ACIT, Circle-7, Pune V. Talera Motors Pvt. Ltd., Pune

ITA 428/PUN/2013

• Counselvise Citation: 42824514 RSA 2013
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 14-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WALIMBE
• Keywords: Depreciation; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 428/PN/2013 (ASSESSMENT YEAR 2005-06) ACIT, CIRCLE-7, PUNE .. APPELLANT VS. TALERA MOTORS PVT. LTD., TALERA ESTATE, GAT-2326, WAGHOLI, PUNE-412207. .. RESPONDENT PAN NO.AABCT5974E APPELLANT BY : SHRI WALIMBE RESPONDENT BY : SHRI DEEPAK SHARMA, C.A. DATE OF HEARING : 22-10-2013 DATE OF PRONOUNCEMENT : 29-10-2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE REVENUE WHEREIN T HE DIRECTION OF THE ASSESSING OFFICER TO ALLOW DEPRECI ATION AMOUNTING TO RS.9,48,266/- ON VEHICLES HAS BEEN OPP OSED. 2. THE ASSESSEE IS A DEALER OF GENERAL MOTORS LTD. FOR SALE AND SERVICE OF ITS VEHICLES. THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS CLAIMED DEPRECIATION ALLOWANCE IN RESP ECT OF DEMO CARS AND OTHER CARS REGISTERED IN THE NAME OF ITS D IRECTORS. IT WAS FURTHER NOTICED BY THE ASSESSING OFFICER THAT E VEN LOAN OBTAINED FOR PURCHASE OF THESE CARS HAS BEEN OBTAIN ED IN THE NAME OF THE DIRECTORS. IN RESPONSE TO QUERY IN THI S REGARD, THE STAND OF THE ASSESSEE HAS BEEN THAT THAT DEMO CARS WAS 2 PURCHASED IN THE NAME OF ONE OF THE DIRECTOR OF THE COMPANY BUT SAME WAS EXCLUSIVELY USED FOR BUSINESS PURPOSE OF THE ASSESSEE COMPANY. IT WAS EXPLAINED BY THE ASSESSEE THAT ALL INCIDENTAL EXPENSES INCLUDING REPAYMENTS OF FUNDS B ORROWED FOR ACQUISITION OF THESE VEHICLES WERE BORNE BY THE ASS ESSEE COMPANY. IT WAS STATED THAT COMPANY WAS ENTITLED T O CLAIM DEPRECIATION OF THESE VEHICLES AS PER PROVISIONS OF SECTION 32(1) OF THE ACT. HOWEVER, THE ASSESSING OFFICER DISALLO WED DEPRECIATION OF CLAIM OF RS.9,48,266/- ON SUCH VEHI CLES. 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY WHO AFTER CONSIDERING SUBMISSIONS ON BEHALF OF ASSESSEE ALLOWED THE CLAIM OF THE ASSESSEE. SAME HAS BEEN OPPOSED BEFOR E US ON BEHALF OF REVENUE. 3.1 WE FIND THAT THE ASSESSING OFFICER DISALLOWED T HE DEPRECIATION CLAIMED ON VEHICLES FOR REASON THAT SA ME WAS REGISTERED IN THE NAME OF THE DIRECTORS. THE STAND OF ASSESSEE HAS BEEN THAT ASSESSEE COMPANY AUTHORISED BOARD OF DIRECTORS TO REGISTER THE DEMO CARS IN THE NAME OF ONE OF THE DIRECTORS AS A NOMINEE OF THE COMPANY AND FURTHER AUTHORISED TO PAY PURCHASE COST, RTO TAXES, INSURANCE, REPAYMENT OF L OAN AND INTEREST THEREON, RUNNING, REPAIRING AND MAINTENANC E COST FROM THE COMPANYS ACCOUNT. ACCORDINGLY, THE FUNDS REQU IRED FOR PURCHASE OF VEHICLES IN QUESTION WERE BORNE BY THE ASSESSEE COMPANY AND THESE ASSETS WERE DULY REFLECTED IN THE SCHEDULE OF FIXED ASSETS OF BALANCE SHEET OF ASSESSEE COMPAN Y FOR THE 3 YEAR UNDER CONSIDERATION. FROM THE LEDGER ACCOUNT EXTRACT OF DEMO CAR LOAN ACCOUNT FURNISHED BY THE ASSESSEE COM PANY IT WAS FOUND THAT ASSESSEE COMPANY WAS MAKING PAYMENT THROUGH EMI TO THE FINANCIAL INSTITUTION/BANK FROM WHICH COMPANY AVAILED LOAN FOR PURCHASE OF THESE DEMO CAR S. THEREFORE, MERELY BECAUSE VEHICLES WAS REGISTERED I N THE NAME OF ONE OF THE DIRECTORS OF THE COMPANY, IT COULD NO T BE SAID THAT ASSESSEE HAS CONTRIBUTED TOWARDS COST OF ACQUISITIO N OF VEHICLES DOES NOT HAVE ANY RIGHT IN OWNERSHIP OF THE VEHICLE S. 3.2 IT IS NOT THE CASE OF THE ASSESSING OFFICER THA T DIRECTORS HAVE CLAIMED OWNERSHIP OVER THE VEHICLES AND CLAIME D DEPRECIATION. IT IS ALSO NOT THE CASE OF ASSESSEE THAT THE SAID VEHICLES WAS NOT USED BY THE ASSESSEE COMPANY FOR I TS BUSINESS. ONCE IT IS NOT IN DISPUTE THAT VEHICLES W ERE USED FOR BUSINESS PURPOSES, THE ASSESSEE COMPANY IS ELIGIBLE FOR DEPRECIATION U/S.32 OF THE ACT ON THE VEHICLES EVEN IF ASSESSEE IS BENEFICIAL OWNER AS HAS BEEN HELD BY THE HONBL E SUPREME COURT IN THE CASE OF MYSORE MINERAL LTD. VS. CIT R EPORTED IN (1999) 239 ITR 775 (SC) WHEREIN IT WAS DECIDED THAT THE COMPANY IS ENTITLED TO DEPRECIATION ON A VEHICLE OW NED BY IT, THOUGH REGISTERED IN THE NAME OF ONE OF THE DIRECTO RS. SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT, PUNE IN THE CASE O F ROHAN BUILDERS AND DEVELOPERS PVT. LTD. IN ITA NO.942/PN/ 2006 ORDER DATED 29-08-2008. IN THE CASE BEFORE US ASSESSEE C OMPANY HAD PURCHASED THE DEMO CARS AND USED FOR ITS BUSINESS C OULD NOT BE DENIED DEPRECIATION ON THE GROUND THAT VEHICLE I N QUESTION 4 WAS NOT REGISTERED IN THE NAME OF ASSESSEE COMPANY. IN VIEW OF THE ABOVE, CIT(A) RIGHTLY HELD THAT ASSESSING OFFIC ER WAS NOT JUSTIFIED IN DENYING DEPRECIATION CLAIMED BY THE AS SESSEE COMPANY IN RESPECT OF VEHICLES IN QUESTION ON THE S OLE GROUND THAT THE SAME ARE REGISTERED IN THE NAME OF ONE OF THE DIRECTORS OF THE COMPANY. IN VIEW OF THIS, WE ARE NOT INCLIN ED TO INTERFERE IN THE FINDING OF THE CIT(A) WHO HAS DIRECTED THE A SSESSING OFFICER TO ALLOW THE DEPRECIATION OF RS.9,48,266/- ON VEHICLES IN QUESTION. ACCORDINGLY, SAME IS UPHELD. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF OCTOBER, 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMA R YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R PUNE DATED: 29 TH OCTOBER 2013 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-III, PUNE 4 CIT-III, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE