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TMI Blog2015 (4) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the view that the assessee’s claim of expenses on shuttering, centering, scaffolding, etc. raised as per circulars issued by the Department is an allowable expenditure in the light of the order of the Tribunal in the assessee’s own case. It is also evident from the record that in earlier year no disallowance was made on this account. Therefore, following the rule of consistency, disallowance cannot be made in the impugned assessment year without any valid reason. No merit in the disallowance and we set aside the order of the ld. CIT(A) and delete the addition in this regard. Disallowance of prior period expenses - Held that:- Similar arguments as raised before the ld. CIT(A), but could not place any documentary evidence to substantiate that the prior period expenses have been crystallized in the impugned assessment year. In the absence of any evidence, we find no merit in the contentions of the assessee. Accordingly, we confirm the order of the ld. CIT(A) who has rightly dealt with the issue. Disallowance of deduction under section 80-IA - Held that:- In the light of the rival submissions, we find that the claim of deduction under section 80-IA of the Act was allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 30-4-2015 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER For the Appellant : Shri. B. P. Yadav, Cost Accountant For the Respondent : Dr. Anand Kumar Agarwal, CIT (DR) ORDER PER SUNIL KUMAR YADAV: These appeals are preferred by the assessee as well as the Revenue against the respective orders of the ld. CIT(A). 2. Since common grounds are involved in these appeals, these were heard together and are being disposed of through this consolidated order. We, however, prefer to adjudicate them one after the other. I.T.A. No. 580/LKW/2012 585/LKW/2012: 3. Appeal in I.T.A. No. 580/LKW/2012 is preferred by the assessee assailing the order of the ld. CIT(A), inter alia, on the following grounds:- 1. The Commissioner of Income Tax (Appeals)-ll, Lucknow (hereinafter referred to as the Ld. CIT(A) erred on facts and in law in confirming the addition of ₹ 8,79,05,9087- made by the Ld. A.O. in the hands of the appellant ignoring the facts of the instant case that the expenses incurred by the appellant on temporary errection/accommodation is fully allowable expenditure. 2. The Ld. CIT(A) erred on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the dates of acquisition of such 'plant', the A.O. was justified in presuming that they had worded for less than 6 months in the year and in restricting depreciation allowable on such plant to 7.5% only i.e. 50% of the general rate of depreciation allowable on machinery. 5. In both these appeals, there are two grounds one is with regard to the disallowance of expenses incurred on temporary erections/site accommodation and the other is with regard to the disallowance of scaffolding and shuttering expenses. 6. With regard to ground No.1, in both the appeals, relating to disallowance of expenses incurred on temporary erections and site accommodation, the facts in brief culled out from the orders of the lower authorities are that the Assessing Officer has made disallowance of ₹ 10,16,41,206/- on account of site accommodation expenses having observed that the assessee has not given any details relating to the nature of such camp construction. Having relied upon the judgment of the Hon'ble Gawhati High Court in the case of CIT vs. Sibson Construction Co., 221 ITR 468, the Assessing Officer has allowed depreciation at 7.5% i.e. ₹ 82,41,179/- and made di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Government, statutory bodies, etc. It was further contended that the construction of the bridge can be considered as production with temporary factory. The project site being the factory where the contractor like assessee makes the product on site. The bridge construction over water crossings, highways, urban areas effected with dense traffic, etc generally offers many challenges i.e. minimal disturbance to surroundings, providing a more concentrated work area for superstructure assembly, possibly increased worker safety for providing improved erection environment, etc. Any slackness in this respect will lead to project failure, significant delays, increase in construction costs and frequent claims or penalties to be imposed by clients. In other words, the proper preliminary arrangements reduce the margin of uncertainty. He has also placed reliance upon the written submissions filed before the ld. CIT(A). The ld. counsel for the assessee has submitted that in earlier assessment years, no disallowance of this nature was ever made though assessments were framed under section 143(3) of the Act. In support of his contention, the ld. counsel for the assessee has placed reliance upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and is allowable. Accordingly we set aside the order of the ld. CIT(A) in this regard and allow the claim of the assessee. Accordingly, the addition sustained by the ld. CIT(A) is hereby deleted. 13. Ground No.2 in both the appeals relates to the disallowance of expenses incurred on shuttering, centering, scaffolding, etc. 14. The brief facts culled out from the orders of the lower authorities in this regard are that the Assessing Officer has made an addition of ₹ 24,59,61,124/- on account of shuttering, centering, scaffolding, etc. having observed that shuttering is a part of plant and machinery and as per section 32 of the Act, 100% depreciation cannot be allowed on any plant and machinery. Having noted that the details of date-wise purchase of shuttering have not been produced before him, he allowed depreciation only at 7.5% i.e. at ₹ 1,99,42,794/-. Accordingly extra revenue expenditure claimed under this head at ₹ 24,59,61,124/- was disallowed and added to the income of the assessee. 15. The assessee has preferred an appeal before the ld. CIT(A) with the submission that the expenses relating to shuttering, centering, scaffolding, etc. are allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serviceable or get exhausted during the year, are written off in the manufacturing account. On the other hand, value of those items, which remain serviceable or fit for future work, are included in the closing stock. The assessee has also placed reliance upon the detailed submissions furnished before the ld. CIT(A) and the same is available at pages 41 to 52 of the compilation of the assessee. The ld. counsel for the assessee has also submitted that in earlier years, no disallowance was made under this head though the assessments were framed under section 143(3) of the Act. Reliance was also placed upon the order of the Tribunal in the assessee s own case for assessment year 1995- 96, in which the Tribunal has followed its earlier order for assessment year 1988-89 and has directed the Assessing Officer to allow 100% depreciation on the cost of shuttering, centering, scaffolding, etc. Copy of the order of the Tribunal is also placed on record. 20. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that no disallowance was made by the Assessing Officer in this regard during the earlier assessment years i.e. 2004-05 to 2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f accounting, hence the expenses relating to previous years cannot be allowed to set off from the current year profit. 25. Assessee preferred an appeal before the ld. CIT(A) with the submission that though these expenses are prior period expenses, but they were crystallized during the year under consideration and therefore allowable as revenue expenditure in this year. Except oral submissions, the ld. counsel for the assessee could not place any evidence in this regard before the ld. CIT(A) and the ld. CIT(A), therefore, confirmed the said disallowance. 26. Aggrieved, the assessee is in appeal before the Tribunal, but during the course of hearing of the appeal, the ld. counsel for the assessee has raised similar arguments as raised before the ld. CIT(A), but could not place any documentary evidence to substantiate that the prior period expenses have been crystallized in the impugned assessment year. In the absence of any evidence, we find no merit in the contentions of the assessee. Accordingly, we confirm the order of the ld. CIT(A) who has rightly dealt with the issue. 27. Accordingly these appeals are disposed of. I.T.A. No. 266/LKW/2013: 28. This appeal is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-sections (2), (3) and (4) shall apply accordingly.] 32. It is not in dispute that the Board s instructions or directions issued to the Income-tax Authorities are binding on the Income-tax authorities, therefore, the Department ought not to have filed this appeal in view of the provisions of section 268A of the Act, since the tax effect in the instant case is less than the amount prescribed for not filing the appeal. Accordingly, this appeal is dismissed. 33. Accordingly, this appeal of the Revenue is dismissed. I.T.A. No. 212 213/LKW/2013: 34. In these appeals, the assessee has assailed the order of the ld. CIT(A) on a common ground that the ld. CIT(A) has confirmed the addition of the prior period expenses for the reason that the expenses were not crystallized in the impugned assessment year. 35. In these cases, the assessee has claimed prior period expenses on the ground that they were crystallized in the impugned assessment year, but no evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in all the scrutiny assessments made in the previous years. 5. The Ld. CIT(A) erred on facts and in law in confirming the additions of ₹ 28,29,34,751/-made by the Ld. A.O. in the hands of the appellant without appreciating the fact that all the expenses debited to the Profit Loss Account under the head shuttering, centering, scaffolding are truly revenue in nature and accepted by the Department in all the scrutiny assessments made in the previous years. 6. The Ld. CIT(A) erred on facts and in law in not providing the appellant reasonable and sufficient opportunity to have its say and to make compliances of the reasons being relied upon by him in making addition in the hands of the appellant. 40. The grounds raised by the Revenue in I.T.A. No. 157/LKW/2014 are as under:- 1. The CIT(A) has erred in law and on facts in restricting the disallowance made out of temporary site accommodation expenses to ₹ 5,34,01,092/- as against ₹ 7,35,38,013/-made by the AO by allowing relief of ₹ 2,01,36,921/-. The CIT(A) failed to appreciate that in the absence of any details the A.O, was justified in allowing depreciation at the general rate prescribed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort on this issue from the Assessing Officer and having examined the issue in detail, he has allowed the claim of the assessee. Therefore, no interference is called for in the order of the ld. CIT(A) on this issue. 45. The ld. D.R., on the other hand, has placed reliance upon the order of the Assessing Officer. 46. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the claim of deduction under section 80-IA of the Act was allowed in assessment years 2005-06 and 2007-08 by the Assessing Officer himself and in assessment year 2003-04 the claim was disallowed, but later on it was allowed by the ld. CIT(A) and the Revenue has not challenged the order of the ld. CIT(A) before the Tribunal. Therefore, it attained finality. Therefore, in the light of these facts, we find no infirmity in the order of the ld. CIT(A) who has rightly allowed the claim of the assessee under section 80-IA of the Act. Accordingly, we confirm the order of the ld. CIT(A) on this issue. 47. In the assessee s appeal in I.T.A. No. 255/LKW/2014, ground No.1 relates to the addition of 12.80 crores made by the Assessing Officer having disallowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year and the same would be allowed by the Revenue after making necessary verification. 53. Ground No.2 in the assessee s appeal in I.T.A. No. 255/LKW/2014 relates to the disallowance of prior period expenses booked in this year. 54. Identical issue was examined by us in the foregoing paras where we have confirmed the addition having noted that the assessee could not place any evidence to establish that the prior period liabilities have been crystalised in the impugned assessment year. Similar is the position in the instant case, as nothing is placed on record to establish that the liabilities for earlier years have been crystalised in the impugned assessment year. Accordingly, following the view taken in the foregoing paras, we confirm the addition. 55. Ground No.3 in the assessee s appeal in I.T.A. No. 255/LKW/2014 relates to the addition of ₹ 4.50 lakhs made by the Assessing Officer in the hands of the assessee after invoking the provisions of section 40(a)(ia) of the Act. In this regard, it is noticed that the Assessing Officer has made disallowance of payment of ₹ 4.50 lakhs on non-deduction of TDS. The disallowance was confirmed by the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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