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TMI Blog2023 (3) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... the new Appendix-I to the Income Tax Rules, 1962. 2. On the facts and under the circumstances of the case, Ld. CIT (A) has erred in law and facts in deleting the addition/disallowance of Rs.7,53,447/- on account of un-paid provisions of leave encashment u/s 43B of the Income Tax Act, 1961. 3. On the facts and under the circumstances of the case, Ld. CIT (A) has erred in law and facts in deleting the addition/disallowance of mobilization expenses amounting to Rs.4,77,50,400/- u/s 40(a)(ia) of the Income Tax Act, 1961. 4. On the facts and under the circumstances of the case, Ld. CIT (A) has erred in law and facts in deleting the addition of Rs.5,02,90,513/- being disallowance of capital expenditure, when it is clearly established that the expenditure on M.S. Plates for bunk house had resulted in creation of enduring benefit to the assessee and hence was capital expenditure, as evidenced by the addition to fixed assets shown in the assessee's balance sheet." 3. Brief facts of the case are that, the assessee filed return of income for the Assessment Year 2013-14 declaring loss of Rs. 10,63,43,600/-. The assessment order came to be passed on 15/03/2016 by disallowing the deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove conditions are duly satisfied since the oil rigs being plant of 'specific category' are owned by the assessee and further it is used in drilling operations for the purpose of exploration and extraction of mineral oil in the field of mineral oil concerns. 11. The Hon'ble Jurisdictional High court in the case of CIT Vs. HLS India Ltd. (2011) 335 ITR 292 (Del) held as under:- "Depreciation allowance is a kind of tax benefit which is given to the business concerns for promotion of business activities in any particular field of business. In the instant case depreciation is allowable to mineral oil concerns @ 100% on the equipments used below the earth surface. If the same depreciation is not allowed to other business concerns on the ground that the owner of these equipments is not a mineral oil concern but it is just providing an assistance or leasing these equipments to a mineral oil concern then definitely this "other concern" will charge more for these services and consequently the mineral oil concerns will be commercially forced not to outsource wireline logging activities to other cmnpanies but to do it themselves". 12. Further, the above order of the Hon'ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been made. Apart from the same as per provision of Sec. 194C(6), no tax needs to be deducted at the time of making payments to the transporters, if the transporter furnished his PAN to the person making the payment. In this connection, PAN of the parties have been submitted before the AO and the assessee had duly submitted TDS returns giving the details of the payments made to transporters on which no TDS was deducted and a statement showing expenses not in the nature of transportation expenses vide reply dated 01.03.2016. Even if there is violation of provisions of Sec. 194C(7) of the Act, disallowance u/s 40(a)(ia) of the Act does not arise, if assessee had complied with the provision of Sec. 194C(6) of the Act. In the instant case, the assessee had obtained PAN of the transporters and duly complied with the provisions of Sec. 194C(6) of the Act. Therefore, TDS was not required to be deducted by the assessee. 16. The Hon'ble Kolkata Tribunal in the case of Rani Ghosh vs. DCIT in ITA No. 1420/Kol/2015 held that if the assessee compliance with provision of section 194C(6), the disallowance u/s 40(a)(ia) of the Act does not arise just because there is a violation of provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, liability of the payee to deduct tax at source arises. Therefore, if there is any breach of such requirement, question of applicability of section 40(a)(ia) would arise. Despite such circumstances existing, sub-section (3) makes exclusion in cases where such liability would not arise. We are concerned with the further proviso to subsection( 3), which provides that no deduction under subsection (2) shall be made from the amount of any sum credited or paid or likely to be credited or paid to the sub-contractor during the course of business of plying, hiring or leasing goods carriages, on production of a declaration to the person concerned paying or crediting such sum in the prescribed form and verified it in the prescribed manner within the time as may be prescribed, if such sub-contractor is an individual who has not owned more than two goods carriages at any time during the previous year. 7) The exclusion provided in sub-section (3) of section 194C from the liability to deduct tax at source under sub-section (2) would thus be complete the moment the requirements contained therein are satisfied. Such requirements, principally, are that the sub-contractor, recipient of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 reported in 379 ITR 129 (Karn.), Hon'ble Karnataka High Court has formulated a question as to whether non-filing of Form No. 15I/J within the prescribed time is only a technical default or the provisions of section 4o(a)(ia) of the Act are attracted? and proceeded to answer the same as under:- "Section 40 (a)(ia) and Section 194C(3) of the Act reads thus: "Section 4o(a)(ia) : Any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in subsection(i) of Section 139". Section 194C/3): No deduction shall be made under subsection (1) or sub- section(2) from - I. T. A.No. 1420 / KO L . / 2 o 1 5 Assessment year: 2012- 2013 (i) the amount of any sum credited or paid or likely to be credited or paid to the account of or to the contractor or subcontractor, if such sum does not exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 940(3) of the Act and to file Form N0.15]. It is only a technical defect as pointed out by the Tribunal in not filing Form N0.15J by the assessee. This matter was extensively considered by the ITAT, Ahmedabad Bench in Valibhai Khanbhai Mankad's case (supra) and the said Judgment has been upheld by the High Court of Gujarat reported in (2013) 216 Taxman 18 (Guj) wherein it is held that once the conditions of Section 1940(3) were satisfied, the liability of the payee to deduct tax at source would cease and accordingly, application of Section 4o(a)(ia) would also not arise. The Tribunal, placing reliance on the judgment of the ITAT, Ahmedabad Bench, has dismissed the appeal filed by the Revenue. We agree with die said propositions and hold that filing of Form No.isl/j is only directory and not mandatory." I. T. A. No. 1420/KOL./2015 Assessment year: 2012-2013 31. A Coordinate Bench of this Tribunal in ITA No. 86/VIZ/2013 in the case of ITO -vs.- Kolli Brothers, order dated 11.12.2013 followed the decision of the Hon'ble High Court of Gujarat in the case of Valibhai Khanbhai Mankad (supra). In the case of M/s. Mahalaxmi Cargo Movers -vs.- ITO in ITA No. 6191/MUM/2013, order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At this juncture, we take note of the plea of the assessee that there is no reimbursement of expenses and such expenses are integral part of the execution of the contract as demonstrated. Hence, the expenditure incurred requires to be set off against the revenue income arising from contract as per rudimentary principles of accountancy. The assessee has taken a plea that no new asset is created or no benefit of enduring nature has been derived. We do not see any rebuttal on this score from the revenue. The Assessing Officer has merely proceeded on a hypothesis of such expenditure being capital in nature without showing any justifiable grounds for doing so. The Assessing Officer has capitalized such expenditure without showing any reasonable grounds. On the contrary, we find merit in the conclusion drawn by the CIT(A) holding the same to be revenue expenditure on the face of such tell-tale facts. In the absence of any merits in the plea of the revenue, we decline to interfere with the order of the CIT(A). 14. In the result, the ground no.2 of the Revenue's Appeal is dismissed." 19. Further even in the AY 2011-12 & 2012-13 also the coordinate bench in ITA No. 3887/Del/2015 & ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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