Delhi High Court
Commissioner Of Income Tax vs Vrm Global Infrastructure Pvt. ... on 14 September, 2010
Author: Manmohan
#5
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 1364/2010
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Ms. Rashmi Chopra, Advocate
versus
VRM GLOBAL INFRASTRUCTURE
PVT. LTD. ..... Respondent
Through: None
% Date of Decision: 14th September, 2010
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the judgment? No.
2. To be referred to the Reporter or not? No.
3. Whether the judgment should be reported in the Digest? No.
MANMOHAN, J:
1. The present appeal has been filed under Section 260A of the
Income Tax Act,1961 (hereinafter referred to as "Act") challenging the
order dated 01st September, 2009 passed by the Income Tax Appellate
Tribunal (in short "Tribunal") in ITA No. 812/Del/2008 for the
Assessment Year 2004-2005.
2. Ms. Rashmi Chopra, learned counsel for the Revenue submitted
that the Tribunal had erred in law and on merits in deleting the addition
made by the Assessing Officer (in short, "AO") on account of
unexplained share application money. According to her, the
respondent-assessee had failed to prove the identity and
creditworthiness of the share applicants and genuineness of the
transaction.
3. Ms. Chopra also submitted that the Tribunal had erred in law in
allowing deduction of `1,77,815/- to the respondent-assessee on
account of depreciation on plant and machinery.
4. However, upon a perusal of the file, we find that the said addition
was deleted by the Commissioner of Income Tax (Appeals) [for short
"CIT(A)] and the Tribunal on the ground that the respondent-assessee
had filed the Permanent Account Number, audited balance sheet and
bank statements of the share applicants and had further furnished
evidence of purchase of plant and machinery as well as its usage.
5. With regard to depreciation, the factual finding of the CIT(A) is
as under:-
"I have gone through the order of the AO and written
submission of the appellant and copy of relevant
documents filed. On a close perusal, it is found that the
appellant company has purchased the plant and
machinery on a loan from the bank for which it has been
paying monthly installments, proof of the same has been
filed. The said plant and machinery was delivered at a
convenient place of delivery at Ghaziabad at one of the
offices of the group company. Subsequently, it was
transported to the work site. As there is clear proof of
evidence for purchasing the said plant and machinery and
the same being put to use, depreciation is to be allowed as
per the I.T. Act. The AO has not appreciated the full facts
of the case and has denied the claim of depreciation. In
view of the above facts, I am of the opinion that the claim
denied to the tune of Rs.1,77,815/- as depreciation should
be allowed......"
6. In fact, the Tribunal with regard to depreciation has also observed
as under:-
"12. We have heard the rival submissions and have gone
through the material available on record. We find that
the disallowance was made by the Assessing Officer on
the basis that these two items were not delivered at the
site office of the assessee company by the sellers. There is
clear finding given by Ld. CIT(A) that there is clear proof
of evidence for purchasing the said plant & machineries
and the same being put to use. It is also noted by the Ld.
CIT(A) that originally these items were delivered at the
convenient place of delivery i.e. Ghaziabad at one of the
offices of the group company and subsequently it was
transported to the work site. This finding of fact is given
by Ld. CIT(A) and that could not be controverted by the
Ld. DR of the revenue and hence we find no good reason
to interfere in the order of Ld. CIT(A) on this issue. This
ground of the revenue is rejected."
6. Keeping in view the aforesaid factual findings, no substantial
question of law with regard to depreciation arises.
7. With regard to share application money, the CIT(A) in its order
has observed as under:-
"I have gone through the order of the AO and written
submission filed by the appellant. Relevant details filed
before the AO have also been filed before me. On a
perusal, it is found that all the said companies have
Permanent Account Number and are income-tax payees.
Their audited balance sheet along with confirmation and
bank statement have been verified which were also filed
before the AO. The identity of the persons is not in doubt
and once they confirmed that they have paid the required
amount which is also supported by bank withdrawal no
further details could have been asked from the appellant
company. The onus has been discharged and if the break-
up of the investments were not found in the relevant
assessment files of the above mentioned companies, the
appellant company could not have done anything about it.
As all the relevant papers were available on the record of
the AO, mere nonattendance should not have invoked
addition for unexplained cash credits."
8. In our considered opinion, the approach adopted by CIT(A) and
Tribunal is in consonance with the decision of Supreme Court in
Commissioner of Income Tax Vs. Lovely Exports (P) Ltd., 216 CTR
195 (SC) wherein it has been held as under :-
"2. Can the amount of share money be regarded as
undisclosed income under s. 68 of IT Act, 1961? We find no
merit in this Special Leave Petition for the simple reason that
if the share application money is received by the assessee
company from alleged bogus shareholders, whose names are
given to the AO, then the Department is free to proceed to
reopen their individual assessments in accordance with law.
Hence, we find no infirmity with the impugned judgment......"
9. Keeping in view the aforesaid mandate of law and the concurrent
findings of fact arrived at by the two authorities below, the share
application money cannot be regarded as undisclosed income of
assessee under Section 68 of Act.
10. Accordingly, present appeal, being bereft of merit, is dismissed
in limine.
MANMOHAN, J
CHIEF JUSTICE
SEPTEMBER 14, 2010
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