Swati Auto Link Pvt.Ltd., Ahmedabad V. The Income tax Officer, Ward-8(2), Ahmedabad

ITA 1471/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0245 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Opportunity of being heard; Question of law
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOU NTANT MEMBER SWATI AUTO LINK P. LTD AHMEDABAD (APPELLANT) PAN NO. AACCS1328L VS. INCOME TAX OFFICER WARD 8(2) AHMEDABAD (RESPONDENT) REVENUE BY : SRI D.K. SINGH, SR. D.R. ASSESSEE BY : SRI S.N. SOPARKAR, A.R. DATE OF HEARING : 23-01-2013 DATE OF PRONOUNCEMENT : 15-02-2013 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS APPEAL ARISES OUT OF ORDER OF LD. CIT(A)XIV-A HMEDABAD DATED 18/03/2010 FOR ASSESSMENT YEAR 2006-07. 2. THE FACTS AS CULLED OUT FROM THE ORDERS ARE AS U NDER:- I.T. A. NO. 1471/AHD/2010 A.Y.:- 2006-2007 ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 2 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF TRADING OF VEHICLE SPARES. IT FILED ITS RETURN OF INCOME ON 28-08-2006 DECLARING TOTAL LOSS OF RS. 3,99,187/-. THE CASE W AS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VID E ORDER DATED 18-12- 2008 AND THE TOTAL LOSS WAS DETERMINED AT RS. 19,07 5/- AFTER MAKING CERTAIN DISALLOWANCES. AGGRIEVED BY THE ORDER OF THE AO TH E ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). CIT(A) VIDE ITS ORDER DA TED 18-03-2010 DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) THE ASSESSEE IS NOW IN APPEAL BEFORE US. BEFORE US, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER:- 1.1 THAT THE HONBLE CIT(A) HAS ERRED IN CONFIRMIN G DISALLOWANCE OF 50 % DISCOUNT OF RS. 2,64,460/- OUT OF TOTAL DIS COUNT OF RS. 5,28,920/- BEING CLAIMED BY THE APPELLANT. 1.2 THAT THE VARIOUS FINDINGS GIVEN BY THE LD. CIT( A) IN CONFIRMING THE DISALLOWANCE OF DISCOUNT OF RS. 2,64,460/- ARE CONTRARY TO THE FACTS OF THE CASE AND EVIDENCE ON RECORD. 1.3 THAT APPELLANT RESPECTFULLY SUBMITS THAT IT HAS GRANTED DISCOUNT ON ACCOUNT OF VARIOUS REASONS AND CIRCUMSTANCES LIK E MARKET SHARE, RTO, INCOME CHARGES. THE APPELLANT REFERS AND RELI ES ON VARIOUS SUBMISSIONS MADE IN ITS LETTER DATED 10.12.2008 AND REQUESTS THAT THE SAME MAY BE SPECIFICALLY TREATED AS AGITATED HERE A LSO. THE LEARNED ASSESSING OFFICER HAS DISALLOWED DISCOUNT EXPENSES BY STATING THAT THE APPELLANT HAS ALLOWED EXCESS DISCOUNT THAN WHAT IS STATED IN TELCO CIRCULAR. THE ABOVE FACT HAS ALSO BEEN CONFIRMED B Y CIT(A). BUT ACTUALLY THERE IS NO SUCH BINDING ON THE DEALERS FO R DISCOUNT TO BE GIVEN IN EXCESS OF WHAT IS MENTIONED IN TELCO CIRCU LAR. ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 3 1.4 THAT APPELLANT THEREFORE SUBMITS THAT THE DISAL LOWANCE OF RS.2,64,460/- BEING DISCOUNT GIVEN, BE DELETED. 2.1 THAT THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWING OF CAR DEPRECIATION OF RS. 1,15,652/- C LAIMED BY THE APPELLANT. 2.2 THAT THE VARIOUS FINDINGS GIVEN BY THE CIT(A) F OR CONFIRMING THE DISALLOWANCE OF RS. 1,15,612 BEING VALUE OF DEP RECIATION CLAIMED BY THE APPELLANT ARE CONTRARY TO THE FACTS OF THE C ASE AND EVIDENCE ON RECORD. 2.3 THAT APPELLANT RESPECTFULLY SUBMITS THAT THE VE HICLES HAVE BEEN PURCHASED WITH THE FUNDS OF THE APPELLANT AND THERE FORE THE APPELLANT IS THE OWNER OF THE VEHICLES. ALL THE CONDITIONS F OR GRANT OF DEPRECIATION HAVE BEEN COMPELLED WITH THE APPELLANT . 2.4 THE APPELLANT THEREFORE SUBMITS THAT THE DISALL OWANCE OF RS. 1,15,652/- BEING VALUE OF DEPRECIATION BE DELETED. 5. GROUND NO. 1.1 TO 1.4 ARE INTERCONNECTED AND ARE THEREFORE CONSIDERED TOGETHER. THEY ARE WITH REFERENCE TO DISALLOWANCE O F DISCOUNT OF RS. 2,64,460/- 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DISCOUNT EXPENSES OF RS. 5,28, 920/-. AO ASKED THE ASSESSEE TO FILE CONFIRMATION OF THE DISCOUNT GIVEN . NO CONFIRMATION WAS FILED BY THE ASSESSEE, AND THEREFORE, AO CONCLUDED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE EXPENSES CLA IMED. HE FURTHER OBSERVED THAT 50 % OF THE DISCOUNT WAS DISALLOWED W HILE FINALIZING THE ASSESSMENTS FOR A.Y. 2003-04, 2004-05 AND 2005-06 F OR THE REASON THAT THE DISCOUNT CLAIMED BY THE ASSESSEE WAS IN EXCESS OF T HAT MENTIONED IN THE ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 4 CIRCULARS ISSUED BY TELCO. HE WAS, THEREFORE, OF T HE VIEW THAT SINCE THE FACTS OF THE YEAR UNDER CONSIDERATION WERE IDENTICA L TO THE FACTS OF THE EARLIER YEAR, HE RELYING ON THE DECISION OF EARLIER YEARS, DISALLOWED 50 % OF THE DISCOUNT AND HELD IT TO BE NOT GENUINE AND ACCORDIN GLY DISALLOWED RS. 2,64,460/-. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). CIT(A) FOLLOWING THE ORDE R OF HIS PREDECESSORS CONFIRMED THE DISALLOWANCE MADE BY THE A.O. AGGRIE VED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US AT THE OUTSET, THE LD. A.R. SUBMITTED THAT AGAINST THE ORDER OF CIT(A) FOR A.Y. 2005-06, THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE HONBLE TRIBUNAL. TRIBUNAL VIDE ITS ORDER IN ITA N O. 500/AHD/2009 DATED 16/12/2010 HAS RESTORED THE ISSUE OF DISALLOWANCE T O THE FILE OF AO WITH A DIRECTION TO MAKE THE NECESSARY INQUIRIES AND ADJUD ICATE THE ADDITION AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. HE PLACED ON RECORD THE COPY OF THE AFORESAID ORDER OF TRIBUNAL. HE FURTHER SUBM ITTED THAT SINCE THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 2005-06, SIMILAR DIRECTIONS MAY BE ISSUED IN THE YEAR UNDER APPEAL. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF A.O. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS OF THE CASE OF THE ISSUE UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 2005-06 HAS BEEN CONFIRME D BY THE AO AND BY CIT(A) IN THEIR ORDERS AND THEREFORE IS UNDISPUTED FACT. THE CO-ORDINATE BENCH WHILE DECIDING THE ISSUE FOR A.Y. 2005-06 HAD FOLLOWED THE ORDER OF ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 5 A.Y. 2003-04 (IN ITA NO.1213/AHD/2007 DATED 10/12/2 010) AND HAS HELD AS UNDER:- 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. FOR THE ASSESSMENT YEA R 2003-04 , 1TAT, 'C BENCH, AHMEDABAD HAS DECIDED THE APPEAL OF THE A SSESSEE IN ITA NO. 1213/AHD/2007 VIDE ORDER DATED 10.12.2010. IN THAT ORDER, THIS ISSUE HAS BEEN RESTORED TO THE FILE OF ASSESSING OF FICER FOR THE DETAILED REASONS GIVEN IN PARA 5 ON PAGES 5-8 OF THE IMPUGNE D ORDER, WHICH READS AS UNDER :- '5. WE HAVE HEARD THE RIVAL CONTENTIONS UND GONE TH ROUGH THE FACTS OF THE CASE. WE FIND THAT FACTS ARE NOT IN DI SPUTE AS REGARDS CLAIM OF DISCOUNT. AS ARGUED BY LD COUNSEL FOR COUNSEL THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF AS SESSEE AND AGAINST THE REVENUE BY THE DECISION OF THIS TRIBUNA L EXACTLY ON IDENTICAL FACTS IN ITA NO.2979/AHD/2009 IN THE CASE OF ACIT V. M/S. NANAVATI MOTORS. FOR ASSESSMENT YEAR 2001-02, THEREIN THE TRIBUNAL HELD IN PARA-4-5 HAS ALLOWED THE CLAIM AS UNDER:- 4 WE FIND THAT THE ASSESSING OFFICER IN THE SECON D ROUND OBSERVED THAT THE DISCOUNT ALLOWED TO THE PURCHASERS FOR THE CARS BY THE ASSESSEE OF TWO TYPE S AND IN SOME CASE, THE ASSESSEE RECEIVED LESSER AMOUNTS THAN THE BILL VALUES AND THE BALANCE AMOUNTS NOT RECEIVE D FROM THE PURCHASERS OF THE CARS WERE TRANSFERRED TO COMMISSION (DISCOUNT) ACCOUNT. IN ANOTHER CASE THE ASSESSEE INITIALLY RECEIVED FULL SALE VALUES AGAINS T THE SALE BILLS AND THEREAFTER RETURNED THE AGREED DISCO UNT AMOUNT TO THE PURCHASERS FOR THE CARS AGAINST OBTAI NING OF THE SIGNATURE FOR THE CUSTOMERS ON THE DISCOUNT VOUCHERS. THE ASSESSING OFFICER HAS OBSERVED THAT CERTAIN DETAILS SUCH AS SALES INVOICES FOR THE SALE OF CARS, DELIVERY NOTES AND THE DISCOUNT VOUCHERS, ETC., WER E PRODUCED BY THE ASSESSEE VERY LATE. THE AO HAS ALS O OBSERVED THAT THE FILE DENOTED AS NAM-4 PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTIONS OF HAVIN G RECEIVED SHORT PAYMENTS IN SOME CASES CONTAINED ONL Y ONE SALES BILL AND THE REST OF THE DOCUMENTS IN THE FILE WERE THE COPIES OF DELIVERY NOTES WHICH DID NOT CON TAIN ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 6 ANY DETAILS OF DISCOUNTS ALLOWED TO THE CUSTOMERS A ND SHORT PAYMENTS RECEIVED FROM THE CUSTOMERS. I HAS BEEN STATED THAT BY THE AO THAT THE FILING OF DELIVERY N OTES IS OF NO SUE. THE AO ALSO OBSERVED THAT THE ASSESSEE SHO ULD HAVE BEEN SHOWN DISCOUNTS ALLOWED BY WAY OF DEDUCTI ON. THE AO ALSO OBSERVED THAT THERE IS A DIFFERENT OF F EW DAYS BETWEEN THE DATE OF ISSUE OF DELIVERY NOTES AND THE CASH DISCOUNT VOUCHERS. THE AO ALSO STANDS THAT IT IS N OT ACCEPTABLE THAT THE SIGNATURES OF THE CUSTOMERS ON THE DISCOUNT VOUCHERS WOULD MATCH WITH THE SIGNATURES O F THE CUSTOMERS ON THE DELIVERY NOTES FOR THE CARS IN ALL CASES SINCE THE HUMAN PROBABILITY MANDATES THAT IN SOME C ASES THE RECIPIENT OF THE DISCOUNT FROM THE ASSESSEE WOU LD BE DIFFERENT THEN THE PERSONS TAKING THE DELIVERY OF T HE CARS FROM THE ASSESSEE. ACCORDING TO THE AO SINCE THE ASSESSEE HAS SHOWN THAT THE SIGNATURES ON THE DISCO UNT VOUCHERS INVARIABLY TALLY WITH THE SIGNATURES OF TH E CUSTOMERS ON THE DELIVERY NOTES, THE DISCOUNT VOUCH ERS PRODUCED BY THE ASSESSEE BECOME DOUBTFUL. THE AO FURTHER OBSERVED THAT IN THE INSTANT CASE, THE DISC OUNTS ALLOWED DO NOT REPRESENT THE EXPENDITURE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE BUSINES S OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND FIELD THE DETAILS OF DISCOUNT AS UNDER:- (A) DISCOUNTS ALLOWED TO THE CUSTOMERS BY ALLOWING THEM TO MAKE SHORT PAYMENTS AGAINST THE BILL VALUE OF CARS 15,95,088/- (B) DISCOUNTS ALLOWED TO THE CUSTOMERS BY MAKING PAYMENTS OF DISCOUNTS AMOUNTS TO THEM SINCE THEY HA D MADE FULL PAYMENTS AGAINST THE BILL VALUE OF SALE O F CARS ON ACCOUNT OF OBTAINING CAR FINANCE FORM FINANCIAL INSTITUTES/BANKS 19,24,387/- TOTAL 35,19,475/- ---------------- BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSESSE E HAS FILED COPY OF SALES BILLS AND THE RESPECTIVE CUSTOMERS L EDGER ACCOUNTS, IT WAS SHOWN TO THE A.O THAT IN RESPECT O F SUCH CUSTOMERS, 95% TO 98% OF SALES VALUE OF CARS WERE R ECEIVED BY ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 7 CHEQUES/DRAFTS AND THE BALANCE AMOUNTS WERE TRANSFE RRED TO DISCOUNTS ACCOUNT. IT HAS BEEN CONTENDED THAT THE PURCHASERS FOR THE CARS WOULD NOT OBLIGE THE ASSESSEE BY MAKIN G PAYMENT OF 95% TO 98 % OF THE BILL VALUE OF THE CARS THOUGH CHEQUES/DRAFTS AND BY MAKING PAYMENT OF BALANCE SMA LL SUMS TO THE TUNE OF 2 TO 5 % OF SALE VALUE BY CASH, SO A S TO ENABLE THE ASSESSEE TO EVADE THE TAX BY CLAMING SUCH AMOUNT AS DISCOUNTS. IT HAS ALSO BEEN ARGUED THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL/EVIDENCES INDICATIVE OF THE FACT THAT IN RESPECT OF SUCH CUSTOMERS, THE ASSESSEE RECEIVED MORE AMOUNTS THAN THOSE RECORDED IN THE CUSTOMERS ACCOUNTS AND THAT THE SA LES CONSIDERATION HAVE BEEN UNDERSTATED. THE CIT(A) DE LETED THE ADDITION BY GIVING FOLLOWING FINDINGS IN PAGES-6-7 OF HIS APPELLATE ORDER:- I HAVE GONE THROUGH THE CONTENTS OF THE ASSESSMENT ORDER AND ALSO CONSIDERED THE VARIOUS CONTENTIONS RAISED BY T HE APPELLANT. IN REGARD TO THE CASES WHERE HE SHORT PAYMENTS ARE RECEIVED FROM THE CUSTOMERS AND THE SMALL BALANCE AMOUNTS AR E TRANSFERRED TO THE DISCOUNT WHICH TOTALED TO RS. 15 ,95,088/-, I AGREE WITH THE APPELLANT THAT IT CANNOT BE THE CASE THAT HUNDREDS OF CUSTOMERS WOULD COLLIDE WITH THE APPELL ANT BY MAKING 95% TO 98% OF THE BILL VALUE THROUGH CHEQUE S/DEMAND DRAFTS AND BY MAKING PAYMENTS OF 2 % TO 5 % OF THE BILL VALUES WHICH HAVE BEEN CLAIMED AS DISCOUNTS BY CASH, SO AS TO ENABLE THE APPELLANT TO EVADE PAYMENT OF INCOME-TAX. ON T HE CONTRARY, SINCE AS PER THE INCOME-TAX RULES, THE DEPRECIATION IS ALLOWED ON THE VALUE OF CARS, THE CUSTOMERS WOULD NOT BE IN CLINED TO UNDER-STATE THE PURCHASE PRICE OF THE VEHICLES BY M AKING PART PAYMENT OF PURCHASE VALUE IN CASH TO OBLIGE THE APP ELLANT. BESIDES, NEITHER THE A.O. WHO COMPLETED THE SET ASI DE ASSESSMENT HAS BEEN ABLE TO BRING ON RECORD AN IOTA OF EVIDENCE SUGGESTIVE OF THE FACT THAT THE APPELLANT UNDERSTAT ED THE SALES OF SALES CONSIDERATION AND THAT THE APPELLANT RECEIVED MORE AMOUNTS AGAINST THE SALES OF CARS THAN THOSE RECORD ED IN THE BOOKS OF ACCOUNTS. THE COPY OF SALES BILL AND THE COPY OF LEDGER ACCOUNTS FILED BY THE APPELLANT BEFORE THE A.O AND ALSO BEFORE ME CLEARLY SHOW THAT WHILE THE APPELLANT RECEIVED M AJORITY FOR THE SALE VALUE THROUGH CHEQUES/DEMAND DRAFTS, THE S MALL ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 8 PORTION OF SAY RS. 2,000, RS. 3000/- RS. 4000/- WHI CH COULD NOT BE RECEIVED FROM THE CUSTOMERS WERE TRANSFERRED TO THE DISCOUNT ACCOUNT. AGAIN, IT IS A FACT KNOWN TO ALL THAT NOW A DAYS THE CUSTOMERS BARGAIN HEAVILY WHILE PURCHASING THE CARS WHICH THE DEALERS ON ACCOUNT OF CUT THROAT COMPETITION AMONGS T THE VARIOUS CAR DEALERS OF THE VARIOUS COMPANIES AND A LSO AMONGST MORE THAN ONE CAR DEALERS OF THE SAME COMPANY. IN THAT VIEW OF THE MATTER, WHAT THE APPELLANT HAS BEEN CLAIMING IS NOT SOMETHING WHICH IS UNUSUAL OR UNACCEPTABLE. THE CLAIM OF THE APPELLANT THEREFORE THAT IF ALLOWE D IS DISCOUNTS OF RS.15,95,088/- REPRESENTED BY SHORT PAYMENTS MAD E BY THE CUSTOMER IS FOUND TO BE CORRECT AND ACCEPTABLE. WE FURTHER FIND THAT EH CIT(A) HAS RELIED ORDERS IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2001-02 AND 2003- 04 RESPECTIVELY, IN ASSESSEES OWN CASE, WHEREBY CIT(A )-IV, SURAT HAS ALLOWED THE CLAIM OF THE ASSESSEE. 5. IN VIEW OF THE ABOVE FACTS THAT THE ASSESSEE BE ING A DEALER OF MOTOR CAR HAS ALLOWED DISCOUNT TO THE CUSTOMERS AS WELL AS COMMISSION, I.E. SHORT PAYMENT ACCOUNT, SALE OF VAL UE OF CARS AND FOR THIS THE ASSESSEE HAS PRODUCED ALL SALE BIL LS, COPY OF ALL LEDGER A/C. OF SUCH CUSTOMERS WHICH PROVE THAT IN T HE CASES OF CUSTOMERS INITIALLY THE CUSTOMERS ACCOUNTS WERE DE BITED WITH FULL SALE VALUE OF CARS AND WITH THE HELP OF LEDGER A/C IT WAS SHOWN THAT THE CUSTOMERS THROUGH THE FULL SALE VALU E OF THE CARS WERE DEBITED IN THE CUSTOMERSA/C, THE CONCERNED CU STOMERS PAID LESSER AMOUNT BY CHEQUES/DRAFT AND THE BALANCE AMOUNT IN THE CUSTOMERS ACCOUNTS WERE TRANSFERRED TO THE COM MISSION EXPENSES/DISCOUNT A/C. THE ASSESSEE BEFORE THE LOW ER AUTHORITIES HAVE PRODUCED THE LEDGER A/C. AND THE COPY OF SALE ILLS ALONG WITH BOOKS OF ACCOUNT AND EVEN NOW THEY HAVE FILED THESE DETAILS. THE FACT IS THAT THE DISCOUNT AND C OMMISSION, I.E. SHORT PAYMENT IS MADE BY THE CUSTOMERS AND THIS CAN BE EASILY VERIFIED FROM THE BOOKS OF ACCOUNT. ACCORDINGLY, C IT(A) HAS RIGHTLY DELETED THE ADDITION AS NARRATED ABOVE AND WE CONFIRM THE SAME. THIS ISSUE OF THE REVENUES APPEAL IS DI SMISSED. ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 9 WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVO UR OF ASSESSEE AND AGAINST THE REVENUE IN PRINCIPLE BUT THE ASSESSEE I N THE PRESENT CASE BEFORE US IS UNABLE TO SUBSTANTIATE ITS CLAIM OF DI SCOUNT FULLY AS NOTED ABOVE IN THIS ORDER THAT THE ENQUIRIES CONDUCTED IN THE CASE OF SHRIT ASHISH P PATEL & SHRI DINESH L SOMANI WHERE, THEY H AVE DENIED OF ANY DISCOUNT. AS THESE TWO PARTIES HAD DENIED DISC OUNT, THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE DISCOUNT ALLOWED. AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE THAT HE IS READY TO PRODUC E 20 PARTIES TO WHOM DISCOUNT WAS ALLOWED ON RANDOM BASIS AND ASSES SING OFFICER CAN MAKE INQUIRIES AND CAN VERIFY. WE FIND THAT TH E PLEA OF THE ASSESSEE IS QUITE REASONABLE AND ACCORDINGLY WE DIR ECT THE ASSESSING OFFICER TO VERIFY 20 PARTIES OF HIS CHOISE AND IN C ASE MAJORITY OF THESE TWENTY PARTIES DENY THE CLAIM OF THE ASSESSEE, HE W ILL DISALLOW THE ENTIRE CLAIM AND IN CASE, THESE PARTIES ADMITS, HE WILL ALLOW THE CLAIM OF THE ASSESSEE. SIMILARLY, THE OTHER ASSESSMENT Y OUR ALSO ON FACTS BEING EXACTLY IDENTICAL WE ALLOW THE CLAIM OF ASSES SEE IN TERMS OF THE ABOVE THIS COMMON ISSUE IN THESE APPEALS OF ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES AS THE ISSUE HAS BEEN SET ASID E TO THE FILE OF THE ASSESSING OFFICER. 7.1 IN VIEW OF THE ABOVE, WE SET ASIDE THE IMPUGNED ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THIS ISSUE AND RESTORE THE ISSUE OF DISALLOWANCE OF DISCOUNT AMOUNTING TO RS. 2,96,329/ - TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT HE WILL MAKE NECESS ARY VERIFICATION/ENQUIRY AS DIRECTED THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E EARLIER TWO ASSESSMENT YEARS (SUPRA) AND RE-ADJUDICATE THIS ADDITION AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. SINCE THE FACTS OF THE ISSUE IN APPEALS IN THE Y EAR UNDER APPEAL ARE IDENTICAL BY THAT EARLIER YEARS, WE RESPECTFULLY FO LLOWING THE DECISION OF CO- ORDINATE BENCH FOR A.Y. 2005-06 RESTORE THE ISSUE O F DISALLOWANCE OF DISCOUNT AMOUNT TO RS. 2,64,460/- TO THE FILE OF A. O WITH SIMILAR DIRECTIONS. THIS GROUND OF THE ASSESSEE IS THUS ALLOWED FOR STA TISTICAL PURPOSES. ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 10 10. GROUND NO 2.1 TO 2.4 ARE WITH RESPECT TO DISAL LOWANCE OF DEPRECIATION OF RS. 1,56,152/-. 11. ON PERUSAL OF THE DEPRECIATION STATEMENT, THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON CAR OF RS.1,15 ,652/-. FURTHER ON PERUSING THE COPIES OF R C BOOK, THE AO OBSERVED TH AT THE CARS WERE REGISTERED IN THE PERSONAL NAME OF THE DIRECTOR. H E WAS OF THE VIEW THAT AN ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION WHEN THE ASSET IS PURCHASED BY THE ASSESSEE AND USED BY IT FOR THE PURPOSE OF BUSINESS . IN THE CASE OF ASSESSEE, THE AO WAS OF THE VIEW THAT SINCE THE ASSET IS NOT IN THE NAME OF ASSESSEE, DEPRECIATION CANNOT BE ALLOWED ON THE ASSETS WHICH ARE NOT OWNED BY THE ASSESSEE. HE RELYING ON THE DECISION IN THE CASE O F ADDITIONAL CIT VS. UNITY MOTOR TRANSPORT SERVICES ASSOCIATION (1991) 190 ITR 13(ALL) AND IN THE CASE OF M.M. FISHERIES 227 ITR 204 (DELHI) WAS OF T HE VIEW THAT THE ASSESSEE HAD NO DOMINATION ON VEHICLE AND FURTHER T HERE WAS NO MATERIAL TO SHOW THE USE OF VEHICLE WAS FOR THE PURPOSE OF BUSI NESS. HE ACCORDINGLY DISALLOWED THE CLAIM OF DEPRECIATION ON CAR AMOUNTI NG TO RS. 1,15,620/- AND ADDED IT TO THE INCOME. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). THE CIT(A) C ONFIRMED THE DISALLOWANCE MADE BY THE AO BY HOLDING AS UNDER:- 3.2 1 HAVE GONE THROUGH THE FACTS OF THE CASE AND SUBMISSION OF THE AUTHORIZED REPRESENTATIVE. WITH DUE REGARDS TO THE LD. CIT(A), I AM NOT INCLINED TO ACCEPT THE CONTENTION OF THE APPELL ANT. THE APPELLANT HAS NOT SUBMITTED ANY REPLY OR PRESENTED ANY CASE L AW TO CONTROVERT THE CASE LAWS RELIED ON BY THE AO. THE APPELLANT IS RELYING ON THE CASE LAWS WHICH ARE PRIOR TO THE LATEST DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF M. M. FISHERIES PVT LTD (2005) 277 ITR 204 IN WHICH HON'BLE HIGH COURT DULY CONSIDERED AND DISTIN GUISHED THE ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 11 HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF MYSOR E MINERALS LTD VS CIT (1999)239 ITR 775 AND RELIED ON THE LATEST D ECISION IN THE CASE OF TAMIL NADU CIVIL SUPPLY CORPORATION LTD VS CIT ( 2001) 249 ITR 214 OF THE HON'BLE SUPREME COURT. THE HONBLE DELHI HIGH COURT DULY CONSIDERED THE FACTS OF THE APPELLANT COMPANY IN THE CASE OF MM. FISHERIES PVT LTD (SUPRA) WHICH ARE IDENTICAL THAN THAT OF THE APPELLANT. THE APPELLANT NEITHER BEFORE THE AO NOR BEFORE ME S UBMITTED ANY EVIDENCES FOR USE OF THIS VEHICLE FOR THE PURPO SE OF ITS BUSINESS. THERE IS NO SUBMISSION ABOUT WHO USED THIS VEHICLE? WHETHER ANY LOG BOOK IS MAINTAINED FOR SUCH USE? WHETHER ANY PERQUI SITE INCLUDED IN THE REMUNERATION OF THE PERSON WHO USED THIS CAR? T HE HON'BLE MADRAS HIGH COURT IN THE CASE OF NEW AMBADI ESTATE PVT LTD VS STATE OF TAMIL NADU (2002) 256 1TR 64 HELD THAT- 'EVERY PERSON INCLUDING COMPANY HAS TO ESTABLISH TH AT THE EXPENDITURE CLAIMED IN ITS INCOME-TAX PROCEEDINGS H AS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ONUS WAS NOT ON THE IT AUTHORITIES TO PROVE THA T PARTLY MOTOR CAR EXPENSES WERE FOR PERSONAL USAGE; RATHER ONUS LAYS ON THE PETITIONER WHO CLAIMED THAT ASSET WAS USED F OR BUSINESS.' NOW COMING TO THE ISSUE OF OWNERSHIP OF THE VEHICLE PURCHASED IN THE NAME OF THE DIRECTOR, HONBLE DELHI HIGH COU RT IN THE CASE OF M. M. FISHERIES PVT LTD (SUPRA) HELD THAT- 'THE OWNERSHIP OF AN ASSET IN HIS PERSONAL CAPACITY BY THE DIRECTOR OF THE COMPANY, CANNOT BE AN ASSET DEEMED TO BE IN THE VESTED OWNERSHIP OR BENEFICIAL UTILITY OF THE COMPA NY. THEY ARE TWO DISTINCT AND INDEPENDENT LEGAL ENTITIES. THIS I S NOT A QUESTION OF LAW, BUT IS PRIMARILY A QUESTION OF FA CT. THE HON'BLE DELHI HIGH COURT CONSIDERED AND EXAMINE D ITS OWN DECISION IN THE CASE B. L PASSI (2002) 254 ITR 225 AND MYSORE MINERAL LTD (1999) 239 ITR 775 (SC) AS RELIED BY T HE ASSESSEE AND HELD THAT THEY ARE NOT APPLICABLE AND MISPLACED WIT H THE FACT OF THE CASE OF THE ASSESSEE. IT IS THEREFORE, THE AO IS JUSTIFIED IN MAKING THE DISALLOWANCE. THE GROUND OF APPEAL OF THE APPELLA NT IS REJECTED. ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 12 12. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US. 13. BEFORE US THE LD. A.R. SUBMITTED THAT THE CAR HAS BEEN PURCHASED OUT OF THE FUNDS OF THE COMPANY AND THE SAME IS REFLECT ED IN ITS BALANCE SHEET EVEN THOUGH THE CAR IS REGISTERED IN THE NAME OF TH E DIRECTOR. HE FURTHER SUBMITTED THAT THE CAR IS USED WHOLLY AND EXCLUSIVE LY FOR THE USE OF BUSINESS OF THE ASSESSEE. HE, THEREFORE, SUBMITTED THAT MER ELY BECAUSE THE CAR IS IN THE NAME OF THE DIRECTOR, THE ASSESSEE CANNOT BE DE NIED THE BENEFIT OF DEPRECIATION. HE FURTHER PLACED RELIANCE ON THE DE CISION OF AHMEDABAD TRIBUNAL IN THE CASE OF STUDIO-3 ARCHITECT PVT LTD (ITA NO. 1841/AHD/2009 ORDER DATED 21/01/2011). HE ALSO PLACED ON RECORD T HE COPY OF AFORESAID TRIBUNAL ORDER. THE LD. D.R. ON THE OTHER HAND SUBM ITTED THAT THE VEHICLE IS IN THE NAME OF DIRECTOR AND THERE IS NO EVIDENCE ON RECORD TO PROVE THAT THE ASSET HAS BEEN USED BY THE ASSESSEE FOR ITS BUSINES S. HE THUS SUPPORTED THE ORDER OF CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT T HE VEHICLE IS STANDING IN THE NAME OF THE DIRECTOR OF THE COMPANY BUT THE SAME IS CONSIDERED AS PART OF FIXED ASSET OF THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT FOR THE PURCHASE OF VEHICLE, THE FUNDS OF THE ASSESSEE HAS BEEN USED COULD NOT BE CONTROVERTED BY THE REVENUE BY BRINGING ANY MATERIA L ON RECORD. WE FIND THAT THE CO-ORDINATE BENCH IN THE CASE OF STUDIO-3 ARCHITECT PVT LTD (SUPRA) HELD AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. THE RELEVANT PROVISIONS OF SECTION 32 OF THE ACT STIPULATE ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 13 DEPRECIATION IN RESPECT OF BUILDING, MACHINERY, PLA NT OR FURNITURE 'OWNED BY THE ASSESSEE' AND 'USED' FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. INDISPUTABLY, THE INNOVA CAR WAS PUR CHASED WITH THE FUNDS OF THE COMPANY AND USED BY THE ASSESSEE FOR T HE PURPOSES OF ITS BUSINESS. THE CONTROVERSY IS IN REGARD TO OWNERSHIP OF THE CAR. THE CONTENTION OF THE ASSESSEE IS THAT CAR BEING NOT RE GISTERED UNDER THE MOTOR VEHICLES ACT IN THE NAME OF THE COMPANY, BY I TSELF IS NOT SUFFICIENT TO HOLD THE CONTRARY. THE FACTUAL POSITI ON AS STATED BY THE ASSESSEE IS NOT DISPUTED BY THE REVENUE. THE CONTEN TION OF THE REVENUE IS THAT UNLESS THE CAR IS REGISTERED IN THE NAME OF THE ASSESSEE UNDER THE MOTOR VEHICLES ACT, THE ASSESSEE WOULD NO T BE ENTITLED TO DEDUCTION OF DEPRECIATION ALLOWANCE IN RESPECT THER EOF. WE ARE OF THE OPINION THAT THE ASSESSES, WHO HAD PURCHASED THE CA R FOR VALUABLE CONSIDERATION AND USED THE SAME FOR ITS BUSINESS, C ANNOT BE DENIED THE BENEFIT OF DEPRECIATION ON THE GROUND THAT THE TRAN SFER WAS NOT RECORDED UNDER THE MOTOR VEHICLES ACT OR THAT THE V EHICLE STOOD IN THE NAME OF A DIRECTOR OF THE ASSESSEE COMPANY IN THE R ECORDS OF THE AUTHORITIES UNDER THE MOTOR VEHICLES ACT. 5.1 THE AFORESAID VIEW IS SUPPORTED BY THE DECISION IN THE CASE OF CIT VS. NAVDURGA TRANSPORT CO., 235 ITR 150 (ALL), WHEREIN THE ISSUE WAS AS TO WHETHER FIRM WAS ENTITLED TO DEPRECIATION ON CARS, BROUGHT IN TO THE FIRM FOR USE OF BUSINESS OF THE FIRM, EVE N THROUGH CARS CONTINUED TO BE REGISTERED IN THE NAME PARTNERS. H ONBLE ALLAHABAD HIGH COURT HELD THAT THE TRIBUNAL RIGHTLY REACHED T HE CONCLUSION THAT THE ASSESSEE OWNED AND USED THE THREE VEHICLES WITH IN THE MEANING OF S. 32 OF THE ACT. SIMILAR VIEW WAS TAKEN IN THE CA SE OF CIT VS, MOHD. BUS SHOKAT ALI (NO.2), 256 ITR 357 (RAJ), CIT VS FA ZILKA DABWALI TPT CO. LTD (2004) 270 ITR398 (P & H), CIT V. SALKI A TRANSPORT ASSOCIATES [1983] 143 ITR 39/13 TAXMAN 191 (CAL.), CIT V. NIDISH TRANSPORT CORPN. [1910] 185 ITR 669/[1989] 44 TAXMA N 351(KER.), CIT V. DILIP SINGH BAGGA [1993] 201 ITR 995/[1994] 77 TAXAMAN 66 (BOM), CIT V NAVDURGA TRANSPORT CO. [1999] 235 ITR 158 (ALL.) AND CIT V BASTI SUGAR MILLS CO. LTD. [2002] 257 ITR 88/ 123 TAXMAN 693 (DELHI) AS ALSO BY THE ITAT IN THEIR DECISION IN TH E CASE OF THE CURIOUS HOUSE (P) LTD. V ITO (1980) 9 TTJ 348 (INDORE) NAD ITO VS. MODI AGENCY, ITA NO. 198/GAU/1977-78 (GAUHATI). ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 14 5.2. IN THE LIGHT OF THE VIEW TAKEN IN THE AFORESAI D DECISIONS, MERE NON-REGISTRATION OF A VEHICLE IN THE NAME OF THE CO MPANY UNDER THE MOTOR VEHICLES ACT, CANNOT DISENTITLE IT IN REGARD TO ITS CLAIM OF DEPRECIATION, WHEN THE FACTS ON RECORD ARE UNDISPUT ED THAT THE ASSESSEE COMPANY HAS, IN FACT, MADE THE INVESTMENT IN PURCHASE OF THE VEHICLE AND SUCH VEHICLE IS BEING USED FOR ITS BUSI NESS. THE REQUIREMENT OF SECTION 32 IS THAT THE VEHICLE MUST BE OWNED BY THE ASSESSEE AND NOT THAT THE ASSESSEE MUST BE A REGIS TERED OWNER OF THE SAME UNDER THE MOTOR VEHICLES ACT. THEREFORE, WE H AVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A). CONSE QUENTLY GROUND NO. 1 RELATING TO DISALLOWANCE OF DEPRECIATION ON MOTOR CAR IS DISMISSED. 15. SINCE THE FACTS OF THE CASE ARE IDENTICAL TO TH AT OF THE ISSUE IN STUDIO-3 ARCHITECT PVT LTD (SUPRA) WE RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINATE BENCH ARE OF THE VIEW THAT THE ASSE SSEE IS ENTITLED TO DEPRECIATION ON THE MOTOR VEHICLE. WE THEREFORE DI RECT THE DELETION OF DISALLOWANCE MADE BY THE A.O. THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (MUKUL KR. SHRAWAT) (ANI L CHATURVEDI) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD : DATED 15/02/2013 A.K. ITA NO.1471/AHD/2010 A.Y. 2006-07 PAGE NO SWATI AUTO LINK PVT LTD VS. ITO 15 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '#