9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 23 - AT - Income TaxDisallowance of depreciation on the crane purchased by the assessee by holding that purchase of crane is not genuine - HELD THAT - AO deputed Inspector to verify as to whether the crane is in existence as contended by the assessee that the crane is used in the business operations of the assessee and works in factory and the AO based on inspectors report found that the crane is in existence and working for Companies operations allowed depreciation on crane while completing the assessment for the AY 2017-18. Since the assessee proved that the crane is in existence and used for its business operations which fact was also accepted by the AO that the said crane is used for business operations of the assessee the AO should not have disallowed depreciation for the assessment years 2013-14, 2014-15 2015-16 for want of confirmation from the supplier and other documents especially when the crane was purchased through broker and there is no dispute on payment of purchase consideration by the assessee. Thus, the disallowance of depreciation on crane made by AO is deleted. Ground no. 1 is allowed. Disallowance of employees contribution to PF by invoking provisions of Section 2(24)(x) r.w.s. 36(1)(va) - HELD THAT - We observe that the assessee deposited Employees Contribution to Provident Fund before due date for filing return of income. We find that in the case of CIT Vs. AIMIL Limited 2009 (12) TMI 38 - DELHI HIGH COURT has held that no disallowance of PF/ESI contribution is called for when the amounts are deposited before filing the return of income. Thus, we delete the disallowance made towards employees contribution towards Provident Fund. Disallowance of depreciation on trucks purchased - trucks were not put to use - assessee submits that assessee purchased trucks on 31.03.2014 and claimed depreciation as the asset was ready to put to use - AO denied depreciation on the ground that trucks are not complete and they cannot be put to use - HELD THAT - We direct the AO to consider the entire cost of trucks including body for the purpose of allowing depreciation in the AY 2014-15 and not on the reduced WDV as furnished by the assessee after assessee claiming the depreciation in the AY 2013-14. Addition of interest payment on the ground that advance given to Kamal Steel Fabricators and Aggarwal Enterprises is not for commercial expediency - HELD THAT - We find force in the submissions of the assessee that when the assessee is having interest free funds and they are sufficient to meet its investments/advances it can be presumed that funds were given to subsidiaries/sister concerns are out of interest free funds and no notional interest can be disallowed. On perusal of the balance sheet of the assessee, we find that the assessee has share capital, reserve and surplus to the extent of 17.19 crores and the outstanding balance as on 31.03.2014 in the case of Kamal Steel Fabricators stood at 2,45,36,627/- and in the case of Aggarwal Enterprises at Rs.3,93,40,000/-. Therefore, since the share capital and reserves and surplus are much more than the advances given by the assessee to Kamal Steel Fabricator and Aggarwal Enterprises there is a presumption that the advances were given out of share capital, reserve and surplus. Thus, the ratio of the decisions relied on supports the assessee s contention. Thus, respectfully following the said decisions the disallowance made by the AO towards interest is deleted.
Issues Involved:
1. Disallowance of depreciation on crane. 2. Disallowance of employees' contribution to Provident Fund. 3. Disallowance of depreciation on trucks. 4. Disallowance of interest payment on advances to sister concerns. Issue-Wise Detailed Analysis: 1. Disallowance of Depreciation on Crane: The first issue pertains to the disallowance of depreciation on a crane purchased by the assessee. The Assessing Officer (AO) disallowed the depreciation for the assessment years 2013-14, 2014-15, and 2015-16, contending that the purchase of the crane was not genuine due to the lack of confirmation from the supplier. However, during the assessment for AY 2017-18, the AO allowed the depreciation after the crane's existence and usage were verified by an Inspector. The Tribunal found that since the crane was confirmed to be in existence and used for business operations, the disallowance for the previous years was unjustified. Therefore, the Tribunal deleted the disallowance of depreciation on the crane for the assessment years 2013-14, 2014-15, and 2015-16. 2. Disallowance of Employees' Contribution to Provident Fund: The second issue involves the disallowance of employees' contribution to the Provident Fund amounting to Rs.1,20,067/-. The contribution was remitted with a delay of one day. The Tribunal observed that the contribution was made before the due date for filing the return of income. Citing the Delhi High Court's decision in CIT Vs. AIMIL Limited (321 ITR 508), the Tribunal held that no disallowance is warranted if the amounts are deposited before filing the return of income. Consequently, the disallowance was deleted. 3. Disallowance of Depreciation on Trucks: For the assessment year 2014-15, the assessee claimed depreciation on trucks purchased on 31.03.2014. The AO disallowed the depreciation, arguing that the trucks were incomplete (only chassis without body) and thus not ready for use. The Tribunal upheld the AO's decision, stating that incomplete trucks cannot be considered ready for use. However, the Tribunal directed the AO to consider the entire cost of the trucks, including the body, for depreciation in AY 2014-15, rather than the reduced Written Down Value (WDV). 4. Disallowance of Interest Payment on Advances to Sister Concerns: The final issue for AY 2014-15 involved the disallowance of Rs.5,26,198/- out of interest payments, with the AO arguing that advances to Kamal Steel Fabricators and Aggarwal Enterprises were not for commercial expediency. The Tribunal noted that the assessee had sufficient interest-free funds (share capital and reserves) to cover the advances. Citing several judicial precedents, the Tribunal held that when sufficient interest-free funds are available, it is presumed that advances are made from these funds. Thus, the disallowance of interest was deleted. Conclusion: In summary, the Tribunal allowed the appeals for AY 2013-14 and AY 2015-16, and partly allowed the appeal for AY 2014-15, providing detailed justifications for each issue based on the evidence and applicable legal precedents. The Tribunal's decision reflects a thorough examination of the facts and adherence to judicial principles.
|
