Dcit New Delhi v. M S Prafful Industries Pvt Ltd New Delhi

1 Ita No 5712 Del 2014 In The Income Tax Appella Te Tribunal Delhi Bench F New Delhi Before Shri G D Agrawal Preside Nt And Shri Chandra Mohan Garg Ju Dicial Member I T A No 5712 Del 2 014 A Y 2011 12 Dcit Circle 14 1 New Delhi Appellant Vs Prafful Industries Pv T Ltd 349 Katra Naya Chandni Chowk New Delhi Aaacp 1335 N Respondent Appellant By Sh Atiq Ahmad Sr Dr Respondent By Sh Sanjay Nath Ca Order Per Chandra Mohan Garg Judicial Member This Appeal Has Been Filed By The Revenue Against T He Order Of The Cit A Xvii New Delhi Dated 18 07 2014 For As Sessment Year 2011 12 2 The Grounds Raised By The Revenue Read As Follow S 1 On The Facts And Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 26 39 405 Made By The Ao Ignoring The Fact That The Asset Purchased Are Clearly Capital A Sset And The Ao Has Also Mentioned The Reasons For Treating The Parts O F Power Plant As Date Of Hearing 11 12 2017 Date Of Pronouncement 12 12 2017 2 Ita No 5712 Del 2014 Capital Expenses With Respect To Quantum Of The Exp Enses 2 On The Facts And Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 16 70 000 Made By Th E Ao On Account Of Disallowance Of Prior Period Expenses Ignoring The Fact That The Above Expenses Are Not Solely For The Year Under Consider Ation 3 On The Facts And Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 4 91 714 On Account O F Disallowance U S 37 And 38 2 By Not Appreciating The Fact That The Assessee Company Has Failed To Produce The Log Book Which Is The Onl Y Authentic Document Which Can Show Record The Uses Of Vehicles For Busi Ness Purposes 4 On The Facts And Circumstances Of The Case The Appellant Craves To Be Allowed To Add Any Fresh Grounds Of Appeal And Or D Elete Or Amend Any Of The Grounds Of Appeal 3 Ground No 1 Apropos Ground No 1 The Ld Senior Departmental R Epresentative Submitted That The Ld Cit A Has Erred An Deleting The Addition Of Rs 26 39 405 Made By The A O By Ignoring The Fact That The Assessee Has Purchased Asset Of Capital Nature And A O Has Given A Clear Finding And Reasoning For Treating The Parts Of Power Plant As Capital Expenses With Respect To Quantum Of Expense S 4 The Ld Ar Strongly Supported The First Appellat E Order And Submitted That Rightly The Ld Cit A Has Rightly Gr Anted Relief To The Assessee As The Appellant Has Given All The Details Of Parts Which Were Purchased To Keep The Machinery In Running Ord Er And The Expenditure Was Of Revenue Which Cannot Be Termed A S Capital Expenditure 3 Ita No 5712 Del 2014 5 On Careful Consideration Of Rival Submissions An D Perusal Of Relevant Para 5 2 Of The First Appellate Order We A Re Satisfied With The Findings Arrived By The Ld Cit A That The Natu Re Of Work Of Appellant Involved As Work With Chemicals Acids Et C And Thus Substantial Amount Have To Be Incurred For Replaci Ng Of Part For Plant And Machinery The Ld Cit A Further Recorde D A Finding That The Appellant Has Given All Details Of Parts Which Were Purchase To Keep The Machinery In Running Order And The Amount Has Been Spent On Purchase Of Various Parts For The Machiner Y It Was Also Observed That No Machinery Has Been Purchased Which Can Be Said To Have Enduring Benefit Therefore The Expenditur E Incurred And Claimed By The Assessee Was Of Revenue In Nature An D Not Capital Expenditure Thus In Our Considered Opinion The First Appellate Authority Was Right And Demolishing The Action Of T He A O And In Granting Relief To The Assessee Accordingly Grou Nd No 1 Of The Revenue Is Dismissed 6 Ground No 2 Apropos Ground No 2 The Ld Departmental Represe Ntative Submitted That The Ld Cit A Has Erred And Deletin G The Addition Of Rs 16 17 000 Made By The A O On Account Of Disall Owance Of Prior Period Expenses Ignoring The Fact That Impugned Ex Penses Were Not Solely For The Year Under Consideration 7 The Ld Ar Submitted That The Payment Has Been M Ade In Compliance With The Order Of The Honble High Court Dated 10 12 2010 Wherein It Was Held That The Appellant I S Liable To Pay 4 Ita No 5712 Del 2014 Cess Therefore The Liability Was Crystallized Dur Ing The Year Under Consideration I E Assessment Year 2011 12 8 On Careful Consideration Of Above Rival Submissi Ons And Perusal Of The Relevant Part 6 2 Of The First Appel Late Order We Note That Payment Of Cess From May 1999 To May 2007 Has Been Made By The Assessee To Comply With The Judgment Of Hon Ble Supreme Court Dated 10 12 2010 Wherein Liability Of Pay Ces S On The Assessee Was Confirmed By Honble Apex Court Ther Efore Due To These Reasons Liability Was Crystallized During Fin Ancial Year 2010 11 Pertaining To Assessment Year 2011 12 Hence W E Are Unable To See Any Valid Reason To Interfere With The Concl Usion Arrived By The Ld Cit A And Thus We Are Uphold The Same C Onsequently Ground No 2 Of The Revenue Being Devoid Of Merits Is Dismissed 9 Ground No 3 The Ld Departmental Representative Submitted That The Cit A Has Erred And Deleting The Amount Of Rs 4 91 714 By Ignoring The Fact That The Company Has Failed To Pr Oduce Log Book Which Is Only Authentic Document Which Can Show And Established The Uses Of Vehicle For The Business Purposes Of Th E Assessee Company 10 The Ld Ar Vehemently Pointed Out That In The C Ase Of A Company Persona Uses Cannot Be Alleged In View Of T He Decision Of Honble Delhi High Court Reported As 197 Taxman Com 25 Delhi 5 Ita No 5712 Del 2014 11 On Careful Consideration Of Our Rival Submissio N We Are Of The View That No Disallowance Can Be Made On Account Of Personal Use In The Case Of A Company Especially When The A O H As Not Been Able To Make The Addition Of Sound Basis The A O Proce Eded To Make Disallowance Without Verifying The Relevant Voucher S Bills And Without Examining The Log Books In A Right Perspect Ive Therefore He Ld Cit A Was Right In Dismissing The Addition Accordingly Ground No 3 Of The Revenue Is Also Dismissed 12 In The Result The Appeal Is Dismissed On All T Hree Grounds Decision Pronounced In The Open Court On 12 12 2 017 Sd Sd G D Agrawal C M Garg President Judicial Member Dated 12 12 2017 R Naheed Copy Forwarded To 1 Appellant 2 Respondent 3 Cit 4 Cit Appeals 5 Dr Itat Assistant R Egistrar Itat New Delhi 6 Ita No 5712 Del 2014 Date 1 Draft Dictated On 10 2017 Ps 2 Draft Placed Before Author 10 2017 Ps 3 Draft Proposed Placed Before The Second Member 2017 Jm Am 4 Draft Discussed Approved By Second Member Jm Am 5 Approved Draft Comes To The Sr Ps Ps 18 12 2017 Ps Ps 6 Kept For Pronouncement On Ps 7 File Sent To The Bench Clerk 1 8 12 2017 Ps 8 Date On Which File Goes To The Ar 9 Date On Which File Goes To The Head Clerk 10 Date Of Dispatch Of Order