M/s Swarna Constructions., Vijayawada V. The DCIT, Circle-2(1), Vijayawada

ITA 385/VIZ/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1665 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 27-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATHDR
• Keywords: Depreciation; Business expenditure; Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside

Judgement Text

PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.385/VIZAG/2007 ASSESSMENT YEAR: 2004-05 SWARNA CONSTRUCTIONS, VIJAYAWADA VS. DCIT, CIRCLE-2 (1), VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO. AAYFS 3636 G APPELLANT BY: SHRI G.V.N HARI, CA RESPONDENT BY: SHRI G.S.S. GOPINATH,DR ORDER PER SHRI B R BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 24.05.2007 PASSED BY THE LD CIT (A) VIJAYAWADA AND IT RELATES TO THE ASSESSMENT YEAR 2004-05. 2. LD COUNSEL APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT HE IS NOT PRESSING GROUND NO.2 AND HENCE THE SAME IS DISM ISSED AS WITHDRAWN. THE REMAINING GROUNDS RAISED BY THE ASSESSEE READS AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN NOT ADMITTING THE EVIDENCES SUBMITTED AND TO UPHOLD THE DISALLOWANCE OF DEPRECIATION. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE DISCOUNT ON SALE OF BONDS IS ALLOWED BUSINESS EXPENDITURE. PAGE 2 OF 3 3. THE FIRST GROUND RELATES TO DISALLOWANCE OF DEPR ECIATION ON THE COST OF EXCAVATOR PURCHASED BY THE ASSESSEE DURING THE Y EAR UNDER CONSIDERATION. THE ASSESSING OFFICER NOTICED THAT T HE ASSESSEE HAS CLAIMED DEPRECIATION ON THE COST OF TATA HI-TECH EX70 EXCAV ATOR AMOUNTING TO RS.22,04,000/- PURCHASED DURING THE YEAR. THE SAID MACHINERY WAS PURCHASED FROM M/S TELCO CONSTRUCTION EQUIPMENT CO. LTD., ON 27.03.2004 AT 18:30 HOURS. SINCE THE MACHINERY WAS PURCHASED A T THE FAG END OF THE YEAR, THE AO CALLED FOR EVIDENCE TO SHOW THAT THE S AME WAS PUT TO USE BEFORE 31.03.2004. SINCE NO EVIDENCE WAS ADDUCED TO PROVE ITS UTILIZATION, THE AO DISALLOWED THE DEPRECIATION OF RS.2,75,500/- CLAIMED THEREON. BEFORE THE LD CIT (A) THE ASSESSEE PRODUCED VARIOUS EVIDENCES TO PROVE ITS UTILIZATION BEFORE 31.03.2004. HOWEVER, THE LD CIT (A) DECLINED TO ADMIT THOSE EVIDENCES AND ACCORDINGLY CONFIRMED THE DISAL LOWANCE OF DEPRECIATION. 3.1 WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS PRODUCED DAILY PROGRES S REPORT ON UTILIZATION OF MACHINERY AND BILL FOR PURCHASE OF FUELS BEFORE LD CIT(A) IN SUPPORT OF ITS CLAIM THAT THE SAID MACHINERY WAS PUT TO USE BEFORE 31.3.2004. BEFORE THE LD CIT(A) THE ASSESSEE HAS ALSO CLARIFIED THAT THE EQUIPMENT WAS TRANSPORTED BY A LORRY AND HIRE CHARGES AMOUNTING T O RS.14,000/- WAS PAID IN CASH ON 29.03.2004. THOUGH THE LD CIT (A) DECLIN ED TO ADMIT THESE ADDITIONAL EVIDENCES, WE ARE OF THE OPINION THAT IN THE INTEREST OF NATURAL JUSTICE, THIS ISSUE REQUIRES RE-EXAMINATION ON THE PART OF THE AO IN THE LIGHT OF EVIDENCES FURNISHED BEFORE THE LD CIT (A). ACCOR DINGLY, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR CONSIDERATION OF TH E SAME AFRESH IN ACCORDANCE WITH LAW. 4. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF DI SCOUNT CHARGES OF RS.7,85,304/-. SINCE THE ASSESSEE COULD NOT FILE EX PLANATIONS AND EVIDENCES PAGE 3 OF 3 IN CONNECTION WITH THE SAID CLAIM, THE AO DISALLOWE D THE SAME. THOUGH THE ASSESSEE FILED CERTAIN EVIDENCES BEFORE THE LD CIT (A), THE 1 ST APPELLATE AUTHORITY DECLINED TO ADMIT THE SAME FOR THE REASON THAT THE AO WAS DEPRIVED BY THE ASSESSEE BY NOT FILING THESE EVIDEN CES. HENCE IN OUR OPINION, THIS ISSUE ALSO NEEDS RE-EXAMINATION BY TH E AO IN THE LIGHT OF EVIDENCES FILED BEFORE THE LD CIT (A). ACCORDINGLY WE SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE AO. NEEDLESS TO MENTION THA T THE ASSESSEE SHOULD BE GIVEN NECESSARY OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30.11.2009 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATED 30 TH NOVEMBER, 2009. COPY TO 1 M/S SWARNA CONSTRUCTIONS, 60-16-2, SIDDHARTHA NAG AR, VIJAYAWADA 2 THE DCIT, CIRCLE-2(1), VIJYAWADA 3 THE CIT, VIJAYAWADA, 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM