THE DCIT, 1(1), Bhopal V. M/S. JYOTI CONSTRUCTION COMPANY, Harda

ITA 124/IND/2015

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7185 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-09-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 02-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Keywords: Depreciation; Audit objection; Difference of opinion; Tax effect; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 147; 148

Judgement Text

JYOTI CONSTRUCTION COMPANY I.T.A. NO. 124/IND/15 , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.124/IND/2015 ASSESSMENT YEAR:2008-09 DCIT - 1(1), BHOPAL / VS. M/S JYOTI CONSTRUCTION COMPANY, CHANDAK CHOWK, AGRASEN CHOURAHA, HARDA (REVENUE) (RESPONDENT ) P.A. NO. AA DFJ4369G REVENUE BY SHRI P.K.MI T RA , SR. DR RESPONDENT BY NONE DATE OF HEARING: 26.09.2018 DATE OF PRONOUNCEMENT: 28 .09.2018 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL FILED AT THE INSTANCE OF REVENUE PERTAI NING TO A.Y. 2008-09 IS DIRECTED AGAINST THE ORDER OF LD. COMMIS SIONER OF INCOME TAX(APPEALS)-I, BHOPAL (IN SHORT CIT(A)), VIDE APPEAL NO. CIT(A)-I/BPL/IT-02/12-13 ORDER DATED 17.12.2014 WHI CH IS ARISING OUT OF THE ORDER U/S 147 R.W.S. 143(3) OF THE INCOM E TAX ACT JYOTI CONSTRUCTION COMPANY I.T.A. NO. 124/IND/15 2 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON 05. 03.2012 BY DCIT, 1(1), BHOPAL. 2. NONE APPEARED ON ASSESSEES BEHALF. CASE HEARD WITH THE ASSISTANCE OF LD. DEPARTMENTAL REPRESENTATIVE. REV ENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL; ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEAL) HAS ERRED IN AANNULLING THE REASSESSMENT ORDER U/S 147 OF THE AC T, DATED 05/03/2012 OF DCIT-1(1), RESULTING IN DELETION OF ADDITION OF RS.3,29,740/- MADE BY HIM ON ACCOUNT OF EXCESS CLAIM OF DEPRECIATION IN TRUCK S. THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR A LTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE, THE APPEAL IS FINALLY HEARD FOR DISPOSAL. ALTHOUGH THE TAX EFFECT INVOLVED IN THIS CASE IS LE SS THAN THE MONETARY LIMIT PRESCRIBED BY DBDT FOR FILING APPEAL, HOWEVER APPEA L IS AUTHORIZED BEING COVERED IN PARA 8 (C ) OF DBDTS INSTRUCTION NO.5/2 014 DATED 10.7.2014 WHICH READ AS UNDER:- PARA 8 ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHOULD BE CONTESTED IRRESPECTIVE OF THE TAX EFFECT. (C ) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. JYOTI CONSTRUCTION COMPANY I.T.A. NO. 124/IND/15 3 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSIN ESS OF CIVIL CONSTRUCTION WORK INCLUDING TRANSPORTATION OF SITE MATERIAL THROUGH HIRING OF VEHICLES. INCOME OF RS. 35,07,360/- DECL ARED IN THE RETURN OF INCOME FILED ON 18.09.2008. ASSESSMENT W AS COMPLETED ON 29.10.2010 AFTER MAKING DISALLOWANCE OF EXPENSES OF RS.1,49,738/- AND THE TOTAL INCOME HAS BEEN ASSESSE D AT RS.36,57,098/-. NOTICE U/S 148 HAS BEEN ISSUED ON 9 .11.2011 FOR REOPENING THE ASSESSMENT AS DISALLOWANCE OF EXCESS CLAIM OF DEPRECIATION ON TRUCKS @30% INSTEAD OF 15% AND ACCO RDINGLY ORDER U/S 147 R.W.S. 148 WAS PASSED ON 5.3.2011 MAKING AN ADDITION OF RS.3,29,740/- TO EXCESS CLAIM OF DEPRECIATION THERE BY ASSESSING THE INCOME AT RS.39,86,838/-. 4. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE THE LD . CIT(A) AND SUCCEEDED. 5. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 6. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY A RGUED SUPPORTING THE FINDINGS OF LD. ASSESSING OFFICER. JYOTI CONSTRUCTION COMPANY I.T.A. NO. 124/IND/15 4 7. WE HAVE HEARD THE CONTENTIONS OF DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS PLACED BEFOR E US. THE FIRST ISSUE RAISED IS WITH REGARD TO ANNULLING OF THE REA SSESSMENT ORDER U/S 147 OF THE ACT BY LD. CIT(A). WE FIND THAT THE ORIGINAL ASSESSMENT WAS FRAMED ON 29.10.2010 AND FOR COMPLET ING THE SAME QUESTIONNAIRE U/S 142(1) OF THE ACT WAS ISSUED BY T HE LD. ASSESSING OFFICER ON 20.08.2010. SPECIFIC QUESTION WAS ASKED WITH REGARD TO DEPRECIATION CLAIMED ON THE ASSETS. ASSESSEE MADE REPLY ON 4.10.2010 ENCLOSING THERE WITH THE STATEMENT SHOWIN G DETAILS OF FIXED ASSETS OWNED BY THE ASSESSEE. AT THAT POINT OF TIME LD.A.O ALLOWED THE ASSESSEES CLAIM OF DEPRECIATION @30% O N THE TRUCKS OWNED BY IT. IN THE AUDIT REPORT ALSO THE DEPRECIA TION @30% WAS SHOWN AND THE AUDITOR HAS VERIFIED THE SAME. SUBSE QUENTLY I.E. AFTER FINALIZING THE ASSESSMENT U/S 143(3) OF THE A CT WHEN IT WAS NOTICED BY LD. ASSESSING OFFICER THAT THE ASSESSEE FIRM WHICH IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND I S NOT RUNNING THE BUSINESS OF PLYING OF TRUCK HAS CLAIMED THE DEPRECI ATION EXCESSIVELY BECAUSE THE DEPRECIATION ALLOWABLE FOR TRUCKS USED IN NORMAL BUSINESS IS ALLOWABLE @15% AND IN CASE THEY ARE USE D FOR PLYING, JYOTI CONSTRUCTION COMPANY I.T.A. NO. 124/IND/15 5 THEN DEPRECIATION @30% IS ALLOWABLE. OBSERVING THI S FACT CASE OF THE ASSESSEE WAS REOPENED AND REASSESSMENT ORDER WA S FRAMED. 8. NOW THE ISSUE BEFORE US IS WHETHER THE REASON G IVEN BY THE LD. ASSESSING OFFICER CAN BE TERMED AS CHANGE OF OPINI ON. AS HELD BY LD.CIT(A), THE REASON FOR REOPENING BY THE LD. ASS ESSING OFFICER WAS MERELY A CHANGE OF OPINION AND HE THEREFORE A NNULLED THE REASSESSMENT PROCEEDINGS. 9. WE ARE HOWEVER OF THE VIEW THAT THE BASIC ISSUE WHICH NEEDS TO BE EXAMINED FIRST IS WHETHER THE ASSESSEE HAS RIGHT FULLY CLAIMED THE DEPRECIATION AS PER ITS NATURE OF BUSINESS. ASSESS EE ITSELF HAS NOT DISPUTED THAT IT IS ENGAGED IN CIVIL CONSTRUCTION B USINESS AND NOT INVOLVED IN PLYING OF TRUCKS. THE DISCUSSIONS ABOU T THE NATURE OF BUSINESS VIS--VIS DEPRECIATION ON TRUCK WAS NEVER TAKEN UP BY AND BEFORE THE ASSESSING AUTHORITY AT THE TIME OF ORIGI NAL ASSESSMENT PROCEEDINGS. IT WAS ONLY DURING REASSESSMENT PROCE EDINGS THAT THIS ISSUE WAS UNDERTAKEN. WE ARE THEREFORE OF THE CONS IDERED VIEW THAT THIS IS NOT THE CASE OF CHANGE OF OPINION RATHER IT IS A NEW MATERIAL FACT WHICH CAME UP BEFORE THE ASSESSING AUTHORITY WHICH WAS NOT JYOTI CONSTRUCTION COMPANY I.T.A. NO. 124/IND/15 6 EXAMINED BY HIM AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. WE THEREFORE SET ASIDE THE FINDINGS OF LD.CIT(A) AN D HOLD THE REASSESSMENT PROCEEDINGS AS VALID. THIS LEGAL GROU ND RAISED BY THE REVENUE IS ALLOWED. 10. NOW WE TAKE UP THE MERITS OF THE CASE AS TO WH ETHER THE ASSESSEE HAS CLAIMED EXCESS AMOUNT OF DEPRECIATION ON TRUCKS AT RS.3,29,740/-. PERUSAL OF RECORDS SHOWS THAT THE A SSESSEE PURCHASED NEW TRUCKS AND WAS ALSO HAVING OLD TRUCKS AND THEY WERE NOT USED FOR PLYING BUSINESS. ASSESSEE IS ENG AGED IN THE BUSINESS OF CIVIL CONSTRUCTION WORK AND TRUCKS HAVE BEEN USED IN THIS BUSINESS. AS PER THE PROVISIONS OF THE INCOME TAX ACT THE IMPUGNED ASSETS I.E. TRUCKS USED FOR CIVIL CONSTRUC TION BUSINESS WERE ELIGIBLE FOR DEPRECIATION @15% AND NOT 30%. N OTHING ON RECORD SHOWS THAT THE ASSESSEE DISPUTED THIS FACT T HAT IT IS HAS EVER CARRIED THE BUSINESS OF PLYING OF TRUCKS. IT HAS O NLY CLAIMED THAT THE TRUCKS WERE USED FOR TRANSPORTATION OF MATERIAL TO VARIOUS SITES WHICH CANNOT TANTAMOUNT TO PLYING BUSINESS RATHER I T IS PURELY AN USE FOR CIVIL CONSTRUCTION WORK IN WHICH MATERIALS ARE TRANSPORTED TO VARIOUS SITES TO CARRY OUT THE CONSTRUCTION WORKS. JYOTI CONSTRUCTION COMPANY I.T.A. NO. 124/IND/15 7 11. WE THEREFORE ARE OF THE CONSIDERED VIEW THAT LD . CIT(A) ERRED IN NOT DEALING THE ISSUE ON MERITS EVEN WHEN THE REVEN UE HAD A STRONG CASE. WE ACCORDINGLY ALLOW THE GROUNDS RAISED ON M ERITS BY REVENUE AND CONFIRM THE ADDITION OF RS.3,29,740/- M ADE BY THE LD.A.O ON ACCOUNT OF EXCESS CLAIM OF DEPRECIATION. IN THE RESULT THE APPEAL OF REVENUE IS ALLOWED. 10. IN THE RESULT THE APPEAL OF THE REVENUE STAND S ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28.09.2 018. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER A CC OUNTANT MEMBER INDORE; DATED :28/09/2018 /DEV COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE