DCIT,Circle-7, Kolkata, Kolkata V. M/s. Ripley & Company Ltd, Kolkata

ITA 1150/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100219 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SARNATH GHOSH
• Keywords: Depreciation; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C, KOLKATA (BEFORE SHRI M. BALAGANESH, A.M. & SHRI S.S.VISWANE THRA RAVI, J.M.) ITA NO. 1150/KOL/2012 : ASSTT. YEAR : 2009-2 010 DCIT, CIRCLE-7 KOLKATA VS M/S. REPLEY & COMPANY LTD. (PAN: AABCR 4633A) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI SANJAY MUKHERJEE, JCIT ASSESSEE BY : S/SHRI SOMNATH GHOSH & SARNATH GHOSH, ADVOCATES DATE OF HEARING : 13.10.2015 DATE OF PRONOUNCEMENT : 04-12-2015 ORDER PER SHRI S.S.VISWANETHRA RAVI, J.M . THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 10.05.2012 PASSED BY THE CIT(APPEALS)-VIII, KOLKATA IN APPEAL NO.258/CIT(A)-VIII/KOL/11-12 FOR THE ASSESSMENT YEA R 2009-10 FRAMED UNDER SECTION 143(3) OF THE I.T.ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING TWO GROUND S BEFORE US. 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL AS IN FAC TS IN DELETING THE DISALLOWANCE MADE BY THE A.O. TOWARDS EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE COMPANY IN RES PECT OF TIPPERS & DUMPERS FOR ASSESSEES OWN BUSINESS AND N OT LET OUT ON HIRE. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL AS IN FAC TS IN DELETING THE DISALLOWANCE MADE BY THE A.O. OF RS.98 ,32,370 TOWARDS DEMURRAGE CHARGE AND PENALTY CHARGE (IMPOSE D BY 2 ITA NO.1150/KOL/2012 M/ S. REPLEY & COMPANY LTD. ASSESSMENT YEAR: 2009-10 STEEL AUTHORITY OF INDIA LTD.) RESPECTIVELY SINCE T HESE ARE PENAL IN NATURE AND UNDER THE INCOME TAX ACT, 1961 PENALTY OF ANY SORT IS NOT AN ALLOWABLE EXPENSE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOMESTIC COMPANY COMPRISED STEVEDORING, CARGO HANDLING, HIRING OF EQ UIPMENTS, CUSTOM CLEARANCE, LOGISTICS, MINING AND EXPORTS AND DURING THE YEAR DERIVED INCOME FROM EXECUTION OF JOBS OF HANDLING CONTRACTO RS UNDER THE CENTRAL COALFIELD AND SAIL (GOVERNMENT UNDERTAKINGS ). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED B Y THE AO THAT THE ASSESSEE CLAIMED DEPRECIATION AT 30% ON THE BLOCK O F ASSETS I.E. TIPPERS AND DUMPERS. THE A.R. CLAIMED THAT THE ASSESSEE IS USING THE VEHICLES FOR ITS OWN BUSINESS AND TRANSPORTATION OF GOODS ON HIRE. THE AO TOOK A VIEW THAT IN TERMS OF A CIRCULAR NO.652 DATED 14.06 .1993 ISSUED BY THE C.B.D.T. WHICH PROVIDES HIGHER RATE OF DEPRECIATION ONLY FOR MOTOR BUSES AND MOTOR LORRIES. THEREBY, HE DISALLOWED THE DEPRECIATION AT 30% BUT HOWEVER RESTRICTED THE DEPRECIATION AT 15% TREATING THE BLOCK ASSETS OF THE ASSESSEE AS PLANT AND MACHINERY. 3.1 BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED T HAT THE VEHICLES WERE USED BY THE ASSESSEE IN TWO CAPACITIES I.E. TR ANSPORTATION OF GOODS FOR HIS OWN PURPOSE AND TRANSPORTATION OF GOODS ON HIRE. TO BE CLEAR FOR CLARITY, THE TRANSPORTATION OF GOODS DURING THE COU RSE OF CONTRACT, WORK TAKEN FOR PURPOSES OF TRANSPORTATION OF CERTAIN PRO DUCTS TO VARIOUS COMPANIES, THE LD. CIT(A) CONSIDERED THE EARLIER OR DERS PASSED FOR ASSESSMENT YEAR 2005-06 DATED 11.04.2008, 2006-07 D ATED 26.06.2009 AND FOR ASSESSMENT YEAR 2008-09 DATED 24.11.2011, T HEREBY WHILE CONSIDERING THE ABOVE ORDERS, THE LD. CIT(A) DIRECT ED THE AO TO ALLOW DEPRECIATION AT 30%. 3 ITA NO.1150/KOL/2012 M/ S. REPLEY & COMPANY LTD. ASSESSMENT YEAR: 2009-10 3.2 REGARDING THE SECOND GROUND, THE ASSESSEE CLAIM ED AN AMOUNT OF RS.98,32,370/- AS EXPENSES AS THE SAID AMOUNT WAS P AID TO SAIL ON ACCOUNT OF DEMURRAGE AND PUNITIVE CHARGES DUE TO DE LAY CAUSED BY RAILWAYS. THE AO DISALLOWED THE SAID EXPENSES IN VI EW OF THE PAYMENTS MADE IN THE NATURE OF FINE AND PENALTY AND OPINED N OT ALLOWABLE WITH REFERENCE TO PROVISIONS OF THE ACT. 3.3 THE LD. CIT(A) DELETED THE ADDITION WHILE CONSI DERING THE ORDERS OF HIS PREDECESSORS AND ALSO DECISION REPORTED IN [ 1980] 123 ITR 269 IN THE CASE OF M/S. KAMAL JYOTI PRASAD VS- CIT AND [1 986] 157 ITR 689 IN THE CASE OF MAHALAXMI SUGAR MILLS CO. LTD. VS- CIT. 4. THOUGH THE BATCH OF TWO APPEALS BEING FILED BY T HE REVENUE, THE LD. COUNSEL SUBMITTED THAT THE FIRST GROUND RAISED BY THE REVENUE ARE COVERED BY AN ORDER DATED 10.01.2011 IN ITA NO.231 OF 2010 OF THE HONBLE JURISDICTIONAL HIGH COURT AT CALCUTTA FOR A SSESSMENT YEAR 2006-07 WHEREIN IT HELD THAT THE ITAT RIGHTLY HELD THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF CIRCULAR NO.652 DATE D 14.06.1993. THE RELEVANT PORTION OF THE ABOVE ORDER IS REPRODUCED B ELOW. . THE ASSESSEE WAS ENTITLED TO THE BENEFIT BECAUS E OF THE FACT THAT THE ASSESSEE WAS USING THE VEHICLES IN BO TH THE CAPACITIES, THAT IS TO SAY, BUSINESS FOR TRANSPORTA TION OF GOODS ON HIRE AS WELL AS TRANSPORTATION OF GOODS. I T WAS ALSO POINTED OUT THAT IN THE PAST FOR THE ASSESSMENT YEA RS 2005- 2006 AND 2004-2005, THE LEARNED C.I.T.(A) HELD THAT THE ASSESSEE HAD THE BUSINESS OF TRANSPORTATION OF GOOD S ON HIERE AS WELL AS TRANSPORTING OTHER GOODS AND, AS S UCH, WAS ENTITLED TO HIGHER RATE OF DEPRECIATION AS PER THE SAID CIRCULAR NO.652. IT APPEARS THAT THE REVENUE DID NO T CHALLENGE THOSE DECISIONS. WE, THEREFORE, FIND THAT IN THE FACTS OF THE PRES ENT CASE, THE LEARNED APPELLATE TRIBUNAL RIGHTLY HELD THAT THE AS SESSEE WAS ENTITLED TO THE BENEFIT OF CIRCULAR NO.652. NO 4 ITA NO.1150/KOL/2012 M/ S. REPLEY & COMPANY LTD. ASSESSMENT YEAR: 2009-10 SUBSTANTIAL QUESTION OF LAW BEING INVOLVED, WE DISM ISS THIS APPEAL. 4.1 FURTHER, THE LD. COUNSEL SUBMITTED THAT THE REV ENUE DID NOT PREFER ANY APPEAL BEFORE THE APEX COURT AND THE LD. DR ALS O CONCEDED THE SAME. HENCE, THE JUDGMENT ON GROUND NO.1 OF THE HON BLE JURISDICTIONAL HIGH COURT AT CALCUTTA HAS BECOME FI NAL AND BINDING ON US. BY RESPECTFULLY FOLLOWING THE JUDGMENT MENTIONE D ( SUPRA ), WE CONFIRM THE ORDER OF THE LD. CIT(A) REGARDING THE G ROUND NO.1 AND DISMISS THE GROUND NO.1 AGAINST THE REVENUE. 5. THE LD. COUNSEL ALSO SUBMITTED IN RESPECT OF GRO UND NO.2 THAT IT IS ALSO COVERED BY THE ORDER OF THIS TRIBUNAL FROM ASS ESSMENT YEARS 1996- 97 BY AN ORDER DATED 29.05.2002 IN ITA NO.1754/KOL/ 95 OF B BENCH, OBSERVATION OF WHICH ARE REPRODUCED HEREINBELOW: 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND FROM T HE RECORD THAT IN THE COURSE OF EXECUTION OF ITS HANDLING JOB , THE APPELLANT HAD NOT ALWAYS BEEN GIVEN ADEQUATE TIME F OR COMPLETING THE JOB RESULTED IN IMPOSITION OF DEMURR AGES FOR DETENTION OF THE WAGES BY THE RAILWAY AUTHORITIES O N THE APPELLANTS PRINCIPAL AGENT M/S. KARAMCHAND THAPER & BROS. LTD. WHO IN TURN DEDUCT THE SAME FROM THE GRO SS BILL OF THE APPELLANT. THE DEMURRAGES AROSE OUT OF THE CONT RACT ENTERED INTO BY THE APPELLANT IN THE ORDINARY COURS E OF ITS BUSINESS AND THERE WAS NO ELEMENT OF INFRINGEMENT O F ANY LAW IN WHICH PENALTY WAS LIABLE TO BE IMPOSED. THUS AS PER OUR CONSIDERED VIEW THAT THE PAYMENT OF DEMURRAGES WAS INCIDENTAL BUSINESS AND ITS IMPACT WAS TO INCREASE THE COST TO THE ASSESSEE THE GOODS HANDLED. MOREOVER, THE DE MURRAGE WAS NOT IMPOSED ON THE APPELLANT BY THE AUTHORITY, BUT WAS IMPOSED ON ITS PRINCIPAL, WHO IN TURN MADE A DEDUCT ION OF THE AMOUNT FROM APPELLANTS BILL. 5.1. THE LD. COUNSEL SUBMITTED THAT THE REVENUE DID NOT FILE ANY APPEAL BEFORE THE HONBLE HIGH COURT AND NO SUCH OR DER CONTRARY TO THE 5 ITA NO.1150/KOL/2012 M/ S. REPLEY & COMPANY LTD. ASSESSMENT YEAR: 2009-10 VIEW OF B BENCH OF THE ITAT FOR THE ASSESSMENT YE AR 1996-97 AND FOR THE ASSESSMENT YEARS SUBSEQUENT TO THEREON WHICH HA S BEEN CONCEDED BY THE LD. DR. HENCE, THE ORDER OF THE B BENCH O F ITAT, KOLKATA HAS BECOME FINAL AND WE, RESPECTFULLY FOLLOWING THE SAI D ORDER, DISMISS THE GROUND NO.2 OF THE REVENUE AND CONFIRM THE ORDER OF THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2015. SD/- SD/- ( M. BALAGANESH) (S.S.VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/12/2015 TALUKDAR/SR.PS COPY OF ORDER FORWARDED TO: 1 M/S. REPLEY & COMPANY LTD., BLOCK-C, 1 ST FLOOR, 22, LEE ROAD, KOLKATA 700 020 2 ACIT, CIRCLE-7 , KOLKATA 3 THE CIT(A), 4 5 CIT, 5. D.R. TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA