DCIT,CIR-8(1), Kolkata, Kolkata V. M/s Associated Road Carriers Ltd., Kolkata

ITA 2282/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6399 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 01-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHISH RASTOGI
• Keywords: Depreciation; Fair market value
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & HONB LE SHRI S.S. VISWANETHRA RAVI, JM ] I.T.A NO. 2282/KOL/20 16 ASSESSMENT YEAR : 2011-1 2 DCIT, CIRCLE-8(1), KOLKATA -VS- M/S ASSOCIATED ROAD CARRIERS LTD. [PAN: AACCA 4861 C] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SALLONG YADEN, ADDL. CIT FOR THE REVENUE : SHRI ASHISH RASTOGI, AR DATE OF HEARING : 16.05.2018 DATE OF PRONOUNCEMENT : 18 .05.2018 ORDER PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED A GAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-16, KOLKATA PA SSED U/S 143(3) OF THE INCOME TAX ACT, 1961. 2. AFTER HEARING RIVAL CONTENTIONS WE HOLD AS FOLLO WS: GROUND NO. 1 AND 2 ARE ON THE ISSUE AS TO WHETHER T HE ASSESSEE IS THE OWNER OF THE TRUCKS AND THE CLAIMS OF THE ASSESSEE DEPENDS ON TH IS ISSUE. THE LD. CIT(A) HAS GIVEN A FACTUAL FINDING THAT THE ASSESSEE HAS PROVED THAT IT IS THE OWNER OF THESE TRUCKS. THIS FINDING WAS BASED ON EVIDENCE. 3. THE LD. CIT(A) AT PAGE 10 LAST PARA ONWARDS HELD AS FOLLOWS: 2 ITA NO.2282/KOL/2016 M/S ASSOCIATED ROAD CARRIERS LT D. A.YR .2011-12 2 IT IS CLEAR FROM THE FACTS OF THE CASE AND DOCUMEN TS SUBMITTED BEFORE ME VIDE THE PAPER BOOK THAT THE APPELLANT IS THE REAL OWNER OF THE VEHICLE. THE LOAN AGREEMENT WITH THE BANK PRODUCED BEFORE ME DURING THE COURSE OF VE RIFICATION CLEARLY STATES THAT MONEY HAS BEEN BORROWED FROM THE BANK AGAINST THE SECURIT Y OF THE VEHICLE OWNED BY THE APPELLANT. THERE IS NO QUESTION OF ANY LEASE IN THE PRESENT CASE. HENCE THE DEPRECIATION SHOULD BE ALLOWED IN VIEW OF THE SUBMISSIONS AND DO CUMENTS PRODUCED BEFORE ME AND IN COURSE OF THE REMANDS PROCEEDINGS BEFORE THE DEP UTY COMMISSIONER OF INCOME TAX. AS SUBMITTED BY THE A/R THAT THE APPELLANT COMPANY HAS BEEN ALLOWED DEPRECIATION ON MOTOR TRUCKS EVERY YEAR, THE ASSESSEE COMPANY CANNO T BE DENIED THE CLAIM OF DEPRECIATION ON MOTOR TRUCKS. ACCORDINGLY THE ASSESSING OFFICER HAS ERRED IN REDU CING THE LOAN REPAYMENT AMOUNT FROM THE DEPRECIATION CLAIMED DURING THE YEAR. REPA YMENT OF LOAN IS NOT ALLOWABLE EXPENDITURE AS IT IS CAPITAL IN NATURE AND SHOULD N OT BE ALLOWED AS AN EXPENDITURE. THE ASSESSEE COMPANY HAS BEEN ALLOWED DEPRECIATION ON MOTOR TRUCKS EVERY YEAR AND THOUGH PRINCIPLES OF RES JUDICATA DO NOT APPLY IN I NCOME TAX, YET THE ASSESSEE COMPANY CANNOT BE DENIED THE CLAIM OF DEPRECIATION ON MOTOR TRUCKS. COPY OF THE BILLS FOR TRUCKS PURCHASED HAD BEEN SUB MITTED DURING THE COURSE OF HEARING AND ALSO BEFORE ME ALONG WITH COPY OF LOAN AGREEMEN TS FOR FINANCING OF THE TRUCKS PURCHASED. IT CAN BE CLEARLY SEEN FROM THE BILLS EN CLOSED THAT THE ASSESSEE COMPANY IS THE OWNER OF THE TRUCKS AND THE BANKS OR FINANCIAL INSTITUTION HAVE GRANTED LOAN FOR THE PURCHASE OF THE SAME. FURTHER STATEMENT OF LOANS TA KEN DURING THE YEAR ALONG WITH STATEMENT OF TRUCKS PURCHASED WERE FILED BEFORE ME. THE APPELLANT COMPANY HAD TAKEN THE VEHICLE ON LOAN AND IT CAN BE CLEARLY SEEN FROM THE LOAN DOCUMENTS FURNISHED BEFORE ME AND SUBMITTE D BY THE A/R THAT THE ASSESSEE COMPANY IS BORROWER AND NOT A LESSEE. IT CAN BE CLE ARLY SEEN FROM THE LOAN DOCUMENT THAT THE ASSET IS OFFERED AS SECURITY IN FAVOUR OF THE LENDER FOR DUE REPAYMENT OF THE FACILITY GRANTED BY THE LENDER. THUS, THERE IS NO LEASE AGREEMENT WHEREBY THE ASSET IS TRANSFERRED TO THE APPELLANT AT THE END OF THE TERM OF THE LEASE. THERE IS MERELY L OAN TAKEN FROM THE BANK AGAINST SECURITY OF THE VEHICLE PURCHASED BY THE APPELLANT. THE APPELLANT IS THE ACTUAL OWNER OF THE VEHICLE AN D SHOULD BE ALLOWED THE CLAIM DEPRECIATION ON THE SAME. IT IS CLEAR FROM THE FACTS OF THE CASE THAT THE APP ELLANT IS THE REAL OWNER OF THE VEHICLE. THE LOAN AGREEMENT WITH THE BANK (FILED BEFORE ME A ND ALSO SUBMITTED BEFORE THE ASSESSING OFFICER) CLEARLY STATES THAT MONEY HAS BE EN BORROWED FROM THE BANK AGAINST THE SECURITY OF THE VEHICLE OWNED BY THE APPELLANT. THERE IS NO QUESTION OF ANY LEASE IN THE PRESENT CASE. 3 ITA NO.2282/KOL/2016 M/S ASSOCIATED ROAD CARRIERS LT D. A.YR .2011-12 3 THE APPELLANT COMPANY HAS ALSO FURNISHED THE FOLLOW ING DETAILS BEFORE THE ASSESSING OFFICER DURING THE COURSE OF THE REMAND PROCEEDING AND THE SAME WAS PRODUCED BEFORE ME FOR THE PERUSAL. DETAILS OF VEHICLES PURCHASED D URING THE YEAR 2010-2011 ALONG WITH DETAILS AS TO WHETHER IT IS FINANCED BY BANK/ FINANCIAL INSTITUTION OR SELF FINANCED. XEROX COPY OF INVOICES FOR ADDITION OF ASSETS FOR F EW VEHICLES ALONG WITH COPY OF LOAN AGREEMENTS WERE ENCLOSED IN THE PAPER BOOK SUBMITTE D. THE AO HAS ERRED IN NOT CONSIDERING THE FACT THAT T HE ASSESSEE HAS NOT TAKEN VEHICLE ON LOAN BUT ALSO SELF - FINANCED VEHICLES AND HENCE TH E DISALLOWANCE OF DEPRECIATION IS ARBITRARY AND WITHOUT ANY BASIS. XEROX COPY OF ASSESSMENT ORDERS FOR LAST FEW ASSESS MENT YEARS INCLUDING ASSESSMENT YEARS 2012-13, 2013-14 WERE FILED WHICH CLEARLY SHO WS THAT NO DISALLOWANCE OF DEPRECIATION HAS BEEN MADE IN EARLIER YEARS OR SUBS EQUENT YEARS. HENCE IN VIEW OF THE AFORESAID DISCUSSION THE AO IS DIRECTED TO DELETE THE DISALLOWANCE OF DEPRECIATION OF RS. 9106343/- ON VEHICLES. WE FIND NO INFIRMITY IN THIS ORDER. THE LD. DR COUL D NOT CONTROVERT THESE FACTUAL FINDING. HENCE WE UPHOLD THIS JUDGMENT AND DISMISS THE APPEAL OF THE ASSESSEE. 4. GROUND NO. 3 IS ON THE ISSUE OF CAPITAL GAINS ON SALE OF LAND. THE LD. CIT(A) HAS DISCUSSED THIS ISSUE AT PAGE 12 LAST PARA OF HIS OR DER. THE LAND-IN-QUESTION WAS SOLD FOR RS. 50,00,000/- AND THIS WAS THE CIRCLE RATE FIXED BY THE CONCERNED AUTHORITIES. THE ASSESSING OFFICER, INSTEAD OF ADOPTING THE ACTUAL A MOUNT RECEIVED ON SALE, HAD TAKEN A FAIR MARKET VALUE ESTIMATED BY THE REGISTERED VALUE R AS THE SALE CONSIDERATION. HENCE IN OUR VIEW, THE LD. CIT(A) WAS RIGHT IN UPHOLDING THE CONTENTION OF THE ASSESSEE. THUS, THIS GROUND IS DISMISSED. 5. GROUND NO. 4 IS AGAINST THE DISALLOWANCE U/S 40A (IA) OF THE ACT. THE LD. CIT(A) HAS GIVEN A FACTUAL FINDING AT PAGE 13 LAST PARA HELD A S FOLLOWS: COPY OF RENT AGREEMENT WAS SUBMITTED BEFORE ME. TH E ASSESSING OFFICER WAS GIVEN DETAILS OF RENT PAID AND IN CASE THE ASSESSING OFFI CER REQUIRED ANY CLARIFICATION IN RESPECT OF THE SAME, IT COULD HAVE BEEN REQUISITION ED. THE ASSESSING OFFICER SHOULD HAVE GIVEN AN OPPORTUNITY TO SUBMIT THAT TDS WERE N OT APPLICABLE ON THE PAYMENT. IT IS HEREBY SUBMITTED THAT THE ONUS OF PROVING THAT TDS IS' APPLICABLE ON THE AFORESAID PAYMENTS IN LIGHT OF THE RENTAL AGREEMENTS IS ON TH E ASSESSING OFFICER WHICH IN THE 4 ITA NO.2282/KOL/2016 M/S ASSOCIATED ROAD CARRIERS LT D. A.YR .2011-12 4 INSTANT CASE HAD NOT BEEN DISCHARGED. THE AUTHORIZE D REPRESENTATIVE HAD SUBMITTED THE RENTAL AGREEMENTS, VOUCHERS AS REQUISITIONED IN THE REMAND PROCEEDINGS ALSO AND BASED ON THE DETAILS SUBMITTED IT IS APPARENT THAT TDS IS NOT LIABLE ON SUCH PAYMENTS. THE DETAILS OF THE PAYMENT OF RENT TO VARIOUS CO-OW NERS WERE FURNISHED DURING THE COURSE OF HEARING AND THE SAME WAS SUBMITTED BEFORE ME. IT CAN BE CLEARLY SEEN FROM THE DETAILS FURNISHED THAT THE ASSESSEE COMPANY HAS DEDUCTED TDS WHEREVER THE AMOUNT OF RENT PAYMENT HAS EXCEEDED THE STIPULATED AMOUNT AND IN CASE THE PROPERTY IS ON CO-OWNERSHIP, THE PAYMENT TO EACH CO-OWNER IS EX CEEDING THE LIMIT, THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE ON AN ARBITRARY BASIS WITHOUT GOING INTO THE FACTS OF THE AGREEMENT AND HENCE THE ADDIT ION MADE U/S 40A(IA) IS LIABLE TO BE DELETED. THE LD. DR COULD NOT CONTROVERT THIS FACTUAL FINDIN G. THUS, WE UPHOLD THE SAME AND DISMISS THIS GROUND OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 18.05.2018 SD/- SD/- [S.S.VISWANETHRA RAVI] [ J.SUDHAK AR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 18.05.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-8(1), KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069. 2. M/S ASSOCIATED ROAD CARRIERS LTD, 32, J.L. NEHRU ROAD, KOLKATA-700071. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 5 ITA NO.2282/KOL/2016 M/S ASSOCIATED ROAD CARRIERS LT D. A.YR .2011-12 5