9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (8) TMI 314 - AT - Income TaxDepreciation on cost of additions to the machinery Held that - There was merit in the contention of the assessee that for the assessee s inability to produce the original invoices in respect of machinery/assets added during the year, there is a reasonable cause for the assessee for not producing the same at the relevant point of time before the AO - the assessee is in a position to produce invoices, copies of duly certified by the AO are also furnished and a cursory glance at those invoices clear reveal the relevant machinery/assets having been acquired during the previous year thus, the matter is remitted back to the AO for fresh determination Decided in favour of Assessee. Addition of unproved gifts u/s 68 Held that - The assessees have claimed to have received huge amounts of money gifts from friends, relatives, medical representatives and so on, on the occasion of inauguration of their hospital, they could not furnish either the details of such persons who gave the gifts, nor any other details or documentary evidence to substantiate their claim - the onus of establishing the identity of the donors, their creditworthiness and the genuineness of the gifts claimed - Explanation of the assessee of having received the gifts also needs to be viewed in the backdrop of the need for the assessees to explain the sources for the amounts of capital introduced by them in the firm, M/s. Prem Sharma Cardiac Care Centre, Warangal - the assessees are in medical profession with a standing that they could establish a hospital of their own, the amounts of gifts may be treated as unexplained income of the assessees from their profession, instead as unexplained credits liable for addition under S.68 of the Act - order of the CIT(A) is set aside Decided in favour of Assessee.
Issues Involved:
1. Disallowance of depreciation on machinery. 2. Additions under Section 68 of the Income Tax Act on account of unproved gifts for the assessment years 2004-05 and 2005-06. Detailed Analysis: 1. Disallowance of Depreciation on Machinery: Facts: The assessee-firm, M/s. Prem Sharma Cardiac Care Centre, Warangal, faced disallowance of depreciation amounting to Rs. 5,19,716 on machinery additions worth Rs. 23,15,348 for the assessment year 2005-06. The Assessing Officer (AO) disallowed the depreciation due to the assessee's failure to furnish relevant bills/invoices despite opportunities given. CIT(A) Proceedings: The CIT(A) remanded the matter to the AO after considering the assessee's claim that the invoices were part of the impounded material during a survey. The AO expressed satisfaction with one invoice of Rs. 54,000 but upheld the disallowance for the remaining amount due to the assessee's inability to produce original invoices. Tribunal's Decision: The Tribunal found merit in the assessee's contention that the Department's custody of the impounded material justified the assessee's inability to produce the original invoices. Since the assessee was now able to produce certified copies of the invoices, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the AO for fresh determination. The AO was directed to allow the depreciation claim after due verification. Outcome: The appeal (ITA No. 538/Hyd/2013) was allowed for statistical purposes. 2. Additions Under Section 68 of the Income Tax Act on Account of Unproved Gifts: Assessment Year 2004-05: Facts: Dr. Prem Raj Sharma and Dr. Nivedita Sharma claimed gifts of Rs. 9,20,000 and Rs. 1,40,000 respectively as capital introduced in the firm. The AO treated these amounts as unproved gifts due to lack of evidence and added them under Section 68. CIT(A) Proceedings: The CIT(A) upheld the AO's decision, citing the assessees' failure to substantiate the gifts with evidence. Tribunal's Decision: The Tribunal noted the assessees' inability to provide details or evidence for the gifts. Given the profession and standing of the assessees, the Tribunal directed that the amounts be treated as unexplained income from their profession rather than unexplained credits under Section 68. The AO was directed to modify the assessments accordingly. Outcome: The appeals (ITA Nos. 539 and 540/Hyd/2013) were partly allowed. Assessment Year 2005-06: Facts: Dr. Prem Raj Sharma and Dr. Nivedita Sharma claimed gifts of Rs. 8,32,350 and Rs. 4,10,000 respectively from their fathers. The AO disallowed these claims due to insufficient evidence of the donors' creditworthiness and the genuineness of the transactions. CIT(A) Proceedings: The CIT(A) confirmed the AO's additions. Tribunal's Decision: The Tribunal emphasized the need for substantial evidence to support the claims of gifts from parents. Given the natural love and affection and the amounts being received via cheques, the Tribunal deemed it just to remand the matter back to the AO for fresh consideration. The assessees were directed to provide substantial evidence and cooperate with the AO. Outcome: The appeals (ITA Nos. 541 and 547/Hyd/2013) were allowed for statistical purposes. Summary: - ITA No. 538/Hyd/2013: Allowed for statistical purposes. - ITA Nos. 539 and 540/Hyd/2013: Partly allowed. - ITA Nos. 541 and 547/Hyd/2013: Allowed for statistical purposes. Order pronounced on July 25, 2014.
|
