ASSISTANT COMMISSIONER OF INCOME TAX 3(1)(1), MUMBAI V. ALD AUTOMOTIVE PRIVATE LIMITED , MUMBAI

ITA 6386/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2894 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 31-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA
• Keywords: Depreciation; Set aside
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 6386 /MUM/2017 ASSESSMENT Y EAR: 2012 - 13 THE A.C.I.T - 3(1)(1), ROOM NO. 607, AAYAKAR BHAVAN, MUMBAI - 400020 VS. M/S ALD AUTOMOTIVE PVT. LTD., 13 FLOOR, MAKER CHAMBER - IV, NARIMAN POINT, MUMBAI - 400021 PAN: AAFCA0924K (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ANADI VARMA ( CIT DR ) ASSESSEE BY : SHRI RAJESH AGRAWAL (A R ) DATE OF HEARING: 07 /03 /201 9 DATE OF PRONOUNCEMENT: 10 / 0 4 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 25.07.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 8 (FOR SHORT THE CIT( A) , MUMBAI, FOR THE ASSESSMENT YEAR 2012 - 13 , WHEREBY THE LD. CIT(A) HAS ALLOWED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE AS SESSEE ENGAGED IN THE BUSINESS OF PROVIDING VEHICLES ON OPERATING LEASE BASIS TO ITS CUSTOMERS AND PROVIDING ALLIED SERVICES, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 11,56,67,769/ - FOR THE AS SESSMENT YEAR UNDER CONSIDERATION. THE ASSESSMENT WAS COMPLETED U/S 143 (3) READ WITH SECTION 92CA (4) OF THE ACT. IT WAS NOTICED THAT THE ASSESSEE HAD SHOWN INCOME OF RS. 135,19,92,359/ - AS LEASE RENTAL AND INCOME OF RS. 30,22,27,218/ - AS FLEET MANAGEMENT INCOME, BESIDES OTHER INCOME OF RS. 16,70,984/ - . THE ASSESSEE HAD CLAIMED EXPENSES AMOUNTING TO RS. 163,02,07,110/ - INCLUDING THE 2 ITA NO. 6386 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 DEPRECIATION OF RS. 74,14,49,570/ - ON VEHICLES. SINCE, THE VEHICLES WERE REGISTERED IN THE NAME OF PARTIES USING THEM AND NOT IN THE NAME OF THE ASSESSEE , A O REJECTED THE CLAIM OF THE ASSESSEE AND MADE ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE AND ALSO ADDED THE DEFERRED MANAGEMENT RESERVES AMOUNTING TO RS. 114,48,078/ - AND DETERMINING THE TOTAL INCOME OF RS. 86, 85,65,420/ - . THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITIONS MADE BY THE AO. THE DEPARTMENT IS IN APPEAL AGAINST THE SAID FINDINGS OF THE LD. CIT (A). 3 . THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS : - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 74,14,49,5 70/ - BEING CLAIM OF DEPRECIATION TO THE ASSESSEE ON VEHICLES GIVEN ON OPERATING LEASE WITHOUT APPRECIATING THE FACT THAT THE VEHICLES WERE NOT REGISTERED IN THE NAME OF THE ASSESSEE BUT IN THE NAME OF THE PARTIES USING IT. 2. WHETHER ON THE FACTS AND CIRCUMST ANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 74,14,49,570/ - BEING DEFERRED MAINTENANCE CHARGES WITHOUT APPRECIATING THE FACT THAT PROVIDING FOR FUTURE EXPENSES WHICH ESCALATE WITH TIME IS NOTHING BUT PROVISION FOR UNASCERTAINED LIABILITIES WHICH IS NOT ALLOWABLE AS PER THE I.T. ACT, 1961 . 4 . AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ISSUES INVOLVED IN TH IS CASE ARE COVERED BY THE DECISION S OF THE MUMBAI TRIBUNAL IN THE ASSESSEES OWN CASE S FOR THE A.YS. 2007 - 08, 2008 - 09, 2009 - 10 AND 2010 - 11. SINCE, THE ORDER OF THE LD. CIT(A) IS IN ACCORDANCE WITH THE DECISION OF THE TRIBUNAL, T HERE IS NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS LIABLE TO BE SET ASIDE. 3 ITA NO. 6386 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 5. ON THE OTHER HAND , THE LD. DEPARTMENTAL REPRESENTATIVE (DR) ADMITTED THAT THE ISSUES INVOLVED IN THE PRESENT CASE ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ASSESSEES OWN CASES PERTAINING TO THE EARLIER YEARS. HOWEVER, THE LD. DR SUPPORTED THE ASSESSMENT ORDER PASSED BY THE A O. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND EXAMINED THE MATERIAL ON RECORD INCLUDING THE CASE S RELIED UPON BY THE PARTIES AND THE DECISION S OF THE COORDINATE BENCH. WE NOTICE THAT THE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN ASSESSEE S CASE, ITA NO. 3303/MUM/2015 FOR THE A.Y. 2010 - 11. THE OPERATIVE PART OF THE ORDER PASSED BY THE COORDINATE BENCH READS AS UNDER: - 6. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE ISS UE IN CONTROVERSY IS COVERED IN AY 2007 - 08 AND 2008 - 09 DATED 25/07/2016 AND IN AY 2009 - 10 DATED 20/07/2016 WHEREIN THE TRIBUNAL HAS HELD AS UNDER: WE FIND THAT, AS OBSERVED BY THE LEARNED CIT(A), THAT THE ISSUE IS COVERED BY THE DECISION FROM HONBLE A PEX COURT IN ICDS LTD. VS. CIT (2013) 350 ITR 527 WHEREIN IT HAS BEEN HELD THAT SECTION 2(3) OF THE MOTOR VEHICLE ACT IS A DEEMING PROVISION THAT CREATES A LEGAL FICTION OF OWNERSHIP IN FAVOUR OF LESSEE ONLY FOR THE PURPOSE OF THE MOTOR VEHICLE ACT. IT HAS BEEN HELD THERE IN THAT THE LESSOR, THE ASSESSEE WAS THE OWNER OF THE VEHICLES. AS THE OWNER, IT USED THE ASSETS IN THE COURSE OF ITS BUSINESS, SATISFYING BOTH REQUIREMENTS OF SECTION 32 OF THE ACT AND HENCE WAS ENTITLED TO CLAIM OF DEPRECIATION IN RESPEC T OF ADDITION MADE TO THE TRUCKS, WHICH WERE LEASED OUT. HOWEVER, WE ARE MAKING IT CLEAR THAT THE LEARNED ASSESSING OFFICER IS TO SATISFY HIMSELF WHETHER THE PARTIES WHO ARE USING THE VEHICLES MAY NOT GET THE BENEFIT OF DEPRECIATION AND IF IT IS FOUND THAT THE DEPRECIATION IS CLAIMED BY THE ASSESSEE AS WELL AS THE PARTIES WHO ARE USING THE VEHICLES, IN THAT CASE THE LEARNED ASSESSING OFFICER IS FREE TO TAKE A DECISION IN 4 ITA NO. 6386 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 ACCORDANCE WITH LAW. WITH THESE REMARKS THE STAND TAKEN BY THE LEARNED CIT(A) IS AFFIRM ED. 8. WE RESPECTFULLY FOLLOWING THE SAME THE TRIBUNAL ORDER WE DISMISSED THE DEPARTMENTAL APPEAL. 7. WE NOTICE THAT THE COORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE ID ENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISIONS OF THE COORD INATE BENCH E S RENDERED IN THE ASSESSEES CASE PERTAINING TO THE EARLIER ASSESSMENT YEARS. SINCE THE FINDINGS OF THE LD. CIT (A) IN THE PRESENT CASE IS IN ACCORDANCE WITH THE DECISION OF THE COORDINATE BENCH RENDERED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2011 - 12, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A). HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, WE UPHOLD THE ORDER PASSED BY THE LD. CIT (A) AND DISMISS THE REVENUES APPEAL. IN THE RESULT, APPEAL FI LED BY THE REVENUE FOR ASSESSMENT YEAR 2012 - 2013 IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL , 2019 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 10 / 0 4 / 201 9 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPE LLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 5 ITA NO. 6386 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI