Shri Jivrajbhai D. Patel, Surat V. The Income Tax Officer, Ward-9(2), Surat

ITA 2516/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0971 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: RASESH SHAH
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.2516/AHD/2013 / ASSTT. YEAR: 2010-2011 JIVRAJBHAI D. PATEL 65, SHIV SHANKAR PARVATI SOCIETY VARACHHA ROAD, SURAT. PAN : ADQPP 1671 B. ITO, WARD - 9(2) SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH, AR REVENUE BY : SHRI O.P. MEENA, SR.DR / DATE OF HEARING : 22/07/2016 / DATE OF PRONOUNCEMENT: 01/08/2016 $%/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF THE LD.CIT(A)-V, SURAT DATED 2.8.2013 PASSED FOR THE AS STT.YEAR 2018-11. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEPR ECATION OF RS.4,13,110/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME AT RS.3 ,31,750/- PLUS AGRICULTURE INCOME OF RS.76,500/-. THE ASSESSEE WA S ENGAGED IN EMBROIDERY JOB WORK AND TRADING IN SHARES. THE ASS ESSEE HAD 10 EMBROIDERY MACHINERIES. OUT OF WHICH TWO MACHINES WERE LET OUT. THE ITA NO.2516/AHD/2013 2 ASSESSEE HAS SHOWN RENTAL INCOME AND CLAIMED DEPREC IATION. THE LD.AO HAS OBSERVED THAT LET OUT OF THE MACHINERY IS NOT T HE BUSINESS OF THE ASSESSEE, AND THEREFORE, RENTAL INCOME FROM THE MAC HINERY IS TO BE ASSESSED AS INCOME FROM SOURCES. THE LD.AO DID N OT GRANT DEPRECIATION TO THE ASSESSEE AND MADE AN ADDITION O F RS.4,13,110/-. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE DID NOT DISPUTE ABOUT THE ASSESSMENT OF INCOME AS INCOME FROM OTHER SOURCES. THE LD.C OUNSEL FOR THE ASSESSEE CONTENDED THAT RENTAL INCOME FROM HIRING O F MACHINERY, PLANT, FURNITURE IS TO BE ASSESSED AS INCOME FROM OTHER S OURCES UNDER SECTION 56(2)(II) OF THE INCOME TAX ACT. SUB-SECTION (II) OF SECTION 57 CONTEMPLATES ALLOWANCE OF DEDUCTION ADMISSIBLE UNDE R SECTIONS 30, 31 AND 32 OF THE INCOME TAX ACT SUBJECT TO PROVISIONS OF SECTION 38. THIS CLAUSE READS AS UNDER: SECTION 57 .. (II) IN THE CASE OF INCOME OF THE NATURE REFERRED T O IN CLAUSES (II) AND (III) OF SUB-SECTION (2) OF SECTION 56, DEDUCTI ONS, SO FAR AS MAY BE, IN ACCORDANCE WITH THE PROVISIONS OF SUB-CLAUSE (II) OF CLAUSE (A) AND CLAUSE (C) OF SECTION 30, SECTION 31 AND SU B-SECTIONS (1) AND (2) OF SECTION 32 AND SUBJECT TO THE PROVISIONS OF SECTION 38. . 5. SECTION 38 OF THE INCOME TAX ACT CONTEMPLATES TH AT, IF ANY PART OF THE MACHINERY, BUILDING WAS USED FOR PERSONAL PURPO SE, TO THAT EXTENT, ITA NO.2516/AHD/2013 3 DEDUCTION WOULD NOT BE ALLOWABLE. THIS AMOUNT IS T O BE CALCULATED ON PROPORTIONATE BASIS. IN THE PRESENT CASE, NO SUCH USER WAS THERE. THUS, THE REVENUE AUTHORITIES HAVE FAILED TO APPRECIATE T HE FACTS IN THE LIGHT OF THIS PROVISION. I ALLOW THE APPEAL OF THE ASSESSEE , AND DIRECT THE AO TO GRANT DEPRECIATION TO THE ASSESSEE TO THE MACHINERI ES GIVEN ON HIRE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 1 ST AUGUST, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER