ACIT, UDAIPUR V. M/s. Ashok Kumar Devendra Meel Ragini, UDAIPUR

ITA 330/JODH/2009

• Counselvise Citation: 33023314 RSA 2009
• Duration Of Justice: 4 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 12-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Business expenditure; Principle of natural justice; Proportionate interest; Revenue expenditure
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.330/JODH/2009 ASSESSMENT YEAR:2006-07 PAN NO. AAAAA5311K ASSISTANT COMMISSIONER OF INCOME TAX, VS. M/S ASHO K KUMAR DEVENDRA MEEL CIRCLE-2, UDAIPUR RAGINI SUWALKA & PARTY, JAIPU R DAUSA GROUP, HO-101, VARDHMAN COMPLEX, BHUPALPURA, UDAIPUR. (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI MAHESH KUMAR (D.R.). ASSESSEE BY : SHRI P.C. PARWAL. DATE OF HEARING : 25/06/2013 DATE OF PRONOUNCEMENT : 06/08/2013 ORDER PER N. K. SAINI: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 18/03/2009 OF THE LD. CIT (A), UDAIPUR. THE FOLLOWI NG GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN:- 1. DIRECTING THE AO TO RESTRICT THE DISALLOWANCE OF PROPORTIONATE INTEREST OUT OF INTEREST PAYMENT TO 12% INSTEAD OF 15% AS DISALLOWED BY THE AO ON ACCOUNT OF INTEREST FREE LO ANS. 2. PROVIDING A RELIEF OF RS. 5,55,033/- OUT OF TOTA L ADDITION OF RS. 10,82,872/- MADE BY THE AO UNDER THE HEAD VEHICLE INSURANCE AND REGISTRATION EXPENSES. 3. DELETING THE ADDITION OF RS. 10,98,197/- ON ACCO UNT OF UNDER VALUATION OF CLOSING STOCK. 4. DIRECTING THE AO TO ALLOW DEPRECIATION @ 50% ON THE WDV OF CARATS. 2 2. THE FIRST ISSUE IN THIS APPEAL RELATES TO THE RE STRICTION OF DISALLOWANCE OF PROPORTIONATE INTEREST OUT OF INTEREST PAYMENT TO 1 2% INSTEAD OF 15% DISALLOWED BY THE A.O. FACTS RELATING TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE IS A LIQUOR CONTRACTOR AND TRADING IN COUNTRY LIQUOR, IMFL AND BEER IN JODHPUR REGION. THE ASSESSEE FURNISHED RETURN OF INCOME ON 13/3/2007 DE CLARING TOTAL INCOME OF RS. 1,95,30,790/-, WHICH WAS PROCESSED U/S 143(1) OF TH E INCOME TAX ACT (HEREINAFTER TO BE REFERRED AS THE ACT) ON 31/3/200 8. LATER ON THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER ON PERUSAL OF BALANCE SHEET, NOTI CED THAT THE ASSESSEE HAS ADVANCED FUNDS TO MANY PARTIES VIZ. RAJA RAM RAJEND RA B & PARTY AND ASHOK KUMAR DEVENDRA MEEL & PARTY. HE FURTHER NOTICED THA T THE ASSESSEE WAS PAYING INTEREST @ 15% TO 18% ON VARIOUS OVERDRAFTS ACCOUN TS, THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN THE REASONS FOR NOT CHARGING T HE INTEREST ON LOANS/FUNDS ADVANCED TO VARIOUS OTHER AOPS AND PARTIES. THE ASS ESSEE SUBMITTED THAT BASICALLY, IT WAS WITHDRAWALS BY THE MEMBERS OF THE EXISTING AOP FROM THEIR CAPITAL CONTRIBUTION, ON WHICH NO INTEREST HAS BEEN PAID BY THE ASSESSED BUT FOR CONVENIENCE OF THE ACCOUNTING PROCEDURE, IT WAS DEB ITED TO THE NEW AOP. IT WAS FURTHER SUBMITTED THAT IN ADDITION TO THE MEMBERS CAPITAL, THE ASSESSEE WAS ALSO HAVING NON INTEREST BEARING FUNDS. THE A.O. DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE WAS SUFFERING HUGE INTEREST BURDEN ON ONE HAND AND IT HAS ADVANCED INTEREST FRE E LOANS TO OTHER AOPS AND INDIVIDUALS, ON THE OTHER HAND. THE ASSESSING OFFIC ER HAD GIVEN A CHART SHOWING DATE, AMOUNT, CUMULATIVE AMOUNT, NUMBER OF DAYS AND RATE OF INTEREST CHARGED AT PAGES 3 TO 5 OF THE ASSESSMENT ORDER, WHEREIN THE A MOUNT OF INTEREST ON 3 ADVANCES MADE TO THE PARTIES HAD BEEN WORKED OUT AT RS. 6,44,515/-. THE SAID AMOUNT WAS DISALLOWED OUT OF THE INTEREST CLAIMED BY THE ASSESSEE AND ADDED TO THE TOTAL INCOME. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER MADE THE ADDIT ION ON ACCOUNT OF INTEREST IN HIGHLY HANDED MANNER AS PER HIS CONVENIENCE BY TREA TING THE SAME AS NON BUSINESS EXPENDITURE FOR MERE WANT OF EVIDENCE REGA RDING BUSINESS EXIGENCY, WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE, UNWARRANTED AND BAD IN LAW. IT WAS CONTENDED THAT THE INTEREST CHARGED WAS ON HIGH ER RATE @ 15% ON THE SAID INTEREST FREE ADVANCE, WITHOUT CONSIDERING THE AVER AGE RATE OF INTEREST APPLICABLE IN THE ASSESSEES CASE. IT WAS FURTHER CONTENDED TH AT ON THE SAME BASIS, THE ASSESSING OFFICER DISALLOWED THE INTEREST @ 12% ONL Y IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2007-08. THEREFORE, THE INTERES T DISALLOWED @ 15% WAS ON HIGHER SIDE AND DESERVED TO BE DELETED/REDUCED. 4. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, OBSERVED THAT ON GOING THROUGH THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2007-08 IN THE CASE OF ANOTHER AOP (M/S DILIP KUMAR & PARTY, AJMER GROUP), THE ASSESSING OFFICER HIMSELF DISALLOWED PROPORTIONATE INTEREST @ 12%. THE LEARNED CIT(A) WAS OF THE VIEW THAT THE DISALLOWANCE MADE @ 15% WAS ON HIGHER SIDE AND HE CONSIDERED IT REASONABLE TO RESTRICT THE DIS ALLOWANCE @ 12% OUT OF THE INTEREST PAYMENT. NOW THE DEPARTMENT IS IN APPEAL . 4 5. THE LEARNED A.R. SUPPORTED THE ORDER OF THE ASSE SSING OFFICER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUPPORTED THE IMPUGNED PASSED BY THE LEARNED CIT(A). 6. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND THE MATERIAL AVAILABLE ON RECORD, IN THE PRESENT CASE, IT APPEAR S THAT THE ASSESSING OFFICER HIMSELF MADE THE DISALLOWANCE @ 12% IN THE SUCCEEDI NG YEAR I.E. 2007-08. IT WAS CLAIMED THAT THE FACTS FOR THE YEAR UNDER CONSI DERATION WERE SIMILAR WITH THE FACTS INVOLVED IN THE ASSESSMENT YEAR 2007-08. THE LEARNED CIT(A) ALSO POINTED OUT THAT IN ANOTHER COMPARABLE CASE HAVING SIMILAR FACTS, THE ASSESSING OFFICER HIMSELF DISALLOWED THE PROPORTIONATE INTEREST @ 12% . WE, THEREFORE, DID NOT SEE ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 7. THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE RELIEF ALLOWED BY THE LEARNED CIT(A) OUT OF THE ADDITION MADE BY THE ASSE SSING OFFICER UNDER THE HEAD VEHICLE INSURANCE AND REGISTRATION EXPENSES. THE FA CTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT THE ASSESSEE HAD DEBITED RS. 12,73,967 /- UNDER THE HEAD VEHICLE REGISTRATION AND INSURANCE EXPENSES AND THE DETAILS FILED BY THE ASSESSEE REVEALED THAT THE ENTIRE AMOUNT WAS RELATED TO THE INSURANCE AND REGISTRATION CHARGES PAID FOR NEW VEHICLES PURCHASED DURING THE YEAR, THEREFORE, IT SHOULD HAVE BEEN CAPITALISED. WHEN CONFRONTED, THE ASSESSE E SUBMITTED THAT THE VEHICLE INSURANCE AND REGISTRATION EXPENSES WERE INCURRED F OR NEW ASSETS PURCHASED DURING THE YEAR, THE ASSESSEE AOP WAS FORMED FOR ON E YEAR ONLY AS THE CONTRACT FOR SOLE SELLING RIGHT OF LIQUOR WAS AWARDED TO THE ASSESSEE FOR ONE YEAR AND THE ASSETS PURCHASED DURING THE YEAR WERE USED WHOLLY A ND EXCLUSIVELY FOR ITS 5 BUSINESS PURPOSES. IT WAS FURTHER STATED THAT THE A SSESSEE COULD NOT CLAIM DEPRECIATION ON CAPITALISATION OF THE NEXT YEAR, TH EREFORE, DEBITED ALL THE EXPENSES IN THE PROFIT AND LOSS ACCOUNT TREATING THE SAME AS BUSINESS EXPENDITURE U/S 37 OF THE ACT. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE CLAIMED THE EXPENSES ON THE REGISTRATION AND INSURA NCE OF THE VEHICLES AS REVENUE IN NATURE BUT THE SAME WERE THE ITEMS TO BE CAPITALIZED BECAUSE THEY RELATE TO THE ACQUISITION OF NEW ASSETS, NOTWITHSTA NDING THE FACT THAT THE ASSESSEE AOP WAS AWARDED CONTRACT FOR ONE YEAR ONLY. THE ASS ESSING OFFICER ACCORDINGLY DISALLOWED RS. 12,73,967/-, HOWEVER, ALLOWED DEPREC IATION @ 15% AND ADDED THE RESULTANT AMOUNT OF RS. 10,82,872/- TO THE TOTAL IN COME OF THE ASSESSEE. 8. BEING AGGRIEVED THE ASSESSEE, CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT OUT OF TOTAL EXPENDITURE OF RS. 12,73,967/-, A SUM OF RS. 5,55,033/- RELATED TO THE VEHICLE INSURANCE CHARGES , WHICH WAS IN THE NATURE OF THE REVENUE EXPENDITURE AND TO BE PAID BY THE ASSES SEE FOR EVERY YEAR AND THE BALANCE AMOUNT OF RS. 7,18,934/- WAS RELATED TO THE GOVERNMENT TAXES, WHICH WERE ALSO OF REVENUE NATURE. IN SUPPORT OF THE ABOV E, A COPY OF LEDGER ACCOUNT WAS FURNISHED. 9. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMI SSIONS AND THE DETAILS FURNISHED BY THE ASSESSEE OBSERVED THAT THE ASSESSE E INCURRED INSURANCE CHARGES OF RS. 5,55,033/- AND REGISTRATION AND TAXE S OF RS. 7,18,934/- AT THE TIME OF ACQUISITION OF NEW VEHICLES. HE WAS OF THE OPINI ON THAT THE REGISTRATION EXPENSES BEING ONE TIME EXPENDITURE WERE OF CAPITAL IN NATURE AND THE INSURANCE EXPENSES OF VEHICLE WERE TO BE INCURRED YEAR AFTER YEAR, THEREFORE, THOSE WERE REVENUE IN NATURE. HE ACCORDINGLY, DELETED THE DISA LLOWANCE TO THE EXTENT OF RS. 6 5,55,033/- AND CONFIRMED THE DISALLOWANCE OF RS. 7, 18,934/- SUBJECT TO DEPRECIATION @ 15%. NOW THE DEPARTMENT IS IN APPEAL . 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. IN THE PRESENT C ASE, IT IS NOTICED THAT THE A.O. DISALLOWED ALL THE EXPENSES INCURRED BY THE ASSESSE E ON ACCOUNT OF INSURANCE AND REGISTRATION CHARGES FOR THE ASSETS ACQUIRED FI RST TIME DURING THE YEAR UNDER CONSIDERATION. HOWEVER, HE IGNORED THIS VITAL FACT THAT INSURANCE CHARGES WERE TO BE PAID YEAR AFTER YEAR ANNUALLY SO THOSE WERE REVE NUE IN NATURE. IN THE INSTANT CASE, IT IS NOT THE CASE OF THE ASSESSING OFFICER T HAT THOSE EXPENSES WERE NOT INCURRED FOR THE BUSINESS PURPOSES, THEREFORE, THE LEARNED CIT(A) WAS FULLY JUSTIFIED IN DELETING THE DISALLOWANCE TO THE EXTEN T OF RS. 5,55,033/-, WHICH RELATED TO THE ANNUAL INSURANCE EXPENSES. WE, THEREFORE, DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 11. THE NEXT ISSUE VIDE GROUND NO. 3 RELATES TO TH E DELETION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDER VALUAT ION OF CLOSING STOCK. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSI NG OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN CLOSING STOCK OF RS. 2,15,95,145 /- IN THE TRADING ACCOUNT OF IMFL/BEER. HE ASKED THE ASSESSEE TO FURNISH DETAILS OF VALUATION OF CLOSING STOCK. FROM THE SAID DETAILS, THE ASSESSING OFFICER NOTICE D THAT THE PERMIT FEES, WHICH WAS PAYABLE ON PER BULK LITER BASIS HAD NOT BEEN IN CLUDED IN THE VALUATION OF CLOSING STOCK. HE WAS OF THE VIEW THAT PERMIT FEES PAID WAS A PART OF PURCHASE PRICE AND OUGHT TO HAVE BEEN INCLUDED IN ARRIVING A T THE VALUE OF CLOSING STOCK. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON' BLE SUPREME COURT IN THE 7 CASE OF CIT VS. BRITISH PAINTS INDIA LIMITED 188 I TR 44. THE ASSESSING OFFICER, ACCORDINGLY MADE THE ADDITION OF RS. 10,98,197/-. 12. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN LIQUOR WHOLESALE AND R ETAIL TRADING BUSINESS AND IN THIS TYPE OF BUSINESS, STOCK HAS TO BE TRANSFERRED FROM GODOWN TO ITS SHOPS ACCORDING TO THEIR REQUIREMENTS ON DAY TO DAY BASIS AND SINCE THE CONTRACT WAS FOR ONE YEAR ONLY, THE ASSESSEE HAD TO SURRENDER TH E STOCK WHICH REMAINED AT THE END OF FINANCIAL YEAR ON THE NEXT DAY ON PURCHASE C OST, THEREFORE, INCLUSION OF PERMIT FEE FOR VALUATION OF CLOSING STOCK WHICH RE MAINED AT THE CLOSE OF YEAR WOULD NOT BE THE OPENING STOCK OF THE ASSESSEE. IT WAS EXPLAINED THAT THE PERMIT FEE WAS PAID FOR A TRANSIT PERMIT FOR TRANSMISSION OF LIQUOR FROM GODOWN TO SHOPS FOR ULTIMATE SALE SO IT WAS INDIRECT EXPENSES FOR T HE ASSESSEE. IT WAS FURTHER STATED THAT AS THE STOCK REMAINING AT THE CLOSE OF YEAR WAS NOT OF THE ASSESSEE, THEREFORE, THE QUESTION OF INCLUDING THE PERMIT FEE OR EXPENSES FOR VALUATION DOES NOT ARISE. 13. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, OBSERVED THAT AS THE BUSINESS OF THE ASSESSEE WAS F OR ONE YEAR ONLY, THEREFORE, STOCK WHICH REMAINED AT THE END OF THE YEAR COULD N OT BE THE OPENING STOCK OF THE ASSESSEE BECAUSE THE SALE HAVE TO BE SURRENDERED/RE TURNED ON THE NEXT DAY TO THE EXCISE DEPARTMENT/DISTILLERY AS EACH YEAR WAS S EPARATE YEAR AND PERMIT FEE FOR EACH YEAR WAS ALSO DIFFERENT. THEREFORE, WHATEV ER PERMIT FEE WAS PAID BY THE ASSESSEE WAS FOR THE SALE MATERIALISED. THE LEARNED CIT(A() HELD THAT THE ASSESSEE WAS RIGHT IN NOT INCLUDING THE PERMIT FEE FOR VALUATION OF CLOSING STOCK 8 ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFF ICER WAS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 14. THE LEARNED D.R. ALTHOUGH SUPPORTED THE ORDER O F THE ASSESSING OFFICER BUT COULD NOT CONTROVERT THE OBSERVATIONS GIVEN BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER. 15. IN HIS RIVAL SUBMISSIONS, THE LEARNED COUNSEL F OR THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 16. AFTER CONSIDERING THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED I N TREATING THE PERMIT FEE RELATING TO THE TRANSMISSION OF THE STOCK FROM GODOWN TO THE SHOPS AS A PART OF THE CLOSING STOCK. MOREOVER, WHATEVER PERMIT FEE WAS PAID BY TH E ASSESSEE THAT WAS FOR THE SALE MATERIALISED, THEREFORE IT COULD NOT HAVE BEEN ADDED WHILE VALUING THE CLOSING STOCK, WHICH WAS TO BE SURRENDERED/ RETURNE D ON THE NEXT DAY FOLLOWING THE END OF THE YEAR TO THE EXCISE DEPARTMENT/DISTIL LERY AT COST PRICE. WE , THEREFORE, DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 17. THE LAST ISSUE VIDE GROUND NO. 4 RELATES TO THE DEPRECIATION ON WRITTEN DOWN VALUE OF THE CARATS. THE FACTS RELATING TO THI S ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS , NOTICED THAT THE ASSESSEE IN THE REVISED DEPRECIATION CHART CLAIMED THE DEPRE CIATION AT RS. 37,000/- ON CARATS, BASED ON THE ADJUSTMENT MADE ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED IN THE ASSESSMENT YEAR 2005-06. HE FURTHER NOTICED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON CARATS @ 100%, HOWEVER, IT WAS ALLOWABLE @ 50%. 9 HE ACCORDINGLY, ADDED THE DIFFERENCE OF RS. 1,26,92 4/- TO THE INCOME OF THE ASSESSEE. 18. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT SOME DISALLOWANCES WERE MADE ON ACCOUNT OF DEPRECIA TION ON CARATS AND ACCORDINGLY WRITTEN DOWN VALUE OF FIXED ASSETS WAS CHANGED AS ON 31/3/2005 AND AS THE ASSESSEE FILED ITS INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2006-07 ON 13/3/2007 I.E. BEFORE FINALISATION OF THE SCRUTINY ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06, THEREFORE, IT COULD NOT TAKE EFFECT O F THE ABOVE CHANGE IN WRITTEN DOWN VALUE OF THE FIXED ASSETS IN THE RETURN OF INC OME FOR THE ASSESSMENT YEAR 2006-07. HOWEVER, DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE FILED REVISED DEPRECIATION CHART AND ALSO FURNISHED THE ORIGINAL DEPRECIATION CHART BUT THE ASSESSING OFFICER DID NOT CONSIDER THE SAME . 19. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEPRECI ATION ON CARATS AS CLAIMED BY THE ASSESSEE BY OBSERVING IN PARA 23 OF THE IMPUGNE D ORDER AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMI SSIONS OF THE LD. A/R AND FOUND THAT THE A.O. TAKEN THE DIFFERENCE OF RS. 1,69,401/- AS ADDITION ON ACCOUNT OF EXCESS CLAIM OF DEPRECIATION. HOWEVER , THE A.O. ALLOWED DEPRECIATION ON COMPUTERS @ 60% AND ALLOWED ADDITIO NAL DEPRECIATION OF RS. 42,477/- AND MADE NET ADDITION OF RS. 1,26,924/ - AS EXCESS CLAIM OF DEPRECIATION. THE DISALLOWANCE MADE BY THE A.O. IS IN ACCORDANCE WITH THE REVISED DEPRECIATION CHART FURNISHED BY THE APPELLA NT. THEREFORE, THE DISALLOWANCE IS CONFIRMED. HOWEVER, ON GOING THROUG H THE ASSESSMENT ORDER IT IS NOTICED THAT THE A.O. DID NOT ALLOW TH E CLAIM OF DEPRECIATION ON CARATS CLAIMED AT RS. 8,37,000/- AS PER REVISED DEP RECIATION CHART. IN THE ORIGINAL DEPRECIATION CHART THE ASSESSEE HAS NOT CL AIMED THE DEPRECIATION THE GROUND THAT THE APPELLANT HAS CLAIMED DEPRECIAT ION @ 100%, THEREFORE, AS PER THE APPELLANT THE WDV WAS NIL FOR THE YEAR U NDER CONSIDERATION. HOWEVER, THE A.O. ALLOWED ONLY 50% DEPRECIATION I.E . RS. 16,74,000/- IN 10 THE ASSESSMENT YEARS 2005-06. THE ASSESSMENT FOR AS SESSMENT YEAR 2005-06 WAS FINALISED AFTER FURNISHING THE RETURN O F INCOME FOR ASSESSMENT YEAR 2006-07, THEREFORE, THE APPELLANT HAS NOT ACCO UNTED FOR THE W.D.V. IN THE DEPRECIATION CHART. FURTHER THE A.O. HAS NOT AL LOWED THE DEPRECIATION ON CARATS ON THE GROUND THAT AGAINST THE DISALLOWAN CE OF 50% DEPRECIATION ON CARAT WAS IN APPEAL. HOWEVER, THE APPELLANT HAS WITHDRAWN THIS GROUND OF APPEAL. AS THE A.O. HAS ALREADY ALLOWED 50% DEPR ECIATION, THERE REMAINS THE W.D.V. AT RS. 16,74,000/- FOR THE YEAR UNDER CONSIDERATION. THEREFORE, THE APPELLANT IS ENTITLED FOR DEPRECIATI ON @ 50% ON THE W.D.V. OF CARATS. THE A.O. IS DIRECTED TO ALLOW DEPRECIATI ON ON CARATS AS CLAIMED BY THE APPELLANT. THE APPEAL IS PARTLY ALLOWED ON T HIS GROUND. NOW THE DEPARTMENT IS IN APPEAL. 20. DURING THE COURSE OF HEARING, THE LEARNED D.R. MERELY SUPPORTED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER BU T COULD NOT REBUT THE OBSERVATIONS OF THE LEARNED CIT(A) BY BRINGING ANY COGENT MATERIAL ON RECORD. IN HIS RIVAL SUBMISSIONS, THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A) AND FURTHER SUBMITTED THAT T HE LEARNED CIT(A) APPRECIATED THE FACTS IN RIGHT PERSPECTIVE AND RIGHTLY DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEPRECIATION. WE, THEREFORE, IN VIEW OF THE ABO VE SUBMISSIONS, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE OBSERVATIONS MAD E BY THE LEARNED CIT(A), WHICH ARE BASED ON THE FACTUAL MATRIX. 21. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISMI SSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 06/08/2013). SD/- SD/- (HARI OM MARATHA) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06/08/2013 *RANJAN 11 COPY FORWARDED TO: 1. APPELLANT- A.C.I.T., CIRCLE-2, UDAIPUR. 2. RESPONDENT- M/S ASHOK KUMAR DEVENDRA MEEL RAGINI SUWALKA & PARTY, UDAIPUR. 3. CIT(A) 4. CIT 5. D.R. 6. THE GUARD FILE (ITA NO. 330/JODH/2009). ASSISTANT REGISTRAR ITAT, JODHPUR.