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TMI Blog2019 (5) TMI 1673X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 14-6-1993 wherein it has clarified that even if the assessee is using the motor lorries in its own business of transportation of goods, then also higher rate of depreciation would be allowed to them. In view the CBDT circular as well as the consistent claim of the appellant for higher rate of depreciation in all the years throughout, we delete the disallowance so done by the Ld. A.O. and sustained by the Ld. CIT(A). Thus, the higher rate of depreciation at 30% is allowed to the appellant and accordingly, this ground of appeal is allowed. Disallowance of Service Tax liability u/s 43B - tax liability unpaid before the due date of filling of return u/s 139(1) - HELD THAT:- Since the provisions of Service Tax rules, prior to its amendment which was applicable from 1-4-2011, stated that the service tax would be payable only on receipt of the same from the service receiver, hence how could the appellant pay the same when the service tax was not received from the service recipient, and therefore the same cannot be added u/s 43B, as it never became due to be paid to the service tax department as the same was not even realised from the appellants service recipients. The intention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the due date of filing of return of income as per provisions of section 139(1) of the Act and the AO has further added an amount of ₹ 7,05,147/- being the amount debited by the assessee on account of insurance keymen persons in the profit and loss account by observing that it is not being used for business purpose and disallowed by the A.O. u/s 37(1) of the Act. Further, the assessee has debited an amount of ₹ 8,44,871/- under repair and maintenance which the A.O. has treated as capital expenditure and thus the amount is disallowed u/s 37(1) of the Act. 3. The appellant assessee in the present proceedings before us has taken the following grounds of appeal: "1. That on the facts and circumstances of the case and in law and in any view of the matter, the Ld. Authorities below have erred in making and upholding the disallowance of ₹ 46,80,814/- on account of alleged excess depreciation claimed at higher rate of 30% instead of allowable depreciation of 15% on Trucks and Trailers. 2. That on the facts and circumstances of the case and in law and in any view of the matter, the Ld. Authorities below have erred in making and upholding the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of depreciation on the trucks and trailers being used for this purpose and therefore, he curtailed the depreciation from 30% as claimed by the assessee in his return of income and also worked out in the Tax Audit Report by the Chartered Accountant to normal depreciation of 15%. 4.2 While confirming the finding of the AO, in the appellate order, the Ld. CIT(A) has held that the appellant did not carried on the business of running the trucks, trailers and cranes on hire and hence as per the CBDT circular no. 652 higher rate of depreciation would not be admissible on them, as it is admissible on motor lorries used in assessee's business of transportation of goods on hire and hence he has sustained the addition on the disallowance made by the A.O. for the claim of higher rate of depreciation. 4.3 During the course of hearing before us, the Ld. counsel Shri Deependra Mohan has submitted a synopsis and has further stated that the appellant carried on the business of contractual work like dump site management, material handling services, container handling services, hauling and stringing of pipe lines, operation and maintenance of equipment etc. which includes transportation of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hiring of cranes material handling services P-61-66 16 Cont. of C.W.C. Bharatpur Material Services Hand Hiring of crane and truck with material handling services P-67-81 17 Cont. of C.W.C Ghaziabad Site Material Services Hand - Do - P-67-81 Supra 18 Cont. of C.W.C. Jhabua Site Material Services Hand - Do - P-67-81 Supra 19 Cont. of C.W.C. Shivpuri Site Material Services Hand - Do - P-67-81 Supra 20 Cont. of C.W.C. Vijaypur Site Material Services Hand - Do - P-67-81 Supra 21 Cont. Gujrat Material Handing Services Material Services Hand Hiring of crane with material handling services P-82-100 22 Cont. of Material Handling Services BORL Material Services Hand - Do - P-101-111 23 Cont. of Material Handling Mangalore Refinery Material Services Hand Hiring of crane and truck with material handling services P-112-127 24 Cont. of Material Handling Services (Chennai) Material Services Hand Hiring of crane with material handling services P-128-139 25 Cont. of Mathura Handling Services Material Services Hand - Do - P-140 -154 26 Cont. of Panipat Handling A/c Material Services Hand Hiring of crane an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f higher depreciation, motor lorries must be hired out to some other person or whether the user of the same in the assesse's business of transportation of goods on hire would suffice. 2. In Board's Circular No. 609, dated 29-7-1991 (Sl. No. 244) it was clarified that where a tour operator or travel agent uses motor buses or motor taxis owned by him in providing transportation services to tourists, higher rate of depreciation would be allowed on such vehicles. It is further clarified that higher depreciation will also be admissible on motor lorries used in the assessee's business of transportation of goods on hire. The higher rate of depreciation, however, will not apply if the motor buses, motor lorries etc., are used in some other non-hiring business of the assessee." 4.3.3 The Ld. A.R. has also submitted that for the succeeding assessment years i.e for A.Y. 2014-15, 2015-16 and 2016-17, the Ld.A.O. has not disallowed any higher depreciation, wherein the assessee was engaged in similar line of business and this higher rate of depreciation @ 30% claimed by them in the return of income has been duly accepted in the scrutiny proceedings u/s 143(3) for all these three succeeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a system. 6. We have heard both the parties on this issue and have perused the relevant material on record with regard thereto. The assessee is a transport contractor firm and has claimed higher rate of depreciation of 30% on trucks and trailers being used in appellants business as is evident from the records available. The case of the department is that higher rate of depreciation is not admissible as the appellant has not done the business of hiring of trucks and trailers, but has used it in its own business for hiring the equipments. 6.1 From the facts as emerging out of the records, it is evidently clear that the assessee has received contractual receipts from his principal contractor for the hiring of trucks, trailers, cranes and other equipment's which the assessee held and has shown in his balance sheet in the fixed assets chart. The A.O. curtailed the higher rate of depreciation claimed by the assessee at 30% to 15% which was upheld by the Ld.CIT(A). In the detailed analysis of the contract wise contracts given by the appellant before the authorities below, as well as in the voluminous paper book submitted before us, the contracts are primary for hiring of the trucks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability unpaid before the due date of filling of return u/s 139(1) of the Act. The ld. CIT(A) has confirmed the addition on account of disallowance of Service Tax liability u/s 43B of the Act, in accordance with the law. 7.1 The Ld. A.R. has stated that the appellant in its balance sheet as on 31.03.2010 has shown service tax payable of ₹ 75,90,253/- and that out of this so payable amount, an amount of ₹ 37,19,883/- was not deposited before the due date of filing of return which was disallowed by the Ld. AO u/s 43B of the act. The Ld. A.R. has submitted provision of section 43B of the Act can be invoked only, where, a deduction was claimed by the appellant. But, in this case, the appellant has not claimed the deduction of ₹ 37,19,883/- of service tax liability by debiting to the profit and loss account. The appellant has accounted for the service tax liability by maintaining a separate account, in which the amount was credited at the time of charging in the bill and the amount was debited at the time of payment, when it becomes due for payment and for that purpose the appellant has maintained a separate service tax account and it has never claimed it in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the same in arriving at the taxable income. The Ld. A.R. again placed reliance on the case of CIT vs Ovira Logistics Pvt Ltd. rendered by Hon'ble High Court of Bombay in 58 taxmann.com 2006 wherein it has been held that where it was found that before end of year, amount on which service tax was payable had not been received from the parties to whom services were rendered, claim of service tax paid could not be disallowed. Following this judgement in another case it has been held by the Hon'ble Bombay High Court in "PCIT vs Tops Security Ltd.", 97 taxmann.com 525 that- "10. With the assistance of both sides, we have perused this Judgment and we find that it dealt with an identical issue. This Court held that Section 43B does not contemplate liability to pay service tax before actual receipt of the funds in the account of the assessee. Hence the liability to pay service tax into the Treasury will arise only upon the assessee receiving the funds and not otherwise. Thus, the consideration has to be actually received and thereupon the liability will arise. 11. No conclusion contravening the above has been brought to our notice by the Revenue. 12. In fact, Mr. Pinto was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which is duly submitted before as well as the authorities below, we find no reason that the service tax payable of ₹ 37,19,883/- which was not paid before the due date of filing of return be disallowed. 10. It is seen from the facts on record which have not been disputed by both the authorities below nor by the Ld. DR that as on 31-3-2010, there was an outstanding service tax payable of ₹ 75,90,253/- and out of this amount ₹ 37,19,883/- remained outstanding before the due of filing of return, which itself means that the appellant has paid more than half of the service tax payable before the due date. 10.1 Further, as it has been held in the case of 'CIT vs Ovira Logistics Private Limited', (supra) by the Honourable Bombay High Court which has been followed in the case of 'CIT vs Tops Security Private Limited', again by the Honorable Bombay High Court that where the service tax was payable but as per the provisions of the Service Tax Rules, the same was to be deposited to the government exchequer only when the service tax has been received from the parties to whom service was rendered, then the claim of service tax payable could not be disallowed u/s 43B til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g before us, hence the same is held to be dismissed as unpressed. 14. With regard to the fourth ground of appeal it is seen that during the course of the assessment proceedings, the A.O. has disallowed ₹ 8,44,871/- considering it as capital expenditure which was claimed as revenue expenditure under the head office repair and maintenance. During the year under consideration the appellant had moved to a new office which was a leased premise wherein it has debited to office repairs and maintenance head certain woodwork etc. done in the rented premises. The Ld. A.O. has held these expenses to be capital in nature and has disallowed the same. The appellant during the course of proceedings before the Ld. A.O. stated that appellant has itself capitalized an amount of ₹ 5,15,114/- under furniture and fixture head and ₹ 2,26,642/- under office equipments head, in its Fixed Assets chart in the balance sheet which it considered to be of capital in nature by which an asset came into existence of enduring nature. The amount of ₹ 8,44,871/- was charged of to revenue as no new asset came into existence, since the premises was a leased premises, and the appellant had spen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay India Enterprises vs DCIT, New Delhi (2009) 27 SOT 344 (Del.) 16 The Ld. D.R. has placed Reliance on the order of Ld. CIT(A) which upheld the addition done by the Ld. A.O. He reiterated the findings of the Ld. A.O. which were duly confirmed by the Ld. CIT(A), stating that the expenditure incurred should have been capitalised and cannot be debited as office repair and maintenance as claimed in the profit and loss account. 17. We have pursued the submissions made by both the parties and the record which is available, we find that during the year under consideration the assessee had shifted its office to a new leased premise. In the said leased premise to make it worthwhile for operation of its new office, the appellant had to incur certain basic expenditure of wooden panelling, false ceiling, wiring, etc. which never belonged to the assessee, as it could not take them away while vacating the said premise, hence this expenditure were charged off to revenue under the head office repair and maintenance by the appellant. We also find that during the year under consideration the assessee has capitalised Rs. of ₹ 5,15,114/- under furniture and fixture head and ₹ 2,26,642 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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