Rimi Enterprises, Agartala V. Income Tax Officer, Ward-3, Agartala

ITA 279/GTY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0716 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 17-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRA JYOTI BHATTACHARYA; ASSESSEES OWN BUSINESS WHICH ALLOWABLE DEPRECIATION
• Assessee Lawyers: SANJOY MODI
• Keywords: Depreciation; TDS
• Section: 133(6); 22

Judgement Text

ITA NO. 279/GAU/2019 RIMI ENTERPRISES A.Y. 2016-17 1 | P A GE IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENCH: GUWAHATI VIRTUAL HEARING AT KOLKATA [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 279/GAU/2019 ASSESSMENT YEAR: 2016-17 RIMI ENTERPRISES (PAN: AANFR 5453 M ) VS. ITO, WARD-3, AGARTALA APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 21.12.2020 DATE OF PRONOUNCEMENT 22.12.2020 FOR THE APPELLANT SHRI SANJOY MODI, AR FOR THE RESPONDENT SHRI SUBRA JYOTI BHATTACHARYA DR ORDER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF LD. CIT(A)- SHILLONG DATED 04.04.2019 FOR A.Y. 2016-17. 2. THE SOLE ISSUE FOR WHICH THE ASSESSEE HAS PREF ERRED AN APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOW ANCE OF RS. 40,83,079/- CLAIMED BY THE ASSESSEE IN RESPECT OF THE HIGHER DEPRECIATION CLAIM. 3. THE FACTS ON THIS ISSUE AS TAKEN NOTE BY THE LD. CIT(A) IN THE IMPUGNED ORDER IS REPRODUCED AS UNDER: THE GROUNDS ARE DIRECTED AGAINST THE DECISION OF T HE AO TO RESTRICT DEPRECIATION ON PLANT AND MACHINERY @ 15% AS AGAINST THE CLAIM @ 30 % BY ASSESSEE. 5.1. ACCORDING TO THE AO, ASSESSEE WAS CLAIMING DEP RECIATION @ 30% ON PLANT AND MACHINERY. HOWEVER, IN THE AUDIT REPORT, THE NATURE OF BUSINESS WAS STATED TO BE CONTRACTORS. THE AO ASKED ASSESSEE WHY DEPRECIATI ON SHOULD BE ALLOWED @ 30% SINCE ASSESSEE WAS STATED TO BE A CONTRACTOR, MEANI NG THEREBY THAT THE SAID PLANT & MACHINERIES WERE USED FOR ASSESSEES OWN BUSINESS F OR WHICH ALLOWABLE DEPRECIATION OUGHT TO BE @ 15%. ACCORDING TO THE AO, ASSESSEE FA ILED TO PRODUCE BOOKS OF ACCOUNTS, BUT IN COURSE OF ASSESSMENT PROCEEDINGS, LEDGER COP IES OF BILLS WERE STATED TO HAVE BEEN FILED. SINCE, ASSESSEE CLAIMED BEFORE THE AO THAT I T WAS HIRING OUT ITS ASSET, THE AO REQUESTED IT TO FURNISH COPY OF SERVICE TAX RETURN. IN REPLY, ASSESSEE STATED THAT SERVICE ITA NO. 279/GAU/2019 RIMI ENTERPRISES A.Y. 2016-17 2 | P A GE TAX WAS NOT LEVIABLE IN ITS CASE. HENCE, NO RETURN WAS FILED. THEREAFTER, THE AO GOT INFORMATION FROM ASST. COMMISSIONER, CGST TO THE EF FECT THAT SERVICE TAX WAS LEVIABLE ON HIRING OUT OF PLANT AND MACHINERY. SUBSEQUENT QU ERIES RAISED BY THE AO WERE NOT COMPLIED WITH. THE AO OBSERVED THAT IN FY 2014-15, ASSESSEE FILED ITS SERVICE TAX RETURN, BUT THE SAME WAS NOT FILED IN THIS YEAR. TH E AO CONCLUDED THAT ENTIRE RECEIPT OF RS. 1,28,73,808/- COULD NOT BE TREATED AS AN ACCOUN T OF HIRING CHARGE. ALLOWABLE DEPRECIATION WAS TAKEN @ 15%. DEPRECIATION WAS REST RICTED TO BE RS. 40,83,079/-. 4. THE LD. CIT(A) HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE BY HOLDING AS UNDER: 5.3. I HAVE CAREFULLY CONSIDERED THE MATTER. AS ST ATED BY THE AO, THE AUDIT REPORT OF ASSESSEE STATED THAT ASSESSEES NATURE OF BUSINESS WAS CONTRACTORS. IN THE P & L A/C AS ON 31.03.2016, THE RECEIPT SIDE HAD THE NARRATION BY BILL RECEIVED DURING THIS YEAR INCLUDING HIRING CHARGES. THE BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFORE THE AO EVEN AFTER SPECIFIE D REQUISITION. ASSESSEE WAS ALSO FOUND NOT TO HAVE BEEN FILING ITS SERVICE TAX RETURN FOR THE YEAR. THEREFORE, ASSESSEE HAS NOT PROVED BEFORE THE AO THAT ITS REPO RT COMPRISED EXCLUSIVELY OF HIRING CHARGES OF PLANT AND MACHINERY. BEFORE ME, CONFIRMATIONS FROM THREE PARTIES WHEREIN IT WAS STATED THAT HIRING CHARGE TO THE TUNE OF RS. 85,94,865/- WAS PAID TO ASSESSEE WERE FILED. OTHER THAN THE SAI D CONFIRMATIONS FOR RS. 85,94,865/-, NO EVIDENCE IN SUPPORT OF CLAIM WAS FU RNISHED. ASSESSEE ALSO HAD NOT FURNISHED ITS BOOKS OF ACCOUNTS TO ME. EVEN THE P & L A/C MENTIONED THAT SUM OF RS. 1,28,73,808/- COMPRISED OF BILLS RECEIVE D AS WELL AS HIRING CHARGES. APPELLANT HAS NOT GIVEN ANY PROOF THAT RS. 42,78,94 3/- (RS. 1,28,73,808/- - RS. 85,94,865/-) WAS OUT OF HIRING CHARGE. THEREFORE, T HE AO CANNOT BE FAULTED IN TAKING THE VIEW THAT THE SUM OF RS. 1,28,73,808/- WAS NOT WHOLLY FROM HIRING CHARGE. FROM AVAILABLE RECORD, AO HAD RIGHTLY INFER RED THAT ASSESSEE WAS USING THE PLANT AND MACHINERY FOR ITS OWN CONTRACT BUSINE SS ALSO. HENCE, DEPRECIATION IS TO BE ALLOWED @ 15% ONLY. 5. AGGRIEVED BY THE AFORESAID ACTION OF THE LD. CIT (A), THE ASSESSEE IS BEFORE ME RAISING THIS ISSUE IN THE INSTANT APPEAL. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. IT WAS BROUGHT TO MY NOTICE THAT THE ASSESSEE HAD RECEIVED TOTAL RECEIPT FROM HIRE CHARGES FROM M/S SUSHI INFRA PVT. LTD. OF RS. 9,12,532/- AND RS. 43,63,728 /- FROM M/S DHAR CONSTRUCTION AND BALANCE RS. 4,94,527/- FROM THE PARTIES NAMED WHICH IS REFLECTED IN THE LEDGER ACCOUNT. IT WAS ALSO BROUGHT TO MY NOTICE THAT RS. 27,52,331 /- WAS OBTAINED BY THE ASSESSEE FIRM FROM LETTING OUT VEHICLE AND LORRIES ON DAILY BASIS. IT WAS BROUGHT TO MY NOTICE THAT TDS WAS ALSO DEDUCTED BY THE TWO MAIN PARTIES. ACCORDING TO LD. AR, SHRI SANJOY MODI, THE AO DID NOT OBTAIN ANY CONFIRMATION FROM THE PARTIES RATHER HE ISSUED NOTICE TO ANOTHER GOVT. DEPARTMENT U/S 133(6) OF TH E ACT. IT WAS BROUGHT TO MY NOTICE ITA NO. 279/GAU/2019 RIMI ENTERPRISES A.Y. 2016-17 3 | P A GE THAT THE ASSESSEE HAS SUBMITTED THE BANK STATEMENT, COPY OF BILLS, LEDGER ACCOUNT AND 26AS IN SUPPORT OF ITS CLAIM OF HIGHER DEPRECIATION CLAIM @ 30%. IT WAS BROUGHT TO MY NOTICE DUE TO TYPOGRAPHICAL MISTAKE, WRONG CODE WAS INSERTED IN THE 3CB AND 3CD REPORT. ACCORDING TO LD. A.R, THE AO AND LD. CIT(A) HAS NOT CORRECTLY APPRECIATED THE FACTS AND HAS ERRED IN DISALLOWING THE HIRE DEP RECIATION ON PLEA THAT THE ASSESSEES TOTAL RECEIPT IS NOT FROM HIRING, THEREFORE HIGHER DEPRECIATION CANNOT BE GIVEN. HOWEVER, ACCORDING TO LD. A.R, THE ASSESSEES SUBST ANTIAL INCOME IS FROM HIRING ITS PLANT & MACHINERY. IT WAS BROUGHT TO MY NOTICE THAT THE ASSESSEES TOTAL RECEIPT IS TO THE TUNE OF RS. 1,28,73,808/- AND THE ASSESSEE HAS RECEIVED HIRING INCOME / RECEIPT TO THE TUNE OF RS. 85,94,865/- WHICH IS 66.76% OF THE TOTAL RECEIPT I.E. TO SAY 2/3 RD OF THE ASSESSEES INCOME. THEREFORE, ACCORDING TO LD. A.R, SINCE THE ASSESSEES SUBSTANTIAL INCOME BEING 2/3 RD OF ITS TOTAL RECEIPT WAS FROM HIRING, THE ASSESSEE WAS QUALIFIED FOR HIGHER DEPRECIATION @ 30% INSTEAD OF 15%. FOR THAT PROPOSITION HE RELIED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF CIT VS. BANSIWALA IRON & STEELS LTD. DATED 05.09.2003 REPORTED IN 134 TAXMAN N 124 (RAJ). IT WAS POINTED OUT BY THE LD. A.R THAT IN THAT CASE DECIDED BY THE HON BLE RAJASTHAN HIGH COURT [I.E. IN THE CASE OF BANSIWALA IRON & STEEL LTD. (SUPRA)] TH AT ASSESSEE HAD TOTAL INCOME OF RS. 91,000/- OUT OF WHICH RS. 60,000/- WAS FROM HIRING BUSINESS AND RS. 31,000/- WAS FROM ITS OWN BUSINESS AND THE ASSESSEE CLAIMED HIGH ER DEPRECIATION @ 40% IN RESPECT OF PLANT & MACHINERY USED FOR HIRING BUSINESS. THE TRIBUNAL ALLOWED THE CLAIM AND REVENUE PREFERRED AN APPEAL AGAINST IT BEFORE THE H ONBLE HIGH COURT, AND HONBLE HIGH COURT TOOK NOTE OF THE FACT THAT ASSESSEES HI RING INCOME WAS MORE THAN 2/3 RD (MORE THAN 65%) OF ITS TOTAL INCOME, THEREFORE THE HONBLE HIGH COURT UPHELD THE ACTION OF THE TRIBUNAL IN ALLOWING THE HIGHER DEPRE CIATION CLAIM FOR THE PLANT AND MACHINERY USED FOR HIRING BUSINESS. SO, THE LD. A. RS PLEA IS THAT APPLYING THE RATIO OF THIS CASE LAW OF BANSIWALA IRON & STEEL (SUPRA), ASSESSEES CLAIM FOR HIGHER DEPRECIATION SHOULD BE ALLOWED. 7. PER CONTRA, THE LD. D.R SHRI SUBRA JYOTI BHATTA CHARYA OPPOSED THE SUBMISSION OF LD. A.R AND SUPPORTED THE ACTION OF AO AS WELL A S LD. CIT(A) AND CONTENDED THAT THE ASSESSEE FAILED TO DEMONSTRATE BEFORE THE AUTHO RITIES BELOW THAT HIGHER DEPRECIATION ITA NO. 279/GAU/2019 RIMI ENTERPRISES A.Y. 2016-17 4 | P A GE CLAIM WAS ONLY FROM HIRING BUSINESS. ACCORDING TO H IM, THEREFORE THIS TRIBUNAL SHOULD NOT INTERFERE IN THE IMPUGNED ORDER PASSED BY THE L D. CIT(A). 8. AFTER HAVING HEARD BOTH THE PARTIES AND HAVING P ERUSED THE RECORDS, IT IS NOTED THAT THE ASSESSEE IN THIS ASSESSMENT YEAR HAS RECEI VED TOTAL RECEIPT OF RS. 1,28,73,808/- AND FROM WHICH THE ASSESSEE HAS RECEIVED FROM HIRIN G RS. 85,23,118/- WHICH IS MORE THAN 66% OF THE TOTAL RECEIPT. THE ASSESSEES CLAIM IS THAT SINCE THE SUBSTANTIAL INCOME I.E. 2/3 RD OF ITS INCOME IS FROM HIRING BUSINESS, IT QUALIFIE S FOR HIGHER DEPRECIATION @ 30%. FOR THAT THE LD. A.R HAS RELIED ON THE DECISIO N OF HONBLE RAJASTHAN HIGH COURT IN BANSIWALA IRON & STEELS LTD. (SUPRA), I FIND THA T ASSESSEES INCOME FROM HIRING CONSTITUTES MORE THAN 2/3 RD OF ITS TOTAL INCOME THEREFORE SINCE THE ASSESSEES SUBSTANTIAL INCOME IS FROM HIRING BUSINESS, RELYING ON THE RATI O LAID BY THE HONBLE RAJASTHAN HIGH COURT IN BANSIWALA IRON & STEELS LTD. (SUPRA), THE ASSESSEES CLAIM FOR HIGHER DEPRECIATION SHOULD BE ALLOWED @ 30% INSTEAD OF 15% ALLOWED BY THE AO. THEREFORE, THE ASSESSEES CLAIM OF ALLOWING HIGHER DEPRECIATIO N @ 30% IS DIRECTED TO BE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER, 2020. SD/- (A. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER DATED: 22 ND DECEMBER, 2020 SB, SR. PS ITA NO. 279/GAU/2019 RIMI ENTERPRISES A.Y. 2016-17 5 | P A GE COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- RIMI ENTERPRISES, C/O, SHRI BIPLAB KUMAR SAHA, JORA PUKUR ROAD, BANAMALIPUR, AGARTALA, TRIPURA-799001 2. RESPONDENT- ITO, WARD-3, AGARTALA 3. THE CIT(A)- GUWAHATI 4. CIT- , GUWAHATI 5. DR, GAUHATI BENCH, GUWAHATI TRUE COPY BY ORDER SR. PRIVATE SECRETARY ITAT, KOLKATA BENCHES, KOLKATA