M/S RJASTHAN HYBRID PVT. LTD., Jaipur V. ACIT, Kota

ITA 421/JPR/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5266 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: F REHMAN
• Keywords: Capital asset; Additional evidence; Valuation report; Revenue expenditure
• Section: 143(3); 234B; 37(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 421/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 M/S RAJASTHAN HYBRID PVT. LTD., E-17 IPIA, ELECTRONIC COMPLEX, KOTA. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AABCR 1460 R VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MAHENDRA GARGIEYA & SHRI F. REHMAN (ADV) JKTLO DH VKSJ LS @ REVENUE BY : SHRI CHANCHAL MEENA LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/04/2016 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 16/05/2016 VKNS'K @ ORDER PER: T.R. MEENA, AM THIS IS AN APPEAL FILED BY THE APPELLANT AGAINST TH E ORDER DATED 29/02/2012 PASSED BY THE LEARNED CIT (A) KOTA FOR A .Y. 2008-09. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1 THE IMPUGNED ADDITIONS AND DISALLOWANCES MADE IN THE ORDER U/S 143(3) OF THE ACT DATED 30.12.2010 ARE BA D IN ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 2 LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTIO N AND VARIOUS OTHER REASONS AND HENCE THE SAME KINDLY BE DELETED. 2. RS.17,900/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.17,900/- ON ACCOUNT OF TOUR TRAVEL EXPENSES. THE DISALLOWANCE SO MADE AND CONFIRMED BY THE CIT(A) BEIN G TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 3. RS.1,35,000/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.1,35,500/- U/S 40(A)(IA) OF THE ACT ON ACCOUNT O F LEGAL AND RENT PAYMENT BECAUSE OF THE ALLEGED NON-COMPLIANCE OF TDS PROVISIONS. THE DISALLOWANCE SO MADE AND CONFIRMED BY THE CIT(A) BEING TOTALLY CONTRARY TO TH E PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE D ELETED IN FULL. 4. RS.14,630/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.14,630/- ON ACCOUNT OF WATCHMAN EXPENSES ON THE PLEA THAT THE SAID EXPENDITURE DID NOT RELATE TO TH E SUBJECTED YEAR. THE DISALLOWANCE SO MADE AND CONFIRM ED BY THE CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIO NS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL . 5. RS.13,898/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.13,898/- ON ACCOUNT OF MOBILE & TELEPHONE EXPENS ES ON THE PLEA THAT IT WAS A CAPITAL ASSET AND NOT A CONSUMABLE. THE DISALLOWANCE SO MADE AND CONFIRMED BY THE CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 3 6. R S .19,810/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS. 19,810/- ON ACCOUNT OF HOTEL EXPENSES AT SITE ON THE PLEA THAT THE SAID EXPENDITURE DID NOT RELATE TO THE SUB JECTED YEAR. THE DISALLOWANCE SO MADE AND CONFIRMED BY THE CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF L AW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 7. R S .25,085/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.25,085/- (OUT OF TOTAL DISALLOWANCE OF RS.27,565/ -) ON ACCOUNT OF TRAVELING EXPENSES ROT ON THE PLEA THAT THE SAID EXPENDITURE DID NOT RELATE TO THE SUBJECTED YE AR. THE DISALLOWANCE SO MADE AND PARTLY CONFIRMED BY THE CIT( A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 8. RS.3,792/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.3,792/- (OUT OF TOTAL DISALLOWANCE OF RS.27,565/- ) ON ACCOUNT OF HOTEL EXPENSES ROT. THE DISALLOWANCE SO MADE AND PARTLY CONFIRMED BY THE CIT(A) BEING TOTALL Y CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE C ASE, KINDLY BE DELETED IN FULL. 9. RS. 15,325/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.15,325/- (OUT OF TOTAL DISALLOWANCE OF RS.26,050/ -) ON ACCOUNT OF DAILY ALLOWANCE ROT EXPENSES ON THE PLEA THAT THE SAID EXPENDITURE DID NOT RELATE TO THE SUBJECTE D YEAR. THE DISALLOWANCE SO MADE AND PARTLY CONFIRMED BY THE CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF L AW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 10. RS.4,742/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 4 RS.4,742/- ON ACCOUNT OF CONVEYANCE EXPENSES ON THE PLEA THAT THE SAID EXPENDITURE DID NOT RELATE TO TH E SUBJECTED YEAR. THE DISALLOWANCE SO MADE AND CONFIRM ED BY THE CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIO NS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL . 11. RS.3,485/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.3,485/- (OUT OF TOTAL DISALLOWANCE OF RS.6,969/-) ON ACCOUNT OF REPAIR BUILDING. THE DISALLOWANCE SO MADE AND PARTLY CONFIRMED BY THE CIT(A) BEING TOTALLY CONTRAR Y TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 12. RS.22,500/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS.22,500/- (OUT OF TOTAL DISALLOWANCE OF RS.27,500/ -) ON ACCOUNT OF ESTIMATED REALIZABLE SCRAP VALUE RELATIN G TO RAW MATERIAL. THE ADDITION SO MADE AND PARTLY CONFIRM ED BY THE CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIO NS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL . 13. RS.18,70,000/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS.18,70,000/- ON ACCOUNT OF THE ALLEGATION OF NON SUBMISSION OF VALUATION PAPERS OF WORK IN PROGRESS. THE ADDITION-SO- MADE AND CONFIRMED BY THE CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 14. THE LD. AO FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING INTEREST U/S 234A & 234B & 234 D OF THE ACT. THE APPELLANT TOTALLY DENIES ITS LIABILITY OF CHARGING OF ANY SUCH INTEREST. THE INTEREST SO CHARG ED, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, K INDLY BE DELETED IN FULL. ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 5 2. GROUND NOS. 1 AND 12 OF THE APPEAL ARE NOT PRESS ED, THEREFORE, WE DISMISS THE SAME AS NOT PRESSED. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFA CTURING OF HYBRID MICRO CIRCUITS. DURING THE YEAR UNDER CONSIDERATION , ITS FILED RETURN ON 29/09/2008 DECLARING TOTAL INCOME OF RS. 12,45,460/ -. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). GROUNDS NO. 2,3,4,5,6,7,8,9,10 AND 11 ARE AGAINST D ISALLOWANCE OF VARIOUS EXPENSES BY THE ASSESSING OFFICER UNDER THE HEADS T OUR AND TRAVEL EXPENSES, LEGAL AND RENT PAYMENT, WATCHMAN EXPENSES , MOBILE AND TELEPHONE EXPENSES, HOTEL EXPENSES AT SITE, TRAVELL ING EXPENSES ROT, HOTEL EXPENSES ROT, DAILY ALLOWANCE ROT EXPENSES, CONVEYANCE EXPENSES AND REPAIR BUILDING EXPENSES ON THE GROUND THAT THE ASS ESSEE HAD NOT GIVEN ANY JUSTIFICATION IN THE CASE OF RENT PAYMENT AND L EGAL AND PROFESSIONAL EXPENSES, NO TDS HAS BEEN DEDUCTED. INVERTER CHARGE UNDER THE HEAD OFFICE EXPENSES HAD BEEN CAPITALIZED BY THE ASSESSI NG OFFICER, WATCHMAN EXPENSES FOR THE MONTH OF MARCH, 2007 WAS NOT INCURR ED FOR THE YEAR UNDER CONSIDERATION, PURCHASE OF MOBILE WAS ALSO CA PITALIZED, HOTEL EXPENSES PERTAINED TO MARCH, 2007, TRAVELLING EXPEN SES PERTAINED TO PERIOD 28/6/2006 TO 03/7/2006 NOT FOR THE YEAR UNDER CONSI DERATION. SIMILARLY HOTEL EXPENSES, DAILY ALLOWANCES, CONVEYANCE EXPENSE S WERE ALSO NOT ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 6 PERTAINED TO YEAR UNDER CONSIDERATION. REPAIR OF BU ILDING EXPENSES, ONLY SELF MADE VOUCHERS WERE PRODUCED, THEREFORE THE LD A SSESSING OFFICER DISALLOWED 10% OUT OF THESE EXPENSES AND MADE ADDITI ONS UNDER THE HEADS MENTIONED ABOVE. 4. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD CONF IRMED THE ADDITION UNDER THE HEADS TOUR AND TRAVEL EXPENSES OF RS. 17, 900/-, WHICH WAS INCURRED ON ACCOUNT OF BUSINESS TOUR TO RAIPUR FOR TECHNO-COMMERCIAL DISCUSSION WITH NSN FOR FURTHER BUSINESS WITH HIS WIFE , BUT NO EVIDENCE HAS BEEN SUBMITTED BY THE ASSESSEE EVEN BEFORE THE LD C IT(A). THEREFORE, HE DISMISSED THE ASSESSEES APPEAL ON THIS GROUND AFTE R CONSIDERING THE ASSESSEES REPLY THAT THE DIRECTOR WAS HAVING HEART PROBLEM AGED 58 YEARS, WAS REQUIRED TO ANY ATTENDANT. THIS EXPENDITURE WAS IN CURRED FOR BUSINESS EXPEDIENCY. BUT EVEN BEFORE US, THE ASSESSEE HAS NOT FILED ANY EVIDENCE REGARDING THE PAYMENT AND PARTICULARLY BILL OR EXPE NDITURE, THEREFORE, WE CONFIRM THE ADDITION. 4.1 THE LD CIT(A) ALSO DISMISSED THE PAYMENT OF RS. 1 .35 LACS PAID TO SHRI ISHWAR DAS AS NO TDS HAS BEEN DEDUCTED. NO EVIDE NCE WAS SUBMITTED ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 7 BEFORE THE LD ASSESSING OFFICER. EVIDENCES FURNISHE D BEFORE THE LD CIT(A) WAS FOUND HIM ADDITIONAL EVIDENCE, WHICH WAS SUBMITTED WITHOUT ANY APPLICATION FOR ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES). EARLIER THIS WAS C LAIMED BY THE ASSESSEE THAT RS. 30,000/- WAS PAID AS RENT FOR THE PERIOD 10 /12/2007 TO 09/2/2008 BUT BEFORE HIM HE HAS CLAIMED THIS PAYMENT FOR WATCH MAN CHARGES. THE TOTAL PAYMENT EXCEED RS. 1.20 LACS, THEREFORE, PROV ISIONS OF SECTION 194(I) OF THE ACT IS APPLICABLE, WHICH IS LIABLE TO BE DEDU CTED TDS. BEFORE US, THE LD AR CLAIMED THAT RS. 1.35 LACS WAS PAYMENT FOR RENT OF VARIOUS OFFICES HIRED BY THE COMPANY FOR THE PUR POSE OF SMOOTH OPERATION OF PROJECT WORK. THE RENT WAS PAID TO THE SI NGLE PERSON WAS ONLY RS. 1,05,000/- WHICH DOES NOT REQUIRE DEDUCT TDS BUT RS. 30,000/- WAS PAID ON ACCOUNT OF DIFFERENT SERVICES TO THE WATCHMA N-CUM-SUPERVISOR AS A SALARY @ 5,000/- PER MONTH FOR SIX MONTHS, IT WAS SHO WN IN THE RENT ACCOUNT BY MISTAKE. THE LD AR HAS ALSO DRAWN OUR ATT ENTION ON PAGE NO. 46 AND 47 OF THE PAPER BOOK TO DEMONSTRATE THAT THE SE ARE THE PAYMENTS TO THE WATCHMEN-CUM-SUPERVISOR. LD. DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES . ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 8 AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, WE FIND NO MERIT THAT THESE EVIDENCES WERE NOT ADDITIONAL EV IDENCE AS HAD NOT SUBMITTED BEFORE THE LOWER AUTHORITIES. PAGE NO. 46 AND 47 OF PAPER BOOK ARE ADDITIONAL EVIDENCES BUT REFERRED THE HOUSING R ENT, THEREFORE, THE ASSESSEES CLAIM IS NOT ACCEPTABLE AT THIS STAGE. O RDER OF THE LD CIT(A) ON THIS GROUND IS UPHELD. 4.2 THE LD CIT(A) ALSO CONFIRMED THE ADDITION UNDER THE HEAD MOBILE AND TELEPHONE EXPENSES TO THE TUNE OF RS. 13,898/- BY T REATING THE TESTING EQUIPMENT EXPENSES AS CAPITAL ASSET, WHICH WAS NOT F OUND CONSUMABLE ITEM. ACCORDINGLY, HE CONFIRMED THE ORDER OF THE LD ASSESSING OFFICER. THE LD AR BEFORE US HAS ARGUED THAT THE MOBILE PURC HASE FOR RS. 16,350/- WAS DEBITED TO P&L ACCOUNT AS MOBIL E WAS PURCHASED FOR TESTING PURPOSES AND THE TESTING WAS DONE BY THE EMP LOYEES SINCE THE USES IS VERY HIGH AND THE HANDLING IS VERY POOR, ACCORDINGLY, IT WAS CLAIMED AS CONSUMABLE AND WRITTEN OFF AS IT BECOME OBSOLETE IN VERY SHORT PERIOD. HE HAS ALSO DRAWN O UR ATTENTION ON PARA NO. 5 OF PAGE NO. 7 OF THE PAPER BOOK AND A RGUED THAT TECHNOLOGY UNDER THE I.T. HAS FREQUENTLY CHANGE D. ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 9 VARIOUS COURTS HAVE DECIDED EVEN THE COMPUTER EXPEN SE AS REVENUE EXPENSES AS TECHNOLOGY BECOME OBSOLETE. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUTBROITIES. AFTER CONSIDERING THE ASSESSEES SUBMISSION THAT H E MADE THIS CLAIM BEFORE THE LD. ASSESSING OFFICER AS WELL AS BEFORE T HE LD CIT(A). THE MOBILE WAS PURCHASED FOR TESTING PURPOSES BY THE ASSESSEE. THE TECHNOLOGY OF I.T. IS FREQUENTLY CHANGING, THEREFORE, IT BECOMES O BSOLETE EVEN WITHIN A SHORT SPAN OF PERIOD. VARIOUS COURTS HAVE DECIDED T HIS CLAIM OF EXPENSE AS REVENUE IN NATURE. ACCORDINGLY, WE ALLOW THE MOBILE PURCHASE EXPENSES AS REVENUE EXPENDITURE. 4.3 THE LD CIT(A) CONFIRMED THE DISALLOWANCE OF HOTEL EXPENSES ON THE GROUND THAT THEY PERTAINED TO PREVIOUS YEAR. THE LD AR CONTENDED THAT THE EXPENSES WERE BOOKED ON RECEIPT OF BILL FROM THE EMP LOYEES AS THE WORK IS DONE AT MANY PLACES IN THE INDIA AND IT IS NOT POSS IBLE TO BOOK ACCORDING TO ITS PERIOD. HE HAS DRAWN OUR ATTENTION ON PARA NO. 9 OF PAGE NO. 7 OF PAPER BOOK AND PRAYED TO ALLOW THIS GROUND OF APPEAL . LD. DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES . ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 10 IT IS A FACT THAT THE EXPENDITURE PERTAINED TO EA RLIER YEARS BUT BILLS RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CONSIDER ATION. ACCORDINGLY, LIABILITY IS CRYSTALLIZED DURING THE YEAR UNDER CON SIDERATION. GENUINENESS OF THE EXPENSES HAS NOT BEEN DOUBTED BY THE LOWER AUTHO RITIES, THEREFORE, WE ALLOW THE ASSESSEES APPEAL ON THIS GROUND. 4.4 THE LD CIT(A) PARTLY ALLOWED THE APPEAL UNDER THE HEAD TRAVELLING EXPENSES ROT FOR RS. 27,565/- ON THE GROUND THAT BIL L FOR RS. 2,480/- IS PERTAINED TO YEAR UNDER CONSIDERATION AND REMAINING EXPENSES WERE PERTAINED TO EARLIER YEAR. THE LD AR HAS ARGUED THAT THESE EXPENSES WERE BOOKED WHEN THE ASSESSEE RECEIVED THE BILLS FROM THE EMPLOYEES AS T HE ASSESSEES ACTIVITIES IS ALL OVER THE INDIA, THEREFORE, EXPENSES COULD NO T BOOKED IN THE RELEVANT YEAR. HE HAS DRAWN OUR ATTENTION ON PAGE NO. 7 OF PA PER BOOK OF PARA NO. 9. LD. DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES . AFTER CONSIDERING THE ASSESSEES SUBMISSION, IT IS BUT NATURAL THAT EXPENSES IS TO BE BOOKED WHEN THE ASSESSEE RECEIVED THE BILLS FROM THE EMPLOYEE AS ALREADY HELD THAT THE ASSESSEES ACTIVI TIES ARE IN ALL OVER THE ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 11 INDIA, THEREFORE, HE BOOKED THE TRAVELLING EXPENSES OF ROT WHEN IT RECEIVED BY IT. THE GENUINENESS OF THE EXPENSES HAS NOT BEEN DOUBTED BY THE LOWER AUTHORITIES, IT IS CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY WE ALLOW THE ASSESSEES APPEAL ON THIS G ROUND. 4.5 HOTEL EXPENSES ROT, DAILY ALLOWANCE OF ROT, CONVEY ANCE EXPENSES ROT WERE ALSO CONSIDERED BY THE LD CIT(A) AND ALLOWED T HE APPEAL PARTLY. HOWEVER, CONVEYANCE EXPENSES HAS NOT BEEN ALLOWED BY HIM ON THE GROUND THAT THE SOME OF THE BILLS WERE RELATED TO CU RRENT YEAR BUT SOME OF THE EXPENSES RELATED TO PREVIOUS YEAR. LD. AR REITERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AS THE EXPENSES WERE BOOKED WHEN THE ASSESSEE RECEIVED THE B ILLS, BUT GENUINENESS HAS NOT BEEN DOUBTED BY THE REVENUE. HE REFERRED PARA NO. 10 AND 11 OF PAGE NO. 3, PARA NO. 9 OF PAGE NO. 7 O F THE PAPER BOOK AND ARGUED THAT SAME MAY PLEASE BE ALLOWED. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. AFTER CONSIDERING THE ASSESSEES SUBMISSION, THE A SSESSEES LIABILITY HAS BEEN CRYSTALLIZED DURING THE YEAR UNDER CONSIDE RATION. GENUINENESS HAS ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 12 NOT BEEN DOUBTED BY THE LOWER AUTHORITIES. ACCORDING LY, WE ALLOW THE ASSESSEES APPEAL ON THESE GROUNDS. 4.6 THE LD CIT(A) ALLOWED THE APPEAL UNDER THE HEAD RE PAIR EXPENSES PARTLY, WHICH IS @ 5% AGAINST THE DISALLOWANCE MADE BY THE LD ASSESSING OFFICER @ 10%, WHICH IS REASONABLE AND WE DO NOT HAVE ANY REASON TO INTERVENE IN THE ORDER OF THE LD CIT(A). ACCORDINGLY , WE CONFIRM THE ORDER OF THE LD CIT(A). 5. GROUND NO. 13 OF THE APPEAL IS AGAINST CONFIRMIN G THE ADDITION OF RS. 18,17,000/- ON ACCOUNT OF ALLEGATION OF NON-SUBMISS ION OF VALUATION PAPERS OF WORK IN PROGRESS. THE LD ASSESSING OFFICER OBSERVE D THAT THE ASSESSEE HAD CLAIMED REDUCTION IN VALUE OF WORK IN PROGRESS O F RS. 18.70 LACS. HOWEVER, NO SUPPORTING DOCUMENTS WERE SUBMITTED BY TH E ASSESSEE. IN ABSENCE OF SUPPORTING DOCUMENTS, THE CLAIM OF THE A SSESSEE WAS NOT VERIFIABLE AND HENCE NOT ALLOWABLE. THE ASSESSEE SUBM ITTED REPORT OF INSURANCE SURVEYOR AND LOSS ASSESSOR IN RELATION TO REDUCTION IN VALUE OF RAW MATERIAL, BUT NO SUCH DOCUMENT WAS SUBMITTED IN R ELATION TO REDUCTION IN VALUE OF WORK IN PROGRESS. HENCE MADE ADDITION OF RS. 18.70 LACS. 6. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD DISM ISSED THE APPEAL ON ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 13 THIS GROUND BY OBSERVING THAT NO SUPPORTING EVIDEN CE WAS FILED BEFORE HIM. MOREOVER, WHEN THE ASSESSEE COULD GET THE REPOR T OF INSURANCE SURVEYOR AND LOSS ASSESSOR IN ESTIMATING THE REDUCT ION IN VALUE OF RAW MATERIAL, IT COULD HAVE CARRIED OUT THE SAME EXERCI SE FOR VALUING THE WORK IN PROGRESS ALSO. THE AMOUNT OF RS. 18.70 LACS INCLU DED A SUM OF RS. 9.90 LACS, WHICH WAS THE VALUE OF FCT KITS. BEFORE THE ASSE SSING OFFICER THE ASSESSEE CLAIMED THAT THESE EXPENSES WERE WRITTEN OFF ON THE BASIS OF INDEPENDENT VALUATION REPORT, HOWEVER, NO SUCH REPOR T WAS FURNISHED BEFORE THE ASSESSING OFFICER. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT WRITTEN OFF VALUATION OF WORK IN P ROGRESS UNDER THE HEAD COMPUTER KIT FOR RS. 8,47,503/- PERTAINED TO Y EAR 2004, ASV CARD RS. 32,497 (DAMAGE) AND REDUCTION IN VALUE OF FCT ASSEMB LY RS. 9,90,000/- PERTAINED TO YEAR 2006. THE WORK IN PROGRESS IS A SUB ASSEMBLY STAGE, THE FINAL ASSEMBLY IS CLEARED ONLY AGAINST FIRM ORDERS, THE WORK IN PROGRESS UNDER CONSIDERATION PERTAINS TO YEAR 2004 AND 2006, THE EXTENSIVE FOLLOW UP FOR SALE OF FCT (FIXED CELLULAR TERMINAL) AND COMP UTERS COULD NOT YIELD RESULTS. SINCE COMPLETION OF THE JOB REQUIRED ADDIT IONAL COMPONENTS AND ADDITIONAL COST HENCE COMPANY TOOK DECISION NOT TO PROCURE ADDITIONAL COMPONENTS TO AVOID FURTHER LOSSES, THIS WAS RESULTE D INTO CONTINUATION OF ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 14 WORK IN PROGRESS IN SUBSEQUENT YEARS. IN SUBSEQUENT YEARS, THE MARKET SCENARIO HAS TOTALLY CHANGED AND PRODUCTS BECOME OB SOLETE, THERE WAS NO OPTION BUT TO WRITE OFF. THIS ARGUMENT WITH EVIDENCE WA S TAKEN BEFORE THE LOWER AUTHORITIES BUT HAVE NOT CONSIDERED KEEPING IN VIEW OF THE TECHNOLOGY CHANGE AND JUDICIOUSLY. THE ASSESSEE HAD SHOWN WORK IN PROGRESS AS ON 01/4/2007 AT RS. 71,76,420/- CONSIST ING OF COMPUTERS, RNWS AND ALUMINIUM SUBSTRATES, PCB ASSEMBLIES AND F CT COMPONENTS OUT OF THESE THE VALUE OF THREE ITEMS WERE REDUCED WITH T HE REASON GIVEN BEFORE THE LOWER AUTHORITIES. THE ASSESSEE HAD SUBMIT TED VALUATION REPORT DATED 25/7/2008 ON AN INDEPENDENT INSURANCE SURVEYO R AND LOSS ASSESSOR, WHICH HAS NOT BEEN CONSIDERED BY THE LD CIT(A). HOWEV ER, THE SAME VALUATION REPORT DATED 25/7/2008 AT THE BOTTOM, THE RE IS CLEAR OBSERVATION- CUM-CERTIFICATION BY THE SAID SURVEYOR, WHICH IS AS UNDER:- CONCLUSION: AS FCT PARTS ARE SPECIFICALLY DESIGNED FOR SPECIFIC PURPOSE, THESE PARTS CANNOT BE USED FOR ANY OTHER P URPOSE. HENCE FOR APPLICANT, IT HAS BECOME TOTALLY UNUSABLE MATER IAL (ITEM NO.-1 TO 15) AND IN MY OPINION THE SCRAP VALUE OF THIS CO ULD BE ONLY RS. 25,000/- +/- 10%. (PB-35-38). IT REVEALED THAT IT CAN BE GATHERED FROM THE REPORT OF THE SURVEYOR THAT THESE ITEMS WERE BECOME OBSOLETE UNUSABLE. HE ALTERN ATIVELY ALSO ARGUED ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 15 THAT THIS IS THE BUSINESS LOSS, WHICH IS ALLOWABLE U /S 37(1) OF THE ACT. IN A.Y. 2010-11, THE ASSESSEE HAS WRITTEN OFF HUGE AMOU NT OF RS. 51,50,000/- , WHICH HAS BEEN DULY ALLOWED BY THE ASSESSING OFFICE R IN SCRUTINY ASSESSMENT, IDENTICAL TO THIS CLAIM. HE FURTHER REL IED ON THE FOLLOWING CASE LAWS:- (I) DIGITAL EQUIPMENT INDIA LTD. VS. DCIT (2006) 10 3 TTJ 329 (BANG). (II) TORRENT POWER LTD. VS DCIT (2012) 20 ITR 653 (AH D. TRIB). (III) AVAYA GLOBAL CONNECT LTD. VS CIT (2009) 122 T TJ 300 THEREFORE, HE PRAYED TO ALLOW THE APPEAL ON THIS GROU ND. 8. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS UNDISPU TED FACT THAT IN IT INDUSTRIES TECHNOLOGY BECOMES OBSOLETE FREQUENTLY, ACCORDINGLY, THE ASSESSEE HAS TO TAKE DECISION TO USE THE ITEMS. THE ASSESSEE IS ENGAGED IN MANUFACTURING OF HYBRID MICRO CIRCUITS BY UPGRADING THE TECHNOLOGY. IT IS A BUSINESS DECISION OF THE ASSESSEE AFTER CONSIDERING THE REPORT FROM THE SURVEYOR, WHICH HAS BEEN FILED BEFORE THE LOWER AUTHO RITIES BUT HAS NOT JUDICIOUSLY APPRECIATED BY THEM. IN SUBSEQUENT YEAR , THE LD ASSESSING ITA 421/JP/2012_ M/S RAJASTHAN HYBRID P LTD. VS ACIT 16 OFFICER ALLOWED THE IDENTICAL WRITE OFF ON ACCOUNT OF OBSOLETE FCT KITS, COMPUTER. THEREFORE, WE DELETE THE ADDITION CONFIRMED BY THE LD CIT(A). ACCORDINGLY, ON THIS GROUND, THE ASSESSEES APPEAL IS ALLOWED. 10. GROUND NO. 14 IS CONSEQUENTIAL TO THE ABOVE FIN DING. 11. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/05/2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 16 TH MAY, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S RAJASTHAN HYBRID PVT. LTD., KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-1, KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDR @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 421/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR