TMI Blog2023 (5) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... on here that the principles of law as laid down in Gannon Dunkerley Co. s case were not discussed in Thampi Company s case [ 2009 (6) TMI 960 - KERALA HIGH COURT] . Therefore, the Tribunal while allowing the appeal filed by the respondent-assessee and allowing deduction on account of depreciation of plant and machineries made by the respondent-assessee by observing that the said deduction would cover charges for obtaining on hire or otherwise machineries of the assessee cannot be held to be at any fault and therefore the order passed by the Tribunal deserves to be upheld. Since this question of law had been raised in all the five instant appeals, therefore, the same stands answered in favour of the respondents-assesses of these appeals and against the appellant. Appeal dismissed. - VATAP No.178 of 2017 (O&M) VATAP No.148 of 2018 (O&M) VATAP No.128 of 2019 (O&M) VATAP No.281 of 2018 (O&M) and VATAP No.267 of 2019 (O&M) - - - Dated:- 19-4-2023 - HON'BLE MS. JUSTICE RITU BAHRI AND HON'BLE MRS. JUSTICE MANISHA BATRA Argued by: For the Appellant : Ms. Mamta Singla Talwar, DAG, Haryana. For the Respondent No. 1 : Mr. Sandeep Goyal, Advocate, in VATAP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of depreciation in plant and machinery. 4. Feeling aggrieved, the respondent-assessee filed appeal before the Tribunal challenging the order of revisional authority whereby additional tax had been levied for the A.Y. 2010-11. The Tribunal vide order dated 24.03.2017 allowed the appeal. 5. Feeling dissatisfied, the VAT Appeal No. 178 of 2017 has been preferred by the revenue on the grounds that the order passed by the Tribunal was liable to be set aside as the fact that depreciation on plant and machinery could not be allowed as deduction as it did not involve overflow of cash from receivables, was overlooked. Learned counsel for the revenue submitted that the depreciation on machinery or tools was not eligible for any deduction in computation of taxable turnover on works contract as the value of depreciation on plant and machinery for the purpose of execution of works contract was a part of expenditure only which the assessee would have otherwise incurred, if it would have hired such machinery from an outside source and for which the contractor had to necessarily pay the hiring charges. 6. It was further argued that the Act, 2003 did not expressly enable the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r such depreciation fell under the head of labour services and deduction thereof could be allowed. In this context, it will be relevant to refer to the ratio of law as laid down by Apex Court in Gannon Dunkerley Co. s case (Supra) before proceeding further. It was observed by Hon ble Apex Court in this case that the value of the goods involved in the execution of a works contract will have to be determined by taking into account the value of the entire works contract and deducting therefrom the charges towards labour and services which would cover:- (a) labour charges for execution of the works; (b) amount paid to a sub-contractor for labour and services; (c) charges for planning, designing and architect's fees: (d) charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract; (e) cost of consumable such as water, electricity, fuel, etc., used in the execution of the works contract the property in which is not transferred in the course of execution of a works contract; (f) cost of establishment of the contractor to the extent it is relatable to supply of labour and services; (g) other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court of Andhra Pradesh while dealing with similar issue had observed that the assessee was entitled for exemption not only on the charges for obtaining on hire or otherwise machinery and tools used for execution of works contract but also on the amounts spent by it on such machinery as a consequence of using them for the execution of works contract including the value of proportionate wear and tear of the machinery which was otherwise identified as depreciation on the premise that it was equivalent to hire charges spent otherwise. It was held that the dominant idea for exempting the said charges was use of the machinery for the execution of the works and the amounts spent by contractor on such machinery and otherwise there was no necessity to use the word or otherwise by Apex Court in Gannon Dunkerley Co. s case (Supra). On going through the observations as made in the above cited authorities, it is crystal clear that notwithstanding the fact that there was no specific provision in the Act, 2003 qua deduction of depreciation in plant and machinery while computing taxable turnover on works contract at the relevant time still, keeping in view the principles as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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