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TMI Blog2015 (8) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... ty the moment they enter the block and therefore the rate of depreciation of a particular item of depreciable asset cannot be tampered with in a subsequent assessment year. In our view, the reasoning adopted by the CIT(Appeals) is just and proper and calls for no interference. - Decided against revenue. Disallowance of purchases - CIT(A) deleting the disallowance - Held that:- It is no doubt true that it is the duty of assessee to furnish evidence to substantiate expenses in the trading, profit & loss account. According to the assessee, the AO only called for sample vouchers and ledger of purchases and therefore purchase bills were not produced. This fact has not been denied in the remand report filed by the AO before the CIT(Appeals). Therefore, there was sufficient reason for the assessee to file purchase bills evidencing purchase of raw materials and coal before the CIT(A). In the remand report, there is no complaint by the AO that the purchase bills were not believable or the AO did not think it fit to make any further enquiry on the supporting bills filed by the assessee before the CIT(A). In these circumstances, the very basis on which disallowance was made by the AO no lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of manufacturing spirits used in making of liquors. While concluding the assessment for A.Y. 2011-12 u/s. 143(3) of the Act, the AO did not allow the claim of assessee for depreciation @ 80% of energy saving devices of the value of ₹ 20,46,677. 5. Before the CIT(Appeals), the assessee pointed out that in the business of manufacture of spirit used in making of liquors the Assessee also runs a liquor bottling plant. The manufacturing unit was located in Bidar district of Karnataka. As per the requirements of Karnataka Pollution Control Board (KPCB), it was mandatory for the assessee to install water treatment plant/seweage treatment plant. Accordingly the sewage treatment plant was installed by the assessee in the financial year 2008-09. As per section 32 of the Act, the rate of depreciation on such plant is 80%. It was pointed out that the assessee has been claiming depreciation rightfully @ 80% from AY 2009-10 and in this regard the financial statements, return filed and depreciation scheduled were filed before the CIT(A). it was submitted that in the first year of claim of such depreciation at 80% in A.Y. 2009-10, depreciation has been allowed by the departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the return of income for the assessment year 2009-10 depreciation claimed at the rate of 80% which is accepted by the AO in the assessment order u/s 143(3) dated 28/12/2011. During the financial year 2009-10 no addition was made and 80% depreciation was claimed on W.D.V. of ₹ 25,58,346/-. In view of the facts a report was called for from the AO and in the remand report the AO s opinion is that the percentage of depreciation is governed by Rule 5(1) of Income Tax Rules 1962. All the assets where depreciation of 80% can be claimed are specifically mentioned in appendix-I of the Rules. The Sewerage Treatment Plant is not available in 80% block hence the claim of the appellant company is not acceptable. As explained by the appellant that plant so installed related to Sewerage Treatment device which could be classified under water pollution control equipment and the same is enumerated III (ix) of Part-A in New Appendix-1, wherein rate of depreciation is more than 80%. On the contrary, the appellant claimed 80% depreciation of total cost of such plant. However, since the genuineness of installation of plant and applicability of higher rate thereon has been accepted, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) and during the remand proceedings also, the assessee did not furnish any details before the AO. 10. The AO on a scrutiny of trading, profit loss account noticed that the assessee had claimed expenses on purchase of raw material and coal totaling ₹ 3,37,94,070 (2,08,49,432 + 1,29,44,538). Since the assessee did not produce invoices or other documents in support of the aforesaid expenses, the AO disallowed 25% of those expenses which resulted in an addition of ₹ 84,48,518 to the total income of the assessee. 11. Before the CIT(Appeals), the assessee contended that its purchases were supported by documentary evidence and that the AO in the course of assessment proceedings required only sample vouchers and complete ledger of purchases, which were provided by the assessee. The assessee pointed out that its books of accounts were audited and the same cannot be held to be incorrect. The assessee also submitted that even in the absence of production of supporting vouchers or bills, the AO has to make necessary enquiries before he makes a disallowance. The assessee relied on decision of ITAT Delhi Bench in TSL Defence Technologies P. Ltd., ITA No.942/Del/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) could have allowed relief. Nevertheless, the CIT(A) s conclusion was on the basis that the AO should have cross-verified from the parties from whom the assessee claimed to have made purchases. In our view, the ultimate conclusions of the CIT(Appeals) that disallowance cannot be sustained is just and proper and calls for no interference. Accordingly grounds No.4 5 are dismissed. 16. Ground No.6 reads as follows:- 6. The learned CIT(A) erred in deleting the addition of ₹ 1,83,09,432 on account of share application money u/s. 68 of I.T. Act by merely accepting the letter of one Mr. Jitendera Virwani who is supposed to have lent ₹ 1,35,00,000/- to Sri Malkani one of the share applicant without appreciating that the assessee could not prove the genuineness of the transaction even during the remand proceedings before the AO. 17. During the previous year, the assessee had received share application money to the tune of ₹ 1,83,09,432. According to AO, the assessee failed to furnish details to prove the identity of investor, creditworthiness and genuineness of the transaction. The AO therefore made an addition of ₹ 1,83,09,432 to the total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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