Urmila Enterprises Pvt Ltd., CHENNAI V. ACIT, CHENNAI

ITA 689/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86256 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI .. , ! , ' #$ BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO. 689/MDS/2014 ' % &% / ASSESSMENT YEAR : 2006-07 M/S URMILA ENTERPRISES PVT. LTD., NO.15 (OLD NO.9), ARK COLONY, ELDAMS ROAD, ALWARPET, CHENNAI - 600 018. PAN : AAACU 1198 C V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(3), CHENNAI - 600 034. (!(/ APPELLANT) (*+!(/ RESPONDENT) !( , - / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE *+!( , - / RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT . , / / DATE OF HEARING : 05.02.2015 01& , / / DATE OF PRONOUNCEMENT : 05.02.2015 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-III, C HENNAI, PASSED FOR ASSESSMENT YEAR 2006-07, WHEREIN THE LD. CIT(AP PEALS) HAS CONFIRMED DISALLOWANCE OF A PART OF DEPRECIATION CL AIMED BY THE ASSESSEE ON VEHICLES. 2 I.T.A. NO. 689/MDS/2014 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF UNDE RTAKING CONTRACT WORK FOR ROAD CONSTRUCTION AND ALSO TRADIN G IN INGERGOLL RAND PRODUCTS, ETC. THE A.O. NOTICED THAT THE ASSE SSEE HAS CLAIMED DEPRECIATION ON VEHICLES AT THE RATE OF 30% . THE HIGHER RATE OF DEPRECIATION OF 30% IS APPLICABLE FOR VEHIC LES RUNNING ON HIRE. THE A.O. TOOK THE VIEW THAT THE ASSESSEE HAS USED THE VEHICLES IN THE BUSINESS OF ROAD CONSTRUCTION AND T RADING WHICH ACTIVITIES ARE THE MAIN BUSINESS ACTIVITIES OF THE ASSESSEE AND HENCE, THE ASSESSEE IS NOT ENTITLED FOR HIGHER RATE OF DEPRECIATION. ACCORDINGLY, SHE REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 AND DISALLOWED THE EXCESS CLAIM OF DEPR ECIATION. THE LD. CIT(APPEALS) ALSO CONFIRMED THE SAID ADDITION. 3. AT THE TIME OF HEARING, THE LD. COUNSEL APPEARIN G FOR THE ASSESSEE INVITED OUR ATTENTION TO THE PROFIT & LOSS ACCOUNT AND SUBMITTED THAT THE ASSESSEE HAS ACTUALLY HIRED OUT THE VEHICLES AND HAS EARNED AN INCOME OF ` 7.47 CRORES AS HIRE/RENTAL RECEIPTS. THE LD. COUNSEL SUBMITTED THAT THE FACT THAT THE ASSESS EE HAS RECEIVED HIRING INCOME CLEARLY SHOWS THAT THE VEHICLES WERE USED ON HIRE. ACCORDINGLY, HE CONTENDED THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN ALLOWING THE DEPRECIATION AT THE RATE OF 15% AS AGA INST 30% CLAIMED BY THE ASSESSEE. 3 I.T.A. NO. 689/MDS/2014 4. ON THE CONTRARY, LD. D.R. STRONGLY DEFENDED THE ORDER PASSED BY THE LD. CIT(APPEALS). 5. HAVING REGARD TO THE RIVAL CONTENTIONS, WE ARE O F THE VIEW THAT THERE IS A MERIT IN THE CONTENTION OF THE ASSE SSEE. A PERUSAL OF THE PROFIT & LOSS ACCOUNT WOULD SHOW THAT THE SALES AND OTHER INCOME DISCLOSED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS ` 8.81 CRORES, OF WHICH THE RENTAL RECEIPTS ALONE CON STITUTE ` 7.47 CRORES, MEANING THEREBY THE ASSESSEE HAS EARNE D INCOME MAINLY FROM HIRING OF VEHICLE. WE NOTICE THAT THE ASSESSING OFFICER HAS GONE BY THE DECLARATION MADE IN THE RETURN OF I NCOME WITH REGARD TO NATURE OF BUSINESS ACTIVITIES. ACCORDING LY, THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE ACTUAL ACTIVITIES CARRIED ON BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. WE N OTICE THAT THE LD. CIT(APPEALS) HAS CONFIRMED THE ADDITION ON THE REASONING THAT THE ASSESSEE HAS FAILED TO FURNISH EVIDENCE IN THE FORM OF HIRING CONTRACTS. AT THE TIME OF HEARING, THE LD. COUNSEL SUBMITTED THAT THE FACT OF HIRING OF VEHICLES IS EVIDENCED BY THE FACT OF RECEIPT OF HIRING INCOME AND THE TAX AUTHORITIES HAVE FAILED TO TAKE NOTICE OF THE SAME. WE AGREE WITH THE SAID CONTENTION OF THE LD. COUNSEL. SINCE THE FINANCIAL STATEMENTS CLEARLY PROVE THAT THE ASS ESSEE HAS RECEIVED RENTAL RECEIPTS ON HIRING OF VEHICLES, WE ARE OF THE VIEW THAT 4 I.T.A. NO. 689/MDS/2014 THE ASSESSEE IS ENTITLED TO HIGHER RATE OF DEPRECIA TION AT THE RATE OF 30%. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD . CIT(APPEALS) ON THIS ISSUE AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ALLOW DEPRECIATION ON V EHICLES AT THE RATE OF 30%. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSI ON OF HEARING ON THE 5 TH DAY OF FEBRUARY, 2015 AT CHENNAI. SD/- SD/- ( ! ) ( .. ) (VIKAS AWASTHY) (B.R. BASKARAN) ' /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, A /DATED, THE 5 TH FEBRUARY, 2015. KRI. B , *'/C D &/ /COPY TO: 1. !( /APPELLANT 2. *+!( /RESPONDENT 3. . E/ () /CIT(A)-III, CHENNAI-34 4. . E/ /CIT, CHENNAI-III, CHENNAI-34 5. FG *'/' /DR 6. GH% I /GF.