RAJI KANNIYAPPAN, CHENNAI V. ITO WARD XI(1), CHENNAI

ITA 565/CHNY/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9737 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 16-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: N DEVANATHAN
• Keywords: Capital asset; Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.565/CHNY/2018 ' (' / ASSESSMENT YEAR : 2010-11 SHRI RAJI KANNIYAPPAN, NO.84/217, ANGAPPA NAICKEN STREET, MANNADY, CHENNAI - 600 001. PAN : APXPK 4991 G V. THE INCOME TAX OFFICER, WARD XI (1), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. N. DEVANATHAN, ADVOCATE ,-*+ . / / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT 0 . 1$ / DATE OF HEARING : 28.11.2018 2!( . 1$ / DATE OF PRONOUNCEMENT : 03.12.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -5, CHENNAI, D ATED 23.09.2016 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.565/CHNY/18 2. THERE WAS A DELAY OF 451 DAYS IN FILING THE APPE AL BY THE ASSESSEE. THE ASSESSEE HAS FILED APPLICATION FOR C ONDONATION OF DELAY. HAVING HEARD THE LD.COUNSEL FOR THE ASSESSEE AND TH E LD. D.R., THIS TRIBUNAL FINDS THAT THERE WAS A SUFFICIENT CAUSE ON THE PART OF THE ASSESSEE IN NOT FILING THE APPEAL WITHIN THE SPECIF IED TIME. THEREFORE, THE DELAY OF 451 DAYS IN FILING THE APPEAL IS HEREBY CO NDONED AND THE APPEAL IS ADMITTED. 3. NOW COMING TO THE MERIT OF THE APPEAL, SH. N. DE VANATHAN, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE AR E TWO GROUNDS INVOLVED IN THIS APPEAL. THE FIRST ISSUE IS WITH R EGARD TO DISALLOWANCE OF DEPRECIATION OF 3,18,550/- ON THE LORRY AND THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF COMMISSION EXPENSES OF 12,48,980/-. ACCORDING TO THE LD. COUNSEL, IT IS NOT A COMMISSION. IT IS HIR E CHARGES. THE ASSESSING OFFICER, ACCORDING TO THE LD. COUNSEL, DISALLOWED T HE CLAIM OF THE ASSESSEE WITH REGARD TO DEPRECIATION ON THE GROUND THAT THERE WAS NO ADDITION TO THE CAPITAL ASSET. REFERRING TO PAGE 1 2 OF THE PAPER-BOOK, THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE PURCHASED A LORRY BEARING REGISTRATION NO.KA 01 C-4267 ON 09.06.2009 FOR A SU M OF 13,85,000/-. REFERRING TO THE JUDGMENT OF KERALA HIGH COURT IN C IT V. NIDISH TRANSPORT CORPORATION (1990) 185 ITR 669, THE LD.COUNSEL SUBM ITTED THAT TRANSFER OF REGISTRATION IS NOT NECESSARY FOR TRANSFER OF OW NERSHIP OF MOTOR VEHICLE. ACCORDING TO THE LD. COUNSEL, TRANSFER TAKES EFFECT WHEN THE MOTOR VEHICLE 3 I.T.A. NO.565/CHNY/18 WAS HANDED OVER TO THE ASSESSEE. EVEN BEFORE THE T RANSFER IS EFFECTED IN THE REGISTRATION CERTIFICATE, THE ASSESSEE USED THE VEHICLE AS ITS OWN. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ASSESS EE IS ENTITLED FOR DEPRECIATION. HENCE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN SAYING THAT THERE WAS NO ADDITION TO THE FIXED ASSET. 4. REFERRING TO THE CLAIM OF 12,48,980/-, THE LD.COUNSEL SUBMITTED THAT IT IS HIRE CHARGES PAID TO OTHER LORRY OWNERS. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HIRED LORRY FROM OTHER OWNERS AND PAID HIRE CHARGES. THEREFORE, IT IS NOT A COMMISSION. THE V OUCHERS AND OTHER MATERIAL ARE AVAILABLE WITH THE ASSESSEE TO ESTABLI SH THE PAYMENT OF HIRE CHARGES. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. 5. WE HEARD SHRI B. SAGADEVAN, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. WITH REGARD TO CLAIM OF DEPRE CIATION, THE ASSESSEE HAS PRODUCED A COPY OF SALE RECEIPT SAID TO BE ISSU ED BY THE LORRY OWNERS, COPY OF WHICH IS AVAILABLE AT PAGE 12 OF TH E PAPER-BOOK. IT IS NOT KNOWN WHETHER THE COPY OF SALE RECEIPT WAS AVAILABL E BEFORE THE ASSESSING OFFICER AND THE CIT(APPEALS). AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, TRANSFER OF REGISTRATI ON IN THE NAME OF THE ASSESSEE MAY NOT BE REQUIRED FOR THE PURPOSE OF CLA IM OF DEPRECIATION. WHAT IS REQUIRED IS DELIVERY OF MOTOR VEHICLE TO TH E ASSESSEE. IN FACT, THE 4 I.T.A. NO.565/CHNY/18 KERALA HIGH COURT IN ITS JUDGMENT IN THE CASE OF NI DISH TRANSPORT CORPORATION (SUPRA) OBSERVED AS FOLLOWS AT PARAGRAP H 3:- THE TRANSFER OF OWNERSHIP OF THE VEHICLES IS N OT A MATTER GOVERNED BY THE PROVISIONS OF THE MOTOR VEHI CLES ACT. A MOTOR VEHICLE IS MOVABLE PROPERTY. THE TRANS FER OF OWNERSHIP THEREOF IS GOVERNED BY THE SALE OF GOODS ACT. TRANSFER TAKES EFFECT FROM THE DATE OF SALE. AS BET WEEN THE TRANSFEROR AND THE TRANSFEREE, THE SALE IS COMP LETE EVEN BEFORE THE TRANSFER IS EFFECTED IN THE REGISTR ATION CERTIFICATE. THE FAILURE TO REPORT THE SAME TO THE REGISTERING AUTHORITY MAY ENTAIL LEVY OF PENALTY PR ESCRIBED UNDER SECTION 31 OF THE MOTOR VEHICLES ACT OR SECTIO N 112 OF THE ACT. BEYOND THAT, IT DOES NOT AFFECT THE PASS ING OF TITLE. LAW IS FAIRLY CLEAR THAT REGISTRATION IS NOT NECESSARY TO PASS TITLE IN THE MOTOR VEHICLE. THE DECISIONS OF T HE SUPREME COURT IN PANNA LAL V. CHAND MAL, AIR 1980 SC 871 ; [1980] ACJ 233 AND THE DECI SIONS OF THIS COURT IN ALIYAR KUNJU V. SUBAIR KHAN [1984] KLT 268, KUNJU RAMAN V. SARAMMA [1986] KLT 742 AND M. SWAMINATHAN V. C. K. JAYALAKSHMI AMMA [1989] 66 COMP CAS 503 ; [1987] 2 KLT 292, ESTABLISH THAT FOR THE TRANSFER OF OWNERSHIP OF A MOTOR VEHICLE, MUTATION OF THE SAME IN THE CERTIFIC ATE OF REGISTRATION IS NOT NECESSARY AND THE VEHICLE CAN B E SOLD AND PURCHASED WITHOUT FOLLOWING THE PROCEDURE PRESCRIBE D UNDER SECTION 31 OF THE MOTOR VEHICLES ACT. IN THE LIGHT O F THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT THE APPELL ATE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ASSES SE ES WHO PURCHASED THE VEHICLES AND USED THEM DURING THE REL EVANT PREVIOUS YEARS ARE ENTITLED TO THE DEPRECIATION ALL OWANCE. THE ASSESSEES WERE, NO DOUBT, THE OWNERS OF THE VEH ICLES. THEY USED THE VEHICLES FOR THEIR BUSINESS AND THEY ARE ENTITLED TO DEPRECIATION ON THE BUSES. WE, THEREFOR E, ANSWER BOTH THE QUESTIONS REFERRED TO US IN BOTH TH E CASES IN THE AFFIRMATIVE, AGAINST THE REVENUE AND IN FAVO UR OF THE ASSESSEES. 5 I.T.A. NO.565/CHNY/18 6. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO VERIFY THE SALE R ECEIPT, COPY OF WHICH IS AVAILABLE AT PAGE 12 OF THE PAPER-BOOK AND THEREAFT ER DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE JUDGMENT OF KERALA HIGH COURT IN NIDISH TRANSPORT CORPORATION (SUPRA), IN ACCORDANCE WITH L AW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. NOW COMING TO THE CLAIM OF HIRE CHARGES OF 12,48,980/-, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE ON THE GROUND THAT THERE WAS NO VOUCHER PRODUCED BEFORE HIM. HOW EVER, THE ASSESSEE CLAIMS THAT THE VOUCHERS WERE AVAILABLE TO SUBSTANT IATE THE PAYMENT OF HIRE CHARGES. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITI ES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE O F THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER I N THE LIGHT OF THE MATERIAL THAT MAY BE PRODUCED BY THE ASSESSEE AND T HEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6 I.T.A. NO.565/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 3 RD DECEMBER, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) ( N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 3 RD DECEMBER, 2018. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-5, CHENNAI 4. PRINCIPAL CIT-9, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.