AK Singh(HUF), V. ITO, Rourkela

ITA 42/CTK/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4284 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 15-02-2010
• Court: TRIBUNAL
• Department Lawyers: D J ROY
• Assessee Lawyers: DINESH KUMAR AGARWAL
• Keywords: Depreciation; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE HONBLE SHRI D.K.TYAGI, JUDICIAL MEMBER. /AND HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER . / I.TA.NO . 42/CTK/2010 / ASSESSMENT YEAR 2005 - 06 A.K.SINGH (HUF) PROP. M/S.VISHAL ENTERPRISES, OCL DAILY MARKET, RAJGANGPUR 770 017 (ORISSA) AACHA 8267 R - - - VERSUS - . INCOME - TAX OFFIC ER, WARD 1, RAJGANGPUR. / A PPELLANT RESPONDENT FOR THE APPELLANT : SHRI DINESH KUMAR AGARWAL, AR FOR THE RESPONDENT : SHRI D.J.ROY, DR / ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THE REGISTRY INFORMS THAT THE APPEAL HAS BEEN BELATEDLY FILED BY THREE DAYS WHICH DELAY WAS ON ACCOUNT OF POSTAL DELAY DELIVERY AS INFORMED BY THE LEARNED COUNSEL FOR THE ASSESSEE AGAINST WHICH THE LEARNED DR HAS NO O BJECTION. THE DELAY IS CONDONED AND THE APPEAL ADMITTED FOR HEARING. 2. THE SOLE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS WITH RESPECT TO DISALLOWANCE OF DEPRECIATION CLAIMED AT 40% OF THE WDV ON PAY LOADERS AS MOTOR VEHICLE, WHICH THE AUTHORITIES BELOW CONSIDERED AS A PART OF PLANT AND MACHINERY AND ENTITLED TO DEPRECIATION OF 25%. 3. THE BRIEF FACTS AS NOTED BY THE LEARNED CIT(A) IN HIS ORDER ON THE ISSUE ARE THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON THE COST OF PAY LOADER OF RS.7,20,084 AT 40% OF THE COST. THE ASSESSING OFFICER RESTRICTED THE CLAIM TO 25%, HOLDING THAT THE PAY LOADER FALLS UNDER THE HEAD PLANT & MACHINERY. IT IS SUBMITTED BEFORE THE LEARNED / I.TA.NO .42/CTK/2010 2 CIT(A) THAT THE PAY LOADER IS REGISTE RED A S MOTOR VEHICLE WITH THE ROAD TRANSPORT AUTHORITIES. SINCE IT IS RUNNING ON HIRE, INCOME HAS TO BE TREATED AS INCOME FROM A TRANSPORT VEHICLE. DEPRECIATION SHOULD ACCORDINGLY BE ALLOWED AT 4 0 % . THE LEARNED CIT(A) OBSERVED THAT DETAILS HAVE BEEN FILED REGARD TO THE MANNER IN WHICH THE PAY LOADER HAS BE E N USED. THE CLASSIFICATION OF MACHINERY BY THE TRANSPORT AUTHORITY CANNOT CHANGE ITS NATURE, AS FAR AS GRANTING DEPRECIATION U/S.32 OF THE ACT IS CONCERNED. UNDER THE INCOME TAX RULES, 1962, DEPRECIATION CAN BE ALLOWED AT 4 0 % ONLY IN THE CASE OF TRA NSPORT VEHICLES AND MOTOR VEHICLES RUNNING ON HIRE. IN THIS CASE, THERE IS NO EVIDENCE TO SHOW THAT THE PAY LOADER WAS USED FOR TRANSPORTATION BUSINESS. THE T URNOVER OF RS.1,08,95,345 FROM PACKING HOUSEWORK RECEIPT, OTHER RECEIPTS AND TRANSPORTING CHARGES. NO DETAILS ARE AVAILABLE TO SHOW THAT THE PAY LOADER WAS USED AS A TRANSPORT VEHICLE. NO DETAILS HAVE BEEN FILED EVEN DURING THE PROCEEDINGS RELATING TO THE PERSONS TO WHOM THE PAY LOADER WAS HIRED OUT, THE DURATION OF HIRE AND THE HIRE CHARGES RECEIVED. NO DOCUMENTARY EVIDENCE SHOWS LOG BOOK, RECEIPTS ETC HAVE BEEN PRODUCED. THE LEARNED CIT(A) THEREFORE, UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. THE LEARNED COUNSEL HAS SUBMITTED A PAPER BOOK WHICH INTER ALIA INCLUDE THE REGISTRATION CERTIF ICATE AUTHORIZING PAY LOADER TO PLY ON ROAD WAS CONSIDERED BY THE ASSESSING OFFICER AND THE LEARNED CIT(A) ALONG WITH VARIOUS DETAILS OF RECEIPTS FROM HIRING OF PAY LOADER AMOUNTING TO RS.12,48,763. VARIOUS DETAILS HAVE BEEN FILED WHICH APPEARED TO HAVE BE EN IGNORED BY THE AUTHORITIES BELOW, THEREFORE, BEING PRAYED THAT THE SAME MAY BE CONSIDERED BY THE ASSESSING OFFICER IN VIEW OF THE FACT THAT THE LEARNED CIT(A) DID NOT RESTORE THE ISSUE TO HIM FOR CONSIDERATION . / I.TA.NO .42/CTK/2010 3 5. THE LEARNED DR DID NOT HAVE ANY OBJECT ION IF THE ISSUE WAS SENT BACK TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION IN THE LIGHT OF FACTS SUBMITTED BY THE LEARNED COUNSEL BEFORE THE TRIBUNAL AS NOT PROPERLY CONSIDERED BY THE AUTHORITIES BELOW. 6. ON OUR PERUSAL OF THE DOCUMENTS AS WERE FILED TO THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED VIEW THAT THE PAY LOADER HAS BEEN REGISTERED AS MOTOR VEHICLE TO PLY ON ROAD IN ACCORDANCE WIT H LAW. HOWEVER, THE ASSESSEE HAD TO INDICATE ITS HIRING OUT TO CLAIM DEPRECIATION @40% IN ACCORDANCE WI TH THE PROVISIONS OF THE INCOME - TAX ACT,1961, THEREFORE, CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE IN SO FAR AS BY NO STRETCH OF IMAGINATION THE PAY LOADER COULD BE CONSIDERED AS PLANT AND MACHINERY TO BE UTILIZED AS SUCH IN THE ASSESSEES BUSINESS OF TRADING IN CEMENT, CLEANING WORK, JOB WORK, LABOUR SUPPLYING. THE INCOME OF HIRE HAS BEEN DECLARED BY THE ASSESSEE, WHICH WAS ON THE BASIS OF INCOME BY HIRING OUT THE PAY LOADER WHICH ENTITLED IT TO DEPRECIATION AT 40%. IN THE LIGHT OF THE SAME, THE ORDER OF THE LEARNED CIT(A) IS SET ASIDE AND THE ISSUE IS RESTORED TO FILE OF THE ASSESSING OFFICER TO VERIFY THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE NOTINGS OF THE LEARNED CIT(A) WHICH CON CLUDES THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT , THE APPEAL OF THE ASSESSEE IS CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 30.07.2010 SD/ - SD/ - ( ), D.K.TYAGI JUDICIAL M EMBER (K.K.GUPTA), ACCOUNTANT MEMBER. DATE: 30.07.2010 ( /) H.K.PADHEE SENIOR.PRIVATE SECRETARY. / I.TA.NO .42/CTK/2010 4 - COPY OF THE ORDER FORWARDED TO : / THE APPELLANT : A.K.SINGH (HUF) PROP. M/S.VISHAL ENTERPRISES, OCL DAILY MARKET, RAJGANGPUR 770 017 (ORISSA) / THE RESPONDENT : INCOME - TAX OFFICER, WARD 1, RAJGANGPUR. THE CIT, THE CIT(A ), DR, CUTTACK BENCH GUARD FILE TRUE COPY , BY ORDER , [ ] SENIOR PRIVATE SECRETARY