M/s.KLF Nirmal Industries P. Ltd, Thrissur V. The ACIT, Circle-1(1), Thrissur

ITA 383/COCH/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3983 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 06-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: VIPIN K K
• Keywords: Depreciation
• Section: 154; 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI CHANDRA POOJARI, AM & GEORGE GEORGE K., JM I .T . A. NO. 383 / COCH/ 201 8 ASSESSMENT YEAR : 2011 - 12 M/S. KLF NIRMAL INDUSTRIES (P) LTD., NEAR CHRIST COLLEGE, IRINJALAKUDA, THRISSUR-680 121. [PAN:AADCK 4657K] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), THRISSUR. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) A SSESSEE BY SHRI VIPIN K.K., REVENUE BY SMT. A.S. BINDHU, DR D ATE OF HEARING 04/10/2018 DATE OF PRONOUNCEMENT 08 / 10 /2018 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), THRISSUR DATED 14/05/2018 FOR THE ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED IN CONCLUDING THAT ALLOWANCE OF REDUCED RATE OF DEPRECIATION IS NOT A DEBATABLE ISSUE TO INVOKE SECTION 154 OF THE INCOME- TAX ACT, 1961. 2. THE ASSESSEE BEING MANUFACTURER OF COCONUT OIL, HAD APPOINTED DISTRIBUTORS IN VARIOUS STATES. THE TRUCKS OWNED BY THE ASSESSEE ARE USED JUST LIKE AN LOGISTIC FIRM TO DISTRIBUTE THE PRODUCT WITHIN AND OUTSIDE STATE I.T.A. NO. 383/COCH/2018 2 OF KERALA. HENCE, APPLYING THE FUNCTIONALITY TEST, ASSESSEE IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION OF 30% AND NOT 15%. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ADDED BACK THE EXCESS CLAIM OF DEPRECIATION IN RESPECT OF VEHICLE AND WINDMILL VIDE ORDER U/S. 154 OF THE ACT DATED 16/11/2016. IN RESPECT OF THE VEHICLE, THE ASSESSING OFFICER ALLOWED 15% OF DEPRECIATION AS AGAINST 30% CLAIMED BY THE ASSESSEE. 4. ON APPEAL, THE CIT(A) OBSERVED THAT THE EXCESS CLAIM OF DEPRECIATION CLAIMED BY THE ASSESSEE IS A PART OF RECORD AND THE ACTION OF THE ASSESSING OFFICER TO DISALLOW THE SAME FALLS WITHIN THE PURVIEW OF SECTION 154 OF THE I.T. ACT. ACCORDING TO THE CIT(A), THOUGH THE ASSESSEE RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. DR. B. VENKATA RAO (2000) ITR 8C (SC), IT IS SEEN THAT THE VEHICLE USED BY THE ASSESSEE WAS TO PLY HIS OWN GOODS AND THE ASSESSING OFFICER WAS RIGHT IN WITHDRAWING THE EXCESS CLAIM ON THE VEHICLE. THEREFORE, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR SUBMITTED THAT THE ISSUE DEALT BY THE AO IN HIS PROCEEDINGS U/S.154 OF THE ACT IS A DEBATABLE ISSUE AND CANNOT BE CONSIDERED SO AS TO DISALLOW THE CLAIM OF DEPRECIATION AT 30% ON TRUCKS OWNED BY THE ASSESSEE AND GRANTING DEPRECIATION AT 15%. HE RELIED ON THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF CIT VS. DR. K.R. JAYACHANDRAN (212 ITR 637) WHEREIN IT WAS HELD THAT THE AMBULANCE VAN WAS I.T.A. NO. 383/COCH/2018 3 KEPT BY THE ASSESSEE FOR THE PURPOSE OF BEING USED ON HIRE AND IT WAS SO PLIED. IT WAS OBSERVED THAT THE PLYING OF THE AMBULANCE VAN ON HIRE ITSELF CONSTITUTES THE BUSINESS OF THE ASSESSEE THOUGH IT MAY BE INCIDENTAL TO THE RUNNING OF THE HOSPITAL. IT WAS ALSO OBSERVED THAT ONE BUSINESS CAN BE ADVANTAGEOUSLY COMBINED WITH ANOTHER BUSINESS. IN THIS CASE, THE ASSESSEE HAS RECEIVED HIRE CHARGES ON THE TRUCKS OWNED BY IT. 6. THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN THIS CASE, THERE WAS NO RECORD ATTACHED TO THE RETURN OF INCOME TO SHOW THAT THE CLAIM OF HIGHER DEPRECIATION ON TRUCKS IS TO BE ALLOWED AT 30% CLAIMED BY THE ASSESSEE INSTEAD OF 15%. THE PROFIT AND LOSS ACCOUNTS OR OTHER DOCUMENTS ATTACHED TO THE RETURN OF INCOME DOES NOT SHOW THAT THE ASSESSEE HAS USED THE TRUCKS FOR GIVING IT ON HIRE. THIS FACT IS ALSO CONFIRMED BY THE LD. AR AT THE TIME OF HEARING BY STATING THAT THE ASSESSEE HAS NOT SHOWN HIRE CHARGES IN ITS BOOKS OF ACCOUNT. HENCE, IT IS APPARENT MISTAKE COMMITTED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT DATED 28/03/2004 AND ALLOWED DEPRECIATION AT 30% AS CLAIMED BY THE ASSESSEE INSTEAD OF DEDUCTIBLE DEPRECIATION AT 15%. IN THE PRESENT CASE, THE APPARENT ERROR HAS ARISEN FROM THE RECORDS OF THE CASE AND IT WAS NOT DISCOVERED FROM OTHER SOURCES. HENCE, THE ERROR DISCOVERED AS A RESULT OF PERUSAL OF THE RECORDS WOULD CONSTITUTE APPARENT I.T.A. NO. 383/COCH/2018 4 ERROR WHICH CONFERRED JURISDICTION ON THE CONCERNED ASSESSING OFFICER TO RECTIFY THE EARLIER ORDER. IT FOLLOWS FROM THIS THAT THE EVIDENCE WHICH WAS CONSIDERED BY THE ASSESSING OFFICER TO RECTIFY THE ERROR IS NOT EXTRANEOUS TO THE RECORD BUT IT IS INTIMATELY CONNECTED WITH THE RECORDS. HENCE, EXERCISING JURISDICTION U/S. 154 OF THE ACT BY THE ASSESSING OFFICER IS JUSTIFIED. BEING SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON TRUCKS AT 15% INSTEAD OF 30% CLAIMED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS REJECTED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH OCTOBER, 2018. SD/- SD/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 8 TH OCTOBER, 2018 GJ COPY TO: 1. M/S. KLF NIRMAL INDUSTRIES (P) LTD., NEAR CHRIST COLLEGE, IRINJALAKUDA, THRISSUR- 680 121. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), THRISSUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), THRISSUR. 4. THE PR. COMMISSIONER OF INCOME-TAX, THRISSUR. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN I.T.A. NO. 383/COCH/2018 5