Income Tax Appellate Tribunal - Jodhpur
Deputy Commissioner Of Income Tax vs Surface Finishing Equipment on 14 July, 2003
Equivalent citations: (2003)81TTJ(JODH)448
ORDER
B.L. Khatri, A.M.
1. ITA No. 399/Jp/1999, an appeal by the Revenue and C.O. No. 138/Jp/1999 by the assessee are against the order dt. 16th April, 1999, of the CIT(A), Jodhpur. Since both appeal of the Revenue and croes-objeotion by the assessee involve common grounds, they are being disposed off by this consolidated order for the sake of convenience.
2. First we shall take up appeal of the Revenue.
Ground No. (i)--Deletion of disallowance of Rs. 7,000 made on account of office service charges pertaining to earlier year.
We have heard the rival submissions. We have also perused the record. The learned CIT(A) had observed that the assessee had received bill in respect of office service charges for the first time for a period of 19 months @ 1,000 and the payment was made by the assessee during this accounting year. Since the assessee had received bill in respect of office service charges and had made payment this year it was fairly an allowable deduction. We find that the liability has arisen during the year under appeal on receipt of bill. Therefore, we decline to interfere with the order of the learned CIT(A).
3. Ground No. (ii)--Allowing of relief of Rs. 10,084 out of disallowance of Rs. 20,084 made in respect of telephone expenses.
We have heard the rival submissions. We have also perused the record. The AO has discussed the issue at p. 6 of his assessment order. The assessee had claimed Rs. 1,00,419 on account of telephone expenses in the P&L A/c. The expenses include those incurred at the residence of one of the, partners at Rs. 13,808. Therefore, the AO had disallowed l/5th of such expenses. The learned CIT(A) has discussed this issue at p. 3 of his order. After having considered the facts of the case, he restricted the disallowance made by the AO to Rs. 10,000 and allowed a relief of Rs. 10,084. Having regard to the totality of facts and circumstances of the case, we decline to interfere with the order of the learned CIT(A). This also covers ground No. 1 of the assessee raised through cross objection.
4. Ground No. (iii)--Allowing of assessee's claim of 100 per cent depreciation on wooden partition and tin shed.
The AO had disallowed depreciation on wooden partition and tin shed at 10 per cent for 6 months. The learned CIT(A) had concluded at p. 5 of his order that the AO was not justified in not allowing 100 per cent depreciation on tin shed and temporary wooden structure because as per IT Rules depreciation at 10 per cent is admissible as per Appendix I item 1(4) which prescribed the rate of depreciation on purely temporary erection such as wooden structure. The learned CIT(A), after having relied upon the decision of the IT AT, Jaipur Bench in the case of Asstt. CIT v. Modi Engineers in ITA No. 1007/Jp/80 decided on 17th Feb., 1995, had directed the AO to allow depreciation as per law. We decline to interfere with the order of the learned CIT(A).
5. Ground No. (iv)--Direction to the AO to allow 100 per cent depreciation on assets mentioned at p. 3 of the assessment order.
We have heard the rival parties. We have also perused the record. The learned CIT(A) had rightly held that items mentioned at p. 3 of the assessment order fall under the category of 'plant and machinery' and since each item was costing less than Rs. 5,000 the AO was directed to allow 100 per cent depreciation in respect of these items. We are of the opinion that the items mentioned at p. 3 of the assessment order fall under the category of plant and machinery and the learned CIT(A) has rightly taken recourse to first proviso to Section 32(1) of the IT Act which says "provided that where actual cost of any machinery or plant does not exceed five thousand rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is first put to use by the assessee for the purposes of business or profession". We, therefore, decline to interfere with the order of the learned CIT(A).
6. Direction to allow 100 per cent depreciation on automatic voltage controller and UPS by holding that the same are energy saving devices.
The brief facts of the case have been discussed by the AO at p. 5 of the assessment order. He found that the assessee had claimed 100 per cent depreciation on computer and UPS. The AO did not allow the claim of the appellant as these items, according to him, did not fall under the category for which depreciation is admissible at 100 per cent.
7. The learned CIT(A) held that the assessee is entitled to depreciation at 100 per cent as the items on which the appellant had claimed depreciation at 100 percent are included in the category of energy saving devices in Appendix 1 under the head electrical equipment. We, therefore, decline to interfere with the order of the learned CIT(A).
8. Ground No. 2 raised in cross-objection : Sustenance of disallowance of Rs. 6,458 out of conveyance and vehicle maintenance expenses.
We have heard the rival submissions. The appellant had submitted that the learned CIT(A) erred in sustaining the disallowance of Rs. 6,452 made by the AO out of conveyance and vehicle maintenance expenses. This issue has been discussed by the AO at p. 7 of his order. He has disallowed l/5th of the claim including depreciation on vehicle for personal use by the partners for the assessee-firm. The learned CIT(A) held that the possibility of personal use of vehicle cannot be totally ruled out.
9. We have considered the rival submissions. We have also perused the facts of the case. We find that the disallowance made by the AO and sustained by the learned CIT(A) is somewhat excessive. It is deemed fit to disallow such claim to 1/6th of the total claim to meet the ends of justice.
10. Ground No. 3--Partial relief of Rs. 1,000 out of Rs. 3,000 in general expenses.
The AO has disallowed a sum of Rs. 3,000 out of general expenses. The AO found that it was not possible to verify such expenses, being petty in nature as well as involving such items which may not be related to business. The learned CIT(A) considered it reasonable to sustain Rs. 2,000 and allowed a relief of Rs. 1,000.
11. After heaving considered the facts of the case, we find that the AO had not pointed out any specific item which were of disallowable nature. The learned CIT(A) has also given partial relief without going into the merits of the case. Therefore, the disallowance of Rs. 2,000 sustained by the learned CIT(A) out of general expenses is hereby deleted.
12. Ground No. 4--Charging of interest under Section 234B.
We have heard the rival submissions. It was held by the Hon'ble Patna High Court, Ranchi Bench in the case of Uday Mistan Bhandar & Complex v. CIT (1996) 222 ITR 44 (Pat) that no interest can be charged in the absence of specific order by the AO for charging interest. This judgment of Patna High Court was affirmed by the Hon'ble Supreme Court in the case of CIT v. Ranchi Club Ltd. Similar finding has also been given by the Hon'ble Delhi High Court in the case of CIT v. Kishan Lal (HUF) (2002) 258 ITR 359 (Del) and the jurisdictional High Court in the case of CIT v. Autolite (I) (P) Ltd. (2002) 256 ITR 303 (Raj). We, therefore, direct deletion of interest under Section 234B of the Act as there was no specific mention to charge interest by the AO.
13. In the result, the appeal of the Department is dismissed whereas the cross-objection of the assessee is allowed in part.