ITO, Paradeep V. M/s Paradeep Earth Movers, Paradeep

ITA 386/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65102 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2012
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: S K JENA
• Keywords: Depreciation
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 386/CTK/2012 / ASSESSMENT YEAR 2008 - 09 INCOME - TAX OFFICER, WARD 2, PARADEEP. - - - VERSUS - M/S.PARADEEP ERTH MOVERS, M - II,/99 MADHUBAN , PARADEEP 754 142 PAN: AAIFP 8165 F ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI N.K.NEB, DR / FOR THE RESPONDENT: / SHRI S.K.JENA, AR / DATE OF HEARING: 11.09.2012 / DATE OF PRONO UNCEMENT: 14.09.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE REVENUE, FOR THE ASSESSMENT YEAR 2008 - 09, IS ON THE SOLITARY GROUND WHICH READS AS UNDER : IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF EXCESS DEPRECIATION OF RS.25,33,766/ - MADE BY THE A.O WHERE THE ASSESSING OFFICER HAS CATEGORICALLY GIVEN A FINDING IN THE IMPUGNED ASSESSMENT ORDER THAT ASSESSEE HAS ENGAGED HI S OWN EXCAVATOR, PAY LOADER AND BACK HOE LOADER MACHINERIES IN HIS OWN BUSINESS AT THE CONFINED AREA OF PARADEEP PORT NOT AT OUTSIDE AREAS AND NEVER USED SUCH MACHINERIES IN BUSINESS OF RUNNING THEM ON HIRE. SINCE PLANT AND MACHINERIES ARE USED FOR PURPOSE S OTHER THAN IN BUSINESS OF RUNNING THEM ON HIRE DEPRECIATION @15% IS ALLOWABLE AS PER PROVISIONS OF SECTION 32 AND DEPRECIATION RATE SPECIFIED I NEW APPENDIX 1 TO I.T.RULE 1962 INSTEAD OF 30% ALLOWED BY THE LD.CIT(A). I.T.A.NO. 386/CTK/2012 2 2. THE BRIEF FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM CONTRACT WORK FILED ITS INCOME FOR THE IMPUG NED AY DECLARING INCOME OF 1 ,04,465. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION OF 50,67,533 @ 30% ON EXCAVATOR, PAY LOADER AND BACK HOE LOADER MACHINERIES. HE CONSIDERED THAT THESE MACHINERIES WERE NOT HIRED OUT FOR ENTITLING THE ASSESSEE TO CLAIM DEPRECIATION @30% INSOFAR AS THEY ARE PLANT AND MACHINERIES AND ARE BEING USED BY THE ASSESSEE FOR HIS OWN BUSINESS OF CONTRACT FOR ALLOWABLE DEPRECIATION @15%. THEREFORE HE DISALLOWED THE BALANCE 15% OUT OF THE 30% CLAIMED BY THE ASSESSEE I.E., 50% OF THE TOTAL CLAIM. 3. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY, WHO DELETED THE DISALLOWANCE BY OBSERVING AS FOLLOWS: 5.3. LN CIT V. TEJBALI SINGH TRANSPORT CO. (1996) 220 I TR 408, IT WAS HELD THAT PAY LOADER USED FOR LIFTING COAL TO DUMPER IS EARTH MOVING MACHINERY COVERED BY CLAUSE LLI(D)(8) OF APPENDIX - I TO INCOME TAX RULES AND IS ENTITLED TO 30% DEPRECIATION. IN BOTHRA SHIPPING SERVICE V. CIT (2011) 37(11) ITCL, 56 (KOL C TRIB), IT WAS HELD THAT THE TATA ,JCB AND 400V WHEEL LOADERS ARE COVERED WITHIN THE EXPRESSION MOTOR LORRIES WHICH ARE USED IN BUSINESS OF RUNNING THEM ON HIRE AND THE AO HAD CORRECTLY ALLOWED THE CLAIM OF DEPRECIATION U/S.32 IN THE SUM OF RS.78,05,25 1/ - APPLYING THE RATE OF 30% ASSIGNED TO ENTRY NO.IIL(3)(II) OF PART A OF APPENDIX I OF THE I.T.RULES,1962 APPLICABLE FOR AS MOTOR BUSES, MOTOR LORRIES AND MOTOR TAXIS USED IN A BUSINESS OF RUNNING THEM ON HIRE. HAVING REGARD TO THE ABOVE DECISIONS, THE D ISALLOWANCE OF EXCESS DEPRECIATION OF RS 25,33,766/ - MADE BY THE AO U/S 32 IS DELETED. 4. THE LEARNED DR INITIATING HIS ARGUMENTS SUBMITTED THAT THE AO HAS CATEGORICALLY BROUGHT ON RECORD THAT THE ASSESSEE RENDERS CONTRACT WORK FOR SHIFTING THE MATERIAL LYING AT THE PORT TRUST WHEN HE BOOKS PURCHASE AND I.T.A.NO. 386/CTK/2012 3 SALES OF THE GOODS MOVED. THEREFORE, THE AO RIGHTLY BROUGHT ON RECORD THAT THE SAID EXCAVATOR, PAY LOADER AND BACK HOE LOADER MACHINERIES WERE BEING USED BY THE ASSESSEE FOR ITS OWN BUSINESS. THEY WERE NEV ER HIRED OUT, THEREFORE, DID NOT ENTITLE THE ASSESSEE TO CLAIM DEPRECIATION AT A HIGHER RATE OF 30%, WHICH ARE ALLOWED TO ONLY MOTOR LORRIES WHICH ARE HIRED OUT AS BUSINESS OF THE ASSESSEE. THE LEARNED CIT(A), THEREFORE, ERRED IN FOLLOWING THE DECISION IN THE CASE OF CIT V. TEJBALI SINGH TRANSPORT CO. (1996) 220 ITR 408 AND THE DECISION OF ITAT,CALCUTTA BENCH IN THE CASE OF BOTHRA SHIPPING SERVICE V. CIT (2011) 37(11) ITCL, 56 (KOL C TRIB) TO HOLD THAT THESE PLANT AND MACHINERIES ARE COVERED WITHIN THE EX PRESSION MOTOR LORRIES WHICH ARE USED IN BUSINESS OF RUNNING THEM ON HIRE. THEREFORE, WITHIN THE ENTRY NO.III(3)(II) OF PART A OF APPENDIX I OF THE I.T.RULES,1962 IT WAS TO BE CONSIDERED TO BE ALLOWABLE AT HIGHER DEPRECIATION. HE SUPPORTED THE GROUND RAI SED BY THE ASSESSING OFFICER FOR HIS PART OF SUBMISSIONS AS MENTIONED ABOVE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE IS USING THESE ASSETS IN THE BUSINESS OF HIRING WHEN TH E RECEIPT FROM PARADEEP PARIVAHAN PVT. LTD., ACE COMMERCIAL CO. PVT. LTD., ORISSA STEVEDORES LTD., SAHOO BROTHERS STEVEDORES PVT. LTD., AND M/S.SOLUTION WERE RECEIPT FOR HIRING OUT THESE MACHINES WERE ACCEPTED TO BY THE ASSESSING OFFICER AS INCOME FROM HIR ING OUT. THEREFORE, IT WAS ONLY THE ASSESSING OFFICERS INTERPRETATION FOR HOLDING THESE ASSETS AS PLANT AND MACHINERY AND NOT AS MOTOR LORRIES OR VEHICLES HIRED OUT FOR CLAIMING DEPRECIATION AT 30% AS ALLOWABLE. THE LEARNED CIT(A) THEREFORE, APPRECIATED T HAT THE MACHINES ARE MOVING THE STOCK OF ASSESSEE AS WELL AS THESE ABOVE PARTIES WHO HAVE TAKEN THEM ON HIRE TO PAY HIRE CHARGES TO THE ASSESSEE. IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE I.T.A.NO. 386/CTK/2012 4 ASSESSEE COULD NOT HAVE UTILIZED THESE MACHINE FOR HIRI NG OUT THEREFORE WAS JUSTIFIABLY DIRECTED BY THE LEARNED CIT(A) FOR DELETION OF THE DISALLOWED DEPRECIATION OF 15%. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FACTS AND CIRCUM STANCES OF THE CASE, WE ARE INCLINED TO FIND THE ORDER OF THE LEARNED CIT(A) JUSTIFIED INSOFAR AS APART FROM THE CASE - LAWS CITED ON FACTS AS HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER HIMSELF THAT THESE MACHINERIES WHETHER WERE REGISTERED AS MOTO R VEHICLES WITH THE ROAD TRANSPORT AUTHORITY OR NOT WERE MACHINERIES USED ONLY FOR THE PURPOSE OF BUSINESS OF HIRING OUT. IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO HOLD THAT THE PLANT AND MACHINERY SHOULD BE FA STENED ON THE LAND TO MAKE THEM IMMOBILE IN ORDER TO GET REGISTERED WITH THE ROAD TRANSPORT AUTHORITY. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAS PAID ROAD TAX ON THESE MACHINERIES CLINCHES THE ISSUE THAT THESE MACHINE ARE MOBILE AND COULD BE USED FOR BUSINESS OTHE R THAN THE BUSINESS OF THE ASSESSEE AS WELL. THE PAYMENTS BY THE HIRERS ARE SUBJECT TO DEDUCTION OF TAX AT SOURCE CRYSTALLIZED THE ISSUE THAT THESE MACHINERIES ARE ENTITLED FOR DEPRECIATION @30% AS WERE HIRED OUT BUSINESS AS RIGHTLY CLAIMED BY THE ASSESSEE AND UP HELD BY THE LEARNED CIT(A). IN VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 14.09.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 386/CTK/2012 5 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : INCOME - TAX OFFICER, WARD 2, PARADEEP. 2 / THE RESPONDENT: M/S.PARADEEP ERTH MOVERS, M - II,/99 MADHUBAN , PARADEEP 754 142 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 13.09.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.09.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTA NT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..