ORDER
1. This order will dispose of ITA Nos. 626 to 629 of 2005. However, the facts are being taken from ITA No. 626 of 2005.
2. The assessee has approached this court by filing the present appeal, raising the following substantial questions of law arising out of order passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’ (hereinafter referred to as ‘the Tribunal’) in ITA No. 219/Chandi/2001, dated 6-4-2005, for the assessment year 1997-98 for opinion of this Court:
Whether in the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal has not erred in law in disallowing that the payments made in respect of Bonus, Gratuity and CPF, which are statutory in nature and were defrayed for meeting statutory obligations irrespective of the purpose for which these were incurred?
Without prejudice to the above, whether in facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal has committed an error of jurisdiction in holding that the depreciation on the assets located at the agricultural farm, but used for business purposes as well was not allowable deduction?
3. The assessee filed his return of income on 28-11-1997 declaring a loss of Rs. 4,69,746, which was processed under Section 143(1)(a) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act) on 8-9-1998. Thereafter, notice under Sections 142(1) and 143(2) of the Act was issued for regular assessment. The claim of the assessee for depreciation of Rs. 10,38,084 on the assets of Hissar Farm was disallowed, keeping in view the provisions of Section 32 of the Act. Certain expenses relating to Hissar Farm debited in the account of the head office were reduced from the income of the Farm.
4. Having failed in its appeal before the Commissioner (Appeals) (Commissioner (Appeals)); the assessee went in appeal before the Tribunal, who also affirmed the findings of the lower authorities vide its order dated 6-4-2005, which is assailed in the present appeal.
5. While rejecting the contention on both the issues raised by the assessee, the Tribunal recorded the following findings:
2.3 We have heard the rival submissions and perused the record. We find that so far as the claim of the assessee on account of depreciation is concerned, on perusal of pages 6-9 of the paper book, it is evident that most of the assets were used for agricultural operation and the claim of the assessee that its assets were being used for business purposes is not supported by any material evidence on record. Therefore, in our considered opinion, the Commissioner (Appeals) was justified in confirming the action of the assessing officer. We, therefore, uphold the same and reject the ground raised by the assessee in its appeal.
3.2 We after hearing both the parties find that it has been contended by the assessee that payment on account of CPF, gratuity and bonus is concerned, it was paid to the staff who was engaged in business operation of the assessee. However, the assessee could not bring any evidence on record to suggest that the said staff was engaged in its business operation and not agricultural operation. Since substantial income was being generated out of agricultural from Hisar Farm, in our considered opinion, provisions of Section 14A will come into force, which says that no expenditure can be allowed in case corresponding income is exempt. We, therefore, keeping in view the above facts and circumstances of the present case, uphold the order passed by the Commissioner (Appeals) and reject the ground raised in appeal by the assessee.
6. We are in complete agreement with the findings recorded by the Tribunal. Once the assessee had not been able to substantiate before the authorities that the assets were not used for agricultural operation and in fact were being used for business purposes, there is no question of grant of depreciation thereon. Similar is the position with regard to the staff engaged for carrying out work at the agricultural farm at Hissar. Section 14A of the Act is complete answer to the issue being raised by the appellant.
7. We do not find any substantial question of law arises in the appeals and accordingly, the same are dismissed.
8. In view of the order passed on merits, the question of justification for delay in filing Appeal Nos. 626 and 627 of 2005 need not be gone into.