Mohammedaltaf Abdulkadar Memon, Surat V. Income Tax Officer, Ward-2(2)(1) and DCIT,CPC, Surat

ITA 151/SRT/2023

AI Insights

The case involves Mohammedaltaf Abdulkadar Memon, who is engaged in the business of transportation services, and the Central Processing Centre (C.P.C.), Bangalore, along with the Income Tax Officer (I.T.O.), Ward-2(2)(1), Surat, and the Deputy Commissioner of Income Tax (DCIT), CPC Bangalore, as respondents. The dispute arose when the C.P.C. did not allow a depreciation deduction of Rs. 40,06,642 on vehicles while processing the assessee's return for the Assessment Year 2016-17. The assessee's application for rectification under Section 154 was rejected, leading to an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which was also unsuccessful. The Tribunal's decision overturned the CIT(A)'s ruling, allowing the depreciation claim based on precedents and the specific provisions of the Income Tax Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302076 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-06-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 27-02-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Depreciation; Rectification of order
• Section: 234B; 143(1); 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 151/SRT/2023 (AY: 2016-17) (Hearing in Virtual Court) Mohammedaltaf Abdulkadar Memon, 4/4478 Taiyabi Street, Zampa Bazar, Surat-395003. PAN: AHZPM 3224 E Vs. I.T.O. Ward- 2(2)(1), Surat & DCIT, CPC Bangalore) APPELLANT RESPONDEDNT Assessee by Shri Sapnesh Sheth, CA Department by Shri Vinod Kumar, Sr. DR Date of Institution of Appeal 28/02/2023 Date of hearing 27/06/2023 Date of pronouncement 27/06/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals) [in short the ld. CIT(A)] dated 11/01/2023 for the Assessment Year (AY) 2016-17. The assessee has raised following grounds of appeal:- “1. On the facts and circumstances of the case as well as law on the subject, the ld. CIT(A),NFAC has erred in confirming the rectification order passed u/s 154 of the Act by DCIT, CPC, Bengaluru. 2. On the facts and circumstances of the case as well as law on the subject, the ld. CIT(A),NFAC has erred in confirming the action of DCIT, CPC. In disallowing depreciation expense of Rs. 40,06,642/- while processing return of income filed by assessee. ITA No. 151/SRT/2023 Mohammedaltaf Abdulkadar Memon Vs ITO 2 3. On the facts and circumstances of the case as well as law on the subject, the ld. CIT(A),NFAC has erred in confirming the action of DCIT, CPC in charging interest of Rs. 1,19,400/- u/s 234B and of Rs. 44,043/-, 234C of the I.T. Act respectively. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. Brief facts of the case are that the assessee is engaged in the business of transportation services, filed his return of income for A.Y. 2016-17 declaring income at Rs. 16,47,750/- on 17/10/2016. The return was processed by the Central Processing Centre, (C.P.C.), Bangalore under Section 143(1) of the Income Tax Act, 1961 (in short, the Act). The C.P.C. Bangalore while processing the return of income, not allowed deduction of depreciation of Rs. 40,06,642/- on vehicles. The assessee filed application for rectification under section 154 dated 11/10/2018. The request/application for rectification was turn down/dismissed vide intimation dated 11/12/2018. In the reasons for rectification, the C.P.C. intimated that depreciation is not allowed for block of asset which is fully disposed off/ceased to exist and capital gain/loss claimed against the block of asset. System has correctly computed income as per details entered by assessee in the ITR-4. 3. Aggrieved by the rejection of application under Section 154, dated 11/10/2018 the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee filed detailed statement of fact and submission. In the submission, the assessee submitted that the Assessing Officer grossly ITA No. 151/SRT/2023 Mohammedaltaf Abdulkadar Memon Vs ITO 3 erred in making adjustment by not allowing depreciation. The assessee is engaged in transportation services. The assessee owned various vehicles for its business activities. The assessee claimed depreciation on tempo @ 30%. Nature of business of assessee is reflected in para (10) of audit report. The CPC erred in not allowing deduction of depreciation of Rs. 40,06,642/- on such vehicle. The C.P.C. allowed depreciation to the extent of Rs. 66,147/- against Rs. 40,72,816/-. No reason is given for such disallowance. The assessee also furnished copy of tax audit report under Section 44AB of the Act alongwith its all annexures. 4. The ld. CIT(A) after considering the submission of assessee held that the rectification claimed by assessee in the order of C.P.C. is outside the purview of Section 154 of the Act. The claim of assessee in application under section 154 was debatable and was not a mistake apparent from the record. Further aggrieved, the assessee has filed present appeal before the Tribunal. 5. We have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and perused the record carefully. The ld. AR of the assessee submits that the assessee is in the business of transportation services. The ld. AR of the assessee invited our attention on para 18 of audit report which deals with details of depreciation, which is extracted below: ITA No. 151/SRT/2023 Mohammedaltaf Abdulkadar Memon Vs ITO 4 6. The ld AR by refereeing the contents of afforesaid details submits that the assessee is eligible for depreciation of Rs. 40,06,642/-. The ld. AR of the assessee further submits that similar disallowance/adjustment was made in A.Y. 2014-15 by CPC, while processing the return under section 143(1). However, on appeal before the ld. CIT(A), the assessee was allowed fully/deprecation @ 30% in its order No. ITBA/NFAC/S/250/2022- 23/1049273171(1) dated 31/01/2023. The ld. AR of the assessee submits that the assessee is eligible for depreciation which has been wrongly disallowed by the C.P.C. The disallowance of depreciation could only be made by selecting the return of income for complete scrutiny. 7. On the other hand, the ld. Sr. DR for the revenue supported the orders of C.P.C. as well as the ld. CIT(A), NFAC. The ld. Sr. DR for the revenue submits that prayer made in application under Section 154 of the Act was beyond the scope of rectification as the same is debatable issue. The assessee was required to file appeal against the original intimation of CPC. In rejoinder submissions, the ld AR for the assessee submits that the ITA No. 151/SRT/2023 Mohammedaltaf Abdulkadar Memon Vs ITO 5 assessee has both the option available under law, either to filed appeal against the initial intimation or to file appeal before ld CIT(A). 8. We have considered the submissions of both the parties and have gone through the orders of lower authorities. We find that the C.P.C. while processing the return of income, not allowed depreciation claimed by the assessee in its computation of income. The application filed under Section 154 of the Act was also rejected vide order dated 01/12/2018. The ld. CIT(A) not allowed the relief to the assessee by taking a view that Section 154 of the Act permits only rectification of mistake which is apparent from record. We find that the C.P.C. while making adjustment/not allowed depreciation and committed mistake which was amenable to rectification within the scope of section 154. We also agree with the submissions of ld AR for the assesse that he has remedy available with him either to file application under section 154 or to file appeal before ld CIT(A). Thus, objection raised by ld CIT(A) is not correct. We further find that similar disallowance / adjustment was made by CPC in AY 2014-15, however, on appeal before ld CIT(A) the assessee was allowed relief to the assessee. Thus, considering the facts and circumstance of the facts, we are of the view that adjustment/ disallowance of depreciation made by C.P.C. is not correct/ in accordance with the language employed in section 143(1)(a), therefore, we direct the assessing officer to allow depreciation as claimed ITA No. 151/SRT/2023 Mohammedaltaf Abdulkadar Memon Vs ITO 6 by the assessee in his return of income. In the result, the grounds of appeal raised by the assessee are allowed. 9. In the result, this appeal of assessee is allowed. Order pronounced on 27/06/2023 in open court. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 27/06/2023 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT 4. DR By Order 5. Guard File Sr. Private Secretary, ITAT Surat