S.B. Packagings, New Delhi V. ACIT, New Delhi

ITA 3693/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8600 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 16-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANSHU KHURANA
• Assessee Lawyers: ASHU TANDO N
• Keywords: Depreciation
• Section: 271(1)(c); 32; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI I.P. BANSAL AND SHRI R.C. SHARMA ITA NO.3693/D/08 ASSESSMENT YEAR : 2003-04 S.B. PACKAGINGS LTD., VS. A.C.I.T., III FLOOR VARDHMAN PLAZA CORNER, CIRCLE-7(1), INDER ENCLAVE, PASHIM VIHAR, NEW DELHI NEW DELHI PAN/GIR NO.AABCS3731Q ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI ASHU TANDON, CA RESPONDENT BY : SMT. ANSHU KHURANA, DR O R D E R PER R.C. SHARMA, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 12.09.2008 FOR THE ASSESSMENT YEAR 2003-04, I N THE MATTER OF IMPOSITION OF PENALTY OF RS.60,802/- U/S 271(1)(C) OF THE I.T. ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. 2.1 FACTS IN BRIEF ARE THAT ASSESSEE COMPANY IS ENG AGED IN THE BUSINESS OF MANUFACTURING OF FLEXIBLE PACKAGING MATERIAL. THE RETURN OF INCOME WAS FILED AT A LOSS OF RS.85,15,537/-. THE ASSESSMENT WAS COMPLETED AT A LOSS OF RS.80,88,113/-, THEREAFTER THE ASSESSMENT WAS RECTI FIED U/S 154 AND THE LOSS WAS INCREASED TO RS.83,50,057/- DISALLOWANCE OF PAR T OF DEPRECIATION CLAIMED ITA NO.3693/D/08 2 BY THE ASSESSEE ON HIGHER RATE. WITH RESPECT TO TH IS A PENALTY U/S 271(1)(C) WAS IMPOSED AMOUNTING TO RS.60,802/-. WE FOUND THA T THE ASSESSEE COMPANY OWNED SOME COMMERCIAL VEHICLES WHICH WERE U SED FOR TRANSPORTATION OF ITS OWN GOODS. THE COMPANY HAD C LAIMED DEPRECIATION AT THE RATE OF 40% WHICH WAS ALLOWED BY THE ASSESSING OFFICER AT 20% THEREBY MAKING AN ADDITION OF RS.1,65,450/- BY OBSERVING TH AT VEHICLES WERE NON COMMERCIAL. THE ASSESSING OFFICER ALSO IMPOSED PEN ALTY U/S 271(1)(C) AMOUNTING TO RS.60,802/- BY OBSERVING THAT THE ASSE SSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OB SERVING THAT VEHICLES WERE NOT USED IN THE HIRING BUSINESS, HENCE, DEPREC IATION AT HIGHER RATE OF 40% CANNOT BE ALLOWED. ACCORDINGLY IMPOSITION OF P ENALTY U/S 271(1)(C) WAS HELD TO BE JUSTIFIED. 2.2 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FO UND FROM THE RECORD THAT AS PER THE BILLS OF VEHICLES PURCHASED DURING THE YEAR THE SAME WERE REGISTERED WITH THE RTO AS COMMERCIAL VEHICLES UNDE R THE CATEGORY OF HEAVY MOTOR VEHICLES, MEDIUM GOODS VEHICLES ETC. THERE I S ALSO NO DISPUTE THAT THESE VEHICLES WERE EXCLUSIVELY USED FOR COMMERCIAL ACTIVITIES FOR TRANSPORTATION OF GOODS. AS PER PROVISIONS OF PART A, CLAUSE-III, SUB CLAUSE (3)(IV), (V) AND (VI) REGARDING RATE OF DEPRECIATIO N SCHEDULE AS GIVEN IN THE ITA NO.3693/D/08 3 INCOME-TAX ACT, 1961, THE RATE OF DEPRECIATION ON T HE COMMERCIAL VEHICLES USED FOR THE PURPOSE OF BUSINESS OR PROFESSION IN A CCORDANCE WITH THE 3 RD PROVISO OF THE CLAUSE (II) OF SUB SECTION (1) OF TH E SECTION 32 IS 40% AND 60%. AS PER NOTE 6 OF THE ABOVE SAID DEPRECIATION SCHEDULE COMMERCIAL VEHICLES MEANS HEAVY MOTOR VEHICLES, HEAVY PASSE NGER MOTOR VEHICLES, LIGHT MOTOR VEHICLE, MEDIUM GOODS VEHICLE AND MEDIUM PASSENGER VEHICLE, BUT DOES NOT INCLUDE MAXICAB, MOTOR-CAB , TRACTOR AND ROAD- ROLLER. THESE EXPRESSIONS HAVE SAME MEANING AS AS SIGN TO THEM IN SECTION 2 OF THE MOTOR VEHICLE ACT, 1988. IN VIEW OF THE FAC T THAT VEHICLES WERE USED BY THE ASSESSEE COMPANY EXCLUSIVELY FOR COMMERCIAL ACTIVITIES FOR TRANSPORTATION OF GOODS ETC., IT CLAIMED DEPRECIATI ON AT 40%. SO FAR AS VEHICLES WERE COMMERCIALS, THE ASSESSEE HAS FURNISH ED BONAFIDE EXPLANATION BEFORE THE LOWER AUTHORITIES FOR CLAIMING HIGH RATE OF DEPRECIATION, WHEN THESE VEHICLES WERE UNDISPUTEDLY USED FOR COMMERCIA L ACTIVITIES OF TRANSPORTATION OF GOODS. THE JUSTIFICATION GIVEN F OR CLAIM OF DEPRECIATION AT A HIGHER VALUE WAS BONAFIDE. UNDER EXPLANATION TO SECTION 271(1)(C) WHEREIN RESPECT OF ANY FACTS MATERIAL TO THE COMPUT ATION OF TOTAL INCOME OF ANY PERSON, AND SUCH PERSON FAILS TO OFFER ANY EXPL ANATION OR OFFER AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR CIT TO BE FALLS OR WHERE SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE ITA NO.3693/D/08 4 AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFID E AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DIS ALLOWED IN COMPUTING TOTAL INCOME OF SUCH PERSON, SHALL BE DEEMED TO REP RESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN THE INSTANT CASE UNDISPUTEDLY THE ASSESSEE HAS OFFERED AN EXPLANATIO N WHICH IS NOT FALLS. BY SHOWING THAT VEHICLES WERE REGISTERED WITH THE RTO AS COMMERCIAL VEHICLES, THE ASSESSEE HAS BEEN ABLE TO SUBSTANTIATE HIS BONA FIDE EXPLANATION FOR CLAIMING OF DEPRECIATION AT A HIGHER RATE OF 40%. NEITHER THERE IS ANY FURNISHING OF INACCURATE PARTICULARS OF INCOME NOR CONCEALMENT OF INCOME. ACCORDINGLY, WE DO NOT FIND ANY MERIT FOR LEVY OF P ENALTY FOR SUCH REDUCTION IN CLAIM OF DEPRECIATION FROM 40% TO 20% ON THE COM MERCIAL VEHICLES. 3. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 4. ORDER PRONOUNCED IN THE OPEN COURT ON 24 -07-20 09. SD/- SD/- ( I.P. BANSAL ) ( R.C. SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :24/07/09 NS : ITA NO.3693/D/08 5 COPY FORWARDED TO : - 1. S.B. PACKAGING LIMITED, III FLOOR, VARDHMAN PLAZ A CORNER, INDER ENCLAVE, PASCHIM VIHAR, NEW DELHI. 2. THE A.C.I.T., CIRCLE 7(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY DY. REGISTRAR, ITA NO.3693/D/08 6