SJS Enterprises, Bangalore V. Addl.CIT, Bangalore

ITA 617/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0571 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-10-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 12-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: H N KHINCHA
• Keywords: Depreciation
• Section: 80HHC; 234B; 143(2); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.617/BANG/2009 ASSESSMENT YEAR : 2003-04 S.J.S. ENTERPRISES, NO.1, THALAGHATTAPUR, KANAKAPURA MAIN ROAD, BANGALORE 560 062. : APPELLANT VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 9, BANGALORE. : RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER GEORGE GEORGE K., JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST C IT(APPEALS) ORDER DATED 30.3.09. 2. IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSE E, TWO ISSUES ARISE IN THIS APPEAL, NAMELY : (I) WHETHER ASSESSEE IS ENTITLED TO DEPRECIATION O N CAR AT A HIGHER RATE. (II) DEDUCTION U/S. 80HHC BE ALLOWED AS CLAIMED BY THE ASSESSEE. ITA NO.617/B/09 PAGE 2 OF 5 3. GROUNDS 2.1, 2.2, 2.3, 2.4, 2.5 AND 2.6 RELATE T O THE FIRST ISSUE MENTIONED ABOVE, WHEREAS GROUNDS 3.1, 3.2, 3.3, 3.4 AND 3.5 RELATE TO THE SECOND ISSUE. IT WAS SUBMITTED OTHER GROUNDS NAMEL Y GROUND 1.1, 4.5 AND 5.1 ARE ONLY CONSEQUENTIALS AND DOES NOT REQUIRE AN Y ADJUDICATION ON THE SAME. 4. BRIEFLY STATED THE FACTS ARE AS FOLLOWS. THE A SSESSEE, A FIRM ENGAGED IN THE MANUFACTURE OF DECALS, FILED A REVIS ED RETURN OF INCOME FOR THE A.Y. 2003-04 ON 1.11.2004 DECLARING AN INCOME O F RS.66,72,660. NOTICE U/S. 143(2) WAS ISSUED AND ASSESSMENT WAS CO MPLETED ON 28.2.06. THE AO DISALLOWED DEPRECIATION OF RS.6,44,187 ON MO TOR CARS ON THE GROUND THAT DEPRECIATION IS ADMISSIBLE ONLY AT 20% AS AGAINST THE CLAIM AT THE RATE OF 50%. THE AO ALSO VARIED THE DEDUCTION CLAIMED U/S. 80HHC FOR THE REASON THAT ELIGIBLE UNDERTAKING IS ALSO ELIGIB LE FOR DEDUCTION U/S. 80-IB AND THAT SECTION 80-IB(13) R/W 80-IA(9) OF THE INCO ME-TAX ACT, 1961, PROVIDES THAT WHEN DEDUCTION U/S. 80-IB IS CLAIMED, NO DEDUCTION TO THE EXTENT OF SUCH PROFITS WILL BE ALLOWED UNDER OTHER SECTIONS. ACCORDINGLY, THE AO HAS REDUCED THE AMOUNT DEDUCTIBLE UNDER SECTION 80-IB FROM THE PROFITS OF THE BUSINESS WHILE COMPUTING THE DEDUCTION U/S. 80HHC. THE TOTAL INCOME HAS BEEN ASSESSED AT RS.74,31,171. INTEREST U/S. 234B OF RS.2,62,448 AND U/S. 234C OF RS.45,234 HAS BEEN LEV IED. 5. ON FURTHER APPEAL, THE CIT(APPEALS) CONFIRMED TH E AOS ORDER. IN REGARD TO THE FIRST ISSUE, VIZ., WHETHER ASSESSEE I S ENTITLED TO DEPRECIATION ON CAR @ 50%, THE CIT(APPEALS) FOLLOWED HIS PREDECE SSORS ORDER IN ASSESSEES OWN CASE FOR A.Y. 2002-03 (ITA NO.47/R-9 /CIT(A)-IV/04-05 DATED 31.8.2005). WITH REFERENCE TO THE SECOND ISS UE, CIT(A) FOLLOWED THE ITA NO.617/B/09 PAGE 3 OF 5 DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN CASE O F ASST. CIT V. ROGINI GARMENTS [2007] 294 ITR (AT) 15 (CHENNAI)(SB) AND DELHI BENCH OF THE TRIBUNAL IN THE CASE OF NODI EXPORTS V. ACIT (24 SOT 526) AND DECIDED THE ISSUE AGAINST THE ASSESSEE. 6. THE ASSESSEE BEING AGGRIEVED IS IN SECOND APPEAL BEFORE US. AT THE VERY OUTSET IT HAS BEEN POINTED OUT BY THE LD. AR, THE ISSUE WHETHER ASSESSEE IS ENTITLED TO DEPRECIATION @ 50% ON MOTOR CARS IS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2002-03 (I TA NO.1463/BANG/2005 DATED 5.4.07). IT WAS SUBMITTED BY LD. AR, THE TRI BUNAL FOR A.Y. 2002-03 DECIDED THE MATTER IN FAVOUR OF ASSESSEE BY REVERSI NG THE CIT(APPEALS) ORDER. A COPY OF THE TRIBUNALS ORDER IN ASSESSEE S OWN CASE FOR A.Y. 2002-03 (SUPRA) IS PLACED ON RECORD. THE LD. DR FA IRLY AGREED THAT ISSUE IS COVERED BY THE ABOVE SAID TRIBUNALS ORDER IN FAVOU R OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL IN ASSESSEES OWN CASE FOR A. Y. 2002-03 HAS HELD AS FOLLOWS: 12. WE HAVE HEARD BOTH THE PARTIES. INCLUSIVE DEF INITION OF COMMERCIAL VEHICLE, WHICH IS AVAILABLE IN EXPLANATI ON TO 3 RD PROVISO TO SEC. 32 (THIS EXPLANATION HAS BEEN REPRO DUCED EARLIER). FOR THE ASST. YEAR 1999-2000, IT WAS PROVIDED IN T HE ACT THAT DEPRECIATION WILL BE ALLOWED AT SUCH PERCENTAGE AS MAY BE PRESCRIBED. THE PERCENTAGE PRESCRIBED WAS 40%. D EPRECIATION AT THE RATE OF 50% HAS BEEN PROVIDED ON NEW COMMERC IAL VEHICLE, WHICH IS ACQUIRED ON OR AFTER 1/4/01 BUT BEFORE THE 1 ST DAY OF APR, 02 AND IS PUT TO USE BEFORE THE 1 ST DAY OF APR, 02 FOR THE PURPOSE OF BUSINESS OR PROFESSION. 13. INCLUSIVE DEFINITION OF COMMERCIAL VEHICLE IS G IVEN IN NOTE 3A BELOW THE DEPRECIATION SCHEDULE. THE INCLUSIVE DEFINITION IS THE SAME AS CONTAINED IN THE EXPLANATION TO 3 RD PROVISO TO SEC. 32. IF THE DEFINITION OF COMMERCIAL VEHICLE HAS NOT BEE N GIVEN EITHER IN THE ACT OR IN THE RULES THEN PERHAPS THE INTERPR ETATION AS PLACED ITA NO.617/B/09 PAGE 4 OF 5 BY THE LEARNED CIT(A) IS ACCEPTABLE. BUT SINCE, IT HAS BEEN MENTIONED THAT COMMERCIAL VEHICLE MEANS LIGHT MOTOR VEHICLE AND THE MEANING OF LIGHT MOTOR VEHICLE IS TO BE TAK EN, THE SAME AS GIVEN IN SEC. 2 OF THE MOTOR VEHICLE ACT 1988. AS PER DEFINITION OF LIGHT MOTOR VEHICLE GIVEN IN MOTOR VEHICLE ACT, IT MEANS A MOTOR CAR PROVIDED UNLADEN WEIGHT OF SUCH MOTOR CAR DOES NOT EXCEED 7,500 KILOGRAMS. IN VIEW OF THESE FACTS, WE ARE SATISFIED THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION AT TH E RATE OF 50% PROVIDED THE UNLADEN WEIGHT OF THE MOTOR CAR IS 7,5 00 KILOGRAMS. ACCORDINGLY, THE AO AFTER VERIFICATION WILL ALLOW D EPRECIATION AT THE RATE OF 50% ON MOTOR CARS ACQUIRED AFTER 1.4.20 01 AND PUT TO USE BEFORE 1.4.2002. THE FACTUAL POSITION FOR A.Y. 2002-03 BEING THE SAM E FOR THIS ASSESSMENT YEAR, WE FOLLOW THE CO-ORDINATE BENCHS DECISION OF TRIBUNAL (SUPRA) AND DECIDE THE ISSUE IN FAVOUR OF ASSESSEE. 8. AS REGARDS THE SECOND ISSUE, THE LD. AR FAIRLY C ONCEDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY SPECIA L BENCH DECISION OF THE TRIBUNAL IN THE CASE OF ACIT V. HINDUSTAN MINT AND AGRO PRODUCTS P. LTD. [2009] 315 ITR (AT) 401 (DEL)(SB) WHICH CONFIRMED THE ROGINI GARMENTS CASE (SUPRA) . THE DELHI SPECIAL BENCH (SUPRA) HELD THE DEDUCTIO N TO BE ALLOWED UNDER ANY OTHER PROVISION OF CHAPTER VI-A O F THE INCOME-TAX ACT, 1961, WITH THE HEADING C, IS TO BE REDUCED BY THE AMOUNT OF DEDUCTION ALLOWED UNDER SECTION 80-IB OR SECTION 80-IA OF THE ACT. RESPECTFULLY FOLLOWING THE SPECIAL BENCH DECISION OF THE DELHI T RIBUNAL, WE UPHOLD THE ORDER OF THE AUTHORITIES BELOW. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ITA NO.617/B/09 PAGE 5 OF 5 PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER, 2009. SD/- SD/- (A. MOHAN ALANKAMONY) (GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 30 TH OCTOBER, 2009. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.