DCIT, CEN. CIR-4(4), KOLKATA, Kolkata V. M/s Parijat Vyapaar Pvt. Ltd., Kolkata

ITA 1296/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1233 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Keywords: Depreciation

Judgement Text

1 ITA NO.1296/KOL/2015 PARIJAT VYAPAAR PVT. LTD., AY, 2010-11 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1296/KOL/2015 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4(4), KOLKATA VS. PARIJAT VYAPAAR PVT. LTD. (PAN: AADCP0161H) APPELLANT RESPONDENT DATE OF HEARING 07.09.2017 DATE OF PRONOUNCEMENT 18.10.2017 FOR THE APPELLANT SHRI KALYAN NATH, ADDL. CIT, DR FOR THE RESPONDENT SHRI SUBASH AGARWAL, ADVOCATE ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-9, KOLKATA DATED 30.07.2015 FOR AY 2010-11. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF REVENU E IS AGAINST THE ORDER OF LD. CIT(A) IN ALLOWING DEPRECIATION ON DUMPERS AND TIPPERS @ 30% AS AGAINST DEPRECIATION @15% ALLOWED BY THE AO. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE AND CAREFULLY PERUSED THE MATERIAL AVAILABLE O N RECORD. WE NOTE THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 30% ON DUMPER AND TIPPER. I N EARLIER TWO ASSESSMENT YEARS THE ASSESSEE ALSO CLAIMED DEPRECIATION @ 30% WHICH WAS NOT ALLOWED BY THE REVENUE AUTHORITY. BASED ON THE SAME FACTS AND CIRCUMSTANC ES, THE AO DISALLOWED 15% EXCESS DEPRECIATION IN THIS YEAR. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO DIRECTED THE AO TO ALLOW DEPRECIATION @ 30% ON DUMPER AND TIPPER BY FOLLOWING VARIOUS JUDGMENTS OF HONBLE GUJARAT HIGH COURT AND HONBLE PUNJAB & HARYANA HIGH COURT. AGGRIEVED, REVENUE IS NOW IN APPEAL BE FORE US. WE NOTE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE KARNATAKA HIGH COURT 2 ITA NO.1296/KOL/2015 PARIJAT VYAPAAR PVT. LTD., AY, 2010-11 IN THE CASE OF CIT VS. MAHALING SETTY & CO. (1992) 195 ITR 526 (KAR), WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER: INVESTMENT ALLOWANCE ELIGIBILITY FOR ALLOWANCE MACHINERY MUST BE OWNED AND WHOLLY USED FOR PURPOSES OF BUSINESS PURPOSE OF BUSINESS INCLUDES EVERY ACTIVITY NECESSARY TO CARRY ON BUSINESS BUSINESS OF CONSTRUCTION WORK DUMPERS AND TIPPERS USED TO LIFT EARTH AND TRANSPORT SAME RESULT IN PRODUCTION OF AN ARTICLE OR THING ARE MACHINERY ENTITLED TO INVESTMENT ALLOWA NCE 'THINGS', 'ARTICLES', MEANING OF INCOME-TAX ACT, 1961, SECT ION 32A THE WORD 'THING' IS SHOWN IN EARL JOWITT'S DICTIONA RY AS MEANING 'THE SUBJECT OF DOMINION OR PROPERTY AS DISTINGUISHED FROM PERSONS'. THERE ARE THREE THINGS: THINGS REAL OR IMMOVABLE, COMPREHENDING LANDS, TENEMENTS AND HEREDITAMENTS; T HINGS PERSONAL OR MOVABLE, COMPREHENDING GOODS AND CHATTELS, AND THINGS MIXED; PARTAKING OF THE CHARACTERISTICS OF THE FORMER TWO, AS A TITLE DEED. THE CIVIL LAW DIVIDED THINGS INTO CORPOREAL AND INCORPOREAL. THE INCORPOREAL ITEMS LIKE DEBTS WOULD BE THINGS. THERE FORE, THE WORD 'THINGS' COMPREHENDS INCORPOREAL ASSETS ALSO. THE TERM 'ARTICLE' IS NOT CONFINED TO MOVABLE PROPE RTY ONLY UNDER SECTION 32A OF THE INCOME- TAX ACT, 1961. INVESTMENT ALLOWANCE IS GRANTED, INT ER ALIA, IN RESPECT OF MACHINERY OR PLANT SPECIFIED IN SUB-SECTION (2) OF SECTION 32A WHICH I S OWNED BY THE ASSESSEE AND IS WHOLLY USED FOR THE PURPOSE OF BUSINESS CARRIED ON BY THE ASSES SEE. THE PURPOSE OF BUSINESS INCLUDES EVERY ACTIVITY WHICH IS NECESSARY TO CARRY ON THE BUSINES S. IT IS NOT THE FINAL TOUCHES INVOLVED IN A CONSTRUCTION WORK THAT RESULT IN THE CARRYING ON OF THE BUSINESS. THE VARIOUS ACTIVITIES FROM THE BEGINNING TO THE END WILL BE PART OF THE BUSINESS. MACHINE USED IN THE BUSINESS OF CONSTRUCTION IS ELI GIBLE FOR INVESTMENT ALLOWANCE AS IS CLEAR FROM SECTION 32A(2)(B)(III). THE PHRASE 'THE BUSINE SS OF CONSTRUCTION IS WIDE AND, NORMALLY, A BUSINESS OF CONSTRUCTION INVOLVES CONSTRUCTION OF B UILDINGS, DAMS, ROADS, CHANNELS, ETC. MACHINERY WHICH IS NECESSARY FOR BUSINESS OF CONSTR UCTION INVOLVING SEVERAL ACTIVITIES CANNOT BE HELD AS NOT CONTEMPLATED BY PARLIAMENT AS COVERE D FOR THE PURPOSE OF INVESTMENT ALLOWANCE. THE WORDS AND PHRASES USED IN A STATUTE WILL HAVE T O BE UNDERSTOOD IN THE CONTEXT IN WHICH THEY ARE USED. CLAUSE (B) IN THE SECOND PROVISO TO SECTION 32A HAS TO BE READ IN THE SETTING IN WHICH OTHER CLAUSES (A), (C) AND (D) ARE USED. SPEC IALLY, CLAUSES (A) AND (B) IN THE SECOND PROVISO MAKE IT CLEAR THAT EXCLUSION FROM THE PROVI SION IS ONLY IN RESPECT OF THE MACHINERY OR PLANT OR APPLIANCES CONNECTED WITH THE ADMINISTRATI VE PART OF THE BUSINESS, I.E., THOSE USED IN THE OFFICE PREMISES OR RESIDENTIAL ACCOMMODATION OF THE ASSESSEE. NATURALLY, ROAD TRANSPORT VEHICLES REFERRED TO THEREIN WILL HAVE TO BE SUCH V EHICLES WHICH ARE MADE TO CARRY THE EMPLOYEES TO THE OFFICE AND BACK HOME. THE WORDS 'R OAD TRANSPORT VEHICLES' INCLUDE VEHICLES LIKE OMNIBUSES, CARS, ETC., AND NOT DUMPERS AND TIP PERS WHICH ARE DIRECTLY USED IN THE ACTIVITY OF THE BUSINESS, AT THE PLACE WHERE THE BUSINESS IS ACTUALLY CARRIED ON. DUMPERS AND TIPPERS ARE ESSENTIALLY MACHINERY USED TO CARRY ON A CONSTR UCTION WORK. THEREFORE, THE USE OF DUMPERS AND TIPPERS FOR THE PURPOSE OF BUSINESS OF CONSTRUCTION, I.E., USED TO LIFT EARTH AND TRANSPORT THE SAME, RESULTS IN THE PRODUCTION OF AN ARTICLE OR THING AND SUCH MACHINERY IS ENTITLED TO INVESTMENT ALLOWANCE UNDER SECTION 32A OF THE ACT. 3 ITA NO.1296/KOL/2015 PARIJAT VYAPAAR PVT. LTD., AY, 2010-11 THE ISSUE BEFORE US HAS BEEN ANSWERED BY THE HONBL E HIGH COURT OF KARNATAKA (SUPRA), SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD . CIT(A) IN ALLOWING DEPRECIATION @ 30% ON DUMPER AND TIPPER. THEREFORE, WE UPHOLD THE SAM E. THIS APPEAL OF REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18TH O CTOBER, 2017 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18TH OCTOBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CENTRAL CIRCLE-4(4), KOLKATA 2 RESPONDENT M/S. PARIJAT VYAPAAR PVT. LTD., 5 TH FLOOR, 12A, NETAJI SUBHAS ROAD, KOLKATA-700 001.. 3. THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY