Sri.Satheesan Balakrishnapillai, Punalur V. The ACIT(CPC), bangalore, Bangalore

ITA 55/COCH/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7160 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-09-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 21-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: SURENDRANATHA RAO
• Keywords: Business income; Depreciation; Rectification of order
• Section: 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI CHANDRA POOJARI, AM & GEORGE GEORGE K., JM I .T . A. NO. 55 / COCH/ 201 8 ASSESSMENT YEAR : 2012 - 13 SHRI SATHEESAN BALAKRISHNA PILLAI, ARUN ENTERPRISES, KP/XXVIII/201, KARAVALOOR, PUNALUR, KOLLAM-691 333. [PAN:AGGPP 4848P] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CPC, BANGALORE. (ASSESSEE - APPELLAN T) (REVENUE - RESPONDENT) A SSESSEE BY SHRI SURENDRANATHA RAO, CA REVENUE BY SMT. A.S. BINDHU, DR D ATE OF HEARING 26 / 09 /2018 DATE OF PRONOUNCEMENT 28 / 0 9 /2018 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), TRIVANDRUM DATED 08/01/2018 WHICH IS EMANATING FROM THE RECTIFICATION ORDER U/S. 154 OF THE I.T. ACT PASSED BY THE ASSISTANT COMMISSIONER OF INCOME-TAX (CPC), BANGALORE DATED 13/07/2013 AND PERTAINS TO THE ASSESSMENT YEAR 2012- 13. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DEALER IN HARDWARES, PAINTS ETC. AND ALSO A DEALER IN PETROLEUM PRODUCTS UNDER THE NAME ASWATHY FUELS. THE ASSESSEE HAD SHOWN IN THE INCOME TAX RETURN, APART FROM INCOME EARNED FROM I.T.A. NO. 55/COCH/2018 2 THE REGULAR BUSINESS THE INCOME EARNED FROM OPERATING GOODS VEHICLE/LORRIES AND ALSO THE CORRESPONDING EXPENSES ADDED TO THE NET PROFIT & LOSS ACCOUNT. A SUM OF RS.1,14,000/- WAS SHOWN AS INCOME FROM THESE VEHICLES AGAINST EXPENDITURE E INCURRED OF RS.15,29,812/-. THE INCOME FROM TRANSPORT BUSINESS WAS TREATED SEPARATELY AND ACCORDINGLY, SHOWN U/S 44AE OF THE ACT. THE ASSESSING OFFICER ADDED THE INCOME FROM TRANSPORT BUSINESS AND DISALLOWED THE CORRESPONDING EXPENSES RESULTING IN ENHANCEMENT OF INCOME TO THE TUNE OF RS.14,15,812/-. IT IS AGAINST THIS ORDER, THE APPELLANT HAD FILED ONLINE RECTIFICATION WHICH WAS NOT ENTERTAINED BY THE ASSESSING OFFICER BUT STILL CONTINUED TO TAX THE INCOME AT RS.14,15,812/-. 3. ON APPEAL, THE CIT(A) OBSERVED THAT THE INCOME EARNED FROM THE VEHICLES IS TO BE TAXED AS BUSINESS INCOME SINCE THE ASSESSEE WAS NOT IN THE BUSINESS OF OPERATING THE VEHICLES BUT VEHICLES WERE OCCASIONALLY UTILIZED BOTH IN THE HARDWARE AND PETROL PUMP BUSINESS. ACCORDING TO THE CIT(A), IT IS INCIDENTAL THAT AN AMOUNT OF EXTRA INCOME WAS EARNED BY USING THE VEHICLES FOR TRANSPORTING HARDWARE AND PETROLEUM PRODUCTS WHICH ALONE WILL NOT MAKE THE ASSESSEE TO HAVE RIGHT FOR TAXING THE INCOME EARNED FROM THE VEHICLES SEPARATELY UNDER DIFFERENT SECTION. WITH REGARD TO THE CORRESPONDING EXPENSES, ACCORDING TO THE CIT(A), IT IS NOT THE CASE OF THE ASSESSEE THAT THEY HAD DEBITED IN THE PROFIT & LOSS ACCOUNT ONLY THE EXPENDITURE WHICH HAD DIRECT LINK TO THE REGULAR BUSINESS IN HARDWARE AND PETROLEUM PRODUCTS AND NONE OF THE EXPENSES SPENT TOWARDS I.T.A. NO. 55/COCH/2018 3 OPERATING THE VEHICLES, THE INCOME OF WHICH ACCORDING TO ASSESSEE IS TO BE ASSESSED TO TAX U/S 44AE, HAD EVER BEEN DEBITED. THEREFORE, ACCORDING TO THE CIT(A), CLAIMING THE SAME EXPENSES SEPARATELY WOULD ACTUALLY RESULT IN DOUBLE CLAIM/DEDUCTION WHICH CANNOT BE ALLOWED AND IT IS NOT TENABLE UNDER THE EXTANT PROVISIONS OF THE ACT AND NO PART OF THE INCOME EARNED BY THE ASSESSEE FROM OPERATING THE SAID VEHICLE CAN BE TAXED SEPARATELY AS THE VEHICLES WERE PURCHASED BY THE ASSESSEE FOR THE BUSINESS PURPOSE OF ARUN ENTERPRISES AND ASWATHY FUELS. THE CIT(A) OBSERVED THAT THE ASSESSEE IS ENTITLED ONLY FOR DEPRECIATION ON VEHICLES AS BUSINESS ASSETS BUT NOT ASSETS USED FOR OPERATING THE VEHICLES ON COMMERCIAL BASIS. ACCORDING TO THE CIT(A), THE ASSESSEE HAD MAINTAINED SEPARATE SETS OF BOOKS OF ACCOUNT FOR THE VEHICLES THEY MAINTAINED AND FOR THE INCOME EARNED THEREFROM AND THE VEHICLES WERE PURCHASED SEPARATELY WITH THE INTENTION OF TRANSPORTING BUSINESS AND INCIDENTALLY THEY USED THE SAME FOR THE MAIN BUSINESS THROUGH WHICH THEY EARNED N INCOME WHICH IN TURN IS TO BE TAXED U/S 44AE. CONSIDERING ALL THE ABOVE, THE CIT(A) CONFIRMED THE DECISION OF THE ASSESSING OFFICER IN NOT ENTERTAINING THE REQUEST FOR RECTIFICATION WHILE CONCLUDING THAT THE INCOME EARNED FROM OPERATING THE VEHICLES IS TO BE TREATED AS BUSINESS INCOME AND NOT INCOME TO BE TAXED U/S44AE. 4. THE LD. AR SUBMITTED THAT THE ASSESSEE, IN ADDITION TO CARRYING ON REGULAR BUSINESS IN HARDWARE AND PETROL PUMP, OWNED TWO VEHICLES, ONE VEHICLE WAS A MAHINDRA PICK UP VAN EXCLUSIVELY USED FOR HARDWARE BUSINESS FOR BRINGING I.T.A. NO. 55/COCH/2018 4 MATERIALS FROM DISTRIBUTORS AND SUPPLYING TO CUSTOMERS AND THE OTHER VEHICLE WAS TANKER LORRY EXCLUSIVELY USED FOR TRANSPORTING FUEL FROM KOCHI TO KARAVALOOR. THE LD. AR SUBMITTED THAT THE INCOME FROM THE TANKER LORRY WAS RS.14,70,302/- AND INCOME FROM THE MAHINDRA PICKUP VAN WAS RS. 59,510/- AND THESE AMOUNTS WERE CREDITED INO THE PROFIT & LOSS A/C AND CORRESPONDING EXPENSES WERE ALSO DEBITED IN THE SAME ACCOUNT. HOWEVER, IT WAS SUBMITTED THAT WHILE PREPARING THE STATEMENT OF INCOME, INADVERTENTLY THE ASSESSEE TOOK THE INCOME FROM BOTH THE VEHICLES U/S 44AE AND HENCE, THERE WAS DUPLICATION OF INCOME. THEREFORE, THE LD AR SUBMITTED THAT THIS ISSUE NEEDED TO BE RECONSIDERED. 5. THE LD. DR RELIED ON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. AS SEEN FROM THE DETAILS IN THE PAPER BOOK FILED BY THE ASSESSEE, THE ASSESSEE OFFERED INCOME U/S. 44AE OF THE ACT AS UNDER: STATEMENT OF TOTAL INCOME RS. RS. RS. PROFITS AND GAINS OF BUSINESS OR PROFESSION TRANSPORT BUSINESS - U/S 44AE (SCHEDULE 1) 1,14,000 BUSINESS NET PROFIT BEFORE TAX AS PER P&L A/C 6,87,573 ADD: INADMISSIBLE EXPENSES & INCOME NOT INCLUDED DEPRECIATION DEBITED TO P&L A/C 4,68,410 EXPENSES CONSIDERED UNDER OTHER HEADS (SCHEDULE 2) 10,64,285 37 DISALLOWANCE (SCHEDULE 3) 55,492 15,88,187 22,75,760 I.T.A. NO. 55/COCH/2018 5 LESS: DEDUCTIBLE EXPENDITURE & INCOME TO BE EXCLUDED INCOMES CONSIDERED SEPARATELY (SCHEDULE 4) 15,29,812 ADJUSTED PROFIT FROM BUSINESS1 7,45,948 TOTAL INCOME FROM BUSINESS AND PROFESSION 8,59,948 LESS: DEPRECIATION AS PER IT ACT (SCHEDULE 5) 2,23,291 INCOME CHARGEABLE UNDER THE HEAD 'BUSINESS AND PROFESSION' 6,36,657 GROSS TOTAL INCOME 6,36,657 DEDUCTIONS UNDER CHAPTER VI-A INVESTMENT U/S. 80C, CCC, CCD, CCF LIFE INSURANCE PREMIUM (SCHEDULE 6) 27,212 TOTAL INVESTMENT SUBJECT OF CEILING U/S. 80CCE 27,212 TOTAL INCOME 6,09,445 AGRICULTURAL INCOME 1,60,000 TOTAL INCOME ROUNDED OFF U/S. 288A 6.1 HOWEVER WHILE PROCESSING THE RETURN U/S. 143(1) OF THE ACT, THE INCOME OF THE ASSESSEE WAS COMPUTED AT RS.20,52,469/- AS AGAINST THE RETURNED INCOME OF RS.6,36,657/-. THERE WAS AN ADDITION OF RS.14,15,812/- ON ACCOUNT OF NON GRANTING OF DEDUCTION OF EXPENDITURE AS CLAIMED BY THE ASSESSEE. IN OUR OPINION, THIS IS TO BE LOOKED INTO BY THE ASSESSING OFFICER SO AS TO ASCERTAIN THE CORRECT INCOME OF THE ASSESSEE. ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CARRY OUT NECESSARY CORRECTION IN THE INTIMATION SENT BY CPC, BANGALORE, IF REQUIRED. HENCE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 55/COCH/2018 6 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH SEPTEMBER, 2018. SD/- SD/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 28 TH SEPTEMBER, 2018 GJ COPY TO: 1. SHRI SATHEESAN BALAKRISHNA PILLAI, ARUN ENTERPRISES, KP/XXVIII/201, KARAVALOOR, PUNALUR, KOLLAM-691 333. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CPC, BANGALORE. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS),TRIVANDRUM 4. THE PR. COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN