M/s. Punjab Chemical Agency, New Delhi V. ACIT, New Delhi

ITA 2447/DEL/2013

• Counselvise Citation: 244720114 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 04-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: S KRISHNAN
• Keywords: Depreciation; Rectification of order
• Section: 143(3); 6; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO. - 2447 /DEL/20 13 (ASSESSMENT YEAR - 2 006 - 07 ) PUNJAB CHEMICAL AGENCY, 14, NAJAFGARH ROAD, NEW DELHI - 110015. PAN - AAJFP7740B (AP PELLANT) VS ACIT, CIRCLE - 25(1), NEW D ELHI (RESPONDENT) APPELLANT BY S H. S.KRISHNAN, ADV. RESPONDENT BY SH. VIKRAM SAHAY, SR. DR ORDER PER DIVA SINGH, JM BY THE PRESENT APPEAL THE ASSESSEE ASSAILS THE CORRECTNESS OF THE ORDER DATED 19.02.2013 OF THE CIT(A) - XXIV, NEW DELHI PERTAINING TO 2006 - 07 ASSESSMENT YEAR. ON THE FOLLOWING GROUNDS: - 1. THAT THE ORDER OF THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) IS BAD BOTH ON LAW AND FACTS. 2. THAT PROCEEDINGS U/S 154 OF THE INCOME TAX ACT ARE BAD BOTH IN LAW AS WELL AS ON FACTS. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING AN ADDITION OF A SUM OF RS.17,3 3,317/ - ALLEGED TO BE EXCESS DEPRECIATION CLAIMED DURING THE YEAR UNDER APPEAL. THE BASIS OF SUCH CALCULATION HAS NOT BEEN ELABORATED IN THE ORDER OF ASSESSMENT. 2. AT THE TIME OF HEARING THE LD. AR SOUGHT AN ADJOURNMENT HOWEVER CONSIDERING THE MATERIAL AVAILABLE ON RECORD IT WAS INDICATED THAT THE ADJOURNMENT W OULD NOT BE GIVEN. IT WAS POINTED OUT FROM THE RECORD THAT ON THE EARLIER TWO OCCASIONS WHEN THE APPEAL CAME UP FOR HEARING I.E 28.10.2013 & 06.02.2014, I T WAS ADJOURNED ON THE REQUEST OF THE ASSESSEE. ACCORDINGLY BEING OF THE VIEW THAT SUFFICIENT TIME HAS ALREADY BEEN GRANTED NO ADJOURNMENT IN THE CIRCUMSTANCES DATE OF HEARING 04 . 0 3 .2015 DATE OF PRONOUNCEMENT 05 .0 3 .2015 2 I.T.A .NO. - 2447/DEL/2013 WOULD BE GIVEN. IN THESE CIRCUMS TANCES THE LD. AR SOUGHT A PASS OVER WHICH WAS GRANTED AND THE APPEAL CONSEQUENTLY WAS TAKEN UP AT THE END OF THE BOARD . 3. THE RELEVANT FACTS OF THE CASE ARE THAT IN THE CASE OF THE ASSESSEE THE AO PASSED AN ORDER U/S 154 OF THE INCOME TAX ACT, 1961 ON 10.02.2012. T HE AO TOOK COGNIZANCE OF THE FACT THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED AT AN INCOME OF RS.14,95,882/ - WHEREIN AUDIT SCRUTINY RE VEALED THAT DEPRECIATION AMOUNTING TO RS.27,73,307/ - ON TANKER S IN THE YEAR UNDER CONSIDER ATION WAS CLAIMED @40% AS OPPOSED TO THE PRESCRIBED RATE OF DEPRECIATION @ 15%. AFTER C ONFRONTING THE ASSESSEE WITH THIS SPECIFIC OBJECTION AND HEARING THE ASSESSEE S REPLY AN ADDITION OF RS.17,33,317/ - BY WAY ADDING EXCESS DEPRECIATION ALLOWED IN THE FOL LOWING MANNER WAS MADE : - IN VIEW OF THE MISTAKE POINTED OUT BY THE AUDIT PARTY, NOTICE U/S 154 OF THE INCOME TAX ACT WAS ISSUED TO THE ASSESSEE ON 09/04/2010 TO FILE THE SUBMISSION BY 16/04/2010. IN RESPONSE TO THE NOTICE THE ASSESSEE VIDE HIS LETTER DATE D 04/08/2010 HAD REPLIED THAT ASSESSEE'S BUSINESS IS OF TRADING NATURE AND IS TRANSPORTING THE GOODS IN THE SAME WAY AS BEING USED FOR HIRING FORM OUTSIDE FOR TRANSPORTATION OF GOODS FOR THE BUSINESS OF ASSESSEE. THE ASSESSEE HAS RELIED ON THE JUDGEMENT IN THE CASES OF CIT VS. BANSAL CREDITS LTD. 2003. HOWEVER ON PERUSAL OF THE ABOVE SAID CASE, IT WAS FOUND THAT THIS JUDGMENT IS APPLICABLE IN CASES WHERE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING VEHICLES ON HIRE OR COMMERCIAL VEHICLE LEASED OUT. IN THE SE CASES THE HIGHER RATE OF DEPRECIATION IS APPLICABLE ONLY WHEN THE LEASED OUT VEHICLES ARE ACTUALLY BEING USED IN THE BUSINESS OF HIRING. THE ASSESSEE HAS NOT PUT TO USE THESE VEHICLES ON HIRE PURPOSES AND NEITHER THESE VEHICLES WERE LEASED OUT BY THE A SSESSEE. THE ASSESSEE IS USING THE VEHICLES FOR TRANSPORTATION OF THEIR OWN PRODUCTS I.E. FOR THEIR OWN BUSINESS PURPOSE. THEREFORE, ASSESSEE CANNOT CLAIM HIGHER RATE OF DEPRECIATION AS IT IS SUPPORTED BY THE DECISIONS OF HON'BLE ANDHRA PRADESH HIGH COURT IN A.M. CONSTRUCTIONS CASE (SUPRA), HON'BLE GUWAHATI HIGH COURT IN ABC INDIA LTD. CASE (SUPRA) AND HON'BLE MADRAS HIGH COURT IN MADAN & COMPANIES CASE (SUPRA). IN VIEW OF THE ABOVE FACTS, THE ASSESSEE IS ENTITLED TO CLAIM THE DEPRECIATION @ 15 % ONLY. THE MISTAKE IS APPARENT FROM THE RECORDS AND THEREFORE, HEREBY RECTIFIED U/S 154 OF THE IT ACT. WITH THIS OBSERVATION, THE REVISED INCOME OF THE ASSESSEE IS RECOMPUTED AS UNDER: - INCOME RS. 14,95,882/ - ADD: - EXCESS DEPRECIATION ALLOWED RS. 17,33,31 7/ - NET ASSESSED INCOME RS. 32,29,199/ - 4 . IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT IN THE PRECEDING YEAR I.E 2005 - 06 ASSESSMENT YEAR AND THE 3 I.T.A .NO. - 2447/DEL/2013 SUBSEQUENT YEARS 2007 - 08 & 2008 - 09 WHICH WERE COMPLETED U/S 143(3) DEPRECIATION O N VEHICLES CLAIMED AT THE HIGHER RATE W AS ALLOWED TO THE ASSESSEE. ACCORDINGLY IN ORDER TO MAINTAIN CONSISTENCY IN FRAMING THE ASSESSMENT S IT WAS SUBMITTED THAT DEPRECIATION CLAIMED AT 4 0% SHOULD BE RETAINED. RELIANCE YET AGAIN WAS PLACED UPON THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BANSAL CREDITS LTD. (2003) 259 ITR 0069 (DEL). 5 . NOT CONVINCED WITH THE EXPLANATION OFFERED THE CIT(A) UPHELD THE RECTIFICATION ORDER PASSED U/S 154. 6 . AGGRIEVED BY THIS THE ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL. 7 . THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE TAX AUTHORIT IES . HOWEVER HE WAS UNABLE TO ASSAIL THE FINDING OF FACT THAT THE TANKERS OWNED BY THE ASSESSEE WERE USED IN ITS OWN BUSINESS AND WERE NEVER HIRED OUT. NO JUDGEMENT OF ANY COURT WAS REFERRED TO IN SUPPORT OF ITS CLAIM SO AS TO SHOW HOW THE ORDER IS NOT MAINTAINED IN LAW OR FACTS. THE LD. SR. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND F IND OURSELVES IN AGREEMENT WITH THE FINDING OF THE CIT(A) . T HE ARGUMENT OF THE ASSESSEE THAT DEPRE CIATION @ 40% SHOULD BE ALLOWED ON THE REASONING THAT IT WAS GRANTED AT THE SAID RATE BY U/S 143(3) IN THE EARLIER AND SUBSEQUENT YEAR CANNOT BE ACCEPTED AS IN TAXATION MATTERS EACH ASSESSMENT YEAR I S A SEPARATE ASSESSMENT AND THE PRINCIPLES OF RES JUDICATA D O NOT APPLY. THE MATERIAL FACT THAT THE LORRIES WERE USED I N ASSESSEE S OWN BUSINESS AND HAD NEVER BEEN HIRED CLEARLY CLINCHES THE ISSUE AGAINST THE ASSESSEE AND THE RELIANCE PLACED UPON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF BANSAL CREDITS LTD. (CITED SUPRA) BEING DISTINGUISHABLE ON FACTS DOES NOT HELP THE ASSESSEE IN ANY MANNER. THE ARGUMENTS ADVANCED THA T HAD THE ASSESSEE NOT USED ITS OWN TANKERS FOR TRANSPORTATION OF GOODS AND HAD HIRED THE TANKERS ON WHICH HIGHER DEPRECIATION W OULD HAVE BEEN GRANTED IS OF NO RELEVANCE AS THE DECISION IS BASED ON FACTS AS ARE AVAILABLE ON RECORD AND NOT ON THE MULTIPLE POSSIBILITY OF FACTS BEING DIFFERENTLY AVAILABLE ON RECORD IN DIFFERENT CASES . IN VIEW OF THE CLEAR LEGISLAT IVE 4 I.T.A .NO. - 2447/DEL/2013 MANDATE WHICH PERMITS HIGHER DEPRECIATION ONLY TO VEHICLES WHICH WERE GIVEN OUT ON HIRE , T HE CLAIM HAS RIGHTLY BE EN REJECTED BY THE CIT(A). A PART FROM THE DECISIONS RELIED UPON BY THE AO, OUR ATTENTION HA S ALSO INVITED TO THE JUDGEMENT OF HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS VARINDRA CONSTRUCTION COMPANY [2012] 206 TAXMAN 14 (P&H) WHICH HAS CLEARLY HELD THAT THE ISSUE IS NO T DEBATABLE. FOR READY - REFERENCE, WE EXTRACT PARA 14 OF THE SAID JUDGEMENT: - 14. A BARE PERUSAL OF THE ABOVE CIRCULAR CLEARLY SHOWS THAT THIS IS APPLICABLE IN RESPECT OF MOTOR BUSES AND MOTOR LORRIES USED IN A BUSINESS OF RUNNING THEM ON HIRE WHEREAS THE ASSESSEE IS UTILIZING THE VEHICLES FOR ITS OWN BUSINESS AND IS NOT CARRYING ON BUSINESS OF HIRING OF MOTOR VEHICLES. THE BOMBAY HIGH COURT IN S. C. THAKUR AND BROS.'S CASE (SUPRA) WAS DEALING WITH A CASE WHERE THE BUSINESS OF THE ASSESSEE WAS RUNNING OF M OTOR VEHICLES ON HIRE AND THE ASSESSEE HAD UTILIZED THE MOTOR LORRY IN HIS OWN BUSINESS OF TRANSPORTATION OF GOODS ON HIRE. SUCH BEING NOT THE POSITION HERE, NEITHER THE CIRCULAR NOR THE JUDGMENT SUPPORT THE CASE OF THE ASSESSEE. THE TRIBUNAL WAS, THUS, NO T JUSTIFIED IN HOLDING THAT THE ASSESSING OFFICER HAD ERRONEOUSLY EXERCISED JURISDICTION UNDER SECTION 154 OF THE ACT. THE SUBSTANTIAL QUESTIONS OF LAW CLAIMED ABOVE ARE, THEREFORE, ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 8 .1. IN VIE W OF THE ABOVE DETAILED REASONING THE GROUNDS RAISED BY THE ASSESSEE ARE REJECTED. 9 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05 TH OF MARCH 2015 . SD/ - SD/ - ( T.S.KAPOOR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 05 / 03 /201 5 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI