SHAN TEXTILES P.LTD, SURAT V. ITO WD 4(3)(4), MUMBAI

ITA 164/MUM/2014

• Counselvise Citation: 16419914 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 07-01-2014
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: JAIDEV
• Keywords: Depreciation; Rectification of order
• Section: 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & MS. SUSHMA CHOWLA , J M ./ I TA NO. 16 4 / MUM/20 1 4 ( / ASSESSMENT YEAR S : 20 10 - 11 ) SHAN TEXTILES PVT. LTD., 404 AA, ROOM NO.18 , WAGWADI, KALBADEVI ROAD, MUMBAI - 400002 VS. ITO WARD - 4(3)(4), MUMBAI ./ ./ PAN/GIR NO. : A AECS 2371 P ( / APPELLA NT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI JAIDEV /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 11 /0 6 / 2015 / DATE OF PRONOUNCEMENT 11 /06 /2015 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER CIT (A), FOR THE ASSESSMENT YEAR 20 10 - 11 , IN THE MATTER OF ORDER PASSED U/S.1 43 (3) OF THE INCOME TAX ACT. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE AS SESSEE COMPANY CLAIMED EXPENDITURE ON ACCOUNT OF DEPRECIATION, INSURANCE, INTEREST ON THE VEHICLE OWNED BY THE DIRECTOR . THE VEHICLE WAS USED BY THE ASSESSEE COMPANY AND PAYMENT WAS ALSO MADE FOR PURCHASE OF VEHICLE BY THE ASSESSEE COMPANY . HOWEVER, THESE VEHICLES WERE PURCHASED IN THE NAME OF DIRECTORS AND ALSO REGISTERED IN THE NAME ITA NO. 16 4 /1 4 2 OF DIRECTORS. SINCE THE VEHICLES WERE USED BY THE ASSESSEE COMPANY, IT HAS CLAIMED DEPRECIATION, INSURANCE EXPENSES, INTEREST ETC. THE AO DECLINED THE SAME ON THE PLEA THAT V EHICLE WAS REGISTERED IN THE NAME OF THE DIRECTOR. THE QUESTION IN WHOSE HANDS CLAIM OF THE EXPENDITURE ON DEPRE CIATION, REPAIR, MAINTENANCE, INTEREST ETC. IS TO BE ALLOWED, HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF M/S V IJA Y FABRICS , ITA NO.7057&7058/MUM/2011, ORDER DATED 27 - 9 - 2012, WHEREIN AFTER FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF DILIP SINGH SARDARSHINGH BAGGA, 201 ITR 995 (BOM). THE BENCH HELD AS UNDER: - 6. WE HAVE HEARD BOTH THE PARTIES AN D THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. IT IS NOT DISPUTED THAT THE VEHICLE ON WHICH DEPRECIATION HAS BEEN DISALLOWED IS STANDING IN THE BALANCE SHEET OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE THE VEHICLE WAS GOT REGISTERED IN THE NAME OF DI RECTOR ONLY FOR THE REASON THAT IT WOULD FACILITATE IF THE VEHICLE IS SOLD TO GET IT TRANSFERRED IN OTHER NAME. ACCORDING TO THE RATIO LAID DOWN IN THE AFOREMENTIONED DECISION OF HON'BLE BOMBAY HIGH COURT, REGISTRATION OF VEHICLE PER - SE IN THE NAME OF ASSE SSEE IS NOT A CONDITION PRECEDENT FOR ALLOWABILITY OF DEPRECIATION ON THE SAID VEHICLE. IN THE PRESENT CASE THE VEHICLE IS IN THE NAME OF THE DIRECTOR OF THE ASSESSEE COMPANY. THEREFORE, WE ARE OF THE OPINION THAT DEPRECIATION CLAIM OF THE ASSESSEE HAS WRO NGLY BEEN DISALLOWED THAT TOO BY WAY OF A RECTIFICATION ORDER. SUCH RECTIFICATION COULD NOT HAVE BEEN DONE AS IT CANNOT BE SAID THAT THERE WAS ANY MISTAKE APPARENT FROM RECORD. THE ASSESSEE COULD RELY UPON THE AFOREMENTIONED DECISION OF HON'BLE BOMBAY HIGH . - COURT TO CONTENT THAT IT IS ENTITLED TO GET DEPRECIATION ON THE VEHICLE REGISTERED IN THE NAME OF ITS DIRECTOR. THE VALUE OF THE VEHICLE HAS BEEN SHOWN TO BE INCURRED BY THE ASSESSEE COMPANY ITSELF AND THE VEHICLE IS SHOWN AS ASSET IN THE BALANCE SHEET OF THE ASSESSEE COMPANY. IN VIEW OF THE ABOVE DISCUSSIONS, WE ALLOW BOTH THE APPEALS FILED BY THE ASSESSEE. THE AO IS DIRECTED TO ALLOW DEPRECIATION. IN THE INSTANT CASE BEFORE US, THE ASSESSEE COMPANY CLAIMED DEPRECIATION ON CAR RS.1,62,905/ - , CAR INSU RANCE EXPENSES RS.22,284/ - AND INTEREST ON CAR LOAN RS.12389/ - . THE CARS WERE PURCHASED BY THE ASSESSEE COMPANY ITA NO. 16 4 /1 4 3 IN THE NAME OF DIRECTORS. INVESTMENT W AS MADE BY THE COMPANY. T HE CARS HAVE BEEN SHOWN AS THE ASSETS OF THE COMPANY IN ITS BALANCE SH E ET. THE CA RS WERE UTILIZED BY THE A SSESSEE COMPANY FOR ITS BUSINESS PURPOSE. THE ACTUAL EXPENSES INCURRED HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT OF THE COMPANY. T HE VEHICLE WAS UNDISPUTEDLY USED BY THE ASSESSEE COMPANY AND ALSO SHOWN AS ASSETS IN ITS BALAN CE SHEET . AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT REFERRED ABOVE, WE DO NOT FIND ANY JUSTIFICATION FOR DECLINE OF CLAIM OF DEPRECIATION, INSU RANCE AND INTEREST ON THE VEHICLE S OWNED AND USED BY T HE ASSESSEE COMPANY. 4. GROUND NO.2 WITH REGARD TO DISALLOWANCE OF EXPENDITURE OF RS. 24,682/ - ON REPLACEMENT OF SOFTWARE WAS NOT PRESSED BY LD. AR, WE, THEREFORE, DISMISS THE SAME. 5 . IN THE RESULT, AP PEAL OF THE ASSESSEE IS ALLOWED IN PART . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 11 /06 / 201 5 . SD/ - SD/ - ( ) ( SUSHMA CHOWLA ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 11 /06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. ITA NO. 16 4 /1 4 4 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI //TRUE COPY/