K.V.Mohammed Kutty, Malappuram V. ACIT, Tirur

ITA 293/COCH/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1015 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 07-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2011
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: A V MURALIDHARAN
• Keywords: Depreciation; Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A NO. 293/COCH/2011 ASSESSMENT YEAR : 2006-07 K.V. MOHAMMED KUTTY, KEVI ENTERPRISES, VENNIYOOR, MALAPPURAM. [PAN:AEVPK 0649E] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2(2), TIRUR. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI A.V. MURALIDHARAN, ADV. REVENUE BY SMT. SUSAN GEORGE VARGHESE, SR. DR DATE OF HEARING 07/01/2013 DATE OF PRONOUNCEMENT 28/02/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24-02-2011 PASSED BY LD CIT(A)-II, CALICUT AND IT RELATES TO T HE ASSESSMENT YEAR 2006-07. 2. FOLLOWING TWO ISSUES ARE URGED IN THIS APPEAL. (A) DISALLOWANCE OF HIGHER RATE OF DEPRECIATION C LAIMED ON MOTOR LORRIES. (B) ADHOC DISALLOWANCE OF RS.1.00 LAKH OUT OF FUE L & DIESEL EXPENSES. 3. THE ASSESSEE IS A WHOLESALE DEALER OF CEMENT . THE ASSESSEE HAS ALSO GOT TWO TRANSPORT DIVISIONS VIZ.,KEVI TRANSPORT DIVISION, V ENNIYUR AND ASIL TRANSPORT DIVISION, BANGALORE. THE ASSESSEE CLAIMED DEPRECIATION ON LO RRIES AT HIGHER RATE OF 30% ON THE GROUND THAT THE VEHICLES ARE USED IN HIS BUSINESS O F HIRING. HOWEVER, THE AO TOOK THE VIEW THAT THE ASSESSEE IS USING THE VEHICLES IN HIS OWN BUSINESS AND HENCE THE HIGHER RATE OF DEPRECIATION IS NOT ADMISSIBLE. ACCORDINGL Y, THE AO RESTRICTED THE DEPRECIATION TO I.T.A. NO.293/COCH/2011 2 NORMAL RATE. THE AO ALSO DISALLOWED A SUM OF RS.1. 00 LAKH ON ADHOC BASIS FROM OUT OF THE CLAIM OF EXPENDITURE UNDER THE HEAD FUEL & DIE SEL EXPENSES ON THE GROUND THAT THE VOUCHERS PRODUCED WERE DEFECTIVE, AFTER DISCUSS ING THE SAME WITH THE REPRESENTATIVE OF THE ASSESSEE. 4. THE LD CIT(A) CONFIRMED THE DISALLOWANCE OF RS.1.00 LAKH ON THE GROUND THAT THE SAME WAS AGREED TO BY THE ASSESSEE BEFORE THE AO. THE LD CIT(A) ALSO CONFIRMED THE DISALLOWANCE OF EXCESS DEPRECIATION BY HOLDING THAT THE SAME IS COVERED BY THE FOLLOWING DECISIONS:- (A) GUPTA GLOBAL EXIM PVT LTD (305 ITR 132)(SC) (B) CIT VS. PEER KHAN CHORD KHAN MERAK (226 ITR 796)(RAJ) (C) CIT VS. MANJEED STONE COMPANY (190 ITR 183) AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFOR E US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WITH REGARD TO THE DISALLOWANCE OF DEPRECIATION CLAIM, THE LD. A.R SUB MITTED THAT THE LD CIT(A) HAS DECIDED THE ISSUE ON THE WRONG IMPRESSION THAT THE ASSESSEE IS ENGAGED IN THE CEMENT BUSINESS ONLY. IT WAS SUBMITTED THAT THE ASSESSEE IS HAVING TWO SEPARATE TRANSPORT DIVISIONS AND HE HAS ALSO RECEIVED TRANSPORT CHARGE S ON RUNNING OF THE VEHICLES ON HIRE AND THESE FACTS HAVE ESCAPED THE ATTENTION OF THE L D CIT(A). WE ALSO NOTICE FROM THE ASSESSMENT ORDER THAT THE ASSESSEE IS HAVING TWO TR ANSPORT DIVISIONS LOCATED AT VENNIYUR AND BANGALORE. IT IS NOT KNOWN WHETHER TH E VEHICLES WERE EXCLUSIVELY USED FOR THE PURPOSE OF CEMENT BUSINESS ONLY. THERE IS NO FI NDING ON THIS ASPECT EITHER IN THE ASSESSMENT ORDER OR IN THE ORDER OF LD CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF GUPTA GLOBAL EXIM PVT LTD (SUPRA) HAS HELD THAT T HE HIGHER RATE OF DEPRECIATION IS ADMISSIBLE, IF THE VEHICLE IS USED FOR THE PURPOSES OF BUSINESS OF RUNNING THEM ON HIRE. IN THE INSTANT CASE, THE TAX AUTHORITIES HAVE DISAL LOWED THE EXCESS CLAIM OF DEPRECIATION WITHOUT GIVING A FINDING THAT THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF RUNNING THE VEHICLES ON HIRE. HOWEVER, ACCORDING TO THE AS SESSEE, HE IS HAVING TRANSPORT DIVISION AT TWO DIFFERENT PLACES. UNDER THESE CIRC UMSTANCES, WE ARE OF THE VIEW THAT THE IMPUGNED ISSUE HAS NOT BEEN PROPERLY EXAMINED BY BO TH THE TAX AUTHORITIES. SINCE THE I.T.A. NO.293/COCH/2011 3 PRESENT ISSUE NEEDS VERIFICATION OF FACTS, WE ARE O F THE VIEW THAT THE SAME MAY BE EXAMINED AT THE END OF THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH THE DIRECTION TO RE-EXAMINE THE ISSUE AFRESH IN THE LIGHT OF DISCUSSIONS MADE S UPRA AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 6. THE NEXT ISSUE IS WITH REGARD TO THE ADHOC D ISALLOWANCE OF RS.1.00 LAKH OUT OF FUEL AND DIESEL EXPENSES. THE LD CIT(A) HAS GIVEN A FIN DING THAT IT WAS AN AGREED ADDITION, AS SOME OF THE VOUCHERS WERE FOUND TO BE DEFECTIVE. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISI ON OF LD CIT(A) ON THIS ISSUE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 28-02-2013 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 28TH FEBRUARY, 2013 GJ COPY TO: 1. K.V. MOHAMMED KUTTY, KEVI ENTERPRISES, VENNIYOOR, MALAPPURAM 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -2(2), TIRUR. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, CAL ICUT. 4. THE COMMISSIONER OF INCOME-TAX, CALICUT. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN