DCIT-IV, Lucknow V. M/S U.P.STATE BRIDGE CORPORATION LTD., Lucknow

MA 48/LKW/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8730 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-06-2012
• Assessment Year: 1995-1996
• Appeal Filed On: 27-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUJA RAJ
• Keywords: Capital asset; Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI B. R. JAIN , ACCOUNTANT MEMBER M. A NO. 48/LKW/2011 [ARISING OUT OF ITA NO. 46/LKW/2000] ASSESSMENT YEAR: 1995 - 96 DY. CIT RANGE V I LUCKNOW V. M/S U.P. STATE BRIDGE CORPORATION LTD. SETU BHAWAN, 16, MADAN MOHAN MALVIYA MARG, LUCKNOW PAN: AAACU3258K (APP LIC ANT) (RESPONDENT) APP LIC ANT BY: SMT. PUJA RAJ, D.R. RESPONDENT BY: NONE DATE OF HEARING: 15.06.2012 DATE OF PRONOUNCEME NT: 15.06.2012 O R D E R PER B. R JAIN : THE REVENUE THROUGH THEIR APPLICATION DATED 27.9.2011 SEEKS RECTIFICATION OF THE TRIBUNAL ORDER DATED 31.1.2011 ON THE FOLLOWING REASON IN G : - 2. IN THIS CASE, THE HON'BLE I TAT DELETED THE ADDITION OF RS. 65,61,6 23 / - MADE BY A.O. BY DISALLOWING 100% DEPRECIATION CLAIMED BY ASSESSEE ON SHUTTERING MATERIAL. 3. THE HON'BLE ITAT FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE IS ACCOUNTING PURCHASE OF SHUTTERING MATERIAL IN TWO DIFFERENT WAYS. FIRSTLY, MATERIAL WHICH HAS BEEN USED UP AT THE WORK SITE IS DEBITED TO THE TRADING ACCOUNT AS WORK EXPENSES AND : - 2 - : IS WRITTEN OFF. THEREAFTER ON THE BALANCE LEFT, DEPRECIATION IS BEING CLAIMED AT 100%. THE HON'BLE ITAT FAILED TO APPRECIATE THE FACT THAT ANY ITEM HAS TO BE CATEGORI ZED AS EITHER REVENUE OR CAPITAL. THE SAME ITEM CANNOT BE TREATED AS BOTH REVENUE & CAPITAL AS HAS HAPPENED IN THE ASSESSEE'S CASE. THE HON'BLE ITAT FAILED TO APPRECIATE THE FACT THAT ANY AMOUNT OF SHUTTERING MATERIAL WHICH IS NOT CHARGED TO WORK EXPENSES HAS TO BE CARRIED FORWARD TO THE NEXT YEAR AS CLOSING STOCK. FURTHER, THE HON'BLE ITAT FAILED TO APPRECIATE THE FACT THAT ANY SALVAGE VALUE OF SHUTTERING MATERIAL HAS NOT BEEN ACCOUNTED FOR BY THE ASSESSEE WHICH CLEARLY SHOWS THAT IT IS NOT A CAPITAL ASSET . 4. FURTHER, THE HON'BLE ITAT HAS ALLOWED DEPRECIATION CLAIMED BY ASSESSEE ON CLOSING BALANCE OF SH UTTERING MATERIAL VALUED AT RS. 65,61,623 / - . THE HON'BLE ITAT FAILED TO APPRECIATE THAT THE ASSESSEE WAS TREATING 'SHUTTERING MATERIAL' AS AN ITEM OF CONSUM ABLE STORES AND THEREFORE, NO DEPRECIATION WAS ALLOWABLE ON CLOSING STOCK OF THE SAME. ALTHOUGH DEPRECIATION U/S 32 OF THE INCOME TAX ACT, 1961 IS ONLY ALLOWABLE ON CAPITAL ASSETS WHICH ARE BOTH OWNED AND USED FOR THE PURPOSE OF THE BUSINESS, BY THE ASSESS EE. SINCE CLOSING STOCK OF 'SHUTTERING MATERIAL' WAS NOT USED FOR THE PURPOSES OF THE ASSESSEE'S BUSINESS AT THE END OF THE YEAR, DEPRECIATION ON THE SAME WAS NOT ALLOWABLE. MOREOVER, THE RATE OF DEPRECIATION ALLOWABLE ON A CAPITAL ASSET IS PRESCRIBED IN A PPENDIX - I TO RULE 5(1) OF THE INCOME TAX RULES, 1962. AS PER THESE RULES THERE IS NO ENTRY WHICH PROVIDES DEPRECIATION ON 'SHUTTERING MATERIAL' AT THE RATE OF 100%. IF 'SHUTTERING MATERIAL' IS CONSIDERED TO BE PLANT THEN DEPRECIATION IS TO BE RESTRICTED TO THE GENERAL RATE PRESCRIBED FOR PLANT ON THE ENT IRE AMOUNT PURCHASED IN A YEAR. : - 3 - : 2 . HEARD LD. D.R. EX - PARTE QUA THE ASSESSEE. THE APPELLATE TRIBUNAL VIDE PARA 9 OF ITS ORDER DATED 31.1.2011 HAS FOUND THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE F ACTS INVOLVED IN ASSESSMENT YEAR 1988 - 89 AND RESPECTFULLY FOLLOWING ITS EARLIER ORDER DATED 31.7.2003 IN ITA NO. 1338/ALLD/1996, ANSWERED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THIS YEAR AS WELL. NO RECTIFIABLE MISTAKE HAVING BEEN POINTED OUT BY THE REVE NUE, WE FIND NO MERIT IN THE APPLICATION. THE SAME IS HEREBY DISMISSED AS ANNOUNCED IN THE OPEN COURT IMMEDIATELY AFTER CONCLUSION OF HEARING ON 15.6.2012. SD/ - SD/ - [SUNIL KUMAR YADAV] [B. R. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15.6.201 2 JJ: 1506 COPY FORWARDED TO: 1 . APP LIC ANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR