ACIT, New Delhi V. M/s. Godavari Shilpkala Ltd., New Delhi

ITA 4637/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81796 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Capital asset; Depreciation
• Section: 43B; 37(1)

Judgement Text

ITA NO. 4637/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO. 4637/DEL/2013 ASSESSMENT YEAR : 2008-09 ACIT, VS GODAVARI SHILPKALA LTD., CENTRAL CIRCLE-13, 12 , AURANGZEB ROAD, ROOM NO. 332, NE W DELHI. ARA CENTRE, (P AN: AAACG1037G) JHANDEWALAN EXTN., NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATPAL SINGH, SR.DR RESPONDENT BY : SHRI AJAY WADHWA, ADV . O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF CIT(A)-I, NEW DELHI DATED 30.05.2013 IN APPEAL NO . 120/11-12 FOR AY 2008- 09. 2. THE MAIN GROUNDS RAISED BY THE REVENUE READ AS U NDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 22,38,121 /- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF CERTAIN EXPENSES W HICH WERE CLAIMED AS REPAIRS & MAINTENANCE EXPENSES BY THE AS SESSEE COMPANY WHEREAS THE SAME WERE FOUND TO BE CAPITAL N ATURE I.E. RELATED TO SUPPLY OF SONA & STEAM EQUIPMENTS OF HEA LTH CLUB, BENEFIT OF WHICH ARE ENDURING IN NATURE TO THE ASSE SSEE. ITA NO. 4637/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 2 OF 6 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,99,424/ - MADE BY AO ON ACCOUNT OF DISALLOWANCE OF EMPLOYEE'S CONTRIB UTIONS TO THE EPF ACCOUNT AS IN RESPECT OF EMPLOYEE'S CONT RIBUTION TO EPF, THE PAYMENT HAS TO BE MADE BEFORE THE DUE D ATE MENTIONED AS PER PF ACT, THE ASSESSEE HAS DEFAULTED IN R/O AUGUST 2007 PAYMENT OF RS.1,25,961/- AND JANUARY, 2 008 PAYMENT OF RS.73,463/-. GROUND NO.1 3. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED BEFORE US. THE LD. DR SUB MITTED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 22,38,121 /- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF CERTAIN EXPENSES WHICH WERE CLAI MED AS REPAIRS & MAINTENANCE EXPENSES BY THE ASSESSEE COMPANY WHEREA S THE SAME WERE FOUND TO BE CAPITAL IN NATURE. THE DR FURTHER CONTENDED THAT THE EXPENSES WERE INCURRED TOWARDS SUPPLY OF SAUNA AND STEAM EQUIPMEN TS OF HEALTH CLUB, BENEFIT DERIVED BY THE ASSESSEE ARE ENDURING IN NATURE TO T HE ASSESSEE. THE DR SUPPORTED THE IMPUGNED ORDER AND SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 4. THE LD. COUNSEL FOR THE ASSESSEE REPLIED THAT TH E AO MADE ADDITIONS ON THE BASIS OF SURMISES AND CONJECTURES WITHOUT ANY J USTIFIED REASON WHICH WAS RIGHTLY DELETED BY THE CIT(A). HE DREW OUR ATTENTI ON TOWARDS OPERATIVE PARA 4.2 OF THE IMPUGNED ORDER AND REITERATED THE SUBMISSION S MADE BY THE AO AS REPRODUCED IN PARA 4.1 OF THE IMPUGNED ORDER AND SU BMITTED THAT THE CIT(A) TOOK A REASONABLE AND JUSTIFIED APPROACH IN RESTRIC TING THE DISALLOWANCE TO ITA NO. 4637/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 3 OF 6 RS.4,44,495/- PERTAINING TO CAPITAL ASSETS AND GRAN TED RELIEF FOR REMAINING AMOUNT OF RS.22,38,121 BY FOLLOWING STATUTORY PROVI SIONS OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT). LD. COUNSEL SUPPORTE D THE IMPUGNED ORDER. 5. ON CAREFUL CONSIDERATION OF ABOVE CONTENTIONS, A T THE OUTSET, WE OBSERVE THAT THE CIT(A) GRANTED PART RELIEF FOR THE ASSESSE E WITH FOLLOWING CONCLUSION IN PARA 4.2 OF THE ORDER WHICH READS THUS:- 4.2 I HAVE CONSIDERED THE ASSESSMENT ORDER, SUBMIS SIONS MADE AND THE RECORD PRODUCED BEFORE ME. PERUSAL OF THE DETAILS CONTAINED IN THE TWO BILLS SHOWS THAT WHILE SOME OF THE ITEMS APPEAR TO BE NEW EQUIPMENT, MOST OF THE ITEMS RELAT E TO DISMANTLING, REPAIRS AND. SMALL ITEMS OF FITMENTS. ON BEING POINTED OUT, LD. AR FAIRLY IDENTIFIED THE FOLLOWING ITEMS AS NEW EQUIPMENT - A) 2 STEAM GENERATORS RS.L,32,000/- B) 2 SAUNA HEATERS RS.L,25,000/- C) ACCESSORIES FOR SAUNA HEATERS RS. 38,500/- D) WOODEN LOCKERS RS.L,48,995/- 4.3 THE TOTAL VALUE OF THE ABOVE NEW EQUIPMENTS C OMES TO RS.4,44,495/- AND, THEREFORE, THESE ITEMS ARE TREAT ED AS CAPITAL ASSETS. THE DISALLOWANCES MADE IS RESTRICTED TO RS. 4,44,495/-. APPELLANT GETS RELIEF OF RS.22,38,121/-. THE AO IS FURTHER DIRECTED TO ALLOW DEPRECIATION ON THE CAPITAL ASSET S OF RS.4,44,495/- AS PER THE EXTANT RULES. THIS ROUND OF APPEAL IS DISPOSED OF IN THESE TERMS. 6. IN VIEW OF ABOVE, WE ARE OF THE OPINION THAT T HE ASSESSEE HAS CLAIMED IMPUGNED AMOUNT AS REPAIRS U/S 37(1) OF THE ACT AND THE CIT(A) RIGHTLY GRANTED RELIEF FOR THE ASSESSEE AFTER ACCEPTING SUBMISSIONS OF THE ASSESSEE IN THIS REGARD ITA NO. 4637/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 4 OF 6 AS MOST OF THE ITEMS SHOWN IN THE BILLS AND VOUCHER S WERE RELATED TO DISMANTLING, REPAIRS AND SMALL ITEMS OF FITMENTS AN D WE ARE UNABLE TO SEE ANY VALID REASON TO TAKE A DIFFERENT POSSIBLE VIEW AS A GITATED BY THE REVENUE. UNDER THESE CIRCUMSTANCES, WE ARE INCLINED TO HOLD THAT T HE AO MADE ADDITIONS WITHOUT ANY BASIS TAKING A HYPER TECHNICAL APPROACH WHICH W AS RIGHTLY RESTRICTED BY THE CIT(A) TO RS.4,44,455/-. WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER IN THIS REGARD AND WE UPHOL D THE SAME. ACCORDINGLY, GROUND NO. 1 OF THE REVENUE IS DISMISSED. GROUND NO.2 7. APROPOS GROUND NO.2, LD. DR SUBMITTED THAT THE L D. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1, 99,424/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF EMPLOYEE'S CONTRIBUTIONS TO THE EPF ACCOUNT IN RESPECT OF EMPLOYEE'S CONTRIBUTION TO EPF AS THE PA YMENT WAS MADE AFTER SUBSTANTIAL DELAY AND THE ASSESSEE HAS DEFAULTED IN TIMELY PAYMENT OF EPF. LD. DR CONTENDED THAT THE IMPUGNED ORDER MAY BE SET ASI DE BY RESTORING THAT OF THE AO. 8. LD. COUNSEL OF THE ASSESSEE SUPPORTED THE ACTION OF THE CIT(A) AND SUBMITTED THAT THE AO HAS NOT DOUBTED THE GENUINENE SS AND STATUTORY REQUIREMENT OF THE PAYMENT. THEREFORE, THE CIT(A) RIGHTLY GRANTED RELIEF FOR THE ASSESSEE. ITA NO. 4637/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 5 OF 6 9. ON A VIGILANT PERUSAL OF THE IMPUGNED ORDER, ASS ESSMENT ORDER AND OTHER MATERIAL PLACED ON RECORD, WE NOTE THAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITH FOLLOWING CONCLUSION IN PARA 5.2 OF T HE ORDER:- 5.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND TH E SUBMISSIONS OF THE APPELLANT. AFTER DELETION OF TH E SECOND PROVISO TO SECTION 43B VICE AN AMENDMENT BY THE FIN ANCE ACT, 2003, THE LAW RELATING TO THE SUBJECT IS THAT STATUTORY PAYMENTS MADE BEFORE THE DUE DATE OF FILING THE RET URN OF INCOME ARE ALLOWABLE DEDUCTIONS. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. APPELLANT GETS RELIE F OF RS. 5,15,700/-. 10. AT THE OUTSET, FROM THE ASSESSMENT ORDER, WE NO TE THAT THE AO MADE ADDITIONS BY HOLDING THAT THE ASSESSEE HAS NOT DEPO SITED THE AMOUNT OF EMPLOYERS AND EMPLOYEES CONTRIBUTION IN EPF ACCOU NT WITHIN THE DUE DATE AND AT THE SAME TIME, WE OBSERVE THAT THE AO HAS NOT RA ISED ANY DOUBT ABOUT THE GENUINENESS OF THE PAYMENT. WE ARE ALSO IN AGREEME NT WITH THE OBSERVATIONS OF THE CIT(A) THAT AFTER DELETION OF THE SECOND PROVIS O TO SECTION 43B OF THE ACT BY FINANCE ACT, 2003, THE STATUTORY REQUIREMENT OF ALL OWABILITY OF STATUTORY PAYMENTS IS THAT THE PAYMENTS MADE BEFORE THE DUE D ATE OF FILING OF RETURN OF INCOME ARE ALLOWABLE U/S 37(1) OF THE ACT AS DEDUCT IONS. 11. WE ARE UNABLE TO SEE ANY AMBIGUITY OR PERVERSIT Y IN THE IMPUGNED ORDER WHICH DELETED THE ADDITION AND WE UPHOLD THE SAME O N THIS ISSUE. FINALLY, GROUND NO. 2 OF THE REVENUE IS ALSO DISMISSED. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO. 4637/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 6 OF 6 ORDER PRONOUNCED IN THE OPEN COURT ON 17.10.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 17 TH OCTOBER, 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR