M/s. High-Tech Engineers, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(1), JAMNAGAR

ITA 446/RJT/2013

• Counselvise Citation: 44624914 RSA 2013
• Duration Of Justice: 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-11-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DR ADHIA
• Keywords: Depreciation; Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NOS. 445 & 446/RJT/2013 / ASSESSMENT YEARS : 2004-05 M/S. HIGH-TECH ENGINEERS, 4/2 PATEL COLONY, MUKUND VILLA, BEDI ROAD, JAMNAGAR PAN: AACFH 7108 L ( / APPELLANT) THE I.T.O., WARD-2(1) JAMNAGAR / RESPONDENT / ASSESSEE BY SHRI D.R. ADHIA, AR / REVENUE BY SHRI AVINASH KUMAR, DR ! / DATE OF HEARING 27.11.2013 '# ! / DATE OF PRONOUNCEMENT 13.12.2013 / ORDER THESE TWO APPEALS BY THE ASSESSEE ARE AGAINST TWO S EPARATE ORDERS OF THE CIT(A)-JAMNAGAR, BOTH DATED 19.09.2013 FOR THE ASS ESSMENT YEAR 2004-05. BOTH THESE APPEALS WERE HEARD ON THE SAME DATE, ARGUED B Y COMMON REPRESENTATIVE; THEREFORE THESE ARE BEING DISPOSED OF BY THIS COMMO N ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ONLY GROUND RAISED IN APPEAL ITA NO.445/RJT/ 2013 IS AS UNDER:- THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CONFI RMING DISALLOWANCE OF RS.1,52,703/- MADE BY LD. A.O. BY REDUCING DEPRECIA TION CLAIMED AT 40% FOR TRACTORS AND DUMPERS. THE SAME NEEDS DELETION. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A FI RM. IT IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. IT CLAIMED DEPRECIATION OF O N TRACTORS AND DUMPERS AT THE RATE OF 40%. THE ASSESSING OFFICER ALLOWED DEPRECIATION AT THE RATE OF 20% ONLY ON THE GROUND THAT THE TRACTORS AND DUMPERS WERE NOT GIVEN ON HIRE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. ON APPEAL, IN THE IMPUGN ED ORDER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OBSERVING THAT AS PER RULE 5, PRES CRIBED RATE OF DEPRECIATION ON COMMERCIAL VEHICLE IS 20% ONLY AND 40% IS ALLOWABL E ONLY FOR VEHICLE USED FOR HIRE PURPOSE. AGGRIEVED WITH THE ORDER OF LD. CIT(A), T HE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING BEFORE THIS TRIBUNAL, THE LD. AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS IN RESPECT HIGHER RATE ADMISSIBLE FOR DUMPER:- A. 11 ITR (TRIB) 82 (CHD) DCIT V. RAKESH JAIN 445 & 446-RJT-2013 HIGH TECH ENGINEERS (SMC) 2 B. ITA NO.1336/KOL/2008 DTD 2.3.2009 ACIT V. ASHO K TRANSPORT ITAT KOLKATA C. ITA NO.1337/KOL/2008 DTD 2.3.2009 ACIT V. DEBE NDRANATH SHAW ITAT KOLKATA D. ITA NO.1264/KOL/2009 DTD. 29.1.2010 DCIT V. SU RESH BAGARAIA IN RESPECT OF TRACTOR AS WELL AS DUMPER, THE LD. AR OF THE ASSESSEE ALSO RELIED UPON THE FOLLOWING DECISIONS:- A. 122 TAXMAN 206 (GUJ) GUJCO CARRIERS GUJARAT HC B. 190 TAXMAN 406 (KER) GAYLORD CONSTRUCTION K ERALA HC C. 27 TTJ (JAB) 405 ITAT JABALPUR TEJBALISINGH TR. CO. D. 83 ITD 473 ITAT CHENNAI TARAPORE & CO. THE LD. AR OF THE ASSESSEE FURTHER POINTED OUT THAT HIGHER RATE OF DEPRECIATION IS ALLOWABLE AS PER APPENDIX- I WHICH DEFINED COMME RCIAL VEHICLES AS PER MEANING ASSIGNED IN SECTION 2 OF THE MOTOR VEHICLE ACT 1988 , SECTION 2(44). THUS, AS PRESCRIBED UNDER THE INCOME-TAX ACT, HIGHER RATE ON TRACTOR IS ALLOWABLE. AS AGAINST THIS, THE LD. DEPARTMENTAL REPRESENTATIV E VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A). 4. RIVAL SUBMISSIONS WERE CONSIDERED. FOR THE RELEV ANT ASSESSMENT YEAR UNDER CONSIDERATION, THE RATE OF DEPRECIATION PROVIDED IS 20% AND NOT 40%. IN THE DECISION OF ITAT, CHANDIGARH B BENCH IN THE CASE OF DCIT V . RAKESH JAIN IN ITA NOS. 150 & 151/CHD/2011; (2011) 11 ITR (TRIB) 82 (CHD), RELIED UPON BY THE LD. AR OF THE ASSESSEE, IT IS HELD THAT ASSESSEE CONTRACTOR HAD CLAIMED DEPRECIATION @ 40% ON TIPPERS, VIBRATOR, VIBRATOR SOIL COMPACTOR, WHICH I S APPLICABLE TO COMMERCIAL VEHICLES. HOWEVER, HERE IN THE CASE ON HAND, THE TRACTORS AND DUMPERS WERE USED BY THE ASSESSEE ITSELF FOR ITS OWN BUSINESS AND NOT USED FOR HIRE PURPOSE. THEREFORE, THE VIEW TAKEN BY THE LD. CIT(A) IS UPHELD. THIS AP PEAL OF THE ASSESSEE IS DISMISSED. 5. NOW WE TAKE UP ITA NO.446/RJT/2013. THIS APPEA L IS AGAINST LEVY OF PENALTY U/S 271(1)(C) OF RS.54,600/-. THE FACTS IN BRIEF A RE THAT IN THE RETURN OF INCOME THE ASSESSEE CLAIMED DEPRECIATION ON TRACTORS AND DUMPE RS @ 40%. THE ASSESSING OFFICER ALLOWED THE SAME @ 20%. ON EXCESS DEPRECIAT ION CLAIMED, THE ASSESSING OFFICER LEVIED PENALTY OF RS. 54,600/- BEING 100% T AX SOUGHT TO BE EVADED. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFI RMED THE PENALTY OBSERVING THAT THE ASSESSEE FURNISHED WRONG PARTICULARS OF INCOME BY W AY OF CLAIMING MORE DEPRECIATION THAN ALLOWABLE AS PER LAW. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 445 & 446-RJT-2013 HIGH TECH ENGINEERS (SMC) 3 6. AT THE TIME OF HEARING, SHRI D. R. ADHIA, AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE, APPEARED AND SUBMITTED THAT SINCE IN THE EARLIER TWO ASSESSMENT YEARS THE ASSESSING OFFICER ALLOWED DEPRECIATION AT THE RATE OF 40%, THUS THERE WAS A BONAFIDE BELIEF THAT THE ASSESSEE IS ENTITLED TO DEPRECIATIO N @ 40% AND ACCORDINGLY IT CLAIMED THE SAME. HOWEVER, IN THE ASSESSMENT ORDER THE ASSE SSING OFFICER ALLOWED DEPRECIATION AT THE RATE OF 20% ONLY FOR WHICH PENA LTY U/S 271(1)(C) IS NOT LEVIABLE. IN SUPPORT OF THIS, THE LD. AR OF THE ASSESSEE RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD., [2010] 322 ITR 158 (SC). 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A). 8. HAVING HEARD BOTH SIDES, I HAVE CAREFULLY GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS A CIVIL CONTRACT OR. IT HAS USED TRACTORS AND DUMPERS FOR ITS OWN BUSINESS AND HAS NOT GIVEN ON HIRE. COM MERCIAL VEHICLES ARE ENTITLED TO DEPRECIATION AT THE RATE OF 20% UNLESS THESE ARE GI VEN ON HIRE. IT APPEARS THAT IN THE EARLIER ASSESSMENT YEARS, THE ASSESSING OFFICER ALL OWED THE DEPRECIATION @ 40% AND FOR THIS REASON THE ASSESSEE HAS CLAIMED THE DEPREC IATION AT THE RATE OF 40% IN THE CURRENT ASSESSMENT YEAR ALSO. THE CLAIM OF THE DEPR ECIATION AT THE RATE OF 40% IN THE ASSESSMENT YEAR UNDER APPEAL IS BONA FIDE KEEPING I N VIEW THE FACT THAT IN THE EARLIER ASSESSMENT YEARS THE ASSESSING OFFICER HIMSELF ALLO WED IT @ 40%. FOR THIS REASON, I AM OF THE VIEW THAT THE PENALTY OF RS.54,600/- U/S 271(1)(C) IS NOT LEVIABLE. THEREFORE, KEEPING IN VIEW OF JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD., [2010] 322 ITR 15 8 (SC), THE PENALTY OF RS.54,600/- LEVIED U/S 271(1)(C) IS HEREBY CANCELLED. THIS APPE AL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, ITA NO.445/RJT/2013 IS DISMISSED AND THE ITA NO.446/RJT/2013 IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $ .. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +),/ ORDER DATE: 13.12.2013 #$ /RAJKOT *BT 445 & 446-RJT-2013 HIGH TECH ENGINEERS (SMC) 4 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- M/S. HIGH-TECH ENGINEERS, 4/2 PATEL C OLONY, MUKUND VILLA, BEDI ROAD, JAMNAGAR 2. / RESPONDENT- THE I.T.O., WARD-2(1), JAMNAGAR 3. ,0,1 * * 2 / CONCERNED CIT, JAMNAGAR 4. * * 2- / CIT (A), JAMNAGAR 5 . 567 1, * 1, #$ / DR, ITAT, RAJKOT 6 . 79 :; / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT