M/s Kavita Roadways, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(4), RAJKOT-GUJARAT

ITA 1274/RJT/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7306 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DR ADHIA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH SMC, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) I.T.A. NO.1274/RJT/2010 (ASSESSMENT YEAR 2007-08) M/S KAVITA ROADWAYS VS THE ITO, WD.2(4) NR.ALFRED HIGH SCHOOL RAJKOT SIDIWARI STREET, RAJKOT PAN : AAFFK3913K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DR ADHIA RESPONDENT BY : SHRI AVINASH KUMAR O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- III, RAJKOT DATED 21-07-2010 FOR THE ASSESSMENT YEA R 2007-08 RAISING THE FOLLOWING EFFECTIVE GROUNDS: 1. THE LD.C.I.T.(A) ERRED IN LAW AND FACTS IN CONF IRMING THE ACTION OF THE LD.A.O. IN TREATING THE AMOUNT OF RS. 3,30,720/- BEING SHORT TERM CAPITAL GAIN ON TRANSFER OF TWO HY VA TIPPERS U/S 50(2) OF THE ACT. THE ADDITION IS ON MERELY CO NJECTURES AND SURMISES AND UNJUSTIFIED ON FACTS AS ALSO IN LA W AND DESERVES TO BE DELETED. 2. TAKING INTO CONSIDERATION THE LEGAL, STATUTORY A ND FACTUAL POSITION, AN AMOUNT OF RS.3,30,720/- ADDED BY THE L D.A.O. OUGHT TO HAVE BEEN DELETED. THE ADDITION NEEDS DEL ETION. 3. THE LD.C.I.T.(A) ERRED IN LAW AND FACTS IN CONFI RMING THE ACTION OF THE LD.A.O. IN APPLYING PROVISIONS OF EXP LANATION 5 TO SEC.32(1) WHICH HAS NO RELEVANCE WITH THE ISSUE INVOLVED. THE ADDITION NEEDS DELETION. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT HYVA TIPPERS WE RE EXISTED AS ON 31-03-2006 HAVE BEEN DISPOSED OFF DURING THE RELEVANT PREVIOUS YEAR. IT WAS SUBMITTED BY THE ASSESSEE THAT BOTH THE TIPPERS WERE TRANSFERRED TO PARTNER, SHRI DIPZAKSINH ITA NO.1274/RJT/2010 2 DOLATSINH DODIA ON 01-04-2006. THE ASSESSING OFFIC ER WAS OF THE VIEW THAT IN THE LIGHT OF PROVISIONS OF SECTION 50(2) OF THE ACT THE ASSESSEE WAS LIABLE TO SHORT TERM CAPITAL GAIN ON TRANSFER OF TIPPERS TO THE EXT ENT OF RS.3,30,722 I.E. THE AMOUNT OF DEPRECIATION DEEMED TO BE ALLOWED FOR ASS ESSMENT YEAR 2006-07. THE ASSESSING OFFICER, AFTER CONSIDERING ASSESSEES SUBMISSION CALCULATED DEPRECIATION OF RS.3,30,722 WHICH IS TAKEN AS DEEME D TO BE ALLOWED FOR ASSESSMENT YEAR 2006-07 AND WRITTEN DOWN VALUE AS O N 01-04-2006 WAS WORKED OUT AT RS. 18,74,090 (RS. 22,04,812 SHOWN BY THE AS SESSEE DEPRECIATION DEEMED TO BE ALLOWED FOR ASSESSMENT YEAR 2006-07 RS .3,30,722). THE ASSESSING OFFICER ACCORDINGLY TREATED SHORT TERM CA PITAL GAIN OF RS,.3,30,722. THE CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER. 3. THE LD.AR SUBMITTED THAT THE REVENUE AUTHORITIES DID NOT APPRECIATE THE FACTS OF THE CASE PROPERLY. HE SUBMITTED THAT THE ASSESSEE HIMSELF HAS CLAIMED DEPRECIATION OF RS. 9,44,920 FOR ASSESSMENT YEAR 20 06-07 AND WRITTEN DOWN VALUE AS ON 31-03-2006 WAS RS.22,04,812. THE LD.AR POINTED OUT THE DETAILED CALCULATION FROM PAGES 1 OF HIS WRITTEN SUBMISSION WHICH READ AS UNDER: 1. ONE OF THE PARTNER OF THE FIRM SHRI DIPAKBHAI D ODIYA PURCHASE 2 HYVA TIPPERS NO.6645 AND 8189 AND INTROD UCE THE SAME AT RS.15,74,866/- EACH AS IS CAPITAL WITH THE FIRM. THUS HE INTRODUCE TOTAL CAPITAL OF RS.31,49,732/-. WORKING OF DEPRECIATION IS AS UNDER: TIPPER NO. PURCHASE / DEPRECIATION BALANCE W.D.V. AS ON INTRODUCE CLAIMED IN AS ON 1-4-2006 I.E. AMOUNT F.Y. 2005-06 31-3-2006 F.Y. 2006-07 ------------- -------------- ----------------- --- ---------- ----------------- A.Y. 2006-07 A.Y. 2007-08 6645 15,74,866/- 4,72,460 11,02,406 11,02,406 8189 15,74,866/- 4,72,460 11,02,406 11,02,406 TOTAL 31,49,732 9,44,920 22,04,812 22,04,812 2. THUS THE W.D.V. AS ON 1-4-2006 IS RS.22,04,812/- . AS ON 1- 4-2006 THE ABOVE TIPPERS WERE TAKEN BACK BY THE PAR TNER SHRI DIPAKBHAI DODIYA AT THE W.D.V. OF RS.22,04,812 /-. THUS WHEN THE ASSESSERE TRANSFERRED BACK W.D.V. AMO UNT ITA NO.1274/RJT/2010 3 ITSELF THERE IS NO PROFIT. MOREOVER PROVISION OF S ECTION 50(2) PROVIDES THAT IF ANY AMOUNT IS RECEIVED IN EXCESS O F W.D.V. THAN IT IS CHARGEABLE TO TAX U/S 50(2). SINCE THE TIPPERS ARE TRANSFERRED AT RS.22,04,812/- (AT RS.11,02,406 EACH ) THERE IS NO PROFIT CHARGEABLE U/S 50(2). THE CONTENTION OF THE LD.AR THAT WHEN THE DEPRECIAT ION FOR ASSESSMENT YEAR 2006-07 HAS BEEN CLAIMED AND ALLOWED, THERE IS NO Q UESTION OF FURTHER DEEMED TO BE ALLOWED DEPRECIATION OF RS.3,30,722. 4. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF CIT(A) AND SUBMITTED THAT THE FACTS AND FIGURES POINTED OUT BY THE LD.AR IN HIS SUBMISSIONS ARE SUBJECT TO VERIFICATION. 5. I HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES, RECORD PERUSED. AS PER THE ASSESSMENT ORDER I NOTICE THAT THE ASSES SEE DID NOT CLAIM ANY DEPRECIATION IN ASSESSMENT YEAR 2006-07. THEREFORE , THE ASSESSING OFFICER WAS OF THE VIEW THAT DEEMED DEPRECIATION OF RS.3,30,722 IS ALLOWED IN ASSESSMENT YEAR 2006-07. HOWEVER, CONTRARY TO THAT THE LD.AR SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION IN ASSESSMENT YEAR 2006-07 FOR RS.9,44,920 WHICH IS SUBJECT TO VERIFICATION, THE RELEVANT MATERIAL OF W HICH IS NOT READILY AVAILABLE AT THIS STAGE. UNDER THE CIRCUMSTANCES, I THINK PROPER TO SEND BACK THIS FILE TO THE ASSESSING OFFICER WITH THE DIRECTION TO VERIFY THE CONTENTION OF THE LD.AR THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.9,44,920 IN ASSESSMENT YEAR 2006-07 AND IF HIS CONTENTION IS FOUND TO BE IN ORDER AND C ORRECT, THE QUESTION OF ALLOWABILITY OF DEEMED DEPRECIATION DOES NOT ARISE AND ISSUE TO BE DECIDED IN FAVOUR OF ASSESSEE. IN CASE THE CONTENTION OF THE ASSESSEE IS FOUND TO BE INCORRECT, UNDER THAT CIRCUMSTANCES ISSUE IS REQUIR ED TO BE DECIDED AS PER LAW AND MAY REPEAT THE ORIGINAL ORDER AFTER PROVIDING O PPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.1274/RJT/2010 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 11- 03-2011, AT THE TIME OF HEARING. SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER RAJKOT, DT : 11 TH MARCH, 2011 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-III, RAJKOT 4. THE CIT-II, RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT