Deputy Commissioner of Income-Tax, Bangalore V. M/s.Motor World Ltd., Bangalore

ITA 2085/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5346 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU JT BENGALURU
• Assessee Lawyers: MOHAN R MUDAKAVI
• Keywords: Audit objection; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.2085/BANG/2016 ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(2), BANGALORE. VS. M/S. MOTOR WORLD LTD., NO.46, KUDLU GATE, 7 TH MILE, HOSUR ROAD, BENGALURU 560 068. PAN: AACCM 6574A APPELLANT RESPONDENT APPELLANT BY : SHRI M.K. BIJU, JT. CIT(DR)(ITAT)-3, BENGALURU RESPONDENT BY : SHRI MOHAN R. MUDAKAVI, CA DATE OF HEARING : 15.05.2017 DATE OF PRONOUNCEMENT : 26.05.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LD.CIT CA) IS OPPOSED TO THE LAW AND FACTS OF THE CASE. 2. WHETHER THE CIT CA) IS RIGHT IN HOLDING THE DECIS ION THAT THE CAR SHOULD BE TREATED AS COMMERCIAL VEHICLE (FO RTUNER CAR) FOR THE MERE REASONS THAT THE VEHICLE WAS UTILIZED FOR THE PURPOSE OF BUSINESS? 3. THE ASSESSEE HAD REGISTERED THE VEHICLE IN THE NO RMAL PROCEDURES AND IS CLAIMING DEPRECATION @ 50% AS APP LICABLE TO ITA NO.2085/BANG/2016 PAGE 2 OF 4 COMMERCIAL VEHICLE. WHETHER THE CIT(A) IS RIGHT I N RENDERING THE DECISION THAT THE VEHICLE BE TREATED AS COMMERC IAL DESPITE THE FACT THAT THE VEHICLE WAS NOT REGISTERED AS PER THE PROCEDURE MANDATED BY THE RTO? 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT( A) IN SO FAR AS IT IS RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND A ND/OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE POINTED OUT THAT THE TAX EFFECT INVOLVED IN THIS A PPEAL WAS LESS THAN RS.10 LAKHS FOR THE IMPUGNED ASSESSMENT YEAR, THEREFORE B Y VIRTUE OF CIRCULAR NO.21/2015, DT.10.12.2015, TAX EFFECT IS BELOW THE PRESCRIBED LIMIT LAID DOWN FOR FILING APPEALS BEFORE THIS TRIBUNAL. 3. LD. DR SUBMITTED THAT PARA 8 OF THE CIRCULAR WAS NOT APPLICABLE IN THIS CASE. THEREFORE HE DID NOT OBJECT TO THE APPL ICATION OF THE CIRCULAR. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE TAX EFFECT O N THE IMPUGNED ISSUE IS LESS THAN RS.10 LAKHS. PARA 4 OF THE CIRCULAR NO.2 1/2015 (SUPRA) IS REPRODUCED HEREUNDER : 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFER ENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND TH E TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BE EN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AG AINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRE D TO AS DISPUTED ISSUES). HOWEVER THE TAX WILL NOT INCLU DE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST IT SELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE ITA NO.2085/BANG/2016 PAGE 3 OF 4 AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CAS ES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFE CT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CAS E OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 5. THE ASSESSEE HAD NOT CHALLENGED THE CONSTITUTI ONAL VALIDITY OF ANY PROVISIONS OF THE ACT NOR HAD IT CHALLENGED THE LEG ALITY OF THE CIRCULAR. REVENUE HAS NOT BROUGHT TO OUR NOTICE ANYTHING TO S HOW THAT THE APPEAL AROSE ON AN ISSUE EMANATING FROM ANY REVENUE AUDIT OBJECTIONS ACCEPTED BY THE DEPARTMENT. ADDITION GIVING RISE TO THE APP EAL DOES NOT RELATE TO ANY UNDISCLOSED FOREIGN ASSETS / BANK ACCOUNTS. THUS, WE FIND THAT CIRCULAR NO.21/2015 (SUPRA) IS SQUARELY APPLICABLE IN THIS C ASE. HOWEVER IF REVENUE FINDS THAT APPEAL ARISES OUT OF ISSUES EMAN ATING FROM AUDIT OBJECTION IT WILL BE FREE TO FILE NECESSARY PETITIO N SEEKING RECALL OF THIS ORDER. WITH THE ABOVE OBSERVATIONS APPEAL OF THE REVENUE I S THEREFORE DISMISSED. 6. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF MAY, 2017. SD/- SD/- ( JASON P. BOAZ ) (SUNIL KUMAR Y ADAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 26 TH MAY, 2017. / D ESAI S MURTHY / ITA NO.2085/BANG/2016 PAGE 4 OF 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.