THE ITO, WARD - 2(2), Vijayawada V. M/s Srinivasa Engineering Construction Company, Hyderabad

ITA 487/VIZ/2013

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9715 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 25-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R GOVINDHA RAJAN
• Keywords: Depreciation; Non-deduction of tax
• Section: 194C; 263; 144

Judgement Text

ITA NO.487/VIZAG/2013 M/S. SRINIVASA ENGINEERING CONSTRUCTION COMPANY, HY DERABAD 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.487/VIZAG/2013 ( / ASSESSMENT YEAR: 2006-07) ITO, WARD - 2(2), VIJAYAWADA VS. M/S. SRINIVASA ENGINEERING CONSTRUCTION COMPANY, HYDERABAD [PAN: ABBFS5704B ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI R. GOVINDHA RAJAN, DR / RESPONDENT BY : SHRI A.S.R.S.S. SIVA PRASAD, AR / DATE OF HEARING : 19.10.2016 / DATE OF PRONOUNCEMENT : 25.11.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A), VIJAYAWADA DATED 16.4.2013 AND IT PERTAINS TO THE ASSESSMENT YEAR 2006-07. ITA NO.487/VIZAG/2013 M/S. SRINIVASA ENGINEERING CONSTRUCTION COMPANY, HY DERABAD 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS FIL ED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 31.10.2006 DECLA RING TOTAL INCOME OF ` 2,50,330/-. THE ASSESSMENT WAS COMPLETED U/S 143( 3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T') ON 29.12.2008 DETERMINING TOTAL INCOME OF ` 11,55,430/-. SUBSEQUENTLY, THE CIT, VIJAYAWADA PASSED AN ORDER U/S 263 OF THE ACT AND S ET ASIDE THE ASSESSMENT ORDER PASSED BY THE A.O. AND DIRECTED TH E A.O. TO RE-DO THE ASSESSMENT DE-NOVO IN THE LINE OF DISCUSSION IN HIS ORDER PASSED U/S 263 OF THE ACT. BASED ON THE FINDINGS OF THE CIT, IN T HE PROCEEDINGS U/S 263 OF THE ACT, THE A.O. HAS PASSED CONSEQUENTIAL ORDER U/S 144 R.W.S. 263 OF THE ACT, DETERMINING TOTAL INCOME AT ` 85,99,360/-, INTER-ALIA BY MAKING DISALLOWANCE OF ` 33,97,695/- TOWARDS EXCESS CLAIM OF DEPRECIATION ON PLANT AND MACHINERY AND DISALLOWANC E OF ` 40,46,236/- U/S 40(A)(IA) OF THE ACT, FOR NON-DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) FOR THE REASO NS RECORDED IN HIS ORDER DATED 16.4.2013, DELETED ADDITIONS MADE BY TH E A.O. TOWARDS DISALLOWANCE OF EXCESS CLAIM OF DEPRECIATION ON PLA NT AND MACHINERY AND DISALLOWANCE OF HIRE CHARGES U/S 40(A)(IA) OF THE A CT. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. ITA NO.487/VIZAG/2013 M/S. SRINIVASA ENGINEERING CONSTRUCTION COMPANY, HY DERABAD 3 3. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS EXCESS CLAIM OF DEPRECIATION ON PLANT AND M ACHINERY. THE A.O., WHILE COMPLETING THE ASSESSMENT U/S 144 R.W.S. 263 OF THE ACT, HAS DISALLOWED EXCESS CLAIM OF DEPRECIATION OF ` 33,97,695/- ON THE GROUND THAT THE ASSESSEE HAS PURCHASED PLANT AND MACHINERY IN THE MONTH OF JANUARY, 2006. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE OUGHT TO HAVE CLAIMED DEPRECIATION OF 50% OF ACTUAL DEPRECIA TION, WHEREAS THE ASSESSEE HAS CLAIMED 100% DEPRECIATION ON THE ASSET S PURCHASED AND PUT TO USE FOR LESS THAN 180 DAYS, THEREFORE, RE-WO RKED DEPRECIATION AND DISALLOWED EXCESS DEPRECIATION CLAIM OF ` 33,97,695/-. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS F URNISHED COMPLETE DETAILS OF ASSETS PURCHASED ALONG WITH INVOICE COPY OF ASSETS AND WORKING OF DEPRECIATION. THE CIT(A) AFTER CONSIDER ING THE DETAILS FILED BY THE ASSESSEE, OBSERVED THAT THE ASSESSEE HAS PUR CHASED THE ASSET BETWEEN MAY, 2005 TO JULY, 2005 AND ENTITLED FOR 10 0% DEPRECIATION. THE REVENUE FAILED TO BRING ON RECORD ANY EVIDENCES TO PROVE THE FINDINGS OF FACTS RECORDED BY THE CIT(A) IS INCORRE CT. THEREFORE, WE UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISE D BY THE REVENUE. 4. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N IS DISALLOWANCE OF HIRE CHARGES U/S 40(A)(IA) OF THE ACT, FOR NON-D EDUCTION OF TAX AT ITA NO.487/VIZAG/2013 M/S. SRINIVASA ENGINEERING CONSTRUCTION COMPANY, HY DERABAD 4 SOURCE U/S 194C OF THE ACT. THE A.O., WHILE COMPLE TING ASSESSMENT U/S 144 R.W.S. 263 OF THE ACT, DISALLOWED HIRE CHARGES OF ` 40,46,236/- FOR THE REASON THAT THE ASSESSEE HAS FAILED TO PRODUCE DETAILS FOR COMPLIANCE WITH TDS PROVISIONS. DURING THE COURSE OF APPELLAT E PROCEEDINGS, THE ASSESSEE HAS FILED COMPLETE DETAILS OF HIRE CHARGES AND ALSO DETAILS OF TDS DEDUCTIONS WHEREVER APPLICABLE. ACCORDING TO T HE ASSESSEE, OUT OF TOTAL HIRE CHARGES OF ` 40,46,236/-, AN AMOUNT OF ` 36,82,590/- HAS BEEN PAID TO INDEPENDENT CONTRACTORS BELOW ` 20,000/-, ACCORDINGLY REQUIREMENT OF DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT DOES NOT ARISE. IN SO FAR AS AN AMOUNT OF ` 3,63,646/- IS CONCERNED, THE ASSESSEE HAS FURNISHED DETAILS OF TDS. THE CIT(A), AFTER CO NSIDERING THE DETAILS FURNISHED BY THE ASSESSEE, OBSERVED THAT OUT OF 7 C ASES, IN RESPECT OF 5 CASES THE ASSESSEE HAS DEDUCTED TDS AND REMITTED TH E SAME TO THE GOVERNMENT ACCOUNT. HOWEVER, IN THE REMAINING 2 CA SES AMOUNTING ` 51,590/-, THOUGH THE AMOUNT EXCEEDS ` 20,000/- IN EACH CASE, THE ASSESSEE FAILED TO DEDUCT TDS. ACCORDINGLY, OBSERV ED THAT DISALLOWANCE U/S 40(A)(IA) OF THE ACT TO THE EXTENT OF ` 51,590/- IS REQUIRED. WITH THESE OBSERVATIONS, DIRECTED THE A.O. TO RESTRICT T HE DISALLOWANCE TO THE EXTENT OF ` 51,590/-. THE FACTS REMAINS UNCHANGED. THE REVEN UE FAILS TO BRING ON RECORDS, ANY EVIDENCE TO PROVE THE FIND INGS OF FACTS RECORDED ITA NO.487/VIZAG/2013 M/S. SRINIVASA ENGINEERING CONSTRUCTION COMPANY, HY DERABAD 5 BY THE CIT(A) IS INCORRECT. HENCE, WE INCLINED TO UPHOLD CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 TH NOV16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 25.11.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-2(2), VIJAYAWADA 2. / THE RESPONDENT M/S. SRINIVASA ENGINEERING CONS TRUCTION COMPANY, FLAT NO.502, BHAGYAPRASHTA RESIDENCY, NEAR GOLCONDA FUNCTION HALL, ATTAPUR, HYDERABAD 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM