Siddhi Travels, Baroda V. The Income tax Officer, Ward-5(3), Baroda

ITA 1162/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9891 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-09-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 15-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JHA
• Keywords: Depreciation; Fair market value
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER DATE OF HEARING : 15/ 09 /2010 DRAFTED ON: 15/09/2010 ITA NO.1162/AHD/2010 ASSESSMENT YEAR : 2002-03 M/S.SIDDHI TRAVELS SUKH NIVAS OPP. AZAD MAIDAN MADANZAMPA ROAD BARODA VS. THE ITO WARD-5(3) BARODA PAN/GIR NO. : AAFFS 8271 E ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI MILIN MEHTA RESPONDENT BY: SHRI S.K. JHA, SR. D.R. O R D E R THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -V, BARODA DATED 29/01/2010 PASSED FOR ASSESSMENT YEAR 2002-03 AND THE SUBSTANTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN INVOKING THE PROVISION OF SECTION 45(4) OF THE I.T. ACT, 19 61 DESPITE THE FACT THAT THERE WAS NO DISTRIBUTION OF ASSETS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN INVOKING THE PROVISION OF SECTION 45(4) DESPITE THE FACT THA T THE ITAT, AHMEDABAD VIDE ORDER DATED 08.09.2006 IN ITA NO.1000/A/2006 HAD SUBSTANTIALLY DECIDED THE ISSUE IN FACTS OF THE APPELLANT. ITA NO.1162/AHD /2010 M/S. SIDDHI TRAVELS VS. ITO ASST.YEAR - 2002-03 - 2 - 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN ADOPTING THE FAIR MARKET VALUE OF BUS AT RS.1,50,000/- WHICH FORMED PART OF ASSETS OF THE FIRM EVEN AFTER DISSOLUTION OF FIR M AND THEREBY MAKING ADDITION OF RS.1,09,354/-. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN ADOPTING THE FAIR MARKET VALUE OF CLEANER MACHINE AT RS.7,00 0/- WHICH FORMED PART OF THE ASSETS OF THE FIRM EVEN AFTER DI SSOLUTION ON A MISTAKEN GROUND THAT THERE IS DISTRIBUTION OF ASSET S ON DISSOLUTION OF FIRM AND THEREBY MAKING ADDITION OF RS.1054. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN NOT ALLOWING DEPRECIATION OF RS.6,096/- ON THE GROUND T HAT THE ASSETS ARE TRANSFERRED DURING THE YEAR UNDER CONSID ERATION. 6. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERR ED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN CHARGING INTEREST U/S.234B OF THE INCOME TAX ACT, 1961. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN INITIATING PENALTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S. 143(3) READ WITH SECTION 254 OF T HE I.T. ACT, 1961 DATED 30/11/2007 WERE THAT THE ASSESSEE-FIRM IS STATED TO BE IN THE BUSINESS OF PLYING OF BUSES. THIS IS THE SECOND ROUND OF ASSES SMENT BECAUSE OF THE DIRECTIONS OF THE RESPECTED CO-ORDINATE BENCH SMC AHMEDABAD IN ASSESSEES OWN CASE BEARING ITA NO.1000/AHD/2006 FO R ASSESSMENT YEAR 2002-03 VIDE ORDER DATED 08/09/2006. THE RE SPECTED CO-ORDINATE BENCH HAS DIRECTED THE ASSESSING OFFICER AFTER THE REPRODUCTION OF THE ORDER OF THE ITAT JABALPUR BENCH PRONOUNCED IN THE CASE OF ACIT VS. ITA NO.1162/AHD /2010 M/S. SIDDHI TRAVELS VS. ITO ASST.YEAR - 2002-03 - 3 - THERMOFLIES INDIA REPORTED AS 60 ITD 554( JABALPUR) . THE DIRECTIONS WERE AS UNDER:- 6. IN THE LIGHT OF ABOVE DISCUSSION, I AM OF THE OPINION THAT THE FACTS OF THE CASE UNDER CONSIDERATION REQUIRE TO BE EXAMINED IN THE LIGHT OF ABOVE DECISIONS. AT THE TIME OF HEARING, THE LEARNED AR WAS SPECIFICALLY ASKED TO FILE COPIES OF FINANCIAL STATEMENTS AND OTHERS BUT THE SAME WERE NOT FILED. ON BARE READI NG OF THE ORDERS OF THE LOWER AUTHORITIES, IT HAS BEEN NOTICED THAT THE ASSESSEE HAS NOT FILED SOME RELEVANT RECORDS AND DETAILS BEFORE THEM. IN THE ABSENCE OF RELEVANT FACTS ON RECORD, THE ISSUE CANN OT BE DECIDED AT THIS STAGE. UNDER THE CIRCUMSTANCES, I FIND IT AP PROPRIATE TO RESTORE ALL THE ISSUES RAISED IN THE GROUNDS OF APP EAL TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO DECIDE THE MATT ERS IN ACCORDANCE WITH ABOVE DECISIONS OR LATEST DECISIONS ON THE ISSUE AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. 3. IN THIS CONTEXT, THE FIRST ARGUMENT OF LEARNED A UTHORISED REPRESENTATIVE OF THE ASSESSEE MR. MILIN MEHTA WAS THAT THOUGH THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO FOLL OW THE DECISIONS CITED THEREIN BUT THE ASSESSING OFFICER HAS IGNORED THOSE DIRECTIONS AND REPEATED THE ADDITION ALMOST IN IDENTICAL MANNER AS IT WAS DONE IN THE PAST. THE SECOND LIMB OF THE ARGUMENT OF LEARNED A UTHORISED REPRESENTATIVE OF THE ASSESSEE IS THAT THE ASSETS O F THE FIRM DISTRIBUTED ON DISSOLUTION OF THE FIRM HAD NOT FALLEN WITHIN THE D EFINITION OF THE TRANSFER AS DEFINED IN SECTION 2(47) OF THE I.T. ACT, 1961. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEES THIRD L IMB OF ARGUMENT WAS THAT WITHOUT ANY BASIS, THE ASSESSING OFFICER HAS D ETERMINED THE CONSIDERATION OF TRANSFER AT RS.1,50,000/-, HOWEVER , AS PER THE RECORDS OF THE CASE AND THE VALUE OF THE ASSET AS PER THE DEPR ECIATION CHART OR AS PER ITA NO.1162/AHD /2010 M/S. SIDDHI TRAVELS VS. ITO ASST.YEAR - 2002-03 - 4 - THE BALANCE-SHEET OF THE FIRM THE BUS VALUE WAS SHO WN ONLY AT RS.40,646/-. 4. FROM THE SIDE OF THE REVENUE, LEARNED DEPARTMENT AL REPRESENTATIVE SHRI S.K. JHA AS SUPPORTED THE ACTI ON OF THE ASSESSING OFFICER AS ALSO THE VIEW TAKEN BY THE LEARNED CIT(A PPEALS). 5. I HAVE HEARD BOTH THE SIDES AT SOME LENGTH. AS FAR AS THE LEGAL QUESTION RAISED BY THE LEARNED AUTHORISED REPRESENT ATIVE OF THE ASSESSEE IS CONCERNED, THE SAME CAN ONLY BE ADDRESSED IF ON MERITS THE MATTER HAS NOT BEEN CONTESTED BEFORE ME. ONCE THE LEARNED AUTH ORISED REPRESENTATIVE OF THE ASSESSEE HAS RAISED SOME FACT UAL ASPECTS ABOUT THE ASSESSMENT OF THE QUANTUM OF THE BUS ALLEGED TO HAV E BEEN TRANSFERRED ON DISSOLUTION OF THE FIRM, THEN IT IS BETTER FIRST TO RESOLVE THIS ASPECT INSTEAD OF GOING INTO THE COMPLEX LEGAL ISSUE WHICH IS ALWA YS A SUBJECT OF CONTROVERSY IN THE PAST. THEREFORE, IT WAS DECIDE D DURING THE COURSE OF HEARING FIRST TO ADDRESS WHETHER THE ASSESSING OFFI CER WAS JUSTIFIED IN DETERMINING THE VALUE OF THE BUS BEARING NO.GJ-60-9 239 AT RS.1,50,000/- FOR THE PURPOSE OF ASSESSING THE 'SHORT-TERM CAPIT AL GAIN'. WHILE EXAMINING THE ASSESSMENT ORDER DATED 24/02/2005 PAS SED U/S.143(3) IN THE FIRST ROUND OF ASSESSMENT, I HAVE NOTICED THAT THE ASSESSING OFFICER HAS ESTIMATED THE VALUE OF THE BUS IN QUESTION AT RS.1,50,000/-. THE ASSESSING OFFICER HAS OBSERVED THAT THE BUS WOULD H AVE BEEN TRANSFERRED TO THE PARTNER AT THE SAID ESTIMATED VALUE. WHAT THE ASSESSING OFFICER HAS DONE THAT AFTER ESTIMATING THE VALUE AT RS.1,50 ,000/- HE HAS REDUCED THE WDV AS SHOWN IN THE BOOKS OF ACCOUNT OF RS.40,6 46/-AND, THEREAFTER, ITA NO.1162/AHD /2010 M/S. SIDDHI TRAVELS VS. ITO ASST.YEAR - 2002-03 - 5 - THE BALANCE OF RS.1,09,354/- WAS HELD AS 'SHORT-TER M CAPITAL GAIN'. ON THE SAID AMOUNT, FURTHER A SUM OF RS.1,054/- WAS ADDED BEING THE ESTIMATE SALE VALUE OF A CLEANER MACHINERY. THE REASON ASSI GNED BY THE ASSESSING OFFICER WAS THAT SINCE THE WDV WAS DISCLOSED AT A F IGURE HIGHER THAN THE WDV OF AN ANOTHER ASSET, THEREFORE, THE BUS MUST HA VE BEEN OF THE LATER DATE AND USED FOR A LESSER PERIOD, THEREFORE, HAVIN G HIGHER FAIR MARKET VALUE. BUT THE BASIC QUESTION IS THAT HOW HE HAD A RRIVED AT THE FIGURE OF RS.1,50,000/- IS NOT COMING OUT FROM THE SAID ORDER . THERE IS NO WHISPER ALTOGETHER THAT HOW HE HAS ESTIMATED THE VALUE AT R S.1,50,000/- ON THE OTHER HAND, THE LEARNED AUTHORISED REPRESENTATIVE O F THE ASSESSEE HAS CONTESTED THAT THE VALUE OF THE BUS SHOULD HAVE BEE N TAKEN AS PER THE WDV AS SHOWN IN THE BOOKS OF ACCOUNT BECAUSE THE BU S BEING A COMMERCIAL VEHICLE HAD SUBSTANTIAL WEAR AND TEAR. HE HAS ALSO CONTESTED THAT THIS IS NOT THE CASE OF TRANSFER OF AN ASSET T O AN OUTSIDER BUT THE ASSET WAS ACQUIRED ON THE DISSOLUTION OF THE FIRM BY ONE OF THE EXISTING PARTNER. IN SUCH A SITUATION, THE ACQUISITION OF ASSET CANNOT BE AT PAR THAT TRANSFER OF A SALE OF ASSET TO AN OUTSIDER. I FIN D FORCE IN THE ARGUMENTS OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE BECAUSE THE VALUE OF THE BUS AT RS./1,50,000/- WAS PURELY ON AN ESTIM ATE BASIS AND THE ASSESSING OFFICER HAS NOT GIVEN ANY COGENT MATERIAL OR SATISFYING REASON AS TO WHY THE VALUE WAS SO ESTIMATED BY HIM. I, TH EREFORE, HOLD THAT THE VALUE AS DISCLOSED IN THE BOOKS OF ACCOUNT SHOULD B E TAKEN FOR THE PURPOSE OF THE COMPUTATION OF THE 'SHORT-TERM CAPIT AL GAIN' BECAUSE THE ASSET IN QUESTION, I.E. BUS ALWAYS WAS SUBJECT TO D EPRECIATION AS IS EVIDENT FROM THE RECORD OF THE CASE. I DIRECT ACCORDINGLY AND THIS GROUND MAY BE ITA NO.1162/AHD /2010 M/S. SIDDHI TRAVELS VS. ITO ASST.YEAR - 2002-03 - 6 - TREATED AS ALLOWED PARTLY IN FAVOUR OF THE ASSESSEE . IN THIS MANNER, GROUND NOS.1, 2 & 3 ARE PARTLY ALLOWED IN FAVOUR OF THE ASSESSEE. 6. GROUND NO.4 IS ALSO DECIDED IN THE IDENTICAL MAN NER BECAUSE IN RESPECT OF THIS ASSET AS WELL THE ASSESSING OFFIC ER HAS SIMPLY ESTIMATED THE VALUE OF THE CLEANER MACHINE AT RS.7,000/- WITH OUT ASSIGNING ANY REASON OR CALLING ANY COGENT EVIDENCE. THUS, THIS GROUND IS ALSO PARTLY ALLOWED IN FAVOUR OF THE ASSESSEE. 7. APROPOS GROUND NO.5, THE SAME HAS NOT EMERGED FR OM THE IMPUGNED ORDER AND THE LEARNED CIT(APPEALS) AS WELL AS THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS NOT S ERIOUSLY CONTESTED BEFORE US, THEREFORE, THE SAME IS, ACCORDINGLY, DI SMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 20/ 09/ 2010. SD/- ( MUKUL KR. SHRAWAT ) JUDICIAL MEMBER AHMEDABAD; DATED 20 TH SEPT-2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT(APPEALS)-V, BARODA 5. THE DR, AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NO.1162/AHD /2010 M/S. SIDDHI TRAVELS VS. ITO ASST.YEAR - 2002-03 - 7 - 1. DATE OF DICTATION..15/09/2010 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17/09/2010 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 20/09/X 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20/09/X 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER