M/s Jayhind Buildcon Pvt. Ltd., JAMNAGAR V. The Pr. Commr. of Income Tax, JAMNAGAR

ITA 186/RJT/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6680 (ITAT-RAJKOT)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 27-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Corroborative evidences; Assessment record; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.186/RJT/2016 ( / ASSESSMENT YEAR : 2011-12) M/S.JAYHIND BUILDCON PVT.LTD. GK COMPLEX KHODIYAR MAIN ROAD JAMNAGAR / VS. THE PR.CIT JAMNAGAR ./ ./ PAN/GIR NO. AABCJ 9032 B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI KEVAL SONECHA, AR ! / RESPONDENT BY : SHRI YOGESH PANDEY, CIT-DR ! & / DATE OF HEARING 08/02/2017 '( ! & / DATE OF PRONOUNCEMENT 14/03/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, JAMNAG AR (PR.CIT IN ITA NO.186 /RJT/2016 M/S. JAIHIND BUILDCON P.LTD. VS. PR.CIT ASST.YEAR 2011-12 - 2 - SHORT) DATED 23/03/2016 PASSED FOR THE ASSESSMENT YEAR (AY) 2011- 12. 2. BRIEFLY STATED, THE ASSESSEE IS A COMPANY ENGA GED IN THE BUSINESS OF TRANSPORTATION AND CIVIL CONSTRUCTION. THE ASSE SSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.13,11,390/- WHI CH WAS ASSESSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS 'THE ACT') AT RS.13,46,390/-. THE PR.CIT, HOWEVER, WAS NOT SATISFIED WITH THE ASSESSMENT ORDER SO PASSED AND ACCORDINGLY ISSUED SHOW-CAUSE NOTICE UNDER S.263 OF THE ACT TO THE ASSESSEE. THE PR.CIT OBSERVED THAT ON PERUSAL OF ASSESSMENT RECORDS, IT IS FOUND THAT THE ASSESSEE HAD PURCHASED TWO TAURUS TRUCKS VIDE INVOICE DATED 31/0 3/2011 I.E. ON THE LAST DAY OF FINANCIAL YEAR. THE PR.CIT ALLEGED THA T THE CLAIM OF THE ASSESSEE FOR DEPRECIATION OF RS.2,78,570/- WAS ALLO WED BY THE ASSESSING OFFICER (AO) WITHOUT EVEN MAKING PRELIMINARY ENQUIR Y AS TO HOW THE SAID TRUCKS WERE PUT TO USE ON THE LAST DAY OF THE FINANCIAL YEAR AND HOW THE TRUCKS WERE ELIGIBLE FOR DEPRECIATION UNDER S.3 2 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. THE PR.CIT ALSO FOUND THAT TH E ASSESSEES CLAIM FOR EXPENDITURE TOWARDS INSURANCE CHARGES OF RS.3,82,14 7/- SO ALSO ALLOWED BY THE AO WITHOUT VERIFYING THE FACT AS TO WHETHER THE CLAIM WAS MADE INCLUDED INSURANCE CHARGES OF THESE NEW TRUCKS. IT WAS ALSO FOUND THAT THE TRUCKS COULD NOT HAVE BEEN PUT TO USE WITHOUT C OMPLETING ALL THE FORMALITIES RELATING TO THE RTO WHICH WERE COMPLETE D LATER IN THE SUBSEQUENT YEAR. THE PR.CIT NEXT ALLEGED THAT THE ASSESSEE CLAIMED TO ITA NO.186 /RJT/2016 M/S. JAIHIND BUILDCON P.LTD. VS. PR.CIT ASST.YEAR 2011-12 - 3 - HAVE BEEN INCURRED EXPENSES OF RS.8,80,000/- + RS.2 ,56,010/- ON THREE TIPPERS AS CAPITAL EXPENDITURE AND CLAIMED DEPRECIA TION THEREON ALONG WITH THE AGGREGATE PURCHASE OF COST OF THESE THREE TIPPERS AMOUNTING TO RS.13,80,000/-. THE PR.CIT FOUND THAT AS PER INVOI CE FOR THE CAPITAL EXPENDITURE OF RS.8,80,000/-, THE CAPITAL EXPENDITU RE HAS BEEN STATED TO BE INCURRED PRIOR TO THE PURCHASE OF THE TIPPERS. THE PR.CIT EXPRESSED ITS CONCERN TO SAY THAT THE AO HAS NOT EXAMINED AS TO H OW CAPITAL EXPENDITURE CAN BE INCURRED ON ASSET WHEN THE PURC HASE OF SUCH ASSET ITSELF IS AT A SUBSEQUENT DATE. THE PR.CIT EXAMINE D THE REPLIES OF THE ASSESSEE IN THIS REGARD BUT FOUND THE SAME LACKING IN MERITS. HE ACCORDINGLY ALLEGED THAT THE ASSESSMENT ORDER OF TH E AO PASSED UNDER S.143(3) IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO T HE INTERESTS OF THE REVENUE AND ACCORDINGLY SET ASIDE THE SAME TO THE F ILE OF THE AO WITH A DIRECTION TO REFRAME THE ASSESSMENT AFTER GIVING OP PORTUNITY TO THE ASSESSEE. 3. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE C IT IN INVOKING JURISDICTION CONFERRED UNDER S.263 OF THE ACT AND I S THUS IN APPEAL BEFORE THE TRIBUNAL. 4. THE LD.AR FOR THE ASSESSEE, MR.KEVAL SONECHA SUB MITTED THAT THE ORDER OF THE AO UNDER S.143(3) WHICH SOUGHT TO BE S ET ASIDE BY THE PR.CIT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ITA NO.186 /RJT/2016 M/S. JAIHIND BUILDCON P.LTD. VS. PR.CIT ASST.YEAR 2011-12 - 4 - IT WAS THUS CONTENDED THAT JURISDICTION UNDER S.263 OF THE ACT HAS BEEN WRONGFULLY ASSUMED BY THE PR.CIT. ON MERITS, AS R EGARDS ALLOWANCE OF DEPRECIATION OF RS.2,78,570/- ON TWO TAURUS TRUCKS AS PER INVOICE AT LAST DAY OF THE FY (31/03/2011), IT WAS CONTENDED THAT T HE TRUCKS WERE PUT TO USE FOR THE PURPOSE OF BUSINESS ON THE SAME DAY PEN DING COMPLETION OF RTO FORMALITIES. IT WAS CONTENDED THAT NON-REGISTR ATION OF RTO WOULD NOT LEAD TO INFERENCE THAT ASSETS WERE NOT PUT TO U SE FOR THE PURPOSE OF BUSINESS. AS REGARD INSURANCE CLAIM OF RS.3,82,147 /-, IT WAS CONTENDED THAT THE INSURANCE EXPENSES WERE INCURRED FOR THE P URPOSE OF BUSINESS IN THE FY 2010-11 AND HAS BEEN DEBITED TO ACCOUNTS AS PER THE ACCOUNTING POLICY ADOPTED BY THE ASSESSEE. AS REGARD CLAIM OF DEPRECIATION ON MAJOR REPAIR EXPENSES OF RS.8,80,000/- FOR THE THREE TIPP ERS, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE SAID EXPENSES WE RE INCURRED FOR THE BODY REPAIRS OF THE EXISTING TRUCKS OWNED BY THE AS SESSEE AND WERE NOT INCURRED IN RELATION TO THE TIPPERS PURCHASED BY TH E ASSESSEE. THE EXPENDITURE BEING CAPITAL IN NATURE AND WERE CAPITA LIZED AND DEPRECIATION WAS CLAIMED AS PER LAW. 5. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF THE PR.CIT AND SUBMITTED THAT THE CONTENTIONS OF THE ASSESSEE WERE DULY CONSIDERED AND OBJECTIVELY REBUTTED IN THE ORDER. IT WAS POIN TED OUT THAT NO ENQUIRY WHATSOEVER WAS MADE BY THE AO ON ISSUES INVOLVED. NO DOCUMENTARY EVIDENCES ARE AVAILABLE ON RECORD TO PROVE THE ASSE RTIONS MADE ON THE ITA NO.186 /RJT/2016 M/S. JAIHIND BUILDCON P.LTD. VS. PR.CIT ASST.YEAR 2011-12 - 5 - VARIOUS ISSUES RAISED BY THE ASSESSEE. IT WAS THUS SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF THE PR.CIT IS CALLED FOR. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDER OF THE PR.CIT ISSUED UNDER S.263 OF THE A CT SOUGHT TO BE IMPUGNED AND ALSO THE ASSESSMENT ORDER PASSED UND ER S.143(3) OF THE ACT AS WELL AS THE SUBMISSIONS REFERRED TO AT THE TIME OF HEARING. THE PR.COMMISSIONER IN THE PRESENT CASE HAS PURPORTED T O ACT IN EXERCISE OF POWER UNDER S.263 ON THE GROUND THAT THE ORDER OF T HE AO IN ADMITTING THE INCORRECT CLAIM OF DEPRECIATION ON TRUCKS PURCH ASED, EXPENDITURE TOWARDS INSURANCE CLAIMS WRONGLY CLAIMED AND DEPREC IATION ON CAPITAL EXPENDITURE WRONGLY ALLOWED WITHOUT ANY ENQUIRY AND WITHOUT EXAMINING THE ISSUES INVOLVED IN PERSPECTIVE. IT WAS ALSO AL LEGED THAT THE REPLY OF THE ASSESSEE IS NOT SUPPORTED BY THE CORROBORATIVE EVIDENCES. ON OBJECTIVE CONSIDERATIONS OF THE ENTIRETY OF CIRCUMS TANCES, WE FIND THAT NO MATERIAL HAS BEEN BROUGHT TO OUR NOTICE BY THE ASSE SSEE WHICH GOES TO PROVE THAT THE AO HAD EXAMINED THE ISSUES RAISED BY THE PR.CIT AND ALLOWED THESE CLAIMS AFTER PROPER FACTUAL APPRECIAT ION THEREOF. WE OBSERVE THAT THE ASSESSEE COULD NOT BRING ANYTHING ON RECORD TO PROVE THAT AN ENQUIRY ON THE ISSUE WAS CONDUCTED BY THE AO WHI LE COMPLETING THE IMPUGNED ASSESSMENT. IT FOLLOWS THAT THE CLAIMS IN QUESTION HAVE BEEN ACCEPTED WITHOUT ANY ENQUIRY THEREON. WE AGREE WIT H THE OBSERVATION OF THE PR.COMMISSIONER THAT DEPRECIATION ALLOWANCE UND ER S.32 ON THE ITA NO.186 /RJT/2016 M/S. JAIHIND BUILDCON P.LTD. VS. PR.CIT ASST.YEAR 2011-12 - 6 - INVOICES FOR PURCHASE OF THE VEHICLE ON THE LAST DA Y CALLS FOR MINIMUM SATISFACTION THAT THE ASSESS WERE PUT TO USE ON THA T DAY ITSELF. THE COMPLETION OF FORMALITIES AT A SUBSEQUENT DATE GIVE S RISE TO REASONABLE AND PLAUSIBLE INFERENCE IN SUPPORT OF THE OPINION O F PR.CIT WHICH IS REQUIRED TO BE REBUTTED BY THE ASSESSEE. SIMILARLY , THE INSURANCE CLAIM FOR THE WHOLE YEAR HAS BEEN CLAIMED EVEN IF IT IS P RESUMED FOR A MOMENT THAT THE VEHICLES INSURED WHEREIN PUT TO USE ON THE LAST DAY. CLEARLY, A PRESUMPTION WOULD ARISE THAT EXPENSES THOUGH PAID W ERE NOT INCURRED DURING THE RELEVANT FY. SIMILARLY, WE FIND MERIT I N THE CASE OF THE PR.CIT THAT DEPRECIATION ON REPAIR EXPENSES OF CAPITAL NAT URE HAVE BEEN ALLOWED WITHOUT MAKING RELEVANT ENQUIRIES AT ALL AS WARRANT ED. UNDER THESE CIRCUMSTANCES, WE ARE INCLINED TO ACCEPT THE CASE M ADE OUT BY THE PR.CIT THAT THE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT M AKING ENQUIRY NECESSITATED IN THE CIRCUMSTANCES OF THE CASE. THU S, ON OBJECTIVE ANALYSIS OF THE FACTS AND THE ATTENDANT CIRCUMSTANCES OF THE CASE THE CONCLUSION IS INESCAPABLE THAT THE ASSESSMENT ORDER PASSED IS ER RONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND THE REFORE RIGHTLY SET ASIDE BY THE PR.CIT IN EXERCISE OF POWER UNDER S.263 OF T HE ACT. HENCE, WE FIND THAT THE ACTION OF THE PR.CIT IS BACKED BY AUT HORITY OF LAW. THEREFORE, WE DECLINE TO INTERFERE WITH IT. HOWEVE R, WE MAY HASTEN TO ADD AT THIS JUNCTURE THAT OUR OBSERVATIONS ARE LIMI TED TO THE CORRECTNESS OF ASSUMPTION OF JURISDICTION UNDER S.263 OF THE ACT A ND SHOULD NOT IN ANY MANNER BE READ AS OUR EXPRESSION ON MERITS. THE AS SESSEE IS AT LIBERTY TO ITA NO.186 /RJT/2016 M/S. JAIHIND BUILDCON P.LTD. VS. PR.CIT ASST.YEAR 2011-12 - 7 - EXPLAIN ITS CASE ON MERITS BEFORE THE AO IN TERMS O F DIRECTION OF THE PR.CIT ON THE ISSUES INVOLVED. THUS, NO SERIOUS PR EJUDICE CAN BE SAID TO HAVE CAUSED IN REMITTING THE MATTER BACK TO THE FIL E OF THE AO BY THE PR.CIT ON THE ISSUES WHERE CORRECTNESS OF THE CLAIM S HAVE NOT BEEN TESTED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 14/03/2 017 AT AHMEDABAD. SD/- SD/- ( RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ; DATED 14/03/2017 .., .,../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & .& / CONCERNED PR.CIT 4. .& ( ) / THE CIT(A)-CONCERNED 5. 234 ,&, , , /DR,ITAT, RAJKOT 6. 4?@ A / GUARD FILE. / BY ORDER, 2& ,& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT