M/s. A.M.Transport Corporation, CHENNAI V. Additional CIT, CHENNAI

ITA 220/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51835 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AVINASH K SAHAY DRIV
• Assessee Lawyers: G STANLY
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 220/MDS/2011 ASSESSMENT YEAR : 2007-08 M/S. A.M. TRANSPORT CORPORATION. NO. 329, THAMBU CHETTY STREET, PARRYS, CHENNAI-600 001. (PAN : AAHFA2077Q) V. THE ADDITIONAL COMMISSIONER OF INCOME TAX, BUSINESS RANGE-VIII, CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. STANLY RESPONDENT BY : SHRI AVINASH K. SAHAY, DR-IV DATE OF HEARING : 08-09-2011 DATE OF PRONOUNCEMENT : 16/09/2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED CIT(APPEALS)-IX, CHENNAI IN ITA NO. 119/2009-10 DAT ED 08-11-2010 FOR THE ASSESSMENT YEAR 2007-08. I.T.A. NO. 220/MDS/2011 2 2. SHRI G. STANLY, ADVOCATE REPRESENTED ON BEHALF O F THE ASSESSEE AND SHRI AVINASH K. SAHAY, LEARNED CIT-DR REPRESENTED ON BEH ALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WHICH IS DOING THE BUSINESS O F TRANSPORT CONTRACTORS. IT WAS THE SUBMISSION THAT THE RETURN FILED BY THE ASSESSE E CAME TO BE TAKEN UP FOR SCRUTINY AND THE ASSESSMENT CAME TO BE COMPLETED WH EREIN THE ASSESSING OFFICER HAD DISALLOWED 10% OF THE LOADING AND UNLOADING CHA RGES CLAIMED AS ALSO DISALLOWED THE DEPRECIATION ON SEVEN TRAILERS. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD DISALLOWED 10% OF THE LOADING AND UNLOADING CHARGES BY HOLDING THAT THE ASSESSEE HAD NOT PRODUCED FULL EVI DENCE IN SUPPORT OF THE EXPENDITURE. IT WAS THE FURTHER SUBMISSION BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE ASSESSING OFFICER HIMSELF H AD ACCEPTED THAT THE ASSESSEE HAD PROVIDED PROOF OF INCURRING THE EXPENDITURE. I T WAS THE SUBMISSION THAT THE ONLY QUESTION WAS THAT THE LOADING AND UNLOADING CH ARGES HAD BEEN PAID TO LABOURERS AND THE SAME WAS SUPPORTED BY SELF-MADE V OUCHERS. IT WAS THE FURTHER SUBMISSION THAT THE ASSESSING OFFICER HIMSELF HAD A CCEPTED THAT THE SAID EXPENDITURE HAS TO BE INCURRED BY THE ASSESSEE. IT WAS THE SUBMISSION THAT NONE OF THE VOUCHERS HAD BEEN FOUND TO BE BOGUS NOR WAS THERE ANY ALLEGATION THAT THE EXPENDITURE WAS NOT GENUINE. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD CONFIRMED THE DISALLOWANCE BY JUST MENTIONING THAT THE EXPENDITURE BEING INCURRED AND HAVING BEEN RECORDED WITH SELF-MADE VO UCHERS, THE POSSIBILITY OF I.T.A. NO. 220/MDS/2011 3 INFLATION CANNOT BE RULED OUT. IT WAS THE SUBMISSI ON THAT ALL THE EXPENSES WERE FULLY VOUCHED AND IT WAS NOT POSSIBLE TO GET VOUCHE RS FROM LABOURERS. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD ALSO NOT MADE ANY ALLEGATION OF INFLATION IN THE EXPENDITURE. 4. IN REGARD TO THE DEPRECIATION IT WAS THE SUBMISS ION THAT THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF DEPRECIATION ON THE TRA ILERS AS THE SAME HAD BEEN PURCHASED BY THE PARTNER OF THE ASSESSEE FIRM, SHRI MANOJ KUMAR GOEL WITH THE HELP OF HDFC BANK LOAN BUT THE PARTNER HAD NOT YET CLEARED THE LOAN AND THE TITLE OVER THE TRAILERS HAD NOT BEEN TRANSFERRED TO THE A SSESSEE FIRM. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD ACCEPTED THAT THE TRAILERS WERE USED BY THE ASSESSEE AND THAT THE SAME HAD BEEN TRANSFERRED BY SHRI MANOJ KUMAR GOEL TO THE ACCOUNTS OF THE ASSESSEE FIRM. IT WAS THE S UBMISSION THAT THE PURCHASE OF THE TRAILERS HAD TO BE DONE THROUGH THE PARTNER AS THE BANKS WERE UNWILLING TO FINANCE THE TRAILERS IN THE HANDS OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE FACT OF THE OWNERSHIP OF THE TRAILERS, THE FACT OF THE TRANSFER OF THE TRAILERS TO THE PARTNERSHIP FIRM AND THE USE OF THE TRAILERS BY THE PARTNERSHIP FIRM WERE NOT DISPUTED. THE ONLY DISPUTE WAS IN REGARD TO THE FA CT THAT THE PARTNER DID NOT CLEAR THE LOAN OF THE HDFC BANK IN RESPECT OF PURCHASE OF THE TRAILERS. IT WAS THE SUBMISSION THAT AS THE VALUE OF THE TRAILERS WAS RE CORDED IN THE BOOKS OF THE ASSESSEE AND AS THE ASSESSEE HAD USED THE TRAILERS IN ITS BUSINESS, THE ASSESSEE WAS ENTITLED TO DEPRECIATION. HE ALSO RELIED UPON THE DECISION OF THE HON'BLE I.T.A. NO. 220/MDS/2011 4 SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. V . CIT, REPORTED IN 239 ITR 775 (SC). IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD DISMISSED THE ASSESSEES CONTENTION ON THE GROUND THAT THE TRAILE RS HAD NOT BEEN TRANSFERRED TO THE ASSESSEE FIRM BY MAKING NECESSARY ENTRIES IN TH E RECORDS OF THE REGIONAL TRANSPORT AUTHORITY AND CONSEQUENTLY THE USE OF THE TRAILERS WAS NOT ESTABLISHED. IT WAS THE SUBMISSION THAT THE FACT THAT THE COST O F THE TRAILERS IS RECORDED IN THE BOOKS OF THE ASSESSEE REMAINS UNDISPUTED AND THE FA CT THAT THE TRAILERS COULD NOT HAVE BEEN USED FOR ANY PERSONAL USE OF THE PARTNER OF THE ASSESSEE IS ALSO UNDISPUTED. THUS IT WAS SUBMITTED THAT THE DEPRECI ATION ON THE TRAILERS MAY BE ALLOWED. 5. IN REPLY, THE LEARNED DR SUBMITTED THAT 10% DISA LLOWANCE OUT OF LOADING AND UNLOADING CHARGES WAS REASONABLE AND WAS LIABLE TO BE SUSTAINED. IT WAS THE FURTHER SUBMISSION THAT AS THE ASSESSEE DID NOT HAV E THE TRAILERS REGISTERED IN ITS NAME, THE ASSESSEE WAS NOT ENTITLED TO THE DEPRECIA TION. HE VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND T HE LEARNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN RE GARD TO THE ISSUE OF 10% DISALLOWANCE OUT OF THE LOADING AND UNLOADING CHARG ES, IT IS NOTICED THAT THE ASSESSING OFFICER HAS CATEGORICALLY ADMITTED THAT A LL THE EXPENSES ARE VOUCHED. THE ASSESSING OFFICER HAS ALSO ACCEPTED THAT THE AS SESSEE WOULD HAVE INCURRED SUCH EXPENDITURE. THE ASSESSING OFFICER PROCEEDS T O SAY THAT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE FULL EVIDENCE IN SUPPORT O F THE EXPENDITURE. WHAT IS THE I.T.A. NO. 220/MDS/2011 5 FULL EVIDENCE THAT THE ASSESSING OFFICER IS DEMANDI NG DOES NOT COME OUT OF THE ORDER OF THE ASSESSING OFFICER. A PERUSAL OF THE O RDER OF THE LEARNED CIT(A) SHOWS THAT THE LEARNED CIT(A) HAS RAISED THE ISSUE OF POS SIBLE INFLATION. TRUE, THE APPEAL BEFORE THE LEARNED CIT(A) IS ONLY AN EXTENSION OF T HE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. THE LEARNED CIT(A) C AN BRING UP ISSUES IN REGARD TO THE ISSUES IN THE APPEAL. HOWEVER, AS NO SPECIFIC VOUCHER HAS BEEN FOUND TO BE FAULTY AND TAKING INTO CONSIDERATION THE POSSIBLE I NFLATION IN THE EXPENDITURE, WE ARE OF THE VIEW THAT AN AD HOC ADDITION OF ` 5 LAKHS WOULD MEET THE INTEREST OF JUSTICE. IN THE CIRCUMSTANCES, THE 10% DISALLOWANC E OUT OF THE LOADING AND UNLOADING CHARGES AS CONFIRMED BY THE LEARNED CIT(A ) STANDS REDUCED TO ` 5 LAKHS. 7. IN REGARD TO THE ISSUE OF THE DEPRECIATION ON TH E TRAILERS, IT IS NOTICED THAT THE VALUE OF THE TRAILERS IS RECORDED IN THE BOOKS OF T HE ASSESSEE FIRM. THE ASSESSING OFFICER HAS ALSO NOT DISPUTED THAT THE TRAILERS ARE NOT USED BY THE ASSESSEE FIRM. THERE WAS ALSO NO ALLEGATION THAT THE PARTNER, SHRI MANOJ KUMAR GOEL, IS INDEPENDENTLY DOING THE BUSINESS OF TRANSPORT CONTR ACT WHEREIN SUCH TRAILERS COULD BE USED. IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOW ING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MYSORE MIN ERALS LTD., REFERRED TO SUPRA, IT IS HELD THAT THE ASSESSEE WOULD BE ENTITLED TO T HE CLAIM OF DEPRECIATION. IN THE CIRCUMSTANCES, THE FINDING OF THE LEARNED CIT(A) AN D THE ASSESSING OFFICER ON THIS ISSUE STANDS REVERSED AND THE ASSESSING OFFICER IS DIRECTED TO GRANT DEPRECIATION I.T.A. NO. 220/MDS/2011 6 ON THE TRAILERS USED BY THE ASSESSEE IN ITS BUSINES S OF TRANSPORTATION AND THE VALUE OF WHICH IS RECORDED IN ITS BOOKS OF ACCOUNTS. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. THE ORDER WAS PRONOUNCED IN THE COURT ON 16/09/2 011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 16 TH SEPTEMBER, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE