Dy. Commissioner of Income Tax, Lucknow V. M/s Lucknow Kanpur Goods Carriers Pvt. Ltd, Lucknow

ITA 319/LKW/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92252 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI VERMA SINGH
• Assessee Lawyers: K R RASTOGI F
• Keywords: Depreciation
• Section: 40A(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.319/LKW/2015 ASSESSMENT YEAR:2010 2011 DCIT, RANGE 4, LUCKNOW VS M/S LUCKNOW KANPUR GOODS CARRIERS, 19, GURUDWARA ROAD, BANSMANDI, CHARBAGH, LUCKNOW PAN:AAAFL2754J (APPELLANT) (RESPONDENT) C.O.NO.24/LKW/2015 (IN ITA NO.319/LKW/2015) ASSESSMENT YEAR:2010 - 2011 DCIT, RANGE 4, LUCKNOW VS M/S LUCKNOW KANPUR GOODS CARRIERS, 19, GURUDWARA ROAD, BANSMANDI, CHARBAGH, LUCKNOW PAN:AAAFL2754J (RESPONDENT) (OBJECTOR) REVENUE BY SMT. NIDHI VERMA SINGH, SR. DR ASSESSEE BY SHRI K. R. RASTOGI, F.C.A. DATE OF HEARING 07/07/2015 DATE OF PRONOUNCEMENT 3 1 /07/2015 O R D E R PER A. K. GARODIA, A.M. THIS APPEAL IS FILED BY THE REVENUE AND THE C.O. IS FILED BY THE ASSESSEE AND THESE ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT (A) II LUCKNOW DATED 24.12.2014 FOR A.Y. 2010 2011. 2 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: - 1. THE COMMISSIONER OF INCOME - TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS OF THE CASE BY APPLYING THE NET PROFIT RATE OF 7.5% ON THE GROSS RECEIPTS THEREBY ALLOWING THE RELIEF OF RS.25,00,921/ - OUT OF THE ADDITIONS M ADE ON ACCOUNT OF DISALLOWANCE OF LORRY HIRE CHARGES, SALARY TO DRIVERS, ADMINISTRATIVE EXPENSES AND LORRY FUEL RUNNING AND MAINTENANCE EXPENSES, WI THOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT PRODUCE COMPLETE BILL AND VOUCHERS IN SUPPORT OF THE CLAIM SO MADE. 2. THE COMMISSIONER OF INCOME - TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.26,15,03 6/ - MADE U/S 68 ON ACCOUNT OF UNEXPLAINED EXPENSES. 3. THE COMMISSIONER OF INCOME - TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 28,26,600/ - MADE ON ACCOUNT OF PAYMENT ABOVE RS.20,000/ - WHICH WAS IN CONTRAVENTION OF PROVISIONS CONTAINED IN SECTION 40A(3) OF THE INCOME - TAX A CT. 4. THE COMMISSIONER OF INCOME - TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,68, 000/ - MADE ON ACCOUNT OF DIFFERENCE BETWEEN THE EXPENSES OF SALARY CLAIMED AND ACTUAL PAYMENT MADE. 5. THE COMMISSIONER OF INCOME - TAX (AP PEAL) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.35,068/ - MADE ON ACCOUNT OF TELEPHONE EXPENSES FOR PERSONAL USE. 6. THE COMMISSIONER OF INCOME - TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION O F RS.43,826/ - MADE ON ACCOUNT OF CAR RUNNING & MAINTENANCE EXPENSES FOR PERSONAL USE. 3. GROUNDS AS PER THE C.O. OF THE ASSESSEE ARE AS UNDER: - 1. THAT THE NET PROFIT RATE OF 7.5% CONSIDERED BY LEARNED CIT(A) IS EXCESSIVE AND A LESSER PERCENTAGE SHOULD BE APPLIED. 3 2. THAT DEDUCTION FOR DEPRECIATION SHOULD ALSO BE ALLOWED FROM THE ESTIMATED PROFIT. 3. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN ADDING RS.1,68,000/ - BEING RENT PAYMENT WITHOUT TDS INSPITE OF THE FACT, THERE IS NO REQUIREMENT TO DEDUCT TDS. FURTHER, NO ADDITION SHOULD BE MADE FOR THIS AS NET PROFIT RATE IS APPLIED. 4. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A) WITH REGARD TO RELIEF ALLOWED BY HIM. IN RESPECT OF THE ISSUES RAISED IN THE C.O., HE REITERATED THE CONTENTIONS RAISED BEFORE CIT (A). HE ALSO SUBMITTED THAT IN THE CASE OF THE GROUP CONCERN M/S LUCKNOW KANPUR GOODS CARRIERS PVT. LTD. ALSO FOR THE SAME ASSESSMENT YEAR, SIMILAR DISALLOWANCES WERE MADE BY THE A.O. AND LEARNED CIT (A) IN THAT CASE ALSO, DELETED THOSE DISALLOWANCES AND APPLIED N.P. RATE OF 7.5% AS IN THE PRESENT CASE AND AGAINST THAT ORDER OF CIT (A), THE APPEAL OF THE REVENUE AND C.O. OF THE ASSESSEE WERE HEARD BY THIS BENCH ON 17.06.2015 A ND THE TRIBUNAL ORDER IS AWAITED. HE SUBMITTED THAT SINCE THE FACTS AND THE DISPUTE ARE SAME, THE DECISION OF THE TRIBUNAL IN THAT CASE MAY BE FOLLOWED IN THE PRESENT CASE ALSO. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE FACTS OF THE CASE AND THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT IN THE CASE OF M/S LUCKNOW KANPUR GOODS CARRIERS PVT. LTD., THE TRIBUNAL ORDER IN ITA NO. 295/LKW/2015 AND C.O. NO. 23/LKW/2015 WAS PRONOUNCED ON 15.07.2015 AND IN THAT CASE, THE APPEAL OF THE REVENUE AND THE C.O. OF THE ASSESSEE WERE DISMISSED. IN THAT CASE ALSO, DISALLOWANCES WERE MADE OUT OF LORRY HIRE CHARGES, SALARY TO DRIVERS, ADMINISTRATIVE EXPENSES AND LORRY FUEL RUNNING AND MAINTENANCE EXPENSES AS IN THE PRESENT CASE. IN THAT CASE 4 ALSO, LEARNED CIT (A ) APPLIED N.P. RATE OF 7.5% AND THE SAME WAS APPROVED BY THE TRIBUNAL. SINCE, LEARNED CIT (A) COULD NOT POINT OUT ANY DIFFERENCE IN FACTS, WE APPROVE THE ORDER OF CIT (A) IN THE PRESENT CASE ALSO ON THE ISSUES RAISED IN REVENUES APPEAL AND GROUND NO. 1 OF THE ASSESSEES C.O. 6. REGARDING THE GROUND NO. 2 IN THE C.O. FILED BY THE ASSESSEE, IT WAS CLAIMED THAT EVEN IF NET PROFIT ESTIMATION @ 7.5% IS CONFIRMED, DEDUCTION OF DEPRECIATION SHOULD BE ALLOWED FROM SUCH 7.5% NET PROFIT. IT WAS SUBMITTED THAT AS P ER BOARD CIRCULAR NO. 29 DATED 31.08.1965, EVEN IF PROFIT IS ESTIMATED, DEDUCTION OF DEPRECIATION SHOULD BE ALLOWED IF PRESCRIBED PARTICULARS HAD BEEN FURNISHED. RELIANCE WAS PLACED ON THE FOLLOWING TWO JUDICIAL PRONOUNCEMENTS: - A) CIT VS. EARTH TECH ENGIN EERS, 224 TAXMAN 358 (PUNJAB & HARYANA) B) LALI CONSTRUCTION CO. VS. ACIT, 229 TAXMAN 286. 7. LEARNED DR SUPPORTED THE ORDER OF CIT (A) AND HE SUBMITTED THAT 7.5% RATE APPLIED BY CIT (A) IS AFTER ALLOWING ALL EXPENSES INCLUDING DEPRECIATION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CONSIDERING THIS BOARD CIRCULAR AND TWO JUDGMENTS CITED BY THE LEARNED AR OF THE ASSESSEE, WE FIND FORCE IN THE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE. THIS IS NOT STATED BY CIT (A) THAT 7.5% NP RATE IS A FTER CONSIDERING ALLOWABILITY OF DEPRECIATION. MOREOVER, N.P. RATE CANNOT TAKE INTO ACCOUNT DEPRECIATION BECAUSE THE CLAIM OF DEPRECIATION KEEP ON VARYING YEAR AFTER YEAR AS WDV GOES DOWN BUT OTHER FACTORS CONTRIBUTING TO NP ARE CONSTANT. WE, THEREFORE, RE STORE THIS MATTER TO A.O. TO ALLOW DEPRECIATION IF IT IS OTHERWISE ALLOWABLE AS PER LAW IN LINE WITH TWO JUDGMENTS CITED BY THE LEARNED AR AS NOTED ABOVE. GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. 5 9 . REGARDING THE GROUND NO. 3 IN THE C.O. FILED BY THE ASSESSEE IN RESPECT OF DISALLOWANCE OF RS. 168,000/ - BEING RENT PAYMENT WITHOUT TDS ALSO, WE FIND THAT A CATEGORICAL FINDING IS GIVEN BY CIT (A) THAT NO EVIDENCE WAS PRODUCED BEFORE HIM TO PROVE THAT ACTUAL RENT OUTFLOW WAS BELOW RS. 120,000/ - . BEFORE US, THIS FINDING OF CIT (A) COULD NOT BE CONTROVERTED BY THE AR OF THE ASSESSEE BY BRINGING SOME COGENT EVIDENCE ON RECORD AND HENCE, ON THIS ISSUE ALSO, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT (A). THIS GROUND IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND CO OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KU MAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 /07/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR