AJAY P. NAVGIRE, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 8(2)(4), MUMBAI

ITA 524/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6577 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 25-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAME IS ACCEPTED
• Keywords: Depreciation

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.524/MUM/2018 ASSESSMENT YEAR: 2013-14 SHRI A JAY P NAVGIRE, Q-1, PRATHMESH CO. HSG. SOC. LTD. VEER SAVARKAR MARG, PRABHADEVI, MUMBAI-400025 / VS. ACIT - 8(2)(4), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400025 ( /ASSESSEE) ( / REVENUE) P.A. NO.AABPN0154D / DATE OF HEARING : 14/02/2019 / DATE OF ORDER: 20/02/2019 / O R D E R PER G. MANJUNATHA, (ACCOUNTANT MEMBER) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-14, MUMBAI, DATED 04/12/2017 AND IT PERTAINS TO AY 2013 -14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- I. THE LEARNED CIT(A) ERRED IN LAW AND ON THE FACT OF THE CASE IN DISALLOWING DEPRECIATION OF RS.6,42,861/- AGAINST C AR HIRE CHARGES. II. THE INCOME HIRE CHARGES OFFERED AS INCOME FROM OTHE R SOURCES AND SAME IS ACCEPTED BY AO AND LEARNED CIT(A) / ASSESSEE BY DR. P. DANIEL / REVENUE BY SHRI MAURYA PRATAP 2 AJAY P. NAVGIRE III. THE APPELLANT THEREFORE PRAYS THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) M AY PLEASE BE ALLOWED. 2. THE BRIEF, FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF VEHICLE HIRING, FILED ITS RETURN OF INC OME FOR AY 2013-14 ON 03/10/2013, DECLARING TOTAL INCOME OF RS.14,73,990/-. DURING TH E YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECEIVED CAR HIRE CHARGES FROM VINAYAK ELECTOMECH PVT. LTD. AS PER THE AGREEMENT BETWEEN THE PARTIES, THE ASSESSEE HAS GIV EN THREE CAR ON HIRE EXCLUDING OF MAINTENANCE CHARGES FOR MONTHLY RENTAL. DURING THE ASSESSMENT PROCEEDINGS, THE AO CALLED UPON TO THE ASSESSEE TO FURNISH NECESSARY EV IDENCE INCLUDING AGREEMENT BETWEEN THE PARTIES TO SUPPORT INCOME DECLARED FROM CAR HIR E CHARGES. THE AO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT ON PERUSA L OF THE DETAILS FILED BY THE ASSESSEE, IT APPEARS THAT RECEIPT OF INCOME FROM CAR HIRING A CTIVITY IS IN FACT SHAM TRANSACTION AND COLOURABLE DEVICE TO CLAIM DEPRECIATION WHICH WOULD NOT ORDINARILY ALLOWABLE AS PER PROVISIONS OF THE ACT. THE AO FURTHER OBSERVED THA T THE ASSESSEE HAS NEITHER PROVED THE EVIDENCE OF RECEIPT OF CAR HIRE CHARGES, THEREFORE, HE OPINED THAT THE DEPRECIATION ON CAR CANNOT BE ALLOWED, ACCORDINGLY, DISALLOWED THE DEPR ECIATION ON MOTOR CAR AMOUNTING TO RS.6,42,861/-. 3. AGGRIEVED BY THE ORDER OF THE LD. AO, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE A SSESSEE HAS MADE AN ELABORATE SUBMISSIONS WHICH HAS BEEN REPRODUCED AT PARA- 3 ON PAGE 2 TO 5 OF THE LD. CIT(A)S ORDER. THE LD. CIT(A), AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE ASSESSEE, CONFIRMED 3 AJAY P. NAVGIRE THE ADDITIONS MADE BY THE AO TOWARDS DISALLOWANCE O F DEPRECIATION ON THE GROUND THAT FACT BROUGHT OUT BY THE AO DURING ASSESSMENT PROCEE DINGS, PROVES THAT THE CLAIM WAS IN FACT A DEVICE TO REDUCE THE TAX LIABILITY AND ACCOR DINGLY, DEPRECIATION ON VEHICLE CANNOT BE ALLOWED. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE LD. CIT(A ) WAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE AO TOWARDS DISALLOWANCE OF DEPRECIATION ON MOTOR CAR WITHOUT APPRECIATING THE FACT THAT THERE IS NO NEED OF EXPRESS WRITTEN A GREEMENT SETTING FORTH TERMS AND CONDITIONS IN ORDER TO PROVE THAT THERE IS AGREEMEN T BETWEEN THE PARTIES. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS FILED ENOUG H DETAILS TO PROVE RECEIPT AT HIRE CHARGES FROM M/S VINAYAK ELECTROMECH PRIVATE LIMITE D, EXCLUDING MAINTENANCE, THEREFORE, WHEN THE AO HAS ACCEPTED INCOME RECEIVED FROM CAR H IRE CHARGES, THERE IS NO REASON FOR DENYING DEPRECIATION ON SUCH MOTOR CAR. IN THIS REG ARD, HE RELIED UPON THE DECISION OF ITAT, PUNE BENCH, IN THE CASE OF KASAT TEXTILES PV T. LTD. VS ACIT (1998) 66 TTJ 0510. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED TH E ORDER OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS FILED ENOUGH MATERIAL TO PROVE RECEIPT OF CAR HIRE CHARGES FROM M/S VINAYAK ELECTROMECH PVT. LTD. ALTHOUGH THE HIRE CHARGES RECEIVED FROM THE COMPANY IS LESS WHEN COMPARED TO MARKET RATE ON THOSE VEHIC LES, BUT FACT REMAINS THAT THE ASSESSEE HAS STATED THAT IT HAS GIVEN VEHICLE ON HI RE EXCLUSIVE OF MAINTENANCE CHARGES THEREFORE, MERELY FOR THE REASON THAT HIRE CHARGES RECEIVED IS LESS CANNOT BE GROUND FOR THE 4 AJAY P. NAVGIRE AO TO DOUBT THE TRANSACTIONS BETWEEN THE PARTIES WH EN SUFFICIENT MATERIAL HAS BEEN FILED BEFORE THE AO. WE FURTHER NOTICED THAT THE ASSESSEE HAS FILED FURTHER DETAILS TO PROVE THAT ALL MAINTENANCE EXPENDITURE HAS BEEN INCURRED BY TH E COMPANY. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT AO WAS ERRED IN DISALLOWING DE PRECIATION WHEN HE HAS ACCEPTED CAR HIRE CHARGES RECEIVED FROM THE COMPANY. THE MOMENT , HE HAS ACCEPTED CAR HIRE CHARGES RECEIVED FROM THE COMPANY IT GOES TO PROVE THE FACT THAT THE RE-EXIST AN AGREEMENT BETWEEN THE PARTIES EVEN THOUGH THERE IS NO EXPRESS WRITTEN AGREEMENT BETWEEN PARTIES FOR SUCH ARRANGEMENTS. HENCE, WE ARE OF THE CONSIDE RED VIEW, THERE IS NO MERIT IN THE FINDINGS OF THE AO IN DISALLOWING DEPRECIATION ON M OTOR CAR. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW THE DEPRECIATION ON VEHICLE AS CLAIMED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/02/2019. SD/- SD/- ( MAHAVIR SINGH ) (G. MANJUNATHA) ! ' /JUDICIAL MEMBER # ' / ACCOUNTANT MEMBER MUMBAI; DATED : 20/02/2019 F{X~{T? P.S / /. .. $!%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT (RESPECTIVE ASSESSEE) 2. #$%!' / THE RESPONDENT. 3. &% &% ' ( ) / THE CIT, MUMBAI. 4. &% &% ' / CIT(A)- , MUMBAI, 5. )*+ % # , , &% % ,. , / DR, ITAT, MUMBAI 6. +/ 0 / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI