Chennai Radha Engineering Works Private Limited, CHENNAI V. Addl. CIT, CHENNAI

ITA 1259/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7979 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 06-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T BANUSEKAR
• Keywords: Business income; Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . . ! ' , # $% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1259/MDS/2016 & '& /ASSESSMENT YEAR : 2011-12 CHENNAI RADHA ENGINEERING WORKS PRIVATE LIMITED, NO.40, SAPTHAGIRI COLONY, JAFERKHANPET, CHENNAI 600 083. PAN : AACCC6068R V. THE ADDITIONAL COMMISSIONER OF INCOME TAX, COMPANY RANGE 1, CHENNAI. ( () /APPELLANT) ( *+() /RESPONDENT) () , - /APPELLANT BY : SHRI T.BANUSEKAR, C.A. *+(),- /RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT ,.# /DATE OF HEARING : 24.10.2016 /0' ,.# /DATE OF PRONOUNCEMENT : 25.11.2016 /O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF CIT(A) - 1, CHENNAI DATED 18.02.2016 FOR THE ASSESSMENT YEAR 2011-12. 2 I.T.A. NO.1259/MDS/2016 2. SHRI T.BANUSEKAR, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS DISALLOWANCE OF DEPRECIATION TO THE EXTENT OF RS.69,18,594/-. ACCOR DING TO THE LEARNED REPRESENTATIVE FOR THE ASSESSEE, THE ASSESSEE CLAIM ED HIGHER RATE OF DEPRECIATION IN RESPECT OF HYDRAULIC CRANES, TIPPER , PAY LOADER AND JCB LOADERS. THE ASSESSING OFFICER DISALLOWED THE HIGHE R RATE OF DEPRECIATION AND ALLOWED THE DEPRECIATION AT THE RATE OF 15%. REFERR ING TO THE ORDER OF THE ASSESSING OFFICER, MORE PARTICULARLY, AT PARAGRAPH 4, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CLAIMED DEPRECIATION AT THE RATE OF 30%. HOWEVER, THE ASSES SING OFFICER RESTRICTED THE SAME TO 15%. REFERRING TO THE NEW APPENDIX I, U NDER ITEM III(3)(II), THE LEARNED REPRESENTATIVE SUBMITTED THAT THE MOTOR CARS, MOTOR LORRIES AND MOTOR TAXIS USED IN A BUSINESS OF RUNNING THEM ON H IRE ARE ELIGIBLE FOR A HIGHER RATE OF DEPRECIATION OF 30% AS AGAINST THE R EGULAR RATE OF 15%. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS NOT IN THE BUSINESS OF RUNNING MOTOR VEHICLE OR MOTOR CAR OR IN THE BUSINE SS OF EITHER TRANSPORTATION OF GOODS OR ON HIRE. 3. REFERRING TO THE CBDT CIRCULAR NO.652 DATED 14.0 6.1993, THE LEARNED REPRESENTATIVE SUBMITTED THAT THE HIGHER RA TE OF DEPRECIATION IS AVAILABLE ON THE MOTOR LORRIES USED IN THE ASSESSEE S BUSINESS OF TRANSPORTATION OF BUSINESS ON HIRE. THEREFORE, ACCO RDING TO THE LEARNED REPRESENTATIVE, WHEN THE ASSESSEE IS USING THE TRIP PER, JCB AND OTHER MOTOR 3 I.T.A. NO.1259/MDS/2016 VEHICLES IN THE ASSESSEES OWN BUSINESS, THE ASSESS EE IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION. REFERRING TO THE ORDER OF THE ASSESSING OFFICER, THE DEPARTMENT REPRESENTATIVE SUBMITTED THAT THIS CIRCU LAR OF CBDT WAS DISTINGUISHED BY THE ASSESSING OFFICER ON THE GROUN D THAT THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF TRANSPORTATION OF GOODS ON HIRE. ACCORDING TO THE LEARNED REPRESENTATIVE, WHEN THE ASSESSEE USED MOTO R VEHICLES IN ITS OWN BUSINESS, THE SAME IS ELIGIBLE FOR HIGHER RATE OF D EPRECIATION. 4. REFERRING TO THE JUDGMENT OF THE APEX COURT IN C IT VS. GUPTA GLOBAL EXIM (P) LTD. REPORTED IN [2008] 305 ITR 132 (SC), THE LEARNED REPRESENTATIVE SUBMITTED THAT IN THE CASE BEFORE TH E APEX COURT, THERE WAS NO EVIDENCE TO INDICATE THAT THE ASSESSEE WAS IN TH E BUSINESS OF HIRING OUT MOTOR LORRIES FOR RUNNING THEM TO EARN BUSINESS INC OME. IN THE CASE BEFORE US, ACCORDING TO THE LEARNED REPRESENTATIVE, MATERI ALS AVAILABLE ON RECORD TO SUBSTANTIATE THAT THE ASSESSEE WAS USING THE MOTOR CAR IN ITS OWN BUSINESS FOR EARNING THE INCOME. THEREFORE, THE JUDGMENT OF THE APEX COURT IN GUPTA GLOBAL EXIM (P) LTD. (SUPRA) MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. 5. ON THE CONTRARY, SHRI A.V.SREEKANTH, THE LEARNED DEPARTMENT REPRESENTATIVE SUBMITTED THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF COMPONENTS AND SPARES FOR CONVEYOR SYSTEMS AND LABOUR CONTRACT, OPERATION AND MAINTENANCE OF CONVEYOR SYS TEMS AT THERMAL POWER STATIONS AND PORT AND GENERATION OF POWER. THE ASSE SSEE CLAIMED 4 I.T.A. NO.1259/MDS/2016 DEPRECIATION IN RESPECT OF HYDRAULIC CRANES, TIPPER , PAY LOADER AND JCB LOADERS, ETC. AT THE RATE OF 30%. THE ASSESSING OFF ICER RESTRICTED THE SAME AT 15% ON THE GROUND THAT THE ASSESSEES BUSINESS IS N OT TRANSPORT OF GOODS. THE MOTOR VEHICLE WAS NOT USED IN THE BUSINESS OF H IRING. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS ELIGIB LE FOR DEPRECIATION ONLY AT THE RATE OF 15%. THE CIT(A) ALSO CONFIRMED THE ORDE R O THE ASSESSING OFFICER. ACCORDING TO THE REPRESENTATIVE FOR THE AS SESSEE, THE CIRCULAR OF THE CBDT IN CIRCULAR NO.652 WAS EXAMINED BY THE ASSESSI NG OFFICER AND IT WAS FOUND THAT IT WAS APPLICABLE IN RESPECT OF MOTOR LO RRIES WHICH WAS HIRED OUT TO SOME OTHER PERSON OR IT WAS USED IN THE BUSINESS OF TRANSPORTATION OF GOODS. ADMITTEDLY, MANUFACTURING OF COMPONENTS AND SPARE FOR CONVEYOR SYSTEM IS THE BUSINESS OF THE ASSESSEE. IT IS NOT T HE BUSINESS OF THE ASSESSEE TO HIRE OUT THE VEHICLES. THEREFORE, THE A SSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE BY RESTRICTING THE DEPRECIATION AT THE RATE OF 15%. REFERRING TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF GUPTA GLOBAL EXIM (P) LTD. (SUPRA), THE LEARNED DEP ARTMENT REPRESENTATIVE SUBMITTED THAT THE USE OF THE MOTOR LORRIES IN THE BUSINESS OF THE ASSESSEE OF TRANSPORTATION OF GOODS IS THE TEST TO BE APPLIE D FOR THE PURPOSE OF ALLOWING THE HIGHER RATE OF DEPRECIATION. THE APEX COURT SPECIFICALLY FOUND THAT THE ASSESSEE WAS IN THE BUSINESS OF TRADING IN TIPPER AND NOT IN ANY OTHER BUSINESS. THE APEX COURT HAS ALSO FOUND THAT THERE WAS NO EVIDENCE TO INDICATE THAT THE ASSESSEE WAS IN THE BUSINESS O F HIRING OUT THE MOTOR 5 I.T.A. NO.1259/MDS/2016 LORRIES FOR RUNNING THEM TO EARN BUSINESS INCOME. T HEREFORE, THE CIT(A) HAS RIGHTLY FOUND THAT IN VIEW OF THE JUDGMENT OF THE A PEX COURT IN GUPTA GLOBAL EXIM (P) LTD. (SUPRA), THE ASSESSEE IS NOT ELIGIBLE FOR HIGHER RATE OF DEPRECIATION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF COMPONENTS AND SPARES FOR CONVEYOR SYSTEMS AND LABOUR CONTRACT OF OPERATION AND MAINTE NANCE OF CONVEYOR SYSTEMS AT THERMAL POWER STATIONS AND PORT AND GENE RATION OF POWER. THE ASSESSEE IS NOT IN THE BUSINESS OF HIRING OUT OF MO TOR LORRIES OR IN THE TRANSPORT OF GOODS. WE HAVE CAREFULLY GONE THROUGH THE NEW APPENDIX I, UNDER ITEM III(3)(II) OF DEPRECIATION SCHEDULE WHIC H CLEARLY SAYS THAT MOTOR CARS, OTHER THAN THOSE USED IN A BUSINESS OF RUNNIN G THEM ON HIRE, ACQUIRED OR PUT TO USE ON OR AFTER THE 1ST DAY OF APRIL, 199 0 IS ELIGIBLE ONLY AT THE RATE OF 15%. SO THE VEHICLES NAMELY MOTOR LORRIES USED I N THE BUSINESS OF RUNNING THEM ON HIRE ALONE ARE ELIGIBLE FOR DEPRECI ATION AT THE RATE OF 30% WHICH IS EVIDENT FROM THE NEW APPENDIX I, UNDER ITE M III(3)(II) OF THE DEPRECIATION SCHEDULE. IN THE CASE BEFORE US, ADMIT TEDLY, THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF RUNNING MOTOR CAR OR MOT OR LORRIES ON HIRE. IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT THE ASSESSEE IS USING THE HYDRAULIC CRANES, TIPPER, PAY LOADER AND JCB LOADERS, ETC. IN THE BUSINESS OF TRANSPORTATION OF GOODS. TRANSPORTATION OF GOODS AD MITTEDLY IS NOT THE 6 I.T.A. NO.1259/MDS/2016 BUSINESS OF THE ASSESSEE. THEREFORE, AS RIGHTLY FOU ND BY THE ASSESSING OFFICER AND CIT(A), THE CIRCULAR OF THE CBDT IN CIR CULAR NO.652 IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREF ORE, THE CIT(A) HAS RIGHTLY PLACED HIS RELIANCE IN THE JUDGMENT OF THE APEX COU RT IN GUPTA GLOBAL EXIM (P) LTD. (SUPRA) AND CONFIRMED THE ORDER OF THE ASS ESSING OFFICER. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON 25 TH NOVEMBER, 2016 AT CHENNAI. SD/- SD/- ( . . ! ' ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) # /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 1 /DATED, THE 25 TH NOVEMBER, 2016. SP. , *.!2 32'. /COPY TO: 1. () /APPELLANT 2. *+() /RESPONDENT 3. 4. ( ) /CIT(A) 4. 4. /CIT, 5. 25 *. /DR 6. & 6 /GF.