2014 (1) TMI 1900 - AT - Income Tax

Depreciation u/s 32(1)(ii) on the infrastructure construction cost capitalized under the head Right to collect toll - on the expenditure incurred on cost of construction of such infrastructure facility, assessee claimed depreciation @ 25% - HELD THAT - It was a common point between the parties that the decision of the Tribunal in the assessee s own case for assessment year 2004-05 as well as assessment year 2007-08 are in favour of the assessee, which continue to hold the field and have not been altered by any higher authority. As a result, Ground of Appeal Nos. 1 and 2 raised by the Revenue are dismissed in view of the aforesaid precedent. Disallowance of employees contribution to EPF u/s 36(i)(va) r.w.s. 2(24)(x) - AO disallowed the impugned amount on the ground that such employee s contribution towards PF was paid beyond the due dates prescribed under the PF Regulations - HELD THAT - As the said amounts were duly deposited before the due date of furnishing return of income prescribed u/s 139(1) of the Act, the CIT(A) deleted the disallowance following the decision of the Tribunal in the assessee s own case for assessment year 2006-07 2011 (9) TMI 1019 - ITAT PUNE . In view of the aforesaid precedent, the action of the CIT(A) is hereby affirmed and the Ground of Appeal No.3 raised by the Revenue is dismissed. Disallowance of expenses on telephone, travel and vehicles on an ad-hoc basis on the plea of personal element - HELD THAT - We find no reason to interfere with the order of the CIT(A) inasmuch as disallowance was made by the Assessing Officer merely on the basis of surmises and conjectures. In the absence of any specific evidence of personal or non-business use, ad-hoc disallowances are not maintainable. Thus, the order of the CIT(A) is hereby affirmed and Revenue fails on the Ground of Appeal No. 4 also. Additional Ground of Appeal admitted by the CIT(A) as the claim was not made in the return of income filed by the assessee - Deduction u/s 35DD denied as claim not made in the return of income - such a claim was not made in the return of income but was preferred by the assessee in the course of assessment proceedings by way of a written communication - HELD THAT - In our considered opinion, the action of the CIT(A) in admitting the aforesaid Ground of Appeal cannot be faulted following the judgment of the Hon ble Bombay High Court in the case of Pruthvi Brokers and Shareholders Pvt. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT . As per the Hon ble Bombay High Court, an assessee is entitled to raise before the appellate authorities additional grounds in terms of additional claims not made in the return filed by it. In holding so, the Hon ble Bombay High Court had duly considered the judgement of the Hon ble Supreme Court in the case of Goetze India Ltd. 2006 (3) TMI 75 - SUPREME COURT which has been relied by the Revenue before us, and therefore, we find no error in the part of the CIT(A) in admitting the impugned Additional Ground of Appeal based on the parity of reasoning laid down by the Hon ble High Court in the case of Pruthvi Brokers and Shareholders Pvt. Ltd. (supra). Accordingly, Ground of Appeal Nos. 5 and 6 are dismissed. CIT(A) allowing the assessee s claim for deduction u/s 35DD - said claim relates to 1/5 expenses of stamp duty payable on amalgamation which has been claimed as deductible in terms of section 35DD - CIT(A) allowed the claim of the assessee on the basis of the decision of the Pune Bench of the Tribunal in the assessee s own case for assessment year 2006-07 2011 (9) TMI 1019 - ITAT PUNE - HELD THAT - The precedent relied upon by the CIT(A) continues to hold the field as none of the parties have asserted that the same has been altered by any higher authority. Therefore, the order of the CIT(A), which is based on the decision of the Tribunal in the assessee s own case for assessment year 2006-07 (supra), is hereby affirmed and the Revenue has to fail on this Ground.

Summary

Issues:
1. Depreciation claim under section 32(i)(ii) on infrastructure construction cost.
2. Deduction eligibility for right to collect toll as an intangible asset.
3. Disallowance of employees' EPF contribution under section 36(i)(va) r.w.s. 2(24)(x).
4. Disallowance of estimated personal elements in telephone, travel, and vehicle expenses.
5. Admission of additional ground for deduction under section 35DD not claimed in the original return.
6. Allowance of deduction under section 35DD for stamp duty expenses on amalgamation.

Detailed Analysis:

1. The first issue pertains to the depreciation claim under section 32(i)(ii) on the infrastructure construction cost. The Assessing Officer disallowed the claim and opted for spreading the cost over the toll collection periods. However, the CIT(A) allowed the depreciation claim based on previous tribunal decisions favoring the assessee. The Tribunal dismissed the Revenue's appeal, citing the consistency of precedent decisions.

2. The second issue involves the eligibility of the right to collect toll as an intangible asset for deduction under section 32(i)(ii). The CIT(A) allowed the claim following previous tribunal decisions in the assessee's favor. The Tribunal upheld the CIT(A)'s decision based on the consistency of precedent decisions, dismissing the Revenue's appeal.

3. The third issue concerns the disallowance of employees' EPF contribution under section 36(i)(va) r.w.s. 2(24)(x). The CIT(A) deleted the disallowance, relying on a tribunal decision in the assessee's favor for a different assessment year. The Tribunal affirmed the CIT(A)'s decision, dismissing the Revenue's appeal.

4. The fourth issue addresses the disallowance of estimated personal elements in telephone, travel, and vehicle expenses. The CIT(A) overturned the ad-hoc disallowances made by the Assessing Officer due to lack of specific evidence of personal use. The Tribunal upheld the CIT(A)'s decision, stating that disallowances based on surmises and conjectures are not valid without concrete evidence.

5. The fifth issue involves the admission of an additional ground for deduction under section 35DD, not originally claimed in the return but raised during assessment proceedings. The CIT(A) admitted the additional ground based on a Bombay High Court judgment, despite the Revenue's objection citing a Supreme Court decision. The Tribunal upheld the CIT(A)'s decision, emphasizing the assessee's right to raise additional claims before appellate authorities.

6. The final issue pertains to the allowance of deduction under section 35DD for stamp duty expenses on amalgamation. The CIT(A) allowed the claim based on a tribunal decision in the assessee's favor for a different assessment year. The Tribunal affirmed the CIT(A)'s decision, noting the absence of any alteration to the precedent relied upon.

In conclusion, the Tribunal dismissed the Revenue's appeal on all grounds, upholding the CIT(A)'s decisions based on consistent precedent judgments and legal interpretations.