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2018 (2) TMI 1521 - AT - Income TaxAddition on account of purchase of tyres as well as depreciation on fixed assets - Held that - AO depends on the wrong assumption of facts it does not represent the correct amount in view of the fact as discussed above. The addition made by the AO is not sustainable. The ld. DR has also not brought anything on record contrary to the findings of ld. CIT-A. In the light of above reasoning, we hold that the order of the Ld. CIT(A) is correct and in accordance with law and no interference is called for. No infirmity in the order of the Ld. CIT(A) in allowing depreciation @ 30% on dumper and tipper. TDS u/s 194C - non deduction of tds - Held that - The payment is not exceeding the limits as specified u/s. 194C of the Act. Therefore, in our considered view, assessee is not liable to deduct the TDS u/s. 194C of the Act.
Issues Involved:
1. Deletion of disallowance on purchase of tyres and depreciation on addition to fixed assets. 2. Allowing depreciation on dumpers and tippers at 30% instead of 15%. 3. Deletion of addition for non-deduction of TDS under Section 194C read with Section 40(a)(ia) of the Income Tax Act. Detailed Analysis: Issue 1: Deletion of Disallowance on Purchase of Tyres and Depreciation on Addition to Fixed Assets The Revenue challenged the deletion of the addition made by the Assessing Officer (AO) on account of purchase of tyres amounting to ?5,91,642 and the depreciation on fixed assets amounting to ?13,67,889. The assessee is a private limited company engaged in earth moving and construction activities. The AO observed discrepancies in the ledger account of M/s Tyre Arcade and the return of cheques due to insufficient funds. Consequently, the AO disallowed the expenses and added them to the total income. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, noting that the AO's decision was based on incorrect figures and assumptions. The CIT(A) found that the correct purchase amount was ?14,16,688, not ?19,59,531, and that the dishonor of cheques due to insufficient funds did not justify treating the purchases as bogus. The CIT(A) directed the AO to delete the addition and allow the depreciation. The Tribunal upheld the CIT(A)’s decision, noting that the AO's findings were based on incorrect assumptions and that the ledger copy of M/s Tyre Arcade, which was available to the AO, did not show any defects. Therefore, the addition made by the AO was not sustainable. Issue 2: Allowing Depreciation on Dumpers and Tippers at 30% Instead of 15% The Revenue contested the CIT(A)’s decision to allow depreciation on dumpers and tippers at 30%, whereas the AO had allowed only 15%. The CIT(A) relied on various judicial precedents, including decisions from the High Courts of Gujarat and Punjab & Haryana, which held that dumpers and tippers used in the business of running them on hire qualify for 30% depreciation. The Tribunal affirmed the CIT(A)’s decision, referencing a consistent view from the Co-ordinate Bench of the Tribunal and the Hon’ble Karnataka High Court in CIT Vs. Mahaling Setty & Co., which supported the higher depreciation rate for such vehicles used in construction activities. Thus, the Tribunal upheld the 30% depreciation rate for dumpers and tippers. Issue 3: Deletion of Addition for Non-Deduction of TDS under Section 194C read with Section 40(a)(ia) The AO disallowed transportation charges of ?1,42,033 due to non-deduction of TDS under Section 194C. The assessee argued before the CIT(A) that none of the payments exceeded the limit specified under Section 194C, and thus, no TDS was required. The CIT(A) agreed and deleted the addition, noting that the provisions of Section 40(a)(ia) were not applicable. The Tribunal reviewed the ledger of transportation charges and confirmed that the payments did not exceed the threshold limit specified under Section 194C. Consequently, the Tribunal upheld the CIT(A)’s decision, finding no liability for TDS deduction and dismissing the Revenue’s appeal on this ground. Conclusion: The Tribunal dismissed both appeals by the Revenue, affirming the CIT(A)’s decisions on all contested issues. The Tribunal found that the AO’s disallowances and depreciation calculations were based on incorrect assumptions and that the CIT(A)’s conclusions were supported by appropriate evidence and judicial precedents.
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