Shri Manish Raichand Shah, Ahmedabad V. The DCIT, Circle-3(3), Ahmedabad

ITA 1399/AHD/2019

AI Insights

The case revolves around the disallowance of depreciation and other expenses claimed by the assessee, Shri Manish Raichand Shah, on a BMW car used for business purposes. Initially, the Assessing Officer disallowed these claims citing that the car was not used for business purposes and was registered in a different state. The Commissioner of Income Tax (Appeals) upheld this decision, stating there was no mistake apparent from the record. However, the Tribunal found that the car was indeed used for business purposes and that the registration in a different state did not negate its business use. The Tribunal criticized the lower authorities for not adequately considering the assessee's submissions and for making decisions ex parte without proper verification of facts.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114251 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-01-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 03-09-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rectification of order; TDS; Set aside
• Section: 154; 143(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Shri Manish Raichand Shah, B-7, 201, Vishwas Appartment, Near Gulab Tower, Sold Road, Ahmedabad-380054 PAN: AVUPS3273N (Appellant) Vs The DCIT, Circle-3(3), Ahmedabad (Respondent) Assessee Represented: Shri P.F. Jain, A.R. Revenue Represented: Ms. Leena Lal, Sr. D.R. Date of hearing : 19-01-2023 Date of pronouncement : 29-03-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the Appellate order dated 22.01.2019 passed by the Commissioner of Income Tax (Appeals)-3, Ahmedabad, arising out of the rectification order passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2009- 10. ITA No. 1399/Ahd/2019 Assessment Year 2009-10 I.T.A No. 1399/Ahd/2019 A.Y. 2009-10 Page No Shri Manish Raichand Shah vs. DCIT 2 2. There is a delay of 149 days in filing the appeal by the assessee. The assessee in its affidavit stated that the Ld. CIT(A) in its order dated 22.01.2019 held that the issue of disallowance of depreciation on imported car is not mistake apparent from record. Therefore the A.O. ought not to have disallowed the same which is not mistake apparent from record. Thus the assessee was of the bonafide belief, the claim of depreciation will be allowed while giving effect to the Ld. CIT(A)’s order. However the Assessing Officer vide order dated 25.09.2019 while giving effect the Ld. CIT(A)’s order upheld the disallowance of depreciation on the ground that no evidence has been produced before him. Thus there is delay of 149 days which may be condoned. 3. The Ld. D.R. appearing for the Revenue has no objection in condoning the above delay. Therefore the delay of 149 days in filing the above appeal is hereby condoned and the appeal is taken for adjudication. 4. The brief facts of the case is that the assessee is engaged in the business of clearing and forwarding agent for custom clearing and domestic freight services through Container Corporation of India. For the Assessment Year 2009-10, the assessee filed its Return of Income declaring total income of Rs.7,74,280/-. Scrutiny assessment u/s. 143(3) was made on 30.12.2011 determining the total income of Rs. 7,96,660/-. Thereafter the case was reopened u/s. 147 and the reassessment was made on 23.12.2016 making disallowance of Container charges paid to CCI of Rs. 86.47 Lakhs for non-deduction of TDS under section 40(a)(ia) of the Act. I.T.A No. 1399/Ahd/2019 A.Y. 2009-10 Page No Shri Manish Raichand Shah vs. DCIT 3 4.1. Thereafter a rectification notice under 154 dated 10.03.2017 was issued stating that there is mistake apparent from record wherein the claim of depreciation of Rs. 23,20,000/- RTO tax and Insurance charges wrongly allowed when the said imported car was not used for the purpose of business. Therefore the same is required to be disallowed. The A.O. also indicated interest expenses paid to NFFC without TDS is also required to be disallowed. 4.2. The assessee vide its reply letter dated 16/03/2017 submitted as follows: 1. The assessee has purchased the BMW car having 4799 CC on 24.02.2009 for Rs.80 Lakh. 2. The car was purchased from Chandigarh, Haryana to save RTO tax only. 3. The assessee is not having resident whether permanent or temporary in Chandigarh and therefore there is no question as to use of a car for non- business. 4. The registration of a car in the state other than the place of business does not tantamount its use for non-business. 5 It is known facts that the assessee has business in Ahmadabad, in the state of Gujarat and also he used the car from 24 th to 31 st March 2009 for his business in Ahmadabad only. 6. The registration of the car in a state or a place other than the business does not prove that the car is not used for business. 7. Considering the above facts, the mistake is not apparent from the records and therefore the same may not be disallowed as proposed. 4.3. However the A.O. has not considered the submission and passed rectification order u/s. 154 thereby disallowed the claim of depreciation and expenditure of Rs. 23,20,000/-. I.T.A No. 1399/Ahd/2019 A.Y. 2009-10 Page No Shri Manish Raichand Shah vs. DCIT 4 5. Aggrieved against the same, the assessee filed an appeal before Ld. CIT(A). The Ld. CIT(A) held that the assessee had submitted it has business activities in Ahmedabad, Gujarat and used the car from 24 th to 31 st March 2009 for his business in Ahmedabad only. Though the registration of the car is other than the place of business of the assessee. Therefore the assessee could not be said, he has not used the car for his business purpose. Therefore this is not a mistake apparent from record. Therefore the Assessing Officer ought not to have made disallowed the depreciation. Since the reassessment is being done ex parte, the A.O. is directed to allow the claim after verification. Thus this issue is disposed of with the above direction and partly allowed the appeal. 6. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The Ld. C.I.T.(Appeals) has erred in law and on facts in directing the A.O. to allow the depreciation etc. of Rs.23,20,000/-, if the same is used for business purpose when he has held that this is not mistake which is apparent from record. 2. The Ld. C.I.T.(Appeals) has further erred in law and on facts in giving directions which runs counter to his own findings of there being no mistake apparent from the record and there is no power to give direction. 3. On the facts, the addition of depreciation and RTO Tax and Insurance of Rs.23,20,000/- made in the order under section 154 passed on 30/03/2017 ought to have been deleted. 7. We have heard rival arguments and perused the materials available on record. The Ld. CIT(A) agreed with the view of the assessee that there is no mistake apparent on record to rectify the disallowance of depreciation on BMW car. There is a categorical direction by the Ld. CIT(A) to allow the claim, if the BMW car is I.T.A No. 1399/Ahd/2019 A.Y. 2009-10 Page No Shri Manish Raichand Shah vs. DCIT 5 used for business purpose by the assessee which is self- contradictory to the first statement namely “there is no mistake apparent on record”. Just because the assessment was completed ex parte, the Ld. CIT(A) ought not to have directed the Assessing Officer to verify the claim of the assessee of the usage of the car. Thus the grounds raised by the assessee stands allowed. 8. In the result, the order passed by the Lower Authorities are hereby set aside. 9. In the result, the appeal filed by the Assessee is hereby allowed. Order pronounced in the open court on 29-03-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 29/03/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद