, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.2981 & 2982/MDS/2016 ' (' / ASSESSMENT YEARS : 2012-13 & 2013-14 M/S CHAKIAT AGENCIES PVT. LTD., NO.40, RAJAJI SALAI, CHENNAI - 600 001. PAN : AABCC 6281 F V. THE DEPUTY COMMISSIONER OF INCOME TAX / INCOME TAX OFFICER, CORPORATE CIRCLE 1(2) / (3), CHENNAI. (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NOS.3041 & 3042/MDS/2016 ' (' / ASSESSMENT YEARS : 2012-13 & 2013-14 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(2), CHENNAI - 600 034. V. M/S CHAKIAT AGENCIES PVT. LTD., NO.40, RAJAJI SALAI, CHENNAI - 600 001. (*+/ APPELLANT) (,-*+/ RESPONDENT) './ 0 1 /ASSESSEE BY : SHRI P.M. VEERAMANI, CA 0 1 /REVENUE BY : SHRI AVIJIT RAKSHIT, JCIT 2 0 /# / DATE OF HEARING : 29.08.2017 34( 0 /# / DATE OF PRONOUNCEMENT : 27.09.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE ASSESSEE AND REVENUE FILED APPEALS AGAINS T THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, 2 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 CHENNAI, DATED 01.08.2016 AND PERTAIN TO ASSESSMENT YEARS 2012- 13 AND 2013-14. THEREFORE, WE HEARD ALL THE FOUR A PPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. LETS FIRST TAKE ASSESSEES APPEALS. THE ONLY I SSUE ARISES FOR CONSIDERATION IS IN BOTH THE APPEALS IS WITH REGARD TO ADMISSIBILITY OF HIGHER RATE OF DEPRECIATION. 3. SHRI P.M. VEERAMANI, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FREIGHT FORWARDING. IN FACT, THE ASSESSEE WAS I SSUED A LICENCE OF MULTIMODAL TRANSPORT OPERATOR BY MINISTRY OF SHIPPI NG. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE CLAIMED DEP RECIATION IN RESPECT OF TRAILERS / LORRIES AT THE RATE OF 30%. THE ASSESSING OFFICER GRANTED ONLY 15% DEPRECIATION ON THE GROUND THAT TH E ASSESSEE IS NOT IN THE BUSINESS OF RUNNING THE TRAILERS / LORRI ES ON HIRE. THE CIT(APPEALS) CONFIRMED THE ORDER OF THE ASSESSING O FFICER BY PLACING RELIANCE ON THE JUDGMENT OF APEX COURT IN C IT V. GUPTA GLOBAL EXIM P. LTD. (2008) 305 ITR 132. 4. REFERRING TO THE CIRCULAR OF THE CBDT IN CIRCULA R NO.652 DATED 14.06.1993, THE LD. REPRESENTATIVE FOR THE AS SESSEE 3 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 SUBMITTED THAT WHEN THE ASSESSEE HAS ITS TRAILERS / LORRIES IN ITS BUSINESS OF TRANSPORT OF GOODS, IT IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION. ACCORDING TO THE LD. REPRESENTATIVE, THIS TRIBUNAL IN THE CASE OF DCIT V. SUNTHANTHER ASSUMTHA (2016) 51 ITR (TRIB) 154, HAS TAKEN A SIMILAR VIEW AFTER REFERRING TO TH E CIRCULAR ISSUED BY CBDT DATED 14.06.1993. REFERRING TO THE JUDGMENT O F APEX COURT IN GUPTA GLOBAL EXIM P. LTD. (SUPRA), THE LD. REPRE SENTATIVE SUBMITTED THAT THE APEX COURT FOUND THAT THERE WAS NO EVIDENCE TO INDICATE THAT THE ASSESSEE WAS IN THE BUSINESS OF H IRING OUT OF MOTOR LORRY FOR RUNNING THEM TO EARN BUSINESS INCOME. IN ORDER TO FIND OUT WHETHER TRUCKS WERE USED IN TRANSPORT BUSINESS AS C LAIMED BY THE ASSESSEE, THE MATTER WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. IN THIS CASE, ACCORDING TO THE LD. REPRES ENTATIVE, THE ASSESSEE IS USING TRAILER / LORRY IN THE BUSINESS O F TRANSPORTATION OF GOODS, THEREFORE, THE ASSESSEE IS ELIGIBLE FOR HIGH ER RATE OF DEPRECIATION. 5. ON THE CONTRARY, SHRI AVIJIT RAKSHIT, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE APEX COURT IN GU PTA GLOBAL EXIM P. LTD. (SUPRA), FOUND THAT USE OF LORRY IN TH E BUSINESS OF TRANSPORTATION IS THE TEST FOR ALLOWING HIGHER DEPR ECIATION. IN THE 4 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 CASE BEFORE US, ACCORDING TO THE LD. D.R., THE ASSE SSEE HAS NOT USED THE TRAILER / LORRY IN THE BUSINESS OF TRANSPO RTATION, THEREFORE, THE ASSESSING OFFICER BY APPLYING THE JUDGMENT OF A PEX COURT IN GUPTA GLOBAL EXIM P. LTD. (SUPRA) DISALLOWED THE CL AIM OF THE ASSESSEE WHICH WAS RIGHTLY CONFIRMED BY THE CIT(APP EALS). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE DEPRECIATION SCHEDULE. MOTOR LORRIES, TAXIES USED IN THE BUSINESS OF RUNNING ON HIRE IS E LIGIBLE FOR HIGHER RATE OF DEPRECIATION. THEREFORE, THE SUPREME COURT IN GUPTA GLOBAL EXIM P. LTD. (SUPRA), AFTER EXTRACTING THE DEPRECIA TION SCHEDULE, FOUND THAT HIGHER RATE OF DEPRECIATION IS ADMISSIBL E ON MOTOR TRUCKS USED IN THE BUSINESS OF RUNNING THEM ON HIRE. IN T HE CASE BEFORE APEX COURT, THE ABOVE TESTS WERE NOT EXAMINED, THER EFORE, THE APEX COURT REMITTED BACK THE MATTER TO THE FILE OF THE C IT(APPEALS) FOR DE NOVO EXAMINATION. IN THE CASE BEFORE US, THE ASSES SEE IS ADMITTEDLY ENGAGED IN MULTI MODEL TRANSPORTATION OF GOODS ON HIRE. THE CBDT IN CIRCULAR NO.609 DATED 29.07.1991, FOUND THAT HIGHER RATE OF DEPRECIATION IS ADMISSIBLE ON MOTOR LORRIES USED IN THE BUSINESS OF TRANSPORT OF GOODS ON HIRE. THIS WAS F URTHER CLARIFIED IN 5 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 CIRCULAR NO.652 DATED 14.06.1993. THE CIRCULAR IS REPORTED IN (1993) 202 ITR (STAT) 55. FOR THE PURPOSE OF CONVE NIENCE, WE ARE REPRODUCING THE CIRCULAR WHICH READS AS UNDER:- UNDER SUB-ITEM 2(II) OF ITEM NO.III OF APPENDIX I TO THE INCOME- TAX RULES, 1962, HIGHER RATE OF DEPRECIATION IS ADMISSI BLE ON MOTOR BUSES, MOTOR LORRIES AND MOTOR TAXIS USED IN A BUSIN ESS OF RUNNING THEM ON HIRE. A QUESTION HAS BEEN RAISED AS TO WHE THER, FOR DERIVING THE BENEFIT OF HIGHER DEPRECIATION, MOTOR LORRIES MUST BE HIRED OUT TO SOME OTHER PERSON OR WHETHER THE USER OF THE SAME IN THE ASSESSEES BUSINESS OF TRANSPORTATION OF GOODS ON HIRE WOULD SUFFICE. 2. IN BOARDS CIRCULAR NO.609, DATED 29 TH JULY, 1991, IT WAS CLARIFIED THAT WHERE A TOUR OPERATOR OR TRAVEL AGEN T USES MOTOR BUSES OR MOTOR TAXIS OWNED BY HIM IN PROVIDING TRANS PORTATION SERVICES TO TOURISTS, HIGHER RATE OF DEPRECIATION W OULD BE ALLOWED ON SUCH VEHICLES. IT IS FURTHER CLARIFIED THAT HIG HER DEPRECIATION WILL ALSO BE ADMISSIBLE ON MOTOR LORRIES USED IN TH E ASSESSEES BUSINESS OF TRANSPORTATION OF GOODS ON HIRE. THE H IGHER RATE OF DEPRECIATION, HOWEVER, WILL NOT APPLY IF THE MOTOR BUSES, MOTOR LORRIES, ETC., ARE USED IN SOME OTHER NON-HIRING BU SINESS OF THE ASSESSEE. 7. IN VIEW OF THE CLARIFICATION OF CBDT, WHEN THE M OTOR LORRIES OR TRUCKS ARE USED IN THE ASSESSEES BUSINESS OF TRANS PORTATION OF GOODS ON HIRE, THEN THE ASSESSEE IS ELIGIBLE FOR HI GHER RATE OF DEPRECIATION. IN THIS CASE, THE ASSESSEE IS ALREAD Y ENGAGED IN THE BUSINESS OF TRANSPORTING GOODS ON HIRE. WHEN THE A SSESSEE IS USING TRUCK / LORRY IN THE BUSINESS OF TRANSPORTATI ON OF GOODS ON HIRE, THEN IT IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION . 6 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF APEX COURT IN GUPTA GLOBAL EXIM P. LTD. (SUPRA). IN THE CASE BEFORE APEX COURT, EVEN THOUGH THE COMMISSIONER OF INCOME TAX ( APPEALS) ASSUMED THAT THE ASSESSEE HAS REPORTED TRANSPORTATI ON INCOME OF ` 12,50,639/- BY WAY OF RUNNING THE VEHICLE ON HIRE, IT WAS ONLY AN ASSUMPTION AND INFERENCE DRAWN BY THE COMMISSIONER OF INCOME TAX (APPEALS) ONLY ON THE FOOTING THAT THE ASSESSIN G OFFICER TREATED ` 12,59,639/- AS PART OF TOTAL BUSINESS INCOME. THE APEX COURT FOUND THAT THERE IS NO DETERMINATIVE FACTOR FOR DEC IDING WHETHER TRUCKS WERE USED IN THE TRANSPORT BUSINESS AS CLAIM ED BY THE ASSESSEE IN THE COURSE OF RUNNING THE BUSINESS. IN THE PRESENT CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TR ANSPORTATION OF GOODS ON HIRE. IT IS NOT IN DISPUTE THAT TRUCK OR L ORRY WAS USED IN THE BUSINESS OF TRANSPORTATION ON HIRE, HENCE THE ASSES SEE IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD THE ORDERS OF BOTH THE AUTHORITIES BELOW. A CCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION AT HIGHER RATE. 7 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 9. NOW COMING TO REVENUES APPEALS, THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT ' THE ACT'). 10. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATI VE AND THE LD. REPRESENTATIVE FOR THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE INVESTMENT WAS MADE BY THE ASSESSEE IN SUBSIDIARY C OMPANIES. THE CIT(APPEALS) BY FOLLOWING THE DECISION OF THIS BENCH OF THE TRIBUNAL IN EIH ASSOCIATED HOTELS LTD. AND SHRIRAM CAPITAL LTD. ALLOWED THE CLAIM OF THE ASSESSEE. SINCE ADMITTEDL Y THE INVESTMENT WAS MADE IN SUBSIDIARY COMPANIES AND IT IS A STRATE GIC INVESTMENT, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 11. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DEPR ECIATION ON PRINTERS. 12. SHRI AVIJIT RAKSHIT, THE LD. DEPARTMENTAL REPRE SENTATIVE, SUBMITTED THAT THE PRINTER IS AN INDEPENDENT MACHIN ERY. IT CAN BE USED WITHOUT LINKING WITH COMPUTER. PLACING RELIAN CE ON THE JUDGMENT OF MADRAS HIGH COURT IN DINAMALAR V. ITO ( 2016) 74 TAXMANN.COM 14, THE LD. D.R. SUBMITTED THAT PRINTER CANNOT FALL 8 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 UNDER THE DEFINITION OF COMPUTER, THEREFORE, IT I S NOT ENTITLED FOR HIGHER RATE OF DEPRECIATION. 13. WE HAVE HEARD THE LD. REPRESENTATIVE FOR THE AS SESSEE ALSO. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MULTIMOD EL TRANSPORTATION OF GOODS ON HIRE. THE ASSESSEE CLAI MS THAT PRINTER IS A PART OF COMPUTER, THEREFORE, ELIGIBLE FOR DEPRECI ATION AT THE RATE APPLICABLE FOR COMPUTERS. IN THE CASE BEFORE MADRA S HIGH COURT IN DINAMALAR (SUPRA), THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PRINTING AND PUBLICATION OF NEWSPAPER. THE ASSESSE E CLAIMED DEPRECIATION IN RESPECT OF SCANNER, COMPUTERIZED CO UNTING AND STACKING MACHINES, CTP MACHINE, MODEM, ETC. IT WAS EXPLAINED BEFORE THE HIGH COURT THAT THE CTP MEANS COMPUTER TO PRINTER. THE ASSESSEE EXPLAINED BEFORE THE HIGH COURT THAT C TP IS A LATEST MACHINE WHEREIN DRAFT OF THE LAYOUT OF THE NEWSPAPE R IS MADE ON THE COMPUTER WHICH IS THEN TRANSMITTED TO THE PRINT ING PRESS. THEREFORE, CTP IS THE MODE OF TRANSMITTING DATA TO THE PRINTING PRESS. IN THE CASE BEFORE US, THE ASSESSEE IS CLAI MING DEPRECIATION ON THE COMPUTER PRINTER. THE JUDGMENT OF MADRAS HI GH COURT IN DINAMALAR (SUPRA) WAS NOT BROUGHT TO THE NOTICE OF THE BOTH THE AUTHORITIES BELOW. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED 9 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHO RITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE OF DEPRECIATION ON COMPU TER PRINTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFRESH AFTER CO NSIDERING THE JUDGMENT OF MADRAS HIGH COURT IN DINAMALAR (SUPRA) AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW, AFTER GIVI NG A REASONABLE OPPORTUNITY TO THE ASSESSEE. 14. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED AND APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 27 TH SEPTEMBER, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 27 TH SEPTEMBER, 2017. KRI. 10 I.T.A. NOS.2981 & 2982/MDS/16 I.T.A. NOS.3041 & 3042/MDS/16 0 ,/78 98(/ /COPY TO: 1. './ /ASSESSEE 2. ASSESSING OFFICER 3. 2 :/ () /CIT(A)-1, CHENNAI-34 4. PRINCIPAL CIT, CHENNAI-1, CHENNAI 5. 8; ,/ /DR 6. <' = /GF.