TMI Blog2012 (12) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in : 1. deleting the disallowance of excess depreciation of ₹ 13,66,440/- claimed on wind-mill 2. deleting the disallowance of depreciation claimed @ 80% on evacuation charges of ₹ 20,20,000/-. 3. Facts of the case, in brief, are that the assesseecompany is engaged in the manufacturing of Glaze Frit mainly used for ceramic tile manufacturing units. It is also engaged in generation of wind-power-energy. The assessee-company filed its return of income for Assessment year 2008-09 on 29.9.2008, disclosing total income of ₹ 1,31,999,340/-. Subsequently, the assessee revised its return on 16.3.2010 in which income was disclosed at ₹ 2,18,04,980/-. In the revised return, the assessee itself withdrew the claim of deduction made u/s 80IA of the Income-tax Act, 1961 [hereinafter referred to as 'the Act', for short]. The assessee had got installed a windmi ll through Suzlon Infrastructure Limited on which depreciation @ 80% has been claimed. The value of assets and rate of depreciation applied by the assessee to claim depreciation is as under : Item Cost Rate of depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.9.2012, copies of which are enclosed in the Paper Book furnished by the assessee. The A.O. has disallowed alleged excess claim of depreciation made by the assessee. The following chart depicts the item-wise depreciation claimed and allowed: Item Cost (Rs.) Eligible rate of Depreciation Depreciation allowable @ 50% (Rs.) Excess claim by the assessee (Rs.) Foundation work and transformer 26,61,554/- 10% 1,33,077/- 9,31,544 Cost of wind-mill, tower and installation charges 2,73,20,696 + 11,88,769 80% 1,14,30,752 - Transformer and electrical components 17,51,904 80% 7,00,761 - Electrical items and installation 13,38,141 15% 1,00,360 4,34,896 13,66,440 So, the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at which wind-mill is allowable. 6. We can further fortify our above view with the decision of the Jodhpur Bench taken on identical facts, in the case of K.K. Enterprises, Udaipur Vs. DCIT [supra], copy of which is placed at pages 1 to 9 of the assessee s paper book. Thus, the decision of the ld. CIT(A) in deleting disallowance of depreciation made by the A.O. of ₹ 9,31,544/- and ₹ 4,34,896/- is in consonance of tested judicial view and earlier decision of Jodhpur Bench. 7. Likewise, the power evacuation charges are essential part of plant installation and without which, wind power plant cannot run. The A.O. has incorrectly mentioned that it is land evacuation charges. Electricity generated by the windmill is transmitted to the State Electricity Board s Grid through power evacuation facility. Power evacuation is essential to transmit electricity generated by windmill to state electricity grid without which it is impossible to sell the power generated by the wind-mill. This system is developed by authorized agencies by the State Government. For augmentation of transmission/ distribution system to evacuate the power from receiving station, discom develop/augments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,584/- and has added it to the assessee s income of this year. However, the ld. CIT(A) has deleted this addition. Now the Revenue is aggrieved. The ld. counsel for the department has given the same reasons in support of ground raised in this regard as given by the A.O., as above. The ld. counsel for the assessee has supported the finding of the ld. CIT(A), and has stated that this issue stands squarely covered by the Tribunal order rendered by the Jodhpur Bench. 12. After hearing both the sides and going through the entire record, including the provisions and the relevant precedents, we are convinced that the decision of ld. CIT(A) in deleting this addition is correct. 13. The A.O. has pointed out that the commission of ₹ 1,92,584/- was deducted on 8.2.2005 which should have been deposited by 7.3.2005 while the same was deposited on 6.4.2005. The assessee s case is that the bill after verification was passed for payment on 1.3.2005 and TDS was made on 1.3.2005, which was deposited on 7.4.2005, and the same is within the prescribed limit. The ld. CIT(A) has relied on the decision of the Hon'ble Calcutta High Court in the case of CIT Vs. Virgin Creations order dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the help of various decisions. The ld. CIT(A), after agreeing with the ld. counsel for the assessee s submission, has deleted entire addition of ₹ 46,49,403/-. Now the Revenue is aggrieved. 15. We have heard the rival submissions and have perused the relevant material on record. It was argued by the ld. counsel for the department, Shri R.K. Chowbe that the A.O. has correctly added the handling charges by disallowing u/s 40(a)(ia) of the Act on account of nondeduction of tax relying on the question/answers given in the Board s Circular No. 715 dated 8.8.1995. He has supported the finding of the A.O, in toto. He has repeated the entire reasons taken by the A.O. to support this ground of appeal. As against which the ld. counsel for the assessee, Shri Pokharana, has taken the reasoning which were taken before the A.O. and the ld. CIT(A) and has agreed with reference to the point made in the orders by the authorities. 16. After co-agitating rival stands in the light of available evidence on record, agree with the finding of ld. CIT(A), in this regard. It is noticed from records that the assessee has made payment of ₹ 42,70,753/- to Indus Intermodel Carriers [Bombay] Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as reimbursement of expenses is not liable to be disallowed u/s 40(a)(ia) of the Act. In this regard, we draw support from the following decisions: 1. In the case of Merilyn Shipping and Transports Vs. Addl. CIT [2012] 70 DTR 81 [Vishakapatanam] wherein it has been held by a S.B. of ITAT that provisions of u/s 40(a)(ia) of the Act are applicable only to the amount of expenditure which is payable as on 31 st March of every year and it cannot be invoked to disallow the expenditure which had been actually paid during the previous year without deduction of TDS . 2. Income-tax Officer Vs. Dr. Willmar Schwabe India [P] Ltd 3 SOT 71 [Del] held that reimbursement of expenses do not fall u/s 194C. 3. The Jodhpur Bench has taken a similar view in the case of ACIT Vs. M/s Pyrotech Electronics Pvt. Ltd in ITA No. 390/JU/2010. The operative part of this Tribunal order reads as under: 13. After considering the submissions and perusing the material on record, we find that the ld. CIT(A) was justified in allowing the claim of the assessee on account of that these payments were made on account of reimbursement of expenditure which do not constitute any income in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the extent of ₹ 32,97,213/- has been disallowed. 21. Before the ld. CIT(A), the assessee made the following submissions: It is submitted that during the year under consideration company has made additions of ₹ 2,00,28,822/- on setting up continues furnace. The depreciation allowable on such furnace is @ 80% and assessee-company has claimed the same as per law. The A.O., while making assessment has allowed depreciation @ 25% on part of plant ₹ 65,78,546/- instead of 80% arbitrarily treating the same as not part of that furnace and disallowed depreciation of ₹ 32,97,213/-. The furnace set up at the unit includes several part combined together makes continues furnace any part cannot be seen isolation. It was submitted before the A.O. that these are gas based furnace and complete unit is made of too many small unit and cannot be seen individually. The A.O. s observation that DG set is not the part of furnace is wrong as this is not DG set, this is gas based generator and the same was part of furnace and without this furnace cannot work. The gas based generator is integrated part of furnace and cannot be separated. It is submitted proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audit fee paid without TDS 2. reducing the disallowance of expenditure of ₹ 34,20,934/- u/s 40(a)(ia) of the Act. 3. deleting the disallowance of depreciation on DG set and cooling towers treating part and parcel of the furnace which was restricted from 80% to 25% applicable to plant and machinery. 27. Facts apropos Ground No. 1 are that the assessee has paid a sum of ₹ 50,000/- as professional fees to its auditors as per form No. 3CD, but no TDS has been deducted thereon. The A.O. has invoked section 194J and has disallowed the entire amount u/s 40(a)(ia) of the Act. The ld. CIT(A), to the contrary, has deleted this addition. 28. We have found that TDS on professionals are deducted at the time of payment as these are liable to tax on receipt of fee. The assessee-company has paid the fee and has deducted TDS and deposited the same on 7.10.2005, prior to due date of filing of return of income u/s 139(1). This due date was 31.10.2005. The ld. CIT(A) has held this amount can be allowed in Assessment year 2006-07 as per section 40(a)(ia) of the Act. Against this finding, the Revenue is in appeal. 29. After hearing both sides, we find that the fee of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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