A.Habeebur Rahman Sons, Gudiyatham V. ACIT Circle 1, Vellore

ITA 2518/CHNY/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5057 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Reopening of assessment; Depreciation; Set aside
• Section: 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.2518/CHNY/2017 ( )( / ASSESSMENT YEAR : 2009-10 M/S A. HABEEBUR RAHMAN SONS S. BEEDI FACTORY, THALAYATHAM BAZAAR, 244-245, SANTHA PET, GUDIYATHAM 632 602. PAN : AAAFA 4558 P V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, VELLORE. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI SRIDHAR DORA, JCIT 1 / 2$ / DATE OF HEARING : 24.04.2019 34) / 2$ / DATE OF PRONOUNCEMENT : 17.05.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -13, CHENN AI, DATED 21.08.2017 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT APART FROM CHALLENGING THE REOPENING OF ASSESSMENT 2 I.T.A. NO.2518/CHNY/17 UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN S HORT 'THE ACT'), THE ASSESSEE HAS ALSO RAISED AN ISSUE WITH REGARD T O DEPRECIATION ON COMMERCIAL VEHICLES. ACCORDING TO THE LD. COUNS EL, THE ASSESSEE CLAIMED DEPRECIATION ON TWO TATA ACE VEHIC LES PURCHASED FOR TRANSPORTATION OF GOODS. ACCORDING T O THE LD. COUNSEL, THESE ARE MEDIUM GOODS VEHICLES PURCHASED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE, THEREFORE, ELI GIBLE ONLY FOR 50% DEPRECIATION. SINCE THE VEHICLES WERE PURCHASE D DURING THE SECOND HALF OF THE FINANCIAL YEAR, THE DEPRECIATION WAS CLAIMED AT 25%. HOWEVER, ACCORDING TO THE LD. COUNSEL, THE AS SESSING OFFICER FOUND THAT THE TWO TATA ACE VEHICLES PURCHASED BY T HE ASSESSEE WERE NOT USED FOR THE BUSINESS OF HIRING, THEREFORE , ELIGIBLE ONLY FOR 15% DEPRECIATION. ACCORDINGLY, HE RESTRICTED THE D EPRECIATION AT 7.5%. 3. REFERRING TO THE DEPRECIATION TABLE UNDER THE IN COME-TAX RULES, 1962 UNDER NEW APPENDIX I, PART A III(VIA), THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS NOT NECESSARY THAT THE VEHICLE SHOULD BE USED FOR HIRING. IT IS SUFFICIENT IF IT IS USED FOR THE BUSINESS OF THE ASSESSEE OR PROFESSION. THEREFORE, ACCORDIN G TO THE LD. 3 I.T.A. NO.2518/CHNY/17 COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFI RMING THE ORDER OF THE ASSESSING OFFICER. 4. WE HEARD SHRI SRIDHAR DORA, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. THE LD. D.R. SUBMITTED THAT H E IS PLACING HIS RELIANCE ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(APPEALS). 5. HAVING HEARD THE LD.COUNSEL FOR THE ASSESSEE AND THE LD. D.R., WE HAVE CAREFULLY GONE THROUGH THE DEPRECIATI ON TABLE PROVIDED UNDER THE INCOME-TAX RULES, 1962, MORE PAR TICULARLY UNDER NEW APPENDIX I. UNDER NEW APP.I, PART A III UNDER THE HEAD MACHINERY AND PLANT, SUB-RULE (2) READS AS FOLLOWS: - MOTOR CARS, OTHER THAN THOSE USED IN A BUSINESS OF RUNNING THEM ON HIRE, ACQUIRED OR PUT TO USE ON OR AFTER TH E 1 ST DAY OF APRIL, 1990 THE PRESCRIBED RATE OF DEPRECIATION IS 15%. IN THIS CASE, WHAT WAS SAID TO BE PURCHASED IS TATA ACE MEDIUM GOODS VEHICLES. PART A III(VIA) READS AS FOLLOWS: - NEW COMMERCIAL VEHICLE WHICH IS ACQUIRED ON OR AFTE R THE 1 ST DAY OF JANUARY, 2009 BUT BEFORE THE 1 ST DAY OF OCTOBER, 2009 AND IS PUT TO USE BEFORE THE 1 ST DAY OF OCTOBER, 2009 FOR THE PURPOSES OF BUSINESS OR PROFESSION THE PRE SCRIBED RATE OF DEPRECIATION IS AT 50%. HOWEVER, THE RATE O F DEPRECIATION WAS RESTRICTED TO 40% BY INCOME-TAX (TWEN TY- NINTH AMDT.) RULES, 2016 WITH EFFECT FROM 01.04.2017. 4 I.T.A. NO.2518/CHNY/17 6. THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2009- 10. THEREFORE, THE APPLICABLE RATE OF DEPRECIATION IS 5 0%. THE TERM COMMERCIAL VEHICLE WAS DEFINED IN NOTES 6 AS FOLL OWS:- COMMERCIAL VEHICLE MEANS HEAVY GOODS VEHICLE, H EAVY PASSENGER MOTOR VEHICLE, LIGHT MOTOR VEHICLE, M EDIUM GOODS VEHICLE AND MEDIUM PASSENGER MOTOR VEHICLE BUT DOES NOT INCLUDE MAXI-CAB, MOTOR-CAB, TRACTOR AND ROAD-ROLLER. THE EXPRESSIONS HEAVY GOODS VEHICL E, HEAVY PASSENGER MOTOR VEHICLE, LIGHT MOTOR VEHICLE, M EDIUM GOODS VEHICLE, MEDIUM PASSENGER MOTOR VEHICLE, MAXI- CAB, MOTOR-CAB, TRACTOR AND ROAD-ROLLER SHAL L HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988 (59 OF 1988) . 7. THE MEDIUM GOODS VEHICLE AND MEDIUM PASSENGER MO TOR VEHICLE ARE CONSIDERED TO BE COMMERCIAL VEHICLE. I N THIS CASE, WHAT WAS ADMITTEDLY PURCHASED BY THE ASSESSEE IS TATA AC E VEHICLES WHICH ARE NOTHING BUT MEDIUM GOODS VEHICLES. THE REFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IT MAY N OT BE NECESSARY FOR THE ASSESSEE TO USE THE VEHICLES FOR THE BUSINE SS OF HIRING. IT IS SUFFICIENT IF THE VEHICLES ARE USED FOR THE BUSINES S OF THE ASSESSEE, I.E. MANUFACTURING OF BEEDIES. IT IS NOBODYS CASE THAT THE VEHICLES WERE NOT USED FOR THE BUSINESS OF THE ASSESSEE. TH EREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSEE IS ELIGIBLE FOR DEPRECIATION AT THE RATE OF 50% AS PROVIDED IN PART A III(VIA). SINCE 5 I.T.A. NO.2518/CHNY/17 THE VEHICLES WERE PURCHASED DURING THE SECOND HALF OF THE FINANCIAL YEAR, THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION AT THE RATE OF 25%. THEREFORE, BOTH THE AUTHORITIES BELOW ARE NOT JUSTI FIED IN DISALLOWING THE CLAIM OF THE ASSESSEE. 8. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD TH E ORDERS OF BOTH THE AUTHORITIES BELOW. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO ALLOW DEPRECIATION AT THE RATE OF 25% AS CLAIMED BY THE ASSESSEE. 9. IN VIEW OF THE DECISION ON MERIT, IT MAY NOT BE NECESSARY TO ADJUDICATE THE ISSUE OF REOPENING RAISED BY THE ASS ESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 17 TH MAY, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 17 TH MAY, 2019. KRI. 6 I.T.A. NO.2518/CHNY/17 / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-13, CHENNAI 4. PRINCIPAL CIT- 8, CHENNAI-34 5. 8; -2 /DR 6. <( = /GF.