ACIT, Circle - 8(2), Kolkata, Kolkata V. M/s Nursing Vanijya Pvt. Ltd., Kolkata

ITA 2388/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4628 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 20-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI TULSIAN
• Keywords: Depreciation
• Section: 143(3); 148

Judgement Text

1 ITA NO. 2388/KOL/2016 NURSING VANIJYA PVT. LTD., AY 2007-08 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 2388/KOL/2016 ASSESSMENT YEAR: 2007-08 ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2(2), KOLKATA VS. NURSING VANIJYA PVT. LTD. (PAN: AAACN8512H) APPELLANT RESPONDENT DATE OF HEARING 14.08.2018 DATE OF PRONOUNCEMENT 16.10.2018 FOR THE APPELLANT SHRI SALLONG YADEN, ADDL. CIT, SR . DR FOR THE RESPONDENT SHRI RAVI TULSIAN, FCA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-12, KOLKATA DATED 21.10.2016 FOR AY 2007-08. 2. GROUND NO.1 OF REVENUES APPEAL IS AGAINST THE A CTION OF LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS.1,64,62,064/- UNDER THE HEAD LEA SE RENT. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE AO WHILE A DDING THE SUM OF RS.1,64,62,064/- ON ACCOUNT OF LEASE RENT HAS OBSERVED AS UNDER: IN THIS CASE, ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 27.10.2009. THE ASSESSEE SUBMITTED A STATEMENT OF LEASE RENT PAID ON ASSETS ACQUIRED UNDER LEASE FINANCE, WHICH SHOWED THE LEASE RENT PAID AS RS. 4,99,29,431/-. IT WAS HOWEVE R, NOTICED FROM THE PROFIT & LOSS A/C (SCHEDULE 12) THAT FROM THE HIRE CHARGES RECEIPT OF RS. 2,20, 90,094/-, THE ASSESSEE DEDUCTED AN EXPENDITURE OF RS. 1,64,62,064/- TOWARDS 'LEASE RENT'. AS PER THE LIST OF LEASE RENT, TOTAL LEASE RENT PAID DURING TH E YEAR WAS RS. 4,99,29,431/- AND SO THE LEASE RENT OF RS. 1,64,62,064/-WAS WRONGLY SHOWN IN THE SCHEDULE 12. 2 ITA NO. 2388/KOL/2016 NURSING VANIJYA PVT. LTD., AY 2007-08 2. NOTICE UNDER SECTION 148 WAS ISSUED ON 30.03.201 2 AND DULY SERVED UPON THE ASSESSEE. MR. RAVI TULSIYAN, THE AUTHORISED REPRESENTATIVE OF THE COMP ANY APPEARED BEFORE THE UNDERSIGNED AND SUBMITTED THE NECESSARY DOCUMENTS. THE AR SUBMITTED LEDGER COPIES AND EXPLAINED THAT IN THE P&L ALE LEASE RENT ON OPERATING LEASE WAS SHOWN UNDER T HE LEASE RENT IN SCHEDULE 12 WHEREAS LEASE RENT ON FINANCE LEASE WAS SHOWN AS DEPRECIATION IN THE P &L A/C AT RS. 3,85,61,636. THIS ENTIRE AMOUNT CLUBBED TOGETHER AMOUNTING TO RS. 4,99,29,431/- WAS CLAIMED AS LEASE RENT WHILE COMPUTING INCOME UNDER THE I.T. ACT, 1961. 3. THE SUBMISSION OF THE ASSESSEE IS CONSIDERED CAR EFULLY BUT NOT FOUND ACCEPTABLE. ASSESSEE FAILED TO PRODUCE ANY SUBSTANTIAL EVIDENCE. ASSESSEE HAS DEBI TED RS.1,64,62,064/- IN THE P&L A/C AS LEASE RENT AND FURTHER CLAIMED DEDUCTION OF SAME IN THE C OMPUTATION. IN VIEW OF THIS, RS. 1,64,62,064/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A) WHO DELETED THE ADDITION BY OBSERVING AS UNDER: 4.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF THE APPELLANT. THE APPELLANT HAS SUBMITTED DOCUMENTS SUBSTANTIATING TH EIR CLAIM THAT THE CONCERNED PAYMENTS ARE DIFFERENT AND THAT THERE ARE TWO DIFFERENT TYPES OF LEASE RENTALS PAID BY THE APPELLANT NAMELY, OPERATING LEASE RENTALS AND FINANCE LEASE RENTALS. THE LIST OF LEASE RENTALS PAID HAVE BEEN LIED IN CHART 1 AND 2 ON PAGES 17 AND 18 OF THEIR PAPER BOOK. A PERUSAL OF THESE CLEARLY SHOW THAT ALL PAYMENTS OF LEASE RENTAL PAID ARE ON THE BASIS OF DIFFERENT AGREEMENTS. IT IS THUS CLEAR THAT THE AGREEMENTS LISTED IN CHART 11 ARE SEPARATE FROM AND IN ADDITION TO THE AGREEMENTS LISTED IN CHART-I. ACCORDINGLY, OPERATING LEASE RENTALS OF RS .1,64,62,064/- IS SEPARATE FROM AND IS IN ADDITION TO FINANCE LEASE RENT OF RS. 4,99,29,431/- . THE AO HAS NOT FOUND ANYTHING SUBSTANTIAL AGAINST YET HE HAS GONE AHEAD AND DISALLOWED THE AM OUNT SIMPLY BY STATING THAT SUBMISSION OF THE ASSESSEE IS CONSIDERED CAREFULLY BUT NOT FOUND ACCEPTABLE ASSESSEE FAILED TO PRODUCE ANY SUBSTANTIAL EVIDENCE. THE BOOKS OF THE APPELLANT AR E AUDITED ON THE BASIS OF THEIR BOOKS OF ACCOUNTS. THE APPELLANT HAS SUBMITTED ALL NECESSARY DOCUMENTS TO SUPPORT THEIR BOOKS. THE APPELLANT HAS NOT REJECTED THEIR BOOKS OF ACCOUNTS. THERE IS NO BASIS FOR THE AO TO DISALLOW THE AMOUNT AND HENCE THE ADDITION BY THE AO IS DELETED. AGGRIEVED, REVENUE IS BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT AO MISUNDERSTOOD THE PAYMENTS M ADE BY THE ASSESSEE ON TWO DIFFERENT LEASE RENTALS INCURRED DURING THE YEAR. WE NOTE THA T FOR OPERATING LEASE, THE ASSESSEE INCURRED RS.1,64,62,064/- (BREAK-UP GIVEN IN CHART-II) IN AD DITION TO THAT LEASE RENTALS OF RS.4,99,29,431/- PAID ON ASSETS ACQUIRED UNDER LEAS E FINANCE (BREAK-UP GIVEN IN CHART-I). THE LD. CIT(A) HAS MADE A FINDING OF FACT THAT ALL PAYMENTS OF LEASE RENTAL PAID ARE ON THE BASIS OF DIFFERENT AGREEMENTS AND THE AGREEMENT LIS TED IN CHART-II ARE SEPARATE FROM AND IN ADDITION TO AGREEMENT LISTED IN CHART-I, WHICH FIND ING OF FACT HAS NOT BEEN CHALLENGED BEFORE 3 ITA NO. 2388/KOL/2016 NURSING VANIJYA PVT. LTD., AY 2007-08 US. THE PAYMENTS MADE ARE NOT DOUBTED AND AUDITED BOOKS OF ASSESSEE HAVE NOT BEEN REJECTED BY AO. THE AOS ACTION ON THIS ISSUE WAS PERVERSE AND RIGHTLY CORRECTED BY LD. CIT(A), SO WE UPHOLD THE SAME. THEREFORE, WE DISMI SS THIS GROUND OF APPEAL OF REVENUE. 6. GROUND NO.2 OF REVENUES APPEAL IS AGAINST THE A CTION OF LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS.4,22,700/- UNDER THE HEAD DEPREC IATION ON CHASSIS. 7. BRIEF FACTS OF THE ISSUE ARE THAT THE AO WHILE A DDING THE SUM OF RS.4,22,700/- ON ACCOUNT OF DEPRECIATION ON CHASSIS HAS OBSERVED AS UNDER: 4. THE ASSESSEE WAS ALLOWED DEPRECIATION OF RS.4, 22,700/- ON CHASSIS. IT IS APPARENT THAT THESE CHASSIS WERE NOT PUT TO USE IN BUSINESS DURIN G THE RELEVANT YEAR. ASSESSEE COULD NOT PROVIDE ANY EVIDENCE TO PUT TO USE. DEPRECIATION O N MERE CHASSIS IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A) WHO DELETED THE ADDITION BY OBSERVING AS UNDER: 5.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. I FIND FORCE IN THE CONTENTIONS OF THE APPELLANT THAT DEPRECIATI ON OF RS. 4,22,700/- WAS CLAIMED ON THE WDV BALANCE BROUGHT FORWARD FROM EARLIER YEARS. THE IMP UGNED CHASSIS WAS NOT PURCHASED IN THE FY 2006-07. IT IS CLEAR THAT A DEPRECIATION OF RS. 4,97,294/- WAS CLAIMED IN THE EARLIER AY. THERE WAS NO ADDITION TO THE BLOCK IN THE FY RELEVA NT TO AY 2007-08. ONCE IT FORMS A PART OF THE BLOCK OF ASSETS IT IMPLIES THAT THE ASSET IS US ED FOR PURPOSES OF BUSINESS AND DEPRECIATION SHALL BE ALLOWED IN ALL THE FOLLOWING YEARS. IN THE INSTANT CASE, THE FACT THAT DEPRECIATION WAS CLAIMED AND ALLOWED IN EARLIER YEARS (AND THE CHASS IS FORMS A PART OF THE BLOCK OF ASSETS) SHOWS THAT THE CHASSIS WAS READY TO USE. THUS, MERE LY ON THE CONTENTION, THAT THE CHASSIS WERE NOT USED M THE CURRENT AY, CLAIM OF DEPRECIATION CA NNOT BE DENIED. THE CASES CITED BY THE APPELLANT ARE APPLICABLE TO THE INSTANT CASE AND HE NCE THE DISALLOWANCE OF DEPRECIATION BY THE AO HAS NO MERIT AND IS DELETED. AGGRIEVED, REVENUE IS BEFORE US. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE CHASSIS UNDER QUESTION WAS A N ITEM OF DEPRECIATION TO THE TUNE OF RS.4,22,700/- CLAIMED ON THE WDV BALANCE BROUGHT FO RWARD FROM EARLIER YEAR BECAUSE IT WAS NOT PURCHASED DURING THIS FINANCIAL YEAR. SO, IT IS A PART OF BLOCK OF ASSETS. IN SUCH A SCENARIO, THE DEPRECIATION CANNOT BE DENIED ON THE GROUND THAT THE SAID ASSET WAS NOT USED 4 ITA NO. 2388/KOL/2016 NURSING VANIJYA PVT. LTD., AY 2007-08 FOR THE PURPOSE OF BUSINESS IN THIS YEAR UNDER CONS IDERATION. THE REASONS ADDUCED BY THE LD. CIT(A) TO GRANT RELIEF TO ASSESSEE IS CORRECT A ND WE UPHOLD THE SAME. SO, WE DISMISS THIS GROUND OF REVENUE ALSO. 10. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16/10/201 8 SD/- SD/- (M. BALAGANESH) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16TH OCTOBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT ACIT, CIRCLE-8(2), KOLKATA. 2 RESPONDENT NURSING VANIJYA PVT. LTD., 12/1B, LIND SAY STREET, KOLKATA-700 087. 3 4 5 CIT(A)-12, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY