ITO, Chandigarh V. M/s Awagaman Cargo Carriers Pvt. Ltd., Chandigarh

ITA 519/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60924 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: NARESH SINGLA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R. SOOD, AM AND MS. SUSHMA CHOWLA, JM ITA NO. 519/CHD/2012 ASSESSMENT YEAR: 2006-07 I.T.O. WARD 5(1), CHANDIGARH V M/S AWAGAMAN CARGO CARRIERS PVT LTD PLOT NO. 20, TRANSPORT AREA SECTOR 26, CHANDIGARH AACCA 9985 B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MANJIT SINGH RESPONDENT BY: SHRI NARESH SINGLA DATE OF HEARING: 27.06.2012 DATE OF PRONOUNCEMENT: 06.07.2012 ORDER PER T.R. SOOD, A.M IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWIN G EFFECTIVE GROUND: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13,85,000/- M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF CLAIM OF EXCESS DIESEL CONSUMPTION. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS RUNNING A TRANSPORT BUSINESS AND OPERATING EIGHT TRUCKS BETWE EN CHANDIGARH AND PUNE. HE NOTICED THAT 320 TRIPS WERE TAKEN BY THE ASSESSE E AND DISTANCE BETWEEN CHANDIGARH AND PUNE IS 1750 KMS, THEREFORE, TOTAL K ILOMETERS COVERED WERE 5,60,000 KMS. TAKING AVERAGE OF 4 KMS PER LITRE, D IESEL CONSUMPTION WAS COMPUTED AT 1,40,000 LITRE AND BY APPLYING RATE OF RS. 30/- TOTAL CONSUMPTION WAS COMPUTED AT RS. 42.00 LAKHS WHERE AS THE ASSESS EE HAD CLAIMED CONSUMPTION OF FUEL AT RS. 60.00 LAKHS . ON A QUER Y THE ASSESSEE SUBMITTED THE DETAILED REPLY VIDE LETTER DATED 31.12.2009 IN WHICH THE REASONS FOR CLAIMING OF FUEL EXPENSES WERE SUBMITTED AS UNDER:- 1 DIFFERENCE IN THE RATES TAKEN FOR CALCULATIONS AT RS. 30.00 PER LITRES BY YOUR GOODSELF. THE RATE OF DIESEL VARIES STATE- WISE. IT RANGED FROM 31.36 TO RS. 38.74 STATE WISE DURING THE YEAR UNDER ASSESSMENT. PROOF OF THE SAME ARE ENCLOSED HEREWIT H YOUR KIND REFERENCE. 2 2 AVERAGE MILEAGE TAKEN FOR CALCULATION IS 4 KM/LIT RES BY YOUR GOODSELF. THE MILEAGE ALSO VARIES AS PER THE CONDI TIONS. DATE OF PURCHASE, LOAD ETC. OF THE LORRIES/TRUCK. IT VARIE S FROM 3.25 TO 3.40 KM/LITRES. COPIES OF THE RC HAS ALREADY BEEN SUBMITTED WITH YOUR OFFICE. MOREOVER, SOMETIMES THE TRUCK HAS TO STAND IDLE (START MODE) AT CHECK POST/TOOL TAX FOR AROUND 1-2 HOURS. THERE ARE AROUND 18-20 CHECK POST AND 55-60 TOLL TAX DURI NG THE TRIP. 3 TOTAL RUNNING KILOMETERS TAKEN ARE 3,500 PER ROUN D TRIP BY GOODSELF. THE RUNNING KILOMETERS ARE TAKEN BY YOUR GOODSELF ARE ON CITY-TO CITY BASIS. OUR CLIENT PREMISES ARE NOT IN HEART OF THE CITIES. OUR LORRIES HAVE TO MOVE AROUND 100-125 KM S TO TAKE/GIVE DELIVERY AT CLIENTS PREMISES DUE TO BY PASS ENTRIE S. GOODS HAVE TO BE LIFTED FROM THEIR GODOWNS/OTHER INDUSTRIES. SOMETIMES, THE TRUCKS MAY HAVE TO TAKE LONGER ROUTES DUE TO TRAFFI C. NO ENTRY AND OTHER UNAVOIDABLE CIRCUMSTANCES. 3. THE ASSESSING OFFICER DID NOT FIND FORCE IN THES E SUBMISSIONS. HE ALSO NOTED THAT AVERAGE PRICE OF DIESEL IN CHANDIGARH WA S RS. 30/- TO RS. 32/- AND THE ASSESSEE HAD PURCHASED ABOUT 60% DIESEL IN CHAN DIGARH ITSELF AND THEREFORE, AVERAGE RATE OF DIESEL WAS APPLIED AT R S. 31/-. ON THIS BASIS THE EXCESS CLAIM WAS WORKED OUT AS UNDER: THE ASSESSEE HAS STATED IN HIS ABOVE REFERRED REPL Y THAT TRUCK HAS TO RUN 100 KMS EXTRA TO MAKE DELIVERY. THE ASSESSEE P LEA IS NOT ACCEPTABLE AS THE TOTAL LENGTH OF A CITY MAY NOT BE 25 KMS. HENCE 25 KMS EXTRA MILEAGE IS ADDED TO THE TOTAL MILEAGE OF PER TRIP. THE ASSESSEE HAS MADE 160 TRIPS UP DOWN AND ON AVERAGE OF 1775 KMS. HENCE TOTAL KILOMETER COMES TO 5,68,000. AS PER AV ERAGE OF 4 KMS PER LITRE DIESEL CONSUMPTION COMES TO 1,42,000 LITRES. HALF OF IT CHARGED ON AVERAGE OF RS. 31 PER LITRE AND HALF OF IT CHARGED AT RS. 33 PER LITRE. THE TOTAL CONSUMPTION COMES TO 71000 X 31 = 22,01,000/- AND 71,000 X 34 = 24,14,000/-. TOTAL COMES TO RS. 46,15,000/-. DIFF ERENCE BETWEEN RS. 46,15,000/- AND RS. 60 LAKHS I.E. RS. 13,85,000/- I S ADDED TO THE INCOME OF THE ASSESSEE. AS ASSESSEE NEEDS ONLY DIESEL OF RS. 46,15,000/- AS PER ABOVE DISCUSSION AND REMAINING AMOUNT OF RS. 13 ,85,000/- CLAIMED ON DIESEL EXPENSES IS DISALLOWED AND ADDED TO THE I NCOME OF THE ASSESSEE. HENCE AN ADDITION OF RS. 13,85,000/- IS MADE TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL THE SUBMISSIONS MADE BEFORE THE ASSESS ING OFFICER WERE REITERATED. IT WAS FURTHER EMPHASIZED THAT APART F ROM DISTANCE BETWEEN CHANDIGARH AND PUNE, GENERALLY A TRUCK HAS TO RUN F URTHER A DISTANCE OF 100 KMS WITHIN THE CITIES FOR LOADING AND UNLOADING OF THE GOODS. 5. THE LD. CIT(A) FOUND FORCE IN THE SUBMISSIONS AN D DELETED THE ADDITION VIDE PARA 2.3 WHICH IS AS UNDER:- I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSE L. THE ASSESSING OFFICER HAS MADE HIS OWN CALCULATION IN THIS CASE WITHOUT C ONSIDERING THE REPLY OF THE APPELLANT. THE APPELLANT HAD DULY EXPLAINED IN THE ASSESSMENT PROCEEDINGS THAT THE RATE OF DIESEL VARIES BETWEEN RS. 31.36 TO RS. 38.74 PER LITRE. IT IS NOT 3 UNDERSTOOD AS TO HOW THE ASSESSING OFFICER HAS APPL IED RATE OF RS. 31 PER LITRE FOR HALF DISTANCE AND RS. 33 FOR THE OTHER HALF. T HERE IS SUBSTANTIAL FORCE IN THE ARGUMENT OF THE LD. COUNSEL THAT THE VEHICLES HAVE TO MOVE 100 TO 125 KMS TO GIVE DELIVERY AT THE CLIENTS PREMISES DUE TO BYE-P ASS ENTRIES. THUS, IT WAS NOT PROPER FOR THE ASSESSING OFFICER TO ADOPT FIXED DIS TANCE, PARTICULARLY FOR A TOWN LIKE PUNE, WHICH IS LOCATED IN 450 SQ. KM OF AREA. THE ASSESSING OFFICER WAS ALSO NOT RIGHT IN TAKEN AVERAGE MILEAGE OF 4 KM PER LITRE WITHOUT TAKING INTO ACCOUNT AGE AND CONDITION OF TRUCK. ALSO, THE DIES EL CONSUMED SOME TIMES IS HIGH DUE TO SLOW MOVEMENT AND WAITING AT NAKAS DUE TO UNAVOIDABLE CIRCUMSTANCES. THE ASSESSING OFFICER HAS MADE THE ADDITION BY CALCULATING THE EXPENSES OF DIESEL IN EXTREMELY IDEAL SITUATIONS AN D WITHOUT LOOKING INTO THE ACTUAL DISTANCE COVERED AND THE MILEAGE WITHOUT ANY SUBSTANTIAL EVIDENCE IN HIS POSSESSION. THE ASSESSING OFFICER HAS NOWHERE POIN TED OUT, IF THE APPELLANT HAD NOT MAINTAINED PROPER DOCUMENTARY EVIDENCE REGA RDING CONSUMPTION OF DIESEL. IN VIEW OF THIS DISCUSSION, IT IS HELD THA T THE ASSESSING OFFICER WAS NOT RIGHT IN MAKING THE ADDITION OF RS. 13,85,000/- OUT OF APPROXIMATELY RS. 60,00,000/- CLAIMED AS DIESEL EXPENSES AND HENCE TH E SAME IS DELETED. GROUNDS OF APPEAL NO. 1 & 2 ARE ALLOWED. 6. BEFORE US, THE LD. DR FOR THE REVENUE STRONGLY S UPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE H AD FILED RETURN DECLARING ONLY RS. 52,688/- FOR EIGHT TRUCKS WHICH WAS MUCH BELOW EVEN COMPARED TO PRESUMPTIVE TAX FOR EACH TRUCK PRESCRIBED U/S 44AE. HE ALSO SUBMITTED THAT AVERAGE RATE OF DIESEL WAS WORKED OUT ON THE BASIS OF DIESEL RATE PREVAILING IN CHANDIGARH FROM WHERE THE ASSESSEE HAD PURCHASED MA XIMUM DIESEL. 7. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSES SEE SUBMITTED THAT AVERAGE OF 4 KMS PER LITRE OF DIESEL ASSUMED BY THE ASSESSING OFFICER IS NOT CORRECT BECAUSE GENERALLY FUEL AVERAGE WAS 3.25 KMS PER LITRE. HE ALSO SUBMITTED THAT APART FROM DISTANCE BETWEEN TWO CITI ES, SOMETIMES THE TRUCKS HAVE TO TRAVEL FURTHER DISTANCE WITHIN THE CITIES FOR LOADING AND UNLOADING THE GOODS. THE TRUCKS HAVE ALSO TO RUN FOR GOING TO WO RKSHOP AND GETTING FUEL WHICH ALSO TAKES FUEL CONSUMPTION. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AN D FIND FORCE IN THE SUBMISSIONS OF THE LD. DR FOR THE REVENUE. THE ASS ESSING OFFICER HAD ADOPTED A RATE OF DIESEL AS PREVAILING IN CHANDIGARH AND SI NCE THE MAXIMUM DIESEL WAS PURCHASED IN CHANDIGARH THEREFORE, IT CANNOT BE QU ESTIONED HOW THE ASSESSING OFFICER HAS ADOPTED THE VALUE AT RS. 31/-. THOUGH THIS VALUE SEEMS TO BE OF LITTLE LOWER SIDE. HOWEVER, IT REMAINS A FACT THA T THE ASSESSEE HAD DECLARED A PROFIT AT RS. 52,682/- WHICH IS VERY LOW. THOUGH W E APPRECIATE THE ARGUMENT THAT THE TRUCKS HAVE TO TRAVEL EXTRA DISTANCE FOR L OADING AND UNLOADING THE 4 GOODS, FOR GOING TO THE WORKSHOP AND GETTING THE FU EL ETC. THEREFORE, CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE IT WAS PROPOSED THAT AN ESTIMATED ADDITION OF RS. 1,50,000/- WOULD MEET THE ENDS OF JUSTICE. THIS PROPOSAL WAS ACCEPTED BY THE LD. COUNSEL OF TH E ASSESSEE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT TH E ASSESSING OFFICER TO MAKE AN ADDITION OF ONLY RS. 1,50,000/- TOWARDS THE EXCESS CLAIM OF DIESEL. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON 06.07. 2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06.07.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 5