIDENCE IN THIS REGARD AND IT IS ALSO SEEN THAT HE HAS NOT OBTAINED REMAND REPORT OF AO ON EACH EVIDENCE FILED BEFORE HIM. THE LD. CIT(A) HAS REPRODUCED THE SUBMISSION MADE BY THE ASSESSEE BEFORE HIM ON PAGES 10 & 11 OF HIS ORD ER AND IN THIS SUBMISSION ALSO, CONTENTIONS ARE RAISED BUT THERE I S NO WHISPER REGARDING THE EVIDENCE IN RESPECT OF THESE CONTENTIONS. MEREL Y MAKING THIS CONTENTION THAT STAMP DUTY EXPENSES WERE INCURRED F OR OBTAINING LOAN CANNOT BE ACCEPTED UNLESS THE SAME IS SUPPORTED BY SOME EVIDENCE. SINCE ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 10 THERE IS NO WHISPER IN THE ORDER OF LD. CIT(A) OR I N THE SUBMISSION MADE BEFORE LD. CIT(A) ABOUT EVIDENCE AND NO REPLY OR EV IDENCE WAS PRODUCED BEFORE THE AO, THE DISALLOWANCE MADE BY THE AO IS J USTIFIED AND THE ORDER OF LD. CIT(A) FOR DELETING THE ADDITION IS NO T SUSTAINABLE. WE, THEREFORE, REVERSE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE AO. THIS GROUND OF REVENUE IS ALLOWED. 14. REGARDING GROUND NO.4, WE FIND THAT THE DEPRECI ATION WAS DISALLOWED FOR THE REASONS THAT THE ASSESSEE COULD NOT PRODUCE EVIDENCE REGARDING THE PURCHASE OF ASSETS OR EVIDENCE IN RES PECT OF PUTTING INTO USE OF THE ASSETS. THE LD. CIT(A) HAS DELETED THIS DISA LLOWANCE ON THE BASIS THAT ON PERUSAL OF THE FACTS OF THE CASE. IT IS SEE N THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD FILED MAJO RITY OF THE BILLS IN RESPECT OF ADDITION TO ASSETS DURING THE YEAR. HE A LSO NOTED THAT ASSESSEE HAD ALSO EXPLAINED THAT DUE TO SHIFTING BETWEEN DEL HI AND AHMEDABAD, CERTAIN BILLS COULD NOT BE TRACED AT THE TIME OF AS SESSMENT PROCEEDINGS AND HENCE COULD NOT BE SUBMITTED. HE FURTHER OBSERVED T HAT PAYMENT WAS MADE BY CHEQUE AND THEY WERE DULY SUPPORTED BY GATE INWARD ENTRY. BUT THERE IS NO MENTION IN HIS ORDER OF DETAILS OF THOS E BILLS WHICH COULD NOT BE PRODUCED BEFORE THE AO IN THE COURSE OF ASSESSME NT PROCEEDINGS BECAUSE OF SHIFTING OF OFFICE FROM DELHI TO AHMEDAB AD AND THERE IS NO FINDING THAT THOSE BILLS WERE PRODUCED BEFORE HIM. WE FAIL TO UNDERSTAND ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 11 THAT EVEN IF SOME BILLS ARE MISPLACED, THE SAME CAN BE FURNISHED BY OBTAINING DUPLICATE COPIES OF BILLS FROM THE CONCER NED SUPPLIERS. NO SUCH BILL HAS BEEN PRODUCED BY THE ASSESSEE BEFORE LD. C IT(A) OR EVEN BEFORE US. CONSIDERING THE FACTS OF THE PRESENT CASE, WE F EEL THAT THE ORDER OF LD. CIT(A) ON THIS ISSUE IS ALSO NOT SUSTAINABLE BECAUS E THE SAME IS WITHOUT ANY BASIS. SIMPLY BECAUSE THE PAYMENT IS MADE BY CH EQUE AND SOME ENTRIES ARE MADE IN THE INWARD REGISTER, IT CANNOT BE ACCEPTED THAT THE ASSETS WERE PROCURED AND WERE PUT TO USE AND HENCE DEPRECIATION IS ALLOWABLE. THE ASSESSEE HAD TO ESTABLISH TWO THINGS I.E. ACQUISITION OF ASSETS AND ITS PUTTING INTO USE WHICH IS NOT DONE I N THIS CASE. WE THEREFORE, REVERSE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE AO. GROUND NO.4 OF REVENUE IS ALLOWED. 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED IN THE TERMS INDICATED ABOVE. ORDER WAS PRONOUNCED IN OPEN COURT ON 25/10/2011. SD/- SD/- (T.K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, MAHATA/- ITA NO.3076/AHD/2010 ASST. YEAR 2007-08 12 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 05/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 24/10/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .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 ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..