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

ITA 2237/AHD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2105 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-04-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 05-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI D.K. SRIVASTAVA, ACCOUNTANT MEMBER ./ I.T.A. NO.2237/AHD/2012 ( / ASSESSMENT YEAR : 2008-09) ACIT CIRCLE-5 BARODA / VS. SHRI MUKESH M.PATEL A-1/3, SHAHIBAUG SOCIETY AMBE SCHOOL, MANJALPUR BARODA 390 007 ./ ./ PAN/GIR NO. : ACQPP 9031 J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAJESH KUMAR, SR.D.R. / RESPONDENT BY : NONE / DATE OF HEARING : 23/04/2013 !'# / DATE OF PRONOUNCEMENT : 10/5/13 $% / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF LD.CIT(APPEALS)-V, BARODA DATED 18/07/2012 PASSE D FOR A.Y. 2008-09 AND THE SOLITARY GROUND IS REPRODUCED BELOW:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN LAW IN DELETING THE ADD ITION MADE ON ACCOUNT OF DISALLOWANCE OF EXCESS DEPRECIATION WITH OUT APPRECIATING THAT THE ASSESSEE IS NOT IN THE BUSINE SS OF RUNNING THE MOTOR BUSES OR MOTOR LORRIES ON HIRE AND AS SUCH HE IS ELIGIBLE FOR DEPRECIATION @ 15% ONLY. ITA NO.2237/AHD /2012 ACIT VS. SHRI MUKESH M.PATEL ASST.YEAR 2008-09 - 2 - 2. ON THE DATE OF HEARING NONE HAS APPEARED FROM TH E SIDE OF THE RESPONDENT-ASSESSEE, ALTHOUGH THE NOTICE OF HEARING WAS DULY SERVED AS IS EVIDENT FROM THE ACKNOWLEDGEMENT OF THE REVENUE HAD PLACED ON RECORD. WE HAVE DECIDED TO PROCEED EX-PARTE QUA THE ASSESSEE AFTER HEARING THE LD.DR. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S.143(3) OF THE IT ACT DATED 23.12.2010 W ERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS IN THE BUSINESS OF COLLEC TION OF GARBAGE. IT HAS ALSO BEEN NOTED BY THE AO THAT THE ASSESSEE IS IN T RADING ACTIVITY OF SPARE- PARTS. FOR RUNNING THESE TWO BUSINESS, THE ASSESSE E IS HAVING TWO PROPRIETORSHIP-CONCERNS; NAMELY, OM SWATCHTHA FOR COLLECTION OF GARBAGE OF VADODARA MUNICIPAL CORPORATION AND OM EN TERPRISES FOR TRADING ACTIVITY. THE OBJECTION OF THE AO WAS TH AT FOR THE PURPOSE OF COLLECTION OF GARBAGE, THE ASSESSEE HAD OWNED VEHIC LES AND THOSE VEHICLES WERE USED FOR THE PURPOSES OF ASSESSEES OWN BUSINE SS, I.E. PICKING UP OF GARBAGE. ACCORDING TO AO, THE ASSESSEE HAS CLAIM ED DEPRECIATION ON THOSE FIGURES @ 30% AS IF THE ASSESSEE IS IN THE BU SINESS OF HIRING OF VEHICLES. THE ASSESSEE WAS SERVED WITH A SHOW-CAUS E AS TO WHY THE DEPRECIATION @ 15% BE NOT ALLOWED. IN THE ABSENCE OF ANY REPLY IN RESPONSE TO THE SHOW-CAUSE, THE AO HAS CONCLUDED TH AT THE ASSESSEE HAD FAILED TO OFFER ANY EXPLANATION, THEREFORE THE ASSE SSEE IS ENTITLED FOR DEPRECIATION @15% ON VEHICLES BEING USED FOR THE PU RPOSE OF THE BUSINESS OF THE ASSESSEE AND SHOULD NOT BE ALLOWED DEPRECIATION @30% BEING NOT IN THE BUSINESS OF HIRING AND PLYING OF V EHICLES. THE ASSESSEE ITA NO.2237/AHD /2012 ACIT VS. SHRI MUKESH M.PATEL ASST.YEAR 2008-09 - 3 - HAD CLAIMED THE DEPRECIATION AT RS.56,81,903/-, HOW EVER THE AO HAD COMPUTED THE DEPRECIATION AT RS.28,40,952/-, THEREF ORE THE DIFFERENCE OF TWO, I.E. RS.28,40,951/- WAS ADDED IN THE HANDS OF THE ASSESSEE. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 4. THE LD.CIT(A) HAS GRANTED RELIEF AS PER THE FOLL OWING PARAGRAPH:- 5.2. I HAVE GIVEN MY CAREFUL CONSIDERATION TO THE FACTS OF THE CASE AS WELL AS THE OBSERVATION MADE BY THE AO AND THE A RGUMENTS PUT FORTH BY THE AR. FROM THE COPY OF WORK ORDER OF SU BMITTED BY THE APPELLANT IT IS SEEN THAT SCOPE OF WORK OF THE APPE LLANT IS COLLECTION OF SOLID WASTE AND TRANSPORTATION TO DISPOSAL SITE/ TREATMENT PLANT. IT HAS BEEN MENTIONED IN THE WORK ORDER THAT: SOLID WASTE IS TO BE COLLECTED THROUGH CLOSED BODY VEHICLES AS MENTIONED IN TENDER AND TO BE TRANSPORTED TO DIS POSAL SITE/TREATMENT PLANT FOR FINAL DISPOSAL. PAYMENT TO BE RECEIVED BY THE APPELLANT DEPENDS ON TOTAL WEIGHT OF THE WASTE TRANSPORTED. IT CAN BE SEEN FROM THE FAC TS OF THE CASE THAT DEALING IN WASTE IS NOT THE BUSINESS OF THE AP PELLANT. THE APPELLANT IS NOT ENGAGED IN WASTE MANAGEMENT OR PROCESSING/TREATMENT OF WASTE. HE IS ONLY TRANSPOR TING THE WASTE BELONGING TO THE MUNICIPAL CORPORATION TO THE FINAL DESTINATION AFTER COLLECTING IT DOOR TO DOOR. THUS, IN ESSENCE THE APPELLANT IS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF WASTE ON HIRE FOR MUNICIPAL CORPORATION. IT HAS BEEN HELD IN THE CAS E OF CIT V/S S.C. THAKUR & BROS.(BOM) THAT HIGHER RATE OF DEPREC IATION IS ALSO ADMISSIBLE TO A MOTOR LORRY WHICH IS USED BY THE AS SESSEE IN HIS OWN BUSINESS OF TRANSPORTATION OF GOODS ON HIRE. I T IS NOT NECESSARY THAT MOTOR LORRIES MUST BE HIRED TO OTHER PERSONS. A SIMILAR FINDING WAS GIVEN IN THE CASE OF ABC INDIA LTD. V/S CIT (GAU) WHEREIN IT WAS HELD THAT AN ASSESSEE IS ENGAG ED IN RUNNING OF VEHICLES FOR HIRE WHEN HE IS TRANSPORTING GOODS FROM ONE PLACE TO ANOTHER AND IT IS IMMATERIAL WHETHER ONE PERSON IS TAKING THE ITA NO.2237/AHD /2012 ACIT VS. SHRI MUKESH M.PATEL ASST.YEAR 2008-09 - 4 - SERVICES OR THERE ARE MANY. CASE LAWS CITED BY THE AO ARE NOT APPLICABLE TO THE FACTS OF THE CASE. IN VIEW OF TH ESE FACTS, IT IS HELD THAT THE APPELLANT IS ENGAGED IN BUSINESS OF RUNNIN G VEHICLES ON HIRE. SO FAR AS CONCLUSION OF THE AO THAT TEMPOS ARE NOT MOTOR LORRIES IS CONCERNED THE WORD MOTOR LORRIES HAS NOT BEEN DEFIN ED EITHER IN THE INCOME TAX ACT OR IN THE INCOME TAX RULES. THE RE IS NO OTHER CATEGORY FOR MOTOR VEHICLES USED IN A BUSINESS OF R UNNING THEM ON HIRE IN WHICH THESE TEMPOS COULD BE FITTED IN. THE REFORE, THEY WILL HAVE TO BE INCLUDED IN THE CATEGORY OF MOTOR LORRIE S ONLY. THUS, THEY ELIGIBLE FOR DEPRECIATION @ 30% AS CLAIMED BY THE APPELLANT. THEREFORE, DISALLOWANCE OF RS.28,40,951/- MADE BY T HE AO TOWARDS EXCESS DEPRECIATION CLAIMED BY THE APPELLAN T IS HEREBY DELETED. 5. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR.RAJESH KUMAR APPEARED AND PLEADED THAT THE LD.CIT(A) HAS NEITHER PROVIDED AN OPPORTUNITY TO THE REVENUE DEPARTMENT NOR CALLED FO R ANY REMAND REPORT BEFORE ENTERTAINING CERTAIN NEW EVIDENCES; MAINLY T HE WORK ORDER ON THE BASIS OF WHICH IT WAS HELD THAT THE MOTOR VEHICLES USED IN A BUSINESS OF RUNNING THEM ON HIRE AND THOSE VEHICLES ARE TO BE I NCLUDED IN THE CATEGORY OF MOTOR LORRIES, THUS ELIGIBLE FOR DEPREC IATION @ 30%. ACCORDING TO LD.DR, THE ASSESSEE HAD FAILED TO COMP LY WITH THE SHOW- CAUSE BEFORE THE AO, THEREFORE IN THE ABSENCE OF AN Y EVIDENCE, THE AO HAD MADE THE IMPUGNED ADDITION, BUT LD.CIT(A) HAS E NTERTAINED CERTAIN FRESH EVIDENCES WHICH WAS IN DEFIANCE OF THE REQUIR EMENT OF RULE46A OF IT RULES, 1962. HE HAS PLEADED THAT THE DECISION O F LD.CIT(A) SHOULD BE REVERSED OR IN THE ALTERNATE THE MATTER CAN GO BACK . FROM THE SIDE OF THE REVENUE, A LETTER HAS ALSO BEEN PLACED BEFORE US DA TED 15/02/2013, ITA NO.2237/AHD /2012 ACIT VS. SHRI MUKESH M.PATEL ASST.YEAR 2008-09 - 5 - WHEREIN THE REVENUE HAS INTIMATED THAT THE TERMS OF THE CONTRACT WITH THE MUNICIPAL CORPORATION WERE NOT PROVIDED BY THE ASSE SSEE TO THE AO. IN THAT LETTER, IT HAS ALSO BEEN INFORMED THAT THE ASS ESSEE WAS ASKED VIDE AN ORDER-SHEET ENTRY DATED 20/12/2010 TO SHOW-CAUSE AS TO WHY THE DEPRECIATION SHOULD NOT BE ALLOWED AS CLAIMED BECAU SE THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF HIRE AND PLYING OF V EHICLE BUT THE ASSESSEE HAD NOT SUBMITTED ANY REPLY. 6. HAVING HEARD THE SUBMISSIONS OF LD.DR AND CONS IDERING THE CONTENTS OF A LETTER ISSUED BY THE CONCERNED AO AND NOW PLACED BEFORE US THROUGH SR.DR OF ITAT, WE ARE OF THE VIEW THAT THE PROVISIONS OF RULE 46A HAVE NOT BEEN COMPLIED WITH BY LD.CIT(A). IN F ACT, IT APPEARS ON PERUSAL OF THE ORDER OF LD.CIT(A) THAT CERTAIN NEW FACTS AS WELL AS CERTAIN NEW EVIDENCES HAVE BEEN ENTERTAINED WITHOUT GRANTIN G AN OPPORTUNITY TO THE REVENUE DEPARTMENT. WE HAVE ALSO NOTED THAT TH E QUESTION OF HIGH RATE OF DEPRECIATION AS RAISED BY THE AO WAS NOT CO RRECTLY ADDRESSED BY LD.CIT(A) AND THE MATTER WAS DEVIATED FROM THE CORE ISSUE THAT WHETHER THE ASSESSEE WAS IN THE BUSINESS OF HIRING OF THE V EHICLES. LD.CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE DIFFERENT GROUND THAT THE HIGHER DEPRECIATION IS ADMISSIBLE ON MOTOR LORRIES. HENCE , THE NATURAL JUSTICE DEMANDS TO RESTORE THIS ISSUE BACK TO THE STAGE OF LD.CIT(A) TO DECIDE THE SAME DE NOVO AS PER LAW, NEEDLESS TO MENTION THAT ONLY AFTER GR ANTING AN ADEQUATE OPPORTUNITY OF HEARING TO THE REVENUE DEPA RTMENT AS WELL AS TO THE ASSESSEE. WITH THESE DIRECTIONS, THIS GROUND O F THE REVENUE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. ITA NO.2237/AHD /2012 ACIT VS. SHRI MUKESH M.PATEL ASST.YEAR 2008-09 - 6 - 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED F OR STATISTICAL PURPOSES ONLY. SD/- SD/- ( D.K. SRIVASTAVA ) ( MUK UL KR.SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEM BER SIGNATURE OF THE AHMEDABAD; DATED 10 / 5 /2013 N OMINATED MEMBERS -------------------------- SD/- SD/- (AKG) (MKS) &.., .(../ T.C. NAIR, SR. PS !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) *+ , / CONCERNED CIT 4. , () / THE CIT(A)-V, BARODA 5. /01 ((*+, *+#, 23$)$ / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. & ' / BY ORDER, / ( //TRUE COPY// (/& )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION DATED 23/4/13(DICTATION-PAD 10 PAGES ATTACHED) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.4.13 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S13.5.13 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.5.13 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER