DCIT CIR 3(1)(1), MUMBAI V. ALD AUTOMOTIVE P.LTD, MUMBAI

ITA 3173/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2550 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 32

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3173/MUM/2015 ASSESSMENT YEAR: 2009-10 DCIT, CIRCLE 3(1)(1) ROOM NO. 607, 6 TH FLOOR AAYAKAR BHAVAN MUMBAI 400020 / VS. M/S. ALD AUTOMOTIVE P. LTD. 13 TH FLOOR, MAKER CHAMBER-IV NARIMAN POINT MUMBAI 400021 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO. AAFCA0924K / REVENUE BY SHRI KAILASH KANOJIYA !'# $ / ASSESSEE BY NONE % & $ ' / DATE OF HEARING : 18/07/2016 & $ ' / DATE OF ORDER: 20/07/2016 ITA NO. 3173/MUM/2015 M/S. ALD AUTOMOTIVE P. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 27/02/2015 OF LD. COMMISSIONER OF INCOME TAX, MUMBAI ALLOWING DEPRECIATION TO THE ASSESSEE ON VEH ICLES GIVEN ON LEASE WHEN THE VEHICLES WERE NOT REGISTERE D IN THE NAME OF THE ASSESSEE AND WERE DIRECTLY DELIVERED TO THE PARTIES USING SUCH VEHICLES. 2. DURING HEARING OF THIS APPEAL THE LEARNED D.R., SHRI KAILASH KANOJIYA, ADVANCED ARGUMENTS WHICH ARE IDEN TICAL TO THE GROUNDS RAISED, DEFENDING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. NONE WAS PRESENT FOR THE ASSESSEE IN SPITE OF ISSUANCE OF REGISTERED AD NOTICE. THE A SSESSEE NEITHER PRESENTED ITSELF NOR MOVED ANY ADJOURNMENT PETITION. IT SEEMS THAT THE ASSESSEE IS NOT INTERESTED TO PUR SUE ITS APPEAL, THEREFORE, WE HAVE NO OPTION BUT TO PROCEED EX-PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2.1 WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D .R. AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE F ACTS IN BRIEF ARE THAT THE ASSESSEE CLAIMED TO HAVE GIVEN V EHICLES ON OPERATING LEASE BASIS ON WHICH DEPRECIATION WAS CLA IMED ON THE LEASED VEHICLES. THE VEHICLES WERE REGISTERED I N THE NAME OF THE PARTIES WHO ARE USING THEM AND NOT IN THE NA ME OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER RAISED A QU ERY TO THE ASSESSEE WITH RESPECT TO ITS CLAIM. THE LEARNED ASS ESSING OFFICER DISALLOWED THE CLAIM OF DEPRECIATION. THE C LAIM OF THE ASSESSEE BEFORE THE LEARNED CIT(A) IS AS UNDER: - ITA NO. 3173/MUM/2015 M/S. ALD AUTOMOTIVE P. LTD. 3 IT WAS SUBMITTED THAT THE MAINTENANCE SERVICE CHAR GES ARE ESTIMATED AT THE BEGINNING OF THE LEASING CONTRACT FOR THE ENTIRE CONTRACT PERIOD AND THE SAME IS RECOVERED IN EQUAL INSTALMENTS OVER THE PERIOD OF THE LEASING CONTRACT FROM THE CU STOMERS ARE DEFERRED. IT IS AN ADVANCE MONEY RECEIVED AGAINST F UTURE OBLIGATIONS. MAINTENANCE CHARGE (WHICH INCLUDES ALS O THE PROFIT MARGIN ON MAINTENANCE COST) IS RECOGNIZED IN LINE W ITH THE NORMAL MAINTENANCE COST INCURRED OVER THE TENURE OF THE CONTRACT ON A SUITABLE BASIS AS PER AS-9. THE ACHIEVE THE MA TCHING COST AND REVENUE, STATISTICAL FORMULAE IS USED TO DETERM INE THE PROPORTIONATE REVENUE TO BE RECOGNIZED IN A FINANCI AL PERIOD AND THEN A DIFFERENCE OF THIS WITH REVENUE ACTUALLY BIL LED IN THE YEAR IS FOUND OUT. THIS DIFFERENCE AMOUNT REPRESENTS THE MAINTENANCE INCOME AGAINST WHICH COSTS WILL BE INCURRED IN FUTU RE. HENCE, SUCH AMOUNT IS NOT CONSIDERED AS INCOME OF THE YEAR /PERIOD. THIS IS IN ACCORDANCE WITH AS-9. RELIANCE WAS PLACE D BY HIM ON THE DECISION IN THE CASE OF ASST. CIT VS. MAHINDRA HOLIDAY RESORTS (INDIA) LTD. (2010) 5 TAXMANN.COM 55, CIT V S. WOODWARD GOVERNOR INDIA LTD. (2010) 195 TAXMAN 328 (DEL), D. E. SASOON AND COMPANY LTD. VS CIT, 261 ITR 27 (SC), CALCUTTA COMPANY LTD. VS CIT, 37 ITR 1 (SC), BHARAT EARTH MOVIERS LT D. VS CIT, 245 ITR 428 (SC), CIT VS BHEL, 239 ITR 756, CIT VS BANK OF INDIA, 218 ITR 371 AND CIT VS IBM, 161 ITR 673 (BOM). 2.2 WE FIND THAT, AS OBSERVED BY THE LEARNED CIT(A) , THAT THE ISSUE IS COVERED BY THE DECISION FROM HON'BLE APEX COURT IN ICDS LTD. VS. CIT (2013) 350 ITR 527 WHEREIN IT HAS BEEN HELD THAT SECTION 2(3) OF THE MOTOR VEHICLE ACT IS A DEEMING PROVISION THAT CREATES A LEGAL FICTION OF OWNERSHIP IN FAVOUR OF LESSEE ONLY FOR THE PURPOSE OF THE MOTOR VEHICLE AC T. IT HAS BEEN HELD THERE IN THAT THE LESSOR, THE ASSESSEE WA S THE OWNER OF THE VEHICLES. AS THE OWNER, IT USED THE ASSETS I N THE COURSE OF ITS BUSINESS, SATISFYING BOTH REQUIREMENTS OF SE CTION 32 OF THE ACT AND HENCE WAS ENTITLED TO CLAIM OF DEPRECIA TION IN RESPECT OF ADDITION MADE TO THE TRUCKS, WHICH WERE LEASED OUT. HOWEVER, WE ARE MAKING IT CLEAR THAT THE LEARN ED ASSESSING OFFICER IS TO SATISFY HIMSELF WHETHER THE PARTIES WHO ARE USING THE VEHICLES MAY NOT GET THE BENEFIT OF D EPRECIATION AND IF IT IS FOUND THAT THE DEPRECIATION IS CLAIMED BY THE ITA NO. 3173/MUM/2015 M/S. ALD AUTOMOTIVE P. LTD. 4 ASSESSEE AS WELL AS THE PARTIES WHO ARE USING THE V EHICLES, IN THAT CASE THE LEARNED ASSESSING OFFICER IS FREE TO TAKE A DECISION IN ACCORDANCE WITH LAW. WITH THESE REMARKS THE STAND TAKEN BY THE LEARNED CIT(A) IS AFFIRMED. FINALLY THE APPEAL OF THE REVENUE IS HAVING NO MER ITS, THEREFORE, DISPOSED OF IN TERMS INDICATED HEREIN AB OVE. CONSEQUENTLY THE APPEAL OF THE REVENUE IS DISMISSED . THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 18/07/2016. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % MUMBAI; ) DATED : 20/07/2016 AA P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 2$ ( +, ) / THE CIT-3, MUMBAI. 4. 1 1 2$ / CIT(A)-8, MUMBAI 5. 45 /$ ! , 1 +,' +! 6 , % / DR, ITAT, MUMBAI 6. 7' 8% / GUARD FILE. / BY ORDER, 04,$ /$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI