M/s. Arvind V. Joshi & Co., Kutch V. The DCIT, Gandhidham Circle, Gandhidham

ITA 47/RJT/2021

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4184 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 06-11-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 08-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 43B

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, राजकोट 瀈यायपीठ 瀈यायपीठ瀈यायपीठ 瀈यायपीठ, , , , राजकोट IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.47/RJT/2021 Assessment Year :2014-15 Arvind V. Joshi & Co. Plot No.18, Sector 8 Gandhidham-Kutch. PAN : AABFA 6236 D Vs. ACIT, Gandhidham Circle Gandhidham. अपीलाथ / (Appellant) यथ /(Respondent) Assessee by : Shri K.C. Thacker, ld.AR Revenue by : Shri Abhimanyu Singh, ld.Sr.DR स ु नवाई क तार ख/Date of Hearing : 07/11/2023 घोषणा क तार ख /Date of Pronouncement: 24/01/2024 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld.Commissioner of Income Tax(A)-2, Rajkot [hereinafter referred to as “Ld.CIT(A)]under section 250(6) of the Income Tax Act, 1961 ("the Act" for short) dated 16.3.2020 pertaining to the Asst.Year 2014-15. 2. At the time of hearing, it is noted that appeal filed before the Tribunal on 9.4.2021 by the assessee is time barred by 298 days, which period happened to be fallen during the COVID pandemic period. We note that due to the pandemic of COVID-19, the limitation prescribed for filing appeals was extended till further orders by the Hon’ble Supreme Court vide its order dated ITA No.47/RJT/2021 2 23/03/2020 in Suo Moto Writ Petition (Civil) No.(s) 3/2020. And the same was ultimately extended upto 28th February 2022 in M.A No.21 of 2022 dated 10th January 2022. This period of extension given by the Supreme Court, is therefore to be excluded for the purpose of limitation in filing appeal before the various authorities. Therefore, considering the same, the impugned delay is concerned. 3. The grounds raised by the assessee in the appeal are as under: i) On the facts and in the circumstances of the case and in law the learned CIT-(A] has erred in law and on facts in confirming disallowance of Rs. 2,11,684/- being employees contribution to Provident Fund deposited beyond the due date as prescribed in the relevant statute. ii) On the facts and in the circumstances of the case and in law the learned CIT (A) ought not have confirmed the disallowance of depreciation of Rs. 2,85,897/- being claimed on approach road to wind mill by ignoring the binding decision of jurisdictional tribunal and other High courts on the relevant issue. iii) On the fact and in the circumstances of the case and in law, the learned CIT(A) ought not have confirmed the disallowance of Rs. 2,22,648/- being depreciation on motor cars. iv) It is therefore prayed that the orders passed by lower authorities may be quashed and set aside and the addition/disallowance of Rs.7,20,229/-may be deleted. Your appellant craves leave to add, amend, alter or withdraw any ground of appeal at the time of hearing. 4. First ground regarding disallowance ofRs.2,11,684/- being employees’ contribution to provident fund deposited beyond the due date as prescribed in the relevant statute is concerned, the issue is admittedly settled against the assessee by the decision of the Hon’ble Supreme Court in the case of Checkmate Services P.Ltd. Vs. (2022) 143 taxmann.com 178. The concluding part of the judgment reads as under: “54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer's obligation to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or ITA No.47/RJT/2021 3 before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction.” In view of the above settled position of law, the deduction under section 36(1)(va) in respect of delayed deposit of amount collected from employee’s contribution to PF cannot be allowed as deduction. Ground of appeal No.1 is rejected. 5. Next ground relates to disallowance of depreciation of Rs.2,85,897/- claimed on approach road to wind mill, which was claimed by the assessee at the rate of 80%. 6. The assessee’s contention throughout has been that it has not claimed any depreciation on land that in fact depreciation has been claimed on temporary road built by it, which approaches the windmill constructed by it; that the purpose of construction road being to facilitate approach to the windmill for its maintenance and running its operations. The assessee is stated to be in the business of running wind-mill. ITA No.47/RJT/2021 4 7. The Revenue, on the other hand, has held that the assessee has claimed depreciation on land and not temporary approach road. The basis with the Revenue for finding so is the fact noted that the assessee had made payment to M/s.Suzlon Wind Power Ltd. for land which in turn had taken the land on lease from the State Government. Thus, it transpires that both the parties are not on the same page with respect to the factsof the issue itself. The assessee is claiming to have constructed a temporary road and claimed depreciation thereon, while the department contends that the assessee has claimed depreciation on land. In the absence of complete and correct facts relating to the issue before us it is impossible to adjudicate the present ground. The matter is therefore restored back to the AO to determine the facts relating to the issue and thereafter adjudicate the claim of the assessee in accordance with law. Ground of appeal No.2 is allowed for statistical purposes. 8. The issue raised in ground no.3 relates to disallowance of expenses incurred on running of vehicles/motor cars which was disallowed by the AO at the rate of 30% of the total claim so made by the assessee holding that personal usage of motor car by the partners in the assessee firm cannot be ruled out, and noting the fact that the assessee had not maintained any log book of running of the vehicles in support of its claim that the vehicles were used entirely for the purpose of business of the assessee. The ld.CIT(A) has upheld the same. ITA No.47/RJT/2021 5 9. Before us, solitary issue of the ld.counsel for the assessee was that the disallowance of 30% of the expenses was unjustifiably high and the same be reduced to 10%. The ld.DR opposed the same. 10. We have heard both the parties. The fact that the assessee has been unable to justify its entire claim of expenses on vehicles /motor cars, as having been incurred for the purpose of business of the assessee, is not disputed. But at the same, we note that while disallowing 30% of the said expenses, there is no rationale or basis given by the Revenue and disallowances at the rate of 30% appears to be an arbitrary and adhoc exercise at the end of the Department. In the interest of justice, therefore, we incline to accept the plea of the assessee that the disallowance of 1/3 rd of the vehicle expenses is unjustifiable high and 10% of the same is fair rate considering the facts of the case. 11. In view of the same, we hold that the disallowance of vehicle expenses be restricted to 10% of the total expenses incurred by the assessee. Ground of appeal No.3 is accordingly partly allowed. Ground No.4 being general in nature needs no adjudication. 12. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the Court on 24 th January, 2024 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 24/01/2024 vk*