NAC Infrastructure Equipment Limited, Hyderabad V. Dy. Commissioner of Income Tax , Circle-16(1), Hyderabad

CO 33/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5601 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 25-02-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 29-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Keywords: Depreciation; Difference of opinion; Tax effect; Change of opinion
• Section: 43B; 143(3); 32

Judgement Text

ITA NO 841 AND CO 33 OF 2018 NAC INFRASTRUCTURE EQU IPMENT LTD HYDERABAD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.841/HYD/2018 (ASSESSMENT YEAR: 2008-09) DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1) HYDERABAD VS NAC INFRASTRUCTURE EQUIPMENT LTD, HYDERABAD PAB: AABCN 8666K (APPELLANT) (RESPONDENT) C.O. NO.33/HYD/2018 (ARISING OUT OF ITA NO.841/HYD/2018) (ASSESSMENT YEAR: 2008-09) NAC INFRASTRUCTURE EQUIPMENT LTD, HYDERABAD PAB: AABCN 8666K (CROSS OBJECTOR) VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1) HYDERABAD (RESPONDENT) (RESPONDENT) FOR REVENUE : SHRI NILANJAN DEY, DR FOR ASSESSEE: SHRI AMIT AGARWAL O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2008-09 AGAINS T THE ORDER OF THE CIT (A)-4, HYDERABAD, DATED 12.02. 2018. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT (A) ERRED IN DIRECTING TO ALLOW DEPRECI ATION @ 30% ON PLANT & MACHINERY INSTEAD OF ELIGIBLE RATE O F 15%. DATE OF HEARING : 25.02.2019 DATE OF PRONOUNCEMENT: 15.05.2019 ITA NO 841 AND CO 33 OF 2018 NAC INFRASTRUCTURE EQU IPMENT LTD HYDERABAD. PAGE 2 OF 5 2. CIT (A) ERRED IN INTERPRETING THE DEFINITION OF THE COMMERCIAL VEHICLES AS DEFINED IN ENTRY III-(3)(II) OF APPENDIX-1 OF I.T RULES. 3. THE CIT (A) ERRED IN NOT APPRECIATING THE FACTS THAT REVENUE DID NOT PREFER FURTHER APPEAL IN THE ASSESS EES OWN CASE FOR A.Y 2005-06 IN ITA NO.464/HYD/2015 DATED 06.07.2016 BECAUSE OF LOW TAX EFFECT. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 2. WE FIND THAT THESE ARE THE SIMILAR GROUNDS OF AP PEAL RAISED BY THE REVENUE IN THE CASE OF M/S. QUIPPO CO NSTRUCTION EQUIPMENT LTD IN ITA NO.856 TO 858/HYD/2018. FOR TH E DETAILED REASONS GIVEN THEREIN, THE APPEAL OF THE REVENUE IS DISMISSED. HOWEVER, FOR THE SAKE OF READY REFERENCE, THE RELEV ANT PORTION OF THE ORDER IN ITA NO.856 TO 858/HYD/2018 ARE GIVEN B ELOW: 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED A COPY THEREOF AND IT IS SEEN THAT THE TRIBUNAL HAS DISMISSED THE REVENUES APPEAL THEREON BOTH ON THE ISSUE OF REOPENIN G AND ALSO ON MERITS. FOR THE SAKE OF CONVENIENCE AND READY REF ERENCE, THE RELEVANT PARAGRAPH OF THE ITAT ORDER IS REPRODUCED HE REUNDER: 5. ON THE ISSUE OF DEPRECIATION ON WHEEL LOADERS AN D WHEEL GRADERS, ASSESSEE MADE DETAILED SUBMISSIONS THAT THESE ITEMS ARE NOTH ING BUT MOTOR-VEHICLE AS PER ENTRY III-(3)(II) OF APPENDIX-I OF INCOME TAX RULES . RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF BOSE ABRAHAM VS. STATE OF KERALA [AIR 2001 SC 835]. FURTHER, ASSESSEE ALSO RELIED ON THE HON'BLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF GUJCO CARRIERS VS. CI T [256 ITR 50] (GUJ.) WHEREIN, 'MOTOR LORRIES' WERE EXPLAINED TO INCLUDE FIRE TRUCKS, FORKLIFT TRUCKS AND CRANE TRUCKS WHICH ARE DESIGNED FOR SPECIAL SERVICE S. ASSESSEE ALSO RELIED ON VARIOUS DECISIONS OF THE ITAT TO JUSTIFY THAT CLAIM OF 40% ALLOWED BY THE AO IN THE ORIGINAL ASSESSMENT IS CORRECT AND RESTRICTION BY THE AO TO 25% IS NOT ACCORDING TO THE PROVISIONS OF LAW. LD. CIT(A) ALLO WED ASSESSEE'S CLAIM BY STATING AS UNDER: '9. THE SUBMISSIONS OF THE ASSESSEE, THE FACTUAL PO SITION AS BROUGHT OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE D OCUMENTS PLACED ON RECORD ARE CONSIDERED. IT IS SEEN THAT THOUGH THE MOTOR GR ADERS AND WHEEL LOADERS ARE NOT DEPICTED AS MOTOR VEHICLES BY THE APPELLANT, THE SA ME HAVE BEEN REGISTERED AS 'OTHER VEHICLE-MMV' BY THE REGISTRATION AUTHORITIES . IN VIEW OF THE RATIOS LAID DOWN BY HON'BLE SUPREME COURT AND FOLLOWED BY VARIO US TRIBUNALS HOLDING THAT THE MOTOR VEHICLES DESIGNED FOR SPECIAL SERVICES AR E TO BE TREATED AS MOTOR ITA NO 841 AND CO 33 OF 2018 NAC INFRASTRUCTURE EQU IPMENT LTD HYDERABAD. PAGE 3 OF 5 VEHICLES, THE APPELLANT IS ELIGIBLE FOR DEPRECIATIO N @ 40% AS CLAIMED. RELIANCE IS SPECIALLY PLACED ON THE DECISIONS OF HON'BLE KARNAT AKA TRIBUNAL IN THE CASE OF BOTHRA SHIPPING SERVICES VS. CIT (ITA NO. 586/KOL/2 010) AND CIT VS. GAYLORD CONSTRUCTION (2010) 190 TAXMANN 406 (KER). ACCORDIN GLY, THE GROUND OF APPEAL IS ALLOWED'. 6. AFTER CONSIDERING THE DETAILED SUBMISSIONS OF TH E DR AND PERUSING THE PAPER BOOK PLACED ON RECORD, I AM OF THE OPINION THAT THE RE IS NO MERIT IN REVENUE'S CONTENTIONS. AS SEEN FROM THE ASSESSMENT ORDER PASS ED U/S. 143(3) ORIGINALLY, AO HAS CONSIDERED THE CLAIM OF DEPRECIATION AND MADE C ERTAIN DISALLOWANCES OUT OF VARIOUS DEPRECIATION CLAIMS MADE IN THE SCHEDULE. I T INDICATES THAT AO FOUND THE CLAIM OF 40% DEPRECIATION ON THE ABOVE SAID VEHICLE S APPROPRIATE AND ALLOWED THE SAME. SINCE THERE IS SPECIFIC DISCUSSION ON THE DEPRECIATION CLAIMS IN THE FIRST ASSESSMENT ORDER, ALLOWANCE OF 40% DEPRECIATION BY THE AO CERTAINLY INDICATES THAT HE HAS CONSCIOUSLY ALLOWED THE DEPRECIATION AT THAT RATE AFTER DUE EXAMINATION. THEREFORE, ANY OPINION BY THE SUBSEQUE NT AO TO RESTRICT THE SAME TO 25% IS A CHANGE OF OPINION, WHICH IS NOT PERMITTED UNDER THE PROVISIONS OF LAW. MOREOVER THE WHEEL LOADERS AND GRADERS ARE MOTOR VE HICLES AND IS CERTAINLY ELIGIBLE FOR DEPRECIATION AT 40% AS PER SCHEDULE AN D THE CASE LAW ON THE SUBJECT. IN VIEW OF THIS, I DO NOT SEE ANY REASON TO INTERFE RE WITH THE WELL REASONED ORDER OF THE CIT(A), BOTH ON THE ISSUE OF REOPENING AND A S WELL AS ALLOWANCE OF DEPRECIATION AT 40% ON WHEEL LOADERS. FOR THESE REA SONS, I UPHOLD THE ORDER OF CIT(A) AND REJECT THE GROUNDS OF REVENUE. 6. THUS, IT CAN BE SEEN THAT THE REVENUES APPEAL W AS NOT DISMISSED ON LOW TAX EFFECT BUT WAS DISPOSED ON MER ITS. FURTHER, WE ALSO FIND THAT THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GUJCO CARRIERS VS. CIT (2002) 256 ITR 50 (GUJ.) HAS CONSIDERED THE EXPRESSION MOTOR LORRIES IN ENTRY III-E(1A) OF AP PENDIX I TO IT RULES, 1962 TO HOLD THAT THE VEHICLES WHICH ARE REG ISTERED AS HEAVY MOTOR VEHICLES WOULD, FOR THE REASON GIVEN, C LEARLY FALL WITHIN THE EXPRESSION MOTOR LORRIES IN ENTRY III- E(1A) OF THE TABLE IN APPENDIX I TO IT RULES AND SINCE THEY WERE USED BY THE ASSESSEE IN ITS BUSINESS OF RUNNING THEM ON HIRE, T HE ASSESSEE WAS ENTITLED TO HIGHER RATE OF DEPRECIATION. 7. SIMILAR VIEW WAS EXPRESSED BY THE COORDINATE BEN CH OF THIS TRIBUNAL IN THE CASE OF ANSARI HOLDINGS & INVESTMEN TS (P) LTD VS. DCIT (2007) 12 SOT 438 (HYD.) WHEREIN MOBILE CRANES REGISTERED AS HEAVY MOTOR VEHICLES WERE HELD TO WOULD FALL WIT HIN THE EXPRESSION OF MOTOR LORRIES AND HENCE ELIGIBLE FO R DEPRECIATION @ 40%. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FILED THE COM PUTATION OF DEPRECIATION ALLOWABLE U/S 32 IN THE FINANCIAL YEAR 31.3.2012 WHEREIN THE PLANT & MACHINERY AND COMMERCIAL VEHICL ES WERE SEPARATELY SHOWN AND DEPRECIATION HAS BEEN CLAIMED AT 30% ON SUCH COMMERCIAL VEHICLES. THE DETAILS OF THE FIXED ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED ARE ALSO FILED BEFORE US. ON PERUSAL OF THE SAME, WE FIND THAT THE WHEEL LOADERS AND GRA DERS ARE MOTOR ITA NO 841 AND CO 33 OF 2018 NAC INFRASTRUCTURE EQU IPMENT LTD HYDERABAD. PAGE 4 OF 5 VEHICLES AS HELD BY THE COORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF NAC INFRASTRUCTURE EQUIPMENT LTD (SUPRA), A SSESSEES SISTER CONCERN. THEREFORE, RESPECTFULLY FOLLOWING T HE DECISION OF THE COORDINATE BENCH, WE DO NOT SEE ANY REASON TO INTER FERE WITH THE ORDER OF THE CIT (A). THEREFORE, THE REVENUES APPE ALS ARE DISMISSED. 3. RESPECTFULLY FOLLOWING THE SAME, THE REVENUES A PPEAL IS DISMISSED. 4. IN THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO.33/HYD/2018, THE GROUNDS RAISED ARE AS UNDER: 1. THAT O THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF CLAIM OF LEAVE ENCASHMENT ON PROVIS ION BASIS AMOUNTING TO RS.4,49,999/- IN COMPUTING THE T OTAL CLAIM. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND WITHOUT PREJUDICE TO THE GROUND NO.1 TAKEN HERE-IN-ABOVE, THE LEARNED CIT (A) ERRED IN CONFIRM ING THE DISALLOWANCE U/S 43B AT RS.4,49,999/- INSTEAD O F RS.2,74,167/- OUTSTANDING AS PER ANNEXURE D OF THE TAX AUDIT REPORT FOR THE RELEVANT A.Y. 3. THAT THE RESPONDENT CRAVES LEAVE, TO ADD, TO AM END, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GRO UNDS STATED HERE-IN-ABOVE EITHER BEFORE OR AT THE TIME O F HEARING OF THE APPEAL. 5. FOR THE REASONS GIVEN IN C.O. NO.34/HYD/2018 IN ITA NO.858/HYD/2018, THIS GROUND OF APPEAL IS TREATED A S ALLOWED FOR STATISTICAL PURPOSES. FOR THE SAKE OF READY REFEREN CE, THE RELEVANT PORTION IN C.O. 34/HYD/2018 IS REPRODUCED HEREUNDER : 10. AS REGARDS GROUND NO.1, THE LEARNED COUNSEL FO R THE ASSESSEE SUBMITTED THAT THOUGH THE ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HO N'BLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD VS. UNION OF INDIA (2007)292 ITR 470 (CAL.) AND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DCI T VS. A.P SEEDS DEVELOPMENT CORPORATION LTD IN ITA ITA NO 841 AND CO 33 OF 2018 NAC INFRASTRUCTURE EQU IPMENT LTD HYDERABAD. PAGE 5 OF 5 NO.1459/HYD/2013 HAS FOLLOWED THE SAME TO HOLD THAT THE PROVISIONS MADE TOWARDS LEAVE ENCASHMENT IS ALLOWABLE AS A DEDUCTION, HE SUBMITTED THAT THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT HAS BEE N STAYED BY THE HON'BLE APEX COURT AND THE ISSUE IS PENDING FOR ADJUDICATION. HE PRAYED THAT THE ISSUE MAY BE REMANDED TO THE FILE OF THE AO TO PASS THE FINAL ORDER AFTER THE APEX COURT DECIDES THE ISSUE. 11. THE LEARNED DR HAD NO OBJECTION TO THIS SUBMISS ION. THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO GIV E EFFECT TO THE HON'BLE SUPREME COURTS DECISION IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA). THUS, GROUND NO.1 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, C.O FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 15 TH MAY, 2019. VINODAN/SPS COPY TO: 1 DY.CIT, CIRCLE 16(1) ROOM NO.121, 1 ST FLOOR, BLOCK B, IT TOWER, MASAB TANK, HYDERABAD 2 M/S. NAC INFRASTRUCTURE EQUIPMENT LTD, NAC CAMPUS , IZZAT NAGAR, KONDAPUR, CYBERABAD, HYDERABAD 500084 3 CIT (A)-4 HYDERABAD 4 PR. CIT 4 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER