Rushil Industries , Bhavnagar V. ACIT, Circle-1, Bhavnagar

ITA 1235/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6174 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 14-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Depreciation; Set aside
• Section: 22; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.1235/AHD/2018 (ASSESSMENT YEAR: 2010-11) RUSHIL INDUSTRIES D-202, SARTHIK ATABHAI CHOWK, BHAVNAGAR-364001 VS. ACIT CIRCLE-1, BHAVNAGAR PAN NO.AABCR0170N ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI TUSHAR HEMANI, SR. ADV. WITH SHRI P.B. PARMAR RESPONDENT BY : SHRI L. P. JAIN , SR. D R DATE OF HEARING 19.04.2021 DATE OF PRONOUNCEMENT 22.04.2021 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 08.03.2018 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS) 6, AHMEDABAD ARISING OUT OF THE ORDER DA TED 16.06.2014 PASSED BY THE ACIT, CIRCLE-1, BHAVNAGAR UNDER SECTI ON 154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO T HE ACT) FOR ASSESSMENT YEAR 2010-11. 2. THE ISSUE RELATES TO DEPRECIATION ON CLAIM OF RS . 24,80,124/- @50% WHEREIN 15% HAS BEEN ALLOWED BY THE REVENUE. ITA NO.1235/AHD/2018 RUSHIL INDUSTRIES VS. ACIT ASST.YEAR 2010-11 - 2 - 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE PURCHASED A MOTOR CAR AMOUNTING TO RS. 49,60,247/- IN THE YEAR UNDER CONSIDERATION AND HAS PUT TO USE BEFORE OCTOBER 200 9. THE CLAIM MADE ON ACCOUNT OF SPECIAL INSERTION OF RATE IN RESPECT OF COMMERCIAL VEHICLE HAS BEEN DENIED BY THE REVENUE. IT WAS FU RTHER SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY NUMBER OF JUDGMENT S PASSED BY THE COORDINATE BENCH. THE COPIES OF THE JUDGMENT WHERE BY AND WHEREUNDER THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF T HE ASSESSEE HAS ALREADY BEEN SUBMITTED BEFORE US BY WAY OF PAPER BOOK. 4. THE LD. DR HAS FAILED TO CONTROVERT SUCH SUBMISS ION MADE BY THE ASSESSEE. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD. 6. THE JUDGMENT PASSED IN THE MATTER OF SHREE BALAJ I PRODUCTS VS. ITO IN ITA NO. 2737/AHD/2013 FOR A.Y. 2010-11 PASSE D BY THE COORDINATE BENCH HAS BEEN CONSIDERED BY US. WHILE DEALING WITH THE IDENTICAL ISSUE THE LD. TRIBUNAL HAS BEEN PLEASED T O OBSERVE AS FOLLOWS:- 5. IN THE PRESENT CASE, THE LD.AO HAS GRANTED DEPR ECIATION AT THE RATE OF 15% WITHOUT EXAMINING RELEVANT PROVISIONS. IT APPEARS THAT HIS FINDING IS BASED UPON HIS EXPERIENCE AND PAST IMPRESSION. HE WAS OF THE OPIN ION THAT ONCE BOARD HAS NOT GRANTED HIGHER RATE OF DEPRECIATION TO CARS, WHICH ARE PUT IN THE BUSINESS OF HIRING, THEN HOW A PARTNER, WHO USED MOTOR CAR FOR THE PURP OSE OF BUSINESS CAN BE GRANTED AT A SUCH RATE. IN THE CASE HE HAD AN IMPRESSION, HIGHER RATE OF DEPRECIATION AT THE MOST COULD BE GRANTED TO THE CAR USED FOR THE PUBLI C TRANSPORTATION FOR THE PEOPLE. ON APPEAL, THE LD.CIT(A) HAS OBSERVED THAT CBDT HAS AMENDED I.T. RULES BY INCOME TAX (THIRD AMENDMENT) RULES, 2009 AND NEW APPENDIX HAS BEEN INTRODUCED. THE LD.CIT(A) MADE REFERENCE TO NOTIFICATION NO.10/2009 DATED 19.12.2009 AND ALSO ITA NO.1235/AHD/2018 RUSHIL INDUSTRIES VS. ACIT ASST.YEAR 2010-11 - 3 - PARA-6 OF THE SAID NOTIFICATION WHICH GIVES DEFINIT ION OF COMMERCIAL VEHICLE. I HAVE EXAMINED THIS NOTIFICATION AVAILABLE ON PAGE NO. 1. 426 OF INCOME TAX RULES (3 RD EDITION) OF TAXMAN I.E. 2016 EDITION. PARAGRAPH-6 CONTEMPLATES DEFINITION OF COMMERCIAL VEHICLE. THIS PARAGRAPH IS AVAILABLE AT PAGE NO.1.433 OF THE TAXMANNS INCOME TAX RULES. I FIND IT IS VERBATIM SAME AS CONSIDERED BY THE ITAT, MUMBAI. THERE IS NO SUCH CONDITION THAT VEHICLE WO ULD QUALIFY AS COMMERCIAL VEHICLES WHEN LICENSED TO BE USED AS PUBLIC TRANSP ORT. FOR FACILITY OF REFERENCE, I TAKE NOTE OF THIS AS UNDER: 6. COMMERCIAL VEHICLE MEANS HEAVY GOODS VEHICLE , HEAVY PASSENGER MOTOR VEHICLE, LIGHT MOTOR VEHICLE, MEDIUM GOODS VEHICLE AND MEDIUM PASSENGER MOTOR VEHICLE BUT DOES NOT INCLUDE MAXI-CAB, MOTOR-CAB, TRACTOR AND ROAD-ROLLER. THE EXP RESSIONS HEAVY GOODS VEHICLE, HEAVY PASSENGER MOTOR VEHICLE, LIGHT MOTOR VEHICLE, MEDIUM GOODS VEHICLE, MEDIUM PASSENGER MOTOR VEHICLE, MAXI-CAB, MOTOR- CAB, TRACTOR AND ROADROLLER SHALL HAVE THE M EANINGS RESPECTIVELY AS ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLE S ACT, 1988 (59 OF 1988). 6. IN VIEW OF THE ABOVE, I DO NOT FIND ANY DISPARIT Y ON FACTS. I ALLOW APPEAL OF THE ASSESSEE AND DELETE DISALLOWANCE MADE BY THE AO . THE JUDGMENT PASSED IN THE MATTER OF CIPRIANI HARR ISON VALVES PVT. LTD. VS. JCIT IN ITA NO. 1239/AHD/2014 FOR A.Y . 2010-11HAS ALSO DEALT WITH THE IDENTICAL ISSUES WHICH IS APPEARING AT PAGE 25 OF THE PAPER BOOK FILED BEFORE US BY THE ASSESSEE. THE RELEVANT PARAGRAPH WHEREOF IS AS FOLLOWS:- 6. FIRST, WE WILL TAKE UP THE GROUND RELATING TO C LAIM OF DEPRECIATION ON MOTOR CAR, CLAIMED BY THE ASSESSEE AT 50%; WHEREAS BOTH THE LO WER AUTHORITIES HAVE RESTRICTED IT TO 15%. LD. COUNSEL SUBMITTED THAT THE MOTOR CAR IN QUESTION WAS PURCHASED IN PREVIOUS ASSESSMENT YEAR, I.E. AY 2009-10, ON 28.03 .2009 FOR BUSINESS PURPOSES. DEPRECIATION IN AY 2009-10 WAS CLAIMED @ 25% BEING HALF OF 50% AS THE MOTOR CAR WAS PURCHASED IN THE MONTH OF MARCH 2009 AND THIS D EPRECIATION WAS CLAIMED AS PER THE CBDT CIRCULAR NO.10/2009 DATED 19.01.2009. LD. COUNSEL FURTHER REFERRED TO APPENDIX-I (SEE RULE 5) RELATING TO RATES OF DEPREC IATION APPEARING IN PAGE 17 OF THE PAPER-BOOK WHICH SPECIFIES THAT 'IF A NEW COMMERCIA L VEHICLE WHICH IS ACQUIRED ON OR AFTER THE FIRST DAY OF JANUARY 2009, BUT BEFORE THE FIRST DAY OF APRIL 2009, AND IS PUT TO USE BEFORE FIRST DAY OF APRIL 2009 FOR THE P URPOSES OF BUSINESS OR PROFESSION', THEN THE ASSESSEE WOULD BE ELIGIBLE TO CLAIM DEPREC ATION @ 50% OF THE WRITTEN DOWN VALUE. LD. COUNSEL ALSO REFERRED TO THE DEFINITION OF COMMERCIAL VEHICLE APPEARING AT PAGE 18 OF THE PAPER-BOOK, AS PER WHICH, COMMERCIAL VEHICLE MEANS ''HEAVY GOODS VEHICLE', 'HEAVY PASSENGER MOTOR VEHICLE', 'LIGHT M OTOR VEHICLE', 'MEDIUM GOOD' AND 'MEDIUM PASSENGER MOTOR VEHICLE BUT DOES NOT I NCLUDE MAXI-CAB, TRACTOR ITA NO.1235/AHD/2018 RUSHIL INDUSTRIES VS. ACIT ASST.YEAR 2010-11 - 4 - AND ROAD-ROLLER. REFERRING THE ABOVE DETAILS AS APPEARING IN THE INCOME-TAX RULES, LD. COUNSEL ALSO REFERRED AND RELIED ON THE DECISION OF THE CO-ORDINATE BENCH, MUMBAI IN THE CASE OF M/S. BLUE STEEL ENGINEERS VS. DCIT IN ITA NO.6641/MUM/2010, PRONOUNCED ON 11.05.2012 AND ALSO CO-ORDINATE BENCH, PUNE DECISION IN THE CASE OF GERA DEVELOPMENTS (P.) LTD VS. JCIT, REPORTED IN [2015] 61 TAXMANN.COM 88 (PUNE-TRIB.), DATED 31.12.2014. 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE RECORD PLACED BEFORE US AND GONE THROUGH THE DECISIONS RELIED ON BY THE LD. COU NSEL FOR THE ASSESSEE. ASSESSEES GRIEVANCE THROUGH THIS GROUND IS AGAINST LD. CIT(A) S ORDER CONFIRMING THE ACTION OF LD. ASSESSING OFFICER RESTRICTING THE DEPRECIATION ON MOTOR CAR @ 15% AS AGAINST 50% CLAIMED BY THE ASSESSEE. ON PERUSAL OF RECORDS, WE FIND THAT THE IMPUGNED MOTOR CAR WAS PURCHASED ON 28.03.2009, I.E., IN PRE VIOUS ASSESSMENT YEAR 2009-10. ADMITTEDLY, THIS MOTOR CAR WAS PURCHASED IN THE NAM E OF ASSESSEE-COMPANY AND USED FOR THE PURPOSES OF ASSESSEES BUSINESS. THE CONTRO VERSY INVOLVED HEREIN IS WHETHER THE DEPRECIATION ON THIS CAR SHOULD BE ALLOWED @ 15 % OR 50%. WE CAN FIND REPLY TO THIS QUESTION IN NEW APPENDIX I (SEE RULE 5) OF INC OME-TAX RULES, WHICH SPECIFIES THE RATE AT WHICH DEPRECIATION IS ADMISSIBLE IN PART A RELATING TO TANGIBLE ASSETS AT III. MACHINERY AND PLANT. UNDER THIS HEAD AT (3)( VIA) READS THAT NEW COMMERCIAL VEHICLE WHICH IS ACQUIRED ON OR AFTER THE 1ST DAY O F JANUARY, 2009 BUT BEFORE THE 1ST DAY OF OCTOBER, 2009 AND IS PUT TO USE BEFORE THE 1 ST DAY OF OCTOBER, 2009 FOR THE PURPOSES OF BUSINESS OR PROFESSION, DEPRECIATION W ILL BE ADMISSIBLE @ 50%. 9. FURTHER, COMMERCIAL VEHICLE HAS BEEN DEFINED AT NOTE NO.6 OF PART A OF THE NEW APPENDIX I, WHICH DEFINES COMMERCIAL VEHICLE AS 'HE AVY GOODS VEHICLE', 'HEAVY PASSENGER MOTOR VEHICLE', 'LIGHT MOTOR VEHICLE', 'M EDIUM GOODS VEHICLE' AND 'MEDIUM PASSENGER MOTOR VEHICLE' BUT DOES NOT INCLU DE 'MAXI-CAB', 'MOTOR-CAB', 'TRACTOR' AND 'ROAD-ROLLER'. WE FURTHER FIND THAT M OTOR CAR PURCHASED BY THE ASSESSEE IS A LIGHT MOTOR VEHICLE WHICH IS WELL WITHIN THE D EFINITION OF COMMERCIAL VEHICLE AND THIS IS ALSO NOT DISPUTED THAT THE MOTOR CAR HAS BE EN USED OTHERWISE THAN FOR BUSINESS PURPOSES, WHICH SHOWS THAT ASSESSEE HAS RIGHTLY CLA IMED DEPRECIATION @ 50% AS THE IMPUGNED MOTOR CAR WAS PURCHASED ON 28.03.2009. OUR VIEW FURTHER GETS SUPPORT FROM THE DECISION OF THE COORDINATE BENCH, PUNE IN THE CASE OF GERA DEVELOPMENTS (P.) LTD (SUPRA) ADJUDICATING SIMILAR ISSUE OF CLAI M OF DEPRECIATION @ 50% INSTEAD OF NORMAL RATE OF 15% AND THE ISSUE WAS DECIDED IN FAV OUR OF THE ASSESSEE BY OBSERVING AS FOLLOWS:- 8. THE SECOND GROUND OF APPEAL RAISED BY THE ASSES SEE IS WITH REGARD TO THE RATE OF ALLOWANCE OF DEPRECIATION ON HONDA MOTOR CA R. THE ASSESSEE CLAIMED DEPRECIATION ON HONDA MOTOR CAR @ 50 PER CE NT ON THE GROUND THAT IT WAS A 'LIGHT MOTOR VEHICLE' AND WAS THEREFORE, C OVERED WITHIN THE MEANING OF A COMMERCIAL VEHICLE. THE ASSESSEE HAD RELIED UP ON THE CBDT NOTIFICATION NO. 10/2009 DT. 19TH JAN., 2009 WHICH PRESCRIBES THAT ENHANCED DEPRECIATION @ 50 PER CENT IS ALLOWABLE ON NEW COMM ERCIAL VEHICLES ACQUIRED ON OR AFTER 1ST JAN., 2009 BUT BEFORE 1ST APRIL, 2009 AND WHICH ARE ITA NO.1235/AHD/2018 RUSHIL INDUSTRIES VS. ACIT ASST.YEAR 2010-11 - 5 - PUT TO USE BEFORE 1ST APRIL, 2009 FOR THE PURPOSE O F BUSINESS OR PROFESSION. THE AO, HOWEVER, ALLOWED DEPRECIATION AT THE NORMAL RATE OF 15 PER CENT ON THE GROUND THAT THE ENHANCED RATE OF DEPRECIATION @ 50 PER CENT ALLOWED BY THE CBDT NOTIFICATION DT. 19TH JAN., 2009 (SUPRA) W OULD COVER ONLY TRUCKS AND OTHER HEAVY VEHICLES AND NOT A MOTOR CAR. THE C IT(A) HAS ALSO AFFIRMED THE AFORESAID STAND OF THE AO, AGAINST WHICH ASSESS EE IS IN APPEAL BEFORE US. 9. IN THIS CONTEXT, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE OBJECTION OF THE IT AUTHORITIES THAT A MOTOR CA R DOES NOT AMOUNT TO A COMMERCIAL VEHICLE IS MISCONCEIVED HAVING REGARD TO THE DEPRECIATION TABLE ANNEXED TO THE IT RULES, 1962. IN THIS CONTEXT, IT IS NOTED THAT R. 5(1) OF THE IT RULES, 1962 (IN SHORT 'THE RULES') PRESCRIBES THAT THE DEPRECIATION ALLOWANCE IS TO BE CALCULATED AT THE PERCENTAGES SPECIFIED IN THE TABLE IN APPENDIX-I THEREOF. THE CONTENTS OF THE TABLE SO FAR AS THEY A RE RELEVANT FOR OUR PURPOSE READ AS UNDER : 'III. MACHINERY AND PLANT 3. (I) TO (VI).... (VIA) NEW COMMERCIAL VEHICLE WHICH IS ACQUIRED ON OR AFTER TH E 1ST DAY OF APRIL, 2009 BUT BEFORE THE 1ST DAY OF APRIL, 2009 AND IS PUT TO USE BEFORE THE 1ST DAY OF APRIL, 2009 FOR THE PURPOSES OF BUSINESS OR PROFESS ION.' 10. FURTHER, PARA 6 OF THE NOTES BELOW READS AS UND ER : '6. 'COMMERCIAL VEHICLE' MEANS . . . . . . . . . . 'LIGHT MOTOR VEHICLE', . . . . . . . . . . . . . . . . . THE EXPRESSIONS . . . . . . . . . . . . . . 'LIGHT MOTOR VEHICLE', . . . . . . . . . . . . . . SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGN ED TO THEM IN S. 2 OF THE MOTOR VEHICLES ACT, 1988 (59 OF 1998).' 11. A CONJOINT READING OF THE AFORESAID PROVISIONS WOULD REVEAL THAT THE VEHICLE IN RESPECT OF WHICH ASSESSEE SEEKS TO CLAIM DEPRECIATI ON @ 50 PER CENT IS A 'LIGHT MOTOR VEHICLE' AND THEREFORE, THE CLAIM FOR ENHANCED RATE OF DEPRECIATION IS ON A SOUND FOOTING. OSTENSIBLY, THE AFORESAID PROVISIONS OF TH E DEPRECIATION TABLE ANNEXED AS APPENDIX-I TO THE RULES CLEARLY APPLY AND THEREFORE , THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN DENYING ASSESSEE'S CLAIM FOR ALLOWANCE OF DEPRECIATION @ 50 PER CENT ON THE VEHICLE IN QUESTION, SUBJECT TO THE FULFILLMENT OF OTHER CONDITIONS. AS A CONSEQUENCE, WE SET ASIDE THE ORDER OF THE CIT(A) A ND DIRECT THE AO TO RECOMPUTE THE DEPRECIATION ALLOWABLE ON THE IMPUGNED VEHICLE AS PER OUR AFORESAID DIRECTION AND IN ACCORDANCE WITH LAW. THUS, ON THIS ASPECT AS SESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 10. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDIN ATE BENCH, AND, IN VIEW OF OUR DISCUSSION ABOVE, WE ARE OF THE VIEW THAT ASSESSEE SHOULD BE ALLOWED THE CLAIM OF DEPRECIATION @ 50% ON THE WDV AS ON 01.04.2009 OF M OTOR CAR PURCHASED FOR BUSINESS PURPOSES ON 28.03.2009. IN THE RESULT, THI S GROUND OF ASSESSEE IS ALLOWED. HENCE, RESPECTFULLY RELYING UPON THE ORDERS PASSED BY THE CO- ORDINATE BENCH WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE; THE ASSESSEE ITA NO.1235/AHD/2018 RUSHIL INDUSTRIES VS. ACIT ASST.YEAR 2010-11 - 6 - IS ENTITLED TO DEPRECIATION @50% AMOUNTING OF RS. 2 4,80,124/- AS CLAIMED. HENCE, THE APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 22 / 0 4 /20 2 1 SD/- SD/- (WASEEM AHMED) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/04/2021 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 19.04.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19.04.2021 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 20.04.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .04.2021 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 22.04.2021 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .04.2021 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