M/s. Bhardwaj Construction Co. Vs ACIT (ITAT Delhi)
As regards to Ground Nos. 11 and 12, relating to disallowance on account of depreciation claimed at Rs. 33,726/- on Cars, the Ld. AR submitted that this disallowance is without any basis. The Ld. AR further submitted that the vehicles have been used for business purposes and are business assets. There is no valid ground given for this disallowance.
The Ld. DR relied upon the assessment order as well as the order of the CIT(A).
We have heard both the sides and perused all the relevant material available on record. It is pertinent to note that the vehicles have been used for business purposes and are business assets of the assessee. Therefore, the CIT(A) was not right in sustaining the said disallowance. Hence, Ground Nos. 11 and 12 are allowed.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal is filed by the assessee against the order dated 04.03.2015 passed by the CIT(A)-XX, New Delhi.
2. The grounds of appeal are as under:
1. That in any case and in any view of the matter, action of Ld. CIT(A) in not deleting the disallowance of Rs.20,21,420/- u/s 40A(3) of The Income Tax Act, 1961 fully as made by Ld. AO and further erred in sustaining the disallowance to the extent of Rs. 19,91,420/- which is bad in law and against the facts and circumstances of the case.
2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the disallowance of Rs.20,21,420/- u/s 40A(3) of The Income Tax Act, 1961 fully made by Ld. AO and further erred in sustaining the disallowance to the extent of Rs. 19,91,420/- and that too without any basis, material and evidences available on record.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.4,553/- on account of 10% of telephone expenses being of personal nature and that too by recording incorrect facts and findings and without giving adequate opportunity of hearing.
4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 4,553/- on account of 10% of telephone expenses being of personal nature is bad in law and against the facts and circumstances of the case.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.2,251/- on account of donations and that too by recording incorrect facts and findings and without giving adequate opportunity of hearing.
6. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 2,251/- on account of donations is bad in law and against the facts and circumstances of the case.
7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.22,397/- on account of 10% of conveyance expenses being of personal nature and that too by recording incorrect facts and findings and without giving adequate opportunity of hearing.
8. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 22,397/- on account of 10% of conveyance expenses being of personal nature is bad in law and against the facts and circumstances of the case.
9. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.5,083/- on account of interest on TDS and that too by recording incorrect facts and findings and without giving adequate opportunity of hearing.
10. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 5,083/- on account of interest on TDS is bad in law and against the facts and circumstances of the case.
11. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.33,726/- on account of 10% of depreciation on vehicle being of personal nature and that too by recording incorrect facts and findings and without giving adequate opportunity of hearing.
12. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 33,726/- on account of 10% of depreciation on vehicle being of personal nature is bad in law and against the facts and circumstances of the case.
13. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the additions/disallowance and passing the impugned assessment order being contrary to law and facts and without providing adequate opportunity of hearing and without considering the principles of natural justice and the same is not sustainable on various legal and factual grounds.
14. That having regards to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of the Ld. AO in charging interest u/s 234B and 234C of the Income Tax Act, 1961.
15. That the appellant craves to leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
3. The Assessee is a firm and engaged in the business civil contractor and deals in contract line from various years. Return of income in this case was filed on 28.09.2011 declaring income at 28,42,500/-. The return of income was processed u/s 143(1) of the Income Tax Act, 1961. Subsequently the case was selected for scrutiny under CASS. First notice u/s 143(2) was issued on 01.08.2012 which was served upon the assessee within the stipulated statutory period. Further notices u/s 142(1) along with detailed questionnaires were issued to the assessee. In response Authorised Representative of the assessee attended the assessment proceedings from time to time with whom the case was discussed in detail. During the year under consideration assessee has done the Civil Contract work of Noida, G.D.A., U.P.R.N.N & Wood hill etc. The firm comprising four partners having profit share ratio of 40%, 35%, 15% and 10% . The assessee was asked to submit comparative chart of GP/ NP ratio for the current assessment year and the previous assessment years. The chart was submitted by the assessee. During the year under consideration the assessee has shown net profit of Rs. 21,66,527/- on gross receipts of 5,40,17,890/- thereby showing net profit rate of 5.86%. There is a better NP Ratio from preceding two years. Hence, no adverse inference is drawn on this issue by the assessing officer. The Assessing Officer made various additions which will as follows :-
I. Disallowance u/s 40A(3) for Rs. 2021420/- on the purchase which were above Rs. 20000/-.
II. Disallowance of Salary and Wages of Rs. 1,25,000/-
III. Disallowance of Telephone Expenses of Rs. 4553/-
IV. Disallowance of Donation of Rs. 2251/-
V. Disallowance of Conveyance Expenses of Rs. 22397/-
VI. Disallowance of Interest on TDS for Rs. 5083/-
VII. Disallowance of Vehicle Depreciation for Rs. 33726/-
4. Being aggrieved by the assessment order assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
5. The Ld. AR submitted that Ground Nos. 3 and 4 due to smallness of the amount, same are not pressed. Hence Ground Nos. 3 and 4 are dismissed. As regards to Ground No. 13, the same is also not pressed by the Ld. AR, hence dismissed. Ground No. 14 is consequential, hence not adjudicated at this juncture.
6. As regards to Ground Nos. 1 and 2 relating to addition of Rs. 2021420/- under Section 40A(3) of the Act, as well as sustaining the disallowance to the extent of Rs. 19,91,420/-, the Ld. AR submitted that the assessee made the purchase of Cement from M/s. Nirmal Cement Store, Ghaziabad during the year and bills were issued from time to time by M/s. Nirmal Cement Store, Ghaziabad in favour of M/s. Bhardwaj Construction Co. During the year in question following payment were made as per details :-
