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2021 (10) TMI 17 - AT - Income TaxUnexplained expenditure u/s 69C - Addition in respect of construction of staff quarters - HELD THAT:- As evident from the information placed by the assessee before us that the staff quarters including amenities constructed was ₹ 12.50 crores. AO himself has accepted that cost of staff quarters in 152 Nos. was estimated to be at ₹ 7.5 crores against the actual expenditure of ₹ 7.96 crores. AO did not consider other infrastructure facilities and amenities provided by the assessee while working out the capital expenditure for construction of staff quarters on which the depreciation is claimed. The department during the appeal hearing did not bring any material to controvert the submission made by the assessee and the assessee has demonstrated that the expenditure incurred for construction of staff quarters and other amenities was ₹ 12.5 crores. It is also fact that the assessee has taken financial assistance from the banks / financial institutions for construction of staff quarters. Thus, the assessee has explained the source for construction as well as demonstrated the cost of construction. Disallowance of depreciation as disallowed in respect of the expenditure incurred in construction of staff quarters - HELD THAT:- CIT(A) has examined the issue in detail and held that the assessee has correctly claimed the depreciation on staff quarters. We have decided in this order that the addition made by the AO is unwarranted and accordingly upheld the order of the CIT(A). Having decided the issue in favour of the assessee with regard to the cost of construction of staff quarters, we, hold that the assessee is eligible for Depreciation on Staff quarters. Addition relating to staff quarters maintenance - As viewed that the assessee has claimed the excess expenditure and accordingly allowed the proportionate expenses on the basis of electricity service connections and disallowed the balance amount - HELD THAT:- In the instant case the assessee has debited the staff quarters maintenance - assessee was maintaining regular books of accounts which were duly audited by the qualified chartered accountant. During the assessment proceedings, the AO called for various details, which was furnished by the assessee and verified by the AO. No defects were noticed in respect of the various claims from the information placed by the assessee before the AO. AO simply compared the electricity connections and disallowed the expenses on the basis of number of connections increased during the year, without looking into the details of various heads of expenditure in maintenance of staff quarters such as cleaning, drainage, maintenance of roads etc. Making the disallowance without any basis and material is incorrect, therefore, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. In the result appeal of the revenue on this ground is dismissed.
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