The ACIT, Circle-7(2), Ahmedabad V. Shri Udaykumar C. Patel, Ahmedabad

ITA 2300/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5201 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 06-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: A S SHAH
• Keywords: Depreciation
• Section: 37; 37(1)

Judgement Text

, , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD L LL LK KK KOZJH OZJH OZJH OZJH OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; ,OA OAOA OA EK/ EK/EK/ EK/KQFERK KQFERK KQFERK KQFERK JKW; JKW;JKW; JKW;] U; ] U;] U; ] U;KF KFKF KF;D LNL; ;D LNL; ;D LNL; ;D LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NOS. 1735 & 2300/AHD/2016 ( / ASSESSMENT YEARS : 2012-13 & 2013-14) ACIT, CIRCLE 7(2), AHMEDABAD. / VS. UDAYKUMAR C. PATEL, PROP. LINE O MATIC GRAPHICS INDUSTRIES, D/62 DIAMOND PARK, GIDC ESTATE, OPP. TOYOTA SHOW ROOM, NARODA, AHMEDABAD 382 330. ./ ./ PAN/GIR NO. : AATPP 8316 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. K. DEV, SR. D.R. / RESPONDENT BY : SHRI A. S. SHAH, A.R. / DATE OF HEARING 22/01/2019 !'# / DATE OF PRONOUNCEMENT 06/02/2019 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTAN CE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS)7, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEA L NOS.CIT(A)- 7/27/15-16 & CIT(A)-7/147/15-16 DATED 26.04.2016 & 01.06.2016 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UN DER S.143(3) OF THE ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 2 - INCOME TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 25.03.2015 & 02.12.2015 RELEVANT TO ASSESSMENT YEAR S (AYS) 2012-13 & 2013-14. 2. FIRST, WE TAKE UP ITA NO.1735/AHD/2016 PERTAININ G TO THE AY 2012-13. REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE BY AO OF RS.1,11,43,571/- U/S 145A. 2. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS.18,86,570/- MADE BY AO TOWARDS PROVISION FOR WARRANTY. 3. THE LD CIT(A) HAS FURTHER ERRED IN LAW AND ON FA CTS IN ALLOWING CLAIM OF EXCESS DEPRECIATION @5% ON CERTAIN VEHICLE S ACQUIRED BY THE ASSESSEE DURING THE F.Y. 2009-10 INSTEAD OF USU AL RATE OF 155. 4. THE DEPARTMENT CRAVES LEAVE TO ADD OR ALTER ANY FURTHER GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING. 3. THE FIRST ISSUE RAISED BY THE REVENUE IS THAT LE ARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 1,1 1,43,571/- U/S 145A OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF PAPER C ONVERTING MACHINE AND RESELLING OF PARTS. THE ASSESSEE IN ITS BALANCE SHEET AS ON 31.03.2012 HAS SHOWN EXCISABLE CLOSING STOCK OF THE FOLLOWING ITEMS: SR. NO. PARTICULARS AMOUNT 1. RAW MATERIAL 5,95,39,950/- 2. FINISHED GOODS 10,81,125/- ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 3 - THE ASSESSEE WHILE VALUING THE CLOSING STOCK AS DIS CUSSED ABOVE HAS NOT INCLUDED THE AMOUNT OF EXCISE AND VAT AMOUNTING TO RS.1,11,43,571/- ONLY. THE ASSESSEE EXPLAINED DURING THE ASSESSMENT PROCEEDING THAT HE HAS BEEN FOLLOWING THE EXCLUSIVE METHOD OF ACCOUNT. THEREFORE, THE AMOUNT OF EXCISE AND VAT WAS NOT INCLUDED IN THE VA LUATION OF CLOSING STOCK AS ON 31.03.2012. 4.1 HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSESS EE IS LIABLE TO INCLUDE THE AMOUNT OF EXCISE AND VAT WHILE VALUING THE CLOSING STOCK AS ON 31.03.2012 AS PER THE PROVISION OF SECTION 145A OF THE ACT. THEREFORE, THE AO DISREGARDED THE CONTENTION OF THE ASSESSEE AND ADDED THE AMOUNT OF EXCISE AND VAT IN THE CLOSING STOCK. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LEARN ED CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVIN G AS UNDER: 4.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. A PERUSAL OF THE SUBMISSION MADE BY THE APPELLANT SHOWS THAT THE HONBLE ITAT IN THE APPELL ANTS OWN CASE FOR ASST. YEARS 2007-08 AND 2008-09 HAS ALLOWED THE APPEAL IN FAVOUR OF THE APPELLANT. FOLLOWING THE DECISION OF HONBLE ITAT, THE CIT(A) FOR A.Y. 2009-10 AND 2010-11 HAS ALSO AL LOWED THE APPEAL OF THE APPELLANT BY GIVING NECESSARY DIRECTI ONS TO THE AO. IN VIEW OF THESE FACTS AND FOLLOWING THE DECISION O F THE LEARNED CIT(A) TAKEN IN A.Y. 2011-12, THE AO IS DIRECTED TO FOLLOW THE DIRECTION OF THE TRIBUNAL FOR THE YEAR UNDER CONSID ERATION AS WELL AS MODIFY THE DISALLOWANCE MADE ACCORDINGLY BY CARR YING OUT THE ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 4 - EXCISE OF VERIFICATION OF REVENUE STATEMENT. THUS, GROUND OF APPEAL NO.1 IS ALLOWED, SUBJECT TO VERIFICATION BY THE AO. BEING AGGRIEVED BY THE ORDER OF LEARNED CIT(A) REVE NUE IS IN APPEAL BEFORE US. 6. LEARNED DR BEFORE US RELIED ON THE ORDER OF AO W HEREAS THE LD. AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 102. THE LEARNED AR BEFORE US RELIED ON THE ORDER OF LD. CIT -A. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT TH E ITAT IN IDENTICAL FACTS AND CIRCUMSTANCES IN THE OWN CASE OF THE ASSESSEE I N ITA NO. 3109/AHD/2013 PERTAINING TO THE A.Y. 2010-11 VIDE O RDER DATED 29.09.2016 HAS DECIDED THE ISSUE IN FAVOR OF THE AS SESSEE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: 6. AFTER HEARING BOTH SIDES AND PERUSED THE MATERI AL ON RECORD, WE FIND THAT HONBLE ITAT, AHMEDABAD CO-ORDINATE BENCH FOR A.Y.2009-10 AND ALSO IN RESPECT OF EARLIER YEAR I.E. A.Y.2007-0 8 HAVE DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY KEEPIN G RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT RENDE RED IN THE CASE OF ACIT VS. NARMADA CHEMATUR PETROCHEMICALS LTD. (2010 ) 327 ITR 369 (GUJ.) IN VIEW OF ABOVE FACTS AND LEGAL FINDINGS, WE CONSIDER THAT LD. CIT(A) HAS CORRECTLY DELETED THE ADDITION IN FAVOUR OF ASSESSEE. REVENUES APPEAL ON THIS ISSUE IS REJECTED. WE ALSO FIND IT IMPORTANT TO REFER TO THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ACIT VS. N ARMADA CHEMATUR ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 5 - PETROCHEMICALS LTD. REPORTED IN 327 ITR 369 WHEREIN IT WAS HELD AS UNDER: THERE IS ONE MORE ASPECT OF THE MATTER. SUCH DUTY OF CENTRAL EXCISE IF ADDED TO ENHANCE THE VALUE OF CLOSING STOCK WOULD R ESULT IN ENHANCED OPENING STOCK ON THE FIRST DAY OF THE NEXT ACCOUNTI NG PERIOD, NAMELY, 1- 4-1997. SO, NEXT YEAR'S PROFITS WOULD GET DEPRESSED ACCORDINGLY. OVER A PERIOD OF TIME, THE WHOLE EXERCISE RESULTS IN EVENI NG OUT; IN OTHER WORDS, REVENUE NEUTRAL. AT THE SAME TIME, WHILE DISTURBING THE VALUE OF THE CLOSING STOCK THE ASSESSING AUTHORITY CANNOT CHANGE THE METHOD OF ACCOUNTING REGULARLY EMPLOYED. 7.1 AS THE FACTS IN THE CASE ON HAND ARE IDENTICAL TO THE FACTS AS DISCUSSED IN THE ABOVE CASE, THEREFORE RESPECTFULLY FOLLOWING THE SAME WE DO NOT WISH TO DEVIATE FROM THE VIEW TAKEN BY THE L D. CIT(A). HENCE, THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. THE SECOND ISSUE RAISED BY THE REVENUE IS THAT L D. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 18,86, 570/- ON ACCOUNT OF THE PROVISION OF WARRANTY. 9. THE ASSESSEE DURING THE YEAR HAS CLAIMED A DEDUC TION OF RS. 18,86,570/- ON ACCOUNT OF PROVISION FOR WARRANTY RE PLACEMENT. THE ASSESSEE FURTHER CLAIMED THAT THE PROVISION WAS MAD E IN THE BOOKS OF ACCOUNTS FROM EXPERIENCE. ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 6 - 9.1 HOWEVER, THE AO TREATED THE PROVISION FOR WARRA NTY AS AN UNASCERTAINED LIABILITY AND ACCORDINGLY HELD THAT T HE SAME COULD NOT BE ALLOWED AS DEDUCTION U/S 37 OF THE ACT. THUS, THE A O DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD C IT(A) WHO HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 5.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT THE AO MADE THE IMPUGNED DISA LLOWANCE ON ACCOUNT OF THE FACT THAT THIS AMOUNT WAS MERELY A P ROVISION FOR WARRANTY AND THEREFORE A CONTINGENT LIABILITY AND N OT AN ASCERTAINED LIABILITY. HE ACCORDINGLY DISALLOWED THE SAME U/S 3 7 OF THE IT ACT. THE APPELLANT DURING THE APPELLATE PROCEEDINGS, STATED THAT THE PROVISION MADE ON ACCOUNT OF WARRANTY WAS AN ASCERTAINED LIAB ILITY SINCE IT WAS BASED ON THE EXPERIENCE AND EVIDENCES OF THE PAST Y EARS. IT WAS ALSO DEMONSTRATED BY THE APPELLANT THAT THE ACTUAL EXPEN SES INCURRED IN RESPECT OF WARRANTY IN SUBSEQUENT YEAR WAS ACTUALLY MUCH MORE THAN THE PROVISION MADE. IT IS SEEN FROM THE DETAILS FUR NISHED BY THE APPELLANT THAT THE APPELLANT HAS INCURRED WARRANTY EXPENSES O F RS.38,64,718/- AGAINST THE PROVISION MADE OF RS.18,86,570/-. THIS SHOWS THAT THE CONTENTION OF THE APPELLANT WAS ACTUALLY FOR AN ASC ERTAINABLE LIABILITY, IS CORRECT. 5.2.1 THE HONBLE SUPREME COURT IN THE CASE OF ROTO RK CONTROLS INDIA PVT. LTD. VS. CIT 314 ITR 62 HAS HELD THAT WARRANTY PROVISION IS ALLOWABLE AS A DEDUCTION. 5.2.2 IN VIEW OF THESE FACTS AND THE DISCUSSION ABO VE AS ALSO THE JUDGEMENT OF THE HONBLE SUPREME COURT, THE ADDITIO N OF RS.18,86,570/- IS DELETED. GROUND OF APPEAL NO. 2 IS ALLOWED. BEING AGGRIEVED BY THE ORDER OF LD CIT(A) REVENUE I S IN APPEAL BEFORE US. ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 7 - 11. THE LEARNED DR BEFORE US VEHEMENTLY SUPPORTED T HE ORDER OF AO WHEREAS THE LEARNED AR BEFORE US SUBMITTED THAT THE SIMILAR PROVISIONS WERE MADE IN THE A.Y. 2014-15 WHICH WAS ALLOWED BY THE REVENUE. 11.1 LD AR FURTHER SUBMITTED THAT THE ACTUAL EXPENS ES INCURRED AGAINST SUCH WARRANTY EXPENSES EXCEED THE AMOUNT OF THE PRO VISION CREATED IN THE BOOKS OF ACCOUNTS. THE LD AR IN SUPPORT OF HIS CLAI M FILED THE COPY OF THE LEDGER OF WARRANTY REPLACING THE EXPENSES WHICH IS PLACED ON RECORD. THE LD AR VEHEMENTLY SUPPORTED THE ORDER OF LD CIT( A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS A SETTLED PRINCIPLE OF L AW THAT THE PROVISIONS CREATED BY THE ASSESSEE ON THE SCIENTIFIC BASIS ARE LIABLE FOR DEDUCTION U/S 37(1) OF THE ACT. IN THIS REGARD, WE FIND SUPPORT A ND GUIDANCE FROM THE JUDGMENTS OF HONBLE SUPREME COURT IN THE CASE OF R OTORK CONTROLS INDIA PVT. LTD. VS. CIT REPORTED IN 314 ITR 62 WHER EIN IT WAS HELD AS UNDER: FROM ANALYSIS OF THE VARIOUS DECISION OF THE SUPRE ME COURT, IN WHICH A SIMILAR ISSUE WAS DECIDED, THE PRINCIPLE WHICH EM ERGES IS THAT IF THE HISTORICAL TREND INDICATES THAT A LARGE NUMBER OF S OPHISTICATED GOODS WERE BEING MANUFACTURED IN THE PAST AND IF THE FACT S ESTABLISHED SHOW THAT DEFECTS EXISTED IN SOME OF THE ITEMS MANUFACTU RED AND SOLD, THEN THE PROVISION MADE FOR WARRANTY IN RESPECT OF THE ARMY OF SUCH SOPHISTICATED GOODS WOULD BE ENTITLED TO DEDUCTION FROM THE GROSS ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 8 - RECEIPTS UNDER SECTION 37. IT WOULD ALL DEPEND ON T HE DATA SYSTEMATICALLY MAINTAINED BY THE ASSESSEE. 12.1 NOW COMING TO THE FACTS OF THE INSTANT CASE, W E NOTE THAT THE ASSESSEE HAS CREATED THE PROVISION @ 0.4% OF THE TO TAL TURNOVER AMOUNTING TO RS.18,86,570/- (0.4% OF RS.47,16,42,44 9/-). ON PERUSAL OF THE LEDGER OF WARRANTY REPLACING EXPENSES, IT WAS O BSERVED THAT THE ASSESSEE HAD INCURRED ACTUAL EXPENSES AMOUNTING TO RS. 60,21,216/- ONLY WHICH EXCEEDS THE PROVISION CREATED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE FACT OF ACTUAL EXPENSES INCURRED BY T HE ASSESSEE UNDER THE HEAD WARRANTY REPLACING EXPENSES WAS NOT DOUBTED BY THE AUTHORITIES BELOW. THE COPY OF THE LEDGER WARRANTY REPLACING EX PENSES IS ALSO AVAILABLE ON RECORD. THEREFORE, AFTER CONSIDERING T HE FACTS IN TOTALITY, WE ARE OF THE VIEW THAT THE PROVISIONS CREATED BY THE ASSESSEE ARE NOT AD-HOC PROVISION BUT BASED ON THE SCIENTIFIC BASIS. WE ALSO NOTE THAT THE ASSESSEE HAS BEEN CLAIMING TH E DEDUCTION FOR THE PROVISION OF WARRANTY EXPENSES AND THERE WAS NO DIS ALLOWANCE MADE BY THE AO IN THE AY 2014-15. IT MEANS THE AO ACCEPTED THE PROVISION FOR THE AY 2014-15. THE LD. DR HAS ALSO NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDING OF LD. CIT-A. ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 9 - IN VIEW OF THE ABOVE, WE HOLD THAT THESE PROVISIONS ARE ALLOWABLE AS DEDUCTION U/S 37(1) OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A). HENCE, TH E GROUND APPEAL OF THE REVENUE IS DISMISSED. 13. THE LAST ISSUE RAISED BY THE REVENUE IS THAT LE ARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 3,7 4,917/- ON ACCOUNT OF EXCESS DEPRECIATION. 14. THE ASSESSEE IN RESPECT OF CERTAIN VEHICLE PURC HASED BEFORE 30.09.2009 CLAIMED DEPRECIATION @ 50% ON THEIR WRIT TEN DOWN VALUE. AS PER THE ASSESSEE, THESE VEHICLES WERE THE COMMERCIA L VEHICLES AS PER THE MOTOR ACT. HOWEVER, THE AO WAS OF THE VIEW THAT THE SE VEHICLES WERE NOT THE COMMERCIAL VEHICLES AND ACCORDINGLY HELD TH AT THE ASSESSEE IS INELIGIBLE TO CLAIM THE DEPRECIATION @50% ON THE WR ITTEN DOWN VALUE. 14.1 THE AO ALSO OBSERVED THAT HIS PREDECESSOR IN T HE AY 2010-11 AND 2011-12 ALSO MADE SIMILAR DISALLOWANCE. ACCORDINGLY , THE AO WORKED OUT THE EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE AMOUNTING TO RS. 3,74,917/- AND DISALLOWED THE SAME BY ADDING TO THE TOTAL INCOME OF THE ASSESSEE. ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 10 - 15. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LEAR NED CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVIN G AS UNDER: 8.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE AO HAS MADE THE DISALLOWANCE ON ACCOUNT OF DEPRECIATION AMOUNTING TO RS.3,47,917/-SINCE WHILE THE APPELLANT HAD CLAIMED VEHICLES AS COMMERCIAL VEHICLES AND ACCORDI NGLY DEPRECIATION AT 50%, THE AO HELD THAT THE VEHICLES WERE NOT COMM ERCIAL VEHICLES AND THEREFORE DEPRECIATION WAS ALLOWABLE ONLY AT 15% . IT IS SEEN THAT THE EXACT ISSUE WAS THE SUBJECT MATTER OF APPEAL IN ASS T. YEARS 2010-11 & 2011-12 AS WELL WHEREIN AFTER A DETAILED DISCUSSION ON THE DEFINITION OF COMMERCIAL VEHICLES AND LIGHT MOTOR VEHICLE, AS DEF INED UNDER THE MOTOR VEHICLES ACT, 1988, DECIDED THE ISSUE IN FAVO UR OF THE APPELLANT. SINCE THE VEHICLES UNDER QUESTION ARE THE SAME ON W HICH.DEPRECIATION HAS BEEN ALLOWED @ 50% AND RELYING ON THE JUDGEMENT OF THE HON'BLE ITAT IN THE CASE OF ACIT VS. VOLTAMP TRANSFORMERS L TD., THE DEPRECIATION AT 50% IS ALLOWED AND THE DISALLOWANCE OF RS.3,74,917/- MADE BY THE ASSESSING OFFICER IS DELETED. GROUND OF APPEAL NO. 5 IS ALLOWED. BEING AGGRIEVED BY THE ORDER OF LEARNED CIT(A) REVE NUE IS IN APPEAL BEFORE US. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT TH E ITAT IN IDENTICAL FACTS AND CIRCUMSTANCES IN THE OWN CASE OF THE ASSESSEE I N ITA NO. 3109/AHD/2013 PERTAINING TO THE A.Y. 2010-11 VIDE O RDER DATED 29.09.2016 HAS DECIDED THE ISSUE IN FAVOR OF THE AS SESSEE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: 9. DURING COURSE OF PROCEEDINGS BEFORE US, LD. D.R . RELIED ON THE ORDER OF A.O., ON THE OTHER HAND, LD. A.R. RELIED O N THE ORDER OF CIT(A) ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 11 - AND FURNISHED THE COPY OF ITAT, AHMEDABAD CO-ORDINA TE BENCH IN ASSESSEES OWN CASE FOR A.Y.2009-10, WHEREIN ITAT H AS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY CONFIRMING CIT(A)S ORDER OF THAT YEAR BY OBSERVING AS UNDER: 10.1. THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION OF RS.3,69,604/- ONTHE NEW COMMERCIAL VEHICLE PURCHASED. THE AOS OB JECTION WAS THAT THOSE VEHICLES WERE NOT REGISTERED BY THE RTO COMM ERCIAL VEHICLE, THEREFORE THE ASSESSEE WAS NOT ENTITLED FOR ADDITIO NAL DEPRECIATION CLAIMED @ 50% ON THOSE VEHICLES ACQUIRED DURING THE YEAR. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY, LD.CIT(A) HAS EXAMINED THE PROVISIONS OF MOTOR VEHICLE ACT AND AL LOWED THECLAIM AS FOLLOWS:- 5.3. DECISION: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND T HE SUBMISSIONSGIVEN BY THEAPPELLANT. THE A.O. HAS DISA LLOWED THE CLAIM OFDEPRECIATION AT HIGHER RATE AS IT HAS BEEN HELD BY HIM THAT THE VEHICLE WAS NOT A COMMERCIAL VEHICLE. THE A.O. HAS TAKEN THE MEANING OF COMMERCIAL VEHICLE IN COMMON P ARLANCE AND HAS HELD THAT COMMERCIAL VEHICLE IS DISTINCT AN D DIFFERENT FROM PRIVATE VEHICLE AND THE VEHICLE USED BY THE AP PELLANT IS A PRIVATE VEHICLE. THE APPELLANT HAS SUBMITTED THAT A S PER NOTE NO. 6 TO THE RULES IN APPENDIX-I, THE WORD COMMERCIAL V EHICLE HAS BEEN DEFINED TO INCLUDE LIGHT MOTOR VEHICLE AS DEFI NED BY MOTOR VEHICLE ACT,1988. FURTHER, SECTION 2(21) OF THE MOT OR VEHICLE ACT DEFINE THE WORD LIGHT MOTOR VEHICLE AS LIGHT MOTOR VEHICLE MEANS TRANSPORT VEHICLE OR AMNIBUS. THE GROSS VEHICLE WEIGHT OF EITHER OF WHIC H OR A MOTOR CAR OR A TRACTOR OR ROAD ROLLER, THEUNLADEN W EIGHT OF ANY OF WHICH DOES NOT EXCEED 7500 KG. THE APPELLANT HAS FURTHER SUBMITTED THAT AS PER THE RC BOOK, THE VEHICLE IS LMV AND THE WEIGHT OF THE CAR IS 2074 KG. AND THE UNLADEN WEIGHT IS 1454 KG. WHICH WAS LE SS THAN 7500KG. THEREFORE, THE APPELLANT HAS CLAIMED T HAT ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 12 - THE CAR PURCHASED WAS ACOMMERCIAL VEHICLE AND APPEL LANT WAS ENTITLED TO DEPRECIATION AT HIGHER RATE. AFTER CONSIDERING THE SUBMISSION OF THE APPELLANT A ND THE FACTS, I AMINCLINED TO ACCEPT THE SUBMISSION MADE B Y THE APPELLANT. THE CLAUSE VI-A OF THE APPENDIX I.E. THE TABLE OF RATES OF WHICH DEPRECIATION IS ADMISSIBLE PRESCR IBES THE DEPRECIATION @ 50% FOR NEW COMMERCIAL VEHICLE WHICH IS ACQUIRED ON OR AFTER 01/01/2009 BUT BEFORE 01/04/20 09 AND IS PUT TO USE BEFORE 01/04/2009 FOR THE PURPOSE OF BUSINESS ORPROFESSION. FURTHER PARAGRAPH 6 OF THE N OTE BELOWTHE TABLE DEFINES COMMERCIAL VEHICLES WHICH INCLUDES LIGHT MOTOR VEHICLES AS PER THE MOTOR VEHI CLE ACTS, THE SPECIFICATIONS FOR WHICH ARE REPRODUCED I N THEPRECEDING PARAGRAPH. THEREFORE, IT IS CLEAR THAT THE APPELLANT IS ENTITLED FOR DEPRECIATION @ 50% WHICH WAS GIVEN AS AN INCENTIVE FOR A SHORT PERIOD BETWEEN 01/01/2009 TO 01/04/2009 BUT THE PERIOD WAS LATER O N EXTENDED UPTO 01/10/2009. THE VEHICLE PURCHASED BYT HE APPELLANT FULFILLS ALL THE CONDITIONS PRESCRIBED IN THE INCOME TAX ACT AND THE RELATED MOTOR VEHICLE ACT AN D FALLS WITHIN THE DEFINITION OF COMMERCIAL VEHICLE. THE ACT HAS NOWHERE PRESCRIBED THAT A COMMERCIAL VEHICLE SH OULD BE A VEHICLE WHICH IS USED FOR THE PURPOSE OF HIRE. IT ONLY PRESCRIBES THAT THE VEHICLE SHOULD BE USED FOR THE PURPOSE OF BUSINESS OR PROFESSION. THE APPELLANT IS, THEREF ORE, ENTITLED FOR THE DEPRECIATION @50%. THE GROUND OF A PPEAL IS ACCORDINGLY ALLOWED. 11. ON HEARING BOTH THE SIDES, WE ARE OF THE CONSID ERED VIEW THAT LD.CIT(A) HAS RIGHTLY INTERPRETED THE RELEVANT PROV ISIONS OF MOTOR VEHICLE ACT, WHEREIN THE WORD COMMERCIAL VEH ICLE HAS BEEN DEFINED. ONCE THE RELEVANT ACT HAS GIVEN A SPE CIFICATION IN RESPECT OF A PARTICULAR TYPE OF VEHICLE, THEN THERE IS NO SCOPE LEFT TO INTERPRET THE COMMERCIAL VEHICLE AS PER COMMON P ARLANCE OR COMMON UNDERSTANDING. THE FINDING IN THIS REGARD OF LD.CIT(A) IS HEREBY CONFIRMED. THIS GROUND OF THE REVENUE IS DIS MISSED. ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 13 - 10. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD. WE FIND THAT IN VIEW OF ABOVE STATED FACTS AND LEGAL FINDINGS THE LD. CIT(A) HAS CORRECTLY DECIDED THE ISSUE IN FAVOU R OF ASSESSEE BY MAKING RELIANCE ON THE ORDER OF ITAT, AHMEDABAD IN CASE OF ACIT VS. M/S. VOLTAMP TRANSFORMERS LTD.(SUPRA). 11. IN THE RESULT, THE APPEAL FILED BY REVENUE IS D ISMISSED. 16.1 AS THE FACTS IN THE CASE ON HAND ARE IDENTICAL TO THE FACTS AS DISCUSSED IN THE ABOVE CASE, THEREFORE RESPECTFULLY FOLLOWING THE SAME WE DO NOT WISH TO DEVIATE FROM THE VIEW TAKEN BY THE L D. CIT(A). HENCE, THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. COMING TO ITA NO.2300/AHD/2016 PERTAINING TO THE AY 2013-14. 17. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1.THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION MADE BY AO OF RS.1,79,53,006/- U/S 145A. 2. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE DISALLOWANCE MADE BY THE AO OF RS.37,65,840/- BEING 0.5% ON SALES TOWARDS PROVISIONS FOR WARRANTY REPLACEMENT. 3. THAT THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE CLAIM FOR WARRANTY REPLACEMENT HAS BEEN MA DE BY THE ASSESSEE TWICE I.E. ON PROVISION BASIS IN CAPTIONED A.Y. AND ALSO IN SUBSEQUENT A.Y. (A.Y. 2014-15) I.E. RS.1,22,89,760/ - ON ACTUAL BASIS, WHICH IS NOT PERMISSIBLE. 4. THE DEPARTMENT CRAVES LEAVE TO ADD OR ALTER ANY FURTHER GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING. ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 14 - 18. THE FIRST ISSUE RAISED BY THE REVENUE IS THAT L EARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 1,7 9,53,006/- U/S 145A OF THE ACT. 19. THE ISSUE INVOLVED IN THIS GROUND OF APPEAL OF THE REVENUE IS IDENTICAL TO THE ISSUE RAISED BY THE REVENUE IN ITA NO.1735/AHD/2016 WHICH HAS BEEN DECIDED AGAINST THE REVENUE AND IN F AVOR OF THE ASSESSEE BY US VIDE PARAGRAPH NO. 7 OF THIS ORDER. THUS RESP ECTFULLY FOLLOWING THE SAME WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A). HENCE THE GROUND OF APPEAL OF THE REVENUE I S DISMISSED. 20. THE SECOND ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS THAT LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 37,65,840/- ON ACCOUNT OF PROVISION FOR WARRANTY RE PLACING EXPENSES. 21. THE ISSUE INVOLVED IN THIS GROUND OF APPEAL OF THE REVENUE IS IDENTICAL TO THE ISSUE RAISED BY THE REVENUE IN ITA NO.1735/AHD/2016 WHICH HAS BEEN DECIDED AGAINST THE REVENUE AND IN F AVOR OF THE ASSESSEE BY US VIDE PARAGRAPH NO. 12 OF THIS ORDER. THUS RES PECTFULLY FOLLOWING THE SAME WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A). HENCE THE GROUND OF APPEAL OF THE REVENUE I S DISMISSED. ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 15 - 22. THE LAST ISSUE RAISED BY THE REVENUE IS THAT LE ARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS.1,22 ,89,760/- ON ACCOUNT OF DOUBLE DEDUCTION. 23. THE AO DURING THE ASSESSMENT PROCEEDING OBSERVE D THAT THE ASSESSEE IS CLAIMING ACTUAL WARRANTY EXPENSES AS WE LL AS PROVISION FOR WARRANTY EXPENSES. ACCORDINGLY, THE AO WAS OF THE V IEW THAT THE ASSESSEE IS CLAIMING DOUBLE DEDUCTION UNDER THE HEA D WARRANTY REPLACEMENT EXPENSES. ACCORDINGLY, THE AO HELD THAT THE ASSESSEE HAD CLAIMED DOUBLE EXPENSES UNDER THE HEARD WARRANTY RE PLACEMENT CHARGES. 24. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LEARN ED CIT(A) WHO DELETED THE ADDITION MADE BY THE AO. BEING AGGRIEVED BY THE ORDER OF LEARNED CIT(A) REVE NUE IS IN APPEAL BEFORE US. 25. BOTH THE LEARNED DR AND LEARNED AR BEFORE US RE LIED ON THE ORDER OF AUTHORITIES BELOW AS FAVORABLE TO THEM. 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ON PERUSAL OF THE COPIES OF TH E LEDGERS FILED BY THE ASSESSEE WHICH ARE PLACED ON PAGES 38-50 OF THE PAP ER BOOK REGARDING THE LEDGER OF WARRANTY EXPENSES, WE NOTE THAT THE A SSESSEE IN ONE YEAR IS ITA NOS.1735 & 2300/AHD/2016 ACIT VS. UDAYKUMAR C. PATEL A.Y. 2012-13 & 2013-14 - 16 - CREATING THE PROVISION IN THE BOOKS OF ACCOUNTS WHI CH IS REVERSED IN THE SUBSEQUENT YEAR BY THE SAME AMOUNT. THEREFORE IT CO ULD NOT BE CONCLUDED THAT THE ASSESSEE HAS CLAIMING THE DOUBLE DEDUCTION ON ACCOUNT OF ACTUAL EXPENSES AS WELL AS PROVISION FOR WARRANTY EXPENSES . ACCORDINGLY, WE ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT(A) HENCE, THE GROUND OF APPEAL OF THE REVENUE IS DISMI SSED. 27. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06/02/2019 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 06/02/2019 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-7, AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD