The Asstt. Commr. of Income Tax, Gandhidham Circle, GANDHIDHAM V. M/s Ravji Manji Sorathia & Co., Adipur-Kutch

ITA 344/RJT/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6109 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 15-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “RAJKOT” BENCH, RAJKOT [Conducted through E-Court at Ahmedabad] BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR & SHRI WASEEM AHMED, ACCOUNTANT MEMEBR आयकर अपील सं./I.T.A. No. 344/Rjt/2016 ( Assess ment Ye ar : 2012-13) As sis ta nt C o mmi s s io ner o f In co me- tax Ga nd hid ha m Ci rc le , Ga nd hid ha m- Ku tc h ब म/ V s . M / s. Ra vj i M a nj i So rat hi a & Co . Pl ot No .4 60 /4 61 , N ear Va nd na Gr ou nd , Kh odi ya r To wer , W a rd -3 B, A dip ur - Ku tch यी ल सं./ ीआ आर सं./P A N / G IR N o . : A A H FR 1 8 4 6 C (अपील Appellant) . . ( य / Respondent) अपील र स /Appellant by : Shri S. S. Rathi, Sr. D.R. य क र स / Respondent by : Sh ri Me hu l Ra np ur a, A. R. स क र D a t e o f H e a r i n g 14/03/2022 !"# क र /D a t e o f P r o n o u n c e m e n t 24/03/2022 ORDER PER MAHAVIR PRASAD, JM: The captioned appeal has been filed at the instance of the Revenue against the order of the Co mmissioner of Inco me Tax (Appeals)-3, Rajkot (‘CIT( A) ’ in short), dated 06.06.2016 arising in the assess ment order dated 09.01.2015 passed by the ITA No. 344/Rjt/2016 [ACIT vs. M/s. Ravji Manji Sorathia & Co.] AY 2012-13 - 2 - Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY. 2012-13. 2. The Revenue ha s taken solitary ground that learned CIT( A) has erred on facts and law in defining the nature of business of the assessee as transporter and in holding that the assessee is entitled to higher rate of depreciation @ 30% on dumpers as against depreciation @15% allowed b y the AO. 3. The facts of the case are that it is seen fro m the Schedule- of Fixed Asset and Depreciation' to the Balance Sheet of Audit Report that the assessee has clai me d higher rate of depreciation on Du mper, Truck etc. @ 30% to the tune of Rs.5,58,37,567.78 instead of 15% of depreciation usually available. He nce AR of the assessee vide order sheet entr y dated 26-11-2014 was asked that 'why depreci ation @ 30% clai med on Du mper s, Trucks should not be allowed only on 15% as co mpan y not in business of running them o n hire.' The assessee vide its reply dated 15- 12-2014 has sub mitted their reasons and case law for ad missibility of higher rate of depreciation @ 30% on dumper , trucks etc. The s ubmission of the assessee is reproduced as under: J U S T I F I C A T I O N F O R C L A I M I N G D E P R E C I A T I O N @ 3 0 % O N T R U C K S / D U M P E R . 1 . I n o r d e r t o a p p r e c i a t e t h e c l a i m o f d e p r e c i a t i o n o n t r u c k s a n d d u m p e r s @ 3 0 % , t h e c l a u s e I I I ( 3 ) ( i i ) o f P a r t A o f a p p e n d i x I u n d e r r u l e 5 i s r e p r o d u c e d b e l o w : I I I . M a c h i n e r y a n d P l a n t . R a t e o f d e p r e c i a t i o n o n WD V ( 1 ) & ( 2 ) x x x x x x ( 3 ) ( i ) x x x ITA No. 344/Rjt/2016 [ACIT vs. M/s. Ravji Manji Sorathia & Co.] AY 2012-13 - 3 - ( i i ) M o t o r b u s e s , m o t o r L o r r i e s a n d m o t o r t a x i s u s e d i n t h e b u s i n e s s o f r u n n i n g t h e m o n h i r e . 3 0 % 2 . I n t h i s r e g a r d y o u r h o n o u r ' s k i n d a t t e n t i o n i s in v i t e d A s s e t s b l o c k o f 1 5 % d e p r e c i a b l e a s s e t s o f t h e d e p r e c i a t i o n s c h e d u l e b l o c k . I n t h i s b l o c k t h e v a r i o u s i s s e t s w er e p u t t o u s e . T h e s e a s s e t s i n c l u d e v a r i o u s v e h i c l e s / T r a c t o rs , e q u i p m e n t s l i k e J C B m a c h i n e s , C o n c r e t e M i x e r s , h y d ra u l i c j a c k s , L o a d e r s e t c . w h i c h a r e u s e d i n d i s c h a r g i n g th e c o n t r a c t u a l o b l i g a t i o n s . S i n c e t h e s e a s s e t s w e r e u se d f o r i t s o w n u s e y o u r a s s e s s e e c l a i m e d d e p r e c i a t i o n @ 1 5 % . F o r r e a d y r e f e r e n c e c o p y o f d e p r e c i a t i o n c h a r t i s a t t a ch e d h e r e w i t h . 3 . I n a d d i t i o n t o i t s o w n c o n t r a c t u a l w o r k y o u r a s se s s e e d u r i n g t h e y e a r u n d e r c o n s i d e r a t i o n a n d i n p r e c e d i n g y e a r h a d c a r r i e d o u t t h e t r a n s p o r t a t i o n w o r k f o r o t h e r s a n d f o r t h a t i t h a d p u r c h a s e d m a j o r i t y o f n e w t r u c k s / d u m p e r s . I n or d e r t o a p p r e c i a t e t h e j o b c a r r i e d o u t b y t h e f i r m s a m p l e co p y o f w o r k o r d e r f o r t r a n s p o r t a t i o n w o r k a n d s a m p l e c o p y o f b i l l s f o r t r a n s p o r t a t i o n h i r i n g r e c e i p t a n d s a m p l e c o p y of w o r k o r d e r f o r t h e s a m e a r e a t t a c h e d h e r e w i t h . 4 . T h e v e h i c l e s u s e d i n t r a n s p o r t a t i o n w o r k f o r o t he r s w e r e s e p a r a t e l y m e n t i o n e d i n A s s e t s B l o c k @ 3 0 % o f t h e d e p r e c i a t i o n , s c h e d u l e w h e r e d e p r e c i a t i o n @ 3 0 % w as c l a i m e d . 5 . I n t h i s r e g a r d y o u r h o n o u r ' s k i n d a t t e n t i o n i s in v i t e d t o t h e a u d i t o r ' s r e p o r t . I t m a y b e o b s e r v e d f r o m t h e t h a t a u d i t o r r i g h t y m e n t i o n i n F o r m N o . 3 C D a t p o i n t N o . 8 ( a ) , t h e n a t u r e o f b u s i n e s s o r p r o f e s s i o n i s " C i v i l C o n t r a c t & T r a n s p o r t a t i o n " . 6 . I t i s f u r t h e r s u b m i t t e d t h a t T r u c k a n d D u m p e r i s a t y p e o f g o o d s t r a n s p o r t a t i o n h e a v y v e h i c l e s p r o v i d e d w i t h a d d i t i o n a l e q u i p m e n t s s o a s t o e n a b l e i n u n l o a d i n g t h e c o n t e n t s m e c h a n i c a l l y . 7 . T h e t r u c k a n d d u m p e r s a r e r e g i s t e r e d a s a t r u c k w i t h M o t o r V e h i c l e A c t . T h e t e r m " D u m p e r " i s s p e c i f i c a l l y u s e d f o r t h e t y p e o f t r u c k w i t h i n t h e b u s i n e s s c o m m u n i t y b e c a u s e o f t h e f a c i l i t y w h i c h i s a v a i l a b l e w i t h t h e s e t y p e s o f t r uc k i . e . m e c h a n i c a l l y u n l o a d i n g t h e g o o d s . 8 . I n t h i s r e g a r d s , y o u r h o n o u r ' s k i n d a t t e n t i o n i s i n v i t e d t o C B D T ' s c i r c u l a r N o . 6 5 2 d a t e d 1 4 / 0 6 / 1 9 9 3 , S e c t i o n 32 , R u l e 5 , " U n d e r s u b - i t e m 2 ( i i ) o f I t e m - I I I o f A p p e n d i x - I t o t h e I . T . R u l e s , 1 9 6 2 , h i g h e r r a t e o f d e p r e c i a t i o n i s a dm i s s i b l e ITA No. 344/Rjt/2016 [ACIT vs. M/s. Ravji Manji Sorathia & Co.] AY 2012-13 - 4 - o n m o t o r b u s e s , m o t o r l o r r i e s a n d m o t o r t a x i s u s e d i n a b u s i n e s s o f r u n n i n g t h e m o n l i r e . A q u e s t i o n h a s b ee n r a i s e d a s t o w h e t h e r , f o r d e r i v i n g t h e b e n e f i t o f hi g h e r d e p r e c i a t i o n , m o t o r L o r r i e s m u s t b e h i r e d o u t t o s om e o t h e r p e r s o n o r w h e t h e r t h e u s e r o f t h e s a m e i n t h e a s s e s s e e ' s b u s i n e s s o f t r a n s p o r t a t i o n o f g o o d s o n hi r e w o u l d s u f f i c e. " C o p y o f C i r c u l a r i s a t t a c h e d a t p a g e n o . A - 1 3 5 f o r y o u r k i n d c o n s i d e r a t i o n . The learned AO did not agree with the contention of the assessee and held that assessee was not in business of running motor lorries on hire and therefore, clai m of depreciation is restricted to Rs.2,79,18,784/- as against the depreciation clai med b y the assessee at Rs.5,58,37,567.78 on dumper, truck etc. Therefore , e xcess depreciation claimed on dumper , truck etc. of Rs.2,79,18,784/- was added back to the total inco me of the assessee. 4. Thereafter , the assessee preferred first statutory a ppeal before the CIT( A) who partl y allowed the appeal of the assessee. 5. Now, Revenue ca me before us. 6. We have gone through the relevant record and impu gned order and heard both the parties. Undisputedly, assessee is in the business of civil contract and sub-contract of road work, over burden re moval and mining work. The learned AO hi mself has mentioned above the said in his assessment order. Undisputedly, assessee is in the business of transportation; loading, unloading of the mined/ excavated/ over-burdened waste rock from the mine to the separate de marcate d specific ITA No. 344/Rjt/2016 [ACIT vs. M/s. Ravji Manji Sorathia & Co.] AY 2012-13 - 5 - areas. In support of its contention, the assessee has filed the letter of intent fro m Bridge & Roof Co. India Ltd., wher ein nature of contract has been defined as ‘providing & supplying of potable water required and also submitted a letter fro m M/s. Mundra Port & special Economic Zone wherein contract was given to the assessee for transportation. Assessee has also submitted audit report to emphasize that For m No.3CD clearl y declared the nature of his business. Assessee has also filed ledger accounts for freight charges and transportation charges before the lower authorities. In similar facts and circumstances, Hon’ble Gu jarat High Court in case of PCIT vs. Durga Construction Co. [2018] 93 taxmann.com 436 (Gujarat) has granted relief to the assessee and dismissed the Revenue’s appeals by observing as under: “ 5 . T h e a s s e s s e e h a s b e e n a w a r d e d c o n t r a c t f o r p r o vi d i n g e q u i p m e n t s o n h i r e w i t h m a n p o w e r t o e x e c u t e t h e w o rk o f e x c a v a t i o n , l o a d i n g a n d r e m o v a l o f m i n e r a l s f r o m o ne p l a c e t o a n o t h e r . T h e e n t i r e o p e r a t i o n i s s c h e d u l e d a n d c o n tr o l l e d b y t h e p r i n c i p a l . T h e a s s e s s e e i s r e q u i r e d t o p r o v i d e s t i pu l a t e d e q u i p m e n t s a n d v e h i c l e s o n h i r e . T h e a s s e s s e e w o u l d n o t b e a l l o w e d t o r e m o v e a n y e q u i p m e n t s o r v e h i c l e s p r o v i de d u n d e r t h e c o n t r a c t w i t h o u t p r i o r p e r m i s s i o n o f t h e p r i n c i p a l . I h e b u s i n e s s o f t h e a s s e s s e e - f i r m i t s e l f w a s p r o v i d i n g e q u i p m e n t s an d m o t o r v e h i c l e s o n h i r e . 6 . C I T [ A] a c c e p t e d t h e a s s e s s e e ' s c o n t e n t i o n a n d r ev e r s e d t h e d e c i s i o n o f A s s e s s i n g O f f i c e r , r e l y i n g o i l t h e e a r li e r d e c i s i o n . T h e A p p e l l a t e C o m m i s s i o n e r h a s a l s o r e l i e d o n C B D T C i r cu l a r N o . 6 5 2 w h i c h p r o v i d e s t h a t u n d e r s u b - i t e m 2 [ i i] o f I t e m I II o f A p p e n d i x I t o t h e R u l e s , h i g h e r r a t e o f d e p r e c i a t i o n w o u l d b e a d m i s s i b l e o n m o t o r b u s e s , m o t o r l o r r i e s a n d m o t o r t a x i s u s e d i n t h e b u s i n e s s o f r u n n i n g t h e m o n h i r e . I t w a s c l a r i f i e d t h a t h i g h e r d e p r e c i a t i o n w i l l a l s o b e a d m i s s i b l e o n m o t o r l o r r i e s u s e d i n t h e a s se s s e e ' s b u s i n e s s o f t r a n s p o r t a t i o n o f g o o d s o n h i r e . 7 . T h e r e v e n u e c a r r i e d t h e m a t t e r i n a p p e a l b e f o r e t h e T r i b u n a l . T h e T r i b u n a l c o n f i r m e d t h e v i e w o f t h e C IT [ A] ta k i n g n o t e o f t h e s c o p e o f w o r k a w a r d e d t o t h e a s s e s s e e un d e r t h e t e n d e r ITA No. 344/Rjt/2016 [ACIT vs. M/s. Ravji Manji Sorathia & Co.] AY 2012-13 - 6 - t e r m s a s a l s o p l a c i n g r e l i a n c e o n t h e C B D T C i r c u l a r N o . 6 5 2 d a t e d 1 4 t h J u n e 1 9 9 3 . 8 . A g a i n s t s u c h j u d g m e n t , t h e R e v e n u e h a s f i l e d t h e p r e s e n t a p p e a l . 9 . F a c t s i n a l l o t h e r a p p e a l s a r e s u b s t a n t i a l l y s i mi l a r a n d a r e t h e r e f o r e n o t s e p a r a t e l y r e c o r d e d . 1 0 S e c t i o n 3 2 [ 1] o f t h e I n c o m e - t a x A c t , 1 9 6 1 [ " t h e A c t " f o r b r e v i t y] p r o v i d e s f o r d e p r e c i a t i o n i n r e s p e c t o f b ui l d i n g s , m a c h i n e r y , p l a n t o r f u r n i t u r e , b e i n g t a n g i b l e a s s e ts a s w e l l a s c e r t a i n i n t a n g i b l e a s s e t s o w n e d w h o l l y o r p a r t l y b y t h e a s s e s s e e a n d u s e d f o r t h e p u r p o s e o f t h e b u s i n e s s o r p r o f e s si o n , a t t h e p r e s c r i b e d r a t e s . N e w A p p e n d i x I , w h i c h i s a p p l i c a bl e f o r A Y 2 0 0 6 - 2 0 0 7 a n d o n w a r d s , i n P a r t - A c o n t e n d s s p e c i f i c r a t e o f d e p r e c i a t i o n f o r " t a n g i b l e a s s e t s " . C a p i t a l - I l l t h er e o f p e r t a i n s t o " m a c h i n e r y a n d p l a n t " . U n d e r s u b - i t e m [ 2] o f I t e m [3] (i i i ) , t h e r a t e o f d e p r e c i a t i o n o n " m o t o r b u s e s , m o t o r l o r r i e s a n d m o t o r t a x i s u s e d i n t h e b u s i n e s s o f r u n n i n g t h e m o n h i r e " i s p r e s c r i b e d @ 3 0 % . I t i s i n t h i s c o n t e x t w e h a v e t o t e s t t h e co r r e c t n e s s o f t h e v i e w t a k e n b y C I T [ A] a n d t h e T r i b u n a l . R e v e n u e ' s ma i n c o n t e n t i o n a p p e a r s t o b e t h a t t h e a s s e s s e e h a d n o t g i v e n t h e s a i d m a c h i n e r y o n h i r e s i n c e t h e a s s e s s e e w a s a w a r d e d t he c o n t r a c t f o r m i n i n g . H o w e v e r , w e h a v e n o t i c e d s o m e o f t h e l e a d i ng t e r m s o f t h e t e n d e r . T h e s e t e r m s i n t e r a l i a r e q u i r e d t h e a s s e s s ee t o p r o v i d e m a c h i n e r y f o r h i r e f o r e x c a v a t i o n o f o v e r b u r d e n ; t ra n s p o r t a t i o n o f s u c h e x c a v a t e d o v e r b u r d e n m i n e r a l s ; t r a n s p o r t a t i o n o f m i n e r a l s f r o m m i n e s t o p i t - h e a d , s t o c k p i l e s o r a t a n y o t h e r p l a c e , a n d t h e t r a n s p o r t a t i o n o f o v e r b u r d e n o f m i n e r a l s a n d e x c a v at e d m i n e r a l s t o b e d o n e b y r u n n i n g m o t o r v e h i c l e s s u c h a s t i p p e rs , d u m p e r s e t c . E s s e n t i a l l y , t h e r e f o r e , t h e a s s e s s e e w a s a w a r d e d c on t r a c t f o r p r o v i d i n g s u c h e q u i p m e n t s o n h i r e . I t w a s i n t h i s co n t e x t , t h e a s s e s s e e h a s h i g h l i g h t e d t h a t t h e a s s e s s e e h a s n o co n t r o l o v e r t h e e q u i p m e n t s s o h i r e d a n d i t w a s t h e p r i n c i p a l w h i c h w o u l d d e c i d e t o d e p l o y t h e e q u i p m e n t s a t t h e a p p r o p r i a t e p l a c e . 1 1 . F r o m t h e m a t e r i a l a v a i l a b l e o n r e c o r d t h o u g h t he a s s e s s e e e s s e n t i a l l y w a s a w a r d e d c o n t r a c t f o r p r o v i d i n g s p e ci a l i z e d e q u i p m e n t s a n d t r a i n e d m a n p o w e r f o r m i n i n g a n d t r a ns p o r t a t i o n o f e x c a v a t e d m i n e r a l s o n h i r e , t h e t e r m s o f t h e t e nd e r a n d t h e e v e n t u a l c o n t r a c t a w a r d e d w o u l d s u g g e s t t h a t t h e a ss e s s e e w a s g i v e n t h e w o r k o f m i n i n g . T h e a s s e s s e e w a s e s s e n t i al l y r e q u i r e d t o p r o v i d e e q u i p m e n t s a n d m a n p o w e r o n h i r e . I n v i e w o f s u c h d i s c u s s i o n , w e f i n d n o e r r o r i n t h e v i e w t a k e n b y th e T r i b u n a l . E v e n i f t h e a s s e s s e e h a d u s e d s u c h e q u i p m e n t s a n d ma n p o w e r f o r i t s d i r e c t m i n i n g o p e r a t i o n s f o r t h e c o n t r a c t , i f it w a s s o a w a r d e d , w e w o n d e r w h e t h e r t h a t w o u l d m a k e a n y d i f f e r e n c e p ar t i c u l a r l y i n v i e w o f C B D T C i r c u l a r s N o . 6 0 9 a n d 6 5 2 a n d t h e d e c is i o n o f t h e S u p r e m e C o u r t i n c a s e o f I . C . D . S . L t d . v . C I T [ 2 0 1 3] 3 5 0 1 T R ITA No. 344/Rjt/2016 [ACIT vs. M/s. Ravji Manji Sorathia & Co.] AY 2012-13 - 7 - 5 2 7 / 2 1 2 T a x m a n 5 5 0 / 2 9 t a x m a n n . c o m 1 2 9 . H o w e v e r , w h en t h i s i s s u e d o e s n o t a r i s e f o r d i r e c t c o n s i d e r a t i o n , w e ne e d n o t c o n c l u d e t h e s a m e . 1 2 . A l l i n a l l , w e s e e n o e r r o r i n t h e v i e w t a k e n by t h e T r i b u n a l . N o q u e s t i o n o f l a w a r i s e s . T a x A p p e a l s a r e d i s m i s s e d . ” In view of above, respectfull y f ollowing the Hon’ble Jurisdictional High Court’s judgme nt, we dismiss the appeal of the Revenue. 7. In the result, the captioned appeal filed by the Revenue is dismissed. Sd/- Sd/- (WASEEM AHMED) (MAHAVIR PRASAD) ACC OUNTANT MEMB ER JUDICIAL MEMBER Ahmedabad: Dated 24/03/2022 True Copy S.K.SINHA आदेश े / Copy of Order Forwarded to:- $. र / Revenue 2. आ दक / Assessee 3. सं(ं)* आयकर आय + / Concerned CIT 4. आयकर आय + - अपील / CIT (A) .. / 0 1ीय 2 2 )*3 आयकर अपील य अ)*कर#3 अ45द ( द / DR, ITAT, Ahmedabad 6. 1 78 9 ल / Guard file. By order/आद श स 3 D e p u t y / A s s t t . R e g i s t r a r I T A T , R a j k o t This Order pronounced in Open Court on 24/03/2022