Sh. Shailesh Jain, Gwalior V. I.T.O.3(2), Gwalior

ITA 379/AGR/2013

• Counselvise Citation: 37920314 RSA 2013
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANURADHA
• Assessee Lawyers: V BAPNA
• Keywords: Depreciation; Opportunity of being heard; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 379/AGRA/2013 ASST. YEAR : 2008-09 SHRI SHAILESH JAIN, VS. INCOME-TAX OFFICER, SADAR BAZAR, MORAR, GWALIOR. 3(2), GWALIOR. (PAN : ADYPJ 8891 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V. BAPNA, C.A. RESPONDENT BY` : SMT. ANURADHA, JR. DR DATE OF HEARING : 01.04.2014 DATE OF PRONOUNCEMENT : 04.04.2014 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) GWALIOR DATED 11.10.2013 FOR THE ASSESSMENT YEAR 20 08-09. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. ON GROUND NO. 1, THE ASSESSEE CHALLENGED THE CON FIRMATION OF ADDITION OF RS.42,741/-, BEING DISALLOWANCE OF DEPRECIATION. TH E AO NOTED THAT THE ASSESSEE FIRM CLAIMED DEPRECIATION OF RS.2,13,705/- FOR VEHI CLES DURING THE YEAR. THE ASSESSEE WAS ASKED TO PRODUCE LOGBOOK ALONG WITH DI ESEL EXPENSES, WHICH WERE NOT ITA NO.379/AGRA/2013 2 PRODUCED. IT WAS, THEREFORE, OBSERVED THAT IN THE A BSENCE OF RECORD, IT IS IMPOSSIBLE TO ASCERTAIN BUSINESS USE / PERSONAL USE. 20% OF TH E DEPRECIATION IN A SUM OF RS.42,741/- WAS DISALLOWED. THE ASSESSEE FILED THRE E HIRE AGREEMENTS OF TAXIS AND ONE AGREEMENT OF TAXI TAKEN ON HIRE WITH THE AO, WH ICH WERE NOT CONSIDERED. SINCE THE TAXIS WERE GIVEN ON HIRE, THEREFORE, THERE IS N O QUESTION OF MAINTAINING LOGBOOK AND VOUCHERS FOR EXPENSES. AS PER HIRE AGREEMENTS, ALL SUCH EXPENSES WERE TO BE BORN BY THE HIRER. THE LD. CIT(A), CONSIDERING THAT NO LOGBOOK IS PRODUCED, CONFIRMED THE ADDITION. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE LD. CI T(A).WHEN THE ASSESSEE HAS GIVEN VEHICLES ON HIRE THROUGH HIRE AGREEMENT, THERE IS N O QUESTION OF MAINTENANCE OF ANY LOGBOOK OR VOUCHERS FOR EXPENSES AS IS NOTED BY THE AUTHORITIES BELOW. THE DETAILS HAVE TO BE VERIFIED FROM THE HIRE AGREEMENTS BEFORE ARRIVING AT THE JUST DECISION IN THE MATTER. THE LD. CIT(A) FAILED TO CONSIDER THE S AME AND ALSO FAILED TO PASS ANY REASONED ORDER. WE, ACCORDINGLY, SET ASIDE THE ORDE R OF THE LD. CIT(A) AND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION TO RE-DEC IDE THIS ISSUE BY PASSING SPEAKING ORDER AND GIVING FINDING ON THE HIRE AGREEMENTS. TH E LD. CIT(A) SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS, THEREFORE, ALLOWED F OR STATISTICAL PURPOSES. ITA NO.379/AGRA/2013 3 5. ON GROUND NO. 2, THE ASSESSEE CHALLENGED THE ADD ITION OF RS.51,875/- ON ACCOUNT OF DISALLOWANCE OF INTEREST. THE ASSESSEE C LAIMED INTEREST AS REVENUE EXPENDITURE AGAINST VEHICLE RECEIPTS. THE AO NOTED THAT NO EVIDENCE OF INTEREST PAYMENT WAS FURNISHED. FURTHER, IT WAS ALSO OBSERVE D THAT IT IS DOUBTFUL THAT WHETHER SUCH VEHICLES SO GIVEN ON HIRE WERE EVER RU N. THE AGREEMENT SO PREPARED DOES NOT REFLECT ACTUAL POSITION OF RENT RECEIVED A S WELL AS RENT PAYMENT. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT INTER EST DISALLOWED WAS PAID TO SBI AGAINST LOANS TAKEN ON ALTO AND HONDA CARS. THE SAM E IS APPEARING IN THE BALANCE SHEET. SINCE THE ASSESSEE IS USING THESE TAXIS FOR HIRE, THEREFORE, INTEREST WAS ALLOWABLE DEDUCTION. THE LD. CIT(A) WITHOUT GIVING ANY REASONS FOR DECISION, CONFIRMED THE ADDITION, HOLDING THAT NO EVIDENCE HA S BEEN FILED. IT, THEREFORE, APPEARS THAT THIS ISSUE ALSO REQUIRES RE-CONSIDERAT ION AT THE LEVEL OF LD. CIT(A). THE ASSESSEE IS USING TAXIS FOR HIRING AND CLAIMED INTE REST PAID TO THE BANK FOR LOAN TAKEN AGAINST PURCHASE OF VEHICLE GIVEN ON HIRE. TH EREFORE, THESE FACTS SHOULD HAVE BEEN VERIFIED FROM THE RECORD AND THE HIRING AGREEM ENTS ETC. THE LD. CIT(A) DID NOT PASS ANY SPEAKING ORDER ON THIS ISSUE AND NO REASON S HAVE BEEN GIVEN FOR CONFIRMING THE ADDITION. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THIS ISSUE ALSO TO HIS FILE WITH DIRECTION TO RE-DECIDE THIS ISSUE BY VERIFYING THE FACT AND BY GIVING REASONS FOR DECISION IN THE APPELLATE ORDER. OPPORTUNITY OF BEING HEARD SHALL BE GIVEN TO THE ASSESSEE. GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.379/AGRA/2013 4 6. ON GROUND NO. 3, THE ASSESSEE CHALLENGED THE ORD ER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RENT PAID FOR VEHICL E. THE AO NOTED THAT THE ASSESSEE MADE CLAIM OF PAYMENT OF RS.1,08,000/- BEI NG VEHICLE RENT PAID FOR MAHINDRA SCORPIO NO. L4 CR 7913 TO MR. VISHNU JAIN, FATHER OF THE ASSESSEE. ALTHOUGH, THE ASSESSEE HAS SHOWN SUCH RENT PAYMENT IN THE LIGHT OF SHAM AGREEMENT DATED 01.04.2007, BUT THE SAME WAS NOT AL LOWED ON THE REASONS THAT THOUGH THE ASSESSEE PAID RENT BUT NO SINGLE PENNY H AS BEEN DEBITED AGAINST FUEL EXPENSES. NO SALARY WAS PAID TO THE DRIVER AND NO P AYMENT DETAILS HAVE BEEN FILED. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT T HE ASSESSEE DECLARED RENTAL INCOME FROM TAXIS IN A SUM OF RS.1,20,000/- FOR THI S TAXI AND HAD TAKEN ON HIRE FOR RS.1,08,000/-. THE AO DID NOT REALIZE THE FACT THAT THE ASSESSEE HAS HANDED OVER THE KEYS OF THESE TAXIS TO THE HIRERS AND ALL THE EXPEN SES ARE BORN BY THE HIRERS. SINCE THE RENTAL INCOME IS ACCEPTED, THEREFORE, THE RENT PAID SHOULD NOT HAVE BEEN DISALLOWED. SIMILARLY, THE LD. CIT(A) WITHOUT GIVIN G ANY REASONS FOR DECISION REJECTED THE CLAIM OF ASSESSEE. THE AO ALSO WITHOUT ANY REASONS SHOULD NOT HAVE MENTIONED THE AGREEMENT TO BE SHAM. WHEN VEHICLES H AVE BEEN GIVEN ON HIRE, THERE IS NO QUESTION OF MAINTAINING THE RECORDS AS WAS CL AIMED BY THE AO. THE LD. CIT(A), THEREFORE, SHOULD HAVE VERIFIED ALL THE TRA NSACTIONS IN DETAIL AND THE AGREEMENTS IN QUESTION AND SHOULD HAVE PASS THE REA SONED ORDER ON THE SAME. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THIS ISSUE ALSO TO HIS ITA NO.379/AGRA/2013 5 FILE WITH DIRECTION TO RE-DECIDE THIS ISSUE BY VERI FYING ALL THE FACTS AND BY GIVING REASONS FOR DECISION IN THE APPELLATE ORDER. OPPORT UNITY OF BEING HEARD SHALL BE GIVEN TO THE ASSESSEE. GROUND NO. 3 IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 7. ON GROUND NO. 4, THE ASSESSEE CHALLENGED THE ADD ITION OF RS.1,50,000/-. THE AO NOTED THAT THE ASSESSEE HAS RECEIVED RS.1,50,000 /- BEING SAHMATIKARTA NO. 2 IN RESPECT OF ONE PROPERTY DEAL BETWEEN RAJ KUMAR SAMA DHIYA AND OTHERS AND SMT. PRITI PAWAIYA AND OTHERS (SELLER AND PURCHASER) PLO T NO. 28/2505 SIZE OF 2850 SQ. FEET. THE SELLERS PAID ENTIRE AMOUNT OF RS.24 LACS DURING THE YEAR AND AS SUCH, RS.1,50,000/- WERE RECEIVED BY THE ASSESSEE IN THE YEAR UNDER APPEAL, BUT HAS NOT OFFERED FOR TAXATION. THE ADDITION OF RS.1,50,000/- WAS ACCORDINGLY MADE. THE ASSESSEE CLAIMED BEFORE THE LD. CIT(A) THAT THE ADD ITION OF RS.1,50,000/- RELATES TO ASSESSMENT YEAR 2009-10. THEREFORE, NO ADDITION COU LD BE MADE IN THE ASSESSMENT YEAR UNDER APPEAL. THE LD. CIT(A) ON EXAMINATION OF THE MATERIAL BEFORE HIM FOUND THAT THE ASSESSEE HAS RECEIVED THE INCOME DURING TH E ASSESSMENT YEAR UNDER APPEAL, I.E., 2008-09 AND ACCORDINGLY, THE ADDITION WAS CON FIRMED. 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE AO HAS GIVEN SPECIFIC FINDING OF FACT THAT THE SELLERS HAVE PAID ENTIRE AMOUNT OF RS.24.00 LACS DU RING THE YEAR UNDER APPEAL. THIS FACT IS NOT DISPUTED BY THE ASSESSEE. THEREFORE, TH E ASSESSEE BEING PARTY TO THE DEAL ITA NO.379/AGRA/2013 6 AND THE AGREEMENT, WOULD HAVE RECEIVED RS.1,50,000/ - BEING SAMATIKARTA NO. 2. SINCE THE RECEIPT OF RS.1,50,000/- RELATES TO THE A SSESSMENT YEAR UNDER APPEAL, THEREFORE, THE ADDITION OF THE SAME WAS CORRECTLY M ADE IN THE ASSESSMENT YEAR UNDER APPEAL. THIS GROUND IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY