ITO 25(1)(4), MUMBAI V. RAVIRAJ ENTERPRISES, MUMBAI

ITA 5085/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62310 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 30-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VIMAL PUMMIYA
• Keywords: Depreciation; Retrospective amendment; Revenue expenditure
• Section: 194C; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI VIJAY PAL RAO, JM & SHRI RAJENDRA, AM ITA NO. 5085/MUM/2011 (ASSESSMENT YEAR 2008-09) THE INCOME TAX OFFICER WARD 25(1)(4), MUMBAI VS RAVIRAJ ENTERPRISES A/501 BLUE GALAXY III C S ROAD, ANANDNAGAR DASHISAR (E) MUMBAI 68 (APPELLANT ) (RESPONDENT) PAN NO. AAJFR7493R ASSESSEE BY SH VIMAL PUMMIYA REVENUE BY SH C G K NAIR DT.OF HEARING 14 TH MAY 2012 DT OF PRONOUNCEMENT 14 TH MAY2012 ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25.4.2011 OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE A SSESSMENT YEAR 2008-09. 2 THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GR OUNDS IN THIS APPEAL: 1. ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CA SE AND IN LAWS, THE LD COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETIN G THE DISALLOWANCE OF ` . 40.48,115/- MADE BY THE ASSESSING OFFICER U/S 40(A )(IA) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW TH E ENTIRE COST OF WOODEN CANTERING MATERIAL AT ` 20,78,948/- AS REVENUE DEDUCTION. 3 GROUND NO.1 IS REGARDING DISALLOWANCE U/S 40(A)(I A) OF THE I T ACT. 3.1 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE H AS CLAIMED SUB CONTRACT PAYMENTS OF ` 47,95,822/- OUT OF WHICH A SUM OF ` 40,48,115/- WAS LIABLE FOR TAX RAVIRAJ ENTERPRISES ITA NO. 5085/MUM/2011 2 DEDUCTION AT SOURCE. THE ASSESSING OFFICER OBSERVE D THAT THE CONTRACTORS PAYMENTS WERE CREDITED TO THE ACCOUNT OF THE CONTRACTORS BET WEEN APRIL 2007 TO FEBRUARY 2008 OF WHICH THE TDS WAS DEDUCTIBLE IN ACCORDANCE WITH SECTION 194C OF THE ACT; BUT THE ASSESSEE FAILED TO DEDUCT THE TDS ON THE AB OVE PAYMENTS CREDITED TO THE SUB CONTRACTORS ACCOUNT. SINCE THE ASSESSEE HAS NOT DEPOSITED THE TDS WITH THE GOVERNMENT BEFORE 31 ST MARCH 2008, THE ASSESSING OFFICER DISALLOWED ` 40,48,115/- U/S 40(A)(IA) OF THE ACT. 3.2 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEA LS) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S GOLDEN STABLES LIFESTYLE CENTRE PVT LTD IN ITA NO. 5145/MUM/2009 ON THE POINT THAT THE AMENDMENT TO SECTION 40(A)(IA) IS RETROSPECTIVE AND THEREFORE , TAX DEDUCTED AT SOURCE, IF DEPOSITED TO THE GOVERNMENT ACCOUNT ON OR BEFORE TH E DUE DATE OF FILING OF THE RETURN, NO DISALLOWANCE COULD BE MADE U/S 40(A)(IA) OF THE ACT. 4 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF T HE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD DR HAS SUB MITTED THAT THE AMENDMENT IN SECTION 40(A)(IA) IS NOT RETROSPECTIVE IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BHARATI SHIPYARD LTD VS DCIT REPORTED IN 132 ITD 53. THEREFORE, THE FINDINGS OF THE COMMISSIONER OF INCO ME TAX(APPEALS) IS NOT SUSTAINABLE. 4.1 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HA S SUBMITTED THAT EVEN IF THE AMENDMENT IS CONSIDERED AS PROSPECTIVE IN NATURE WH EN THE ASSESSEE HAS DEDUCED THE TDS ONLY ON 31.3.2008 WHEN THE ACCOUNT OF THE C ONTRACTOR IS CREDITED. HE HAS REFERRED THE LEDGER ACCOUNT OF THE CONTRACTOR AT PA GES 44 ONWARDS OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS CREDITED T HE SUB CONTRACTORS ACCOUNT ONLY ON 31.3.2008 AND DEDUCTED THE TAX AT THE TIME OF CREDITING THE ACCOUNT. RAVIRAJ ENTERPRISES ITA NO. 5085/MUM/2011 3 THEREFORE, THE TDS DEDUCTED IN THE MONTH OF MARCH I S REQUIRED TO BE DEPOSITED ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN AS P ER THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT AND NO DISALLOWANCE CAN BE MADE. HE HAS RE LIED UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF BAPUSHAEB NANASAHEB DHUMAL PROP & BROTHERS VS ACIT REPORTED IN 40 SOT 361(MUM). 4.2 THUS, THE LD AR OF THE ASSESSEE HAS SUBMITTED T HAT WHEN THE TDS WAS DEDUCTED ON 31.3.2008 AND THE SAME WAS DEPOSITED IN THE GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING OF THE RETURN, THEN N O DISALLOWANCE IS CALLED FOR U/S 40(A)(IA) OF THE ACT. 5 AFTER CONSIDERING THE RIVAL CONTENTION AND CAREFU L PERUSAL OF THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSING OFFI CER HAS MADE THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE DID NOT DEDUCT THE TAX AT SOURCE WHENEVER THE PAYMENTS WERE MADE TO THE CONTRACTORS FROM APRIL 20 07 TO FEBRUARY 2008. THOUGH THE ASSESSEE MADE CERTAIN PAYMENTS DURING THE PERIO D BETWEEN APRIL 2007 AND FEB 2008; HOWEVER, THE ASSESSEE HAS CLAIMED THAT THE SA ID PAYMENTS WERE ONLY IN ADVANCE AND THE ACCOUNTS OF THE CONTRACTORS WAS CRE DITED ONLY ON 31.3.2008 BY DEDUCTING THE TDS. THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE ON LEGAL POINT THAT THE AMENDMENT BROU GHT IN SECTION 40(A)(IA) BY INSERTING THE PROVISO BY THE FINANCE ACT 2010 W.E.F 1.4.2010 IS CURATIVE IN NATURE AND THEREFORE, APPLIED RETROSPECTIVE. 5.1 IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BAPUSHAEB NANASAHEB DHUMAL PROP & BROTHERS (SUPRA), THE AMENDMENT IN QUESTION IS ONLY PERSPECTIVE AND NOT RETROSPECTIVE. HOWEVER, SINCE THE ASSESSEE HAS CLAIMED THE DEDUCTION OF TDS ONLY ON 31.3.2008, THEREFORE, WHEN THE SAME WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETURN, THEN N O DISALLOWANCE CAN BE MADE. WE RAVIRAJ ENTERPRISES ITA NO. 5085/MUM/2011 4 FIND MERIT ON THE SUBMISSION OF THE LD AR OF THE AS SESSEE, PROVIDED THE TAX HAS BEEN DEDUCTED IN THE MONTH OF MARCH, 2008. 6 THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF BAPUSHAEB NANASAHEB DHUMAL PROP & BROTHERS (SUPRA), ONE OF US JUDICIA L MEMBER IS THE AUTHOR OF THE SAID ORDER HAS CONSIDERED AND DECIDED THE ISSUE IN PARAS 10 & 11 AS UNDER; 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD AS WELL AS CASE LAW RELIED UPON BY BOTH THE PARTIES. THE CONTRO VERSY IN THE PRESENT CASE REVOLVES AROUND THE APPLICABILITY OF THE PROVISIONS OF S. 194C WHILE DISALLOWING THE EXPENDITURE UNDER THE PROVISION OF S. 40(A)(IA) OF THE ACT. IT IS UNDISPUTED FACT THAT THE ASSESSEE MADE THE PAYMENT TO THE SUB- CONTRACTOR DURING THE PREVIOUS YEAR BUT THE TAX WAS DEDUCTED ONLY ON 31ST MARCH, 2005. THE AO HAS ALREADY ALLOWED THE DEDUCTION IN RESPECT OF PAYMENT MADE DURING THE MONTH OF MARCH, 2005 BUT DISALLOWED THE DEDUCTION IN RESPECT OF THE PAYMENTS WHICH WERE CREDITED AND MADE DURING THE PE RIOD OTHER THAN THE MONTH OF MARCH, 2005. NO DOUBT THAT AS PER THE PROVIS IONS OF CHAPTER XVII-B AND PARTICULARLY S. 194C AS THE PAYMENTS UNDER CONSIDE RATION ARE COVERED UNDER THE PROVISIONS OF S. 194C, THE TAX HAS TO BE DE DUCTED AT THE TIME OF PAYMENT OR CREDIT OF SUCH SUM IN WHICH THE TAX IS D EDUCTED WITHIN 7 DAYS FROM THE END OF THE MONTH AND HAS TO BE DEPOSITED WITH T HE GOVERNMENT WITHIN THE PERIOD PRESCRIBED UNDER S. 194C. IN CASE OF FAILURE OF DEDUCTION OF TAX AND/OR DEPOSITING THE SAME AS PER THE PROVISIONS OF S. 194C OR THE PROVISIONS OF CHAPTER XVII, AS THE CASE MAY BE, THE ASSESSEE HA S TO FACE THE CONSEQUENCES AS PROVIDED UNDER THE SAID CHAPTER XVII OF THE ACT BY ATTRACTING THE PENALTY OR INTEREST. THE PROVISIONS OF S. 40(A)(IA) ARE IN ADDITION TO THE PROVISIONS OF CHAPTER XVII AS WELL AS CHAPTER XXII TO ENSURE THE DEDUCTION AND DEPOSIT OF THE TDS. IT IS APPROPRIATE TO QUOTE THE PROVISIONS OF S. 40(A)(IA) : '40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SS. 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTIN G THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OR PROFESSION, (A) IN THE CASE OF ANY ASSESSEE (I) ............... (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYA LTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PA YABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CON TRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING S UPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID, RAVIRAJ ENTERPRISES ITA NO. 5085/MUM/2011 5 (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-S. (1) OF S. 1 39; OR (B) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF TH E PREVIOUS YEAR : PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HA S BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTE D (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAI D AFTER THE SAID DUE DATE; OR (B) DURING ANY OTHER MONTH OF THE PREVIOUS YEAR BUT P AID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTI NG THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEE N PAID. EXPLANATIONFOR THE PURPOSES OF THIS SUB-CLAUSE, (I) COMMISSION OR BROKERAGE SHALL HAVE THE SAME MEANING AS IN CL. (I) OF THE EXPLANATION TO S. 194H ; (II) FEES FOR TECHNICAL SERVICES SHALL HAVE THE SA ME MEANING AS IN EXPLN. 2 TO CL. (VII) OF SUB-S. (1) O F S. 9; (III) PROFESSIONAL SERVICES SHALL HAVE THE SAME M EANING AS IN CL. (A) OF THE EXPLANATION TO S. 194J; (IV) WORK SHALL HAVE THE SAME MEANING AS IN EXPLN. III TO S. 194C; (V) RENT SHALL HAVE THE SAME MEANING AS IN CL. (I) TO THE EXPLANATION TO S. 194-I; (VI) ROYALTY SHALL HAVE THE SAME MEANING AS IN EX PLN. 2 TO CL. (VI) OF SUB-S. (1) OF S. 9;' 11. AS PER THE CL. (IA) OF SUB-S. (A) OF S. 40 WHEN TAX IS DEDUCTIBLE AT SOURCE ON THE PAYMENT UNDER CHAPTER XVII AND SUCH TAX HAS NOT B EEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID THEN THE SAID DED UCTION IS NOT ALLOWABLE. AS PER THE SUB-CL. (A) OF CL. (IA) IF THE TAX IS DED UCTED DURING THE LAST MONTH OF PREVIOUS YEAR AND PAID ON OR BEFORE THE DUE DATE OF F ILING OF RETURN AS PER THE PROVISIONS OF S. 139(1) THEN SUCH SUM SHALL BE ALLO WED AS DEDUCTION. IN THE CASES WHERE THE TAX IS DEDUCTED DURING PREVIOUS YEAR O THER THAN THE LAST MONTH OF PREVIOUS YEAR BUT IS DEPOSITED BEFORE THE L AST DAY OF PREVIOUS YEAR THEN IT WILL BE ALLOWED AS DEDUCTION. THEREFORE, THE CONDITION FOR ALLOWABILITY OF THE DEDUCTION IS PRESCRIBED UNDER S. 40(A)(IA) ITSE LF AND PROVISIONS OF CHAPTER XVII AND S. 194C UNDER CHAPTER XVII-B AT THAT RELEVANT POINT OF TIME ARE RELEVANT ONLY FOR THE PURPOSES OF ASCERTAINING THE DEDUCTIBILITY OF THE TAX ON THE PAYMENT. ONCE, THE NATURE OF PAYMENT IS FALL ING UNDER THE PROVISIONS OF CHAPTER XVII/XVII-B THEN THE DISALLOWANCE UNDER S. 40(A)(IA) SHALL BE AS PER THE CONDITION AS PROVIDED UNDER THIS SECTION ITSELF. THE PROVISO TO S. 40(A)(IA) MAKES IT FURTHER CLEAR THAT EVEN IN THE CASE WHEN THE TAX HAS BEEN DEDUCTIBLE AS PER THE PROVISIONS OF CHAPTER XVII BUT DEDUCTED IN THE SUBSEQUENT YEAR OR DEDUCTED DURING THE LAST MONTH OF PREVIOUS YEAR BUT PAID RAVIRAJ ENTERPRISES ITA NO. 5085/MUM/2011 6 AFTER THE DUE DATE UNDER S. 139(1) OR DEDUCTED DURIN G THE OTHER MONTH OF THE PREVIOUS YEAR EXCEPT LAST MONTH BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR THEN THE SAID SUM SHALL NOT BE ALLOWED AS DEDUC TION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR BUT ALLOWED IN THE PREVIO US YEAR IN WHICH THE SAID TAX HAS BEEN PAID. IF THE CONDITION OF DEDUCTI ON AND PAYMENTS PRESCRIBED UNDER CHAPTER XVII/XVII-B ARE APPLICABLE FOR DISALLOWANCE OF THE DEDUCTION UNDER S. 40(A)(IA) THEN THE PROVISIONS OF S. 40(A)(IA) WILL BE RENDERED AS MEANINGLESS, ABSURD AND OTIOSE. AS PER THE PROVISIO NS OF S. 40(A)(IA) THE DEDUCTION IS DISALLOWED ONLY IN THE CASE WHEN EITHE R NO TAX WAS DEDUCTED OR IT WAS NOT PAID AFTER DEDUCTION. BUT WHEN THE TAX I S DEDUCTED MAY BE BELATEDLY AND DEPOSITED BELATEDLY THEN DEDUCTION IS ALLOWABLE IN THE PREVIOUS YEAR IN WHICH IT WAS SO DEPOSITED. THEREFOR E, IF THE PROVISIONS OF S. 194C WITH RESPECT TO THE TIME OF DEDUCTION AND PAYM ENTS ARE APPLIED FOR THE DISALLOWANCE UNDER S. 40(A)(IA) THEN THERE WILL BE NO PURPOSE OR OBJECT FOR PROVIDING THE CERTAIN CONDITIONS OF ACTUAL DEDUCTIO N OF TAX AND PAYMENT OF TAX UNDER S. 40(A)(IA). IN OUR VIEW, THE PROVISIONS O F CHAPTER XVII ARE RELEVANT ONLY FOR ASCERTAINING THE DEDUCTIBILITY OF THE TAX A T SOURCE AND NOT FOR THE ACTUAL DEDUCTION AND PAYMENT FOR ATTRACTING THE PROV ISIONS OF S. 40(A)(IA). SINCE IN THE CASE IN HAND WHEN THE ASSESSEE HAD DED UCTED THE TAX IN THE LAST MONTH OF THE PREVIOUS YEAR I.E., MARCH, 2005 AND DEPOS ITED THE SAME BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER S. 139 (1) THEN IT IS COVERED UNDER CL. (A) OF S. 40(A)(IA). THEREFORE WHEN THE ASSESSEES C ASE IS COVERED UNDER THE MAIN PROVISIONS OF EXISTING LAW THEN WE NEED NOT TO GO TO THE ISSUE OF PROSPECTIVE OR RETROSPECTIVE EFFECT OF THE AMENDMENT I N THE PROVISIONS BY THE FINANCE ACT, 2010. AS REGARDS THE DECISION RELIED UPO N BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WHEN THE PROVISO TO S. 4 0(A)(IA) IS NOT CONTRARY TO THE MAIN SECTION/ENACTMENT THEN THE SAID DECISIO N WILL NOT HELP THE CASE OF THE REVENUE. EVEN OTHERWISE WHEN THE CASE OF THE ASSESSEE FALLS UNDER THE MAIN PROVISIONS OF S. 40(A) (IA) THEN THE SAID DECIS ION RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THE CASE OF CI T VS. MADURAI MILLS CO. LTD. (SUPRA) IS NOT RELEVANT. ACCORDINGLY, WE SET ASI DE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE CLAIM OF THE DEDUCTION OF THE ASSESSEE. 7. ACCORDINGLY, ON PRINCIPLE, WE HOLD THAT IF THE T DS HAS BEEN DEDUCTED IN THE MONTH OF MARCH 2008 AND THE SAME HAS BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETURN, THEN NO DISALLOWANCE CAN BE M ADE U/S 40(A)(IA) OF THE ACT. HOWEVER, THIS FACTUAL ASPECT HAS NOT BEEN EXAMINED BY THE AUTHORITIES BELOW. THEREFORE, FOR THIS LIMITED PURPOSE, WE SET ASIDE T HIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER TO VERIFY THIS FACT OF DEDUCTION OF TDS IN THE MONTH OF MARCH 2008 AND ACCORDINGLY DECIDE THE SAME AS PER THE ABOVE OB SERVATION. RAVIRAJ ENTERPRISES ITA NO. 5085/MUM/2011 7 8 GROUND NO.2 IS REGARDING DISALLOWANCE OF CENTERIN G MATERIAL EXPENSES. 8.1 THE ASSESSEE IS IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACT WORK. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEBIT ED ` 23,34,860/- TOWARDS CANTERING MATERIAL IN THE P&L ACCOUNT. THE ASSESS ING OFFICER WAS OF THE VIEW THAT THE SAME IS CAPITAL IN NATURE AND TO BE DISALLOWED. THE ASSESSING OFFICER ACCORDINGLY ALLOWED DEPRECATION @ 15%. 8.2 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEA LS) HAS ALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF THE COST OF WOODEN CENTERING MATERIAL AT ` 20,78,948/- AND CONFIRMED THE DISALLOWANCE IN RESP ECT OF STEEL ITEMS ON WHICH THE DEPRECIATION @ 15% WAS ALLOWED. 9 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD DR HAS SUBMITTED THAT S INCE THE CENTERING MATERIAL IS BEING USED FOR MANY YEARS; THEREFORE, THE SAME CANN OT BE ALLOWED AS REVENUE EXPENDITURE. HE HAS RELIED UPON THE ORDER OF THE AS SESSING OFFICER. 9.1 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HA S SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE WOODEN MATERIAL USED FOR CENTERIN G PURPOSES EVERY YEARS. HE HAS REFERRED THE PURCHASE BILL OF THE WOODEN CENTER ING MATERIAL PLACED AT PAGES 29 TO 43 OF THE PAPER BOOK. THE CENTERING MATERIAL, TO BE KEPT UNDER THE CONSTRUCTED STRUCTURE FOR A MINIMUM PERIOD OF 21 DAYS ON WHICH WATER IS REGULARLY POURED TO KEEP THE NEWLY CONSTRUCTED STRUCTURE WET; THEREFORE , THE SAID WOODEN MATERIAL CANNOT BE REUSED. 10 AFTER CONSIDERING THE RIVAL CONTENTION AND CAREF UL PERUSAL OF THE RELEVANT MATERIAL ON RECORD, WE NOTE THAT AS FAR AS THE WOOD EN MATERIAL IS CONCERNED, THE RAVIRAJ ENTERPRISES ITA NO. 5085/MUM/2011 8 COMMISSIONER OF INCOME TAX(APPEALS) HAS CONSIDERED THE RELEVANT FACTS WHILE DECIDING THIS ISSUE IN PARA 4.3 AS UNDER: 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRESEN TATIVE AND THE STAND TAKEN BY THE A.O. THE A.O. HAS NOT DISPUTED THE GEN UINENESS OF PURCHASE OF CANTERING MATERIAL BY THE APPELLANT AND IT IS SEEN THAT THE APPELLANT HAS PRODUCED PURCHASE VOUCHERS BEFORE THE A.O. AS SEEN FR OM THE DETAILS OF PURCHASE OF CANTERING MATERIAL IN THIS YEAR AND THE S UBSEQUENT YEARS, IT IS NOTICED THAT THE APPELLANT PURCHASED CANTERING MATERI AL YEAR AFTER YEAR AND IF THE SAME CANTERING MATERIAL PURCHASED DURING THIS YE AR CAN BE USED IN THE NEXT YEAR, THEN THERE WAS NO NECESSITY FOR PURCHASE OF CANTERING MATERIAL IN THE SUBSEQUENT YEARS. AS CONTENDED BY THE REPRESENTAT IVE THE WOODEN PLANKS ERECTED ON THE SITE FOR THE PURPOSE OF FILLING CEMENT CONCRETE CANNOT BE REMOVED FOR A PERIOD OF ONE MONTH TILL THE PROCESS OF FILLING IS OVER. WHEN THE WATER IS POURED EVERY DAY, THE WOODEN PLANKS GET D AMAGED AND THERE IS NO RESALE VALUE AND THE SAME CANNOT BE USED AGAIN IN THE NEXT YEAR. THIS IS EVIDENT FROM THE FACT THAT THE APPELLANT PURCHASED W OODEN MATERIAL OF RS.14,13,259/- AND RS 12,10,677/- FOR A.YS.09-10 AND 10-11 RESPECTIVELY. IN VIEW OF THE ABOVE, I ACCEPT THE CLAIM OF THE APPELLANT T HAT THE PURCHASE OF WOODEN MATERIAL HAS TO HE ALLOWED AS REVENUE DEDUCTI ON. FURTHER IT IS NOTICED EVEN AFTER ALLOWING THE COST OF WOODEN MATE RIAL AS DEDUCTION, THE APPELLANT HAS ADMITTED NET PROFIT OF RS 10,12,735/- ON A TURNOVER OF RS 1,25,38,522/- AND THE NET PROFIT ADMITTED WORKS OUT TO 8.08%. HOWEVER, THE COST OF MS PIPES AND ANGLES CANNOT HE ALLOWED AS RE VENUE DEDUCTION AS THE SAME CAN HE USED OVER A PERIOD OF TIME. ACCORDINGLY , THE A.O. SHALL ALLOW THE ENTIRE COST OF WOODEN CANTERING MATERIAL AT RS 20,78, 948/- AND ON THE STEEL ITEMS HE SHALL ALLOW ONLY DEPRECIATION AT THE RATE O F I 5%. THE ASSESSING OFFICER SHALL REWORK THE DISALLOWANCE ACCORDINGLY. 10.1 AS DISCUSSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) WHEN THE WOODEN MATERIAL REMAINS UNDER THE NEWLY CONSTRUCTED STRUCT URE FOR A PERIOD OF MONTH DURING WHICH CONTINUOUS WATER POURING IS DONE TO KEEP THE STRUCTURE WET, THEN POSSIBILITY OF USING THE WOODEN MATERIAL FOR THE NEXT YEAR IS VERY BLEAK AND NEGLIGIBLE. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS), QUA THIS ISSUE AND THE SAME IS UPHELD. RAVIRAJ ENTERPRISES ITA NO. 5085/MUM/2011 9 11 IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE OF H EARING I.E. 14 TH MAY 2012 SD/ SD/- ( RAJENDRA ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 14 TH MAY 2012 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI