TMI Blog2014 (7) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... urred on shuttering, centering, scaffolding, etc. - Held that:- The assessee has been debiting a particular amount per cubic metre to the cost of the project as expenses incurred in shuttering, centering, scaffolding, etc. keeping in view the complexity of nature of work. Copy of the office circular is available at p. 54 of the compilation of the assessee, in which guidelines have been laid down for debit of ₹ 600 per cubic metre on account of shuttering, centering, scaffolding, etc. Keeping in view the totality of the facts and circumstances of the case and the nature of complexity of the work, we are of the view that the assessee's claim of expenses on shuttering, centering, scaffolding, etc. raised as per circulars issued by the department is an allowable expenditure in the light of the order of the Tribunal in the assessee's own case. It is also evident from the record that in earlier year no disallowance was made on this account. Therefore, following the rule of consistency, disallowance cannot be made in the impugned assessment year without any valid reason. We accordingly find no merit in the disallowance and we set aside the order of the learned CIT(A) and delete the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the learned CIT(A) and restore the matter to the file of the AO with a direction to adjudicate this issue in the light of evidence with regard to the nature of payment. Accordingly, this appeal of the assessee is disposed of. - ITA No.580/LKW/2012, ITA No.585/LKW/2012, ITA No.212 & 213/LKW/2013, ITA No.266/LKW/2013, ITA No.157/LKW/2014, ITA No.255/LKW/2014 - - - Dated:- 7-7-2014 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER Assessee by: Shri. B. P. Yadav, Cost Accountant Department by: Dr. Anand Kumar Agarwal, CIT (DR) ORDER PER SUNIL KUMAR YADAV: These appeals are preferred by the assessee as well as the Revenue against the respective orders of the learned CIT(A). 2. Since common grounds are involved in these appeals, these were heard together and are being disposed of through this consolidated order. We, however, prefer to adjudicate them one after the other. ITA Nos. 580/Lkw/2012 585/Lkw/2012: 3. Appeal in ITA No. 580/Lkw/2012 is preferred by the assessee assailing the order of the learned CIT(A), inter alia on the following grounds : 1. The CIT(A)-II, Lucknow [hereinafter referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the jurisdictional High Court of Allahabad in the case of Harijan Avas Nirbal Varg Avas Nigam Ltd. v. CIT (1998) 229 ITR 776 (All) has held that such equipment/expenses are in the nature of 'plant' and that as such the assessee is entitled to claim only depreciation on them. He failed to appreciate that since the assessee did not file details of the dates of acquisition of such 'plant', the AO was justified in presuming that they had worked for less than 6 months in the year and in restricting depreciation allowable on such plant to 7.5 per cent only i.e. 50 per cent of the general rate of depreciation allowable on machinery. 5. In both these appeals, there are two grounds-one is with regard to the disallowance of expenses incurred on temporary erections/site accommodation and the other is with regard to the disallowance of scaffolding and shuttering expenses. 6. With regard to ground No. 1. in both the appeals, relating to disallowance of expenses incurred on temporary erections and site accommodation, the facts in brief culled out from the orders of the lower authorities are that the AO has made disallowance of ₹ 10,16.41,206 on account of site ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the copy of an office order regarding administrative and financial sanction in respect of construction of a bridge along with details of its estimated cost before the learned CIT(A). The expenditures incurred on this account have been separately shown in the audited financial statement under a particular head of account for providing necessary information to the management, Government, statutory bodies, etc. It was further contended that the construction of the bridge can be considered as production with temporary factory. The project site being the factory where the contractor like assessee makes the product on site. The bridge construction over water crossings, highways, urban areas effected with dense traffic, etc. generally offers many challenges i.e., minimal disturbance to surroundings, providing a more concentrated work area for superstructure assembly, possibly increased worker safety for providing improved erection environment, etc. Any slackness in this respect will lead to project failure, significant delays, increase in construction costs and frequent claims or penalties to be imposed by clients. In other words, the proper preliminary arrangements reduce the margi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier assessment years, we find no justification in the disallowance made in this very assessment year, as the AO cannot blow not and cold in the same breath by admitting the claim of the assessee in one assessment year and denying the same in the succeeding assessment year. We are, therefore, of the view that the claim of the assessee is reasonable and is allowable. Accordingly we set aside the order of the learned CIT(A) in this regard and allow the claim of the assessee. Accordingly, the addition sustained by the learned CIT(A) is hereby deleted. 13. Ground No. 2 in both the appeals relates to the disallowance of expenses incurred on shuttering, centering, scaffolding, etc. 14. The brief facts culled out from the orders of the lower authorities in this regard are that the AO has made an addition of ₹ 24,59,61,124 on account of shuttering, centering, scaffolding, etc. having observed that shuttering is a part of plant and machinery and as per s. 32 of the Act, 100 per cent depreciation cannot be allowed on any plant and machinery. Having noted that the details of date-wise purchase of shuttering have not been produced before him, he allowed depreciation only at 7.5 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o steel pipes, sheets, etc. for which purchases are being made from time to time in bulk or otherwise also. Keeping in view the quality of shuttering, etc. they are regularly being used in connection with the activities of the assessee. In this regard, the assessee is consistently following a system of accounting whereby the value of those items, which become useless or unserviceable or get exhausted during the year, are written off in the manufacturing account. On the other hand, value of those items, which remain serviceable or fit for future work, are included in the closing stock. The assessee has also placed reliance upon the detailed submissions furnished before the learned CIT(A) and the same is available at pp. 41 to 52 of the compilation of the assessee. The learned counsel for the assessee has also submitted that in earlier years, no disallowance was made under this head though the assessments were framed under s. 143(3) of the Act. Reliance was also placed upon the order of the Tribunal in the assessee's own case for asst. yr. 1995-96, in which the Tribunal has followed its earlier order for asst. yr. 1988-89 and has directed the AO to allow 100 per cent depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal relates to the disallowance of prior period expenses. 24. In this regard, it is noticed from the orders of the lower authorities that the assessee has claimed a sum of ₹ 11,55,272 as prior period expenses which were disallowed by the AO having observed that the assessee has been following mercantile system of accounting, hence the expenses relating to previous years cannot be allowed to be set off from the current year profit. 25. Assessee preferred an appeal before the learned CIT(A) with the submission that though these expenses are prior period expenses, but they were crystallized during the year under consideration and therefore, allowable as revenue expenditure in this year. Except oral submissions, the learned counsel for the assessee could not place any evidence in this regard before the learned CIT(A), and the learned CIT(A), therefore, confirmed the said disallowance. 26. Aggrieved, the assessee is in appeal before the Tribunal, but during the course of hearing of the appeal, the learned counsel for the assessee has raised similar arguments as raised before the learned CIT(A). but (could not place any documentary evidence to substantiate that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any case. (4) The Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to the orders, instructions or directions issued under sub-s. (1) and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case. (5) Every order, instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-s. (1) and the provisions of sub-ss. (2), (3) and (4) shall apply accordingly. 32. It is not in dispute that the Board's instructions or directions issued to the IT Authorities are binding on the IT authorities, therefore, the Department ought not to have filed this appeal in view of the provisions of s. 268A of the Act, since the tax effect in the instant case is less than the amount prescribed for not filing the appeal. Accordingly, this appeal is dismissed. 33. Accordingly, this appeal of the Revenue is dismissed. ITA Nos. 212 and 213/Lkw/2013 : 34. In these appeals, the assessee has assailed the order of the learned CIT(A) on a common ground that the learned CIT(A) has confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rming the addition of ₹ 5,34,01,092 made by the learned AO in the hands of the appellant without appreciating the fact that all the expenses debited to the P L a/c under the head Temporary Site Accommodation are revenue expenses and accepted by the Department in all the scrutiny assessments made in the previous years. 5. The learned CIT(A) erred on facts and in law in confirming the addition of ₹ 28,29,34,751 made by the learned AO in the hands of the appellant without appreciating the fact that all the expenses debited to the P L a/c under the head shuttering, centering, scaffolding are truly revenue in nature and accepted by the Department in all the scrutiny assessments made in the previous years. 6. The learned CIT(A) erred on facts and in law in not providing the appellant reasonable and sufficient opportunity to have its say and to make compliances of the reasons being relied upon by him in making addition in the hands of the appellant. 40. The grounds raised by the Revenue in ITA No. 157/Lkw/2014 are as under: 1. The CIT(A) has erred in law and on facts in restricting the disallowance made out of temporary site accommodation expenses to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nality and thereafter in asst. yrs. 2005- 06 and 2007-08, no disallowance was made by the AO in this regard. The learned counsel for the assessee has further contended that the learned CIT(A) has called remand report on this issue from the AO and having examined the issue in detail, he has allowed the claim of the assessee. Therefore, no interference is called for in the order of the learned CIT(A) on this issue. 45. The learned Departmental Representative, on the other hand, has placed reliance upon the order of the AO. 46. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the claim of deduction under s. 80-IA of the Act was allowed in asst. yrs. 2005-06 and 2007-08 by the AO himself and in asst. yr. 2003-04 the claim was disallowed, but later on it was allowed by the learned CIT(A) and the Revenue has not challenged the order of the learned CIT(A) before the Tribunal. Therefore, it attained finality. Therefore, in the light of these facts, we find no infirmity in the order of the learned CIT(A) who has rightly allowed the claim of the assessee under s. 80-IA of the Act. Accordingly, we confirm the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that in the impugned assessment year provision for foreseen loss cannot be allowed, but the assessee will be allowed to debit the actual loss suffered by it in any of the assessment years and the same would be allowed by the Revenue after making necessary verification. 53. Ground No. 2 in the assessee's appeal in ITA No. 255/Lkw/2014 relates to the disallowance of prior period expenses booked in this year. 54. Identical issue was examined by us in the foregoing paras where we have confirmed the addition having noted that the assessee could not place any evidence to establish that the prior period liabilities have been crystallised in the impugned assessment year. Similar is the position in the instant case, as nothing is placed on record to establish that the liabilities for earlier years have been crystallised in the impugned assessment year. Accordingly, following the view taken in the foregoing paras, we confirm the addition. 55. Ground No. 3 in the assessee's appeal in ITA No. 255/Lkw/2014 relates to the addition of ₹ 4.50 lakhs made by the AO in the hands of the assessee after invoking the provisions of s. 40(a)(ia) of the Act. In this regard, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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