M/s. Maruti Nandan Industries, JODHPUR V. ITO, CHURU

ITA 400/JODH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82976 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: U C JAIN
• Keywords: Depreciation; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL , JODHPUR BENCH: J ODHPUR ( BEFORE SHRI H ARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ) I.T.A. NO. 400 /JODH/201 4 (A.Y. 200 9 - 1 0 ) M/S MARUTI NANDAN INDUSTRIES V S ITO, ATHUNA BAZAR, RATANGARH WARD - 1, CHURU CHURU PAN NO. AAOFM 4569 J (APPELLANT) (RESPONDENT) ASSESSEE BY : - SHRI U.C. JAIN DEPARTMENT BY : - SHRI MAHESH KUMAR - D.R. DATE OF HEARING : 1 8 /0 9 /201 4 DATE OF PRONOUNCEMENT : 23 / 0 9 /2014 O R D E R P E R HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE, FOR A.Y. 200 9 - 1 0 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) - III, JAIPUR , RAJASTHAN DATED 09 . 06 .201 4 . 2. BRIEFLY STATED THE FACTS OF THE CASE A RE THAT THE ASSESSEE FIRM CARRIES ON THE BUSINESS OF MANUFACTURING AND TRADING IN GUWAR GUM. FOR A.Y. 2009 - 10, IT FILED ITS RETURN OF INCOME [ROI] ON 28.9.2009 2 DECLARING TOTAL INCOME OF RS. 64,280/ - AS AGAINST WHICH ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME - TAX ACT, 1961 ['THE ACT' FOR SHORT] AT A TOTAL INCOME OF RS. 4,69,399/ - . IN ARRIVING AT THE ABOVE INCOME, THE A.O HAS MADE THE FOLLOWING ADDITIONS AFTER DISALLOWING CERTAIN EXPENSES: 1. INCOME DECLARED BY THE ASSESSEE RS. 64,280/ - ADD: (I) DISALLOWANCE OF EXPENSES AS PER PARA 3 RS. 2,56,419/ - (II) DISALLOWANCE OF EXPENSES AS PER PARA 4 RS. 75,219/ - (III) DISALLOWANCE OF DEPRECIATION AS PER PARA 5 RS. 32,400/ - (IV) DISALLOWANCE OF EXPENSES AS PER PARA 6(I) RS. 12,174/ - (V) DISALLOWANCE OF EXPENSES AS PER PARA 6(II) RS. 10,754/ - (VI) DISAL LOWANCE OF EXPENSE AS PER PARA 6(III) RS. 7,853/ - (VII) DISALLOWANCE OF EXPENSES AS PER PARA 6(IV) RS. 10,200/ - TOTAL TAXABLE INCOME RS. 4,69,399/ - ROUNDED OFF RS. 4,69,400/ - AGGRIEVED, THE ASSESSEE FILED APPEAL AND THE LD. CIT(A) FOLLOWED SUIT RESU LTING INTO DISMISSAL OF ASSESSEES APPEAL. NOW THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY LEARNED CIT (A) IS ERRONEOUS AND BAD IN LAW, BAD IN FACTS AND CONTRARY TO THE MATERIAL ON RECORD AND AS SUCH IS LIABLE TO BE QUASHED. 3 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN SUSTAINING AN ADDITION OF DISALLOWANCES OF RS. 370619/ - MADE BY THE LEARNED A.O. OUT OF THE FOLLOWING EXPENSES: - 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN SUSTAINING AN ADDITION OF RS. 32 , 400/ - MADE BY THE LEARNED A.O. OUT OF DEPRECATION CLAIMED. 4. THAT PETITIONER MAY KINDLY BE PERMITTED T O RAISE ANY ADDITIONAL OR ALTERNATIVE GROUNDS AT OR BEFORE THE TIME OF HEARING. 5. THE PETITIONER PRAYS FOR JUSTICE AND RELIEF. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. IT WAS OBSEQUIOUSLY S UBMITTED THAT THE ADDITIONS MADE BY THE A.O AND CONFIRMED BY THE LD. CIT(A) CANNOT (I) OUT OF FIREWOOD EXPENSES 254419/ - (II) OUT OF FREIGHT EXPENSES 75219/ - (III) OUT OF OFFICE EXPENSES 12174/ - (IV) OUT OF STAFF WELFARE 10754/ - (V) OUT OF TRAVELING EXPENSES 7853/ - (VI) OUT OF TELEPHONE EXPE NSES 10200/ - TOTAL : - 370619/ - 4 BE SUSTAINED IN THE EYES OF LAW BECAUSE IN THE A.Y UNDER CONSIDERATION THE PERCENTAGE OF EXPENSES IN ALL THESE SIX ITEMS ARE ON THE LOWER SIDE AS COMPARED TO THE EARLIER A. YS. AND AT THE SAME TIME, A N.P. RATE SHOWN IN THE YEAR IS BETTER THA N THE LAST YEAR. THEREFORE, THERE IS NO BASIS FOR DISALLOWING PART OF THE EXPENSES CLAIMED AND MAKING ADDITIONS AS HAS BEEN DONE BY THE A.O. 4. ON THE OTHER HAND, THE LD. D.R HAS RELIED ON THE ORDER OF THE LD. CIT(A). 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE NOTICED THAT THE EXPENDITURE ON PERCENTAGE BASIS IN THE YEAR UNDER CONSIDERATION IN SO FAR AS THESE HEADS ARE CONCERNED, ARE ON THE LOWER SIDE AS COMPARED TO THE IMMEDIAT ELY PAST A.Y. IN THIS REGARD, OUR ATTENTION WAS INVITED TO PAGE 1 OF PAPER BOOK FILED BY THE LD. A.R. WE EXTRACT THE RELEVANT PORTION HEREINBELOW: HEAD OF EXPENSES A.Y. A.Y. 2008 - 09 2009 - 10 [UNDER APPEAL] (1) FIREWOOD EXPENSES 0.62% 0.58% (2) FREIGHT EXPENSES 0.57% 0.17% (3) OFFICE EXPENSES 0.047% 0.027% (4) STAFF WELFARE - 0.024% (5) TRAVELING EXPENSES 0.073% 0.018% (6) TELEPHONE EXPENSES 0.044% 0.023% 5 THUS, THESE FIGURES WERE NOT CONTROVERTED BY THE LD. D.R. WE HAVE ALSO NOTICED THAT THE N.P. RATE IN THE YEAR UNDER CONSIDERATION HAS BEEN DISCLOSED AT .03% WHEREAS IN THE EARLIER A.Y. IT WAS ONLY .02%. ACCORDINGLY, WE FIND FORCE IN THE SUBMISSIONS OF THE LD. A.R SHRI U.C. JAIN AND HOLD THAT THESE ADDITIO NS BASED ON DISALLOWANCES OUT OF EXPENSES IN RELATION TO FIRE - WOOD, FREIGHT, OFFICE, STAFF WELFARE, TRAVELLING AND TELEPHONE ARE BASELESS A ND DESERVE DELETION. AS A RESULT, WE ORDER DELETION OF ALL THESE ADDITIONS AND ALLOW TH IS GROUND OF THE APPEAL OF TH E ASSESSEE. 3. GROUND NO. 3 PERTAINS TO SUSTAINED ADDITION OF RS. 32,400/ - MADE BY THE A.O OUT OF DEPRECIATION CLAIMED. FACS OF THIS GROUND ARE THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 4,91,061/ - AS PER PROFIT AND LOSS ACCOUNT SUBMITTED. ON EXA MINATION, IT WAS FOUND THAT OUT OF TOTAL DEPRECIATION, THE ASSESSEE HAS CLAIMED RS. 2,22,654/ - AS DEPRECIATION ON LAND AND BUILDING. AS PER THE A.O, DEPRECIATION ON LAND IS NOT ALLOWABLE UNDER THE ACT. HE, THEREFORE, DISALLOWED RS. 32,400/ - AFTER EXCLUDI NG THE COST OF THE LAND WHICH IS 5000 SQM AND RATE HAS BEEN ADOPTED AT RS. 80/ - PER SQ. M AS PER THE RSIDC LTD ORDER. IN FACT, THE ASSESSEE HAS DIVIDED THE DEPRECIATION IN THREE A.YS., NAMELY, RS. 40,000/ - IN A.Y. 2007 - 08; RS. 36,000/ - IN A.Y. 2008 - 09 AND RS. 32,400/ - IN THE YEAR UNDER CONSIDERATION. THUS, THE A.O HAS 6 DISALLOWED DEPRECIATION OF RS. 32,400/ - AND HAS ADDED IN THIS YEAR. APART FROM THIS, HE HAS MENTIONED THAT IN OTHER A.YS, DEPRECIATION HAS BEEN ALLOWED AND FOR THAT MATTER REMEDIAL ACTION W ILL BE TAKEN AS PER THE ACT. BEFORE THE LD. CIT(A), THE ASSESSEE CHALLENGED THIS ADDITION BUT ALL IN VAIN. BEFORE US BOTH THE PARTIES HAVE REITERATED THEIR EARLIER ARGUMENTS. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THE ASSESSEE HA D PURCHASED LAND AND BUILDING IN AUCTION FROM RFC IN THE MONTH OF JUNE 2006 F.Y. 2006 - 07 FOR TOTAL CONSIDERATION OF RS. 10,70,000/ - . THE CASE OF THE ASSESSEE IS THAT IN SUCH AUCTION, PURCHASE COST OF THE LAND CANNOT BE CONSIDERED FROM THE COST OF THE BUIL DING. THE ASSESSEE FURNISHED A COPY OF THE OFFICE ORDER DATED 28.5.2007 ISSUED BY THE RSID AND INVESTMENT CORPORATION LTD., JAIPUR. SINCE THE FACTS OF THIS ISSUE ARE VERY JUMBLED, AND MORE FACTS ARE REQUIRED TO ASCERTAIN WHETHER THE ASSESSEE PURCHASED BU ILDING IN AUCTION WHICH ALSO INCLUDED OBVIOUSLY THE LAND OR THAT THE COST OF THE LAND AND COST OF THE BUILDING WERE TOGETHER TAKEN ON AUCTION IN OTHER A.Y S AS STATED ABOVE. IT SEEMS THAT THE A.O HAS ALLOWED RESPECTIVE CLAIM OF DEPRECIATION. THEREFORE, IN THE INTEREST OF JUSTICE, WE RESTORE THIS 7 ISSUE TO THE FILE OF THE A.O SO THAT HE CAN DECIDE THIS ISSUE AFTER MAKING PROPER VERIFICATION. ACCORDINGLY, GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 23 RD SEPTEMBER , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JU DICIAL MEMBER DATED : 23 RD SEPTEMBER , 2014 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR