TMI Blog2011 (5) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... SAL, SHRI K.D. RANJAN, JJ. Appellant by : Smt. Mona Mohanty, Sr. DR Respondent by : Sh. M.L. Dujari, CA ORDER PER I.P. BANSAL, J.M. The appeal is filed by the revenue and cross objection by the assessee both are directed against order passed by ld. CIT (A) dated 14.7.2010 for A.Y. 2005-06. Grounds of the appeal and cross objection are read as under: Grounds of Revenue s appeal: - 1. On the facts and in the circumstances of the case and in law, the order of the CIT (A) is erroneous, perverse, illegal and against the provisions of law which is liable to be set aside. 2. On the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in deleting the addition of Rs. 3,31,145/- made by the AO on account of under statement of income. 3. On the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in deleting the addition of Rs. 2,36,066/- made by the AO on account of under statement of income. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 82,07,445/- made by the AO on account of wrong claim of depreciation. 5. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned a finding that the difference was on account of service tax which could not be treated as income of the assessee. The assessee has accounted for the income part; hence, no addition on this account was called for. 6. After narrating the facts, it was submitted by ld. DR that the said amount was rightly added by the AO to the income of the assessee as assessee could not explained the difference in the amount credited in the account of the assessee relating to OCL India Ltd. and ld. CIT(A) has wrongly deleted the same. 7. On the other hand, it was submitted by ld. AR that the difference was on account of service tax payable. He drew our attention towards the detail submitted to the CIT (A) with regard to the payments received from OCL Ltd. and these details are contained in pages 52 to 65 of the paper book. He submitted that after going through all these details ld. CIT (A) has rightly deleted the addition as the difference was on account of service tax payable which could not be treated as income of the assessee. Thus, relying upon the order of CIT (A), it was pleaded that addition has been rightly deleted and his order in this regard should be upheld. 8. We have care ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im, it was pleaded by ld. AR that the addition has rightly been deleted and the order of CIT (A) on this issue should be upheld. 12. We have carefully considered the rival submission in the light of material placed before us. In the submissions made before CIT (A) it was submitted that there were two separate transactions. Rs. 61,90,940/- relates to sale of goods. Another amount of Rs. 64,27,006/- related to sale of power plant. It was also submitted that in the profit and loss account a sum of Rs. 62,60,331/- was credited and not a sum of Rs. 61,90,940/- as claimed by the AO. It was submitted that debit also includes element of service tax and the difference is on account of such element of taxes and duties which have been accounted for separately. On these submissions ld. CIT(A) has recorded a finding that the actual difference was a sum of Rs. 1,66,275/- and it was not 2,36,066/- as added by the AO and secondly that the said difference was on account of charges of taxes and duties. No material has been brought on record to show that these findings of fact recorded by ld. CIT (A) are contrary to the facts existing on record. In absence of any such material, we decline to inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stallation of control panel, distribution boards, switch fuse units and power cables under the head electrical installation . The power supply to the Crain was made on 24th July, 2004, to Plate Bending Machine on 25.6.2004 and to various electrical installations on 30th May, 2004 and thus, it was claimed that depreciation on fabrication shop is allowable. Copies of log sheets in respect of operation of SAW-1 Machine HB-8 Machine to claim that operation in fabrication shop had begin ever before completion of new shed were also filed. The AO considered the reply filed by the assessee as unsatisfactory for the following reasons: - i) There is no evidence of any nature in respect of cranes and other machines being put to use before the date of completion of factory or even after that date. ii) The inspector report in respect of electrical equipment relied upon by the assessee does not indicate that equipment was put to use. Rather it is a step in preparation and certification that electrical supply lines etc. have been laid according to the norms prescribed for industrial power. The inspection report of Electrical Inspector simply verifies that installation was in place and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the report dated 27th August, 2004. Reference was also made to the other evidences produced before the AO to show that power supply to 50 Ton Cranes were made on 24th July, 2004, to Plate Bending Machine on 25.6.2004 and to electric installations on 30th May, 204. Thus, it was pleaded that AO is wrong in not allowing the claim to the assessee. So as it relates to depreciation on HB-8 equipment it was submitted that merely because the contractor who has completed the erection work has raised bill on 31.3.2005, it does not mean that such erection was not completed before 31.3.2005. Referring to the observation of AO that plant was ready to use, it was submitted that according to decision of Gujarat High Court in the case of CIT Vs. Sonal Gum Industries 322 ITR 542, under the concept of Block of assets the depreciation is allowable even on the machinery which is ready to use. On these submissions of the assessee ld. CIT(A) has recorded a finding that by placing the report of Inspector on record the assessee has produced sufficient evidence of putting to use the electric installation, Plate Bending Machine and 50 Ton Cranes. He observed that once a Government Authority inspecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said machine was put to use during the year under consideration. The cross objection of the assessee has raised only this issue therefore, the same is dismissed. 19. Now coming to ground no. 5 of revenue s appeal this issue has been discussed by the AO in para 6 of the assessment order. After going through the expenditure relating to repairs of building and machinery the AO observed that various expenditures were of capital in nature. Working out those expenditure at a sum of Rs. 2,68,984/- the said amount was added to the income of the assessee as the same was not capitalized by the assessee. Ld. CIT (A) has directed the AO to allow depreciation on that amount on the ground that if they are not considered as current repair and maintenance then it is capital expenditure and form part of fixed assets on which depreciation is allowable. Therefore, ld. CIT (A) has directed the AO to allow the depreciation on such amount. 20. We have heard both the parties on this issue and we find no infirmity in the order of CIT (A) in which it has been held that in case of disallowance made on account of those expenditure being capital in nature then depreciation has to be allowed. We decli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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