2011 (2) TMI 1599 - AT - Income Tax

Tribunal Decisions on Revenue Appeals: Expenditure Disallowance, Provident Fund, Depreciation, MAT

The Tribunal dismissed the Revenue's appeals on issues regarding disallowance of expenditure on re-conditioning of buses, employer's contribution to the ... - Issues Involved:1. Disallowance of expenditure on re-conditioning of buses and withdrawing depreciation.2. Disallowance of employer's contribution to the Provident Fund under Section 43B.3. Disallowance of guest house expenditure.4. Disallowance of depreciation on new addition of assets.5. Applicability of Minimum Alternate Tax (MAT) under Section 115JB.Detailed Analysis:1. Disallowance of expenditure on re-conditioning of buses and withdrawing depreciation:The Revenue challenged the deletion of disallowance of Rs. 4,34,03,541/- for re-conditioning buses and withdrawing depreciation of Rs. 5,22,635/-. The Tribunal referred to its earlier decisions in the assessee's own cases for different assessment years, where it was held that such expenditure is of revenue nature as it was incurred to preserve and maintain existing assets without bringing new assets into existence. The Tribunal cited the Supreme Court's decision in CIT Vs. Sarvana Spinning Mills P Ltd., which clarified that repairs to maintain existing assets fall under 'current repairs' under Section 31(i). The Tribunal found no infirmity in the CIT(A)'s findings and dismissed the Revenue's appeal on this issue.2. Disallowance of employer's contribution to the Provident Fund under Section 43B:The Revenue contested the deletion of disallowance of Rs. 5,75,12,229/- for employer's contribution to the Provident Fund. The Tribunal noted that the contributions were made within the due date for filing the return of income, as observed by the Assessing Officer. The Tribunal referred to the Delhi High Court decision in CIT v. P.M. Electronics Ltd., which held that contributions made within the due date are allowable. The Tribunal followed this precedent and dismissed the Revenue's appeal on this issue.3. Disallowance of guest house expenditure:The Revenue appealed against the deletion of disallowance of Rs. 1,00,000/- for guest house expenses. The assessee conceded that this issue was covered against them by the Tribunal's earlier decisions in their own cases, where it was held that such expenses are not allowable following the Supreme Court's decision in Britannia Ind. Ltd. The Tribunal, respecting its earlier decision, reversed the CIT(A)'s order and allowed the Revenue's appeal on this issue.4. Disallowance of depreciation on new addition of assets:The Revenue challenged the deletion of disallowance of Rs. 2,60,53,207/- for depreciation on new assets. The Tribunal found that the Assessing Officer disallowed the claim due to a lack of details, but the CIT(A) allowed it based on the consistency of the assessee's audited claims and the verification by statutory auditors. The Tribunal upheld the CIT(A)'s findings that the auditing by statutory auditors could not be dismissed as unreliable and confirmed the allowance of the depreciation claim, dismissing the Revenue's appeal on this issue.5. Applicability of Minimum Alternate Tax (MAT) under Section 115JB:The Revenue contested the CIT(A)'s decision that the assessee, a state-owned corporation, was not liable to pay MAT under Section 115JB. The Tribunal reviewed the facts and submissions, noting that the assessee was not a company under the Companies Act but a corporation established under the Road Transport Corporation Act, 1950. The Tribunal referred to the Kerala High Court decision in Kerala State Electricity Board v. DCIT, which held that such corporations are not liable under Section 115JB. The Tribunal found that the assessee's accounts were not prepared under the Companies Act but under specific provisions of the Road Transport Corporation Act. It upheld the CIT(A)'s decision that the assessee was not liable to MAT, dismissing the Revenue's appeal on this issue.Conclusion:The Tribunal dismissed the Revenue's appeals on issues 1, 2, 4, and 5, while allowing the Revenue's appeal on issue 3. The final judgment resulted in the Revenue's appeal being partly allowed.