Shri Udaykumar Chhabildas Patel, Ahmedabad V. The ACIT, Circle-7(2), Ahmedabad

CO 8/AHD/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3116 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A C SHAH
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO . 3337/AHD/2014 CROSS OBJECTION NO .08/AHD/2015 (IN I.T.A. NO.3337/AHD/2014) ( / ASSESSMENT YEAR : 2011-12) ACIT CIRCLE -7(2), AHMEDABAD. / VS. UDAYKUMAR CHHABILDAS PATEL PROP. OF M/S. LINE-O-MATIC GRAPHIC INDUSTRIES D-62, DIAMOND PARK, GIDC ESTATE, OPP. TOYOTO SHOW ROOM, NH NO.8, NARODA, AHMEDABAD - 382330 ./ ./ PAN/GIR NO. : AATPP 8316 R ( / APPELLANT ) .. ( / RESPONDENT ) & CROSS OBJECTOR / APPELLANT BY : SHRI A.C. SHAH, A.R. / RESPONDENT BY : SHRI RAJDEEP SINGH, SR. D.R. / DATE OF HEARING 08/09/2017 !'# / DATE OF PRONOUNCEMENT 15/09/2017 $% / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL ALONGWITH A CROSS OBJECTION BY THE DEPARTMENT AND ASSESSEE RESPECTIVELY AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XX, AHMEDABAD, DATED 11/09/2014 FOR THE ASSESSMENT YEAR (AY) 2011-12. ITA NO.3337/AHD/2014 & CO NO.08/AHD/2015 (IN ITA N O.3337/AHD/2014) ASST.YEAR 2011-12 - 2 - 2. FIRST WE TAKE UP THE GROUNDS OF APPEAL IN ITA NO .3337/AHD/2014 FOR ASST. YEAR 2011-12: I. LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.7,49,832/- BY CONSIDERING THE CARS A S COMMERCIAL VEHICLES ELIGIBLE FOR DEPRECIATION @50% INSTEAD OF 15% DESPITE THE FACT THAT SAME WERE NOT REGISTERED AS COMMERCIA L VEHICLES AND THERE WAS NO EVIDENCE OF THEIR COMMERCIAL USAGE BY THE ASSESSEE AS MUCH. II. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO DECIDE THE ISSUE OF ADDITION U/S.145A OF THE ACT ON THE BASIS OF ITAT DECISION WHEREIN RELIANCE HAS BEEN PL ACED ON THE JUDGMENT OF HON. HIGH COURT OF GUJARAT IN NARMADA C HEMATUR PETRO CHEMICALS LTD. [327 ITR 369] AND UNIQUE INDUS TRIES [307 ITR 350] DESPITE THE FACT THAT THE PROVISIONS OF SE CTION 145A CAME INTO EFFECT AFTER ASSESSMENT YEARS INVOLVED IN THESE CASES. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, ASSESSEE IS AN INDIVIDUAL AND FILED ITS RETURN OF INCOME ON 25/09/2011 DISCLOSING THEREIN TOTAL INCOME OF RS .9,27,95,370/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G OF PAPER CONVERTING MACHINE AND RESELLING OF PARTS. THE SAID RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE I.T. ACT. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICE UNDER SECTION 143(2) OF THE IN COME TAX ACT, 1961 AND DULY SERVED UPON THE ASSESSEE. 3.2 IN HIS RETURN, ASSESSEE HAS CLAIMED @50% DEPREC IATION ON THE CAR SINCE IT WAS PURCHASED BEFORE 30/09/2009 AND THAT I T IS A COMMERCIAL VEHICLE. ASSESSEE PURCHASED MARUTI SWIFT ON 22/05/2 009 FOR RS.6,00,137/- AND INOVA CAR PURCHASED ON 02/09/200 9 FOR RS.12,64,189/- ITA NO.3337/AHD/2014 & CO NO.08/AHD/2015 (IN ITA N O.3337/AHD/2014) ASST.YEAR 2011-12 - 3 - AND THE LOADING RICKSHAW IS PURCHASED ON 08/08/2009 FOR RS.3,06,626/-. THE ASSESSEE CLAIMED DEPRECIATION @50% AS PER THE R ULES. HOWEVER, IT IS PROPOSED TO ALLOW THE DEPRECIATION @15% SINCE IT IS NOT COMMERCIAL VEHICLE AND CLAIM OF THE ASSESSEE WAS REJECTED AND EXCESS CLAIM OF DEPRECIATION AT RS.7,49,832/- WAS DISALLOWED AND AD DED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3.3 DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS OBSERVED BY THE LEARNED AO THAT THE AUDITOR IN HIS REPORT U/S.4 4AB OF THE ACT HAS CERTIFIED THAT THERE IS DEVIATION FROM THE METHOD O F VALUATION AS PRESCRIBED U/S.145A OF THE ACT AND THE ELEMENT OF E XCISE, SERVICE TAX AND VAT HAVE NOT BEEN INCLUDED IN THE VALUE OF CLOS ING STOCK OF RAW MATERIALS AND PACKING MATERIALS, THEN THE SAME WILL BE INCREASED BY RS.36,050/- ON ACCOUNT OF CENTRAL EXCISE. FURTHER I F THE ELEMENT OF VAT IS INCLUDED IN THE VALUE OF CLOSING STOCK OF RAW MA TERIAL AND PACKING MATERIAL, THEN THE SAME WILL BE INCREASED BY RS.1,1 8,87,642/-. MOREOVER, IF THE VALUE OF SERVICE TAX IS ADDED THEN VALUE OF CLOSING STOCK WOULD INCREASE BY RS.3,19,114/-. IT WAS FURTHER OBSERVED BY THE AO, SINCE THE ASSESSEE HAD NOT VALUED THE CLOSING STOCK AS PER TH E PROVISIONS OF SECTION 145A OF THE ACT, SO THE ASSESSEE WAS REQUES TED TO EXPLAIN AS TO WHY THE ELEMENT OF TAXES, WHICH ARE INCLUDIBLE IN T HE VALUE OF THE CLOSING STOCK SHOULD NOT BE INCLUDED IN VALUE OF STOCK AS P ER PROVISIONS OF SECTION 145A OF THE ACT. ITA NO.3337/AHD/2014 & CO NO.08/AHD/2015 (IN ITA N O.3337/AHD/2014) ASST.YEAR 2011-12 - 4 - 3.4 A SHOW-CAUSE NOTICE WAS ISSUED. ASSESSEE STATED HE FOLLOWS THE EXCLUSIVE METHOD AND THEREFORE SECTION 145A IS NOT APPLICABLE. THE REVENUE NEUTRAL STATEMENT IS ENCLOSED ALONG WITH 3C D REPORT. THE CIT(A) FOR ASST. YEAR 2009-10 ALLOWED THE APPEAL BY DIRECTING THE AO TO DELETE THE ADDITION AFTER VERIFICATION OF REVENUE N EUTRAL STATEMENT BUT EXPLANATION OF THE ASSESSEE WAS NOT TENABLE IN THE EYES OF THE AO AND MADE AN ADDITION OF RS.1,22,42,805/- U/S.145A. 4. AGAINST THE ABOVE ADDITION ASSESSEE PREFERRED FI RST STATUTORY APPEAL BEFORE THE LEARNED CIT(A) WHO PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. 5. NOW APPELLANTS APPEAL IS BEFORE US. 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. LEARNED AR CITED AN ORDER OF CO-ORDINATE BENCH IN A SSESSEES OWN CASE IN ITA NO.3109/AHD/2013 FOR ASST. YEAR 2010-11, WHE RE GROUND WAS BEFORE THE ITAT IS AS UNDER: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONSID ERING CARS AS COMMERCIAL VEHICLE ELIGIBLE FOR DEPRECIATION @50% I NSTEAD OF 15% DESPITE THE FACT THAT THE SAME WERE NOT REGISTERED AS COMMERCIAL VEHICLES AND THERE WAS NO EVIDENCE OF THEIR COMMERC IAL USAGE BY THE ASSESSEE AS SUCH. HONBLE BENCH HELD THAT AFTER HEARING BOTH THE SIDE S AND PERUSED THE MATERIAL ON RECORD, WE FIND THAT HONBLE ITAT, AHMEDABAD CO- ORDINATE BENCH FOR ASST. YEAR 2009-10 AND ALSO IN R ESPECT OF EARLIER YEAR I.E. ASST. YEAR 2007-08 HAVE DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ITA NO.3337/AHD/2014 & CO NO.08/AHD/2015 (IN ITA N O.3337/AHD/2014) ASST.YEAR 2011-12 - 5 - ASSESSEE BY KEEPING RELIANCE ON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF ACIT VS. NARMADA CHEMATUR PETROCHEMICALS LTD. (2010) 327 ITR 369 (GUJ.) IN VI EW OF ABOVE FACTS AND LEGAL FINDINGS, WE CONSIDER THAT LD. CIT(A) HAS CORRECTLY DELETED THE ADDITION IN FAVOUR OF ASSESSEE. REVENUES APPEAL ON THIS ISSUE IS DISMISSED. 6.2 ON THE OTHER HAND, GROUND OF APPEAL ALSO DECIDE D IN FAVOUR OF ASSESSEE BY THE HONBLE BENCH AND QUESTION WAS THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO DECIDE THE ISSUE OF ADDITION MADE U/S.145A ON THE BASIS OF AN ITAT DECISION WHEREIN R ELIANCE HAS BEEN PLACED ON THE GUJARAT HIGH COURT JUDGMENTS IN THE C ASE OF NARMADA CHEMATUR PETRO CHEMICALS LTD. (327 ITR 369) AND UNI QUE INDUSTRIES (307 ITR 350) DESPITE THE FACT THAT THE PROVISIONS OF SECTION 145A CAME INTO EFFECT AFTER ASSESSMENT YEARS INVOLVED IN THES E CASES. COORDINATE BENCH OF THE ITAT IN IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR ASST. YEAR 2010-11 DISMISSED THE APPEAL OF THE DEPARTMENT. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE COORD INATING BENCHS DECISION IN ITA NO.3109/AHD/2013 FOR ASST. YEAR 201 0-11 WHICH IS DECIDED ON 20/09/16, WE DISMISS APPEAL OF THE DEPAR TMENT. 7. NOW WE TAKE UP THE ASSESSEES CROSS OBJECTION NO .08/AHD/2015 (IN ITA NO.3337/AHD/2014), ON THE FOLLOWING OBJECTI ONS: ITA NO.3337/AHD/2014 & CO NO.08/AHD/2015 (IN ITA N O.3337/AHD/2014) ASST.YEAR 2011-12 - 6 - I. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISA LLOWING OF TRAVELING EXPENSES OF RS.1,19,000 INCURRED FOR DEVI BEN PATEL ON THE GROUND THAT IT IS PERSONAL IN AS MUCH AS THE EX PENSES INCURRED ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. II. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF CAR DEPRECIATION OF RS.34,293/- ON THE GROUND THAT IT IS OF PERSONAL NATURE UNDER SECTION 38(2) IN AS MUCH AS T HE CAR IS FORMING PART OF BLOCK OF ASSETS FALLING WITH THE CL ASS OF ASSETS OF 15% RATE AND THEREFORE NO PORTION CAN BE DISALLOWED . 8. SO FAR CO IS CONCERNED. ASSESSEE DOES NOT WANT TO PRESS HIS CO. SAME IS ALSO DISMISSED AS NOT PRESSED. 9. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IN ITA NO.3337/AHD/2014 FOR ASST. YEAR 2011-12 IS DISMISSE D AND CROSS OBJECTION NO.08/AHD/2015 (IN ITA NO.3337/AHD/2014) FOR ASST. YEAR 2011-12 IS ALSO DISMISSED AS NOT PRESSED. THIS ORDER PRONOUNCED I N OPEN COURT ON 15 / 09 /201 7 SD/- SD/- IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/09/2017 PRITI YADAV, SR.PS ITA NO.3337/AHD/2014 & CO NO.08/AHD/2015 (IN ITA N O.3337/AHD/2014) ASST.YEAR 2011-12 - 7 - ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-XX, AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. ! ( / BY ORDER, , / //TRUE COPY// )/ * ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 08/09/2017(DICTATION-PAD 6 PAGE S ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12/09/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER