M/s. Liberty Phosphate Ltd., V. The ACIT., Circle-1(2), Baroda

ITA 3336/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9299 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-11-2010
• Assessment Year: 1994-1995
• Appeal Filed On: 06-10-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKULKUMAR SHRAWAT JUDIC IAL MEMBER AND SHRI N.S. SAINI ACC OUNTANT MEMBER I.T.A. NO. 3336/AHD/2008 ASSESSMENT YEAR :1994-95 LIBERTY PHOSPHATE LIMITED, 74/75, G.I.D.C.,NANDESARI DIST. BARODA-391340. VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(2), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BAARODA. APPELLANT RESPONDENT. PAN NO: AAACL 3600N APPELLANT BY : SHRI SUNIL H. TALATI. RESPONDENT BY : SMT. NEETA SHAH, SR. D.R. ORDER PER SHRI N.S. SAINI, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, BARODA DATE D 14-8-2008 IN APPEAL NO.CAB-I/186/2007-08. 2. THE GROUND NO.1 OF THE APPEAL READS AS UNDER :- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN GRANTING THE DEPRECIATION AT RS.4,58,629/- AS AGAIN ST THE CORRECT DEPRECIATION CLAIMED BY THE APPELLANT OF RS.8,55,25 5/-, WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE ADDITION S OF MACHINERIES OF RS.36,69,035/-. IT IS SUBMITTED THAT ON THE FACTS A ND CIRCUMSTANCES OF THE CASE, THE APPELLANT IS ENTITLED TO FULL CLAIM OF DE PRECIATION OF RS.8,55,255/- AND THE SAME BE ALLOWED. ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 2 3. THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN MANUFACTURE AND TRADING OF SINGLE SUPER PHOSPHATE. THE ASSESSING O FFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS DISALLOWED DEPRECIATION BY O BSERVING AS UNDER :- . IN THIS REGARD, IT IS TO BE NOTED THAT A SEARC H U/S.132 WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 17-12-1996 VIDE WHIC H IT WAS FOUND THAT THE ASSESSEE HAS CLAIMED WRONG DEPRECIATION ON ACCO UNT OF FIXED ASSETS CREATED OVER A PERIOD OF TIME. THEREFORE, ON ACCOUN T OF THESE FACTS, THE SUBMISSIONS OF THE ASSESSEE ARE NOT FOUND TO BE TEN ABLE. FURTHER, THE ASSESSEE HAS FAILED TO FURNISH PARTY-WISE DETAILS O F THE EXPENDITURE INCURRED IN RESPECT OF FABRICATION AND LABOUR JOB. HENCE, THE CLAIM OF THE ASSESSEE IS REJECTED, AND THE DISALLOWANCE MADE VID E ORIGINAL ASSESSMENT ORDER FOR RS.8,55,255/- STANDS AS IT IS. PENALTY U/ S.271(1) INITIATED VIDE ORIGINAL ASSESSMENT ORDER ALSO REMAINS TO UNCHANGED . 4. THE ABOVE DISALLOWANCE WAS CONFIRMED IN APPEAL B Y THE CIT (A). THE ABOVE DISALLOWANCE WAS DELETED BY THE CIT (A) VIDE ORDER NO.CAB-I-540/99-00 DATED 8-2-2001. BEING AGGRIEVED THE REVENUE FILED A PPEAL BEFORE THE TRIBUNAL BEING ITA NO.1711/AHD/2001 AND THE TRIBUNAL; VIDE O RDER DATED 23-2-2007 RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSI NG OFFICER FOR ADJUDICATING THE ISSUE AFRESH BY OBSERVING AS UNDER:- 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MAT ERIAL AVAILABLE ON RECORD. OBJECTIONS OF THE ASSESSING OFFICER WAS TO THE FACT THAT THE ASSESSEE DID NOT FURNISH PARTY-WISE DETAILS OF EXPE NDITURE INCURRED IN RESPECT OF FABRICATION AND LABOUR CHARGES, THEREFOR E, CLAIM OF DEPRECIATION WAS DISALLOWED. CIT (A) HAS REFERRED TO NUMBER OF B ILLS, BUT HAS NOT GIVEN ANY COMMENT ABOUT PARTY-WISE DETAILS, AS ASKED BY T HE ASSESSING OFFICER, THEREFORE, INQUIRY ON THESE LINES REMAINS TO BE CAR RIED OUT. IN VIEW OF THESE FACTS, WE SET ASIDE ISSUE BACK TO THE FILE OF ASSES SING OFFICER TO BE DECIDED AFRESH. 5. IN PURSUANCE TO THE ABOVE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER ISSUED A LETTER NO.BRD/ACIT/CIR.1(2)/LPL/07-08 DATE D 16-11-2007 REQUIRING THE ASSESSEE TO FURNISH THE FOLLOWING BY 22-11-2007:- DEPRECIATION OF RS.8,55,255/- I) PARTY-WISE DETAILS OF THE EXPENDITURE IN RESPECT OF FABRICATION AND LABOUR JOB. ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 3 II) LEDGER COPY OF ACCOUNT, BILLS AND VOUCHERS ETC. , IN RESPECT OF THE PLANT AND MACHINERY AMOUNTING TO RS.36,69,037/-. CE RTIFICATE REGARDING INSTALLATION AND COPY OF LAB OUR CHARGES ACCOUNT IN RESPECT OF PLANT AND MACHINERY INSTALLED SHOULD ALS O BE FURNISHED. III) YOUR LETTER DATED 27-08-1999 IN ORIGINAL. ON 22-11-2007 THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE SHRI ATUL SHAH ATTENDED AND REQUESTED FOR FURTHER TIME OF THREE DA YS TO SUBMIT THE DETAILS/INFORMATION WHICH WAS ALLOWED. DESPITE AMP LE OPPORTUNITY TO THE ASSESSEE FROM 19-10-2007 TO 26-11-2007 THE ASSESSEE DID NOT FURNISH ANY DETAILS BEFORE THE ASSESSING OFFICER AND THEREFORE, THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION OF RS.8,55,255/-. 7. BEING AGGRIEVED THE ASSESSEE CARRIED OUT THE MAT TER IN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE DISALLOWANCE. 8. BEING STILL AGGRIEVED BY THE ORDER OF THE CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE US. THE AUTHORISED REPRESENTATIVE ARGUED TH AT ALL DETAILS WERE FILED BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINA L ASSESSMENT PROCEEDINGS. HE ALSO SUBMITTED THAT THE ASSESSEE IS A LIMITED COMPA NY WHOSE ACCOUNTS ARE AUDITED AND IN THE SCHEDULE OF FIXED ASSETS, THE BR EAK UP OF PLANT AND MACHINERY ACQUIRED BEFORE 30-9-1993 AND AFTER 30-9-1993 ARE S TATED AND HAS BEEN CERTIFIED BY THE AUDITORS. HE THEREFORE, SUBMITTED THAT AS TH E ASSESSEE ITSELF HAS DISCLOSED THE ASSETS WHICH WERE ACQUIRED AFTER 30-9-1993. THE REFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE CLAIM FOR DEPR ECIATION FOR THE WHOLE YEAR ON THE PLANT AND MACHINERY WORTH RS.36,69,035/- FOR TH E REASON THAT THE PLANT AND MACHINERY HAS BEEN ACQUIRED BY THE ASSESSEE AFTER 3 0-9-1993. 9. THE DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAN D ARGUED THAT THE TRIBUNAL IN THE FIRST ROUND OF APPEAL HAS RESTORED BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATING THE SAME AFTER CONSIDERING PARTY-WISE DETAILS OF EXPENDITURE INCURRED IN RESPECT OF FABRICATION A ND LABOUR CHARGES WHICH WAS TO BE SUPPLIED BY THE ASSESSEE TO THE ASSESSING OFFICE R. THE A.O. ALLOWED AMPLE ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 4 OPPORTUNITY TO THE ASSESSEE TO FILE DETAILS AS DIRE CTED BY THE TRIBUNAL BUT THE ASSESSEE FAILED TO DO SO AND THEREFORE, THE A.O. WA S LEFT WITH NO OTHER ALTERNATIVE BUT TO DISALLOW THE CLAIM OF DEPRECIATION OF RS.8,5 5,255/-. 10. WE HAVE HEARD THE RIVAL; SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORDS. IN THE INSTANT CASE, THE ASSESSEE CLAI MED DEPRECIATION ON ADDITION TO PLANT AND MACHINERY AMOUNTING TO RS.36,69,035/- FOR THE WHOLE YEAR AND ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCE EDINGS ALLOWED DEPRECIATION AT 50% OF THE RATE PRESCRIBED IN THE INCOME TAX ACT ON THE GROUND THAT THE ASSESSEE HAS ACQUIRED A NEW PLANT AND MACHINERY AF TER 30-9-1993 AND THAT THE ASSESSEE FAILED TO FURNISH PARTY-WISE DETAILS OF TH E EXPENDITURE INCURRED IN RESPECT OF FABRICATION AND LABOUR JOB AND THEREFORE , THE CLAIM OF THE ASSESSEE THAT MACHINERY WAS ACQUIRED AND USED BEFORE 30-9-1993 CO ULD NOT BE VERIFIED. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) AFTER VERIFYING CERTAIN BILLS ALLOWED THE CLAIM OF THE ASSESSEE FOR DEPRECIATION FOR ENTIRE YEAR. ON FURTHER APPEAL, THE TRIBUNAL OBSERVED THAT THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN ALLOWING THE CLAIM FOR DEPRECIATION FOR THE ENTIRE YEAR BY VERIFYING CERTAIN BILLS AND BY N OT MEETING THE OBJECTIONS OF THE LEARNED ASSESSING OFFICER THAT PARTY-WISE DETAILS O F EXPENDITURE INCURRED IN RESPECT OF FABRICATION AND LABOUR CHARGES WERE NOT PRODUCED BEFORE THE AO FOR VERIFICATION. ACCORDINGLY, THE TRIBUNAL SET ASIDE THE ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR READJUDICATING THE SA ME AFTER VERIFYING THE PARTY- WISE DETAILS OF EXPENDITURE INCURRED IN RESPECT OF FABRICATION AND LABOUR JOB INCURRED IN CONNECTION WITH THE PLANT AND MACHINERY IN QUESTION. IN THE SET ASIDE PROCEEDINGS, THE LEARNED ASSESSING OFFICER ALLOWED AMPLE OPPORTUNITY TO THE ASSESSEE AS STATED IN HIS ORDER BUT THE ASSESSEE FA ILED TO FURNISH THE PARTY-WISE DETAILS OF THE EXPENDITURE INCURRED FOR FABRICATION AND LABOUR JOB IN CONNECTION WITH THE PLANT AND MACHINERY. THEREFORE, THE LEARNE D ASSESSING OFFICER DISALLOWED THE CLAIM OF DEPRECIATION OF RS.8,55,255 /-. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) PARTLY CONFIRM ED THE DISALLOWANCE BY OBSERVING AS UNDER:- ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 5 3.3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. APP ELLANT HAS ALL ALONG BEEN SUBMITTING THAT THE MACHINERY WAS SELF F ABRICATED AND HENCE THERE WAS NO QUESTION OF GIVING PARTY WISE DETAILS OF FABRICATION AND LABOUR EXPENSES. IN LETTER DATED 27-8-1999 AND 16-9-1999 F ILED DURING ASSESSMENT PROCEEDINGS, COPIES OF WHICH HAVE BEEN F ILED WITH FORM NO.35, APPELLANT HAD SUBMITTED DETAILS OF ADDITION OF RS.36,69,035/- TO THE PLANT AND MACHINERY ALONG WITH STATEMENT OF PURCHAS E OF INVOICES. A COPY OF REPORT BY TRIVEDI & ASSOCIATES, REGISTERED VALUE R AND INSPECTION ENGINEERS DATED 16-5-1997 WAS ALSO FILED CERTIFYING THAT THE APPELLANT- COMPANY HAD, DURING 1993-94, INVESTED RS.33,80,000/ - IN PLANT AND MACHINERY ITEMS, I.E. MIXER MACHINE, DEN MACHINE AN D CONVEYOR SYSTEM, PACKING PLANT AND ACID TANK. IN THIS CERTIFICATE, M /S. TRIVEDI AND ASSOCIATES CERTIFIED THAT IT HAD PERSONALLY INSPECT ED ALL THE ITEMS OF PLANT AND MACHINERY. THE APPELLANT ALSO CLAIMS TO HAVE PR ODUCED FIXED ASSETS REGISTER BEFORE THE ASSESSING OFFICER IN SUPPORTED OF INSTALLATION OF THE SAID MACHINERY. APPELLANT HAD ALSO SUBMITTED COPIES OF I NTER OFFICE MEMOS BY FACTORY MANAGER TO THE MANAGING DIRECTOR INTIMATING ABOUT INSTALLATION AND COMMISSIONING OF THE SAID MACHINERY WITH ITS LE TTER DATED 16-9-1999 FILED DURING THE ASSESSMENT PROCEEDINGS. IT IS SEEN THAT SUCCESSIVE ASSESSING OFFICERS HAVE NOT DOUBTED THE PURCHASE OF COMPONENTS WORTH RS.36,69,035/- UNDER THE HEAD SELF FABRICATED PLAN T AND MACHINERIES ; THEIR ONLY DOUBT HAD BEEN REGARDING INSTALLATION AN D COMMISSIONING. APPELLANT HAS SUBSTANTIATED ITS CLAIM REGARDING THE INSTALLATION OF MACHINERY WITH, FIRSTLY APPROVED VALUER, TRIVEDI AN D ASSOCIATES REPORT AND, SECONDLY, INTER OFFICE MEMOS FROM FACTORY MANAGER T O THE M.D. THE APPELLANT HAS EXPLAINED REASONS FOR ABSENCE OF PART Y WISE EXPENSES ON FABRICATION AND LABOUR CHARGES TO BE DUE TO SELF FA BRICATION. IN THIS SITUATION, WHEN PURCHASE OF COMPONENTS WORTH RS.36, 69,035/- IS NOT DISBELIEVED, APPELLANTS CLAIM THAT THE MACHINERY W AS SELF FABRICATED HAS TO BE ACCEPTED. HOWEVER, THE ASSESSING OFFICER IN T HE ORIGINAL ASSESSMENT ORDER HAD ALSO RAISED THE ISSUE OF INSTALLATION OF MACHINERY BEFORE 30-9- 1993 AND DURING 30-9-1993 TO 31-3-1994. IT IS SEEN THAT APPELLANT HAD BIFURCATED THESE ADDITIONS TO PLANT AND MACHINERY I N : (I) 131 COMPONENTS WORTH RS.31,72,759/- UNDER THE H EAD SELF FABRICATED PLANT AND MACHINERIES FOR THE PERIOD 1- 4-1993 TO 30-9-1993 AND (II) 18 COMPONENTS (FROM SL.NO.133 TO 150) WORTH RS .4,96,276/- UNDER THE HEAD SELF FABRICATED PLANT AND MACHINERIES FO R THE PERIOD 1-10-1993 TO 31-3-1994. DEPRECIATION WAS CLAIMED @ 25% FOR FULL YEAR FOR IT EMS AT (I) AT RS.7,93,190/- AND FOR HALF YEAR FOR ITEMS AT (II) A T RS.62,034/-. A PERUSAL OF THE LIST OF 132 COMPONENTS SHOWS THAT PURCHASES WEN T ON UP TO 30-9-1993 ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 6 FOR INSTANCE SL.NO.115 (BILL OF DEEPAK CONSTRUCTION DATED 30-9-1993 FOR RS.8,000/- FOR MACHINERY FOUNDATION), SL. NO.117 (B ILL OF UNIQUE BEARING CENTRE DATED 29-9-1993 FOR RS.8,892/- FOR BEARING), SL. NO.118 (BILL OF ARIHANT ENTERPRISE DATED 29-9-1993 FOR RS.7,933/- F OR POWER CAPACITOR), SL. NOS.120 (SUNDRY GOODS WORTH RS.5,890/- ON 30-9-199 3, SL. NO.122 (BILL OF SHRINATHJI ENGINEERING COMPANY DATED 29-9-1993 FOR RS.1,934/- FOR NUTS AND BOLTS), SR.NO. 127 (BILL OF PREET ENGG. WORKS D ATED 29-9-1993 FOR RS.34,803/- FOR RUBBER LINING) AND SR. NO.129 (BILL OF SHELL CAST CORPORATION DATED 29-9-1993 FOR RS.4,585/- FOR CAST ING). THERE ARE MANY OTHER BILLS IN LIST (I) FALLING IN LAST TEN DAYS OF SEPTEMBER,1993. COMPLETE INSTALLATION BY 28-9-1993 WOULD HAVE REQUIRED ALL T HE COMPONENTS TO BE PURCHASED BEFORE 28-9-1993. WHEN MACHINE FOUNDATION , NUTS AND BOLTS, CASTING, RUBBER LINING ETC., WERE STILL TO BE PURCH ASED ON 28-9-1993; THERE WAS NO QUESTION OF THE MACHINERIES BEING INSTALLED AND READY FOR COMMISSIONING /PUTTING TO USE BY 28-9-1993, AS MENT IONED IN THE IOM. AN INCOMPLETE PLANT COULD NOT HAVE BEEN COMMISSIONED A ND/OR COULD NOT HAVE BEEN READY FOR PUTTING TO USE. THUS, THE IOM D ATED 30-9-1993 STATING THAT ALL THE MACHINERY LIKE MIXER, HOPPER, CONVEYOR BELT, PACKING MATERIAL, PACKING PLANT, ETC. HAD BEEN INSTALLED BY 28-9-1993 AND COMMISSIONED ON THE SAME DAY AND COMMERCIAL PRODUCTION SUCCESSFULLY STARTED ON 29-9- 1993 CANNOT BE RELIED UPON REGARDING ACTUAL DATE OF INSTALLATION/ COMMISSIONING AND PUTTING TO USE OF THE MACHINERY I N QUESTION. MOREOVER, AS PER IOM DATED 27-3-1994 SUBMITTED TO THE ASSESSI NG OFFICER DURING ORIGINAL ASSESSMENT PROCEEDINGS, THE STORAGE CAPACI TY OF SULPHURIC ACID TANK WAS EXPANDED AND IT WAS COMMISSIONED BY 25-3-1 994. THE ACID TANK COMPONENTS ARE INCLUDED IN LIST (I) OF RS.31,7 2,759/-, AS LIST (II) IS IN RESPECT OF PAY LOADER. THERE IS NO DOUBT THAT THE A DDITIONS TO ACID TANK COULD BE COMPLETED ONLY 25-3-1994. THESE ADDITIONS WERE THUS NOT ELIGIBLE FOR DEPRECIATION CLAIM FOR THE FULL YEAR, HAVING BE EN PUT TO USE FOR LESS THAN 180 DAYS. THE REGISTERED VALUER HAD CERTIFIED THE V ALUE OF MACHINERY INSTALLED DURING F.Y. 1993-94 BY PHYSICAL INSPECTIO N ON 15-5-1997 ONLY. THUS, THE CLAIM OF APPELLANT REGARDING MACHINERY WO RTH RS.31,72,759/- BEING INSTALLED AND PUT TO USE BEFORE 30-91993 IS N OT SUBSTANTIATED AND IS NOT ACCEPTED. THE DETAILS OF PURCHASES OF COMPONENT S INDICATE THAT THERE WAS NO POSSIBILITY OF THE MACHINERY BEING READY FOR USE BEFORE 30-9-1993. IT IS THEREFORE, HELD THAT THE ENTIRE MACHINERY WOR TH RS.36,69,035/- WAS PUT TO USE FOR LESS THAN 180 DAYS DURING THE PREVIOUS Y EAR AND IS ENTITLED TO HALF OF THE DEPRECIATION AT NORMAL RATES. SUCH DEPR ECIATION WORKS OUT AT RS.4,58,629/- AS AGAINST RS.8,55,255/- CLAIMED WHIC H MAY BE ALLOWED BY THE ASSESSING OFFICER ACCORDINGLY. 11. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE OF ALLOWANCE OF DEPR ECIATION AT THE RATE 100% CLAIMED BY THE ASSESSEE AND THE AT THE RATE 50% ALL OWED BY THE LEARNED ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 7 ASSESSING OFFICER WAS RESTORED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER BY THE TRIBUNAL FOR VERIFICATION OF PARTY-WISE DET AILS OF THE EXPENDITURE INCURRED IN RESPECT OF FABRICATION AND LABOUR JOB FOR THE PLANT AND MACHINERY IN QUESTION. THE ASSESSEE FAILED TO GIVE THE ABOVE DETAILS TO TH E LEARNED ASSESSING OFFICER AND THEREFORE, HE WAS UNABLE TO VERIFY THE SAME AND DISALLOWED DEPRECIATION OF RS.8,55,255/-. SINCE THE ASSESSEE FAILED TO COMPLY WITH THE DIRECTIONS OF THE TRIBUNAL FOR FURNISHING THE PARTY-WISE DETAILS OF E XPENDITURE INCURRED IN CONNECTION WITH THE PLANT AND MACHINERY, THEREFORE, THE LEARNED ASSESSING OFFICER WAS FULLY JUSTIFIED IN DISALLOWING THE DEPR ECIATION OF RS.8,55,255/-. FURTHER, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WH ILE CONFIRMING THE DISALLOWANCE HAS OBSERVED THAT MANY BILLS FALLING I N THE LAST TEN DAYS OF SEPTEMBER, 1993 AND COMPLETE INSTALLATION BY 28-9-1 993 WOULD HAVE REQUIRED ALL COMPONENTS TO BE PURCHASED BEFORE 28-9-1993. WHEN M ACHINE FOUNDATION, NUTS AND BOLTS CASTING RUBBER LINING ETC., WERE STILL TO BE PURCHASED ON 28-9-1993 THEREFORE, THE MACHINERIES BEING INSTALLED AND READ Y FOR COMMISSIONING/PUTTING TO USE BY 28-9-1993 AS MENTIONED IN THE INTER OFFICE M EMO DOES NOT ARISE. FURTHER, INTER OFFICE MEMO DATED 30-9-1993 STATES THAT MACHI NERY LIKE MIXER, HOPPER, CONVEYOR BELT, PACKING MATERIAL, PACKING PLANT HAD BEEN INSTALLED BY28-9-1993 AND COMMISSIONED ON THE SAME DAY AND COMMERCIAL PRO DUCTION SUCCESSFULLY STARTED ON 29-9-1993 COULD NOT BE RELIED UPON REGAR DING ACTUAL DATE OF INSTALLATION/COMMISSIONING AND PUTTING TO USE OF TH E MACHINERY IN QUESTION. MOREOVER, AS PER INTER OFFICE MEMO DATED 27-9-1994 SUBMITTED TO THE LEARNED ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEE DINGS, THE STORAGE CAPACITY OF SULPHURIC TANK WAS EXPANDED AND IT WAS COMMISSIONED BY 25-3-94. THE ACID TANK COMPONENTS ARE INCLUDED IN LIST (I) OF RS.31,72,759 /-. THEREFORE, THERE IS NO DOUBT THAT ADDITION TO ACID TANK COULD BE COMPLETED ON 25 -3-1994 ONLY. THESE ADDITIONS ARE THEREFORE NOT ELIGIBLE FOR DEPRECIATION FOR THE FULL YEAR AND ACCORDINGLY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DIRECT ED THE LEARNED ASSESSING OFFICER TO ALLOW DEPRECIATION OF RS.4,58,629/- AS A GAINST RS.8,55,255/- CLAIMED BY THE ASSESSEE. NO MATERIAL WAS BROUGHT ON RECORD BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE TO CONTROVERT THE AB OVE FINDINGS OF THE LEARNED ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 8 COMMISSIONER OF INCOME TAX (APPEALS). THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 12. GROUND NO.2 OF THE APPEALS READS AS UNDER :- THE LD. CIT (A) HAS ERRED IN CONFIRMING THE DISAL LOWANCE OF RS.1,10,773/- OUT OF TELEPHONE AND MOTOR CAR EXPENS ES., BEING 50% OF TELEPHONE EXPENSES AND 20% OF MOTOR CAR EXPENSES. I T IS SUBMITTED THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND ELEMEN T OF PERSONAL USE IS NOT THERE AND IS NOT SPECIFICALLY POINTED OUT BY TH E ASSESSING OFFICER OR CIT (A). IN VIEW OF THIS,. THE ADDITION MADE BE DEL ETED OR BE SUBSTANTIALLY REDUCED. 13. THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER DISALLOWED RS.1,10,773/- OUT OF TELEPHONE AND MOTOR CAR EXPENSES ON THE GROUND T HAT ASSESSEE COULD NOT FURNISH COPY OF TERMS OF EMPLOYMENT OF THE DIRECTOR S, BILLS AND VOUCHERS IN RESPECT OF TELEPHONE MOTOR CAR EXPENSES AND PROOF R EGARDING TREATING THE TELEPHONE AND MOTOR CAR EXPENSES AS PERQUISITES IN THE HANDS OF THE DIRECTORS. THE ADDITIONS MADE IN THE ORIGINAL ASSESSMENT WAS D ELETED BY THE CIT (A). ON FURTHER APPEAL BY THE REVENUE THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER BY OBSERVING THAT THERE WAS N O FINDING AS TO WHETHER THE USE OF MOTOR CAR ETC., BY THE DIRECTOR HAD BEEN TRE ATED AS PERQUISITE IN THEIR HANDS. THE ASSESSING OFFICER WAS THEREFORE, DIRECTE D TO VERIFY THE SAME AND RE ADJUDICATE THE ISSUE. 14. THE A.O. THEREFORE, REQUIRED THE ASSESSEE IN TH E SET ASIDE PROCEEDINGS TO FILE COPY OF TERMS OF EMPLOYMENT OF THE DIRECTORS, BILLS AND VOUCHERS IN RESPECT OF TELEPHONE AND MOTOR CAR EXPENSES, PROOF REGARDING T HE TREATING THE TELEPHONE AND CAR EXPENSES AS PERQUISITE IN THE HANDS OF THE DIRECTORS. THE ASSESSEE DID NOT FILE THE ABOVE DETAILS AND EVIDENCES AND THEREF ORE, THE A.O. MADE DISALLOWANCE OF RS.1,10,773/- OUT OF TELEPHONE AND MOTOR CAR EXPENSES. ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 9 15. IN APPEAL, THE CIT (A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOR THE SAME REASONS. 16. THE AR OF THE ASSESSEE BEFORE US RELIED UPON TH E ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1996-97 IN ITA NO.1093/AHD/2000 DATED 12-8-2005 AND SUBMITTED THAT THE TRIBUNAL IN THAT ORDER HAD DELETED THE SIMILAR DISALLOWANCE ON THE GROUND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IROEN AND ENGG. CO. VS. CIT 253 ITR 749 (GUJ.) HAS HELD THAT THERE CANNOT BE A DISALLOWANCE IN THE CASE OF THE A SSESSEE COMPANY FOR PERSONAL USE OF TELEPHONE AND VEHICLE. HE SUBMITTED THAT FOLLOWING THE SAME THE GROUND OF APPEAL OF THE ASSESSEE SHOULD BE ALLOWED. THE DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 17. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT IN THE ORIGINAL ASSESSMENT P ROCEEDINGS THE DISALLOWANCE OUT OF VEHICLE AND TELEPHONE EXPENSES OF RS.1,10,77 3/- CAME TO BE MADE BY THE ASSESSING OFFICER ON THE GROUND OF PERSONAL USE OF TELEPHONE AND VEHICLE BY THE DIRECTORS OF THE COMPANY. IN APPEAL, THE SAME WAS DELETED BY THE CIT(A). ON FURTHER, APPEAL FILED BY THE REVENUE THE TRIBUNAL R ESTORED BACK THE MATTER TO THE FILE OF THE A.O. FOR RE-ADJUDICATING THE SAME AFTER VERIFYING THE FACT THAT WHETHER THE PERSONAL USE OF THE TELEPHONE AND CAR WAS TREAT ED AS PERQUISITE IN THE HANDS OF THE DIRECTORS OR NOT. IN THE SAID SET ASIDE PROC EEDINGS IN SPITE OF AMPLE OPPORTUNITY GIVEN TO THE ASSESSEE FROM 19-10-1993 T O 26-11-1993 THE ASSESSEE FAILED TO FILE THE REQUIRED DETAILS BEFORE THE ASSE SSING OFFICER. THEREFORE, THE A.O. MADE DISALLOWANCE OF RS.1,10,773/- ON ACCOUNT OF PE RSONAL USE OF TELEPHONE AND CAR WHICH WAS CONFIRMED IN APPEAL BY THE CIT(A). 18. IN THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND T HAT THE ASSESSEE FAILED TO COMPLY WITH THE DIRECTIONS OF THE TRIBUNAL TO PRODU CE NECESSARY EVIDENCES TO SHOW THAT THE PERSONAL USE OF TELEPHONE AND CAR BY THE DIRECTORS WAS TREATED AS PERQUISITE IN THE HANDS OF THE DIRECTORS. THEREFORE , THE LOWER AUTHORITIES WERE FULLY JUSTIFIED IN MAKING THE DISALLOWANCE OUT OF T ELEPHONE AND CAR EXPENSES ON ITA.NO.3336/AHD/2008 ASSES SMENT YEAR 1994-95 10 ACCOUNT OF PERSONAL USE BY THE DIRECTORS. WE THEREF ORE, CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THIS GROUND OF APPEAL OF THE AS SESSEE. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 19 TH DAY OF NOVEMBER, 2010. SD/- SD/ - (MUKULKUMAR SHRAWAT) (N.S. SAINI) JUDICIAL MEMBER. ACCOUNTANT MEMBER. AHMEDABAD: ON THIS 19 TH DAY OF NOVEMBER, 2010. COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT (A)-I, BARODA. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER. (DY./ASSISTANT REGISTRAR), ITAT,AHME DABAD. DATE. INITIALS. 1. DRAFTED DICTATED ON 16-11-2010 2. DRAFT PLACED BEFORE AUTHORITY. 18-11-20 10 3. DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER. 19-11- 2010 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 19-11 -2010 5. APPROVED DRAFT COMES TO P.S. 19-11-2010 6. KEPT FOR PRONOUNCEMENT ON 19-11-2010 7. FILE SENT TO THE BENCH CLERK. 19-11- 2010 8. DATE ON WHICH FILE GOES TO AR 9. DATE OF DISPATCH OF ORDER.