M/s. Sadruddin A. Rahim Bala, Ahmedabad V. The Dy.CIT, Bharuch Circle, Bharuch

ITA 650/AHD/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2127 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 20-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S R MEENA
• Assessee Lawyers: ANIL R SHAH
• Keywords: Depreciation
• Section: 143(3); 32; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH : SURAT BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER ITA.NO.650/AHD/2015 ASSESSMENT YEAR 2006-2007 M/S. SADRUDDIN A. RAHIM BALA, ANKLESWAR. PAN AAHFS2020B C/O. SHRI ANIL R. SHAH, C.A., SHREEJI HOUSE, 4 TH FLOOR, B/H. M.J. LIBRARY, ELLIS BRIDGE, AHMEDABAD PIN 380 006. VS. THE DCIT, BHARUCH CIRCLE, BHARUCH. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI ANIL R. SHAH, C.A. FOR REVENUE : SHRI S.R. MEENA, SR. DR DATE OF HEARING : 24.07.2019 DATE OF PRONOUNCEMENT : 24.07.2019 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-VI, BARODA, DATED 01.11.2014, FOR THE A.Y. 2006-2007, CHALLENGING THE REOPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE I.T. ACT, 1961 AND DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS.6,37,034/-. 2 ITA.NO.650/AHD/2015 M/S. SADRUDDIN A. RAHIM BALA, ANKLESWAR. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FIRM HAS FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR UNDER APPEAL ON 06.12.2006 DECLARING INCOME OF RS.8,13,498/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 29.12.2008 DETERMINING THE TOTAL INCOME OF RS.59,43,030/-. THE A.O. REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE I.T. ACT. THE A.O. FOUND THAT ASSESSEE FIRM HAS CLAIMED DEPRECIATION ON 08 ITEMS @ 30% AGAINST THE ALLOWABLE DEPRECIATION @ 15% AS PER SECTION 32 OF THE I.T. ACT. SINCE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION WORK. ASSESSEE WAS ENTITLED TO DEPRECIATION @ 15% AS AGAINST @ 30% ON TRUCK, TEMPO, JEEP AND CAR ETC. THE ASSESSEE SUBMITTED BEFORE A.O. THAT ASSESSEE FIRM IS ENGAGED IN BUSINESS OF CIVIL CONSTRUCTION AND IT USED TRUCK AND OTHER VEHICLES FOR BUSINESS PURPOSES. AS A CIVIL CONTRACTOR ASSESSEE OWNED TRUCKS AND VEHICLES WHICH ARE NECESSARY FOR SMOOTH RUNNING OF BUSINESS. IF ASSESSEE DOES NOT OWN ANY SUCH TRUCK AND VEHICLES, THEN ASSESSEE IS FORCED TO USE THEM ON HIRE BASIS. UNDER INCOME TAX ACT WHEN MOTOR VEHICLES AND LORRIES WHICH ARE USED IN THE 3 ITA.NO.650/AHD/2015 M/S. SADRUDDIN A. RAHIM BALA, ANKLESWAR. BUSINESS OF RUNNING THEM ON HIRE, THEN, ASSESSEE IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION AT 30%. THE ASSESSEE HOWEVER, ADMITTED THAT IT IS IN THE BUSINESS OF CIVIL CONSTRUCTION AND VEHICLES ARE USED FOR BUSINESS PURPOSES ONLY. THE A.O, THEREFORE, FOUND THAT ASSESSEE HAS NO EXPLANATION FOR CLAIMING DEPRECIATION @ 30% ON THE VEHICLE USED NOT FOR THE PURPOSE OF PLYING ON HIRE BUT FOR RUNNING ITS BUSINESS AND CONSTRUCTION. THE A.O. ACCORDINGLY DISALLOWED EXCESS DEPRECIATION OF RS.6,37,034/-. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A). THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE A.O. IN WHICH THE A.O. REPORTED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION WORK AND NOT ENGAGED IN RUNNING MOTOR VEHICLES ON HIRE. UNDER SUB-ITEM 3(2) OF ITEM- III OF APPENDIX-1 OF INCOME TAX RULES HIGHER RATE OF DEPRECIATION @ 30% IS ADMISSIBLE ON MOTOR VEHICLES USED IN BUSINESS OF RUNNING THEM ON HIRE. THE ASSESSEE FIRM IS ONLY ENGAGED IN BUSINESS OF CONSTRUCTION WORK, THEREFORE, ASSESSEE CANNOT CLAIM HIGHER DEPRECIATION OF 30%. THE ASSESSEE ALSO FILED REJOINDER TO THE REMAND REPORT. THE LD. 4 ITA.NO.650/AHD/2015 M/S. SADRUDDIN A. RAHIM BALA, ANKLESWAR. CIT(A) CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES NOTED THAT IT IS NOT IN DISPUTE THAT ASSESSEE IS ENGAGED IN CONSTRUCTION BUSINESS AND HE HAS ADMITTEDLY BY USING OF THE ASSETS IN QUESTION FOR THE PURPOSE OF HIS OWN BUSINESS AND WAS NOT PLYING THESE MOTOR VEHICLES ON HIRE. THEREFORE, AS PER THE ABOVE RULE, ASSESSEE WOULD BE ENTITLED FOR DEPRECIATION @ 15%. THE LD. CIT(A), ACCORDINGLY, DISMISSED THE APPEAL OF ASSESSEE. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES. LEARNED COUNSEL FOR THE ASSESSEE MERELY RELIED UPON THE SUBMISSIONS MADE BEFORE THE A.O. AS INCORPORATED IN PARA-3 OF THE ASSESSMENT ORDER. 4. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT ASSESSEE IS ENGAGED IN CONSTRUCTION OF BUSINESS AND HAS ADMITTEDLY USED ALL THE ASSETS IN QUESTION FOR THE PURPOSE OF ITS OWN BUSINESS AND WAS NOT PLYING THESE MOTOR VEHICLES ON HIRE. AS PER SUB-ITEM 3(2) OF ITEM-III 5 ITA.NO.650/AHD/2015 M/S. SADRUDDIN A. RAHIM BALA, ANKLESWAR. OF APPENDIX-1 OF THE INCOME TAX RULES, HIGHER RATE OF 30% DEPRECIATION IS APPLICABLE ONLY TO MOTOR BUS, MOTOR LORRIES AND MOTOR TAXIES USED IN THE BUSINESS OF RUNNING THEM ON HIRE. THUS, AS PER THIS RULE, ASSESSEE IS NOT ENTITLED FOR HIGHER DEPRECIATION @ 30%. THE ASSESSEE MERELY CONTENDED BEFORE A.O. THAT SINCE IT IS IN CONSTRUCTION BUSINESS AND IF HE DOES NOT OWN TRUCKS AND OTHER VEHICLES, THEN, HE HAS TO USE THE VEHICLES ON HIRE. THEREFORE, HIGHER DEPRECIATION IS APPLICABLE TOO. IT IS A MERE CLAIM MADE WITHOUT ANY SUPPORT FROM THE INCOME TAX RULES. THE CASE CANNOT BE DECIDED ON IFS AND BUTS. THE ASSESSEE FAILED TO MAKE-OUT ANY CASE OF HIGHER DEPRECIATION. THEREFORE, THERE IS NO CASE OF INTERFERENCE AT ALL. THE REOPENING WAS, THEREFORE, RIGHTLY MADE INTO THE MATTER PARTICULARLY WHEN LEARNED COUNSEL FOR THE ASSESSEE DID NOT ARGUE ON REOPENING OF THE ASSESSMENT IN THE MATTER. IN THE RESULT, BOTH THE GROUNDS OF APPEALS OF THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, APPEAL OF ASSESSEE DISMISSED. 6 ITA.NO.650/AHD/2015 M/S. SADRUDDIN A. RAHIM BALA, ANKLESWAR. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P.MEENA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED 24 TH JULY, 2019 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT, SURAT BENCH, SURAT 6. GUARD FILE. //BY ORDER// ASST. REGISTRAR, ITAT, SURAT BENCH BENCH.