TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 446
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....ng with water treatment chemicals, industrial additives, oilfield chemicals and trading of equipments. In the course of assessment proceedings for A.Y.2008-09, the AO noticed that the assessee had purchased new plant and machinery worth Rs. 4.18 crores on which the assessee had claimed depreciation. The AO called upon the Assessee to explain as to whether the plant and machinery were installed in the factory premises of the assessee and whether they are actually used for the purpose of assessee's business. The assessee in reply pointed out that machineries worth Rs. 2.46 crores which were additions to the plant and machinery during the relevant previous year were basically installed at various customer's site. The assessee further explained justification for installation of the plant and machinery at customer's site as owing to the nature of business of the Assessee. The Assessee provides water treatment, process-focused programs and emissions reduction across a broad range of end users in various industries. For the above purpose the Assessee supplies chemicals. The effect of the chemicals on the purpose for water treatment or emission reduction etc., requires constant monitoring ....
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....69 per MT and Industrial adhesives and oil field chemicals @ Rs. 2,18,244 per M.T. This according to the AO showed that the sale price of both the finished products have reduced from that of the last year. Therefore, the AO came to the conclusion that the Assessee's explanation regarding free installation of plant and machinery at the customer's site at increased sale value was not correct. The AO further concluded that there was no justification for installing those plant and machineries at customers site at free of cost. According to the AO, the assessee did not charge any rent for those machineries nor enhanced its sale prices. The AO thereafter concluded that the Assessee was not entitled to depreciation or additional depreciation since the machineries were not installed at the assessee's factory premises and not used for the purpose of the assessee's business. The quantum of depreciation on plant and machinery installed at customers site disallowed was worked as under:- 1. Plant and machineries installed for more than 180 days amounting to Rs. 2,22,86,680/-. Depreciation and additional depreciation 15% + 20% =35% on Rs. 2,22,86,680/- .... Rs. 7800338/- 2. Bala....
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....hinery. The' AR. In his written submission has submitted that ---- "in this connection it may be mentioned that recently the Hon'ble Supreme Court in the matter of ICDS Ltd. Vs. CIT in Civil Appeal No. 3286 to 3290 of 2008 dt. 14-01-2013 has held that even if the assets of the lessor are put at lessees premises and used by the lessee, then also the lessor would get the depreciation claimed for the simple reason that the lessor is the owner of the asset and the income from lease is shown as income in the account of the lessor. " I have considered the finding; of the AO and the written Submission as well as case law filed by the A.R. during the appellate proceeding. I think assessee's case on this issue is squarely covered by the ratio decided by the Hon'ble Supreme Court in the case of ICDS Ltd. (supra). Thus, assessee's appeal on ground no": 1 (a) and 1 (b) are allowed." 8. Aggrieved by the order of CIT(A) the revenue has raised ground no.1 and 2 before the Tribunal. The ld. DR reiterated the stand of the AO as reflected in the order of assessment. According to him the terms of the agreement between the assessee and the customers with regard to the owner....
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....ce to 5% of total disallowance Rs. 3,15,17493/- i.e. Rs. 15,75,874/- without considering the facts of the case as well as the information brought on record by the AO. in the course of assessment proceeding as well as in the remand proceedings. " 11. The assessee claimed a sum of Rs. 5,90,92,000/- on account of travelling and conveyance. The details of such expenses showed that a sum of Rs. 3,15,17,493/- was reimbursed to the employees for local travelling. The AO called upon the Assessee to furnish details of such travelling made by the employees, places of visit, amount incurred from their pockets and how it was reimbursed. The Assessee in reply furnished a list of 122 persons to whom reimbursement was made. According to the AO, the Assessee did not file any other details. According to the AO, the Assessee also failed to prove the business exigencies in support of such huge reimbursement of travelling expenses. The AO therefore held that genuineness of such reimbursement of expenses on account of travelling was not established by the assessee. Regarding the balance expenditure of Rs. 2,75,74,507/- the AO observed that the assessee has given a brief description of party wise paym....
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....ses in the present case before CIT(A) and these details are annexed at pages 63 and 64 of the assessee's paper book. When these details were forwarded to the AO the AO did not find any fault. He however, has stated in his remand report that the assessee could not produce certain other details called for as to what were the other details called for is not spelt out in the remand report. It is therefore clear that there is no valid basis for sustaining the disallowance made by the AO. The CIT(A) has however has taken a conservative approach and disallowed 5% of the reimbursement of travelling expenses. We are of the view that no fault could be found with the approach adopted by CIT(A). Ground no.3 raised by the revenue is dismissed. 17. Ground No.4 raised by the revenue reads as follows :- "4. That on the facts and circumstances of the case Ld. CIT(A) erred in restricting the disallowance of Labour Supply Expenses to 5% of total disallowance Rs. 1,06,11,230/- i.e. Rs. 5,30,560/- without considering the facts of the case as well as the information brought on record by the AO. in the course of assessment proceeding as well as in the remand proceedings." 18. The AO disallowed 5% of....
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.... view that the order of CIT(A) on this issue does not call for any interference. As already observed despite filing of all the details, the AO has given a vague remand report that some of the details called for were not furnished. In the given facts and circumstances the CIT(A) with a conservative approach sustained the disallowance of 5% of the labour supply expenses. We do not find any fault with the approach of CIT(A). Consequently we dismiss ground no.4 raised by the revenue. 22. Ground No.5 raised buy the revenue reads as follows :- "5. That on the facts and circumstances of the case Ld. CIT(A) erred in allowing the 'Misc. Expenses" of Rs. 51,98,275/- without considering the facts of the case as well as the information brought on record by the AO. in the course of assessment proceeding as well as in the remand proceedings." 23. The assessee claimed a sum of Rs. 3,54,58,000/- on account of miscellaneous expenses. According to the AO the details of such expenses showed that an amount of Rs. 1,03,96,550/- was on account of sundry expenses. According to the AO no details of such sundry expenses was produced by the Assessee and therefore the genuineness of such claim was n....