M/s P.D Agrawal Infrastucture Ltd, v. The Add.C I T 5,

ITA 176/IND/2009 | 2006-2007
Pronouncement Date: 06-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 17622714 RSA 2009
Assessee PAN AACCP3626N
Bench Indore
Appeal Number ITA 176/IND/2009
Duration Of Justice 1 year(s) 3 month(s) 28 day(s)
Appellant M/s P.D Agrawal Infrastucture Ltd,
Respondent The Add.C I T 5,
Appeal Type Income Tax Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 06-08-2010
Date Of Final Hearing 28-07-2010
Next Hearing Date 28-07-2010
Assessment Year 2006-2007
Appeal Filed On 08-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI B.R.KAUSHIK ACCOUNTANT MEMBER PAN NO. : AACCP3626N I.T.A.NO. 287/IND/2009 A.Y. : 2004-05 M/S. P. D. AGRAWAL INFRASTRUCTURE LIMITED ACIT 6 JOY BUILDERS COLONY VS RANGE 5(1) BARWAH INDORE. APPELLANT RESPONDENT I.T.A.NO. 176/IND/2009 A.Y. : 2006-07 M/S. P. D. AGRAWAL INFRASTRUCTURE LIMITED ACIT 6 JOY BUILDERS COLONY VS RANGE 5(1) BARWAH INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI H.P.VERMA AND SHRI ASHISH GOYAL ADVOCATES RESPONDENT BY : SHRI K.K.SINGH CIT DR AND SMT. APARNA KARAN SR. DR O R D E R PER B. R. KAUSHIK A.M. THESE TWO APPEALS OF THE ASSESSEE INVOLVE SIMILAR I SSUES. THESE APPEALS ARE THEREFORE DECIDED BY THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE. - 2 - 2 I.T.A.NO. 287/IND/2009 A.Y. : 2004-05 : 2. THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF THE LD.CIT(A) DATED 19 TH MARCH 2009 FOR THE ASSESSMENT YEAR 2004-05. 3. THE FIRST GROUND OF APPEAL READS AS UNDER :- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A)II INDORE ERRED IN :- A) SUSTAINING DISALLOWANCE OF RS. 26 43 871/- U/S 80-IA OF THE INCOME-TAX ACT 1961 BY STATING THAT THE PROVISIONS U/S 80IA IS NOT APPLICABLE TO THE ASSESSEE. B) SUSTAINING RATE OF DEPRECIATION @ 25% ON TRUCK/DUMPERS RUN ON HIRE ALSO AND DERIVED HIRING INCOME IN PLACE OF DEPRECIATION CLAIMED @ 40 %. C) SUSTAINING DISALLOWANCES OF TELEPHONE EXPENSES AT RS. 50 000/-. D) SUSTAINING DISALLOWANCES OF REBATE U/S 80G FOR DONATION GIVEN TO RED CROSS SOCIETY OF RS. 31 000/- WHICH WERE WRONG ILLEGAL & UNJUSTIFIED. - 3 - 3 4. GROUNDS NO. 2 TO 5 ARE GENERAL IN NATURE AND NO A DJUDICATION IS REQUIRED. 5. IN GROUND NO.1(A) OF THE APPEAL THE ASSESSEE HAS CHALLENGED THE SUSTENANCE OF DISALLOWANCE OF RS. 26 43 871/- U/S 8 0IA OF THE INCOME-TAX ACT 1961. 6. THE ASSESSEE HAS CLAIMED THAT THE DECISION OF THE L D.CIT(A) THAT THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION U/S 80I A OF THE INCOME-TAX ACT 1961 IS ERRONEOUS IN LAW IN THE FACTS AND CIRC UMSTANCES OF THE CASE. 7. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED OR IGINAL RETURN OF INCOME ON 28 TH OCTOBER 2004 DECLARING TOTAL INCOME AT RS. 35 37 566/- AND BOOK PROFIT U/S 115JB AT RS. 1 21 83 916/-. THE AO FINALIZED THE ASSESSMENT AT A TOTAL INCOME OF RS. 53 80 370/- AS PER ORDER U/S 143(3) OF THE INCOME-TAX ACT 1961 DATED 19 TH DECEMBER 2006. THE AO INTER ALIA DISALLOWED THE CLAIM FOR DEDUCTION OF RS. 26 43 871 /- U/S 80IA OF THE INCOME-TAX ACT 1961 FOR THE REASONS DISCUSSED IN D ETAILS. IN THE ASSESSMENT ORDER THE AO HELD THAT AS PER CLAUSE (C ) OF SECTION 80IA THE ASSESSEE COULD HAVE BEEN ELIGIBLE FOR DEDUCTION U/S 80IA ONLY IF IT HAD STARTED OPERATING AND MAINTAINING THE INFRASTRUCTUR E FACILITY AND SINCE THE ASSESSEE WAS ONLY ENGAGED IN DEVELOPMENT OF INFRAST RUCTURE FACILITY AND NEITHER OPERATION NOR MAINTENANCE THEREOF WAS CARRI ED OUT THE CONDITIONS U/S 80-IA WERE NOT FULFILLED. THE LD.CIT(A) UPHELD THE ORDER OF THE AO ON - 4 - 4 THIS ISSUE AS PER DISCUSSION AT PAGES 1 TO 4 OF HIS IMPUGNED ORDER RELYING ON THE ORDER OF APPEAL FOR ASSESSMENT YEAR 2006-07 IN THE CASE OF SHRI P. D. AGRAWAL FOR ASSESSMENT YEAR 2006-07 IN I.T.A.NO. 116/08-09/1464 DATED 17 TH FEBRUARY 2009 THE RELEVANT EXTRACT OF WHICH HAS BEEN REPRODUCED BY THE LD. CIT(A) AT PAGES 3 & 4 OF HIS IMPUGNED ORDER. 8. THE CONCLUDING PARAS 1.06 AND 1.07 OF THE IMPUGNED ORDER OF THE LD.CIT(A) ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE :- 1.06 THE APPELLANT HAS SIMPLY CARRIED OUT THE WORK S CONTRACT OF CIVIL CONSTRUCTION ALLOTTED TO IT AND I N NONE OF THESE CONTRACTS THE POSITION WAS AS SPECIFIED IN TH E CIRCULAR OF THE BOARD CLARIFYING THE EXPLANATION INSERTED IN TH IS SECTION. IN OTHER WORDS IN NONE OF THESE CONTRACTS THE AMO UNT WAS INVESTED BY THE APPELLANT. THE APPELLANT AS SUCH I S NOT ELIGIBLE FOR DEDUCTION U/S 80IA AND HENCE THE ACTIO N OF THE AO OF NOT ALLOWING THE DEDUCTION IS HEREBY CONFIRME D. THE JUDGMENT RELIED UPON BY THE APPELLANT IS OF NO HELP AS IT IS DISTINGUISHABLE FROM THE FACTS OF THE CASE OF TH E APPELLANT. 1.07. THE ISSUE IS THEREFORE COVERED BY THE ORDE R OF THIS OFFICE IN THE CASE OF THE APPELLANT AND HENCE FOLLOWING THE S AME IT IS HELD THAT THE DEDUCTION U/S 80IA IS NOT AVAILABLE TO THE APPELLANT AND HENCE THIS GROUND OF APPEAL IS REJECTED. - 5 - 5 9. THE LD. COUNSEL REITERATED THE SUBMISSIONS TAKEN BE FORE THE LOWER AUTHORITIES AND THE LD. SENIOR D.R. SUPPORTED THEIR ORDERS. 10. WE HAVE CAREFULLY CONSIDERED THE ISSUE IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW MATERIALS PLACED ON RECORD A ND RIVAL SUBMISSIONS. IT IS OBSERVED THAT SIMILAR ISSUE HAS BEEN DECIDED BY US AS PER OUR ORDER DATED 28 TH JULY 2010 IN I.T.A.NO.517/IND/2009 AND 522/IND/2 009 IN THE CASE OF ACIT BHOPAL VS. R.K. GUPTA CONTRACTORS & EN GINEERS PVT.LTD. BHOPAL FOR THE ASSESSMENT YEARS 2006-07. THE RELE VANT PORTION OF THE ORDER IS REPRODUCED BELOW :- IN VIEW OF THE SUBMISSIONS MADE ABOVE WE ARE REPR ODUCING HEREUNDER THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 2.7.2010 (ITA NO. 373/IND/2009) :- THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-II INDORE DATED 19.5.2009 ON THE FOLLOWING GROUND: 1. THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF TH E CASE IN CONFIRMED THE DISALLOWANCE MADE BY ASSESSI NG OFFICER ON ACCOUNT OF DEDUCTION CLAIMED U/S 80IA OF RS.10 29 342/- WITHOUT CONSIDERING THE FULL FACTS A ND REASONING. THE DISALLOWANCE MADE AND CONFIRMED BY L D. CIT(A) THEREFORE IS TOTALLY WRONG AND ILLEGAL ON TH E FACTS OF THE CASE. 2. DURING THE HEARING OF THIS APPEAL THE LD. SR. D R SHRI P.K. MITRA POINTED OUT THAT THE IMPUGNED ISSUE IS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THIS V ERY BENCH DATED 7 TH MAY 2010 IN THE CASE OF SCC PROJECTS PRIVATE LTD (ITA NO.127/IND/2009). THIS FACTUAL MAT RIX WAS NOT CONTROVERTED BY THE LD. COUNSEL FOR THE ASS ESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL - 6 - 6 AVAILABLE ON RECORD. IN VIEW OF THE AFORESAID FACTS AND ASSERTION OF THE LD. RESPECTIVE COUNSEL THE RELEVA NT PORTION OF THE AFORESAID ORDER IS REPRODUCED HEREUN DER: - THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER O F THE LEARNED CIT(A)-I INDORE DATED 12.1.2009 ON THE GR OUND THAT LD. FIRST APPELLATE AUTHORITY ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE MADE U/S 80IA AT RS.60 60 548/- WITHOUT CONSIDERING THE FULL FACTS A ND THE LEGAL POSITION. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHRI C.P.RAWKA LD. COUNSEL FOR THE ASSESSEE AND SHRI K.K. SINGH LEARNED CIT DR. AT THE OUTSET THE LEARNED CIT DR CONTENDED THAT IN VIEW OF THE AMENDM ENT MADE IN THE STATUTE THE ISSUE IS TO BE DECIDED AGA INST THE ASSESSEE THEREFORE THERE IS NO INFIRMITY IN THE S TAND OF THE LEARNED CIT(A). ON THE OTHER HAND THE LD. COUN SEL FOR THE ASSESSEE DID NOT CONTROVERT THE ASSERTION O F THE LEARNED CIT DR. 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSE SSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE ACTIVITY OF CONSTRUCTION AT VARIOUS SITES IN MADHYA PRADESH DECLARED NIL INCOME IN ITS RETURN FILED ON 13.10.20 05 WHICH WAS PROCESSED U/S 143(1) ON 15.6.2006 AND A REFUND OF RS.21 12 117/- WAS ISSUED ON 28.8.2006. THE CASE WAS SELECTED FOR SCRUTINY THEREFORE STATUTOR Y NOTICE U/S 143(2) WAS SERVED UPON THE ASSESSEE TO WHICH TH E ASSESSEE MADE COMPLIANCE AND ALSO FILED WRITTEN SUBMISSIONS. THE ASSESSEE CLAIMED RELIEF OF RS. 65 24 994/- U/S 80IA OF THE ACT. THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS.87 74 994/-. THE ASSESSMENT ORDER WAS CARRIED IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHO ALLOWED THE RELIEF ON DISALLOWANCE OF EXPENSES BUT REJECTED THE CLAIM OF THE ASSESSEE ON THE ISSUE OF CLAIMED RELIEF U/S 80IA. THE RELEVANT FINDING AS DETAILED IN PARA 2.1.2 OF THE IMPUGNED ORDER ARE REPRODUCED HEREUNDE R :- 2.1.2 I HAVE EXAMINED THE ENTIRE ISSUE. THE DEDUCT ION U/S 80IA IS NO LONGER MEANT FOR CONTRACTORS BE IT THE WORK FOR UPGRADATION OR NEW CONSTRUCTION WORK. THE PROVISION IS TO PROVIDE INCENTIVES WHO ARE DEVELOPI NG MAINTAINING AND OPERATING NEW INFRASTRUCTURAL FACIL ITIES (INCLUDING ROADS) SUCH AS THE WORK TAKEN BY ANY ENTERPRISE UNDER BOT (BUILT OPERATE & TRANSFER) - 7 - 7 SCHEME. IN THAT CASE THE FUND IS NOT PROVIDED BY T HE GOVERNMENT OR ITS AGENCIES. RATHER THE REQUIRED FU NDS ARE MET BY THE ENTERPRISE ITSELF AND IN THAT SITUAT ION THE ENTERPRISE IS AUTHORISED TO CHARGE TOLL TAX WHILE MAINTAINING AND OPERATING SUCH ROADS UPTO CERTAIN PERIOD (AS PER THE AGREEMENT WITH THE GOVERNMENT) T O RECOVER ITS COST. THE INCOME EARNED THEREAT IS SUBJ ECT TO DEDUCTION U/S 80IA FOR SPECIFIED NUMBER OF YEARS. T HE OWNERSHIP OVER SUCH PROJECTS ARE THEREAFTER TRANSFE RRED TO THE GOVERNMENT AFTER THE SAID PERIOD. IN ORDER T O MAKE THIS POINT CLEAR IT IS ESSENTIAL TO REPRODUCE THE PROVISIONS OF SECTION 80- IA. BEFORE COMING TO ANY CONCLUSION WE ARE REPRODUCING HEREUNDER SECTION 80-IA(4) OF THE ACT :- 80-IA. 33 [(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFE RRED TO IN SUB-SECTION (4) (SUCH BUSINESS BEING HEREINAF TER REFERRED TO AS THE ELIGIBLE BUSINESS) THERE SHALL IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUS INESS FOR TEN CONSECUTIVE ASSESSMENT YEARS.] XXX XXX XXX (4)] WHICH FULFILS ALL THE FOLLOWING CONDITIONS N AMELY : (I) IT IS NOT FORMED BY SPLITTING UP OR THE RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF AN 44 [UNDERTAKING] WHICH IS FORMED AS A RESULT OF THE RE-ESTABLISHMENT RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH 44 [UNDERTAKING] AS IS REFERRED TO IN SECTION 33B IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPO SE: 45 [ PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY IN THE CASE OF TRANSFER EITHER IN WHOL E OR IN PART OF MACHINERY OR PLANT PREVIOUSLY USED BY A ST ATE ELECTRICITY BOARD REFERRED TO IN CLAUSE (7) OF SECTION 2 OF - 8 - 8 THE ELECTRICITY ACT 2003 (36 OF 2003) WHETHER OR NOT SUCH TRANSFER IS IN PURSUANCE OF THE SPLITTING UP O R RECONSTRUCTION OR REORGANISATION OF THE BOARD UNDER PART XIII OF THAT ACT.] EXPLANATION 1.FOR THE PURPOSES OF CLAUSE (II) ANY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OTHER THAN THE ASSESSEE SHALL NOT BE REGARDE D AS MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE IF THE FOLLOWING CONDITIONS ARE FULFILLED NAMELY : (A) SUCH MACHINERY OR PLANT WAS NOT AT ANY TIME PREVIOUS TO THE DATE OF THE INSTALLATION BY TH E ASSESSEE USED IN INDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESPECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLO WED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOME OF ANY PERSON FOR ANY PE RIOD PRIOR TO THE DATE OF THE INSTALLATION OF MACHINERY OR PLANT BY THE ASSESSEE. EXPLANATION 2.WHERE IN THE CASE OF AN 46 [UNDERTAKING] ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUS LY USED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINE SS AND THE TOTAL VALUE OF THE MACHINERY OR PLANT OR PART S O TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF THE MACHINERY OR PLANT USED IN THE BUSINES S THEN FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-S ECTION THE CONDITION SPECIFIED THEREIN SHALL BE DEEMED TO HAVE BEEN COMPLIED WITH. (4) THIS SECTION APPLIES TO (I) ANY ENTERPRISE CARRYING ON THE BUSINESS 47 [OF (I) DEVELOPING OR (II) OPERATING AND MAINTAININ G OR (III) DEVELOPING OPERATING AND MAINTAINING] ANY INFRASTRUCTURE FACILITY WHICH FULFILS ALL THE FOLLO WING CONDITIONS NAMELY : (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA O R BY A CONSORTIUM OF SUCH COMPANIES 48 [OR BY AN AUTHORITY OR A BOARD OR A CORPORA-TION OR ANY OTHER BODY ESTABLI SHED OR CONSTITUTED UNDER ANY CENTRAL OR STATE ACT;] 49 [(B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENT RAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORI TY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR ( II) OPERATING AND MAINTAINING OR (III) DEVELOPING OPER ATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY;] - 9 - 9 (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAI NING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRED ON OR AFTER THE 1ST DAY OF APRIL 1999 BY AN ENTERPRISE WHICH DEVELOPED SUCH INFRASTRUCTURE FACI LITY (HEREAFTER REFERRED TO IN THIS SECTION AS THE TRANS FEROR ENTERPRISE) TO ANOTHER ENTERPRISE (HEREAFTER IN THI S SECTION REFERRED TO AS THE TRANSFEREE ENTERPRISE) FOR THE P URPOSE OF OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILI TY ON ITS BEHALF IN ACCORDANCE WITH THE AGREEMENT WITH TH E CENTRAL GOVERNMENT STATE GOVERNMENT LOCAL AUTHORI TY OR STATUTORY BODY THE PROVISIONS OF THIS SECTION S HALL APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE TH E ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DED UCTION FROM PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURI NG WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENT ITLED TO THE DEDUCTION IF THE TRANSFER HAD NOT TAKEN PLA CE. 50 [EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE INFRASTRUCTURE FACILITY MEANS (A) A ROAD INCLUDING TOLL ROAD A BRIDGE OR A RAIL SYSTEM; (B) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PR OJECT; (C) A WATER SUPPLY PROJECT WATER TREATMENT SYSTEM IRRIGATION PROJECT SANITATION AND SEWERAGE SYSTEM OR SOLID WASTE MANAGEMENT SYSTEM; (D) A PORT 51 AIRPORT INLAND WATERWAY 52 [ INLAND PORT OR NAVIGATIONAL CHANNEL IN THE SEA];] 53 [(II) ANY UNDERTAKING WHICH HAS STARTED OR STARTS PROVIDING TELECOMMUNICATION SERVICES WHETHE R BASIC OR CELLULAR INCLUDING RADIO PAGING DOMESTIC SATELLITE SERVICE NETWORK OF TRUNKING BROADBAND N ETWORK AND INTERNET SERVICES ON OR AFTER THE 1ST DAY OF AP RIL 1995 BUT ON OR BEFORE THE 31ST DAY OF MARCH 54 [2005].] EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE DOMESTIC SATELLITE MEANS A SATELLITE OWNED AND OPERATED BY AN INDIAN COMPANY FOR PROVIDING TELECOMMUNICATION SERVICE; (III) ANY UNDERTAKING WHICH DEVELOPS DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK 55 [OR SPECIAL ECONOMIC ZONE] NOTIFIED 56 BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEM E - 10 - 10 FRAMED 56 AND NOTIFIED 57 BY THAT GOVERNMENT FOR THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL 1997 AND ENDING ON THE 31ST DAY OF MARCH 58 [2006] : 59 [ PROVIDED THAT IN A CASE WHERE AN UNDERTAKING DEVELOPS AN INDUSTRIAL PARK ON OR AFTER THE 1ST DAY OF APRIL 1999 OR A SPECIAL ECONOMIC ZONE ON OR AFTER THE 1ST DAY OF APRIL 2001 AND TRANSFERS THE OPERATION AND MAINTENANCE OF SUCH INDUSTRIAL PARK OR SUCH SPECIAL ECONOMIC ZONE AS THE CASE MAY BE TO ANOTHER UNDERTAKING (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE UNDERTAKING) THE DEDUCTION UNDER SUB-SE CTION (1) SHALL BE ALLOWED TO SUCH TRANSFEREE UNDERTAKING FOR THE REMAINING PERIOD IN THE TEN CONSECUTIVE ASSESSM ENT YEARS AS IF THE OPERATION AND MAINTENANCE WERE NOT SO TRANSFERRED TO THE TRANSFEREE UNDERTAKING : 60 [ PROVIDED FURTHER THAT IN THE CASE OF ANY UNDERTAKING WHICH DEVE-LOPS DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK THE PROV ISIONS OF THIS CLAUSE SHALL HAVE EFFECT AS IF FOR THE FIGU RES LETTERS AND WORDS 31ST DAY OF MARCH 2006 THE FIGURES L ETTERS AND WORDS 31ST DAY OF MARCH 60A [ 2011 ] HAD BEEN SUBSTITUTED;] (IV) AN 61 [UNDERTAKING] WHICH (A) IS SET UP IN ANY PART OF INDIA FOR THE GENERAT ION OR GENERATION AND DISTRIBUTION OF POWER IF IT BEGINS T O GENERATE POWER AT ANY TIME DURING THE PERIOD BEGINN ING ON THE 1ST DAY OF APRIL 1993 AND ENDING ON THE 31S T DAY OF MARCH 62 [ 2011 ] ; (B) STARTS TRANSMISSION OR DISTRIBUTION BY LAYING A NETWORK OF NEW TRANSMISSION OR DISTRIBUTION LINES A T ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL 1999 AND ENDING ON THE 31ST DAY OF MARCH 62 [ 2011 ] : PROVIDED THAT THE DEDUCTION UNDER THIS SECTION TO AN 63 [UNDERTAKING] UNDER SUB-CLAUSE (B) SHALL BE ALLOWED ONLY IN RELATION TO THE PROFITS DERIVED FROM LAYING OF SUCH NETWORK OF NEW LINES FOR TRANSMISSION OR DISTRIBUTI ON; 64 [(C) UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNISATION OF THE EXISTING NETWORK OF TRANSMISSI ON OR DISTRIBUTION LINES AT ANY TIME DURING THE PERIOD BE GINNING ON THE 1ST DAY OF APRIL 2004 AND ENDING ON THE 31S T DAY OF MARCH 65 [ 2011 ] . EXPLANATION.FOR THE PURPOSES OF THIS SUB- CLAUSE SUBSTANTIAL RENOVATION AND MODERNISATION MEANS AN INCREASE IN THE PLANT AND MACHINERY IN THE - 11 - 11 NETWORK OF TRANSMISSION OR DISTRIBUTION LINES BY AT LEAST FIFTY PER CENT OF THE BOOK VALUE OF SUCH PLANT AND MACHINERY AS ON THE 1ST DAY OF APRIL 2004;] 66 [(V) AN UNDERTAKING OWNED BY AN INDIAN COMPANY AND SET UP FOR RECONSTRUCTION OR REVIVAL OF A POWER GENERATING PLANT IF (A) SUCH INDIAN COMPANY IS FORMED BEFORE THE 30TH DAY OF NOVEMBER 2005 WITH MAJORITY EQUITY PARTICIP ATION BY PUBLIC SECTOR COMPANIES FOR THE PURPOSES OF ENFO RCING THE SECURITY INTEREST OF THE LENDERS TO THE COMPANY OWNING THE POWER GENERATING PLANT AND SUCH INDIAN COMPANY IS NOTIFIED 67 BEFORE THE 31ST DAY OF DECEMBER 2005 BY THE CENTRAL GOVERNMENT FOR THE PURPOSES OF THIS CLAUSE; (B) SUCH UNDERTAKING BEGINS TO GENERATE OR TRANSMI T OR DISTRIBUTE POWER BEFORE THE 31ST DAY OF MARCH 68 [ 2011 ] ;] 69 [ 69A [ (VI) ANY UNDERTAKING CARRYING ON THE BUSINESS OF LAYING AND OPERATING A CROSS-COUNTRY NA TURAL GAS DISTRIBUTION NETWORK INCLUDING PIPELINES AND S TORAGE FACILITIES BEING AN INTEGRAL PART OF SUCH NETWORK WHICH FULFILS THE FOLLOWING CONDITIONS NAMELY: (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA O R BY A CONSORTIUM OF SUCH COMPANIES OR BY AN AUTHORITY O R A BOARD OR A CORPORATION ESTABLISHED OR CONSTITUTED U NDER ANY CENTRAL OR STATE ACT; (B) IT HAS BEEN APPROVED BY THE PETROLEUM AND NATURAL GAS REGULATORY BOARD ESTABLISHED UNDER SUB- SECTION (1) OF SECTION 3 OF THE PETROLEUM AND NATUR AL GAS REGULATORY BOARD ACT 2006 (19 OF 2006) AND NOTIFIE D BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE; (C) ONE-THIRD OF ITS TOTAL PIPELINE CAPACITY IS AV AILABLE FOR USE ON COMMON CARRIER BASIS BY ANY PERSON OTHER THAN THE ASSESSEE OR AN ASSOCIATED PERSON; (D) IT HAS STARTED OR STARTS OPERATING ON OR AFTER THE 1ST DAY OF APRIL 2007; AND (E) ANY OTHER CONDITION WHICH MAY BE PRESCRIBED. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE AN ASSOCIATED PERSON IN RELATION TO THE ASSESSEE MEANS A PERSON (I) WHO PARTICIPATES DIRECTLY OR INDIRECTLY OR THR OUGH ONE OR MORE INTERMEDIARIES IN THE MANAGEMENT OR CON TROL OR CAPITAL OF THE ASSESSEE; - 12 - 12 (II) WHO HOLDS DIRECTLY OR INDIRECTLY SHARES CAR RYING NOT LESS THAN TWENTY-SIX PER CENT OF THE VOTING POW ER IN THE ASSESSEE; (III) WHO APPOINTS MORE THAN HALF OF THE BOARD OF DIRECTORS OR MEMBERS OF THE GOVERNING BOARD OR ONE OR MORE EXECUTIVE DIRECTORS OR EXECUTIVE MEMBERS OF TH E GOVERNING BOARD OF THE ASSESSEE; OR (IV) WHO GUARANTEES NOT LESS THAN TEN PER CENT OF THE TOTAL BORROWINGS OF THE ASSESSEE. ] ] EXPLANATION.FOR THE REMOVAL OF DOUBTS IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY IN RELATION TO A BUSINESS REFERRED TO IN SUB - SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTR ACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR ST ATE GOVERNMENT) AND EXECUTED BY THE UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-SECTION (1).] IF THE AFORESAID PROVISION OF LAW IS ANALYSED IT C AN BE SAID THAT THE AFORESAID EXPLANATION (BOLD PORTION) WAS SUBSTITUTED BY THE FINANCE ACT (NO. 2) ACT 2009 WI TH RETROSPECTIVE EFFECT FROM 1.4.2000 AND PRIOR TO ITS SUBSTITUTION EXPLANATION AS INSERTED BY THE FINANC E ACT 2007 WITH RETROSPECTIVE EFFECT FROM 1.4.2000 WAS AS UNDER :- EXPLANATION FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENT ERED INTO WITH THE UNDERTAKING OR ENTERPRISE AS THE CASE MAY BE IN THE LIGHT OF THE AFORESAID EXPLANATION SUBSTITUT ED BY FINANCE ACT 2009 WITH RETROSPECTIVE EFFECT FROM 1.4 .2000 AND THE ASSESSMENT YEAR BEFORE US BEING 2005-06 SU B- SECTION (4) HAS BEEN SPECIFICALLY EXPLAINED THAT IT SHALL NOT APPLY IN RELATION TO A BUSINESS REFERRED IN THA T SUB- SECTION WHICH IS IN THE NATURE OF WORKS CONTRACT AW ARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT) AND EXECUTED BY THE UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-SECTION (1). IN SUB- SECTION (1) TO SECTION 80IA THE WORD ANY BUSINESS HAS BEE N MENTIONED BUT IN VIEW OF INSERTION OF EXPLANATION I N RESPECT TO SUB-SECTION (4) THERE IS NO INFIRMITY I N THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THEREFORE THE IMPUGNED AMOUNT WAS RIGHT LY DISALLOWED. - 13 - 13 FINALLY THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 7 TH MAY 2010. 4. IN THE AFORESAID ORDER THE TRIBUNAL ON IDENTICAL FACTS HAS DELIBERATED UPON THE ISSUE U/S 80IA(4) OF THE ACT. IF THE EXPLANATION INSERTED BY THE FINA NCE (2) ACT 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000 I S ANALYSED IT SPECIFICALLY SAYS THAT IT SHALL NOT AP PLY IN RELATION TO A BUSINESS REFERRED IN SUB-SECTION WHIC H IS IN THE NATURE OF WORK CONTRACTS AWARDED BY ANY PERSON INCLUDING CENTER OR STATE GOVT. IN VIEW OF THIS FAC T WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A). E VEN OTHERWISE IN VIEW OF THE AFORESAID DECISION SINCE THE ASSESSEE CARRIED OUT THE WORK CONTRACTS ALLOTTED BY GOVT. AUTHORITY M.P. RURAL ROAD DEVELOPMENT AUTHORITY FOR CONSTRUCTION OF ROAD THEREFORE IT WILL NOT BE ELI GIBLE FOR THE TAX BENEFIT U/S 80IA OF THE ACT. IN VIEW OF THE SE FACTS THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE TH EREFORE DISMISSED. FINALLY APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF LEARNED REPRE SENTATIVES OF BOTH SIDES AT THE CONCLUSION OF HEARING ON 2.7.2010. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON THE FIL E. A CLARIFICATORY EXPLANATION BELOW SUB-SECTION (13) OF SECTION 80IA OF THE ACT WAS INSERTED WITH RETROSPECTIVE EFFECT FROM 1.4.2000 BY THE FINANCE ACT 2009 AS PER WHICH NOTHING CONTAINE D IN THIS SECTION SHALL APPLY IN RELATION TO A BUSINESS REFER RED TO IN SUB- SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONT RACT AWARDED BY ANY PERSON INCLUDING THE CENTRAL OR STATE GOVERNMEN T AND EXECUTED BY THE UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB- - 14 - 14 SECTION (1). THE ASSESSMENT YEAR INVOLVED IN THE PR ESENT APPEAL BEING 2006-07 THEREFORE THIS EXPLANATION IS CLEAR LY APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. IT HAS BEEN SPECI FICALLY PROVIDED THAT THE PROVISIONS U/S 80IA OF THE ACT SHALL NOT A PPLY TO A BUSINESS REFERRED TO IN SUB-SECTION (4) OF SECTION 80IA OF THE ACT WHICH IS OF THE NATURE OF WORKS CONTRACTS. IN SUB -SECTION (1) THE WORD ANY BUSINESS HAS BEEN MENTIONED. IDENTICAL ISSUE HAS BEEN DELIBERATED UPON AND DECIDED BY THE TRIBUNAL I N THE AFORESAID CASE THE RELEVANT PORTION WHEREOF HAS BE EN REPRODUCED ABOVE. WE THEREFORE HOLD THAT SINCE NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE U/S 80IA OF THE ACT THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN GRANTING THE SAME. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) ON THIS ISSUE IS THEREFORE SET ASIDE AND THE APPEAL OF APPEAL OF THE REVENUE IS ALLOWED. 11. SINCE THE FACTS OF THIS CASE RIVAL SUBMISSIONS AN D CASE LAWS RELIED UPON ARE ON SIMILAR LINES TO THOSE CONSIDERE D IN OUR AFORESAID ORDER DATED 28 TH JULY 2010 WE REJECT THE CLAIM OF THE ASSESSEE AN D UPHOLD THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. THIS GROUND O F APPEAL IS THEREFORE DISMISSED. - 15 - 15 12. THE NEXT GROUND OF APPEAL IS AGAINST THE DECISION O F THE LD.CIT(A) IN SUSTAINING DEPRECIATION @ 25 % ON TRUC K/DUMPER RUN ON HIRE AS AGAINST @ 40 % CLAIMED BY THE ASSESSEE. 13. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE WAS OWN ING MACHINERY WHICH WAS GIVEN ON HIRE TO OTHERS DURING A LEAN PERIOD AND SINCE SPARE CAPACITY OF THE MACHINE DURING ITS NON- UTILIZATION IN THE BUSINESS OF THE ASSESSEE WAS UTILIZED FOR EARNING HIRING CHARGES WHICH WAS IN THE NATURE OF BUSINESS RECEIPTS THE ASSETS HAVE BEEN USED FOR THE PURPOSE OF BUSINESS AND DEPRECIATION @ 40 % IS ADMI SSIBLE. 14. THE LD. SENIOR D.R. SUPPORTED THE ORDER OF THE LOW ER AUTHORITIES. 15. WE HAVE CAREFULLY CONSIDERED THE ISSUE IN VIEW OF T HE ORDERS OF THE AUTHORITIES BELOW MATERIALS PLACED ON RECORD A ND RIVAL SUBMISSIONS. IT IS OBSERVED FROM THE FACTS DISCUSSED IN THE ORDER O F THE LOWER AUTHORITIES THAT THE ASSESSEE CLAIMED DEPRECIATION OF RS. 45 83 489/- @ 40 % ON J.C.B. AND DUMPER. THE ASSESSEE CLAIMED THAT DEPREC IATION WAS ADMISSIBLE @ 40 % BECAUSE IT WAS GIVEN ON HIRE AND SIMILAR CLAIM WAS ALLOWED IN EARLIER YEARS. THE ASSESSEE DURING THE Y EAR HAS RECEIVED HIRING CHARGES TO RS. 21 43 858/- ON J. C. B. MACHINE AND DUMPER WHICH ARE INCLUDED IN THE CONTRACT RECEIPTS OF THE BUSINESS C ARRIED ON FOR LAST SO MANY YEARS. THE AO WAS OF THE OPINION THAT THE DEPR ECATION @ 40 % WAS - 16 - 16 AFDMISSIBLE ON TRUCKS DUMPERS ETC. IF THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND SINCE THE PRIMARY BU SINESS OF THE ASSESSEE WAS CONSTRUCTION JCB TRUCKS DUMPERS ETC. WERE TO BE TREATED AS PLANT AND MACHINERY ELIGIBLE FOR DEPRECIATION @ 25%. THE AO ALSO OBSERVED THAT ONLY BECAUSE THE EQUIPMENT WAS GIVEN ON HIRE WHEN IT WAS LYING IDLE THE NATURE OF THE BUSINESS OF THE ASSESSEE WOULD N OT CHANGE TO TRANSPORT. HE ALSO OBSERVED THAT THE HIRE CHARGES EARNED WERE VERY MEAGER AS COMPARED TO THE TOTAL CONTRACT RECEIPTS AND IT COUL D THEREFORE NOT BE SAID THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TR ANSPORT AND ENTITLED TO HIGHER CLAIM OF DEPRECIATION @ 40 % ON DUMPER J.C. B. & TRUCKS. 16. THE LD.CIT(A) RELYING ON THE DECISION IN THE CASE O F CIT VS. GUPTA GLOBAL EXIM PRIVATE LIMITED 305 ITR 132 (S. C.) HELD THAT THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF GIVING THE DUMPER J. C. B.AND TRUCKS ON HIRE AND THEREFORE THE DEPRECIATI ON WAS ADMISSIBLE ONLY @ 25 %. 17. WE HAVE CAREFULLY CONSIDERED THE ISSUE IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW MATERIALS PLACED ON RECORD A ND THE RIVAL SUBMISSIONS. 18. IT IS OBSERVED THAT THE HON'BLE APEX COURT IN THE C ASE OF CIT VS. GUPTA GLOBAL EXIM PRIVATE LIMITED (SUPRA) HAS HELD THAT THE HIGHER RATE WAS ADMISSIBLE ON MOTOR TRUCKS USED IN A BUSINESS OF RUNNING THEM ON - 17 - 17 HIRE AND THAT USER OF THE SAME IN THE BUSINESS OF T HE ASSESSEE FOR TRANSPORTATION WAS THE TEST. IT WAS ALSO HELD THAT MERELY THE INCOME FORM THE LETTING OF THE TRUCKS ON HIRE WAS INCLUDED IN T HE BUSINESS INCOME THE HIGHER RATE WOULD NOT APPLY 19. THE HON'BLE APEX COURT HAS HELD AS UNDER :- ..THE HIGHER RATE WAS ADMISSIBLE ON MOTOR TRUCKS U SED IN A BUSINESS OF RUNNING THEM ON HIRE. THEREFORE THE US ER OF THE SAME IN THE BUSINESS OF THE ASSESSEE OF TRANSPORTAT ION WAS THE TEST. MERELY BECAUSE THE INCOME FROM THE LETTING OF THE TRUCKS ON HIRE WAS INCLUDED IN THE BUSINESS INCOME THE HIGHER RATE WOULD NOT APPLY. 20. IN VIEW OF THE ABOVE PRINCIPLE LAID DOWN BY THE HON 'BLE APEX COURT THIS GROUND OF APPEAL IS REJECTED. 21. THE NEXT GROUND OF APPEAL IS AGAINST THE CONFIRMATI ON OF DISALLOWANCE OF RS. 50 000/- OUT OF THE TELEPHONE E XPENSES OF RS. 5 67 456/-CLAIMED BY THE ASSESSEE. 22. THE AO OBSERVED THAT IN ABSENCE OF ANY RECORD OF TH E USE OF THE TELEPHONES INSTALLED AT THE RESIDENCE OF DIRECTORS AND MOBILE PHONES BY THE DIRECTORS THE PERSONAL ELEMENT COULD NOT BE R ULED OUT AND AN AMOUNT - 18 - 18 OF RS. 50 000/- WAS DISALLOWED AND ADDED TO THE INC OME OF THE ASSESSEE. THE LD.CIT(A) CONFIRMED THE ADDITION. 23. THE LD. COUNSEL SUBMITTED THAT THE DISALLOWANCE WA S NOT CORRECT AND THAT EXPENDITURE FOR THE PERSONAL USE OF TELEPH ONES BY THE DIRECTORS OF THE COMPANY COULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE BECAUSE THE SAME WAS IN THE NATURE OF PERQUISITES T O THE DIRECTORS. 24. ON CAREFUL CONSIDERATION OF MATERIALS PLACED ON REC ORD AND RIVAL SUBMISSIONS WE ARE OF THE OPINION THAT THE ASSESSE E HAD FAILED TO ESTABLISH BEFORE THE LOWER AUTHORITIES THAT THE PER SONAL USE OF PHONES WAS BY WAY OF FACILITIES AND PERQUISITES PROVIDED TO TH EM AS PER THEIR TERMS OF EMPLOYMENT. IT IS ALSO OBSERVED THAT THE DISALLOWAN CE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) I S EVEN LESS THAN 10 % OF THE TOTAL EXPENDITURE OF RS. 5 67 456/-. WE THE REFORE SEE NO REASON TO INTERFERE WITH THE DECISION OF THE LD.CIT(A) ON THI S ISSUE. 25. THE NEXT GROUND OF APPEAL IS AGAINST REJECTION OF C LAIM U/S 80-G OF THE INCOME-TAX ACT 1961. THIS GROUND OF APPEAL WAS NOT PRESSED AND THE SAME IS THEREFORE TREATED AS REJECTED. 26. AS A RESULT THE APPEAL OF THE ASSESSEE IS DISMISSE D. I.T.A.NO. 176/IND/2009 A. Y. 2006-07 : - 19 - 19 27. THIS APPEAL HAS BEEN FILED AGAINST THE ORDER DATED 17 TH FEBRUARY 2009 FOR THE ASSESSMENT YEAR 2006-07 IN THE CASE OF THE ASSESSEE. 28. GROUND NO. 1(A) IS AGAINST THE DECISION OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF THE AO WHEREBY HE REJECTED THE CLAIM OF DEDUCTION OF RS. 1 23 57 300/- U/S 80IA OF THE INCO ME-TAX ACT 1961. 29. THE FACTS ARE SIMILAR TO THOSE IN I.T.A.NO. 287/IND /2009 FOR ASSESSMENT YEAR 2004-05. FOR THE REASONS DISCUSSED ABOVE WHILE DECIDING THE APPEAL OF THE ASSESSEE WE HOLD THAT THE LD.CIT (A) HAS RIGHTLY CONFIRMED THE ACTION OF THE AO IN REJECTING THE CLA IM OF THE ASSESSEE U/S 80IA OF THE INCOME-TAX ACT 1961. THIS GROUND OF AP PEAL IS THEREFORE REJECTED. 30. NEXT GROUND OF APPEAL IS AGAINST THE SUSTENANCE OF DISALLOWANCE OF RS. 2 LAKHS OUT OF WAGES EXPENSES. 31. THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED WAGES OF RS. 3 73 17 511/- FOR WHICH MOST OF THE VOUCHERS WERE SELF PREPARED THAT THE PAYMENTS WERE IN CASH AND SOME OF THE VOUCHERS DID NOT HAVE SIGNATURES OR THUMB IMPRESSIONS OF THE PAYEES. SINCE THE CLAIM OF EXPENDITURE WAS NOT VERIFIABLE THE AO MADE A DISALLOWANCE OF RS. 2 LAKHS ON ESTIMATE BASIS. THE LD.CIT(A) CONFIRMED THE ADDITION FOR THE REASON THAT THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE ENTIRE EXPENDITURE AND - 20 - 20 DISALLOWANCE BEING 0.5 % OF THE EXPENSES CLAIMED CO ULD NOT BE CONSIDERED UNREASONABLE. 32. DURING THE COURSE OF HEARING OF THE APPEAL THE LD. COUNSEL REITERATED THAT LOOKING TO THE NATURE OF BUSINESS IT WAS NOT POSSIBLE TO OBTAIN SIGNATURES IN ALL CASES BECAUSE THE LABOURE RS WERE ILLITERATE AND PAYMENTS WERE MADE IN CASH. 33. THE LD. CIT D.R. SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 34. ON CAREFUL CONSIDERATION OF THE FACTS WE ARE OF TH E CONSIDERED OPINION THAT THE AO HAD HELD THAT SOME OF THE VOUCH ERS DID NOT BEAR ANY SIGNATURES OR THUMB IMPRESSIONS. THE LD.CIT(A) HAS RIGHTLY HELD THAT IN ABSENCE OF EVIDENCE TO SUPPORT THE CLAIM A REASONA BLE PORTION OF THE EXPENDITURE WAS REQUIRED TO BE DISALLOWED AND THAT THE DISALLOWANCE BEING 0.5 % OF THE TOTAL CLAIM OF LABOUR EXPENSES IN VIEW OF THE DEFECTS POINTED OUT BY THE ASSESSING OFFICER COULD NOT BE C ONSIDERED UNREASONABLE WE THEREFORE REJECT THIS GROUND OF APPEAL. 35. THE NEXT GROUND OF APPEAL IS AGAINST DISALLOWANCE O F RS. 1.50 LAKHS ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPENSE S. 36. THE AO MADE THE DISALLOWANCE FOR THE REASON THAT F OR SOME OF THE EXPENSES THE VOUCHERS WERE NOT SUPPORTED BY BIL LS OR CASH MEMOS. THE EXPLANATION OF THE ASSESSEE THAT THE BILLS COUL D NOT BE OBTAINED FOR THE REPAIRS CARRIED OUT AT VARIOUS REMOTE SITES HOWEVE R SELF PREPARED - 21 - 21 VOUCHERS BY THE CONCERNED SUPERVISORS WERE PRODUCED BEFORE THE AO. WAS REJECTED BY THE LD.CIT(A) WHO CONSIDERED THAT THE DISALLOWANCE OF RS. 1.50 LAKHS OUT OF TOTAL CLAIM OF RS. 1 83 12 46 7/-COULD NOT BE CONSIDERED UNREASONABLE AND CONFIRMED THE ADDITION. 37. THE LD. COUNSEL REITERATED THE SUBMISSIONS TAKEN BE FORE THE LOWER AUTHORITIES. 38. THE LD. CIT D.R. SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 39. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMS TANCES OF THE CASE WE ARE OF THE OPINION THAT LOOKING TO THE NAT URE OF THE BUSINESS OF THE ASSESSEE IT WAS NOT POSSIBLE TO OBTAIN THE BIL LS FOR PETTY REPAIRS BECAUSE AT THE SITES LOCATED IN REMOTE AREAS THERE WOULD NOT BE MECHANICS WHO WOULD BE ABLE TO GIVE PRINTED BILLS. THE SELF-MADE VOUCHERS PRODUCED BY THE ASSESSEE HAVE NOT BEEN DEN IED BY THE ASSESSING OFFICER BUT IT HAS BEEN OBSERVED THAT THE VOUCHERS WERE NOT SUPPORTED BY THE BILLS. WE THEREFORE SEE NO REASON TO SUSTAIN THE AD HOC DISALLOWANCE. THIS GROUND OF APPEAL IS ALLOWED. 40. NEXT GROUND OF APPEAL IS AGAINST SUSTAINING THE DIS ALLOWANCE OF RS. 80 766/- ON ACCOUNT OF BAD DEBTS. 41. THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSES SING OFFICER IN ABSENCE OF PROPER EVIDENCE. THE DETAILS OF BAD D EBTS WERE ALSO NOT FILED BEFORE THE AO. SHE THEREFORE DID NOT CONSIDER THE CLAIM OF THE ASSESSEE - 22 - 22 AS GENUINE. THE LD.CIT(A) REJECTED THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNT OF RS. 64 602/- WAS DEDUCTED BY E.E.P. WARD KATNI OUT OF PAYMENT MADE ON 19.1.2004 AND RS. 16 165/- WAS DED UCTED BY NARMADA VALLEY DEVELOPMENT AUTHORITIES MANAWAR. THE LD.CIT (A) OBSERVED THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE AMOUNT WA S INCLUDED IN THE INCOME OF THE ASSESSEE AND IT HAD BECOME BAD DURING THE YEAR UNDER CONSIDERATION. 42. THE LD. COUNSEL REITERATED THE SUBMISSIONS TAKEN BE FORE THE LOWER AUTHORITIES AND THE LD. CIT D.R. SUPPORTED TH E ORDER OF THE LD.CIT(A). 43. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT DEDUCTIONS WERE MADE FR OM THE AMOUNTS PAYABLE BY THE CONTRACTEES FOR SOME DEFECTS OBSERVE D IN THE CLAIM MADE BY THE ASSESSEE FOR THE EXECUTION OF THE WORK. THE DEDUCTIONS HAVE BEEN MADE BY THE GOVERNMENT AGENCIES. HAD THE DEDUCTIONS BEEN MADE FORM THE RECEIPTS OF THE CURRENT YEAR THE TOTAL CONTRAC T RECEIPTS WOULD HAVE BEEN REDUCED TO THAT EXTENT AND THE AMOUNT WOULD NO T HAVE BEEN REQUIRED TO BE DEBITED TO THE PROFIT AND LOSS ACCOUNT SEPAR ATELY. THE NATURE OF DEDUCTIONS IS THUS NOT VERY CLEAR. HOWEVER LOOKI NG TO THE SMALLNESS OF THE AMOUNT AND THE NATURE OF THE BUSINESS OF THE AS SESSEE WE CONSIDER THAT THE CLAIM OF BAD DEBTS IS ADMISSIBLE BECAUSE T HE SAME DEBTS HAVE - 23 - 23 BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT AND THE DE DUCTION SEEMS TO BE RELATED TO THE WORKS CARRIED OUT FOR THE AFORE STAT ED AGENCIES WHOSE RECEIPTS HAVE BEEN ALREADY ACCOUNTED FOR BY THE ASS ESSEE FOR THE PURPOSE OF ITS INCOME IN CONTRACT BUSINESS. THE ADDITION IS THEREFORE DELETED. THE DECISION OF LOWER AUTHORITIES ON THIS ISSUE IS REVE RSED. THIS GROUND OF APPEAL IS ALLOWED. 44. THE NEXT GROUND OF APPEAL IS AGAINST REJECTION OF C LAIM OF AGRICULTURAL INCOME OF RS.1 LAKH AND TREATING IT AS INCOME FROM OTHER SOURCES. 45. THE ASSESSEE HAD CLAIMED AGRICULTURAL INCOME OF RS. 2 04 500/-. ACCORDING TO THE AO THE ASSESSEE WAS HAVING 9 ACRE S OF AGRICULTURAL LAND WHICH WAS GIVEN ON CULTIVATION TO THE FARMERS FOR WHICH THE ASSESSEE RECEIVED RS. 2 LAKHS PER ANNUM. THE AO OBS ERVED THAT THE INCOME HAS BEEN DECLARED AT HIGHER SIDE AND SHE TH EREFORE REJECTED THE CLAIM OF RS. 1 LAKH AND TREATED IT AS INCOME FROM OTHER SOURCES WHICH WAS CONFIRMED BY THE LD. CIT(A) IN VIEW OF THE DEC ISIONS OF DURGA PRASAD MORE VS. CIT 82 ITR 520 ( S. C.) AND THE DE CISION OF I.T.A.T. IN THE CASE OF CHALTHAN VIBHJAG KHAND UDYOG SAHAKARI M ANDI LIMITED VS. ITO IN I.T.A.NO. 3691/AHD/2004. THE LD.CIT(A) OBSER VED THAT SELF- SERVING STATEMENT OF THE ASSESSEE COULD NOT BE ACCE PTED BECAUSE THE CLAIM MADE AS PER COPY OF AGREEMENT DATED 25 TH FEBRUARY 2005 WAS NOT - 24 - 24 SUPPORTED BY COPY OF REVENUE RECORDS IN SUPPORT OF THE CLAIMS THAT THE LAND WAS GIVEN ON LEASE. THE DETAILS OF CROPS WERE ALSO NOT GIVEN. THE ASSESSEE COULD NOT ALSO FILE ANY DETAILS OF AGRICUL TURAL INCOME DECLARED IN EARLIER YEARS AND THE SUBSEQUENT YEARS. 46. ON CAREFUL CONSIDERATION OF THE FACTS WE ARE OF TH E CONSIDERED OPINION THAT THE AGRICULTURAL INCOME OF RS. 2 LAKHS ON9 ACRES OF LAND GIVEN TO CULTIVATORS ON LEASE WAS RIGHTLY CONSIDERED AS EXCESSIVE CLAIM IN VIEW OF THE FACT THAT THE ASSESSEE COULD NOT GIVE RELEVA NT DETAILS. WE THEREFORE SEE NO REASON TO INTERFERE WITH THE DECISION OF THE LD.CIT(A) ON THIS ISSUE. THIS GROUND OF APPEAL IS ALSO REJECTED. 47. AS A RESULT THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 6 TH AUGUST 2010. SD/- SD/- (JOGINDER SINGH) (B. R. KAUSHIK) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :6 TH AUGUST 2010. CPU* 248