G.R. FASHIONS P.LTD, MUMBAI V. ASST CIT 4(2), MUMBAI

ITA 4498/MUM/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3685 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 30-06-2014
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT MAMDEO
• Assessee Lawyers: M B SANGHAVI
• Keywords: Depreciation
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER ITA NO. 4498/MUM./2014 ( ASSESSMENT YEAR : 20 0 5 06 ) G.R. FASHIONS PVT. LTD. 716, PRAGRAJ GALLI M.J. MARKET, MUMBAI 40 0 002 PAN AABCG5415B . APPELLANT V/S INCOME TAX OFFICER (EXEMPTION) 1(1) 5 TH FLOOR, ROOM NO.505 PIRAMAL CHAMBERS, LALBAUG PAREL, MUMBAI 400 012 . RESPONDENT REV ENUE BY : SHRI SHRIKANT MAMDEO ASSESSEE BY : SHRI M.B. SANGHAVI DATE OF HEARING 05 . 01 .201 6 DATE OF ORDER 05.01.2016 O R D E R PER SAKTIJIT DEY , J.M. INSTANT APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1 ST MAY 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 8, MUMBAI, F OR THE ASSESSMENT YEAR 2005 06. 2. IN G ROUNDS NO.1.1 TO 1.3, ASSESSEE HAS CHALLENG ED THE RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). G.R. FASHIONS PVT. LTD. 2 3. AS COULD BE SEEN FROM THE ORDER OF THE LEARNED COMMISSIONER (APPEALS), TH OUGH, THE ASSESSEE HAD RAISED A GROUND BEFORE THE FIRST APPELLATE AUTHORITY CHALLENGING THE RE OPENING OF THE ASSESSMENT BUT AT THE TIME OF HEARING, ASSESSEE DID NOT PRESS THE GROUND, HENCE, IT WAS DISMISSED AS NOT PRESSED. THIS FACT IS EVIDENT FROM PARA 2 .1 OF THE LEARNED COMMISSIONER (APPEALS)S ORDER. TO A PERTINENT QUESTION FROM THE BENCH, THE LEARNED COUNSEL FOR THE ASSESSEE ALSO ACCEPTED THIS FACT. THAT BEING THE CASE, GROUND RAISED BEFORE THIS FORUM AGAIN CHALLENGING THE VALIDITY OF RE OPENING OF ASS ESSMENT UNDER SECTION 147, IN OUR VIEW, IS THOROUGHLY MISCONCEIVED, HENCE, CANNOT BE ENTERTAINED. ACCORDINGLY, WE DISMISS GROUNDS NO.1.1 TO 1.3 RAISED BY THE ASSESSEE. 4. GROUNDS NO.2.1 TO 2.2, ASSESSEE HAS CHALLENGED DISALLOWANCE OF ` 4,20,450, ON ACCOUNT O F CLAIM OF DEPRECIATION ON MOTORCAR. 5. BRIEFLY STATED THE FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, WHILE VERIFYING THE CLAIM FOR DEPRECIATION, NOTICED THAT TWO MOTORCARS ON WHICH ASSESSEE HAD CLAIMED DEPRECIATION AGGREGATING TO ` 4,20,458, WERE PURCHASED IN THE NAME OF DIRECTORS. THE ASSESSING OFFICER RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT AS REFERRED TO BY HIM IN THE ASSESSMENT ORDER, G.R. FASHIONS PVT. LTD. 3 HELD THAT AS THE ASSESSEE IS NOT THE OWNER OF THE MOTORCAR, CLAIM OF DEPRECIATIO N IS NOT ALLOWABLE. BEING AGGRIEVED OF SUCH DISALLOWANCE, THE ASSESSEE CHALLENGED THE SAME BY FILING APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LEARNED COMMISSIONER (APPEALS), HOWEVER, ALSO CONFIRMED THE DISALLOWANCE ACCEPTING THE REASONING OF THE AS SESSING OFFICER. 6. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THOUGH THE VEHICLES WERE PURCHASED AND REGISTERED IN THE NAME OF DIRECTORS UNDER THE MOTOR VEHICLE ACT, BUT FOR ALL PRACTICAL PURPOSES, THEY WERE USED BY THE ASSESSEE COMPANY. IT W AS SUBMITTED , INVESTMENT IN PURCHASE OF CARS WAS NOT ONLY DONE BY THE ASSESSEE BUT IT HAD ABSOLUTE RIGHT TO USE, SELL OR REPAIR THE MOTORCAR. IT WAS SUBMITTED , ALL EXPENDITURES RELATING TO USE AND MAINTENANCE INCLUDING INSURANCE OF VEHICLE S ARE BORNE BY TH E ASSESSEE COMPANY AND DEBITED IN ITS BOOKS OF ACCOUNT. HE, THEREFORE, SUBMITTED , ONLY BECAUSE THE MOTORCARS WERE PURCHASED IN THE NAME OF THE DIRECTORS, IT CANNOT BE SAID THAT THE COMPANY HAS NO RIGHT OVER THE VEHICLES, HENCE, NOT ELIGIBLE FOR DEPRECIATIO N. FOR SUCH PROPOSITION, HE RELIED UPON THE FOLLOWING TWO DECISIONS OF THE TRIBUNAL, MUMBAI BENCH: I) M/S. PADMASHREE WVG AND MFG MILLS PVT. LTD. V/S ACIT, ITA NO.6570/MUM./2013, ORDER DATED 30.6.2015 G.R. FASHIONS PVT. LTD. 4 II) M/S. V TEX WEAVING & MFG MILLS LTD., ITA NO .6572/MUM./2013 ORDER DATED 1.12.2015 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS). 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS FAR AS FACTUAL ASPECT IS CONCERNED, IT IS CLEARLY EVIDENT THAT THE DISALLOWANCE OF DEPRECIATION BY DEPARTMENTAL AUTHORITIES IS SOLELY FOR THE REASON THAT TWO MOTORCARS WERE PURCHASED AND REGISTERED IN THE NAME OF THE DIRECTORS WITHOUT CONTROVERTING THE FACT THAT THE INVESTMENT IN VEHICLE WERE MADE BY THE ASSESSEE COMPANY AND FOR ALL PRACTICAL PURPOSES, THE ASSESSEE COMPANY IS EXERCISING I T S RIGHTS A S OWNER OF THE MOTORCARS. AS COULD BE SEEN, IDENTICAL ISSUE OF DISALLOWANCE OF DEPRECIATION IN RESPECT OF MOTORCARS PURCHASED IN THE NAME OF DIRECTORS CAME UP FOR CONSIDERATION BEFORE THE CO ORDINATE BENCH OF THE TRIBUNAL IN THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL. THE TRIBUNAL FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN ICDS LTD. V/S CIT, 350 ITR 527 (SC), HELD THAT ONLY BECAUSE THE VEHICLES ARE PURCHASED AND REGISTERED IN THE NAME OF DIRECTORS AS PER THE PROVISIONS OF MOTOR VEHICLE ACT, IT CANNOT BE SAID THAT ASSESSEE COMPANY IS NOT ELIGIBLE FOR DEPRECIATION EVEN THOUGH FOR ALL PRACTICAL P URPOSES, THE VEHICLES ARE G.R. FASHIONS PVT. LTD. 5 USED BY THE ASSESSEE COMPANY FOR ITS BUSINESS. RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE CO ORDINATE BENCH OF THE TRIBUNAL AS REFERRED TO ABOVE, WE HOLD THAT ASSESSEES CLAIM OF DEPRECIATION ON MOTORCAR IS TO BE ALLOWED. A CCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DO SO. GROUNDS NO.2.1 TO 2.2, ARE ALLOWED. 9. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.01.2016 SD/ - N.K. BILLAIYA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED : 05.01.2016 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRI VATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI