ACIT, Erode V. R R Thulasi Builders India (P) Limited, Erode

ITA 695/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3976 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 22-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Capital asset; Depreciation
• Section: 40A(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO. 657/MDS/2016 / ASSESSMENT YEAR : 2011-2012. R.R. THULASI BUILDERS (P) LTD, SAKTHI MAHAL, 63, PERUNDURAI ROAD, ERODE 638 011. VS. THE JOINT COMMISSIONER OF INCOME TAX, RANGE -1, ERODE ./I.T.A. NO. 695/MDS/2016 / ASSESSMENT YEAR : 2011-2012. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, ERODE VS. R.R. THULASI BUILDERS (P) LTD, SAKTHI MAHAL, 63, PERUNDURAI ROAD, ERODE 638 011. [PAN AADCR 2519R] ( () / APPELLANT) ( *+() /RESPONDENT) ASSESSEE BY : SHRI. T.N. SEETHARAMAN, ADVOCATE DEPARTMENT BY : SHRI. A.V.SREEKANTH, IRS, JCIT. /DATE OF HEARING : 15-11-2016 /DATE OF PRONOUNCEMENT : 23-11-2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE RESPECTIVELY DIRECTED AGAINST AN ORDER DATED 15.12. 2015 OF LD. ITA NOS.657 &695/MDS/2016 :- 2 -: COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE. APPEAL OF THE ASSESSEE IS TAKEN UP FIRST FOR DISPOSAL. 2. ASSESSEE HAS TAKEN ALTOGETHER SEVEN GROUNDS OF WHIC H GROUND NO.7 IS GENERAL IN NATURE NEEDING NO SPECIFI C ADJUDICATION. 3. VIDE ITS GROUNDS NO.1 & 2, ASSESSEE IS AGGRIEVED ON SUSTENANCE OF DISALLOWANCE OF A2,66,000/- OUT OF M ESS EXPENDITURE OF A33,25,007/- CLAIMED. 4. FACTS APROPOS ARE THAT ASSESSEE A CIVIL ENGINEERIN G CONTRACTOR HAD FILED RETURN FOR THE IMPUGNED ASSESS MENT YEAR DISCLOSING AN INCOME OF A5,94,78,280/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE LD. ASS ESSING OFFICER THAT ASSESSEE HAD CLAIMED MESS EXPENDITURE OF A33,25,007 /-. AS PER LD. ASSESSING OFFICER SUCH EXPENDITURE WAS SUPPORTED ON LY BY SELF MADE VOUCHERS. ACCORDING TO HIM, DUE TO LACK OF EVIDENCE , ELEMENT OF PERSONAL EXPENDITURE IN THE CLAIM COULD NOT BE RULE D OUT. HE MADE A DISALLOWANCE OF 8% OF CLAIM. SUCH DISALLOWANCE CAM E TO A2,66,000/-. 5. ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER O F INCOME TAX (APPEALS) BUT DID NOT MEET WITH ANY SUCC ESS. AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE HAD M AINTAINED ONLY ITA NOS.657 &695/MDS/2016 :- 3 -: SELF-MADE VOUCHERS AND THEREFORE DISALLOWANCE COULD NOT BE CONSIDERED AS UNJUSTIFIED. 6. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE SUBMIT TED THAT IT HAD TWENTY FIVE SITES WHERE IT WAS DOING CONSTRU CTION WORK. ACCORDING TO HIM, DISALLOWANCE WAS MADE ARBITRARILY THOUGH SELF-MADE VOUCHERS WERE AVAILABLE. 7. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONGL Y SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. LD. ASSESSING OFFI CER HAD RESORTED TO AN ADHOC DISALLOWANCE FOR A REASON THAT EXPENDITURE CLAIMED WAS ONLY SUPPORTED BY SELF-MADE VOUCHERS. HOWEVER, LD. ASS ESSING OFFICER HAS NOT BROUGHT OUT ANY SPECIFIC DEFECT IN THE SELF MA DE VOUCHERS. SELF- MADE VOUCHERS CAN BE REJECTED ONLY IF THE DETAILS LIKE ADDRESS OF THE PAYEE, SIGNATURE OF PAYEE AND OTHER ESSENTIAL PART ICULAR IS NOT AVAILABLE. NO SUCH DEFECTS WERE POINTED OUT BY THE LD. ASSESSING OFFICER EXCEPT FOR A GENERAL OBSERVATION THAT EXPEN DITURE WAS SUPPORTED ONLY BY SELF-MADE VOUCHERS. WE ARE OF TH E OPINION THAT DISALLOWANCE WAS NOT WARRANTED. SUCH DISALLOWANCE S TANDS DELETED. GROUNDS NO. 1 & 2 OF THE ASSESSEE STAND ALLOWED. ITA NOS.657 &695/MDS/2016 :- 4 -: 9. VIDE ITS GROUNDS NO. 3 TO 6, GRIEVANCE OF THE ASSES SEE IS ON A DISALLOWANCE OF ITS CLAIM OF DEPRECIATION ON TEMPOR ARY STRUCTURES. 10. FACTS APROPOS ARE THAT ASSESSEE HAD CLAIMED DEPRECI ATION @100% ON TEMPORARY SHEDS COSTING A61,61,054/-. AS PER ASSESSEE, IT HAD TO HAVE TEMPORARY SHEDS FOR ITS LABOURERS AND F OR MATERIAL STORAGE AT ITS CONSTRUCTION SITES. HOWEVER, AS PER THE LD. ASSESSING OFFICER THESE TEMPORARY SHEDS WERE CONSTRUCTED WITH ASBESTO S OR TINS SHEETS, CEMENT, CONCRETE FLOORING AND STEEL RODS. ACCORDIN G TO HIM, THESE STRUCTURES WERE NOT TEMPORARY IN NATURE, SINCE IT COULD BE USED FOR A PERIOD OF FOUR YEARS. HE ALLOWED ONLY 25% OF THE CL AIM. 11. ASSESSEES APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT MEET WITH ANY SUCCESS. THOUGH AS SESSEE CLAIMED SUCH EXPENDITURE, AS A REVENUE OUTGO, RELYING ON THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. MADRAS AUTO SERVICES (P) LTD 233 ITR 468, LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT ACCEPT THIS CONTENTION AS WELL. ACCORDING TO HIM, B Y VIRTUE OF JUDGMENT OF THE APEX COURT IN THE CASE OF GEOTZE (INDIA) LTD VS. CIT 284 ITR 323 SUCH A FRESH CLAIM COULD NOT BE ADMITTED. 12. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE SUBMIT TED THAT WHEN THE STRUCTURES WERE IN TEMPORARY IN NATURE, A SSESSEE WAS ITA NOS.657 &695/MDS/2016 :- 5 -: ELIGIBLE FOR 100% DEPRECIATION. RELIANCE WAS PLACED ON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF SHALIVAHANA CONSTRUCTIONS LTD. VS. DCIT (12 SOT 406 ). 13. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 14. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED THAT STRUCTURES ERECTED BY THE ASSESSEE, AT ITS VARIOUS WORK SITES WAS FOR SHELTERING ITS LABOURERS AND FOR STORAGE OF ITS MATERIALS. MAY BE, IT IS T RUE THAT SUCH SHELTERS COULD HAVE BEEN USED FOR FOUR YEARS. THIS WOULD NO T IN OUR OPINION BE SUFFICIENT TO CONCLUDE THAT THE STRUCTURE WAS A PE RMANENT ONE. CO- ORDINATE BENCH IN THE CASE OF SHALIVAHANA CONSTRUCTIONS LTD (SUPRA) HAS HELD AS UNDER ON SIMILAR FACTS AND CIRCUMSTANCES A T PARA 7 & 8. 7.IN THE CASE OF CONTRACTORS, CERTAIN STRUCTURES ARE PUT UP AT PROJECT SITE ON LAND GIVEN TEMPORARILY BY THE CONTRACTEE. THESE STRUCTURES ARE MEANT FOR THE USE BY THE CONTRACTOR AS HIS PROJECT OFFICE AND ALSO FOR H OUSING LABOUR AS WELL AS EMPLOYEES OF THE CONTRACTOR. THE LAND IS NEITHER OWNED BY THE CONTRACTOR NOR IS IT HELD B Y THE CONTRACTOR AS LEASEHOLD. IN THIS VIEW OF THE MATTER , THE STRUCTURES PUT UP ON SUCH LAND, OF WHATEVER NATURE, ARE PURELY TEMPORARY STRUCTURES. THE ASSESSEE MIGHT HAV E USED MATERIAL WHICH GIVES LONGER LIFE TO THE STRUCT URES IN QUESTION, BUT THE FACT REMAINS THAT THE ASSESSEE IS NEITHER THE OWNER OF THE LAND NOR HAS IT ANY CLAIM OVER THE STRUCTURES AFTER COMPLETION/TERMINATION OF THE CONTRACT. IN FACT, WHEN SUCH STRUCTURES ARE PUT UP ON LAND NOT BELONGING TO THE PERSON, THE EXPENDITURE I S OF ITA NOS.657 &695/MDS/2016 :- 6 -: REVENUE NATURE IN VIEW OF THE JUDGMENT OF THE HON'B LE SUPREME COURT IN THE CASE OF CIT V. MADRAS AUTO SER VICE (P.) LTD. [1998] 233 ITR 468 . THE SAME VIEW HAS BEEN TAKEN BY THIS BENCH OF THE TRIBUNAL IN THE CASE OF PREMLATHA V. ITO 63 ITD 69( SIC). WE ARE OF THE CONSIDERED OPINION THAT THE CIT HAS OVERLOOKED THIS ISSUE OF OWNERSHIP OF LAND. 8. COMING TO CATEGORISATION IN APPENDIX I TO INCOME -TAX RULES, 1962, THE RELEVANT PORTION OF RATES OF DEPRE CIATION (FOR INCOME-TAX) READS AS FOLLOWS: BLOCK OF ASSETS DEPRECIATION ALLOWANCE AS PERCENTAGE OF WRITTEN DOWN VAULE 1 2 I. BUILDINGS ... .... .. (4) PURELY TEMPORARY ERECTIONS SUCH AS WOODEN STRUCTURES... 100 AT BEST, IT IS ONLY AN ILLUSTRATION OF THE TERM 'PU RELY TEMPORARY ERECTIONS'. NOWHERE IN THIS CLASS OF ASSE TS IT IS MENTIONED THAT A PURELY TEMPORARY ERECTION SHOUL D NOT BE MADE OF CEMENT OR BRICK. VIEWED FROM THE POINT O F OWNERSHIP OF THE LAND, THE FUNCTION OF SUCH STRUCTU RES AND THEIR UTILITY, AND ALSO KEEPING IN MIND THE RAT IO OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF MALAB AR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 , IT IS DIFFICULT TO ACCEPT THE VIEW OF THE LEARNED CIT THAT THE ORDE R PASSED BY THE ASSESSING OFFICER SUFFERS FROM AN ERR OR AND IT IS PREJUDICIAL TO THE INTERESTS OF THE REVEN UE. UNDER THESE CIRCUMSTANCES, WE ALLOW THE APPEAL OF T HE ASSESSEE AND CANCEL THE ORDER PASSED BY THE CIT UND ER SECTION 263 OF THE ACT. ITA NOS.657 &695/MDS/2016 :- 7 -: 15. ACCORDING, WE ARE OF THE OPINION THAT ASSESSEE CLAI M WAS JUSTIFIED. WE DIRECT ASSESSEE BE GIVEN 100% DEPREC IATION ON SUCH TEMPORARY STRUCTURES. GROUNDS NO. 3 TO 6 OF THE A SSESSEE STAND ALLOWED. 16. NOW, WE TAKE UP APPEAL OF THE REVENUE. REVENUE HAS TAKEN ALTOGETHER SEVEN GROUNDS OF WHICH GROUND NO.1, 6 & 7 ARE GENERAL IN NATURE NEEDING NO SPECIFIC ADJUDICATION. 17. VIDE ITS GROUND NO. 2, GRIEVANCE RAISED BY THE REV ENUE IS ON THE DELETION OF AN ADDITION MADE BY THE LD. ASSESSI NG OFFICER FOR AN ALLEGED DIFFERENCE IN ACCOUNT OF THE ASSESSEE WITH ONE M/S. KPR & COMPANY. 18. FACTS APROPOS ARE THAT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, FROM THE DETAILS FILED BY THE ASSESSEE , LD. ASSESSING OFFICER NOTED THAT ASSESSEE HAD PURCHASED MATERIAL S WORTH A1,06,72,968/- FROM M/S. KPR & COMPANY, ERODE. LD. ASSESSING OFFICER ISSUED NOTICE U/S133(6) OF THE ACT TO M/S. KPR & COMPANY REQUIRING THEM TO PRODUCE COPY OF THE LEDGER ACCOU NT OF THE ASSESSEE IN THEIR BOOKS. BASED ON SUCH LEDGER ACCOUNT GIVEN BY M/S. KPR & COMPANY, LD. ASSESSING OFFICER FOUND THAT ASSESSEE HAD PURCHASED ITA NOS.657 &695/MDS/2016 :- 8 -: MATERIALS WORTH A1,79,14,479/- FROM M/S. KPR & COM PANY DURING THE RELEVANT PREVIOUS YEAR. THUS, AS PER LD. ASSESSING OFFICER THERE WAS A DIFFERENCE OF A72,41,511/-. LD. ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE COULD NOT GIVE ANY EXPLANATION FOR SU CH DIFFERENCE. AN ADDITION OF A72,41,511/- WAS MADE. 19. BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), AR GUMENT OF THE ASSESSEE WAS THAT ACTUAL PURCHASES MADE FROM BY M/S. KPR & COMPANY WAS A1,80,37,585/-. AS PER ASSESSEE AFTER DEDUCTING CREDIT NOTES ISSUED BY THE SAID CONCERN THE NET PURCHASE V ALUE CAME DOWN TO A 1,79,14,466/-. CONTENTION OF THE ASSESSEE WAS THAT OUT OF THE SAID AMOUNT A1,06,72,968/- WAS FOR BUILDING MATERI ALS AND THIS ALONE WAS CONSIDERED BY THE LD. ASSESSING OFFICER. AS PE R ASSESSEE IT HAD ACQUIRED, IN ADDITION TO THE BUILDING MATERIAL, OTH ER ITEMS LIKE CENTERING MATERIALS AND LABOUR SHED MATERIALS WORTH A71,66,640/- AND A97,137/-, WHICH WERE ACCOUNTED IN ITS FIXED ASSETS . AS PER ASSESSEE, IF ALL THESE THREE WERE CONSIDERED, THE PURCHASES STOOD FULLY RECONCILED. LD. COMMISSIONER OF INCOME TAX (APPEAL S) WAS APPRECIATIVE OF THESE CONTENTIONS AND HE DELETED TH E ADDITION. 20. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE, ST RONGLY ASSAILING THE ORDER OF THE LOWER AUTHORITIES SUBMI TTED THAT ASSESSEE ITA NOS.657 &695/MDS/2016 :- 9 -: DID NOT SUBMIT THE RECONCILIATION BEFORE LD. ASSESS ING OFFICER. FURTHER, AS PER LD. DEPARTMENTAL REPRESENTATIVE, LD. COMMISS IONER OF INCOME TAX (APPEALS) HAD ACCEPTED THE RECONCILIATION WITHO UT GIVING A CHANCE TO THE LD. ASSESSING OFFICER TO EXAMINE. 21. PER CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT COPY OF THE ACCOUNT OF THE M/S. KPR & COMPANY IN T HE BOOKS OF THE ASSESSEE PLACED IN THE PAPER BOOK PAGE 15 TO 29 WO ULD CLEARLY SHOW THAT THE ACTUAL PURCHASES EFFECTED PAYMENTS FROM TH EM CAME TO A1,79,14,466/-. AS PER LD. AUTHORISED REPRESENTATI VE, ASSESSEE HAVING PRODUCED BOOKS OF ACCOUNTS AND LD. ASSESSING OFFICE R HAVING VERIFIED SUCH BOOKS OF ACCOUNTS, CLAIM OF THE REVENUE THAT N EW MATERIALS WAS PRODUCED BY THE ASSESSEE BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), WAS INCORRECT. 22. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE IS THAT LD. ASSESSING OFFICER HAD CO NSIDERED THE PURCHASE OF BUILDING MATERIALS ALONE FROM M/S. KPR & COMPANY WHEN MAKING A COMPARISON WITH ACCOUNT OF THE ASSESS EE IN THE BOOKS OF ACCOUNTS OF M/S. KPR & COMPANY. APART FROM THIS , AS PER THE ASSESSEE THERE WERE PURCHASES OF CENTERING MATERIAL WHICH WERE ITA NOS.657 &695/MDS/2016 :- 10 -: ACCOUNTED AS CAPITAL ASSETS AND OTHER MATERIALS AC COUNTED IN LABOUR SHED ACCOUNT. THE LEDGER ACCOUNT OF M/S. KPR & COMP ANY IN THE BOOKS OF THE ASSESSEE PLACED AT PAPER BOOK PAGE 15 TO 18 SHOWS A AGGREGATE DEBIT BALANCE OF A1,71,59,007/- AND AGGR EGATE CREDIT OF A1,81,90,842/-. IN THE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT MATTER REQUIRES A FRESH LOOK BY THE LD. ASSESS ING OFFICER. WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE REGARDING DIFFERENCE, IF ANY IN THE ACCOUNT OF M/S. KPR & CO MPANY BACK TO THE LD. ASSESSING OFFICER FOR CONSIDERATION A FRESH IN ACCORDANCE WITH LAW. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSE. 23. VIDE ITS GROUND NO. 3, GRIEVANCE RAISED BY THE REV ENUE IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DELET ED AN ADDITION OF EXPENDITURE BOOKED AGAINST ONE SHRI. BOJARAJAN. 24. RELATED FACTS ARE THAT ASSESSEE HAD ENGAGED A FEW S UB- CONTRACTORS FOR CARRYING OUT ITS WORK. SHRI. BOJAR AJAN WAS ONE AMONG THESE SUB CONTRACTORS. ASSESSEE HAD PAID SUMS AGGR EGATING TO A22,00,000/- DURING THE RELEVANT PREVIOUS YEAR. LD . ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE COULD NOT GIVE PAN AND ADDRESS OF SHRI. BOJARAJAN. AS PER LD. ASSESSING OFFICER NATU RE OF WORK CARRIED OUT ITA NOS.657 &695/MDS/2016 :- 11 -: BY SHRI. BOJARAJAN WAS NOT EXPLAINED BY THE ASSESSE E. HE DISALLOWED THE CLAIM AND MADE AN ADDITION OF A22,00,000/-. 25. IN ITS APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT IT HAD DEDUCTED TDS AT SOURCE ON PAYMENT TO SHRI. BOJARAJAN AND THE PAYMEN TS WERE MADE BY CHEQUES. LD. COMMISSIONER OF INCOME TAX (APPEALS) H ELD THAT ADDITION WAS NOT SUSTAINABLE AND HE DELETED THE ADDITION. 26. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE STR ONGLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT ASSESSEE NEITHER FURNISHED PAN NOR ADDRESS OF SHRI. BOJARAJA N BEFORE LD. ASSESSING OFFICER. AS PER LD. DEPARTMENTAL REPRESE NTATIVE THE CLAIM WAS ALLOWED BY THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) ON THE BACK OF THE LD. ASSESSING OFFICER. 27. PER CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTE D THAT ASSESSEE HAD GIVEN ADDRESS OF THE SHRI. BOJARAJAN. AS PER LD. AUTHORISED REPRESENTATIVE BILLS RAISED BY THE SHRI. BOJARAJAN PLACED AT PAPER BOOK PAGE NO.32 & 33 CLEARLY GAVE HIS ADDRESS . ITA NOS.657 &695/MDS/2016 :- 12 -: 28. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. TO A QUESTION RAI SED BY THE BENCH, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSEE H AD NOT PRODUCED TDS CERTIFICATE IN FORM 16A, RELATING TO THE PAYME NTS EFFECTED. NO DOUBT IN THE COPIES OF THE CONTRACT BILL PLACED AT PAPER BOOK PAGE NO. 32& 33, WORK DONE BY SHRI. BOJARAJAN IS MENTIONED A S CONSTRUCTION OF HERO HONDA SHOWROOM AT TIRUCHENCODE. HOWEVER, IN T HE ASSESSMENT ORDER IT HS BEEN MENTIONED BY THE LD. ASSESSING O FFICER THAT ASSESSEE COULD NOT FURNISH ADDRESS OR PAN OF THE CONTRACTOR. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT CLAIM NE EDS FRESH LOOK BY THE LD ASSESSING OFFICER. WE SETSIDE THE ORDER AND REMIT THE ISSUE REGARDING CLAIM OF A22,00,000/- PAID TO SHRI. BOJAR AJAN BACK TO THE ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCOR DANCE WITH LAW. GROUND NO.3 IS ALLOWED FOR STATISTICAL PURPOSE. 29. VIDE GROUND NO.4, GRIEVANCE RAISED BY THE REVENUE IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED AN ADDITION U/S.40A(3) OF THE ACT. 30. CONCERNED FACTS ARE THAT ASSESSEE HAD PRODUCED LIST OF PURCHASES MADE DURING THE RELEVANT PREVIOUS YEAR BE FORE LD. ASSESSING OFFICER. LD. ASSESSING OFFICER WAS OF THE OPINION THAT THERE WERE CASH ITA NOS.657 &695/MDS/2016 :- 13 -: PURCHASES OF A3,45,993/- FROM M/S. MAHALAKSHMI CORP ORATION AND A2,89,836/- FROM VENKATESWARA HARDWARE. AS PER LD. ASSESSING OFFICER SUCH PAYMENTS ATTRACTED SEC. 40A(3) OF THE ACT. HE MADE DISALLOWANCE OF A6,35,830/- 31. IN ITS APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT NONE O F THE PAYMENT EXCEEDED A20,000/-. LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BASED ON THE ABOVE SUBMISSION. 32. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE STR ONGLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT DISALLOWANCE WAS UNJUSTLY DELETED BY THE LD. COMMI SSIONER OF INCOME TAX (APPEALS). 33. PER CONTRA, LD. AUTHORISED REPRESENTATIVE PLACING RELIANCE ON LEDGER COPIES OF THESE TWO CONCERNS IN THE BOOKS OF THE ACCOUNTS PLACED AT PAPER BOOK PAGE 37 TO 59, SUBMITTED THAT THERE WERE NO INDIVIDUAL PAYMENTS IN EXCESS OF A20,000/-. 34. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. THOUGH LD. ASSESSI NG OFFICER HAD MENTIONED IN THE ASSESSMENT ORDER THAT ASSESSEE HAD PRODUCED BOOKS OF ACCOUNTS, IT IS NOT CLEAR WHETHER HE HAD VERIFI ED THE ACCOUNTS OF ITA NOS.657 &695/MDS/2016 :- 14 -: M/S. MAHALAKSHMI CORPORATION AND VENKATESWARA HARD WARE CAREFULLY. CLAIM OF THE ASSESSEE WAS THAT NONE OF THE PAYMENTS ATTRACTED SEC.40A(3) OF THE ACT. VERIFICATION OF THE LEDGER ACCOUNTS OF THE CONCERNED HERE IN THE BOOKS OF ACCOUNTS PLACED AT P APER BOOK 37 TO 59, THUS SHOW THERE IS NO INDIVIDUAL PAYMENTS IN EX CESS OF A20,000/- IN CASH. WE ARE OF THE OPINION THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN DELETING SUCH ADDITION. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMM ISSIONER OF INCOME TAX (APPEALS). GROUND NO.4 OF THE REVENUE STANDS DI SMISSED. 35. VIDE GROUND NO.5, GRIEVANCE OF THE REVENUE IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CL AIM OF DEPRECIATION ON CERTAIN NEW MACHINERY WITHOUT VERIF YING WHETHER SUCH MACHINERY WERE PUT TO USE DURING THE RELEVANT PREV IOUS YEAR. 36. ASSESSEE HAD CLAIMED DEPRECIATION ON ITEMS OF PLAN T AND MACHINERY PURCHASED FROM M/S. EXPO HYDOTECH PVT. LT D, COIMBATORE, M/S. CONVEYTECH SYSTEMS, CHENNAI AND M/S. S M MOTOR S (AMV) SALEM. LD. ASSESSING OFFICER WAS OF THE OPINION THAT THE I NVOICES FOR PLANT AND MACHINERY WERE DATED 30.03.2011 AND IT WOULD NOT HA VE REACHED THE WORK SITES IN ANDHRA PRADESH IN ONE DAY. THUS, AC CORDING TO LD. ASSESSING OFFICER, ASSESSEE COULD NOT SHOW THAT PLA NT AND MACHINERY ITA NOS.657 &695/MDS/2016 :- 15 -: WERE USED DURING THE RELEVANT PREVIOUS YEAR. HE DI SALLOWED CLAIM OF DEPRECIATION OF A2,54,218/- ON SUCH PLANT AND MACH INERY. 37. ASSESSEES APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE WAS SUCCESSFUL. ACCORDING T O HIM, PASSIVE USE OR READY TO USE STATE OF THE MACHINERY WOULD BE SUF FICIENT FOR ALLOWING A CLAIM FOR DEPRECIATION. HE DELETED THE DISALLOW ANCE AND DIRECTED ASSESSING OFFICER TO ALLOW 50% OF THE CLAIM OF THE DEPRECIATION. 38. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT MACHINERY ITEMS WERE NOT PUT TO USE DURING THE RELEVANT PREVIOUS YEAR. ACCORDING TO HIM, CLAIM OF THE ASSESSEE WAS INCORRECTLY ALLOWED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 39. PER CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTE D THAT THE BILL FOR PURCHASE OF CONVEY TECH SYSTEM WAS DATED 21.03.2011. ACCORDING TO HIM, THE MACHINE ITEMS WAS CEMENT SILO OF 100 TON CAPACITY. FURTHER ACCORDING TO HIM, PURCHASE FROM S M MOTORS WAS AMW TRUCK MODEL 2518 HL (6 X4) TRUCK, AND THE BILL WAS DATED 05.03.2011. IN SO FAR AS, PURCHASE OF MACHINE FROM M/S. EXPO HYDOTECH PVT. LTD, COIMBATORE, LD. AUTHORISED REPRE SENTATIVE FAIRLY ADMITTED THAT ASSESSEE COULD NOT PRODUCE EVIDENCE FOR SUPPORTING THE CLAIM OF USE DURING THE RELEVANT PREVIOUS YEAR. ITA NOS.657 &695/MDS/2016 :- 16 -: 40. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. WHAT THE ASSESSEE BROUGHT FROM M/S. CONVEYTECH SYSTEMS, CHENNAI WAS CEMENT SILO 100 TON CAPACITY. BILL PLACED AT PAPER BOOK AT PAGE 60 CLEARLY SHOW THAT IT WAS RAISED ON 21.03.2011. THE CEMENT SILO DOES NOT REQUIRE ANY S PECIFIC INSTALLATION. PURCHASE FROM S M MOTORS THROUGH BILL DATED 05.03.2 011, COPY OF WHICH IS PLACED AT PAPER BOOK PAGE 61 IS OF AN AMW TRUCK. THE DESCRIPTION OF THE TRUCK GIVEN IN THE BILL CLEARLY SHOWS IT WAS SUPPLIED IN A READY TO USE MANNER COMPLETE IN ALL RESPECTS. T HUS IN OUR VIEW, THESE TWO MACHINES, WERE ELIGIBLE FOR THE CLAIM OF DEPRECIATION. LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS IN OUR OPI NION RIGHT IN OBSERVING THAT PASSIVE US OR BEING IN A READY TO U SE STATION WOULD BE TREATED AS SUFFICIENT FOR CLAIM OF DEPRECIATION. HENCE AS FAR AS THESE TWO MACHINES, ARE CONCERNED CLAIM OF THE ASSESSEE WAS RIGHTLY ALLOWED BY THE LD. COMMISSIONER OF INCOME TAX (APPE ALS). HOWEVER, AS FAR AS THIRD ITEM WHICH WAS PURCHASED FROM M/S. EXPO HYDOTECH PVT. LTD, COIMBATORE, IS CONCERNED, ADMITTEDLY, ASS ESSEE COULD NOT PRODUCE ANY EVIDENCE TO SHOW USE OR A READY TO USE STATE. HENCE, IN SO FAR AS CLAIM OF DEPRECIATION FOR THE MACHINERY PURCHASED FROM M/S. EXPO HYDOTECH PVT LTD IS CONCERNED, WE SETASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND REINSTATE THE DISALLOWANCE ITA NOS.657 &695/MDS/2016 :- 17 -: MADE BY THE LD. ASSESSING OFFICER. GROUND NO.5 OF T HE REVENUE IS TREATED AS PARTLY ALLOWED. 41. TO SUMMARIZE, THE APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 23 RD DAY OF NOVEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER / CHENNAI ! / DATED: 23RD NOVEMBER, 2016 KV !' # $% &% / COPY TO: 1 . '( / APPELLANT 3. ) () / CIT(A) 5. %+, # - / DR 2. #.'( / RESPONDENT 4. ) / CIT 6. ,/ 0 / GF