TMI Blog1997 (9) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... al), and the decision of the Kerala High Court in the case of CIT vs. A.V. Thomas Co. Ltd. (1997) 225 ITR 29 (Ker) where it has been held that disallowance under s. 37(3A) does not apply in respect of insurance of vehicles. In respect of vehicle tax, however, no decision is relied on. In fact, it is seen that s. 30 grants deduction for taxes on building. Tax on plant and machinery (vehicles inclusive) has not been granted in ss. 30 to 36. This has to be considered only under s. 37. Therefore, the decisions relied on by the assessee are not applicable. Therefore, 20 per cent disallowance on vehicle tax is upheld being in nature of maintenance of a car as for purpose of disallowance under s. 37(3A). This ground is partly allowed. 3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reconsideration. The learned Departmental Representative on the other hand, strongly supported the order of the learned CIT(A). 6. After considering the rival submissions, we are of the opinion that in conformity with the order for the asst. yr. 1984-85 the matter should be restored to the file of the learned CIT(A) for reconsideration. We do so. This ground is allowed for statistical purposes. 7. The next ground is in respect of deduction of Rs. 9,000 being consultation fees paid to Shri G.S. Vasan, the disallowance of which has been confirmed by the learned CIT(A) because no evidence of the work done has been produced. In this respect, we are of the opinion that the order of the learned CIT(A) cannot be interfered with. No evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Representative on the other hand, strongly supported the order of the learned CIT(A). 10. In our opinion, the matter should be restored back to the file of the learned CIT(A). It appears that he was of the view that there was no acceptance on the part of HEC in this respect that Rs. 2,65,000 are not going to be paid by them to the assessee. The opinion of the learned CIT(A), it appears, is mainly on the basis that there was no acknowledgment on the part of HEC in this respect. In our view, if the accounts had been confirmed by HEC, then it is a constructive acknowledgment. This matter has therefore, to be looked from all these angles but after proper ascertainment of the facts. This ground is allowed for statistical purposes. 11. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assets which were installed during the extended period of time. According to him, the plain reading of the rule does not indicate that the depreciation should be irrespective of period of user. He, therefore, confirmed the order of the AO. 13. The learned counsel for the assessee submitted that once the AO had allowed the extension of the previous year he cannot disallow the depreciation in respect of the machinery installed during the previous year. He submitted that claim of depreciation in this case did not go against the spirit of the Act allowing the depreciation on machinery installed during the previous year. In this respect, he relied on the decision in the case of VXL India Ltd. vs. ITO and ITO vs. D.P.F. Textiles Ltd. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Bharat Machinery Hardware Mart (1982) 136 ITR 875 (Guj) allow this ground. 16. The appeal is partly allowed for statistical purposes. 17. We now take up the Revenue's appeal. The following grounds are raised by the Revenue in this appeal : (i) The learned CIT(A) has erred in law and on facts in holding that expenses of repairs of vehicles amounting to Rs. 83,045 could not be considered for the purpose of disallowance under s. 37(3A) and in allowing relief of Rs. 16,609. (ii) The learned CIT(A) has also erred in law and on facts in directing the AO to allow deduction of liquidated damages to the extent of Rs. 3,78,548. (iii) The learned CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of advice received from the contractor regarding the deduction to the extent of Rs. 3,78,548. The only question to be decided is as to whether/what should constitute the point at which the liability has been incurred. If one opines that it can be argued that the liability has been incurred as per contract the moment there is the slightest departure from the schedule of delivery in such cases the deficiency in quantification of damages will arise. Even the quantum of damages are left open to negotiation of the two parties. He is of the opinion that on the basis of information liability to the extent of Rs. 3,78,548 only can be said to have incurred during this accounting year. He, therefore, deleted this addition. 20. The learned De ..... X X X X Extracts X X X X X X X X Extracts X X X X
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