ALWAR GENERAL FINANCE CO. P LTD., Alwar V. ITO, Alwar

ITA 150/JPR/2011

• Counselvise Citation: 15023114 RSA 2011
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 23-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Depreciation

Judgement Text

1 ITA 150-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 150/JP/2011 ASSTT. YEAR : 2003-04. M/S. ALWAR GENERAL FINANCE CO. PVT. LTD. VS. THE I NCOME-TAX OFFICER, ROAD NO. 2, AGARWAL BHAWAN, ROAD NO.2, WARD 1(2), ALWAR. ALWAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.C. PARWAL RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 11.08.2011 DATE OF PRONOUNCEMENT : 19.08.2011. ORDER DATED : 19/08/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2003-04. 2. GROUND NO. 1 IS WHICH AGAINST REOPENING OF THE A SSESSMENT AND GROUND NO. 3 WHICH IS AGAINST CONFIRMING THE DISALLOWANCE OF LOS S ON SALE OF TRUCK OF RS. 2,78,655/- WERE NOT PRESSED. THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 3. REMAINING GROUND NO. 2 IS AGAINST IN NOT ALLOWIN G DEPRECIATION OF RS. 6,59,543/- ON THE TRUCK USED FOR BUSINESS PURPOSES. 4. THE AO DISALLOWED THE DEPRECIATION OF RS. 6,58,3 76/- AS CLAIMED BY THE ASSESSEE IN RESPECT OF TRUCK NOS. RJ 02-G-7373 AND RJ 02-G-7 434. THE AO DISALLOWED THE 2 DEPRECIATION ON THE GROUND THAT THE LESSEE OF THE T RUCKS NOT PRODUCED BEFORE HIM AND THE GENUINENESS OF LEASE TRANSACTION REMAINED UNVERIFIE D AND ALSO BOTH THE LEASE AGREEMENTS HAVE BEEN WITNESSED BY SHRI PRADEEP GUPTA, AN EMPLO YEE OF THE ASSESSEE COMPANY. IN FACT, THE AO REJECTED THE CONTENTION OF THE ASSESSE E IN PLYING OF TRUCKS ON LEASE AND INVOKING PROVISIONS OF SECTION 44AE ASSESSED THE TR UCK INCOME OF RS. 1,92,500/- AGAINST INCOME SHOWN BY ASSESSEE AT RS. 2,28,000/- AND DEPR ECIATION ON TRUCK WAS NOT ALLOWED AS THE INCOME WAS COMPUTED UNDER SECTION 44AE. IT WAS CONTENDED BEFORE LD. CIT (A) THAT ALL THE BASIC REQUIREMENTS WHICH WERE NECESSARY TO CLAIM DEPRECIATION WERE FILED. THE TRUCKS ARE OWNED BY ASSESSEE, PURCHASE BILL AND REG ISTRATION OF THE TRUCKS WERE ALSO FILED. TRUCKS HAVE BEEN USED FOR THE PURPOSE OF BUSINESS. THE BUSINESS OF THE COMPANY IN ASMUCH AS TRUCK PLYING INCOME IN THE FORM OF LEASE AMOUNT HAS BEEN SHOWN IN THE PROFIT & LOSS ACCOUNT. COPY OF LEASE AGREEMENT DULY NOTARI ZED WAS ALSO FILED. IT WAS ALSO SUBMITTED THAT THESE TRUCKS WERE USED IN EARLIER YE AR ALSO AND DEPRECIATION WAS ALLOWED. 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, THE LD. CIT (A) FOUND THAT THE CONTENTION OF THE AO THAT THE AS SESSEE IS NOT LEGAL OWNER OF THE TRUCK IS NOT CORRECT. THE ASSESSEE HAS SHOWN LEASE MONEY ON ACCOUNT OF LEASED OUT TRUCKS. AFTER CONSIDERING THE ISSUE, THE LD. CIT (A) FOUND THAT T HE ASSESSEE HAS MANAGED ITS AFFAIRS IN SUCH A MANNER SO THAT TAX LIABILITY MAY BE AVOIDED. ACCORDINGLY HE REJECTED THE GROUND IN RESPECT TO DEPRECIATION ALSO. HOWEVER, WHILE DI SCUSSING THE ISSUE IN RESPECT TO LOSS CLAIMED BY THE ASSESSEE, THE LD. CIT (A) CONFIRMED THE ORDER OF AO BUT WHILE CONFIRMING THE ORDER OF THE AO, HAS OBSERVED THAT PROVISIONS OF SECTION 44AE WERE NOT RIGHTLY INVOKED BY THE AO AS ASSESSEE HAS ALREADY SHOWN REN TAL INCOME AND, THEREFORE, IT WILL BE A DOUBLE TAXATION. 3 6. AGAINST THE ORDER OF LD. CIT (A) DISMISSING THE GROUND IN RESPECT TO DEPRECIATION AND LOSS, THE ASSESSEE HAS PREFERRED APPEAL HERE BE FORE THE TRIBUNAL. 7. IN RESPECT TO LOSS CLAIMED, THE ISSUE HAS NOT BE EN PRESSED BY THE LD. A/R AT THE TIME OF HEARING. HOWEVER, REGARDING DEPRECIATION, I T WAS SUBMITTED THAT SINCE LD. CIT (A) HAS ACCEPTED RENTAL INCOME ON ACCOUNT OF LEASED OUT TRUCKS, THEREFORE, DEPRECIATION SHOULD BE ALLOWED. 8. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT MATTER NEEDS RE-VERIFICATION AT THE E ND OF LD. CIT (A). IN PARA 4.3 THE LD. CIT (A) HAS DISCUSSED THE ISSUE IN RESPECT OF DEPRE CIATION IN DETAIL AND BY GIVING A FINDING THAT ASSESSEE COULD NOT PROVE THE GENUINENE SS OF LEASE MONEY SHOWN AND, THEREFORE, HE REJECTED THE CLAIM. HOWEVER, IN PARA 5.3 WHILE DISPOSING THE ISSUE IN RESPECT OF LEASE, THE LD. CIT (A) HAS OBSERVED THAT THE A DDITION MADE BY AO IS CONFIRMED BUT AO COMPUTED THE INCOME UNDER SECTION 44AE IS NOT JU STIFIED BECAUSE THE ASSESSEE HAS SHOWN THE RENTAL INCOME ALREADY IN HIS BOOKS OF ACC OUNT. IT WILL BE DOUBLE TAXATION IN HANDS OF THE ASSESSEE . THE LD. COUNSEL OF THE AS SESSEE IS TAKING ADVANTAGE OF THIS OBSERVATION OF LD. CIT (A). THEREFORE, WE FEEL THA T MATTER SHOULD BE SENT BACK TO LD. CIT (A) TO CONSIDER THE ASPECT OF ALLOWABILITY OF DEPRE CIATION ONCE AGAIN. THE LD. COUNSEL OF THE ASSESSEE HAS ALSO STATED THAT DEPRECIATION ON T HESE TWO TRUCKS WAS CLAIMED IN EARLIER YEAR ALSO AND THE SAME HAS BEEN ALLOWED. IT HAS BE EN FURTHER STATED THAT AS PER ORDER OF LD. CIT (A) ENTIRE INCOME SHOWN BY ASSESSEE ON ACCOUNT OF LEASING OUT OF TRUCKS HAS ALSO BEEN ACCEPTED, THEREFORE, DEPRECIATION SHOULD BE AL LOWED. ALL THESE ASPECTS AS STATED ABOVE, NEEDS RE-VERIFICATION. THEREFORE, WE RESTOR E THIS ISSUE TO THE FILE OF LD. CIT (A) TO 4 CONSIDER AFRESH AFTER AFFORDING REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 .8.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ COPY FORWARDED TO :- M/S. ALWAR GENERAL FINANCE CO. PVT. LTD., ALWAR. THE ITO WARD 1(2), ALWAR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 150/JP/2011) BY ORDER, AR ITAT JAIPUR.