METCO ENTERPRISES P. LTD, MUMBAI V. DCIT 10(2), MUMBAI

ITA 263/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3886 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP LD
• Keywords: Depreciation

Judgement Text

ITA NO. 263/MUM/2015-B-JM M/S.METCO ENTERPRISES P.LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL,B BENCH,MUMB AI BEFORE : SHRI R.C. SHARMA, ACCOUNTANT MEMBER, AND SHRI SANDEEP GOSAI N, JUDICIAL MEMBER ITA NO. 263/MUM/2015 A.Y: 2011-12 M/S. METCO ENTERPRISES PVT. LTD VS. D.C.I.T 10( 2), MUMBAI PAN: AABCM 237H (APPELLANT) (RESPONDENT) FOR THE APPELLANT/ ASSESSEE: NONE APPEARED FOR THE RESPONDENT/DEPARTMENT: SHRI NEIL P HILIP, LD.DR DATE OF HEARING: 19-07-2016 DATE OF PRONOUNCEMENT: 05-08-201 6 ORDER PER SANDEEP GOSAIN, JM : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY LEARNED CIT(A) 21, MUMBAI DATED 05-11-2014 FOR A. Y 2011-12 ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANC E OF 25% OUT OF DEPRECIATION CLAIM, ON SUSPICIOUS ASSUMPTIONS AND P RESUMPTIONS. 2. THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADHOC DISALLOWANCE OF RS.7,50.000/- OUT OF MOTOR LORRY EXPENSES, GENUI NELY INCURRED FOR THE PURPOSE OF BUSINESS. 2. IT IS NOTICED THAT INSPITE OF SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREFORE, WE PROCEED TO DISPOSE OF THE R EVENUES APPEAL AFTER HEARING THE LD.DR AND PERUSING THE MATERIAL AVAILABLE ON RECORD ON MERITS OF THE CASE. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS A TRADER, IMPORTER AND EXPORTER OF MINERALS AND CHEMICALS. THE ASSESSEE HAS ALSO A SPE CIALIZED TRANSPORT DIVISION ENGAGED ITA NO. 263/MUM/2015-B-JM M/S.METCO ENTERPRISES P.LTD 2 IN TRANSPORTATION OF DIFFERENT HAZARDOUS CHEMICALS FOR DIFFERENT CUSTOMERS BY ITS OWN VEHICLES/ HIRED VEHICLES. HOWEVER, THE ASSESSEE FIL ED ITS RETURN ON 26-09-2011 DECLARING TOTAL INCOME OF RS.62,40,560/-. THE CASE WAS SELECT ED FOR SCRUTINY BY ISSUANCE STATUTORY NOTICES. THE AO FOUND THAT THE RAW MATERIAL PURCHAS ED BY THE ASSESSEE IS NOT DEBITED TO THE P & L, BUT INCLUDED IT IN THE FIXED ASSETS ACCO UNT AND DEPRECIATION CLAIMED. IN THE COMPUTATION OF DEPRECIATION ON FIXED ASSETS THE PUR CHASE AMOUNT OF RS.13,38,048/- WAS INCLUDED IN THE MACHINERY & EQUIPMENT OF RS.35,13,1 78/- AS ADDITION FOR LESS THAN 180 DAYS AND DEPRECIATION @7.5% WAS CLAIMED. THUS, DEPR ECIATION OF RS.1,00,353/- WAS CLAIMED IN THE COMPUTATION OF INCOME. THE ASSESSEE SUBMITTED THAT THE PURCHASES WERE GENUINE BEING THE PAYMENT WAS ROUTED THROUGH BANKIN G CHANNEL. 4. THE AO FURTHER FOUND THAT DURING THE ASSESSMENT PROCEEDING THE ASSESSEE COMPANY HAS DEBITED AN AMOUNT OF RS.5,71,88,942/- T O ITS P & L A/C. UNDER THE HEAD MOTOR LORRY ( RUNNING & MAINTENANCE). BEFORE HIM TH E ASSESSEE SUBMITTED THAT MOTOR LORRY EXPENSES WERE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS DULY SUPPORTED BY EVIDENCES/VOUCHERS. AO MADE A DISALLO WANCE OF RS.10 LAKHS. HOWEVER, THE VARIOUS SUBMISSIONS OF THE ASSESSEE ON ITS CLAI M WAS NOT CONSIDERED BY THE AO. AND THE DEPRECIATION CLAIMED @ 7.5 AMOUNTING TO RS.1,00 ,353/- WAS DISALLOWED/ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE ON THE PLEA THA T THE PURCHASES OF MATERIALS USED FOR CONSTRUCTING TANKS WERE NON GENUINE. THE AO HAS ALS O DISALLOWED AN AMOUNT OF RS.10,00,000/- FROM MOTOR LORRY EXPENSES. 5. AGGRIEVED BY SUCH ORDER OF THE AO THE ASSESSEE PREFERRED APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE VARIOUS SUBMIS SIONS OF THE ASSESSEE CONFIRMED THE DISALLOWANCE ON DEPRECIATION TO THE EXTENT OF @ 25% AND ALSO CONFIRMED RS.7,50,000/- OUT OF MOTOR LORRY EXPENSES BEING NOT GENUINELY INC URRED FOR THE PURPOSE OF BUSINESS. 6. AGGRIEVED BY SUCH ORDER OF THE LD.CIT(A) IN CONF IRMING THE SAME, NOW THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING/SUBMITTI NG THE ABOVEMENTIONED GROUNDS. ITA NO. 263/MUM/2015-B-JM M/S.METCO ENTERPRISES P.LTD 3 7. WE HAVE HEARD THE LD.DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS A TRADER, IMPORTER AND EXPORTE R OF MINERALS AND CHEMICALS. FOR TRANSPORTATION OF GOODS THE ASSESSEE USED ITS OWN V EHICLES/HIRED VEHICLES. WE FURTHER FIND THAT FOR THE PURCHASES OF GOODS THE PAYMENTS WERE MADE THROUGH BANKING CHANNEL. THE ASSESSEE HAS ALSO FURNISHED NECESSARY BILLS/VOU CHERS IN SUPPORT OF ITS CLAIM. HOWEVER, BASED ON AN INFORMATION OF THE SALES TAX A UTHORITIES HE MADE/DISALLOWED THE IMPUGNED ADDITIONS. THE LD.CIT(A) HAS ALSO CONFIRME D THE SAME BY 25% DEPRECIATION AND BY RS.7,50,000/- TOWARDS MOTOR LORRY EXPENSES. CONSIDERING THE FACTS OF THE CASE WE RESTRICT THE DEPRECIATION @ 10% AS AGAINST 25% BY THE LD. CIT(A) AND RS.5,50,000/- AS AGAINST RS.7,50,000/- BY THE LD. CIT(A) TOWARDS DISALLOWANCE MADE ON A/C MOTOR LORRY EXPENSES. THESE GROUNDS OF ASSESSEES APPEA L ARE PARTLY ALLOWED. THE ASSESSEE GETS PART RELIEF. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05-08-2016 SD/- R.C. SHARMA ACCOUNTANT MEMBER SD/- SANDEEP GOSAIN JUDICIAL MEMBER DATE 05-08-2016 ITA NO. 263/MUM/2015-B-JM M/S.METCO ENTERPRISES P.LTD 4 1. THE APPELLANT: M/S. METCO ENTERPRISES PVT. LTD 401, 4 TH FLOOR, RAM MILAN PREMISES CHSL, SUBHASH ROAD, VILE PARLE(E), MUMBAI-57. 2 THE RESPONDENT-THE DCIT 10(2), ROOM NO. 432, 4 TH FLOOR, AAYKAR BHAVAN, M..K ROAD, MUMBAI-21 3 /THE CIT, 4.THE CIT(A ) 5. DR, MUMBAI BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP/SPS COPY OF THE ORDER FORWARDED TO: