DCIT, Circle-16(1), Hyderabad, Hyderabad V. Nac Infrastructure Equipment Ltd., Hyd, Hyderabad

ITA 464/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6354 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 21-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 24-04-2015
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Keywords: Depreciation; Difference of opinion; Assessment record; Change of opinion; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 464/HYD/2015 ASSESSMENT YEAR: 2005-06 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16(1), HYDERABAD VS M/S. NAC INFRASTRUCTURE EQUIPMENT LTD., HYDERABAD [PAN: AABCN8666K] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI M. SITARAM, DR FOR ASSESSEE : NONE DATE OF HEARING : 21-06-2016 DATE OF PRONOUNCEMENT : 06-07-2016 O R D E R THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-4, HYDERABAD D ATED 30-01-2015. REVENUE HAS RAISED TWO GROUNDS. THE F IRST ONE BEING CANCELLATION OF RE-ASSESSMENT ORDER PASSED U/S. 147 O F THE INCOME TAX ACT [ACT] BY THE CIT(A) HOLDING THAT RE-ASSESSMEN T PROCEEDINGS ARE BAD IN LAW. WITHOUT PREJUDICE TO THAT, REVENUE IS A LSO CONTESTING THAT CIT(A) ERRED IN DIRECTING DEPRECIATION AT 40% ON WHEEL LOADERS AND WHEEL GRADERS AS AGAINST DEPRECIATI ON AT 25% ALLOWED BY THE AO. NONE APPEARED FOR ASSESSEE. THE A PPEAL WAS DISPOSED OFF AFTER CONSIDERING THE SUBMISSIONS OF LD . DR EXPARTE ASSESSEE-RESPONDENT. 2. IN THE ASSESSMENT OF ASSESSEE ORIGINALLY COMPLETED U/S. 143(3), THE AO HAS ALLOWED THE DEPRECIATION AS CLAIMED BY ASSESSEE I.T.A. NO. 464/HYD/2015 M/S. NAC INFRASTRUCTURE EQUIPMENT LTD., :- 2 -: ON WHEEL LOADERS AND WHEEL GRADERS AT 40%. AFTER COM PLETION OF THE ASSESSMENT, THE SUBSEQUENT AO NOTICED THAT THESE TWO ITEMS REQUIRE DEPRECIATION ONLY AT 25% UNDER THE HEAD MACHI NERY AND PLANT AND ALLOWANCE OF DEPRECIATION AT 40% AS MOTOR-VE HICLE AS RESULT IN ESCAPEMENT OF INCOME. CONSEQUENTLY, A NOTICE U/S. 147 WAS ISSUED. ON 26-03-2010, IN THE RE-ASSESSMENT COMP LETED ASSESSEES OBJECTION REGARDING RE-OPENING AND ALSO R ATE OF DEPRECIATION WERE NEGATIVED BY THE AO. 3. ON APPEAL BEFORE THE LD. CIT(A), LD. CIT(A) ACCEP TED THE CONTENTIONS WITH REFERENCE TO THE REOPENING OF ASSESSMEN T. IT WAS SUBMITTED THAT REOPENING ON THE SAME SET OF FACTS AFTER CO MPLETION OF ASSESSMENT U/S. 143(3) AMOUNTS TO CHANGE OF OPINION AND HENCE BAD IN LAW. ASSESSEE RELIED ON THE FOLLOWING JUDGME NTS: I. PRAVEEN P. BHARCUHUA (MRS.) VS. DCIT [256 CTR 3446 (BOM); II. AMRIT FEEDS LTD., VS. ACIT & ORS [51 DTR 315] (CAL.); III. DECISION OF THE JURISDICTIONAL ITAT IN GVK BIOSCIENCE S P. LTD., VS. ADDL. CIT [29 ITR (TRIB) 684] (HYD); IV. KELVINATOR OF INDIA LTD., VS. CIT [256 ITR 1] (DEL)( FB) WHICH WAS APPROVED BY HON'BLE SUPREME COURT IN 320 ITR 561 (SC); 4. LD. CIT(A) ACCEPTING THE CONTENTIONS HELD AS UNDER: I HAVE PERUSED THE ASSESSMENT ORDER, DOCUMENTS PL ACED ON RECORD AND THE SUBMISSIONS OF THE APPELLANT DURING THE COURSE OF APPEAL PROCEEDINGS AND ALSO BEFORE THE ASSESSING OF FICER. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LEGAL POSITION AS SUBMITTED BY THE APPELLANT, IT IS SEEN THAT THE RE- ASSESSMENT PROCEEDINGS ARE NOT VALIDLY INITIATED AN D ARE LIABLE TO BE ANNULLED. THE ASSESSING OFFICER HIMSELF HAS RECORD ED AT PARA 2.1 OF ASSESSMENT ORDER THAT, FROM THE ASSESSMENT RECORD IT WAS NOTICED THAT , WHICH SHOWS THAT THE MATERIAL RELIED ON BY THE ASSESSING OFFICER TO INIT IATE REOPENING PROCEEDINGS WERE ALREADY ON RECORD AND REASSESSMENT PROCEEDINGS WERE INITIATED ONLY ON THE BASIS OF CHANGE OF OPINI ON. SINCE NO NEW I.T.A. NO. 464/HYD/2015 M/S. NAC INFRASTRUCTURE EQUIPMENT LTD., :- 3 -: MATERIAL IS ON RECORD NOR RELIED ON BY THE ASSESSIN G OFFICER TO INITIATE THE REASSESSMENT PROCEEDINGS, THE SAME CANNOT BE SA ID TO BE VALIDLY INITIATED. IN VIEW OF THE ABOVE AND ALSO R ESPECTFULLY FOLLOWING THE RATIOS LAID DOWN BY THE HON'BLE SUPRE ME COURT IN THE CASE OF KELVINATOR INDIA PVT. LTD., VS. CIT (2010) IN 32 ITR 561 (SC), THE REASSESSMENT PROCEEDINGS ARE HELD TO BE BAD IN LAW AND THE APPELLANTS GROUND OF APPEAL IS ALLOWED. 5. ON THE ISSUE OF DEPRECIATION ON WHEEL LOADERS AND WHEEL GRADERS, ASSESSEE MADE DETAILED SUBMISSIONS THAT THESE ITEMS ARE NOTHING BUT MOTOR-VEHICLE AS PER ENTRY III-(3)(II) OF APPENDIX-I OF INCOME TAX RULES. RELIANCE WAS PLACED ON THE JUDGME NT OF HON'BLE APEX COURT IN THE CASE OF BOSE ABRAHAM VS. STATE OF KERALA [AIR 2001 SC 835]. FURTHER, ASSESSEE ALSO RELIED ON THE H ON'BLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF GUJCO CARRIERS VS. CIT [256 ITR 50] (GUJ.) WHEREIN, MOTOR LORRIES WERE EXPLAINED TO INCLUDE FIRE TRUCKS, FORKLIFT TRUCKS AND CRANE TRUCKS WHICH ARE DESI GNED FOR SPECIAL SERVICES. ASSESSEE ALSO RELIED ON VARIOUS DECISIONS OF THE ITAT TO JUSTIFY THAT CLAIM OF 40% ALLOWED BY THE AO IN THE ORIGINAL ASSESSMENT IS CORRECT AND RESTRICTION BY THE AO TO 25% IS NOT ACCORDING TO THE PROVISIONS OF LAW. LD. CIT(A) ALL OWED ASSESSEES CLAIM BY STATING AS UNDER: 9. THE SUBMISSIONS OF THE ASSESSEE, THE FACTUAL P OSITION AS BROUGHT OUT BY THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER AND THE DOCUMENTS PLACED ON RECORD ARE CONSIDERED. IT IS SEEN THAT THOUGH THE MOTOR GRADERS AND WHEEL LOADERS ARE NOT DEPICTED AS MOTOR VEHICLES BY THE APPELLANT, THE SAME HAVE BEEN REGISTERED AS OTHER VEHICLE-MMV BY THE REGISTRATION AUTHORITIES . IN VIEW OF THE RATIOS LAID DOWN BY HON'BLE SUPREME COURT AND FOLLO WED BY VARIOUS TRIBUNALS HOLDING THAT THE MOTOR VEHICLES DESIGNED FOR SPECIAL SERVICES ARE TO BE TREATED AS MOTOR VEHICLES, THE A PPELLANT IS ELIGIBLE FOR DEPRECIATION @ 40% AS CLAIMED. RELIANCE IS SPE CIALLY PLACED ON THE DECISIONS OF HON'BLE KARNATAKA TRIBUNAL IN THE CASE OF BOTHRA SHIPPING SERVICES VS. CIT (ITA NO. 586/KOL/2010) AN D CIT VS. GAYLORD CONSTRUCTION (2010) 190 TAXMANN 406 (KER). ACCORDINGLY, THE GROUND OF APPEAL IS ALLOWED. I.T.A. NO. 464/HYD/2015 M/S. NAC INFRASTRUCTURE EQUIPMENT LTD., :- 4 -: 6. AFTER CONSIDERING THE DETAILED SUBMISSIONS OF THE DR AND PERUSING THE PAPER BOOK PLACED ON RECORD, I AM OF THE OPINION THAT THERE IS NO MERIT IN REVENUES CONTENTIONS. AS SEEN F ROM THE ASSESSMENT ORDER PASSED U/S. 143(3) ORIGINALLY, AO H AS CONSIDERED THE CLAIM OF DEPRECIATION AND MADE CERTAIN DISALLOWANC ES OUT OF VARIOUS DEPRECIATION CLAIMS MADE IN THE SCHEDULE. IT INDICATES THAT AO FOUND THE CLAIM OF 40% DEPRECIATION ON THE ABOVE SA ID VEHICLES APPROPRIATE AND ALLOWED THE SAME. SINCE THERE IS SPEC IFIC DISCUSSION ON THE DEPRECIATION CLAIMS IN THE FIRST ASS ESSMENT ORDER, ALLOWANCE OF 40% DEPRECIATION BY THE AO CERTAIN LY INDICATES THAT HE HAS CONSCIOUSLY ALLOWED THE DEPRECIATION AT THAT RATE AFTER DUE EXAMINATION. THEREFORE, ANY OPINION BY THE SUBS EQUENT AO TO RESTRICT THE SAME TO 25% IS A CHANGE OF OPINION, WHICH IS NOT PERMITTED UNDER THE PROVISIONS OF LAW. MOREOVER THE W HEEL LOADERS AND GRADERS ARE MOTOR VEHICLES AND IS CERTAINLY ELIG IBLE FOR DEPRECIATION AT 40% AS PER SCHEDULE AND THE CASE LAW ON THE SUBJECT. IN VIEW OF THIS, I DO NOT SEE ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE CIT(A), BOTH ON THE ISSUE OF REOPENING AND AS WELL AS ALLOWANCE OF DEPRECIATION AT 40% ON WH EEL LOADERS. FOR THESE REASONS, I UPHOLD THE ORDER OF CIT(A) AND REJECT THE GROUNDS OF REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH JULY, 2016 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 06 TH JULY, 2016 TNMM I.T.A. NO. 464/HYD/2015 M/S. NAC INFRASTRUCTURE EQUIPMENT LTD., :- 5 -: COPY TO : 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16 (1), HYDERABAD. 2. M/S. NAC INFRASTRUCTURE EQUIPMENT LTD., NAC CAMP US IZZAT NAGAR, KONDAPUR, CYBERABAD, HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-4, HYDERABAD 4. COMMISSIONER OF INCOME TAX-IV, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.