The ACIT, Circle-5, Baroda V. Shri Mukesh M.Patel, Baroda

ITA 2221/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5868 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 04-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2221/AHD/2014 (ASSESSMENT YEAR: 2008-09) ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-5, BARODA V/S SHRI MUKESH M PATEL C/O. M/S. M J CONSTRUCTION, 19, VAD FALIA, GHEEKANTA, RAOPURA, BARODA-390001 (APPELLANT) (RESPONDENT) PAN: ACQPP9031J APPELLANT BY : SHRI JAMES KURIAN, SR. D. R. RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 17 -05-201 7 DATE OF PRONOUNCEMENT : 19 -05-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)- V, BARODA DATED 09.05.2014 PERTAINING TO A.Y. 2008- 09. ITA NO. 2221 /AHD/2014 . A.Y. 2008-0 9 2 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 28,40,951/- MADE ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED BY CLAIMING HIGHER RATE OF DEPRECIATION @ 3 0% AS AGAINST ADMISSIBLE RATE OF 15%. 3. ASSESSEE IS IN THE BUSINESS OF COLLECTION OF GARBAG E AND ALSO ENGAGED IN TRADING ACTIVITIES OF SPARE PARTS AND HARDWARE CHEM ICALS. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE A.O. NO TICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 30%. THE ASSESSEE WAS SH OW CAUSED TO EXPLAIN WHY DEPRECIATION SHOULD BE ALLOWED @ 30% AND NOT 15 % AS THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF HIRING AND PLYING OF VEHICLES. THE ASSESSEE FILED A DETAILED REPLY IN SUPPORT OF ITS CLAIM WHIC H DID NOT FIND ANY FAVOUR WITH THE A.O. WHO WAS OF THE FIRM BELIEF THAT 30% I S ALLOWABLE ONLY WHEN ASSESSEE IS CARRYING ON THE BUSINESS OF RUNNING MOT OR BUSES, MOTOR LORRIES AND MOTOR TAXIES ON HIRE AND NOT WHEN VEHICLES ARE USED FOR ASSESSEES OWN BUSINESS. THE A.O. ACCORDINGLY RECOMPUTED THE DEPRE CIATION @ 15% AND MADE A DISALLOWANCE OF RS. 28,40,951/-. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND STRONGLY AGITATED THE DISALLOWANCE MADE BY THE A.O. 5. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) OBSERVED THAT THE ASSESSEE IS ENGAGED IN COLLECTION AND TRAN SPORTATION OF WASTE BELONGING TO VADODARA MUNICIPAL CORPORATION ON HIRE . DRAWING SUPPORT FROM THE CBDT CIRCULAR NO. 652 DATED 14.06.1993 AND ALSO FROM THE ITA NO. 2221 /AHD/2014 . A.Y. 2008-0 9 3 DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF S.C. THAKUR & BROTHERS 322 ITR 463, THE LD. CIT(A) CAME TO THE CO NCLUSION THAT BUSINESS OF RUNNING MOTOR LORRIES ON HIRE DOES NOT NECESSARILY MEAN THAT MOTOR LORRIES SHOULD BE GIVEN ON HIRE TO OTHER PARTIES. EVEN, IF THE APPELLANT IS A TRANSPORTER AND IS IN THE BUSINESS OF TRANSPORTATIO N OF GOODS ON HIRE FOR OTHER PERSONS, IT ALSO AMOUNTS TO BUSINESS OF RUNNI NG MOTOR LORRIES ON HIRE AND THE HIGHER RATE OF DEPRECIATION WILL BE ADMISSI BLE. THE LD. CIT(A) WAS CONVINCED WITH THE CLAIM OF HIGHER RATE OF DEPRECIA TION BY THE ASSESSEE AND ACCORDINGLY DIRECTED THE A.O. TO ALLOW DEPRECIATION @ 30%. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. THE LD . D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. NONE APPEARED ON BEHALF OF THE ASSESSEE. 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT THE DECISION OF THE HONBLE HIGH COURT OF BOMB AY RELIED UPON BY THE FIRST APPELLATE AUTHORITY IN THE CASE OF S.C. THAKU R & BROTHERS (SUPRA) SQUARELY APPLY ON THE FACTS OF THE CASE. THE RELEVA NT PORTION OF DECISION OF THE HONBLE HIGH COURT READS AS UNDER:- IN APPEAL THE LEARNED TRIBUNAL RELIED ON THE CIRCU LAR NO.652 DT.L4 TH JUNE 1993 (1993) 112 CTR (ST) 14) ISSUED BY THE CBDT WHICH RE ADS AS UNDER: 'SUBJECT: SEC.32 OF THE IT ACT, 1961 RATE OF DEPRECI ATION ON MOTOR LORRIES USED IN THE BUSINESS OF TRANSPORTATION OF GOODS REGARDING UNDER SUB ITEM 2(II) OF ITEM NO. ILL OF APPENDIX 1 TO THE IT RULES, 1962 HIGHER RATE OF DEPRECIATION IS ADMISSIBLE ON MOTOR BUSES, MOTOR LORRIES AND MOTOR TAXIS USED IN A BUSINESS OF RUNNING THEM ON HIRE. A QUESTION H AS BEEN RAISED AS TO WHETHER FOR DERIVING THE BENEFIT OF HIGHER DEPRECIATION, MO TOR LORRIES MUST BE HIRED OUT TO ITA NO. 2221 /AHD/2014 . A.Y. 2008-0 9 4 SOME OTHER PERSON AND WHETHER THE USER OF THE SAME IN THE ASSESSEE'S BUSINESS OF TRANSPORTATION OF GOODS ON HIRE WOULD SUFFICE. 2. IN BOARD'S CIRCULAR NO.609 DT. 29 TH JULY, 1991 (1992)96 CTR (ST 233), IT WAS CLARIFIED THAT WHETHER A TOUR OPERATOR OR TRAVEL AG ENT USING MOTOR BUSINESS OR MOTOR TAXIS OWNED BY HIM IN PROVIDING TRANSPORTATIO N SERVICES TO TOURISTS, HIGHER RATE OF DEPRECIATION WOULD BE ALLOWED ON SUCH VEHIC LES. IT IS FURTHER CLARIFIED THAT HIGHER DEPRECIATION WILL ALSO BE ADMISSIBLE ON MOTO R LORRIES USED FOR THE ASSESSEE'S BUSINESS OF TRANSPORTATION OF GOODS ON H IRE. THE HIGHER RATE OF DEPRECIATION HOWEVER, WILL NOT APPLY IF THE MOTOR B USINESS, MOTOR LORRIES ETC. ARE USED IN SOME OTHER NON-HIRING BUSINESS OF THE ASSES SEE'. 8. THERE IS NO DISPUTE THAT THE ASSESSEE IS COLLECTING AND TRANSPORTING WASTE ON HIRE FOR VADODARA MUNICIPAL CORPORATION. THEREFO RE, IT CAN BE SAFELY CONCLUDED THAT THE VEHICLES ARE USED BY THE ASSESSE E FOR HIS OWN BUSINESS OF COLLECTING AND TRANSPORTING WASTE ON HIRE OR IT CAN ALSO BE SAID THAT THE ASSESSEE IS USING THE VEHICLES ON HIRE FOR VADODARA MUNICIPAL CORPORATION. CONSIDERING THESE FACTS IN THE LIGHT OF THE CBDT CI RCULAR AND THE DECISION OF THE HONBLE HIGH COURT (SUPRA), WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). 9. APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 19 - 05- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 19 /05/2017