The ITO, Ward-5(2), Baroda V. M/s. All India Roadlines, Baroda

ITA 273/AHD/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0425 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-10-2009
• Assessment Year: 1996-1997
• Appeal Filed On: 31-01-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.273 & 749/AHD/2005 & C.O.66/AHD/2005 (ARISING OUT ITA NO.273/AHD/2005) ASSESSMENT YEAR:1996-97 DATE OF HEARING:28.10.09 DRAFTED:13.11.09 INCOME TAX OFFICER, WARD-5(2), 5 TH FLOOR, AAYARKAR BHAVAN, RACE COURSE CIRCLE, BARODA ALL INDIA ROADLINES B/6, GANGOTRI APARTMENT, TOWER-B, R.V. DESAI ROAD, VADODARA PAN NO.AAEFA1250A ALL INDIA ROADLINES B/6, GANGOTRI APARTMENT, TOWER-B, R.V. DESAI ROAD, VADODARA PAN NO.AAEFA1250A V/S . V/S . V/S . M/S. ALL INDIA ROADLINES B/6, GANGOTRI APARTMENT, TOWER-B, R.V. DESAI ROAD, BARODA INCOME TAX OFFICER, WARD-5(), BARODA, AAYARKAR BHAVAN, RACE COURSE CIRCLE, VADODARA INCOME-TAX OFFICER, WARD-5(2), BARODA (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- NONE REVENUE BY:- SHRI C.K. MISHRA, SR. DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE CROSS APPEALS BY THE REVENUE AND ASSESSEE AND CROSS OBJECTION( CO) BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-II, BARODA IN APPEAL NO.CAB/II-44/04-05 D ATED 24-11-2004. THE ASSESSMENT WAS FRAMED BY THE INCOME-TAX OFFICER, WA RD-5(2), VADODARA U/S.143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 11-03-2004 FOR THE ASSESSMENT YEAR 1996 -97. ITA NO.273/AHD/2005, 749/AHD./2005 & CO 66/AHD/2005 A.Y 1996-97 ITO WD-5(2) BARODA V. M/S ALL INDIA ROADLINES PAGE 2 FIRST WE WILL TAKE UP REVENUES APPEAL IN ITA NO.27 3/AHD/2005. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IN DELETING THE ADDITION OF RS.1,64,005/- ON ACCOUNT O F LOSS / DAMAGES CLAIMED BY THE ASSESSEE AND ADDITION MADE BY THE ASSESSING OFFICER AT RS.4,96,388/-. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROUND NO.I :- I) IN DELETING THE ADDITION TO THE EXTENT OF RS.1, 64,005/- OUT OF ADDITION OF RS.4,96,388/- MADE ON ACCOUNT OF LOSS / DAMAGES CLA IMED IN THE PROFIT & LOSS ACCOUNT. THE DECISION OF THE LD. CIT(A) IS NOT ACCE PTABLE BECAUSE ONCE NET RECEIPTS WERE DISCLOSED AFTER CONSIDERING SUCH LOSS ES / DAMAGES, NO FURTHER CLAIM CAN BE ALLOWED ON THE BASIS OF EVIDENCE PRODU CED. 3. WE HAVE HEARD THE LD. SR. DEPARTMENTAL REPRESENT ATIVE AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND T HAT THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.4,96,388/- IN REGARD TO CLA IM OF LOSS / DAMAGES IN THE PROFIT & LOSS A/C. BY THE ASSESSEE. THE ASSESSEE BEFORE THE ASSESSING OFFICER STATED THAT THE GROSS RECEIPT WAS CREDITED WHEN THE BILL FOR TR ADE WAS RAISED AND LOSS / DAMAGES WERE CLAIMED SEPARATELY IN THE PROFIT & LOSS A/C. T HE AO NOTED FROM THE AUDIT REPORT AND THE RELEVANT NOTE ON ACCOUNTS IS RE-PRODUCED FR OM THE ASSESSMENT ORDER, AS IT IS:- THE INCOME IS SHOWN IN CERTAIN CASES NET OF RECOVE RY. THE FIRM IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING EXCEPT FOR CLAIMS, LOSS, DAMAGES TO THE GOODS EITHER PAYABLE OR RECEIVABLE WHICH ARE NOT AC KNOWLEDGED AS DEBT OR NOT ASCERTAINED. THE ASSESSING OFFICER NOTED THAT SINCE THE RATES HA D BEEN ACCOUNTED FOR NET OF THE RECOVERIES, NONE FURTHER CLAIM OF LOSS / DAMAGES CA N BE ALLOWED. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT (A), ASSESSEE HAS PRODUCED THE CLAIM IN REGARD TO DEDUCTION MADE BY IPCL. TAKI NG INTO CONSIDERATION THIS CLAIM, THE CIT(A) DELETED THE ADDITION OF RS.1,64,005/- AN D SUSTAINED THE BALANCE ADDITION OUT OF THE TOTAL ADDITION OF RS.4,96,388/-. THE CI T(A) HAS NOTED IN PARA-4.3 AS UNDER:- 4.3 I HAVE CONSIDERED THE SUBMISSIONS MADE AS WELL AS ARGUMENTS PUTFORTH BY THE LEARNED COUNSEL FOR THE APPELLANT. THE ARGUM ENTS OF THE AO, FINDINGS IN THE ASSESSMENT ORDER AND REPORT DATED 17.8.2004 AND NOTE PUT BY THE AUDITORS ARE ALSO CONSIDERED. THE CONTENTION OF THE COUNSEL IS THAT CLAIM / DAMAGES OF RS.4,96,388 ARE ACCOUNTED FOR IN THE YEA R OF SETTLEMENT OF DISPUTE WITH THE PARTIES AND HENCE THE SAME IS ALLOWABLE AS EXPENDITURE AND ONCE GROSS RECEIPTS ARE ACCOUNTED FOR, THE CLAIMS DEBITE D SEPARATELY ARE NOT A ITA NO.273/AHD/2005, 749/AHD./2005 & CO 66/AHD/2005 A.Y 1996-97 ITO WD-5(2) BARODA V. M/S ALL INDIA ROADLINES PAGE 3 DOUBLE CLAIM AS INFERRED BY THE AO. IT IS NOTICED T HAT DURING THE YEAR VARIOUS PARTIES HAVE DEDUCED AMOUNT TOWARDS SHORTAGE / LATE DELIVERY CHARGES WHICH ARE CLAIMED BY THE APPELLANT. DURING THE YEAR TOTAL DEDUCTION BY IPCL IS WROTH RS.1,64,005. THE APPELLANT HOWEVER FAILED TO JUSTI FY ITS CLAIM MADE OF RS.4,96,388 DURING THE YEAR. CONSIDERING OVERALL FA CTS AND SUBMISSION OF THE APPELLANT, I DIRECT THE AO TO ALLOW THE CLAIM OF RS .1,64,005 FOR WHICH DETAILS ARE FURNISHED BY THE APPELLANT. IN THE ABSENCE OF D ETAILS, THE BALANCE DISALLOWANCE IS CONFIRMED. WE FIND THAT THE ASSESSEE HAS FILED CLAIM IN RESPEC T OF DEDUCTION BY IPCL AT RS.1,64,005/- AND TO THAT EXTENT THE CIT(A) HAS ALL OWED THE CLAIM OF THE ASSESSEE. IN RESPECT TO THE DAMAGES / LOSS, THE ASSESSEE COULD N OT PRODUCE ANYTHING EVEN BEFORE US AND THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF PROOF PRODUCED BY HIM IN RESPECT OF IPCL ONLY. WE FIND N O INFIRMITY ORDER OF CIT(A) AND THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 4. THE NEXT ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATI ON ON TRUCKS PURCHASED DURING THE YEAR AT 100%. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROUND NO. II :- II) IN DIRECTING TO ALLOW DEPRECIATION ON THE TRUC KS PURCHASED DURING THE YEAR UNDER CONSIDERATION BY HOLDING THAT DEPRECIATION AT 100% IS ADMISSIBLE AS THE TRUCKS WERE USED FROM 29.09.1995, THERE WAS NO POSS IBILITY OF USING THE TRUCK FROM EARLIER DATE. 5. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIV E AND GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HE ASSESSING OFFICER DISALLOWED THE DEPRECIATION ON TRUCKS FOR RS.1,82,966/- BY STA TING THE TRUCKS WERE USED FROM THE DATE OF PERMIT GIVEN BY THE ROAD TAX OFFICER THAT W ITH EFFECT FROM 01-10-1995 AND ACCORDINGLY HE DISALLOWED 50% OF DEPRECIATION. AGG RIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO ALLOWED THE CLAIM OF THE ASSESSEE BY CONSIDERING THE REPORT OF THE ASSESSING OFFICER BY GIVING FOLLOWING FINDING IN PARA-5.3 AND 5.4 :- 5.3 THE REPORT OF THE AO WAS DULY CONFRONTED TO TH E AUTHORIZED REPRESENTATIVE WHO STATED THAT EVEN IF THE PERIOD O F PERMIT IS CONSIDERED FROM 1.10.1995, THE NUMBER OF DAYS FOR THE PERIOD FROM 1 .10.1995 TO 31.3.1996 COMES TO 183 DAYS AND HENCE TRUCKS WERE USED FOR A PERIOD MORE THAN 180 DAYS AND ELIGIBLE FOR DEPRECIATION AS CLAIMED. THE COUNSEL RELIED ON THE DECISION IN CASE OF AIR TRAVEL 136 TAXMAN 194 AND S TATED THAT RATIO LAID DOWN IS SQUARELY APPLICABLE IN THE FACTS OF APPELLANTS CASE AND MORE PARTICULARLY ITA NO.273/AHD/2005, 749/AHD./2005 & CO 66/AHD/2005 A.Y 1996-97 ITO WD-5(2) BARODA V. M/S ALL INDIA ROADLINES PAGE 4 WHEN THE TRUCKS WERE SENT FOR A TRIP OF PICL WHICH IS A PUBLIC LIMITED UNDERTAKING WHERE SAME CANNOT BE FABRICATED. 5.4 I HAVE CONSIDERED THE SUBMISSIONS MADE AS WELL AS ARGUMENTS PUTFORTH BY THE LEARNED COUNSEL FOR THE APPELLANT. THE ARGUMENT S FOR THE AO, FINDINGS IN THE ASSESSMENT ORDER AND REPORT DATED 17.8.2004 ARE ALSO CONSIDERED. THE CONTENTION OF THE COUNSEL IS FOUND TO BE ACCEPTABLE THAT TRUCKS WERE SENT FOR TRIP TO LUDHIYANA FOR IPCL WHICH IS A PUBLIC UNDERT AKING AND EVEN IF THE PERIOD OF PERMIT IS CONSIDERED FROM 1.10.1995, THE NUMBER OF DAYS FOR THE PERIOD FROM 1.10.1995 TO 31.3.1996 COMES TO 183 DAYS AND H ENCE TRUCKS WERE USED FOR A PERIOD MORE THAN 180 DAYS AND ELIGIBLE FOR DE PRECIATION AS CLAIMED. THE COUNSEL RELIED ON THE DECISION IN THE CASE OF AIR T RAVEL 136 TAXMAN 194. THE RATIO LAID DOWN IN THE SAID DECISION IS SQUARELY AP PLICABLE IN THE FACTS OF APPELLANTS CASE. THE CONTENTION OF THE APPELLANT I S ALSO CONVINCING THAT EVEN IF DEPRECIATION IS DISALLOWED, THE WDV WOULD STANDS ENHANCED RESULTING INTO REFUND OF TAX IN SUBSEQUENT YEARS GIVING NO BENEFIT TO REVENUE. THE AO IS THEREFORE DIRECTED TO ALLOW THE CLAIM OF DEPRECIATI ON CONSIDERING THE USE FOR MORE THAN 180 DAYS. THE APPELLANT SUCCEEDS ON THIS GROUND. WE FIND THAT THE CIT(A) HAS GIVEN A CONCLUSIVE FIND ING THAT THE TRUCKS WERE USED FOR MORE THAN 180 DAYS I.E. 183 DAYS BUT THE LAW ON THI S ISSUE IS VERY CLEAR THAT IF THE TRUCKS ARE TO BE USED AFTER 30 TH OF SEPTEMBER OR AS ON 01-10-1995 I.E. FOR THE PART OF SIX MONTHS OF THE YEAR, THE DEPRECIATION WILL BE AL LOWED ONLY AT 50%. WE HAVE GONE THROUGH THE PROVISIONS OF U/S.32 OF THE ACT AND THE PROVISO CLEARLY PROVIDES THAT IN CASE THE ASSET IS PUT TO USE FOR THE PURPOSE OF BUS INESS FOR A PERIOD OF LESS THAN 180 DAYS IN THAT PREVIOUS YEAR THEN THE DEDUCTION UNDER THIS SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO 50% OF THE AMOUNT CALC ULATED AT THE PERCENTAGE PRESCRIBED FOR THAT ASSET. THE RELEVANT PROVISO TO SECTION 32 READS AS UNDER:- DEPRECIATION 32 (1).. [ PROVIDED [ PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO IN CLAUSE (I) OR C LAUSE (II), AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSEE DUR ING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFE SSION FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT PREVIOUS Y EAR, THE DEDUCTION UNDER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE (I) OR CLAUSE (II) [OR CLAUSE (IIA)] S THE CASE MAY BE:] WE FIND THAT THE CIT(A) HAS RECORDED FINDING OF FAC T THAT ASSETS WERE USED FOR 183 DAYS WHICH IS MORE THAN 180 DAYS AND ACCORDINGLY TH E ASSESSEE IS ELIGIBLE FOR DEPRECIATION @ 100% OF RATE PRESCRIBED. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND ACCORDINGLY THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. ITA NO.273/AHD/2005, 749/AHD./2005 & CO 66/AHD/2005 A.Y 1996-97 ITO WD-5(2) BARODA V. M/S ALL INDIA ROADLINES PAGE 5 NOW COMING TO ASSESSEES APPEAL IN ITA NO.749/AHD/2 005 AND CO NO.66.AHD/2005. 6. THE CO OF THE ASSESSEE IS BARRED BY LIMITATION B Y EIGHT DAYS AND THE DEFECT MEMO HAD BEEN ISSUED TO THE ASSESSEE ON 10-03-2005. AS REGARDS TO APPEAL OF THE ASSESSEE WHICH IS TIME BARRED BY 25 DAYS AND DEFECT MEMO WAS ISSUED ON 10-03- 2005. DESPITE SERVICE OF DEFECT MEMO THE ASSESSEE H AS NOT RECTIFIED THE DEFECTS IN THE APPEAL MEMO AND CO. IT SEEMS THAT THE APPEAL OF THE ASSESSEE AND CO WERE FIXED ON VARIOUS DATES I.E. ON 29-03-2005, 31-07-20 09, 21-10-2009 AND FINALLY ON 28- 10-2009 I.E. THE DATE OF HEARING. DESPITE SERVICE B Y AFFIXTURE BY THE REVENUE, THE ASSESSEE WAS NOT PRESENT. THE SERVE NOTICE WAS SEN T BY THE REVENUE READS AS UNDER:- OFFIC E OF THE INCOME TAX OFFICE R, WARD-5(3), AAYAKAR BHAVAN, 5 TH FLOOR, ROOM NO.506, RACE COURSE CIRCLE BARODA PH. 234 5611 NO. BRD/WD.5(3).ITAT/2009-10 DATED: 20.08.2009 TO, THE DEPUTY REGISTRAR I.T.A.T., 3 RD FLOOR, ABHINAV ARCADE, OP. MUNICIPAL SCHOOL, PRITAMNAGAR, ELLISBRIDGE, AHMEDABAD. SIR, SUB : SERVICE OF DR NOTICE ON THE ASSESSEE IN TH E CASE OF M/S. ALL INDIA ROADLINES, B/6, GANGOTRI APT. TOWER-B, R.V.DESAI ROAD, BARODA. ITA NO.73 & 749/A/05, CO.NO.66/A/05, DATE OF HEARING 21.10.2009. ---------------------------------------- ------------------- PLEASE REFER TO THE ABOVE. 2. ON INQUIRY, IT IS ASCERTAINED THAT THE ASSESSEE IN THE ABOVE CASE HAS LEFT THE ABOVE ADDRESS BEFORE THREE YEARS. THEREFORE, THE NO TICE COULD NOT BE SERVED PHYSICALLY. HENCE, THE NOTICE WAS SERVED BY AFFIXTU RE. I ENCLOSE HEREWITH OFFICE COPY OF THE NOTICE A LONG WITH THE AFFIXTURE REPORT. ENCLO: AS ABOVE. YOURS FAITHFULLY, ITA NO.273/AHD/2005, 749/AHD./2005 & CO 66/AHD/2005 A.Y 1996-97 ITO WD-5(2) BARODA V. M/S ALL INDIA ROADLINES PAGE 6 SD/- ( D.P. NAIR ) INCOME-TAX OFFICER, WARD-5(3), BARODA COPY TO : 1. THE SR. AUTHORIZED REPRESENTATIVE, D BENCH ITAT, ABAD. 2. THE JT. CIT, RANGE-5, BARODA. IT SEEMS THAT THE ASSESSEE IS NOT INTERESTED IN REM OVING THE DEFECTS, THE APPEAL AND CO ARE DEFECTIVE AND THIS CANNOT BE ADMITTED WITHOU T REMOVAL OF DEFECTS BY THE ASSESSEE. ACCORDINGLY, THIS APPEAL AND CO OF ASSES SEE ARE DISMISSED AS NOT MAINTAINABLE. 8. IN THE RESULT, REVENUES APPEAL AND THAT OF ASSESSE ES APPEAL AND CO ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20/11/2009 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 20/11/2009 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- II, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD