TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 744
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....tion of liabilities u/s 41 (1). That the appellant craves to add, amend alter, delete or modify any or all the above grounds of appeal before or at the time of hearing. Assessment Year 2006-07 On the facts and in the present circumstances of the case the ld. CIT (A) has erred in: I. Deleting the disallowance of excess depreciation of Rs.1,53,327/- claimed on JCB. II. Deleting the disallowance of Rs.24,03,543/- made u/s 40(a) (ia) on account of non-deduction of TDS on transport expenses. That the appellant craves to add, amend, alter, delete or modify any or all the above grounds of appeal before or at the time of hearing. 2. The first issue which is common in both the appeals relates to deleting the disallowance of excess depreciation on tippers, road rollers and JCB. In assessment year 2005-06, the amount involved is Rs 4,63,058/- whereas in assessment year 2006-07 the amount involved is Rs. 1,53,327/-. The facts of the case stated in brief are that the assessee firm derives income from mainly contract receipts and hiring of J....
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....ion (b), expression heavy goods vehicle 'Road Roller' also and it shall have same meaning as assigned it in section 2 of the motor vehicles Act 1989. The rate of depreciation for Road Roller is applicable at 40% as it comes under Motor Lorries. 14. Moreover the appellant has also given them on hire and shown income from hire in the P & L Account as under:- (i) Tippers Rs.118460/- (ii) JCB Rs.148350/- (iii) Road Roller Rs.109235/- Because of this reason also, the appellant is entitled to claim depreciation @ 40% not at 25% as allowed by the AO. Further the addition made by the AO of Rs.4 lac on account of rejection of books of account has been confirmed by the undersigned, no further addition on any account can be made in addition to the addition already made. Therefore, the disallowance made by the AO is deleted. The appeal is allowed on this ground." 4. In assessment year 2006-07, ld. CIT (A) allowed the depreciation @ 40% following his decision for assessment year 2005-06. 5. Before us ld. AR of the assessee reiterated the similar arguments. On the o....
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.... does not include other purely off highway construction equipment vehicle designed and adapted for use in any enclosed premises, factory or mine other than road network not equipped to travel on public roads on their own power." 8. Thus as per Central Motor Vehicles Rules, 1989, excavator, loader, dumpers, would be included as construction equipment vehicles and are to be termed as non-transport vehicles. Ld. CIT (A) has treated these assets as commercial vehicles. 9. Hon'ble Andhra Pradesh High Court in the case of CIT vs. A.M. Construction 238 ITR 775 (AP) has held that tippers are eligible for depreciation @ 40%. It has further been held that sub-item (ii) of item 2 of Appendix I does not say that the motor lorries should be exclusively used for hire or business by the assessee. In the case of the assessee, the vehicles have been used for hiring purpose, therefore, depreciation at higher rates of 40% will be allowable in the case of tippers. In the case CIT vs. Sibson Construction Company 221 ITR 468 (Gau), Hon'ble Gauhati High Court held that item III-D(4) of Appendix I part I of Income-tax Rules, 1962 mentions earth moving machinery which is engaged in construction work such....
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....al services, fall within the category of 'motor trucks' (also called 'motor lorries') 11. Examined in the light of above mentioned judicial pronouncements in our considered opinion depreciation on tippers, road rollers and JCB will be allowable @ 40% as against 25% allowed by the AO treating these machineries as plant and machinery and not under the category of motor vehicles. Accordingly, we do not find any infirmity in the order passed by ld. CIT (A) allowing the higher rate of depreciation in respect of tippers, road rollers and JCBs in both the years though for different reasons. 12. The next issue for consideration relates to deleting the disallowance of Rs. 29,31,198/- made u/s 40 (a)(ia) on account of non-deduction of TDS on transport expenses. In A.Y. 2006- 07, the disallowance of Rs. 24,03,543/- has been made. The AO during the course of assessment proceedings noted that the assessee had not deducted tax at source on transportation expenses as required u/s 194C of the Act. Therefore, the amount was not allowable u/s 40 (a)(ia) of the Act. The AO asked the assessee as to why the expenses on which TDS has not been deducted should not be allowed. It was submitted by the ass....
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....truck hire charges along with material cost. The truck owners collected the sand from the river bank, paid royalty to Nagar Parishad and the delivered the same at the site of the assessee. Ld. AR of the assessee furnished copy of invoices of Khalil Ahmed, Rajendra Sharma, Suwalka & Co., Hajarilal and Bhavik Bulk Carrier for the puposes of verification of the contention of the assessee. On going through these invoices ld. CIT (A) came to the conclusion that the payments were not made for transportation, but for supply of material purchased including the transportation charges. Therefore, the provisions of Section 194C were not applicable and accordingly the provisions of Section 40 (a)(ia) were also not applicable. Ld. CIT (A) accordingly deleted the addition. 14. We have heard both the parties and gone through the material available on record. There is no dispute about the fact that the assessee had made payments to various parties for purchase of construction material which included the cost of transportation also. The assessee is engaged in the business of civil construction. U/s 194 C any person responsible for paying any sum to any recipient for carrying out any work (includin....
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.... the limited sense as product or result. The carrying out of work indicates doing something to conduct the work to completion or an operation which produces such result. In V.M. Salgaocar & Bros. Ltd. v. ITO [1999] 237 ITR 630, the Karnataka High Court has concurred with the views expressed by the Bombay and Calcutta High Courts. The High Courts of Gujarat, Madras, Orissa and Delhi have also expressed similar views. Hon'ble Supreme Court has held that section 194C before insertion of Explanation III was not applicable to transport contracts, i.e., contracts for carriage of goods. 16. In the case of the assessee, the assessee has purchased material through various parties such as sand, murram, etc., for which payment has been made. Ld. CIT (A) has held that the payment made for material which includes cost of transportation to the site would not be covered u/s 194C of the Act. We are in agreement with the decision of the CIT (A) that the assessee had made payment not for transportation of his goods, but has made payment for the purchase of building material which included cost of transportation upto the site of the assessee. The payments for purchase of material and supply at the s....
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....f the year under consideration. The payments have been made during the year under consideration. Ld. CIT (A) considered the submissions made by the assessee and observed that the assessee had not derived any benefit as the assessee had paid off the liability in the year under consideration. There was no remission or cessation of liability. The AO had not collected any material on record to show that the parties to whom the payments were shown to have been made by the assessee had written off the amounts in the year under consideration. Since there was no cessation or remission of liability, the amount was not liable to be added u/s 41(1) of the Act. Ld. CIT (A) accordingly deleted the addition. 19. We have heard both the parties and gone through the material available on record. There is no dispute about the fact that outstanding liabilities as on 31st March, 2004 have been paid during the year under consideration. The AO had treated the amount as cessation of liability on the ground that the assessee had not produced the receipts for making the payment. The AO has not brought any material on record that the payment was not made to the parties. The AO has accepted the liability wh....