ACIT, Chandigarh v. M/s GSCO Infrastructure (P) Ltd., Chandigarh

ITA 263/CHANDI/2013 | 2009-2010
Pronouncement Date: 25-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 26321514 RSA 2013
Bench Chandigarh
Appeal Number ITA 263/CHANDI/2013
Duration Of Justice 7 month(s) 19 day(s)
Appellant ACIT, Chandigarh
Respondent M/s GSCO Infrastructure (P) Ltd., Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 25-10-2013
Date Of Final Hearing 08-10-2013
Next Hearing Date 08-10-2013
Assessment Year 2009-2010
Appeal Filed On 07-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.263/CHD/2013 ASSESSMENT YEAR : 2009-10 THE ACIT VS M/S G.S.C.O. INFRASTRUCTURE CIRCLE 3(1) PVT. LTD. CHANDIGARH. SCO 67 SECTOR 20-C CHANDIGARH. PAN : AACCG-4392A (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI KUMARI RESPONDENT BY : SHRI A.K.JINDAL DATE OF HEARING : 08.10.2013 DATE OF PRONOUNCEMENT : 25.10.2013 O R D E R PER SUSHMA CHOWLA JM THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(APPEALS) CHANDIGARH DATED 03.12.2012 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 ( 'THE ACT' FOR SHORT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. 'WHETHER ON FACTS AND CIRCUMSTANCES THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.14 69 449/- OUT OF EXPENDITURE OF RS.6 24 97 436/- CLAIMED ON ACCOUNT OF VEHICLE REPA IR AND MAINTENANCE MADE BY THE AO AS THE ASSESSEE FAILED TO PRODUCE VOUCHERS. 2. 'WHETHER ON FACTS AND CIRCUMSTANCES THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.8 72 198/- OUT OF E XPENDITURE OF RS.9 18 103/- MADE BY THE ASSESSING OFFICER BY TREATING THE TEMPO RARY STRUCTURE AS PERMANENT STRUCTURE MERELY ON THE BASIS OF SMALL AMOUNT OF E XPENDITURE AS COMPARED TO CONTRACT AMOUNT. 3. 'WHETHER ON FACTS AND CIRCUMSTANCES THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.74 101/- MADE BY THE AO ON ACCOUNT OF INTEREST FREE 2 LOAN GIVEN TO SISTER CONCERN M/S CHANDIGARH CABLES PRIVATE LIMITED WHEREAS THE ASSESSEE COMPANY HAS RAISED HUGE LOAN A ND DEBITED INTEREST TO THE P&L ACCOUNT. 4. THE APPELLANT CRAVES TO ADD OR AMEND ANY GROUND/GRO UNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. THE ISSUE RAISED BY THE REVENUE VIDE GROUND NO. 1 IS AGAINST THE DELETION OF DISALLOWANCE OF RS.14 69 449/- MADE OUT OF VEHICLE REPAIR AND MAINTENANCE EXPENDITURE. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NO TED THAT OUT OF TOTAL EXPENDITURE OF RS. 6 24 97 436/- CLAIMED BY T HE ASSESSEE FOR VEHICLE REPAIR AND MAINTENANCE VOUCHERS RELATING T O EXPENDITURE TOTALING RS. 14 69 449/- WERE NOT PRODUCED BY THE A SSESSEE. THE PLEA OF THE ASSESSEE WAS THAT THE SAID VOUCHERS HAVE BEE N MISPLACED DUE TO SHIFTING OF THE OFFICE. THE ASSESSEE BEFORE THE CIT(APPEALS) CLAIMED THAT THE ASSESSING OFFICER HAD FAILED TO GI VE THE DETAILS OF RS. 14 69 449/- POINTING OUT THAT SUCH BILLS WERE N OT PRODUCED BY THE ASSESSEE. THE ASSESSEE CLAIMED BEFORE THE CIT(APPE ALS) THAT THE VOUCHERS WHICH WERE MISPLACED HAD BEEN TRACED AND COMPLETE RECORDS WERE AVAILABLE WITH THE ASSESSEE. THE CIT( APPEALS) DELETED THE ADDITION IN THE ABSENCE OF THE SAID DETAILS BEI NG AVAILABLE ON THE ASSESSMENT RECORD. THE REVENUE IS IN APPEAL AGAINS T THE SAID DELETION OF ADDITION BY THE CIT(APPEALS). 5. SMT. JYOTI KUMARI APPEARED FOR THE REVENUE AND S HRI A.K.JINDAL APPEARED FOR THE ASSESSEE AND PUT FORWAR D THEIR CONTENTIONS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. ADMITTEDLY DURING THE COURSE OF THE ASSESSMENT PROC EEDINGS COMPLETE BILLS/VOUCHERS WERE NOT PRODUCED BY THE AS SESSEE AS SOME 3 OF THE BILLS WERE MISPLACED BY THE ASSESSEE WHILE T RANSFER OF ITS RECORD FROM SITE TO HEADQUARTER. THE ASSESSEE IN T HE APPELLATE PROCEEDINGS HAD ADMITTED THAT THE SAID VOUCHERS HAD BEEN TRACED AND COMPLETE RECORD BILLS AND VOUCHERS WERE NOW AVAILA BLE WITH THE ASSESSEE. HOWEVER ON THE OTHER HAND THE ASSESSEE CLAIMS THAT THE SAID BREAK-UP/DETAILS OF THE TOTAL AMOUNT DISALLOWE D AT RS. 14 69 449/- HAD NOT BEEN GIVEN IN THE ASSESSMENT OR DER OR OTHERWISE GIVEN TO THE ASSESSEE. WE FIND NO MERIT IN THE SAI D PLEA OF THE ASSESSEE IN VIEW OF THE ADMISSION OF THE ASSESSEE T HAT IT HAD TRACED CERTAIN VOUCHERS/BILLS WHICH WERE NOT AVAILABLE WIT H IT DURING THE ASSESSMENT PROCEEDINGS. HOWEVER IN THE INTEREST O F JUSTICE WE DEEM IT FIT TO RESTORE THIS ISSUE BACK TO THE FILE OF AS SESSING OFFICER TO DECIDE THE SAME DENOVO AFTER AFFORDING THE REASONAB LE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FURNISH THE DETAILS OF THE BILLS/VOUCHERS BOOKED UNDER THE HEAD VEHICLES REPAIR AND MAINTENANCE. THE GROUND NO. 1 RAISED BY THE R EVENUE IS THUS ALLOWED FOR STATISTICAL PURPOSES. 7. THE ISSUE IN GROUND NO. 2 RAISED BY THE REVENUE IS AGAINST DELETION OF DISALLOWANCE OF RS. 872 198/- BOOKED ON ACCOUNT OF EXPENDITURE INCURRED ON TEMPORARY STRUCTURE. THE A SSESSING OFFICER HAD DISALLOWED CERTAIN PART OF THE EXPENDITURE BOOK ED BY THE ASSESSEE ON TEMPORARY BUILDING/SHELVES ON WHICH 100% DEPRECI ATION WAS CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER NOT ED THAT THERE WAS EXTENSIVE USE OF BRICKS CEMENT AND IRON FOR CONSTR UCTION OF THE SAID STRUCTURE AND THEY WERE HELD TO BE PERMANENT STRUCT URES AND DEPRECIATION @ 5% WAS ALLOWED TO THE ASSESSEE. 4 8. THE CIT(APPEALS) VIDE PARA 3.3 HELD AS UNDER : 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSION OF THE LD. COUNSEL. THE TOTAL AMOUNT SPENT ON TEMPORARY ST RUCTURES WAS OF RS. 9 18 103/- CONSISTING OF RS. 8 84 642/- AT THE SIT E OF NCL KHADIA (M.P.) AND RS. 33 461/- AT SANGRUR. THE EXPLANATION OF THE APPELLANT IS THAT IT HAD A CONTRACT FOR HIRING OF EQUIPMENTS FOR OVERBUR DEN REMOVAL AND WAS ALLOTTED ANOTHER CONTRACT FOR REMOVAL OF OVERBURDEN OF FIRST DIG (SOLID) AND THE STRUCTURE AT NCL SITE WAS CREATED TO AVOID WAST AGE OF TIME. THE STRUCTURE WAS USED FOR STORAGE OF HEAVY MACHINERY & MACHINERY PARTS AND OIL & OTHER CONSUMABLES WORKSHOP FOR REPAIR OF MAC HINERY AND QUARTERS FOR LABOUR. CONSIDERING THE CONTRACT AMOUNT (MORE T HAN RS. 55 CRORES) THE AMOUNT ON TEMPORARY STRUCTURE CREATED OF RS. 8 84 642/- IS TOO SMALL. BRICKS MUD M.S. SHEETS AND CEMENT ARE USED EVEN IN A TEMPORARY STRUCTURE AND SIMPLY BECAUSE THESE ITEMS WERE USED IN MAKING THIS STRUCTURE DO NOT MEAN THAT THE STRUCTURE HAS BECOME PERMANENT. WHATEVER STRUCTURE IS CREATED AT THE WORK SITE IS A LWAYS A TEMPORARY STRUCTURE SINCE IT IS TO BE DISMANTLED/DEMOLISHED/ LEFT AFTER THE WORK IS OVER. I AM ENTIRELY IN AGREEMENT WITH THE LD. COUNS EL THAT PERMANENT STRUCTURE CANNOT BE CREATED IN SUCH A SMALL AMOUNT. THE AMOUNT SPENT FOR SITE AT SANGRUR STRUCTURE WAS OF RS. 33 4 61/- ONLY WHICH BY NO STRETCH OF IMAGINATION CAN BE TREATED TO HAVE BEEN SPENT FOR PERMANENT STRUCTURE. HENCE THE ASSESSING OFFICER WAS NOT RIG HT IN TREATING THESE STRUCTURES AS PERMANENT STRUCTURES AND IN RESTRICTI NG THE DEPRECIATION TO 5%. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS ACCORDINGLY DELETED. GROUND OF APPEAL NO. 2 IS ALLOWED. 9. THE LD. DR FOR THE REVENUE FAILED TO CONTROVERT THE FINDINGS OF THE CIT(APPEALS) AND IN THE ABSENCE OF THE SAME WE FIND NO MERIT IN GROUND NO. 2 RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 10. THE GROUND NO. 3 RAISED BY THE REVENUE IS AGAIN ST DELETION OF ADDITION OF RS. 74 101/- MADE ON ACCOUNT OF INTERES T FREE LOAN ADVANCED BY THE ASSESSEE TO ITS SISTER CONCERN M/S CHANDIGARH CABLES PVT. LTD. THE LD. AR FOR THE ASSESSEE AT THE OUTS ET POINTED OUT THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE T RIBUNAL WHEREIN SIMILAR ISSUE AROSE IN THE CASE OF SHRI GURMEET SIN GH I.E. THE SOLE PROPRIETOR WHOSE BUSINESS HAS BEEN TAKEN OVER BY TH E PRESENT ASSESSEE. 11. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDER OF THE ASSESSING OFFICER. 5 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT THE ASSESSEE HAD MADE INTEREST FREE AD VANCES TO M/S CHANDIGARH CABLES PVT. LTD. BOTH FOR THE PURCHASE OF LAND AND FOR PURCHASE OF CERTAIN MATERIAL. THE SAID ADVANCES WE RE MADE BY SHRI GURMEET SINGH IN ASSESSMENT YEAR 2006-07 I.E. THE T IME WHEN THE BUSINESS WAS BEING CARRIED ON BY SOLE PROPRIETOR. THE SAID BUSINESS HAS SINCE BEEN TAKEN OVER BY THE PRESENT ASSESSEE. THE TRIBUNAL VIDE PARA 14 IN RELATION TO THE INTEREST RELATABLE TO SU CH ADVANCES HAD OBSERVED AS UNDER : 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS W E FIND THAT THE STATEMENT OF ACCOUNT OF M/S CHANDIGARH CABLES PVT LTD AT PAGE 15 OF THE PAPER BOOK READS AS UNDERSTATEMENT OF M/S CHANDIGARH CABLE PVT LTD. DATE PARTICULAR DEBIT CREDIT BALANCE 9-AUG-05 TO DD NO- 589038 175 000.00 175 000.00 18-NOV-OS TO DDNQ-24514 1 250 000.00 1 425 000.00 27-DCC-05 TO DDNO. - 16744 600 000.00 2 021000.00 27-MAR-06 TO DD NO- 526020 4 000 000.00 6 025 000.00 31 - MAR - 06 BY DD NO. 25641 500 000.00 5525000.00 15-JUN-06 TO DDNO. -380453 500 000.00 6 025 000.00 13 - JUL - 06 TO DDNO. 394213 500 000.00 6525 000.00 12 - DEC - 06 BY DD NO. 424586 425 000.00 6 100 000.00 1 6 - APR - 07 BY PURCHASE OF ELECTRICAL CABLES 2 592 419.00 3 507 581.00 31-JUL-07 BY PURCHASE OF ELECTRICAL CABLES 2 019 841.00 1 487 740.00 LL-JUL-08 BY PURCHASE OF INDUSTRIAL PLOT C-69-70 & 61 & 62 1 094 400.00 393 340.00 (547200 X 2) AT CHANOLAN DISTT KURALI 393 340.00 LL-JUL-08 BY PURCHASE OF BUILDING AT PLOT NO. C-69-70 393 340.00 TOTAL 7 025 000.00 7 025 000.00 THE ABOVE SHOWS THAT A SUM OF RS.10 94 400/- HAS BE EN ADJUSTED AGAINST PURCHASE OF THE LAND AND ; ABOUT RS. 50 LAKHS TOWARDS PURCHASE OF MATERIAL A S FAR AS ADVANCES AGAINST MATERIAL ARE CONCERNED. THE SAME IS FOR BUSINESS PURPOSES AND THEREFORE NO DISALLOWANCE IS CALLED FOR. AS FAR AS ADVANCE AGAINST LAND IS CONCERNED THE INTEREST CANNOT BE ALLOWED IN ANY CA SE NOT MERELY BECAUSE THE ADVANCE HAS BEEN GIVEN TO THE SISTER CONCERN BUT BE CAUSE THE MONEY HAS BEEN BORROWED FOR THE ACQUISITION OF FIXED ASSETS . AFTER AMENDMENT TO SECTION 36(1) (III) IT HAS BEEN MADE QUITE CLEAR THAT INTE REST ON THE FUNDS BORROWED FOR THE PURPOSE OF ACQUISITION OF ASSETS IS NOT ALLOWAB LE. ACCORDINGLY WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSE SSING OFFICER TO CONFIRM THE DISALLOWANCE OF INTEREST'; AMOUNTING TO RS. 15 0 00/- WHICH IS APPROXIMATE AMOUNT OF INTEREST INCURRED FOR THE PUR POSE OF ACQUISITION OF ASSETS. 13. IN THE FACTS OF THE PRESENT CASE BEFORE US THE RE IS A DIFFERENCE THAT THE LAND WHICH WAS PROPOSED TO BE PURCHASED BY THE ASSESSEE IN 6 ASSESSMENT YEAR 2006-07 HAS SINCE BEEN PURCHASED. IN VIEW THEREOF WE FIND NO MERIT IN THE GROUND OF APPEAL RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 14. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER 2013. SD/- SD/-P ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 25 TH OCTOBER 2013 POONAM COPY TO: THE APPELLANT THE RESPONDENT THE CIT(A) THE CIT DR ASSISTANT REGISTRAR ITAT CHD.