M/s Maruthi Transports, Vijayawada V. THE ACIT, CENTRAL CIRCLE-2, VIJAYAWADA, Vijayawada

CO 4/VIZ/2016

• Counselvise Citation: [2016] 111 COUNSELVISE.COM (IT) 0072 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BHUPAL REDDY
• Keywords: Unexplained expenditure; Business income; Depreciation; Business expenditure; Search and seizure; Document seized; Bad and doubtful debts; Condonation of delay; Documents seized; TDS; Set aside
• Section: 143(3); 142(1); 40(a)(ia); 143(2); 139(1); 40a(ia); 13; 22; 32; 56; 263; 132

Judgement Text

ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.312/VIZAG/2012 ( / ASSESSMENT YEAR: 2007-08) M/S. MARUTHI TRANSPORTS, VIJAYAWADA VS. DCIT, CENTRAL CIRCLE, VIJAYAWADA [PAN: AAFFM6825Q ] ( / APPELLANT) ( / RESPONDENT) ./I.T.A.NO.315 TO 317/VIZAG/2012 ( / ASSESSMENT YEARS: 2004-05 TO 2006-07 RESPECTIVEL Y) ACIT, CENTRAL CIRCLE, VIJAYAWADA VS. M/S. MARUTHI TRANSPORTS, VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NOS.2 TO 4/VIZAG/2016 (ARISING OUT OF I.T.A.NO.315 TO 317/VIZAG/2012) ( / ASSESSMENT YEARS: 2004-05 TO 2006-07 RESPECTIVEL Y) M/S. MARUT HI TRANSPORTS, VIJAYAWADA VS. ACIT, CENTRAL CIRCLE, VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 2 ./I.T.A.NO.318 TO 321/VIZAG/2012 ( / ASSESSMENT YEARS: 2007-08 TO 2010-11 RESPECTIVEL Y) ACIT, CENTRAL CIR C LE, VIJAYAWADA VS. M/S. MAHA MARUTHI LOGISTICS PVT. LTD., VIJAYAWADA [PAN NO.AAFCM6209J] ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NOS.5 TO 8/VIZAG/2016 (ARISING OUT OF I.T.A.NO.318 TO 321/VIZAG/2012) ( / ASSESSMENT YEARS: 2007-08 TO 2010-11 RESPECTIVEL Y) ACIT, CENTRAL CIRLCE, VIJAYAWADA VS. M/S. MAHA MARUTHI LOGISTICS PVT. LTD., VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI BHUPAL REDDY, DR / DATE OF HEARING : 15.06.2016 / DATE OF PRONOUNCEMENT : 29.06.2016 / O R D E R PER BENCH: THESE ARE APPEALS FILED BY THE REVENUE, AS WELL AS THE ASSESSEE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST THE SEPARATE, BUT IDENTICAL ORDERS OF COMMISSIONER OF I NCOME TAX (A)-I, HYDERABAD DATED 29.6.2012 FOR THE ASSESSMENT YEARS 2004-05 TO 2010- 11. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE C OMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OFF, BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 3 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE WAS ENGAGED IN THE BUSINESS OF HANDLING AND TRANSPORT CONTRACTS AT VISAKHAPATNAM AND ALSO AS CONSIGNMENT AGENT FOR RINL AT NAGPUR. INITI ALLY, THE ASSESSEE WAS REGISTERED AS A PARTNERSHIP FIRM AND LATER CONV ERTED INTO A PRIVATE LIMITED COMPANY ON 12.4.2006 UNDER THE PROVISIONS O F COMPANIES ACT, 1956. THE ASSESSEE HAS FILED REGULAR RETURNS OF IN COME FOR THE RESPECTIVE ASSESSMENT YEARS U/S 139(1) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). A SEARCH AND SE IZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED IN THE CASE OF M/S. MAHAMA RUTHI LOGISTICS PVT. LTD., VISAKHAPATNAM ON 4.2.2010. CONSEQUENT TO SEAR CH, THE CASE OF THE ASSESSEE WAS CENTRALISED TO DCIT, CENTRAL CIRCLE, V IJAYAWADA. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/S 153A/153C OF THE ACT AND REQUESTED ASSESSEE TO FILE THE RETURN OF INCOME FOR THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR IN WHICH THE SEARCH TOOK PLACE. IN RESPONSE TO NOTICE U/S 1 53A/153C OF THE ACT, THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE ASS ESSMENT YEAR 2004-05 TO 2010-11 ON 14.2.2011. THE CASE HAS BEEN SELECTE D FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2) AND 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED. IN RESPONSE TO SHOW CAUS E NOTICE, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TOME AND FURNISHED BOOKS OF ACCOUNTS AND OTHER DETAILS C ALLED FOR. THE A.O. ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 4 AFTER CONSIDERING THE DETAILS FURNISHED BY THE ASSE SSEE, COMPLETED ASSESSMENT U/S 143(3) R.W.S. 153A/153C OF THE ACT A ND MADE FOLLOWING ADDITIONS/DISALLOWANCES: A) DISALLOWANCE OF VARIOUS EXPENDITURE UNDER THE PR OVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS. B) DISALLOWED HIGHER CLAIM OF DEPRECIATION ON COMME RCIAL VEHICLES SUCH AS TIPPERS, MOBILE CRANES, REACH STACKERS AND FORK LIFT. C) UNEXPLAINED INCOME AND EXPENDITURE OF BRANCH OFF ICES. D) DISALLOWANCE OF BAD DEBTS. E) AD-HAC ADDITION U/S 132(4) OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE AS SESSEE HAS MADE ELABORATE WRITTEN SUBMISSIONS ON EACH AND EVERY ITE M OF ADDITIONS/DISALLOWANCE MADE BY THE A.O. THE CIT (A ) AFTER CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSESSEE PARTLY A LLOWED THE APPEALS FILED BY THE ASSESSEE FOR ALL THE ASSESSMENT YEARS. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. THE REVENUE HAS RAISED COMMON GROUNDS FOR ALL TH E ASSESSMENT YEARS. FROM THESE GROUNDS OF APPEAL, THE REVENUE HA S AGITATED FIVE ISSUES I.E. (1) DELETION OF DISALLOWANCE OF EXPENDI TURE U/S 40(A)(IA) OF THE ACT. (2) DELETION OF BAD DEBTS (3) DELETION OF DISALLOWANCE OF HIGHER ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 5 RATE OF DEPRECIATION ON COMMERCIAL VEHICLES LIKE TI PPERS, MOBILE CRANES, FORKLIFTS AND REACH STACKERS. (4) DELETION OF UNEXP LAINED EXPENDITURES OF BRANCH OFFICES (5) DELETION OF AD-HOC ADDITIONS MAD E U/S 132(4) OF THE ACT. 5. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS DISALLOWANCE OF EXPENDITURE UNDER THE PROVISIONS OF SECTION 40(A )(IA) OF THE ACT. THE FACTS RELATING TO DISALLOWANCE OF EXPENDITURE U/S 4 0(A)(IA) OF THE ACT ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE A.O. NOTICED THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON TRANSPORTATION CHARGES, HANDLING CHARGES, HIRE CHARGES AND OTHER CHARGES UNDER THE R ESPECTIVE TDS PROVISIONS. THEREFORE, ISSUED A SHOW CAUSE NOTICE A ND ASKED TO EXPLAIN WHY THE EXPENDITURE SHALL NOT BE DISALLOWED UNDER T HE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF T DS. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT IT H AS DEDUCTED TDS ON TRANSPORTATION CHARGES, HANDLING CHARGES AND HIRE C HARGES WHEREVER APPLICABLE IN ACCORDANCE WITH THE RESPECTIVE TDS PR OVISIONS, HOWEVER, WHEREVER TDS PROVISIONS ARE NOT APPLICABLE, THE SAM E IS NOT COVERED UNDER THE PROVISIONS OF TDS. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS COMPLIED WITH THE TDS PROVISIONS AND FILED THE NECE SSARY TDS RETURNS, THEREFORE, NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA ) OF THE ACT. THE A.O. AFTER CONSIDERING THE EXPLANATIONS FURNISHED B Y THE ASSESSEE HELD ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 6 THAT THE ASSESSEE COMPANY FAILED TO DEDUCT TAX AT S OURCE IN THE CASE OF EXPENDITURE CLAIMED UNDER THE HEAD HANDLING CHARGES , TRANSPORTATION CHARGES AND HIRE CHARGES. THE ASSESSEE HAS DEFAULTE D IN DEDUCTING TDS ON AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTO R FOR CARRYING OUT THE WORK OF TRANSPORTATION, WATCH AND WARD SERVICES AND ALSO HANDLING CHARGES, THEREFORE, IN VIEW OF THE PROVISIONS OF SE CTION 40(A)(IA) OF THE ACT, DISALLOWED THE AMOUNT FOR NON DEDUCTION OF TDS . THE A.O. WAS OF THE OPINION THAT THE ASSESSEE OUGHT TO HAVE DEDUCTE D TDS ON THESE EXPENSES, HOWEVER FAILED TO DEDUCT TDS UNDER THE PR OVISIONS OF ACT, THEREFORE, THE EXPENDITURE CANNOT BE ALLOWED WHILE COMPUTING THE INCOME FROM PROFITS & GAINS OF BUSINESS OR PROFESSI ON. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAS COMPLIED WIT H THE TDS PROVISIONS WHEREVER APPLICABLE. THE ASSESSEE FURTHER CONTENDED THAT THE EXPENDITURE INCURRED UNDER THE HEAD TRANSPORTATION CHARGES, HANDLING CHARGES AND HIRE CHARGES ARE INCURRED AND PAID DUR ING THE SAME FINANCIAL YEAR. THEREFORE, IN VIEW OF THE SPECIAL BENCH DECISION OF ITAT, VISAKHAPATNAM IN THE CASE OF M/S. MERLYN SHIPPING A ND TRANSPORTERS (2012) 136 ITD 23, NO DISALLOWANCE CAN BE MADE FOR NON-DEDUCTION OF TDS, IF THE EXPENDITURE IS PAID WITHIN THE FINANCIA L YEAR. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE A.O. DISALLOWED EXPENDITUR ES UNDER THE ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 7 PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, FOR THE REASON THAT THE ASSESSEE HAS FAILED TO DEDUCT TDS UNDER RESPECTIVE TDS PROVISIONS. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS NOT C OMPLIED WITH THE PROVISIONS OF TDS. THEREFORE, IN VIEW OF CLEAR PROV ISIONS OF SECTION 40(A)(IA) OF THE ACT, DEDUCTIONS CANNOT BE ALLOWED FOR FAILURE TO DEDUCT TDS. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAS COMPLIED WITH THE TDS PROVISIONS, WHEREVER APPLICABLE. THE ASSESSEE F URTHER CONTENDED THAT THE EXPENDITURE INCURRED UNDER THESE HEADS HAS BEEN FULLY PAID DURING THE SAME FINANCIAL YEAR, THEREFORE, NO DISAL LOWANCE CAN BE MADE FOR NON-DEDUCTION OF TDS, IN CASE THE EXPENDITURE H AS BEEN PAID DURING THE SAME FINANCIAL YEAR. WE FIND FORCE IN THE ARGUM ENTS OF THE ASSESSEE FOR THE REASON THAT ANY EXPENDITURE INCURRED ON WHI CH TDS HAS NOT BEEN DEDUCTED, BUT THE SAME HAS BEEN PAID DURING THE SAM E FINANCIAL YEAR, NO DISALLOWANCE CAN BE MADE UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THIS VIEW WAS UPHELD BY THE COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF M/S. MERILYN SHIPPING AND TRANSPORTERS VS. ACIT (SUPRA), WHEREIN THE COORDINATE BENCH HELD THAT NO DISALLOWANCE CAN BE MADE UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF T HE ACT, IF THE AMOUNTS HAVE ALREADY BEEN PAID DURING THE SAME FINANCIAL YE AR. 7. THE LD. D.R., WHILE ARGUING THE CASE SUBMITTED T HAT THE HONBLE A.P. HIGH COURT HAS SUSPENDED THE OPERATION OF SPEC IAL BENCH DECISION ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 8 OF MERILYN SHIPPING & TRANSPORTERS VS. ACIT. SINCE, THE HONBLE HIGH COURT ADMITTED THE APPEAL FILED BY THE REVENUE, THE DEPARTMENT IS NOT FOLLOWING THE DECISION OF ITAT, AND HENCE, DISALLOW ANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT, WHERE THE ASSESSEE HAS FAILED TO DEDUCT TDS UNDER THE RESPECTIVE PROVISIONS OF THE ACT. WE HAVE CONSI DERED THE ARGUMENTS OF THE LD. D.R. IN THE LIGHT OF THE FACTS OF THE HO NBLE A.P. HIGH COURT, WHICH HAS SUSPENDED THE OPERATION OF SPECIAL BENCH DECISION OF MERILYN SHIPPING & TRANSPORTERS VS. ACIT AND FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF MUKUNDARA ENGINEERS & CONTRACTORS VS. ACIT, HAS CONSIDERED THE ISSUE AND AFTER CONSIDERIN G THE REVENUE OBJECTION WITH REGARD TO THE SPECIAL BENCH DECISION OF MERILYN SHIPPING & TRANSPORTERS AND ALSO CONSIDERING THE RATIO OF DECI SION OF HONBLE A.P. HIGH COURT, IN THE CASE OF JANAPRIYA ENGINEERING SY NDICATE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTI ON OF THE ORDER IS REPRODUCED HEREUNDER: WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. CONSISTENT WITH THE VIEW TAKEN BY THE ITAT SPECIAL BENCH VISAKHAPATNAM AND ALSO IN THE LIGHT OF THE VI EW EXPRESSED BY THE HONBLE A.P. HIGH COURT IN THE CASE OF JANAP RIYA ENGINEERING SYNDICATE, WE ARE OF THE OPINION THAT THE PROVISION S OF SECTION 40A(IA) OF THE ACT CANNOT BE MADE APPLICABLE IN RES PECT OF THE AMOUNTS ALREADY PAID BEFORE 31 ST MARCH. IN OTHER WORDS, THE A.O. IS DIRECTED TO RESTRICT THE DISALLOWANCE TO THE AMO UNTS PAYABLE AFTER 31 ST MARCH. WITH THESE OBSERVATIONS, GROUND NO.3 OF TH E ASSESSEE IS TREATED AS PARTLY ALLOWED. ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 9 8. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS FU RNISHED BY THE ASSESSEE AND ALSO FOLLOWING THE COORDINATE BENCH DE CISION OF ITAT, VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRA NSPORTERS VS. ACIT (SUPRA), HELD THAT NO DISALLOWANCE CAN BE MADE UNDE R THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, IF EXPENDITURE INCURR ED IS ALREADY PAID DURING THE SAME FINANCIAL YEAR. HOWEVER, THE CIT(A) HAS SET ASIDE THE ISSUE TO THE FILE OF THE A.O. AND DIRECTED THE A.O. TO EXAMINE THE ISSUE WITH REFERENCE TO PAID AND PAYABLE. IN CASE THE EXP ENDITURE INCURRED UNDER THESE HEADS IS PAID DURING THE SAME FINANCIAL YEAR, THEN NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT. IN VIEW OF THE CLEAR FACTUAL POSITION RECORDED BY THE CIT(A) AND ALSO LE GAL POSITION CLARIFIED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CAS E OF M/S. MERILYN SHIPPING & TRANSPORTERS (SUPRA), WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY HELD THAT NO DISALLOWANCE CAN BE MADE, IF T HE EXPENDITURE INCURRED IS PAID DURING THE SAME FINANCIAL YEAR EVE N THOUGH NO TDS HAS BEEN DEDUCTED. WE DO NOT SEE ANY REASON TO INTERFER E WITH THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPHELD THE ORDER OF CIT(A) AND REJECT THE GROUND RAISED BY THE REVENUE. 9. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N IS DISALLOWANCE OF BAD DEBTS CLAIM. THE ASSESSEE HAS MADE A CLAIM O F BAD DEBTS OF ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 10 RS.7,05,463/-. THE ASSESSEE CONTENDED THAT THE ENTI RE AMOUNT REPRESENTS BILLS RAISED IN EARLIER YEARS AND ACCOUN TED FOR AS INCOME IN THE BOOKS OF ACCOUNTS. THE A.O. DISALLOWED THE BAD DEBT BY HOLDING THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE INCOME PE RTAINS TO CLAIM OF BAD DEBT HAS BEEN OFFERED TO TAX IN THE PRECEDING YEARS . THE A.O. FURTHER WAS OF THE OPINION THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE DEBT HAS BECOME BAD. IT IS THE CONTENTION OF THE ASSESS EE THAT IT HAS CLAIMED THE BAD DEBT AND WRITTEN OFF THE DEBT IN THE BOOKS OF ACCOUNTS. ONCE THE DEBT IS WRITTEN OFF IN THE BOOKS OF ACCOUNTS, NO NE ED TO PROVE THAT THE DEBT HAS BECOME BAD IN THE YEAR IN WHICH THE CLAIM IS MADE. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REAS ON THAT IN VIEW OF THE CLEAR PROVISIONS OF SECTION 36(1)(VII) OF THE ACT, ONCE THE ASSESSEE WRITTEN OFF DEBT AS IRRECOVERABLE, NEED NOT TO PROV E THAT THE DEBT HAS BECOME BAD. THE ONLY REQUIREMENT IS THAT IT NEEDS T O WRITE OFF THE DEBT IN THE BOOKS OF ACCOUNTS. THE CIT(A) AFTER CONSIDER ING THE EXPLANATIONS FURNISHED BY THE ASSESSEE, SET ASIDE THE ISSUE TO T HE FILE OF THE A.O. AND DIRECT THE A.O. TO EXAMINE WHETHER THE BAD DEBT CLA IM MADE BY THE ASSESSEE IS PART OF REVENUE RECEIPTS IN THE EARLIER YEARS. IN CASE THE SAME IS OFFERED TO TAX IN THE EARLIER YEARS, THEN C LAIM MADE BY THE ASSESSEE TOWARDS BAD DEBT SHOULD BE ALLOWED. THE CI T(A) HAS RIGHTLY DECIDED THE ISSUE. WE DO NOT SEE ANY ERROR OR INFIR MITY IN THE ORDER ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 11 PASSED BY THE LD. CIT(A). HENCE, WE INCLINED TO UP HELD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE REVENUE. 10. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS DISALLOWANCE OF HIGHER DEPRECIATION CLAIM IN RESPECT OF COMMERCI AL VEHICLES SUCH AS REACH STACKERS, MOBILE CRANES AND FORKLIFTS. THE FA CTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS INVOLVED IN THE BUSI NESS OF TRANSPORTATION AND HANDLING OF GOODS AS CONSIGNMENT AGENT FOR RINL , CONCOR, IC, DCS AND CFS AND ALSO C & F AGENT FOR OTHER PARTIES. THE ASSESSEE HAS USED THE COMMERCIAL VEHICLES SUCH AS TIPPERS, REACH STACKERS, MOBILE CRANES AND FORKLIFTS IN THE BUSINESS OF HANDLING AN D TRANSPORT OF MATERIALS FROM STOCK YARDS TO WAGONS AND CONTAINERS . THE ASSESSEE HAS CLAIMED DEPRECIATION AS PER ENTRY III(3)(II) OF PAR T A OF NEW APPENDIX-1 OF INCOME TAX RULES 1962, WHICH IS APPLICABLE TO CO MMERCIAL AND NEW COMMERCIAL VEHICLE USED IN THE BUSINESS OF RUNNING THEM ON HIRE. THE ASSESSEE CLAIMS THAT IT OWNS THE VEHICLES AND OPERA TES THE VEHICLE IN ITS BUSINESS OF TRANSPORT, HANDLING AND CLEARING AND FO RWARDING AND ALSO IN SOME TIMES IT GIVES THE VEHICLES ON HIRE. THE ASSES SEE INVOLVED IN THE BUSINESS OF HANDLING AND TRANSPORTATION OF GOODS IN RESPECT OF CONTRACTS UNDERTAKEN BY IT WITH M/S. RINL AND OTHER COMPANIES . THE WORK INVOLVES TRANSPORTATION OF GOODS FROM STOCK YARDS T O CONTAINERS LOADING AND UNLOADING TO CONTAINERS, ETC. THESE COMMERCIAL VEHICLES SUCH AS ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 12 REACH STAKERS, MOBILE CRANES AND FORK LIFTS ARE USE D MAINLY FOR THE PURPOSE OF LOADING AND UNLOADING AND TRANSPORTATION OF GOODS TO THE CONTAINERS. 11. THE A.O. DISALLOWED THE CLAIM OF HIGHER RATE OF DEPRECIATION FOR THE REASON THAT THE ASSESSEE MAIN BUSINESS IS NOT HIRIN G OF VEHICLES. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE IS IN TO TH E BUSINESS OF HANDLING AND TRANSPORTATION OF GOODS AND THE PROCESS OF TRAN SPORTATION IS INCIDENTAL TO COMPOSITE WORKS CONTRACT UNDERTAKEN B Y THE ASSESSEE. THE HIGHER RATE OF DEPRECIATION PRESCRIBED UNDER THE IN COME TAX ACT IS APPLICABLE TO ASSESSES, WHERE THEY ARE INVOLVED IN THE BUSINESS OF RUNNING THEM ON HIRE. THE A.O. FURTHER OBSERVED TH AT ON PERUSAL OF THE CONTRACT AGREEMENT ENTERED INTO BY THE ASSESSEE WIT H M/S. RINL AND OTHERS, THE MAIN WORK INVOLVED IS CONTRACT FOR HAND LING AND STORAGE OF IRON AND STEEL MATERIALS OF RINL, VISAKHAPATNAM STE EL PLANT AT NAGPUR ON CONSIGNMENT AGENCY BASIS. IN ADDITION TO TRANSPO RTATION OF GOODS, THE ASSESSEE IS CARRYING OUT VARIOUS ACTIVITIES LIKE RE CEIPT AND CLEARING OF CONSIGNMENTS, UNLOADING INCLUDING HAND SHUNTING IN CASE OF WAGONS, LIFTING/LOADING INTO TRUCKS AND CARRYING/TRANSPORTA TION TO STOCK YARDS/STAKING POINT. THE ASSESSEE HAS BEEN PAID SEP ARATELY FOR EACH AND EVERY ACTIVITY UNDERTAKEN BY IT. ON PERSUAL OF THE AGREEMENT, IT IS CLEAR THAT NOWHERE THE CONSIDERATION IS PAID FOR TRANSPOR TATION OF GOODS. THE ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 13 TRANSPORTATION OF GOODS IS INCIDENTAL TO MAIN ACTIV ITY UNDERTAKEN BY THE ASSESSEE WHICH IS STORAGE AND HANDLING OF GOODS. TH E A.O. HAS GIVEN ELABORATE DISCUSSION FOR COMING TO THE CONCLUSION T HAT THE ASSESSEE IS NOT INVOLVED IN THE BUSINESS OF HIRING COMMERCIAL V EHICLES. THE A.O. FURTHER OPINED THAT HIGHER DEPRECIATION FOR COMMERC IAL VEHICLES UNDER THE INCOME TAX ACT IS APPLICABLE TO THE ASSESSEE IN VOLVED IN THE BUSINESS OF RUNNING COMMERCIAL VEHICLES SUCH AS MOT OR BUSES, MOTOR LORRIES AND MOTOR TAXIES ON HIRE. THE ASSESSEE IS N OT INVOLVED IN THE BUSINESS OF HIRING OF COMMERCIAL VEHICLES, THEREFOR E, NOT ELIGIBLE FOR CLAIMING HIGHER DEPRECIATION AS PER ENTRY III(3)(II ) OF PART A OF NEW APPENDIX-1 OF INCOME TAX RULES 1962. WITH THESE OBS ERVATIONS DISALLOWED THE CLAIM OF HIGHER DEPRECIATION ON COMM ERCIAL VEHICLES. 12. THE LD. D.R. SUBMITTED THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM HIGHER RATE OF DEPRECIATION ON COMMERCIAL VEHICLES, AS THE ASSESSEE IS NOT INVOLVED IN THE BUSINESS OF RUNNING COMMERCIAL VEHICLES ON HIRE. THE D.R. FURTHER SUBMITTED THAT HIGHER RATE OF DEPR ECIATION IS ALLOWABLE TO THOSE ASSESSEES WHO ARE INVOLVED IN THE BUSINESS OF HIRING OF COMMERCIAL VEHICLES. THE ASSESSEE USED THE VEHICLES IN ITS BUSINESS OF HANDLING AND STORAGE OF GOODS, THEREFORE, IT CANNOT BE HELD THAT THE MAIN ACTIVITY OF THE ASSESSEE IS HIRING OF COMMERCI AL VEHICLES, THEREBY IT ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 14 IS ELIGIBLE FOR HIGHER DEPRECIATION. THE D.R. FURTH ER SUBMITTED THAT THE HIGHER RATE OF DEPRECIATION IN RESPECT OF TIPPERS, MOBILE CRANES, REACH STACKERS AND FORKLIFTS IS AVAILABLE, WHEN THE SAME ARE USED IN THE BUSINESS OF RUNNING THEM ON HIRE. THE D.R. FURTHER ARGUED THAT WHETHER ASSESSEE IS ELIGIBLE TO CLAIM HIGHER DEPRECIATION O R NOT IS TO BE DECIDED BASED ON THE ACTIVITY UNDERTAKEN BY THE ASSESSEE. IN THE PRESENT CASE ON HAND, THE DOMINANT ACTIVITY OF THE ASSESSEE IS T O STORAGE AND HANDLING GOODS AS A CONSIGNMENT AGENT FOR VARIOUS C LIENTS. THE ASSESSEE NEITHER INVOLVED IN THE BUSINESS OF TRANSPORTATION OF GOODS NOR IN THE BUSINESS OF RUNNING THEM ON HIRE. THE TRANSPORTATIO N OF GOODS IS INCIDENTAL TO THE MAIN CONTRACT UNDERTAKEN BY THE A SSESSEE I.E. STORAGE AND HANDLING OF GOODS. ONCE COMMERCIAL VEHICLES ARE USED IN ASSESSEES OWN BUSINESS OF STORAGE AND HANDLING OF GOODS, IT C ANNOT BE CONSIDERED THAT THE ASSESSEE IS INVOLVED IN THE BUSINESS OF HI RING OF VEHICLES, THEREBY ELIGIBLE FOR HIGHER CLAIM OF DEPRECIATION. 13. THE LD. A.R. FOR THE ASSESSEE, ON THE OTHER HAN D STRONGLY SUPPORTED THE ORDER OF CIT(A). THE A.R. FURTHER ARG UED THAT THE A.O. HAS NOT DISPUTED THE FACT THAT THE ASSESSEE HAS OWNED C OMMERCIAL VEHICLES AND PUT THEM ON THE BUSINESS OF TRANSPORTATION OF G OODS. THE A.O. DISPUTED THE FACT THAT THE ASSESSEE IS NEITHER INVO LVED IN THE BUSINESS OF TRANSPORTATION OF GOODS NOR HIRING OF VEHICLES. THE FACTS REMAINED THAT ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 15 THE ISSUE HAS ALREADY BEEN CONSIDERED BY THE HONBL E ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 TO 2006-0 7, WHEREIN THE ITAT CLEARLY HELD THAT THE ASSESSEE IS IN TO THE BU SINESS OF TRANSPORTATION OF GOODS, HOWEVER, THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE A.O. FOR THE LIMITED PURPOSE ON VERIFICATION OF TECHNICA LITIES OF THE COMMERCIAL VEHICLES FOR HIGHER CLAIM OF DEPRECIATION. THEREFOR E, THE A.O. WAS NOT CORRECT IN HOLDING THAT THE ASSESSEE IS NOT IN THE BUSINESS OF TRANSPORTATION OF GOODS THEREBY NOT ELIGIBLE FOR HI GHER CLAIM OF DEPRECIATION. THE A.R. FURTHER SUBMITTED THAT THE A SSESSEES MAIN ACTIVITY IS TRANSPORTATION AND HANDLING GOODS BELON GING TO THE THIRD PARTIES. IN THE PROCESS, THE ASSESSEE HAS EMPLOYED COMMERCIAL VEHICLES TO TRANSPORT THE GOODS FROM STOCK YARDS TO STOCKING POINT FOR LOADING AND UNLOADING OF THE GOODS TO CONTAINERS. THESE COMMERC IAL VEHICLES SUCH AS MOBILE CRANES, REACH STACKERS AND FORKLIFTS ARE USE D FOR THE PURPOSE OF MOVEMENT OF GOODS FROM ONE PLACE TO ANOTHER PLACE A ND ALSO LOADING THE GOODS TO CONTAINERS AND UNLOADING THE GOODS FRO M CONTAINERS. THE MAIN ACTIVITY OF THE ASSESSEE IS TO TRANSPORT GOODS AND THESE VEHICLES ARE USED FOR THE PURPOSE OF TRANSPORTATION OF GOODS FROM ONE PLACE TO ANOTHER PLACE. ONCE THE VEHICLES ARE USED FOR TRANS PORTATION OF GOODS, THE ASSESSEE IS ELIGIBLE FOR CLAIMING HIGHER DEPREC IATION. ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 16 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE FACTUAL MATRIX OF THE CAS E IS THAT THE ASSESSEE IS INVOLVED IN THE BUSINESS OF TRANSPORTATION AND H ANDLING GOODS AS CONSIGNMENT AGENT FOR VARIOUS COMPANIES. IN THE PR OCESS, THE ASSESSEE HAS EMPLOYED COMMERCIAL VEHICLES SUCH AS TIPPERS, M OBILE CRANES, REACH STACKERS AND FORKLIFTS FOR THE PURPOSE OF TRANSPORT ATION AND LOADING AND UNLOADING GOODS FROM ONE PLACE TO ANOTHER PLACE. T HE DOMINANT ACTIVITY OF THE ASSESSEE IS TRANSPORTATION AND HANDLING GOOD S AT VARIOUS PLACES. THE ASSESSEE NEEDS TO ESTABLISH A STOCK YARD, WHERE THE GOODS BELONGING TO OTHER COMPANIES ARE COMES TO THE STOCK YARD. THE ASSESSEE MAIN ACTIVITY IS HANDLING AND TRANSPORTATION OF GOO DS FROM STOCK YARDS TO CONTAINERS. THE A.O. DISALLOWED THE CLAIM OF HIGHER DEPRECIATION FOR THE REASON THAT THE MAIN ACTIVITY OF THE ASSESSEE IS NO T TRANSPORTATION OF GOODS OR HIRING OF VEHICLES. THE ASSESSEE IS INVOLV ED IN THE BUSINESS OF STORAGE AND HANDLING OF GOODS AND THE TRANSPORTATIO N ACTIVITY IS INCIDENTAL TO THE COMPOSITE CONTRACT UNDERTAKEN BY THE ASSESSEE. THE A.O. FURTHER HELD THAT HIGHER DEPRECIATION FOR COMM ERCIAL VEHICLE, UNDER CLAUSE III(3)(II) OF PART-A OF NEW APPENDIX-1 OF IN COME TAX RULES IS APPLICABLE TO THOSE ASSESSEES WHO ARE ENGAGED IN TH E BUSINESS OF RUNNING THEM ON HIRE. BUT, IF THE COMMERCIAL VEHIC LES ARE USED IN THE ASSESSEES OWN BUSINESS WHETHER OR NOT THE SAME ARE USED FOR ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 17 TRANSPORTATION OF GOODS, THEN ASSESSEE IS NOT ELIGI BLE TO CLAIM HIGHER RATE OF DEPRECIATION. THE A.O. HAS GIVEN ELABORATE DISCU SSION TO COME TO THE CONCLUSION THAT THE ASSESSEE IS NOT INVOLVED IN THE BUSINESS OF TRANSPORTATION OF GOODS. IT IS THE CONTENTION OF TH E ASSESSEE THAT ITS DOMINANT ACTIVITY IS TRANSPORTATION AND HANDLING GO ODS BELONGING TO OTHERS. THE ASSESSEE HANDLING AND TRANSPORTS GOODS FROM STOCK YARDS TO CONTAINERS. IT IS FURTHER CONTENDED THAT THESE COMM ERCIAL VEHICLES ARE USED IN THE BUSINESS OF TRANSPORTATION OF GOODS, TH EREFORE, IT IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION. 15. THERE IS NO DISPUTE WITH REGARD TO THE OWNERSHI P AND RATE OF DEPRECIATION ON THESE COMMERCIAL VEHICLES. THE A.O. HAS NOT DOUBTED THE OWNERSHIP OF VEHICLES OWNED BY THE ASSESSEE AND ALSO THE RATE OF DEPRECIATION ELIGIBLE FOR THESE COMMERCIAL VEHICLES . THE ONLY DISPUTE IS THAT WHETHER THE ASSESSEE MAIN ACTIVITY IS TRANSPOR TATION OF GOODS WHICH IS ELIGIBLE FOR CLAIMING HIGHER RATE OF DEPRECIATIO N OR NOT. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE IS NOT IN THE BUSI NESS OF RUNNING THEM ON HIRE AND ALSO USED THEM IN THE BUSIHNESS OF TRAN SPORTATION OF GOODS ON HIRE. THE ASSESSING OFFICER HAS DISCUSSED AT LEN GTH THE NATURE AND METHOD OF CONDUCTING THE BUSINESS AND ANALYSING THE CONTRACTS ENTERED INTO WITH THE PARTIES. AT THE END OF THE DISCUSSIO N, THE A.O. ACCEPTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRA NSPORTATION OF GOODS ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 18 OF OTHERS ON HIRE. THE ONLY OBJECTION RAISED BY TH E A.O. IS THAT THE ASSESSEE MAIN BUSINESS ACTIVITY IS NOT TRANSPORTATI ON OF GOODS. THE ASSESSEE IS INVOLVED IN THE BUSINESS OF STORAGE AND HANDLING OF GOODS AND IN THE PROCESS THE TRANSPORTATION OF GOODS IS I NCIDENTAL TO MAIN ACTIVITY OF HANDLING AND STORAGE OF GOODS, THEREFOR E, IT CANNOT BE CONSIDERED THAT THE ACTIVITY UNDERTAKEN BY THE ASSE SSEE IS HIRING OF COMMERCIAL VEHICLES. 16. THE A.O. HAS DISCUSSED AT LENGTH THE TECHNICALI TIES AND FUNCTIONS OF THESE COMMERCIAL VEHICLES AND HOW THESE VEHICLES AR E USED IN THE BUSINESS OF THE ASSESSEE. ACCORDING TO THE A.O., RE ACH STACKERS IS BASICALLY A CONTAINER HANDLER AND USED FOR LOADING CONTAINERS EITHER FROM A RAILWAY WAGON OR A TRAILER LORRY AND THEREAFTER S TACKING THE SAME FROM ONE CONTAINER TO ANOTHER CONTAINER OR FROM ONE PLAC E TO ANOTHER PLACE. THE REACH STACKERS ARE MOUNTED ON A MOVING ASSEMBLY HAVING WHEELS/TYRES AND ITS MECHANICAL COMPONENTS ARE DESI GNED FOR HEAVY DUTY WORK. IT HAS A HYDRAULIC MOUNTED LIFTING BOOM TO WHICH A SEPARATOR IS ALSO ATTACHED. HYDRAULIC CYLINDERS INSIDE THE BO OM WOULD CARRY THE LIFTING AND EXTENION OF FUNCTIONS OF THE BOOM. ON A WHOLE, IT IS HEAVY DUTY MACHINERY EQUIPMENT WHICH IS MOUNTED ON A MOVI NG ASSEMBLY. THOUGH ITS MOBILITY IS THAT OF A HEAVY VEHICLE, YET IT IS NOT SUITABLE TO BE ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 19 USED IN PUBLIC PLACES LIKE ROAD/RAILWAYS ETC. SIMIL ARLY, IN RESPECT OF MOBILE CRANES, THE A.O. OPINED THAT IT ALSO PERFORM S ALMOST SIMILAR FUNCTIONS AS THAT OF REACH STACKERS, BUT ARE NOT ME ANT FOR HEAVY CAPACITY. THE STANDARD EQUIPMENT OF A MOBILE CRANE HAVE A FACILITY FOR LIFTING EMPTY CONTAINERS AND OTHER CARGOS OF WEIGHT NOT EXCEEDING 10 TONNES. ENTIRE ASSEMBLY OF LIFTING THE CARGO/EMPTY CONTAINERS AND MOVING THE SAME FROM ONE PLACE TO ANOTHER IS WHEEL MOUNTED. THE LIFTING AND MOVING ASSEMBLY IS HYDRAULIC AND MECHAN ICAL POWERED. THE MOBILE CRANE IS HEAVY DUTY MACHINERY EQUIPMENT MOUN TED ON WHEELS AND THEY ARE REGISTERED WITH THE RTO. AS FAR AS FO RK LIFTS ARE CONCERNED, THE A.O. OPINED THAT THEY ARE SIMILAR VEHICLES WITH CAPACITY FOR LIFTING AND MOVING CARGO UP TO 10 TONNES. THE FORKLIFTS ARE US ED FOR TRANSPORTING THE CARGO FROM ONE PLACE TO ANOTHER PLACE IN THE YA RD. IT IS HYDRAULICALLY AND MECHANICALLY POWERED AND ALSO HEAVY DUTY EQUIPM ENT MOUNTED ON WHEELS. THE A.O. HAS NOT DISPUTED THE FACT THAT THE SE COMMERCIAL VEHICLES ARE EXCLUSIVELY USED FOR THE PURPOSE OF TR ANSPORTATION AND LOADING AND UNLOADING OF GOODS. THE A.O. FURTHER OB SERVED THAT THESE CATEGORIES OF VEHICLES ARE MEANT FOR SPECIAL PURPOS E AND MOSTLY USED IN THE WEARHOUSES OF THE PRINCIPAL AND CONFINED TO SUC H HANDLING AND TRANSPORTATION OF CARGO WITHIN THAT AREA. FROM THE DISCUSSIONS, ONE THING IS CLEAR THAT THESE VEHICLES ARE OPERATED WITH HYDR AULICAL AND MECHANICAL ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 20 POWER AND ALSO MOUNTED ON WHEELS. THE A.O. ALSO HEL D THAT THESE VEHICLES ARE REGISTERED WITH RTO, HOWEVER, DISPUTED THE FACT THAT THOUGH THESE VEHICLES ARE USED IN THE BUSINESS OF TRANSPOR TATION OF GOODS, THE ASSESSEE MAIN ACTIVITY IS NOT TRANSPORTATION OF GOO DS. 17. THE QUESTION THAT NEEDS TO BE ANSWERED IS WHETH ER HIGHER CLAIM OF DEPRECIATION CAN BE ALLOWED TO COMMERCIAL VEHICLES WHICH ARE USED IN ASSESSEE OWN BUSINESS OF TRANSPORTATION OF GOODS. T HE FACTS WITH REGARD TO THE NATURE OF VEHICLES AND ITS FUNCTIONS ARE NOT DISPUTED BY THE A.O. THE ONLY DISPUTE IS THE NATURE OF ACTIVITY UNDERTAK EN BY THE ASSESSEE. ON FACTS AND CIRCUMSTANCES OF THE ASSESSEES NATURE OF BUSINESS, WHETHER THE ASSESSEE IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION AS PER CLAUSE III(3)(II) OF PART-A OF NEW APPENDIX-1 OF I. T. RULES. THE INCOME TAX ACT PRESCRIBED VARIOUS RATE OF DEPRECIATION FOR VARIOUS ASSETS BASED ON THE FUNCTIONS OF EACH ASSET. AS PER THE SCHEDULE OF DEPRECIATION, NORMAL VEHICLES ARE COMING UNDER THE GENERAL CATEGO RY OF PLANT AND MACHINERY AND HENCE ELIGIBLE FOR NORMAL RATE OF DEP RECIATION. SIMILARLY, THE INCOME TAX ACT PRESCRIBES HIGHER RATE OF DEPREC IATION FOR COMMERCIAL VEHICLES WHICH ARE USED IN THE BUSINESS OF RUNNING THEM OR HIRE OR TRANSPORTATION OF GOODS. AS PER THE SCHEDULE OF DEP RECIATION, COMMERCIAL VEHICLES WHICH ARE PURCHASED IN A SPECIFIED PERIOD ARE ELIGIBLE FOR HIGHER ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 21 RATE OF DEPRECIATION, IF THEY ARE PUT IN THE BUSINE SS OF RUNNING THEM ON HIRE. 18. IN THE PRESENT CASE ON HAND, THE ASSESSEE IS IN TO THE BUSIENSS OF TRANSPORTATION AND HANDLING OF GOODS BELONGING TO O THERS. THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH RINL AND OTHERS TO TRANSPORT AND HANDLING GOODS AS A CONSIGNMENT AGENT. THE MAIN ACT IVITY OF THE ASSESSEE IS TO TRANSPORT GOODS FROM STOCK YARDS TO CONTAINERS LOADING AND UNLOADING ETC. IN THE PROCESS, THE ASSESSEE HA S USED COMMERCIAL VEHICLES SUCH AS TIPPERS, MOBILE CRANES, REACH STAC KERS AND FORKLIFTS. THESE COMMERCIAL VEHICLES ARE CONSIDERED AS HEAVY D UTY VEHICLES AND ALSO REGISTERED WITH THE RTO. THE ASSESSEE HAS USE D THESE VEHICLES IN ITS BUSINESS OF TRANSPORTATION OF GOODS. ON PERUSA L OF THE DETAILS FILED BY THE ASSESSEE, WE FIND THAT THE DOMINANT ACTIVITY OF THE ASSESSEE IS TO TRANSPORT GOODS FROM ONE PLACE TO ANOTHER PLACE. T HESE COMMERCIAL VEHICLES ARE USED IN THE BUSINESS OF TRANSPORTATION OF GOODS FROM ONE PLACE TO ANOTHER PLACE. THEREFORE, WE ARE OF THE VI EW THAT THESE COMMERCIAL VEHICLES ARE ELIGIBLE FOR HIGHER RATE OF DEPRECIATION AS PER CLAUSE III(3)(II) OF PART-A OF NEW APPENDIX-1 OF IN COME TAX RULES 1962. 19. THE ASSESING OFFICER DISALLOWED THE CLAIM ON TH E GROUND THAT THE ASSESSEE IS NOT IN THE BUSINESS OF RUNNING THEM ON HIRE. BUT, THE A.O. HAS NOT DISPUTED THE FACT THAT THE ASSESSEE IS INVO LVED IN THE BUSINESS OF ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 22 TRANSPORTATION OF GOODS. THE BUSINESS OF THE ASSESS EE IS TO PLACE THESE HEAVY EQUIPPED VEHICLES FOR HANDLING AND TRANSPORT OF CARGO AT STOCK YARDS/WEAR HOUSES ON BEHALF OF THE CLIENTS. THERE I S NO BAR AS PER LAW TO DENY HIGHER RATE OF DEPRECIATION, IF THE VEHICLES A RE NOT PLIED ON ROADS. WHAT IS REQUIRED TO BE SEEN IS WHETHER THESE VEHICLE S ARE USED FOR TRANSPORTING THE GOODS AS WELL AS FOR LOADING AND U NLOADING PURPOSES. ONE HAS TO EXAMINE AND CONSIDER THE NATURE OF RECEI PT IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF USAGE OF THESE VEHICLEWS . THE GOODS AND CONTAINERS HANDLED AND CARRIED BY THE ASSESSEE VEHI CLES ARE BELONGING TO THE CLIENTS SUCH AS M/S. RINL AND M/S. CONCUR ET C. AS PER THE TERMS AND CONDITIONS OF THE AGREEMENT, THE ASSESSEE PERFORMS THE FUNCTIONS AND RECEIVES THE CONSIDERATION WHICH IS P AID IN TERMS OF HIRE CHARGES AS WELL AS LOAD CHARGES. IN SOME CASES, CON TRACTS HAVE BEEN ENTERED INTO TO HANDLE THE CARGO BELONGING TO THE C LIENTS AND THE PAYMENTS HAVE BEEN RECEIVED ON THE BASIS OF THE WEI GHT OF THE CARGO. IN SOME CASES, THESE VEHICLES ARE EXCLUSIVELY HIRED TO CUSTOMERS AND PLACED AT THEIR DISPOSAL FOR SPECIFIED PERIOD OF TI ME. WHEN THE COMMERCIAL VEHICLES ARE USED IN THE BUSINESS OF TRA NSPORTATION OF GOODS AND ALSO IN THE BUSINESS OF RUNNING THEM ON HIRE TH E RATE OF WEAR AND TEAR IS MORE, ACCORDINGLY, THESE VEHICLES ARE ENTIT LED FOR HIGHER RATE OF DEPRECIATION. ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 23 20. THE ASSESSEE GETS RATES FOR HANDLING ACTIVITIES WHICH CONTAINS RATES FOR HANDLING OF CONTAINERS, TRANSPORTATION OF CONTA INERS FOR TRANSHIPMENT AND ROUND TRIP TRANSPORTATION OF CONTAINERS BOTH WA YS LOADED FOR FACTORY STUFFING/RESTUFFING. FROM THESE FACTS, IT CLEARLY D EMONSTRATED THAT THE PURPOSE AND USAGE OF THESE VEHICLES IS IN THE BUSIN ESS OF TRANSPORTATION AND HANDLING OF GOODS. THE RATES CAN BE CHARGED ON ANY BASIS EITHER IN TERMS OF TONNAGE OF GOODS HANDLED OR PER HOUR OF VE HICLES USED IN THE BUSINESS. WHAT IS IMPORTANT IS THAT THE DOMINANT ACT IVITY OF THE ASSESSEE. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE DOMINANT ACTIVITY OF TH E ASSESSEE IS TO TRANSPORTATION AND HANDLING GOODS BELONGING TO THIR D PARTIES. THE ASSESSEE HAS USED THESE COMMERCIAL VEHICLES FOR THE EXCLUSIVE PURPOSE OF TRANSPORTATION AND HANDLING AND ALSO LOADING AND UNLOADING OF GOODS TO THE CONTAINERS AND TIPPERS FOR ONWARD TRANSMISSI ON OF GOODS. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF GOODS BELONGS TO THIR D PARTIES. IN THE PROCESS IT HAS EMPLOYED COMMERCIAL VEHICLES FOR THE PURPOSE OF TRANSPORTATION OF GOODS AND LOADING AND UNLOADING O F GOODS FROM STOCK YARDS TO CONTAINERS OR STACKING POINTS. THEREFORE, AND HENCE, ELIGIBLE FOR HIGHER RATE OF DEPRECIATION AS PER CLAUSE III(3)(II ) OF PART-A OF NEW APPENDIX-1 OF INCOME TAX RULES 1962. ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 24 21. IT IS PERTINENT TO DISCUSS HERE THE CASE LAW R ELIED UPON BY THE ASSESSEE. THE ASSESSEE RELIED UPON THE DECISION OF HIGH COURT OF GUJARAT, IN THE CASE OF GUJCO CARRIERS VS. CIT (200 2) 256 ITR 50. THE HONBLE HIGH COURT, HELD THAT THE MOBILE CRANE WHIC H ADMITTEDLY WAS REGISTERED AS A HEAVY MOTOR VEHICLE UNDER THE MOTOR VEHICLES ACT AND THE RULES THEREUNDER CLEARLY FELL WITHIN THE EXPRES SION MOTOR LORRIES IN ENTRY 3-E(1A) OF THE TABLE IN APPENDIX 1 OF I.T. RU LES, SINCE IT WAS USED BY THE ASESSEE IN ITS BUSINESS OF RUNNING IT ON HIR E, THE ASSESSEE ENTITLED FOR HIGHER DEPRECIATION. THE RELEVANT PORTION OF TH E ORDER IS EXTRACTED BELOW: AS PER WEBSTER'S II NEW RIVER SIDE UNIVERSITY DICTI ONARY, THE WORD 'LORRY' IN THE MEANING RELEVANT TO THE PRESENT CONTEXT, WOU LD MEAN, 'A MOTOR TRUCK AS PER THE ENCYCLOPAEDIA BRITANNICA, TRUCK IS 'ALSO CALLED LORRY'. THUS, THE EXPRESSION 'MOTOR LORRIES' IN ENTRY III-E( 1A) OF APPENDIX I WOULD MEAN 'MOTOR TRUCKS'. LORRY OR TRUCK WOULD MEA N NOT ONLY ANY MOTOR VEHICLE DESIGNED TO CARRY FREIGHT OR GOODS BU T ALSO TO PERFORM SPECIAL SERVICES LIKE FIRE FIGHTING. FIRE ENGINE AL SO CALLED FIRE TRUCK IS A SELF- PROPELLED MOBILE PIECE OF EQUIPMENT USED IN FIRE-FI GHTING. THERE CAN BE OTHER SPECIAL SERVICES TO BE PERFORMED BY MOTOR VEH ICLES DESIGNED FOR SUCH SERVICES. THUS, A LORRY I.E., TRUCK ADAPTED OR DESIGNED TO CARRY A CRANE IS MEANT FOR SPECIAL SERVICES OF LIFTING LOAD , MOVING IT SIDE BY SIDE, ROTATING IT OR MOVING IT HORIZONTALLY. MOST INDUSTR IAL TRUCKS PERMIT MECHANIZED PICK-UP AND DEPOSIT OF THE LOADS, ELIMIN ATING MANUAL WORK IN LIFTING AS WELL AS TRANSPORTING. THE CRANE TRUCK IS A PORTABLE BOOM CRANE MOUNTED ON AN INDUSTRIAL TRUCK. IT WILL, THUS, BE CL EAR THAT MOTOR VEHICLES LIKE FIRE TRUCKS, FORK LIFT TRUCKS AND CRANE TRUCKS WHICH ARE DESIGNED FOR SPECIAL SERVICES FALL WITHIN THE CATEGORY OF 'MOTOR TRUCKS' (ALSO CALLED 'MOTOR LORRIES'). THE WORD 'CRANE' WHEN USED FOR AN INANIMATE OBJECT MEANS A MACHINE FOR MOVING HEAVY OBJECTS USUALLY BY SUSPENDING THEM FROM A PROJECTING ARM OR BEAM. CRANE IS ONE OF A DI VERSE GROUP OF MACHINES THAT NOT ONLY LIFT HEAVY OBJECTS BUT ALSO SHIFT THEM HORIZONTALLY. MOVABLE CRANES ARE MOUNTED OR RAILWAY CARS, MOTOR T RUCKS OR CHASSIS EQUIPPED WITH CATERPILLAR TREADS AND THE HOISTING M ACHINERY IS MOUNTED SO ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 25 AS TO COUNTERPOISE PART OF THE LOAD ON THE BOOM AND THEREBY, PREVENTING THE ENTIRE CRANE FROM OVERTURNING WHILE CARRYING TH E LOAD. THE FORK LIFT TRUCK, WIDELY USED FOR MOVING GOODS BETWEEN WAREHOU SE STORAGES AND SHIPPING VEHICLES, 'IS A HIGHLY MANOEUVRABLE CRANE ADAPTABLE TO HANDLING DRUMS, CRATES, OR LOADED SKIDS OR PALLETS.' A CRANE IS USUALLY TYPED ACCORDING TO ITS UNDERCARRIAGE. SOME OF THE CRANES WHICH UNDERCARRIAGE IS NOT A TRUCK ARE, 'CRAWLER CRANES' MOUNTED ON CONTIN UOUS TRACKS, THE 'RAIL OR LOCOMOTIVE CRANE' ON SPECIAL CHASSIS WITH FLANGED W HEELS FOR USE ON RAILWAY TRACKS AND 'FLOATING CRANE' ON A BARGE OR S COW. THEREFORE, SEARCH FOR THE ITEM 'CRANES' IN THE ENTRIES IN APPENDIX I WITHOUT KEEPING IN MIND THE NATURE OF EQUIPMENT, WAS BASED ON AN ERRONEOUS PREMISE. A CRANE MOUNTED ON A TRUCK IS A TRUCK CRANE WHICH IS A WELL KNOWN MACHINERY WHICH CAN EASILY MOVE OVER ROADS AND HIGHWAYS AND I S NOT A STATUTORY EQUIPMENT. THUS, A MOBILE CRANE MOUNTED ON A TRUCK CONSTITUTES A SINGLE UNIT KNOWN AS A 'TRUCK CRANE' WHICH IS ADAPTED FOR USE UPON ROADS FOR SPECIAL SERVICES. THE TRUCK ON WHICH THE CRANE IS M OUNTED IS CONSTRUCTED AND ADAPTED SPECIALLY TO CARRY THE CRANE. IN THE INS TANT CASE, TRUCK IS ADAPTED FOR USE SOLELY FOR CARRIAGE OF THE CRANE MO UNTED ON IT. THE MOUNTED CRANE IS ATTACHED TO THE TRUCK WHICH CARRIE S IT. THE TEST OF CARRYING GOODS SUCH AS POTATOES AND TOMATOES THAT R EQUIRE LOADING AND UNLOADING IN CONTEXT OF CARRIAGE OF FREIGHT WHEN TR ANSPORTED, AS WAS SUGGESTED ON BEHALF OF THE REVENUE, WILL NOT BE DEC ISIVE. UNLOADING, IN THE CONTEXT OF TRUCK CRANE WHERE THE CRANE REMAINS MOUNTED AND ATTACHED TO THE TRUCK WHEN CARRIED AND EVEN AT THE DESTINATION WHERE IT IS PUT TO USE IS NOT A RELEVANT FACTOR AT ALL. THOUGH NOT REQUIRED TO BE LOADED OR UNLOADED LIKE OTHER GOODS TRANSPORTED IN CARRIAG E OF FREIGHT, THE CRANE REMAINS FIXED, MOUNTED ON THE TRUCK WHICH HAS BEEN ADOPTED FOR USE SOLELY FOR ITS CARRIAGE AND SUCH TRUCK CRANE IS USE D FOR SPECIAL SERVICE OF LIFTING AND MOVING HEAVY OBJECTS. THIS IS WHY SUCH MOBILE CRANE IS REGISTERED AS A HEAVY MOTOR VEHICLE WHICH IS A HEAV Y GOODS VEHICLE AS DEFINED IN S. 2(16) OF THE MOTOR VEHICLES ACT. THE APPROACH OF THE TRIBUNAL AND THE AUTHORITIES BELOW IT THAT CRANES ARE NOT ME NTIONED SPECIFICALLY AS AN INDEPENDENT ITEM FALLING IN THE CATEGORIES FOR W HICH HIGHER DEPRECIATION ALLOWANCE AT THE RATE OF 40 PER CENT WHEN USED FOR HIRE AND AT 30 PER CENT WHEN NOT SO USED HAS BEEN PROVIDED AS AGAINST 10 PE R CENT OF MACHINERY IN GENERAL, AND THEREFORE, THEY SHOULD BE TREATED A S FALLING IN THE GENERAL CATEGORY OF MACHINERY, IS AN OVER-SIMPLIFICATION OF THE MATTER. THE APPROACH OF THE TRIBUNAL THAT THE PLEA TAKEN BY THE ASSESSEE THAT CRANE WAS AN INTEGRAL PART OF THE MOTOR VEHICLE ON WHICH IT IS MOUNTED REQUIRED ASCERTAINMENT OF FACTS AND FRESH INVESTIGATION, AMO UNTS TO IMPOSING A BURDEN ON A PERSON TO PROVE SOMETHING OF WHICH COUR T OR TRIBUNAL CAN TAKE JUDICIAL NOTICE. LACK OF EFFORT AND KNOWLEDGE SUFFICIENT FOR TAKING SUCH JUDICIAL NOTICE SHOULD NOT BE A BURDEN ON THE CITIZ ENS IN JUDICIAL PROCEEDINGS. AS PROVIDED BY S. 56 OF THE EVIDENCE A CT, NO FACT OF WHICH THE COURT WILL TAKE JUDICIAL NOTICE, NEED BE PROVED . THIS EQUALLY APPLIES TO THE TRIBUNALS WHICH ARE NOT IN FACT STRICTLY BOUND BY THE RULES OF EVIDENCE. THE MOBILE CRANE OF THE ASSESSEE WHICH ADMITTEDLY W AS REGISTERED AS A HEAVY MOTOR VEHICLE, WOULD FOR THE ABOVE REASONS, C LEARLY FALL WITHIN THE ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 26 EXPRESSION 'MOTOR LORRIES' (WHICH MEANS MOTOR TRUCK S) IN ENTRY III-E(1A) OF THE TABLE IN APPENDIX I UNDER R. 5 OF THE SAID RULES , SINCE IT WAS USED BY THE ASSESSEE IN ITS BUSINESS OF RUNNING THE CRANE O N HIRE. THEREFORE, THE ASSESSEE WAS ENTITLED TO DEPRECIATION AT THE RATE O F 40 PER CENT ON CRANE MOUNTED ON MOTOR TRUCK. 22. THE ASSESSEE RELIED UPON THE DECISION OF ITAT, KOLKATA BENCH IN THE CASE OF DCIT S. RIPLEY AND COMPANY LTD. (2014) 40 CCH 401. THE COORDINATE BENCH OF THIS TRIBUNAL, UNDER SIMILAR CI RCUMSTANCES HELD THAT COMMERCIAL VEHICLES USED IN THE BUSINESS OF TRANSPO RTATION OF GOODS ON HIRE AS WELL AS TRANSPORTATION OF GOODS ARE ELIGIBL E FOR HIGHER RATE OF DEPRECIATION. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW: ITAT FOUND THAT THE TRIBUNAL IN ASSESSEE'S OWN CASE EARLIER HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN THIS REGARD THE TRIBUNAL'S DECISION IN ASSESSEE'S OWN CASE IN ITA NO.334/KOL/2001 FOR A .YR. 1997-98 AND ITA NO.687/KOI/2002 FOR A.YR.1998-99 ARE RELEVANT. SINC E IT HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE ON IDENTICAL ISSUE THERE IS NO REASON TO DIFFER FROM THE SAME. MOREOVER, THE CASE LAW OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS JIYAJEERA O COTTON MILLS LTD. (SUPRA) ALSO SUPPORTS THE ASSESSEE'S CASE. IN THIS CASE THE HON 'BLE JURISDICTIONAL HIGH COURT HAS EXPOUNDED AS UNDER -. 'THE GOODS WERE NOT DELIVERED IN TIME AND THEREBY A PENALTY UNDER THE DEFAULT CLAUSE HAD TO BE PAID. IT IS NOT A PENA LTY FOR BREACH OF ANY LAW. THE PAYMENT WAS MADE ON ACCOUNT OF THE CON TRACTUAL OBLIGATION UNDER THE AGREEMENT. WHEN THE GOODS WERE NOT DELIVERED WITHIN THE STIPULATED PERIOD, AN EXTRA AMOUNT, DESI GNATED 'PENALTY' HAD TO BE PAID. THIS WAS DONE IN COURSE OF CARRYING ON THE BUSINESS BY THE ASSESSEE. USUALLY, TIME IS NOT OF THE ESSENC E OF THE CONTRACT, BUT THE PARTIES ARE ENTITLED TO MAKE IT SO BY INSER TING A SPECIFIC CLAUSE IN THE CONTRACT. THE PARTIES ARE ENTITLED TO FIX THE TIME WITHIN WHICH THE GOODS MUST BE DELIVERED AND TO STIPULATE THAT IF THERE IS ANY FAILURE TO DELIVER THE GOODS WITHIN THE CONTRAC TED PERIOD, EXTRA MONEY WILL HAVE TO BE PAID TO COMPENSATE THE BUYER FOR NON- DELIVERY OF THE GOODS IN TIME. IN THE INSTANT CASE, THERE WAS SPECIFIC REQUIREMENT TO DELIVER THE GOODS IN TIME AND A PENA LTY CLAUSE FOR DEFAULT. THESE RIGHTS AND OBLIGATIONS AROSE IN COUR SE OF CARRYING ONE OF THE BUSINESS OF BUYING AND SELLING GOODS. ONE FA ILS TO SEE HOW THIS PAYMENT MADE UNDER A CONTRACTUAL OBLIGATIONS C ANNOT BE ALLOWED AS BUSINESS EXPENDITURE. ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 27 AMOUNT PAID FOR NON-DELIVERY OF GOODS IN TIME IS AL LOWABLE AS DEDUCTION EVEN THOUGH SUCH AMOUNT IS DESIGNATED AS 'PENALTY' IN THE SUPPLY CONTRACT, TIME BEING THE ESSENCE OF THE CONTRACT. ' ( PARA 6) THUS ITAT FIND THAT WHEN THE AMOUNTS ARE PAID ON CO NTRACTUAL OBLIGATION THE SAME HAVE TO BE ALLOWED AS BUSINESS EXPENDITURE . THE AMOUNT PAID FOR NON DELIVERY OF GOODS IN TIME IS ALLOWABLE AS D EDUCTION EVEN THOUGH SUCH AMOUNT IS DESIGNATED AS 'PENALTY' IN THE SUPPL Y CONTRACT, TIME BEING THE ESSENCE OF THE CONTRACT. IN VIEW OF THE ABOVE D ISCUSSIONS AND PRECEDENT ITAT DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE ID. CIT(A) AND ACCORDINGLY ITAT UPHOLD THE SAME. (PARA 6.1) 23. THE ASSESSEE RELIED UPON THE DECISION OF ITAT, KOLKATA BENCH IN THE CASE OF ACIT VS. BOTHRA SHIPPING SERVICES (2014 ) 42 CCH 57. THE COORDINATE BENCH OF THIS TRIBUNAL, UNDER SIMILA R CIRCUMSTANCES HELD THAT EQUIPMENTS LIKE PAY LOADERS, JCBS, 400V L OADERS ARE COVERED WITHIN THE EXPRESSION MOTOR LORRIES WHICH A RE USED IN THE BUSINESS OF RUNNING THEM ON HIRE AND THE A.O. HAD C ORRECTLY ALLOWED THE CLAIM OF DEPRECIATION U/S 32 OF THE ACT APPLYIN G THE RATE OF 30% ASSIGNED TO ENTRY NO.III(3)(II) OF PART A OF APPEND IX 1 OF INCOME TAX RULES 1962 APPLICABLE AS MOTOR BASIS, MOTOR LORRIES AND MOTOR TAXES USED IN THE BUSINESS OF RUNNING THEM ON HIRE. RELE VANT PORTION OF THE ORDER IS EXTRACTED BELOW: ONCE THE ISSUE HAS ALREADY BEEN EXAMINED AND HELD I N FAVOUR OF THE ASSESSEE U/S 263 OF THE ACT THE SAME CANNOT BE THE SUBJECT MATTER OF REOPENING BY THE AO. THUS ASSUMPTION OF JURISDICTI ON BY THE AO IS NOT SUSTAINABLE. CIT VS INDIRA EXPORTS PVT. LTD. 226 TA XMAN.COM 103 (IT APPEAL NO.24 OF 2012) ORDER DATED SEPTEMBER, 26, 20 13, FOLLOWED. (PARA 6) ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 28 24. COMING TO THE CASE LAWS RELIED UPON BY THE LD. D.R. THE D.R. RELIED UPON THE DECISION OF HONBLE SUPREME COURT O F INDIA, IN THE CASE OF CIT VS. GUPTA GLOBAL EXIM PVT. LTD. (2008) 305 I TR 132 AND SUBMITTED THAT ONCE COMMERCIAL VEHICLES ARE USED IN ASSESSEES OWN BUSINESS, THEN THE ASSESSEE IS NOT ELIGIBLE FOR HIG HER RATE OF DEPRECIATION. WE HAVE CONSIDERED THE CASE LAW RELIED UPON BY THE D.R, IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND C OME TO THE CONCLUSION THAT THE CASE LAW RELIED UPON BY THE LD. D.R. IS NO T APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE FACTS OF THE CASE BE FORE THE HONBLE SUPREME COURT WAS THAT IN THAT CASE THE ASSESSEE WA S ENGAGED IN THE BUSINESS OF IMPORTING TIMBER LOGS AND SELLING THEM IN INDIA. THE ASSESSEE IN ITS BUSINESS OF TRADING IN TIMBER USED TRAILERS AND LOADERS AND PUT THEM ON HIRE AND ALSO SOME TIME GIVEN THE V EHICLES ON HIRE TO THIRD PARTIES. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE THE HONBLE SUPREME COURT HELD THAT MERE INCLUSION OF T RANSPORTATION INCOME IN TOTAL BUSINESS INCOME WAS NOT A DETERMINA TIVE FACTOR FOR DECIDING WHETHER TRUCKS WERE USED BY ASSESSEE DURIN G RELEVANT YEAR IN A BUSIENSS OF RUNNING THEM ON HIRE. IN THE PRESENT CA SE ON HAND, THE DOMINANT ACTIVITY OF THE ASSESSEE IS TO TRANSPORTAT ION AND HANDLING GOODS BELONGING TO THIRD PARTIES. THE ASSESSEE EMPL OYED THE COMMERCIAL VEHICLES FOR THE EXCLUSIVE PURPOSE OF TRANSPORTATIO N, LOADING AND ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 29 UNLOADING OF GOODS. THEREFORE, WE ARE OF THE VIEW THAT THE FACTS OF THE PRESENT CASE STANDS IN A DIFFERENT FOOTING, THEREFO RE HELD THAT THE CASE LAW RELIED UPON BY THE LD. D.R. IS NOT APPLICABLE T O THE FACTS OF THE PRESENT CASE. 25. THE D.R. RELIED UPON THE DECISION OF ITAT, VISA KHAPATNAM BENCH IN THE CASE OF SRIDEVI STEEL AND CEMENT STORES VS. ITO (2007) 106 ITD 326. THE FACTS OF THE CASE BEFORE THE COORDINATE B ENCH OF THIS TRIBUNAL ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSIENSS O F TRADING IN STEEL AND CEMENT. THE ASSESSEE HAS EMPLOYED MINI VANS FOR THE PURPOSE OF TRANSPORTATION OF STEEL AND CEMENT TO THE DESTINATI ON OF ITS CUSTOMERS AND IT WAS NOT UNDER HIRE TO ANY OUTSIDER. UNDER TH ESE FACTS AND CIRCUMSTANCES, THE COORDINATE BENCH HELD THAT THE D OMINANT OBJECT OF THE ASSESSEE WAS TO CARRY ON THE BUSINESS OF STEEL AND CEMENT AND ALSO PROVIDE VALUE ADDED SERVICES TO THE CUSTOMERS PURCH ASING STEEL AND CEMENT. THERE WAS NOTHING ON RECORD TO SUGGEST THAT SUBSTANTIAL INCOME OF THE ASSESSEE WAS FROM RUNNING THE VEHICLES ON HI RE, THEREFORE, HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR HIGHER RATE O F DEPRECIATION. THE FACTS OF THE CASE RELIED UPON BY THE D.R. IS ALTOGETHER D IFFERENT FROM THE FACTS OF THE PRESENT CASE. THEREFORE, WE ARE OF THE OPIN ION THAT THE CASE LAW RELIED UPON BY THE D.R. IS NOT APPLICABLE TO THE FA CTS OF THE PRESENT CASE. ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 30 26. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RELIED UPON THE RATIO OF CASE LAWS CITED ABOVE, WE ARE OF THE VIEW THAT THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REPORT ISSUED BY THE A.O. CLARIFYING THE NATURE AND PURPOSE OF COMMERCIAL VEHICLES HELD THAT THESE VEHICLES ARE ELIGIBLE FOR HIGHER RATE OF DEPRECIATION. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY TH E REVENUE. 27. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF BRANCH OFFICE S. DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS FOUND RE VEALS THAT THE ASSESSEE HAS MAINTAINED CASH BOOK WHEREIN RECEIPTS AND EXPENDITURE ARE RECORDED. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS NOT RECORDED THESE RE CEIPTS AND EXPENDITURE IN THE REGULAR BOOKS OF ACCOUNTS MAINTA INED FOR THE RELEVANT PERIOD, THEREFORE, MADE ADDITIONS TOWARDS INCOME AN D EXPENDITURE SEPARATELY UNDER THE HEAD UNEXPLAINED INCOME AND UN EXPLAINED EXPENDITURE AND BROUGHT TO TAX. THE A.O. WAS OF THE OPINION THAT THE TRANSACTION RECORDED IN THE SEIZED BOOKS OF ACCOUNT S IS NOT ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNTS. THE A.O. FURTHER WAS OF THE OPINION THAT ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 31 THESE INCOME AND EXPENDITURE IS KEPT OUTSIDE THE RE GULAR BOOKS OF ACCOUNTS THEREFORE, OPINED THAT THE ASSESSEE HAS NO T INCLUDED THESE RECEIPTS IN THE REGULAR RETURNS FILED FOR THE RESPE CTIVE ASSESSMENT YEARS. WITH THESE OBSERVATIONS, MADE SEPARATE ADDITIONS TOW ARDS RECEIPTS AND EXPENDITURE. IT IS THE CONTENTION OF THE ASSESSEE T HAT ONCE ADDITION IS MADE TOWARDS INCOME, THE A.O. WAS NOT CORRECT IN MA KING SEPARATE ADDITION TOWARDS EXPENDITURE. WHEN THE UNEXPLAINED I NCOME HAS BEEN ASSESSED BASED ON MATERIAL DETECTED DURING THE COUR SE OF SEARCH AND SEIZURE OPERATION, THE A.O. IS NOT CORRECT TO DISBE LIEVE AND IGNORE THE EXPENDITURE REFLECTED IN THE SAME DOCUMENT. WHEN INC OME AND EXPENDITURE ARE RELATING TO THE SAME BUSINESS AND T HE BRANCH IT IS DIFFICULT TO REJECT AND READ BOTH THE ITEMS AS SEPA RATE AND ISOLATED. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS MAINTAINED A CASH BOOK WHEREIN VARIOUS RECEIPTS AND EXPENDITURE PERTAINS TO ITS BUSINESS ACTIVITY IS RE CORDED. ONCE INCOME IS ASSESSED BASED ON A PARTICULAR SEIZED DOCUMENT, THE A.O. WAS NOT CORRECT IN MAKING SEPARATE ADDITIONS TOWARDS EXPEND ITURE BY HOLDING THAT THE ASSESSEE HAS FAILED TO PROVE THE SOURCES F OR EXPENDITURE. IN OUR CONSIDERED OPINION, THE A.O. WAS COMPLETELY ERR ED IN MAKING SEPARATE ADDITIONS TOWARDS INCOME AND EXPENDITURE. WHEN THE INCOME AND EXPENDITURE IS PART OF A SINGLE SEIZED DOCUMENT , THE A.O. SHOULD ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 32 HAVE TELESCOPED THE SOURCES AVAILABLE IN THE FORM O F INCOME TO THE EXPENDITURE. THE CIT(A) AFTER CONSIDERING THE EXPLA NATIONS FURNISHED BY THE ASSESSEE DIRECTED THE A.O. TO SET OFF THE EXPEN DITURE AGAINST ADDITIONS MADE TOWARDS UNEXPLAINED INCOME BASED ON THE SEIZED DOCUMENTS. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A ) ORDER AND REJECT THE GROUND RAISED BY THE REVENUE. 28. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADMISSION OF INCOME U/S 132(4) OF THE ACT. THE FACTS RELATING TO THE ISSUE ARE THAT D URING THE COURSE OF SEARCH AND SEIZURE OPERATION, THE MANAGING DIRECTOR OF THE COMPANY ADMITTED THAT HE WOULD DEISCLOSE ADDITIONAL INCOME OF RS.1,00,00,000/- CRORE AND RS.1,55,30,000/- RESPECTIVELY, FOR THE AS SESSMENT YEAR 2009- 10 & 2010-11, ACCORDINGLY, FILED RETURN IN RESPONSE TO NOTICE U/S 153A/153C OF THE ACT. THE A.O. MADE SEPARATE ADDITI ONS TOWARDS INCOME ADMITTED DURING THE COURSE OF SEARCH OPERATI ON, IN ADDITION TO THE INCOME RETURNED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 153A/153C OF THE ACT. THE A.O. WAS OF THE OPINION THAT THE ADMISSION OF ADDITIONAL INCOME WHILE RECORDING THE STATEMENT U/S 132(4) OF THE ACT IS AN ADDITIONAL UNDISCLOSED INCOME WHICH CANNOT BE SET OFF AGAINST THE ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 33 REGULAR INCOME DECLARED IN THE RETURN OF INCOME. T HE A.O. FURTHER WAS OF THE OPINION THAT THE ASSESSEE HAS ADMITTED ADDIT IONAL INCOME IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT TO STOP FU RTHER ENQUIRIES BY THE INVESTIGATING DEPARTMENT. THEREFORE, THE ASSESS EE WAS NOT CORRECT IN EXPLAINING THAT THE INCOME HAS BEEN OFFERED IN DIFF ERENT ASSESSEES NAMES AND ALSO TELESCOPED AGAINST THE REGULAR INCOM E DECLARED FOR THE ASSESSMENT YEAR 2010-11. IT IS THE CONTENTION OF T HE ASSESSEE THAT IT HAS ADMITTED INCOME OF RS.1,00,00,000/- IN THE NAME OF M/S. VENKATARAMA ENGINEERING FOR THE ASSESSMENT YEAR 200 9-10 AND RS.1,55,30,000/- FOR THE A.Y. 2010-11. THE ASSESSEE FURTHER CONTENDED THAT AS REGARDS THE ASST. YEAR 2010-11, THE ASSESSE E HAS ADMITTED INCOME BASED ON THE REGULAR BOOKS OF ACCOUNTS WHICH WAS UPDATED AT THE TIME OF SEARCH AND ACCORDINGLY DISCLOSED THE IN COME AND PAID THE TAXES. THE ASSESSEE FURTHER CONTENDED THAT THE MANA GING DIRECTOR OF THE COMPANY, WHILE ANSWERING THE STATEMENT RECORDED U/S 132(4) OF THE ACT, NEVER STATED THAT HE WOULD DISCLOSE ADDITIONAL INCO ME IN THE HANDS OF THE COMPANY. THE ASSESSEE FURTHER CONTENDED THAT AD DITION MADE BY THE A.O. IS BASED ON THE ADMISSION OF THE ASSESSEE AND NOT BASED ON ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. THEREFO RE, THE A.O. WAS NOT CORRECT IN MAKING SEPARATE ADDITIONS U/S 132(4) OF THE ACT BASED ON THE ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 34 ADMISSION OF ASSESSEE, WHEN HE HAD MADE VARIOUS ADD ITIONS IN THE ASSESSMENT PROCEEDINGS. 29. HAVING HEARD BOTH THE SIDES, WE FIND THAT THE A.O. HAS MADE VARIOUS ADDITIONS TO RETURNED INCOME IN RESPECT OF DISALLOWANCE OF EXPENDITURE, SHORT ACCOUNTING OF RECEIPTS AND OTHER ADDITIONS AFTER THOROUGH EXAMINATION OF BOOKS OF ACCOUNTS. IN ADDIT ION, THE A.O. HAS MADE SEPARATE ADDITIONS TOWARDS ADDITIONAL INCOME O F RS.1,00,00,000/- AND RS.1,55,30,000/- RESPECTIVELY FOR THE ASSESSMEN T YEAR 2009-10 & 2010-11, PURELY BASED ON THE STATEMENT GIVEN BY THE ASSESSEE U/S 132(4) OF THE ACT AND WITHOUT THERE BEING ANY INCRI MINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH SUGGEST THE UNDISCLOSED INCOME OF THE ASSESSEE. WE FURTHER OBSERVED THAT WHILE ANS WERING THE STATEMENT U/S 132(4) OF THE ACT, THE MANAGING DIREC TOR NEVER MENTIONED ABOUT DECLARATION OF ADDITIONAL INCOME IN ADDITION TO THE INCOME DISCLOSED IN THE BOOKS OF ACCOUNTS. IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD SUGGESTING INCOME RELATING TO THE ASSESSEE IN THESE TWO YEARS, EXCEPT THE UNEXPLAINED INCOME OF HYDERAB AD, NAGPUR AND VISAKHAPATNAM BRANCHES, WHICH ARE ALREADY ASSESSED AS INCOME OF THE ASSESSEE, THE ADDITIONS MADE PURELY ON THE BASIS OF STATEMENT RECORDED U/S 132(4) OF THE ACT WILL NOT STAND. THE A.O. MAD E ADDITION SOLELY ON THE BASIS OF STATEMENT OF THE ASSESSEE. THE STATEME NT GIVEN BY THE ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 35 ASSESSEE IS NOT SUPPORTED BY ANY CORROBORATIVE EVID ENCES FOUND DURING THE COURSE OF SEARCH. WE FURTHER OBSERVED THAT AS A DMITTED IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT, THE ASSES SEE HAS ADMITTED RS.1,00,00,000/- INCOME FOR THE ASSESSMENT YEAR 200 9-10 IN THE HANDS OF M/S. VENKATARAMA ENGINEERING. SIMILARLY, IN THE STATEMENT THE ASSESSEE HAS DISCLOSED INCOME OF RS.1,55,30,000/- F OR THE ASSESSMENT YEAR 2010-11 WHICH IS BASED ON THE BOOKS OF ACCOUNT S AS ON THE DATE OF SEARCH. THEREFORE, WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY THE A.O. BASED ON THE ASSESSEES ADMISSION U/S 132(4) O F THE ACT WITHOUT ANY INCRIMINATING MATERIAL CANNOT SUSTAIN IN THE EY ES OF LAW. THE A.O. FAILED TO BRING ON RECORD ANY MATERIAL EVIDENCES TO SHOW THAT THESE ADDITIONS REPRESENTS UNDISCLOSED INCOME OF THE ASSE SSEE. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSESSEE DELETED THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY REASO NS TO INTERFERE WITH THE ORDER PASSED BY THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE REVENUE. 30. THE NEXT ISSUE THAT EMANATES FROM THE ASSESSEE APPEAL FOR THE A.Y. 2007-08 IS DISALLOWANCE OF PRO-RATE DEPRECIATI ON FOR 11 DAYS IN THE HANDS OF MARUTHI TRANSPORTERS. THE FACTS WHICH LEAD S TO THE LITIGATION IS THAT THE ASSESSEE WAS INITIALLY CAME IN TO EXISTENC E AS A PARTNERSHIP FIRM UNDER THE NAME AND STYLE OF MARUTHI TRANSPORTS, LAT ER BECAME MAHA ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 36 MARUTHI LOGISTICS PVT LTD BY WAY OF CONVERSION OF P ARTNERSHIP FIRM INTO PRIVATE LIMITED COMPANY UNDER PART IX OF COMPANIES ACT, 1956. THE ASSESSEE FIRM WAS CONVERTED IN TO PRIVATE LIMITED C OMPANY ON 11-4- 2006, I.E. THE FIRM WAS IN EXISTENCE FOR ELEVEN DAY S. THE ASSESSEE CLAIMED DEPRECIATION ON BLOCK OF ASSETS FOR A PERIO D OF ELEVEN DAYS. THE A.O. WAS OF THE OPINION THAT WHEN A FIRM IS CONVERT ED INTO COMPANY ALL ASSETS AND LIABILITIES HAVE BEEN TAKEN OVER BY THE SUCCEEDING COMPANY, THEREFORE, IT IS WRONG ON THE PART OF ASSESSEE TO C LAIM DEPRECIATION FOR ELEVEN DAYS. THE A.O. FURTHER OBSERVED THAT THE SUC CEEDING COMPANY, I.E. MAHA MARUTHI LOGISTICS PRIVATE LIMITED HAS CLA IMED DEPRECIATION ON W.D.V OF ASSETS FOR THE WHOLE YEAR, THEREFORE, CLAIM OF DEPRECIATION FOR ELEVEN DAYS AMOUNTS TO DOUBLE CLAIM ON THE SAME ASS ETS. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAS CLAIMED DEPR ECIATION FOR ELEVEN DAYS AND THE SUCCEEDING COMPANY HAS CLAIMED FOR THE REMAINING PERIOD, THEREFORE, THE A.O. WAS NOT CORRECT IN HOLDING THAT THERE IS DOUBLE CLAIM. 31. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE WAS INITIALLY CAME IN TO EX ISTENCE AS A PARTNERSHIP FIRM, LATER BECAME PRIVATE LIMITED COMP ANY ON 11-4-2006, BY WAY OF PART IX CONVERSION UNDER THE PROVISIONS OF C OMPANIES ACT, 1956. THE FIRM WAS IN EXISTENCE FOR ELEVEN DAYS. THE ASSE SSEE CLAIMED ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 37 DEPRECIATION ON BLOCK OF ASSETS FOR A PERIOD OF ELE VEN DAYS. THE A.O. WAS OF THE OPINION THAT WHEN A FIRM IS CONVERTED IN TO COMPANY ALL ASSETS AND LIABILITIES HAVE BEEN TAKEN OVER BY THE SUCCEED ING COMPANY, THEREFORE, IT IS WRONG ON THE PART OF ASSESSEE TO C LAIM DEPRECIATION FOR ELEVEN DAYS. IT IS THE CONTENTION OF THE ASSESSEE T HAT IT HAS CLAIMED DEPRECIATION ON WHOLE BLOCK FOR ELEVEN DAYS AND THE SUCCEEDING COMPANY HAS CLAIMED FOR THE REMAINING PERIOD. THE A SSESSEE FURTHER CONTENDED THAT THE LD. CIT(A) WITHOUT APPRECIATING FACTS, HELD THAT IN THE EVENT OF DISSOLUTION OF FIRM, THE ASSETS AND LI ABILITIES OF THE FIRM HAS TO BE REVALUED AND EXCESS OF ASSETS OVER LIABILITIE S SHOULD BE TAKEN AS INCOME FOR THE PURPOSE OF COMPUTATION OF INCOME. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT WHEN A PARTNERSHIP FIRM CONVERTED IN TO PRIVATE LIMITED COMPANY AS A GOING CONCERN, THE QUESTION OF DISSOLUTION OF FIRM AND REVALUATION OF ASSETS AND LIABILITIES DOES NOT ARISE. 32. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS, WE NOTICED THAT THERE IS NO DISPUTE WITH REGARD TO CONVERSION OF PARTNERSHIP FIRM IN TO PRIVATE LIMITED COMPANY. THE A.O. DISPUTED DEPRE CIATION CLAIM MADE BY THE ASSESSEE, BY HOLDING THAT BOTH FIRM AS WELL AS COMPANY HAS CLAIMED DEPRECIATION FOR ELEVEN DAYS WHICH AMOUNTS TO DOUBLE CLAIM ON SAME ASSETS FOR ELEVEN DAYS. UNDER THESE FACTS AND CIRCUMSTANCES, WE ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 38 ARE OF THE VIEW THAT BOTH ENTITIES ARE ENTITLED FOR DEPRECIATION ON PRO- RATA BASIS FOR THE NUMBER OF DAYS THE ASSETS ARE PU T TO USE IN THEIR BUSINESS. HOWEVER, AS PER THE PROVISO PROVIDED TO S EC. 32(1)(II) OF THE ACT, THERE IS CONCEPT OF LESS THAN 180 DAYS AND MO RE THAN 180 DAYS FOR THE PURPOSE OF ALLOWING DEPRECIATION. IN CASE, ASSE T IS PUT TO USE FOR MORE THAN 180 DAYS OR LESS THAN 180 DAYS, THEN IT I S ELIGIBLE FOR 100% OR 50% DEPRECIATION AS THE CASE MAY BE, IRRESPECTIVE O F THE FACT THAT THE ASSETS IS PURCHASED OR PUT USE ON ANY DATE BETWEEN 1 ST DAY OF THE FINANCIAL YEAR OR LAST DAY OF THE FINANCIAL YEAR. U NDER THE GIVEN FACTS AND CIRCUMSTANCES, THERE IS A LITTLE POSSIBILITY OF DOU BLE CLAIM BY BOTH THE ASSESSEES FOR THOSE ELEVEN DAYS. THOUGH, ASSESSEE CLAIMS THAT IT HAS CLAIMED DEPRECIATION FOR ELEVEN DAYS, THE A.O. OBSE RVED THAT THE SUCCEEDING COMPANY HAS CLAIMED DEPRECIATION FOR THE WHOLE YEAR. THE FACTS ARE NOT CLEAR, TTEREFORE, WE SET ASIDE THE IS SUE TO THE FILE OF A.O. AND DIRECT THE A.O. TO VERIFY THE CLAIM IN THE LIGH T OF THE DISCUSSION ABOVE AND ALLOW ACCORDINGLY. IN CASE, BOTH FIRM AS WELL AS THE COMPANY HAVE CLAIMED DEPRECIATION ON PRO-RATA BASIS FOR ACT UAL NUMBER OF DAYS THE ASSETS ARE HELD BY THEM, THEN THE A.O. IS DIREC TED TO ALLOW DEPRECIATION AS CLAIMED BY THE ASSESSEE. 33. THE ASSESSEE HAS FILED CROSS OBJECTION IN SUPPO RT OF THE ORDER PASSED BY THE CIT(A). THE ASSESSEE HAS FILED THE C ROSS OBJECTIONS ON ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 39 25.2.2016. THERE IS A INORDINATE DELAY IN CROSS OBJ ECTION FILED BY THE ASSESSEE. THE ASSESSEE OUGHT TO HAVE FILED THE CROS S OBJECTION WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF APPEAL MEMO FROM T HE TRIBUNAL. IN THIS CASE, THE ASSESSEE HAS RECEIVED THE APPEAL MEMO FRO M THE TRIBUNAL ON 1.10.2012. THE ASSESSEE OUGHT TO HAVE FILED THE CR OSS OBJECTIONS ON OR BEFORE 31.10.2012. BUT, THE ASSESSEE HAS FILED THE CROSS OBJECTION ON 25.2.2016. THERE IS AN INORDINATE DELAY IN CROSS OB JECTION FILED BY THE ASSESSEE. THE ASSESSEE NEITHER FILED ANY PETITION F OR CONDONATION OF DELAY IN FILING THE CROSS OBJECTION NOR EXPLAINED T HE REASONS FOR DELAY IN FILING THE CROSS OBJECTION. THEREFORE, WE ARE OF TH E VIEW THAT THE ASSESSEE HAS NOT EXPLAINED THE REASONS FOR NOT FILI NG THE CROSS OBJECTIONS WITHIN THE DUE DATES SPECIFIED UNDER THE ACT. HENC E, WE DISMISS THE CROSS OBJECTIONS FILED BY THE ASSESSEE AS NOT MAINT AINABLE. 34. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA NOS.315 TO 321/VIZAG/2012 AND THE CROSS APPEALS FILED BY THE A SSESSEES IN CO NOS.2 TO 8/VIZAG/2016 ARE DISMISSED . THE APPEAL FILED BY THE ASSESSEE IN ITA NO.312/VIZAG/2012 IS ALLOWED FOR STATISTICAL PURPOSE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH JUN16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER ITA NOS.312, 315 TO 321/VIZAG/2012 & CO NOS.2 TO 8/ VIZAG/2016 M/S. MARUTHI TRANSPORTS & M/S. MAHA MARUTHI LIGISTI CS PVT. LTD., VIJAYAWADA 40 # /VISAKHAPATNAM: ' /DATED : 29.06.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. MARUTHI TRANSPORTS, D.NO.33 -25-33/B, GOVINDARAJULUNAIDU STREET, SURYARAOPET, VIJAYAWADA- 520 002. 2. / THE APPELLANT THE ACIT, CENTRAL CIRCLE, VIJAYA WADA 3. / THE RESPONDENT THE M/S. MAHA MARUTHI LOGISTICS PVT. LTD., D.NO.33- 25-33/B, GOVINDARAJULUNAIDU STREET, SURYARAOPET, VI JAYAWADA 4. / THE RESPONDENT THE DCIT, CENTRAL CIRCLE, VIJAY AWADA 5. + / THE CIT, VIJAYAWADA 6. + / THE CIT (CENTRAL), HYDERABAD 7. + ( ) / THE CIT (A)-I, HYDERABAD 8. # . , . , # / DR, ITAT, VISAKHAPATNAM 9 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM