Sri.T.T.Kuruvilla, Alappuzha V. DCIT, Alappuzha

ITA 664/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73811 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: R SRINIVASAN
• Keywords: Depreciation

Judgement Text

1 ITA NO.664/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 664/COCH/2013 (ASSESSMENT YEAR 2008-09) SHRI .T.T. KURUVILA VS DY.CIT, CIR.1 ALLEPPEY PARCEL SERVICE ALLEPPEY ALLEPPEY PAN : ABDPT4582E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R SRINIVASAN RESPONDENT BY : SMT. LATHA V KUMAR DATE OF HEARING : 30/12/2013 DATE OF PRONOUNCEMENT : 10-01-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE C.I.T.(A)-V, KOCHI DATED 18-09-2013 FOR THE ASSESSM ENT YEAR 2008-09. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE U/S 40A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE. 3. SHRI R SRINIVASAN, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ALREADY PAID THE ENTIRE AMOUN T TO THE EXTENT OF 2 ITA NO.664/COCH/2013 RS.3,62,67,416. SINCE THE AMOUNT IS PAID AS ON 31- 03-2008, NO DISALLOWANCE COULD BE MADE U/S 40(A)(IA) IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN MERLYN SHIPPING & TRANSPORTERS VS ACIT 146 TTJ 1 (VIZAG). THE LD.REPRESENTATIVE FURTHER S UBMITTED THAT THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS VECTOR S HIPPING SERVICES (P) LTD VIDE JUDGMENT DATED 31-07-2013 HAS AFFIRMED THE ORDER OF THE SPECIAL BENCH OF THIS TRIBUNAL MERLYN SHIPPING & TRANSPORT ERS (SUPRA). HOWEVER, THE CALCUTTA HIGH COURT IN THE CASE OF CRESCENT EXPORT SYNDICATE (ITA NO.23 OF 2013) HAS TAKEN A DIFFERENT VIEW. SINCE T HE ALLAHABAD HIGH COURT HAS TAKEN VIEW CONCURRING WITH THE DECISION O F THE SPECIAL BENCH OF THIS TRIBUNAL, ACCORDING TO THE LD.REPRESE NTATIVE, THE LOWER AUTHORITY HAS NOT JUSTIFIED IN CONFIRMING THE DISAL LOWANCE. 4. THE LD.REPRESENTATIVE FOR THE ASSESSEE FURTHER S UBMITTED THAT SECTION 40(A)(IA) AS IT STOOD FOR THE ASSESSMENT YE AR UNDER CONSIDERATION, SAYS THAT WHERE THE TAX WAS DEDUCTIB LE DURING THE PREVIOUS YEAR AND WAS DEDUCTED DURING THE LAST MONT H OF THE PREVIOUS YEAR, TO THE EXTENT THE TAX DEDUCTED AND PAID BEFOR E THE DUE DATE OF FILING OF THE RETURN OF INCOME WOULD BE ALLOWED AS DEDUCTION. ACCORDING TO THE LD.REPRESENTATIVE, REFERENCE TO SE CTION 194H IS NOT 3 ITA NO.664/COCH/2013 REQUIRED. ACCORDING TO THE LD.REPRESENTATIVE, THE PROVISIONS OF THE ACT WERE AMENDED ONLY WITH EFFECT FROM 01-04-2010. THE REFORE, THE TAX PAID BEFORE THE DUE DATE FOR FILING THE RETURN OF I NCOME U/S 139(1) HAS TO BE ALLOWED. 5. ON THE CONTRARY, SMT. LATHA V KUMAR, THE LD.DR S UBMITTED THAT THE CALCUTTA IN CRESCENT EXPORT SYNDICATE (SUPRA) A ND GUJARAT HIGH COURT IN THE CASE OF CIT VS SIKANDARKHAN N TUNVAR [ 357 ITR 312 (GUJ)] IN ELABORATE JUDGMENTS FOUND THAT THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERLYN SHIPPING & TRANSPORT ERS (SUPRA) IS NO LONGER A GOOD LAW. HOWEVER, THE ALLAHABAD HIGH COURT IN T HE CASE OF VECTOR SHIPPING SERVICES (P) LTD (SUPRA) WITHOUT ANY DISCU SSION CONCURRED WITH THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERLYN SHIPPING & TRANSPORTERS (SUPRA). SINCE THE ALLAHAB AD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD (SUPRA) HA S NOT PASSED A SPEAKING ORDER, ACCORDING TO THE LD.DR, THE REASONI NG GIVEN BY THE GUJARAT HIGH COURT IN THE CASE OF SIKANDARKHAN N TUNVAR (S UPRA) AND THE CALCUTTA HIGH COURT IN THE CASE OF CRESCENT EXPORT SYNDICATE (SUPRA) HAS TO BE FOLLOWED. ACCORDING TO THE LD.DR, THE LAW AS IT ST OOD FOR THE RELEVANT POINT OF TIME REQUIRES THE ASSESSEE TO DEDUCT TAX. FAILU RE TO DEDUCT TAX HAS TO 4 ITA NO.664/COCH/2013 RESULT IN DISALLOWANCE OF THE AMOUNT PAID IN VIEW O F THE SPECIFIC PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SPECIAL BENCH OF THIS TRIBUNAL IN MERLYN SHIPPING & TRANSPORTERS (SU PRA) CONSIDERED THE ISSUE WITH REGARD TO THE LANGUAGE EMPLOYED BY T HE LEGISLATURE IN SECTION 40(A)(IA) OF THE ACT AND FOUND THAT TAX WAS DEDUCTIBLE ONLY IN RESPECT OF THE AMOUNTS REMAIN TO BE PAID AS ON 31 ST MARCH OF THE RELEVANT FINANCIAL YEAR. HOWEVER, THE GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SUPRA) AND THE CALCUTTA HIGH COURT IN CRESCENT EXPORT SYNDICATE (SUPRA), AFTER ELABORATE DISCUSSIONS FOUND THAT THE DECISION OF THE SPECIAL BENCH OF THIS TRIB UNAL IN MERLYN SHIPPING & TRANSPORTERS (SUPRA) IS NOT APPLICABLE A ND IT IS NO GOOD LAW. THE ALLAHABAD HIGH COURT, IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD (SUPRA), HOWEVER, WITHOUT ANY DISC USSION CONCURRED WITH THE DECISION RENDERED BY THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERLYN SHIPPING & TRANSPORTERS (SUPRA). THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH AFTER CONSIDERING THE JUDGMENT OF THE GUJARA T HIGH COURT IN THE CASE OF SIKANDARKHAN N TUNVAR (SUPRA) AND THE CALCUTTA H IGH COURT IN THE CASE 5 ITA NO.664/COCH/2013 OF CRESCENT EXPORT SYNDICATE (SUPRA) AS ALSO THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD (SUPRA) AND THEREAFTER DECIDE THE ISSUE IN ACCORDAN CE WITH LAW. 7. THE ASSESSEE HAS TAKEN ONE MORE GROUND THAT THE LAW WAS AMENDED WITH EFFECT FROM 01-04-2010 AND BEFORE THE AMENDMENT, THE TAX DEDUCTED AND PAID BEFORE THE DUE DATE FOR FILING OF THE RETURN OF INCOME HAS TO BE ALLOWED U/S 40(A)(IA) OF THE ACT. THIS ISSUE WAS NOT CONSIDERED BY THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER SHALL CONSIDER THE LAW A PPLICABLE DURING THE YEAR UNDER CONSIDERATION AFTER TAKING INTO CONSIDERATION OF THE AMENDED PROVISIONS OF THE ACT AND THEREAFTER DECIDE THE SAM E IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSE SSEE. 8. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES WITH REGARD TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT ARE SET ASIDE AND REMAND BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICE R SHALL RECONSIDER THE ISSUE AS INDICATED ABOVE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEA RING TO THE ASSESSEE. 6 ITA NO.664/COCH/2013 9. THE ASSESSEE HAS TAKEN ONE MORE GROUND WITH REGA RD TO DISALLOWANCE OF VEHICLE MAINTENANCE EXPENSES. 10. SHRI R. SRINIVASAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CLAIMED RS.3,28,599 TOWARDS VEHIC LE MAINTENANCE EXPENSES. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE IS HAVING FIVE VEHICLES FOR BUSINESS PURPOSE. HOWEVER, THE ASSESS ING OFFICER DISALLOWED RS. 1,41,310 ON THE GROUND THAT THE VEHICLE MIGHT H AVE BEEN USED FOR PERSONAL PURPOSE. ACCORDING TO THE LD.REPRESENTATI VE, THE VEHICLE IS USED ONLY FOR BUSINESS PURPOSE. EVEN ASSUMING THAT THE VEHICLE WAS USED FOR PERSONAL PURPOSE, THE ASSESSEE MIGHT HAVE USED ONE VEHICLE AND NOT THE ENTIRE VEHICLE. THEREFORE, THE DISALLOWANCE OF RS. 1,41,310 IS NOT JUSTIFIED. ON A QUERY FROM THE BENCH AS TO WHAT WOULD BE THE R EASONABLE EXPENDITURE INCURRED FOR PERSONAL USE OF THE VEHICL E, THE LD.REPRESENTATIVE FOR THE ASSESSEE VERY FAIRLY SUBMITTED THAT THE ASS ESSEE MIGHT HAVE INCURRED EXPENDITURE TO THE EXTENT OF RS.75,000 FOR THE YEAR UNDER CONSIDERATION. 11. ON THE CONTRARY, SMT. LATHA V KUMAR, THE LD.REP RESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER ESTIM ATED PERSONAL USE OF THE VEHICLE TO THE EXTENT OF RS.1 LAKH. THE ASSESS ING OFFICER HAS ALSO DISALLOWED DEPRECIATION ON THE SKODA CAR AT RS.41,3 10. THEREFORE, THE 7 ITA NO.664/COCH/2013 TOTAL DISALLOWANCE IS RS.1,41,310. HOWEVER ON APPE AL , THE CIT(A) FOUND THAT THE ASSESSEE HAS NOT FILED ANY MATERIAL TO SHO W THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS ON THE HIGHER SIDE EVEN THOUGH THE USE OF VEHICLE FOR PERSONAL PURPOSE CANNOT BE RULED OUT. IN THE ABSENCE OF ANY DETAILS WITH REGARD TO USAGE OF THE VEHICLE, ACCORD ING TO THE LD.DR, THE CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSES SING OFFICER. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSING OFFICER DISALLOWED A SUM OF RS.1 LAKH TOWARDS VEHICLE MAINTENANCE EXPE NSES ON THE GROUND THAT THE VEHICLE MIGHT HAVE BEEN USED FOR PERSONAL PURPOSE AND ANOTHER SUM OF RS.41,310 WAS ALSO DISALLOWED ON ACCOUNT OF DEPRECIATION ON THE SKODA CAR. THE CIT(A) CONFIRMED BOTH THE DISALLOWA NCES. BEFORE THE TRIBUNAL THE ASSESSEE IS AGITATING THE DISALLOWANCE OF RS.1 LAKH WITH REGARD TO VEHICLE MAINTENANCE EXPENSES. AS FAR AS THE DEPRECIATION IS CONCERNED ON THE SKODA CAR, THE ASSESSEE HAS NOT DI SPUTED HE DISALLOWANCE CONFIRMED BY THE CIT(A). THEREFORE, T HE ISSUE ARISES BEFORE THIS TRIBUNAL IS ONLY WITH REGARD TO THE DISALLOWAN CE OF RS.1 LAKH ON THE VEHICLE MAINTENANCE EXPENSES. BOTH THE AUTHORITIES BELOW MADE THE DISALLOWANCE ON ESTIMATE BASIS. IT IS NOT IN DISPU TE THAT THE ASSESSEE IS HAVING FIVE CARS. THEREFORE, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THE DISALLOWANCE OF RS.75,000 INSTEAD OF R.1 LAKH W OULD MEET THE ENDS OF 8 ITA NO.664/COCH/2013 JUSTICE. ACCORDINGLY, THE ORDERS OF LOWER AUTHORIT IES ARE MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO DISALLOW ONLY RS.7 5,000 INSTEAD OF RS.1 LAKH WITH REGARD TO VEHICLE MAINTENANCE EXPENSES. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH JANUARY, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 10 TH JANUARY, 2014 PK/- COPY TO: 1. SHRI T.T. KURUVILA, ALLEPPEY PARCEL SERVICE, VAZ HICHERRY JUNCTION, ALLEPPEY 2. DY.CIT, CIR.1, ALLEPPEY 3. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM 4. THE COMMISSIONER OF INCOME-TAX(A)-V, 7 TH FLOOR, KERA BHAVAN, S.R. V.H.S. ROAD, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH