The ACIT,Bharuch Circle, Bharuch V. Shri Dhir Mukeshkumar Trilikchand, Bharuch

ITA 357/AHD/2009

• Counselvise Citation: 35720514 RSA 2009
• Duration Of Justice: 3 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-07-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 03-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Audit objection; Reassessment proceedings; Capital expenditure
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JU DICIAL MEMBER ACIT BHARUCH (APPELLANT) VS. SRI DHIR MUKESHKUMAR TRILIKCHAND, BHARUCH (RESPONDENT) PAN NO. AEWPD0634D REVENUE BY : SHRI B.L. YADAV, SR. D.R. ASSESSEE BY : NONE DATE OF HEARING : 17-07-2012 DATE OF PRONOUNCEMENT : 31-08-2012 / ORDER PER : KUL BHARAT, JUDICIAL MEMBER:- THE PRESENT APPEAL OF THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI BARODA DATE D 24-11-2008. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) BARODA HAS ERRED IN ALLOWING CLAIM OF REPAIR S EXPENSES OF RS. 17,80,271/- TREATED BY THE A.O. AS CAPITAL EXPENDIT URE IN VIEW OF HONBLE APEX COURTS DECISION IN THE CASE OF BALLIM AL NAVALKISHOR AND OTHERS V/S CIT 138 CTR 284 (SC) WHERE IT WAS HE LD THAT IN CASE THE COST OF REPLACED PART/REPAIRS CONSTITUTE SUBSTA NTIAL VALUE OF OLD MACHINERY, THE EXPENDITURE IS REQUIRED TO BE CAPITA LIZED RELIEF CLAIMED IN APPEAL. I.T.A. NO 357/AHD/2009 A.Y.:-2004-05 ITA NO. 357/A/2009 OF 2009 A.Y. 2004-05 PAGE NO. ACIT VS. SRI DHIR MUKESHKUMAR TRILIKC HAND 2 THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN THE AFORESAID GROUNDS BE SET ASIDE AND THAT THE ORDER OF THE A.O. BE REST ORED. 3. THE FACTS AS NARRATED IN THE ORDER OF THE LD. CI T(A) IS REPRODUCED BELOW:- 3. IN THIS CASE RETURN OF INCOME AS FILED ON 01-1 1-2004 FOR A.Y. 2004-05 & DECLARING TOTAL INCOME OF RS. 1,96,5 79/- AND THE SAME WAS PROCESSED UNDER SECTION 143(1) ON 31.12.2004. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT ORDER US/S 143(3) OF THE ACT WAS COMPLETED ON TOTAL INCOME OF RS. 16,20,800/ -. THE APPELLANT IS ENGAGED IN THE BUSINESSES OF HIRING OF DG SET AN D REPAIRING AND ACTING AS ENGINEERS AND CONTRACTORS. 3.1 DURING THE GENERAL AUDIT, THE RETURN PROCEEDED UNDER SECTION 143(1) WAS AUDITED AND AUDIT OBJECTION WAS RAISED, INDICATING THAT THE ASSESSEE HAD DEBITED TO PROFIT & LOSS ACC OUNT EXPENSES ON MAINERY REPAIRS AND MAINTENANCE OF D.G.SET OF RS. 1 7,80,271/- AS AGAINST THE COST OF D.G. SET OF RS. 4,37,500/- WHIC H WAS SUBSTANTIAL IN NATURE AND ARE REQUIRED TO BE CAPITALIZED. BY NOT DOING SO IT RESULTED IN UNDER ASSESSMENT OF INCOME OF RS. 17,80,271/-. A REPLY OF THE A.O. REQUESTING FOR DROPPING OF THE OBJECTION WAS NOT AC CEPTED BY THE AUDIT. ACCORDINGLY, REMEDIAL ACTION UNDER SECTION 148 WAS INITIATED BY THE A.O. AND THE SAME WAS APPROVED BY THE COMMIS SIONER OF INCOME TAX-III, BARODA VIDE LETTER NO. BRD/CIT III AUDIT/2006-07 DATED 20.06.2006. 3.2. DURING THE COURSE OR REASSESSMENT PROCEEDINGS, AFTER EXAMINATION OF THE BILLS ON REPAIRS AND MAINTENANCE , IT IS STATED BY JTHE ASSESSING OFFICER THAT EXPENDITURE OF RS. 17,1 8,271/- TOWARDS D.G. SET WITH ALLIED REPAIRS AND MACHINERY IS IN T HE NATURE OF CAPITAL EXPENDITURE AND AFTER ALLOWING FOR DEPRECIA TION, NET ADDITION OF 14,22,417/- WAS EFFECTED 4. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER FILED AN APPEAL BEFORE THE LD. CIT(A). THE ASSESSE E HAS CHALLENGED THE REOPENING AS WELL AS THE ADDITION MADE OF RS. 14,24 ,217/-. THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE PARTLY ALLOWED THE ITA NO. 357/A/2009 OF 2009 A.Y. 2004-05 PAGE NO. ACIT VS. SRI DHIR MUKESHKUMAR TRILIKC HAND 3 APPEAL OF THE ASSESSEE THEREBY THE REOPENING OF THE ASSESSMENT WAS UPHELD AND THE ADDITION OF RS. 14,24,217/- WAS DIRECTED TO BE DELETED. NO-ONE APPEARED ON BEHALF OF THE ASSESSEE THE NOTICE OF HE ARING SENT WAS RECEIVED BACK WITH REMARK INCOMPLETE ADDRESS. THE APPEAL WA S TAKEN UP FOR HEARING IN THE ABSENCE OF THE ASSESSEE. LD. DEPARTMENTAL R EPRESENTATIVE STRONGLY ARGUED THAT THE ASSESSMENT OF THE ASSESSING OFFICER IS CORRECT. HE SUBMITTED THAT THE ASSESSING OFFICER HAS RELIED UPON THE JUDG MENT OF THE HONBLE SUPREME COURT OF BALLIMAL NAVALKISHOSRE AND ANOTHER VS. COMMISSIONER OF INCOME TAX 1997 (138) CTR 284 (SC). WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND THE JUDGMENT AS CITED. WE FIND THAT THE LD. CIT(A) HAS TAKEN THIS ISSUE AS UNDER:- ON MERITS IT IS NOTICED THAT THE CONTENTION OF THE APPELLANT THAT THE REPAIR EXPENSES PERTAIN TO NOT ONLY D.G. SET BU T ALSO FOR OTHER MACHINERIES SUCH AS HYDRA CRANE AND JCB MACHINE AND THAT THE BOOK VALUE OF THESE MACHINES AS PER SCHEDULE -9 OF THE B ALANCE SHEET IS AROUND 25 LAKHS. FURTHER, THE APPELLANT IS IN THE BUSINESS OF HIRING OUT OF D.G. SET AND ALLIED MACHINERIES AND ALL THE BILLS OF REPAIRS WERE PRODUCED BEFORE THE A.O. AND THESE WERE VERIFIED BY THE A.O. IT HAS NOT BEEN INDICATED BY THE A.O. THAT SUCH EXPENSES L ED TO CREATION OF NEW ASSET. THEREFORE, THE ADDITION OF RS. 1424217/ - IS DIRECTED TO BE DELETED. 5. THE ASSESSING OFFICER HAS RELIED UPON THE DECISI ON OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF BALLIMAL NAVA LKISHOSRE AND ANOTHER VS. COMMISSIONER OF INCOME TAX 1997 (138) CTR 284 ( SC) WHILE MAKING ADDITION. WE FIND THAT DECISION OF THE HONBLE SU PREME RENDERED IN THE CASE BALLIMAL NAVALKISHOSRE AND ANOTHER VS. COMMISS IONER OF INCOME TAX (SUPRA) IS NOT APPLICABLE IN VIEW OF THE FACT THAT IN THAT CASE THE ASSESSEE HAS MADE TOTAL RENOVATION OF CINEMA THEATRE, NEW FURNIT URE, NEW SANITARY FITTINGS AND NEW ELECTRONIC WIRINGS BESIDES EXTENSIVE RENOVA TION OF BUILDINGS. BUT IN THIS CASE THE LD. CIT(A) RECORDED THE FINDING OF FA CT THAT THE REPAIR EXPENSES PERTAIN TO NOT ONLY DG SET BUT ALSO FOR THE OTHER M ACHINERY SUCH AS HYDRO CRANE AND JCB MACHINES. THE BOOK VALUE OF THE MACH INES AS PER SCHEDULE OF THE BALANCE SHEET IS RS. 25 LAKHS. IT IS RECORDED BY THE LD. CIT (A) THAT ALL THE BILLS OF REPAIRS WERE PRODUCED BEFORE THE ASSES SING OFFICER AND THESE WERE VERIFIED BY THE ASSESSING OFFICER. IN THIS VI EW OF THE MATTER WE DO NOT FIND ANY INFIRMITY INTO THE LD. CIT(A) HENCE THIS G ROUND OF THE REVENUES APPEAL IS DISMISSED. ITA NO. 357/A/2009 OF 2009 A.Y. 2004-05 PAGE NO. ACIT VS. SRI DHIR MUKESHKUMAR TRILIKC HAND 4 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- (A.K. GARODIA) (KUL BHARAT) ACCOUNTANT MEMBER JU DICIAL MEMBER AHMEDABAD : DATED 31 / 08 /2012 A.KUMAR, P.S. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A)-III, BARODA 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# * STRENGTHENED PREPARATION & DELIVERY OF ORDERS IN TH E ITAT 1) DATE OF TAKING DICTATION 27-08-2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE N.A. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 27-08-2012 4) DATE OF CORRECTION 28-08-2012 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 7) ORDER UPLOADED ON 31-08-2012 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 31-08-2012