ITO, Ward-2, Khammam V. Sri B.V.R Minerals, Khammam

ITA 409/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5577 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Keywords: Depreciation
• Section: 143(3); 147; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.409/HYD/2013 ASSESSMENT YEAR 2007-08. INCOME-TAX OFFICER, -V- SRI B. V.R. MINERLAS, WARD-2, KHAMMAM. KHAMMAM. PAN:AAEHB 0464F (APPELLANT) (RESPONDENT) APPELLANT BY SHRI B. YADAGIRI RESPONDENT BY SHRI D.L. NARASIMHA RAO DATE OF HEARING 11-02-2014 DATE OF PRONOUNCEMENT 11-02-2014 ORDER PER SAKTIJIT DEY, J.M: THIS APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGA INST THE ORDER OF THE CIT (A), VIJAYAWADA DATED 29-1-2013 PE RTAINING TO ASSESSMENT YEAR 2006-07. 2. THE SOLE ISSUE ARISING FOR CONSIDERATION IN THE AFORESAID APPEAL OF THE DEPARTMENT IS CIT (A) DELETING THE ADDITIO N OF RS.2,24,687/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION CLAIMED ON TATA HITACHI MODEL EX 110 HYDRAULIC BACKHOE WITH G.P BUCKET AND KIT. 3. BRIEFLY STATED, THE ASSESSEE A PARTNERSHIP FIR M IS ENGAGED IN THE BUSINESS OF DOLOMITE MINING AND SALES. FOR THE ASSESSMENT 2 ITA NO.409 OF 2013 SRI B.V.R MINERALS, KHAMMAM. YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN O N 31-10-2006 DECLARING AN INCOME OF RS.2,95,470/-. THE ASSESSM ENT IN THE CASE OF THE ASSESSEE WAS COMPLETED U/S 143(3) READ WITH SECTION 147 OF THE ACT VIDE ORDER DATED 15-12-2009 DETERMINING THE TOTAL INCOME AT RS.4,13,200/-. SUBSEQUENTLY, THE INCOME WAS MOD IFIED TO RS.6,36,650/- BY VIRTUE OF AN ORDER PASSED U/S 154 OF THE ACT ON 8- 12-2011. THE ASSESSMENT ORDER PASSED U/S 143(3) RE AD WITH SECTION 147 WAS SUBJECTED TO PROCEEDINGS U/S 263 O F THE ACT BY THE CIT. THE CIT NOTED THAT TATA HITACHI MODEL EX 1 10 HYDRAULIC BACKHOE WITH G.P. BUCKET AND KIT MACHINERY AND THE SAME WAS DISPATCHED FROM THE FACTORY AT DHARWAD, KARNATAKA V IDE INVOICE- CUM-DISPATCH MEMO AT 6.30 PM ON 29-3-2006. THE CIT WAS OF VIEW THAT SINCE THE TRANSPORTATION AND INSTALLATIO N OF MACHINERY WILL TAKE MORE THAN A DAY FROM DHARWAD TO WORK SITE AT KHAMMAM, THE CLAIM OF DEPRECIATION AMOUNTING TO RS.2,24,687/- O N THE PURCHASE VALUE OF RS.29,95,821/- WAS WRONG. THE CIT THEREFO RE SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO DO IT AFRESH AFTER CONSIDERING ALL THE FACTS. DURING THE REASSES SMENT PROCEEDINGS, IT WAS CONTENDED BY THE ASSESSEE THAT THOUGH IT MAY BE A FACT THAT THE PROCLAINER WAS PURCHASED ON 29-3 -2006 AT 6.30PM BUT HOWEVER THE DISTANCE FROM THE FACTORY AT DHARWA D IN KARNATAKA TO WORKING PLACE AT KHAMMAM IS APPROXIMATELY 450 TO 500 KM, THUS THE JOURNEY WOULD TAKE ABOUT 10 TO 12 HOURS. IT W AS SUBMITTED THAT AS THE PROCLAINER WAS PURCHASED WITH ALL EQUIP MENT ATTACHED TO IT, THE ASSESSEE COULD PUT THE SAME TO USE IN ITS WORK IMMEDIATELY ON ITS REACHING THE PLACE OF DESTINATION AFTER UNL OADING ON 30/3/2006 ITSELF. IT WAS SUBMITTED THAT SINCE THE EXCAVATOR DOES NOT REQUIRE ANY REGISTRATION ETC., BEFORE USING THE MACHINERY THE SAME WAS IMMEDIATELY ENGAGED IN MINING OPERATION A S IT WAS VERY 3 ITA NO.409 OF 2013 SRI B.V.R MINERALS, KHAMMAM. URGENT FOR DOLOMITE DESPATCHES. THE ASSESSING OF FICER HOWEVER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. THE ASS ESSING OFFICER WAS OF THE VIEW THAT WHEN THE MACHINERY WAS DESPAT CHED AT 6.30 PM ON 29-3-2006 AND IT WILL TAKE AT LEAST 12 HOURS TO TRANSPORT THE SAME TO THE PLACE OF WORK, THEN IT MIGHT HAVE REACH ED AT 7.00AM ON 30-3-2006. HE OBSERVED THAT THE ASSESSEE DID NOT S UBMIT THE DETAILS OF DOLOMITE DESPATCHES MADE ON 30-3-2006 AN D 31-3-2006 WHICH MIGHT HAVE REQUIRED THE USAGE OF THE MACHINER Y. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE ALSO C OULD NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE DESPATCH OF MACHINERY WAS CHECKED AT CHECK-POST WHILE TRAVELLING TO THE PLACE OF WORK AT KHAMMAM. HE THEREFORE DISALLOWED THE CLAIM OF DEPRECIATION O N THE PROCLAINER AMOUNTING TO RS.2,24,687/- AND ADDED IT TO THE INCO ME OF THE ASSESSEE. BEING AGGRIEVED OF SUCH ADDITION, THE AS SESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). 4. IN COURSE OF HEARING BEFORE THE CIT (A), THE ASS ESSEE REITERATED THE STAND TAKEN BEFORE THE ASSESSING OFF ICER. THE CIT (A) DELETED THE ADDITION HOLDING AS UNDER:- 8 . ON GOING THROUGH THE MATERIAL ON RECORD, I FIND M UCH FORCE IN THE PLEADINGS OF THE APPELLANT AND THE FAC T OF THE DELIVERY OF THE PROCLAINER AT 6.30PM ON 2903-2006 A T DHARWAD WAS NOT DISPUTED BY THE ASSESSING OFFICER A LSO. FURTHER, AS SEEN FROM THE IMPUGNED ASSESSMENT ORDER , EVEN THE ASSESSING OFFICER OBSERVED THAT THE JOURNEY PER IOD MIGHT BE ABOUT 12 HOURS FROM DHARWAD TO KHAMMAM AND BY TH E ABOVE PARAMETER, IT COULD BE CONSTRUED THAT THERE W AS EVERY POSSIBILITY OF ITS REACHING THE DESTINATION ON 30-3 -2006. GOING BY THIS DOCUMENTARY EVIDENCE, THE CLAIM OF P UTTING THE ASSET INTO USE ON 30 TH MARCH, 2006 COULD NOT BE BRUSHED ASIDE 4 ITA NO.409 OF 2013 SRI B.V.R MINERALS, KHAMMAM. AS THE SAME WAS CLAIMED TO BE RECEIVED IN READY-TO -USE CONDITION EVEN OTHERWISE, IN VIEW OF THE ESTABLISH MENT OF ITS REACHING THE DESTINATION AT KHAMMAM ON THE MORNING OF 30 TH MARCH, 2006, THE CLAIM OF ITS PASSIVE USER CANNOT BE REJECTED. IN VIEW OF THE JUDICIAL PRECEDENTS RELIED UPON BY THE APPELLANT, THE CLAIM OF DEPRECIATION ON THE ABOVE A SSET CANNOT ALSO BE BRUSHED ASIDE. THUS TAKING INTO ACCOUNT TH E FACTUAL AND LEGAL BACKGROUND, IT IS FELT JUSTIFIABLE TO ALL OW THE CLAIM OF DEPRECIATION ON THE ABOVE ASSET AND HENCE THE AD DITION OF RS.2,24,687/- IS ORDERED TO BE DELETED. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF TH E REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. ON GO ING THROUGH THE FACTS AND MATERIALS ON RECORD, WE ARE OF THE VIEW THAT THE CIT (A) WAS JUSTIFIED IN ALLOWING THE CLAIM OF DEPRECIATION MADE B Y THE ASSESSEE. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS N OT BROUGHT ANY MATERIAL ON RECORD TO DISPUTE THE ASSESSEES CONTENTIO N THAT IT WOULD HAVE TAKEN THE PROCLAINER 10 TO 12 HOURS JOURNEY TO R EACH THE WORK SITE AT KHAMMAM. THEREFORE, IF THE PROCLAINER HAS STARTED ITS JOURNEY AT 6/30 PM ON 29-3-2006, IT IS QUITE POSSIBLE FOR IT TO HAVE RE ACHED THE WORK SITE AT KHAMMAM BY 7.00 AM ON 30-3-2006. THERE IS ALSO NO M ATERIAL ON RECORD TO SHOW THAT THE PROCLAINER WAS NOT READY TO USE. IN THESE CIRCUMSTANCES, IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD TO DISPUT E THE CONTENTIONS OF THE ASSESSEE THAT THE PROCLAINER REACHED THE WORK SITE ON 30 TH MORNING AND PUT TO USE IN MINING WORK, THE CONTENTION OF THE ASSE SSEE CANNOT BE DISBELIEVED ON MERE PRESUMPTION. IN THE AFORESAID CIR CUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF THE CIT (A) WHICH IS ACCORDINGLY CONFIRMED. THE GROUNDS RAISED ARE THEREFORE DISMISSED. 5 ITA NO.409 OF 2013 SRI B.V.R MINERALS, KHAMMAM. 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 11-02-2014. S D / - (CHANDRA POOJARI) ACCOUNTANT MEMBER S D / - (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 11 TH FEBRUARY, 2014. JMR* COPY TO:- 1) ITO, WARD-2, AAYAKAR BHAVAN, BEHIND KINNERASANI THEATRE, KHAMMAM. 2) M/S. BVR MINERALS, DOOR NO.5-1-13/2, KAVIRAJ NAGAR, KHAMMAM. 3) CIT(A), VIJAYAWADA. 4) CIT, VIJAYAWADA. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. 6 ITA NO.409 OF 2013 SRI B.V.R MINERALS, KHAMMAM.