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Crest Composite & Plastics Pvt. Ltd. Versus ITO, Ward – 1 (2) , Ahmedabad And Vice-Versa

2018 (1) TMI 592 - ITAT AHMEDABAD

Disallowance of depreciation on electrical equipments - Held that:- AO has erred in not granting depreciation at 15% by not considering the electrical installation as plant & machinery. - Decided in favour of assessee - Disallowance of unapproved gratuity - Held that:- Disallowance u/s.40A(7) of the IT Act cannot be made on the ground of absence of approval of gratuity fund as the deduction was not claimed on account of any provision. - Disallowance of interest expenses and finance charg .....

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ilize the reserve and surplus. AO has no right to suggest as to how the funds, reserves and surplus, share capital etc. should be utilized. It is the company who decides the time of utilization of reserve and surplus funds. During the year under consideration appellant has taken fresh loans from (i) Ranjit Sen, (ii) Aditya Sen, (iii) Supriya Sen, (iv) Suparna Sen, (v) R. R. Gopal. All other balances are opening balances. Thus without prejudice to the above and in the alternative, the appellant s .....

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r F.Y.2007-08 and there is no new amount has been taken during the year under consideration and an addition u/s.68 is not legal and assessee cited a judgment CIT vs. Usha Stud Agricultural Famrs Ltd. (2008 (3) TMI 91 - DELHI HIGH COURT) in the appeal, it has been held that no addition u/s.68 with respect to opening balance. In our considered opinion, in such circumstances this ground of appeal cannot sustain. - Addition toward the late payment of employees contribution to PF and ESIC - Held .....

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l against the said decision is pending before the Hon’ble Supreme Court does not dilute binding nature of this judicial precedent. - Decided against assessee. - ITA No. 1540/Ahd/2015 And ITA No. 1456/Ahd/2015 - Dated:- 8-1-2018 - SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER For The Assessee : Shri Prakash Udeshi, AR For The Revenue : Shri V. K. Singh, Sr. DR ORDER PER MAHAVIR PRASAD, JUDICIAL MEMBER:- These cross appeals by the assessee and Revenue are directed .....

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wance of unapproved gratuity of ₹ 2,83,300/-. 3. The Revenue has raised following grounds in its appeal vide ITA No. 1456/Ahd/2015: 1. The ld. CIT(A) has erred in law and on facts in deleting the disallowance of interest expenses and finance charges of ₹ 16,75,605/- without appreciating the fact that the assessee has not furnished any supporting evidence regarding the utilization of fund when the assessee is having enough fund for utilization. 2. The ld. CIT(A) has erred in law and o .....

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had claimed depreciation at 15% on electrical equipments instead of 10% so that the difference of 5% i.e. ₹ 1,36,878/- and further the additional deprecation of ₹ 77,178/- was inadmissible. Ld. CIT(A) held that AO has failed to appreciate that the appellant company has claimed the depreciation at 15% because the electrical installations were installed at the plant of the factory. The electrical installation includes items like Control penal board cooling and temperature control in pl .....

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ture and fixtures. Ld. CIT(A) also not convinced with the plea of the assessee and hence he confirmed the addition of ₹ 1,45,617/- made by the AO. 5. We have gone through the relevant record and impugned order. Ld. AR cited an order of co-ordinate bench in ITA No.4172/Ahd/2007. Coordinate bench has held as under: We find from the arguments of both the sides as well as the orders of the lower authorities that the nature of assets i.e. electrical installation that consists of electrical wire .....

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rival contentions and perused the material on record, it is undisputed that electrical items are fitted with projector and other film exhibition systems. Without electrical items, the projector as well exhibition systems cannot be run. Therefore, it is a part and parcel of the plant and machinery. Thus, the assessee is entitled to higher rate @25%. We confirm the order of the CIT(A) and dismiss the Revenue s appeal on this ground. 7. Respectfully following the aforesaid decision of coordinate be .....

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he relevant record and impugned order, in this case, appellant has filed an application for approval of Gratuity Fund under Part-C of the 4th Schedule to Income Tax of 31st Jan, 2007 as on date, same was not disposed off by the department. In this case, amount was paid to LIC group of Gratuity Fund, which is under the control of the Central Government and an application for approval of Gratuity fund is pending before the department. As per decision of Hon ble Punjab & Haryana High Court, in .....

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isallowance u/s.40A(7) of the IT Act cannot be made on the ground of absence of approval of gratuity fund as the deduction was not claimed on account of any provision. As per order of co-ordinate bench, in the case of New Bharat Engineering Works (Jam) Ltd. vs. ITO 44 TTJ (Ahd) 522. The learned Counsel for the assessee further submitted that the assessee made a claim on actual expenses incurred under the head gratuity contribution. Therefore, provisions of section 40A(7) of the Act would not app .....

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s, further he observed that the appellant had not utilized its reserve and surplus and used the borrowed funds in the business. Hence, he disallowed the whole of the interest amount of ₹ 16,75,605/-. In appeal ld. AO disallowed ground of appeal. 12. We have gone through the relevant record and impugned order. In this case, AO has failed to appreciate that vide reply No.3 dtd.10/03/2014 utilization of borrowings taken during the year under consideration. The appellant had demonstrated the u .....

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suggest as to how the funds, reserves and surplus, share capital etc. should be utilized. It is the company who decides the time of utilization of reserve and surplus funds. During the year under consideration appellant has taken fresh loans from (i) Ranjit Sen, (ii) Aditya Sen, (iii) Supriya Sen, (iv) Suparna Sen, (v) R. R. Gopal. All other balances are opening balances. Thus without prejudice to the above and in the alternative, the appellant stated that the proposition that when advance have .....

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O as unexplained/unsecured loan is concerned. During the year of assessment proceeding, the AO had asked for the confirmation of parties to the Unsecured Loan. Assessee filed confirmations of 11 parties to the unsecured loans alongwith their PAN. But in absence of source, credit worthiness, identity etc. one of the parties to the Unsecured loans i.e. Standard Cal Chem, the Ld. AO made addition of ₹ 20,00,000/- as Unsecured loan. In appeal ld. CIT(A) deleted the addition. 15. We have gone t .....

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cannot sustain. In the result, this ground of appeal is dismissed. 16. So far as ground related to deleing the addition of ₹ 95,274/- made by AO toward the late payment of employees contribution to PF and ESIC, even though same was not paid within due date. The ld. AO made disallowance of contribution of the employee towards PF & ESI of ₹ 95,274/- observing that the same were paid after due date. In appeal ld. CIT(A) allowed the claim of ₹ 95,274/-. 17. We have gone throug .....

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