Sh. Santosh Kr. Motwani, Datia V. I.T.O.,Ward-1(2), Gwalior

ITA 206/AGR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89194 (ITAT-AGRA)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 07-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT SHUK LA
• Assessee Lawyers: T S LEELARAMANI
• Keywords: Depreciation; Corroborative evidences
• Section: 2

Judgement Text

I.T.A. NO. 206/AGR/2014 ASSESSMENT YEAR 2006-07 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA [CORAM:PRAMOD KUMAR AM ] I.T.A. NO. 206/AGR/2014 ASSESSMENT YEAR: 2006-07 SANTOSH KUMAR MOTWANI, ..APPELLANT PROP. M/S. SANTOSH KUMAR & BROTHERS, DATIA (M.P.) [PAN: ASSPK 9870 G] VS. INCOME-TAX OFFICER, .RESPONDENT WARD 1(2), GWALIOR. APPEARANCES BY: T.S. LEELARAMANI FOR THE APPELLANT AMIT SHUKLA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 17 , 2015 DATE OF PRONOUNCING THE ORDER : JUNE 24 , 2015 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CHALLEN GED THE CORRECTNESS OF CIT(A)S ORDER DATED 24 TH APRIL, 2014 IN THE MATTER OF ASSESSMENT U/S. 143(3 ) OF THE INCOME-TAX ACT FOR THE ASSESSMENT YEAR 2006-07. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GRIEVANCE : ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADHOC DISALLOWA NCE OF 10% OUT OF DIESEL, TYRE & TUBE, LUBRICANT & SALARY AMOUNTING TO RS.1,7 7,870/-. SUITABLE RELIEF MAY KINDLY BE ALLOWED. I.T.A. NO. 206/AGR/2014 ASSESSMENT YEAR 2006-07 PAGE 2 OF 5 3. SO FAR AS THIS GROUND OF APPEAL IS CONCERNED, RE LEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE US, AN INDIVIDUAL, IS DER IVING INCOME FROM OPERATION OF BUSES. THE ASSESSEE HAD FILED RETURN OF ITS INCOME DISCLOSING INCOME OF RS.87,890, ON 14 TH FEBRUARY 2007. DURING THE COURSE OF SCRUTINY ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIM ED A DEDUCTION IN RESPECT OF DIESEL EXPENSE, MOTOR PARTS AND LUBRICANT EXPENSES, TYRE AND TUBES EXPENSES OF RS.1,77870/-. IN THE SUPPORTING EVIDENCE, HOWEVER, THE COMPLETE DETAILS OF THE ASSESSEE AND VEHICLE NUMBERS WERE NOT MENTIONED. IN MANY OF THE VOUCHERS, AS THE ASSESSING OFFICER NOTED, ONLY SIDDHESHWAR BUS SERV ICE DATIA WAS MENTIONED. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER PRO CEEDED TO DISALLOW AN ADHOC AMOUNT OF RS.10,000 IN RESPECT OF THESE EXPENSES. A GGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE LEARNED CIT (A) SUSTAINED THE IMPUGNED ADDITION AND WHILE DOING SO OBSERVED AS FOLLOWS : I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS AND CONVINCED THAT IN VIEW OF THE FACT THAT THE APP ELLANT COULD NOT PRODUCE COMPLETE BILLS AND VOUCHERS AND OTHER DOCUMENTARY E VIDENCES TO SUBSTANTIATE THESE EXPENSES AND THE EVIDENCES/BILLS AND VOUCHES FURNISHED WERE ALSO DEFECTIVE, THEREFORE, THE 10% DISALLOWANCE OUT OF T HESE EXPENSES MADE BY THE A.O. IS REASONABLE. HENCE, THE DISALLOWANCE OF RS.1,77,870/- MADE BY THE A.O. IS HEREBY CONFIRMED. 4. THE ASSESSEE IS AGGRIEVED AND IS IN FURTHER APPE AL BEFORE ME. 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. I HAVE NOTED THAT THE PRIMARY REASONS FOR DISALL OWANCE IS ASSESSING OFFICERS OBSERVATION WITH RESPECT TO VEHICLE NUMBERS NOT BEI NG MENTIONED ON THE VOUCHERS AND SOME OF THE VOUCHERS BEING SELF MADE VOUCHERS. I HAVE ALSO NOTED THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVE D THAT SO FAR AS THE SALARIES ARE CONCERNED, COMPLETE DETAILS OF EMPLOYEES HAVE NOT B EEN PLACED ON RECORD. IN MY CONSIDERED VIEW, HOWEVER, THE DISALLOWANCE OF EXPEN SES ON THE GROUND THAT VEHICLE I.T.A. NO. 206/AGR/2014 ASSESSMENT YEAR 2006-07 PAGE 3 OF 5 NUMBERS ARE NOT GIVEN IS UNSUSTAINABLE IN LAW AND T O THAT EXTENT THE GRIEVANCE OF THE ASSESSEE DESERVES TO BE UPHELD. SIMILARLY, VOUCHERS BEING HANDMADE VOUCHERS CANNOT BE A REASON ENOUGH TO MAKE OR SUSTAIN THIS D ISALLOWANCE. HOWEVER, SO FAR AS THE DISALLOWANCE OF SALARY IS CONCERNED, IT IS INCU MBENT UPON THE ASSESSEE TO GIVE COMPLETE DETAILS OF THE EMPLOYEES IN RESPECT OF WHO M SALARIES ARE CLAIMED AND PARTIAL DISALLOWANCE OF EXPENSES ON ACCOUNT OF ASSE SSEES FAILURE TO DO SO CANNOT BE FAULTED WITH. IN VIEW OF THESE DISCUSSIONS, I UPHOL D THE PARTIAL DISALLOWANCE OF SALARY EXPENSE WHICH COMES TO RS.27,000/- AND AS REGARDS T HE BALANCE DISALLOWANCE FOR EXPENSES, I DELETE THE SAME. IN EFFECT THUS, THIS G ROUND OF APPEAL IS PARTLY ALLOWED. 7. IN THE SECOND GROUND OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF DEP RECIATION OF RS.223300/- .THE DEPRECIATION MAY KINDLY BE ALLOWED. 8. THE MATERIAL FACTS ARE NOT DISPUTED. THE ASSESSE E PURCHASED A BUS ON 25 TH JANUARY, 2006. THE INSURANCE AND REGISTRATION CHARG ES IN RESPECT OF THE SAME WERE PAID AT THAT POINT OF TIME, BUT THIS BUS, I.E, BUS NO. MP-32 P0110 COULD ONLY BE USED ON THE REGULAR ROUTE W.E.F. APRIL, 2006 BECAUSE THE BUS PERMIT WAS ISSUED AT THAT POINT OF TIME ONLY. EVEN THOUGH THE ASSESSEE CLAIME D THAT THIS BUS WAS USED IN THE MONTH OF FEBRUARY AND MARCH ON THE STRENGTH OF TEMP ORARY PERMIT, THE ASSESSING OFFICER DECLINED THE DEPRECIATION ON THE GROUND THA T AS THE RELEVANT BUS PERMIT WAS NOT AVAILABLE TO THE ASSESSEE, THE BUS COULD NOT HA VE BEEN ACTUALLY USED ON COMMERCIAL BASIS IN THE RELEVANT PREVIOUS YEAR. THE ASSESSING OFFICER RELIED UPON THE PERMIT ISSUED BY THE TRANSPORT AUTHORITY WHICH STATED THAT THE BUS IS GRANTED PERMISSION TO PLY ON THAT ROUTE W.E.F. APRIL, 2006. AGGRIEVED BY THE DISALLOWANCE OF DEPRECIATION, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A), BUT ONCE AGAIN WITHOUT ANY SUCCESS. THE LEARNED CIT(A) NOTED THAT THE PERMIT FOR PLYING THIS BUS WAS ISSUED ONLY IN THE MONTH OF APRIL 2006 AND THEREFORE, BUS COULD NOT HAVE PLIED DURING THE F.Y. 2005-06. THE ASSESSEE IS AGG RIEVED AND IS IN FURTHER APPEAL BEFORE ME. I.T.A. NO. 206/AGR/2014 ASSESSMENT YEAR 2006-07 PAGE 4 OF 5 9. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 10. GIVEN THE SETTLED LEGAL POSITION THAT IN ORDER TO BE ELIGIBLE FOR DEPRECIATION, IT IS NOT REALLY NECESSARY THAT A BUS MUST ACTUALLY HAVE PLIED ON THE ROAD AND THAT ITS AVAILABILITY FOR BUSINESS AND BEING KEPT READY FOR THAT PURPOSE, IS SUFFICIENT FOR VALID CLAIM OF DEPRECIATION, AS WAS HELD BY HONBLE DELHI HIGH COURT IN THE CASE OF CAPITAL BUS SERVICE PVT. LIMITED VS. CIT, 123 ITR 405, IT I S NOT REALLY NECESSARY TO GO INTO THE QUESTION AS TO WHETHER THE BUS IN QUESTION WAS ACTUALLY USED ON THE ROADS. AS LONG AS THE BUS WAS READY FOR USE FOR BUSINESS, EVE N THOUGH IT MAY NOT HAVE ACTUALLY OPERATED ON THE ROAD FOR WANT OF BUSINESS, THE BUS WAS ELIGIBLE FOR DEPRECIATION. IN THE CASE OF CAPITAL BUS SERVICE (SUPRA), AND IN THE CONTEXT OF THIS ISSUE, THEIR LORDSHIPS HAD, INTER ALIA, OBSERVED AS FOLLOWS: THE ALLOWANCE FOR NORMAL DEPRECIATION DOES NOT DEPE ND UPON THE ACTUAL WORKING OF THE MACHINERY: IT IS SUFFICIENT IF THE M ACHINERY IN QUESTION IS EMPLOYED BY THE ASSESSEE FOR THE PURPOSES OF THE BU SINESS AND FOR NO OTHER BUSINESS AND IT IS KEPT BY HIM READY FOR ACTUAL USE . 11. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF HO NBLE DELHI HIGH COURT, I UPHOLD THE CLAIM OF ASSESSEE AND DIRECT THE ASSESSI NG OFFICER TO GRANT DEPRECIATION. THE ASSESSEE SUCCEEDS IN THIS GROUND. 12. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. PR ONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JUNE, 2015. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 24 TH DAY OF JUNE 2015 *AKS/- I.T.A. NO. 206/AGR/2014 ASSESSMENT YEAR 2006-07 PAGE 5 OF 5 COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA