DCIT, CC-VI, Kolkata, Kolkata V. M/s. Magma Fincorp Ltd., Kolkata

ITA 715/KOL/2010

• Counselvise Citation: 71523514 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 12-04-2010
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: S K TULSIYAN
• Keywords: Depreciation; Question of law

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C , KOLKATA [ . .. . , ,, , . .. . ! ! ! !. .. . , , , , '# ] [BEFORE SHRI N.VIJAYAKUMARAN , JUDICIAL MEMBER & SRI C.D.RAO , ACCOUNTANT MEMBER] $ $ $ $ / ITA NO. 715/(KOL) OF 2010 %& '(/ ASSESSMENT YEAR : 2007-08 D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA M/S.MAGMA FINCORP. LTD. KOLKATA . (PAN-AABCM 9445K ) (+, / APPELLANT ) - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 '/ FOR THE APPELLANTS: / SHRI NIRAJ KUMAR /0+, 1 2 '/ FOR THE RESPONDENT: / SHRI S.K.TULSIYAN 3 1 !# /DATE OF HEARING : 22.03.2012. 4' 1 !# /DATE OF PRONOUNCEMENT : 28.03.2012. '5 / ORDER ' ' ' ' . .. . ! ! ! !. .. . , , , , '# PER C.D.RAO, AM THE ABOVE APPEAL FILED BY DEPARTMENT IS AGAINST ORD ER OF THE LD. C.I.T.(A), CENTRAL-I, KOLKATA, DATED 26.02.2010 RELATING TO AS SESSMENT YEAR 2007-08. 2. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOLLOWI NG GROUNDS OF APPEAL :- 1. THAT LD.CIT(A)- CENTRAL-I, KOL HAS ERRED IN NOT CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE. 2 .THAT, DEPRECIATION ON MOTOR CARS OF THE ASSESSE E IS ALLOWABLE UNDER SL.NO.2 OF ITEM -111 OF PART-A OF THE TABLE OF DEPRECIATION. T HEY ARE NOT USED IN BUSINESS OF RUNNING THEM ON HIRE BUT ARE USED IN A LEASING BUS INESS. THE OBJECTIVE OF THE STATUE IS CLEARLY TO GIVE HIGHER DEPRECIATION WHERE WEAR A ND TEAR IS MORE, AS IN THE CASE OF A TAXI. A LEASED ASSET MAY BE USED AS A PERSONAL CAR FOR THE USE, FOR EG. OF THE M.D. OF THE COMPANY, IN WHICH CASE THE WEAR AND TEAR IS LES S. THE CIT(A) ERRED IN GIVING A GENERAL MEANING TO A SPECIFIC ENACTMENT, 3) THAT THE LD. CIT(A) ERRED IN NOT DISTINGUISHING BETWEEN A DISALLOWANCE U/S.43B RELATING TO EMPLOYERS CONTRIBUTION TO PROVIDENT FUN D AND U/S.36(L)(VA) AS IN THIS CASE, WHICH COVERS EMPLOYEES CONTRIBUTION TO PROVIDENT FU ND. 4) SUCH OTHER GROUNDS AS MAY BE RAISED AT THE TIME OF APPEAL HEARING. 2 3. THOUGH THERE ARE FOUR GROUNDS THE ISSUE INVOLVE D ARE ONLY TWO. THE FIRST ISSUE IS RELATING TO HIGHER DEPRECIATION WHERE WEAR AND T EAR IS MORE AS IN THE CASE OF TAXI AND THE OTHER ISSUE IS RELATING TO EMPLOYERS CONTRIBUTI ON TO PROVIDENT FUND. 4. AT THE TIME OF HEARING BEFORE US THE LD. COUNSE L APPEARING ON BEHALF OF ASSESSEE SUBMITTED THAT THE FIRST ISSUE IN RESPECT OF HIGHER DEPRECIATION IS COVERED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNALS ORDER IN ASSESSEES OWN CASE IN ITA NO.1741/KOL/2009 FOR A.YR.2006-07 AND IN RESPECT OF GROUND NO.2 IN ITA NO.116/KOL/2009 IN THE CASE OF SUBHASH PROJECTS & M ARKETING LTD. VS ACIT,CC- XXVIII,KOLKATA ORDER DATED 5 TH MARCH, 2011 WHICH WAS SUBSEQUENTLY CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT. THEREFORE, H E REQUESTED TO DISMISS THE APPEAL OF THE REVENUE. 5. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHA LF OF THE REVENUE THOUGH RELIED ON THE ORDER OF AO COULD NOT CONTRADICT THE SUBMISS IONS MADE BY THE LD. COUNSEL FOR ASSESSEE. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD, AS REGARDING THE HIGHER DEPREC IATION THIS TRIBUNAL IN ITA NO.1741/KOL/2009 FOR A.YR.2006-07 ORDER DATED 08.01 .2010 HAS HELD AS UNDER :- 6.4. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESS EE IS ENTITLED TO NORMAL RATE OF DEPRECIATION I.E.15% ON THE MOTOR CARS OTHER THAN T HOSE USED IN THE BUSINESS OF RUNNING THEM ON HIRE. THUS IN RESPECT OF MOTOR CARS WHICH ARE USED IN THE BUSINESS OF RUNNING THEM ON HIRE THE ASSESSEE IS OUT OF PURVIEW OF THE NORMAL RATE OF DEPRECATION OF 15% AS PROVIDED IN III(2) OF THE DEPRECIATION TA BLE. AS PER ENTRY NO.3(II) THE DEPRECIATION IS ALLOWABLE ON THE MOTOR TAXIS USED I N THE BUSINESS OF RUNNING THEM ON HIRE. THE CONTENTION OF THE REVENUE IS THAT THE ASS ESSEE WOULD FALL IN THIS CATEGORY ONLY IF MOTOR TAXI ARE USED IN THE BUSINESS OF RUNNING T HEM ON HIRE AND NOT MOTOR CARS. WE ARE UNABLE TO ACCEPT THE ABOVE CONTENTION OF THE RE VENUE BECAUSE IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IF THE ASSESSEE USED T HE MOTOR CARS IN THE BUSINESS OF RUNNING THEM ON HIRE THE ASSESSEE WOULD NOT BE ENTI TLED TO DEPRECIATION ON SUCH MOTOR CARS BECAUSE ENTRY NO.III(2) EXCLUDES MOTOR CARS U SED IN THE BUSINESS OF RUNNING THEM ON HIRE. IF AS PER REVENUE THE ASSESSEE IS TO BE EXCLUDED FROM ENTRY NO.3(II) ALSO THEN HE WILL NOT BE ENTITLED TO ANY DEPRECIATION, W HICH CAN NEVER BE THE INTENTION OF THE LEGISLATURE. IT WAS EXPLAINED BY THE LD. COUNSE L THAT THE MOTOR CAR USED IN THE BUSINESS OF RUNNING THEM ON HIRE IS IN COMMON PARLA NCE REFERRED TO AS MOTOR TAXIS. THIS CONTENTION OF THE LD. COUNSEL SEEMS PLAUSIBLE. WE, THEREFORE, HOLD THAT WHEN THE MOTOR CARS ARE USED IN THE BUSINESS OF RUNNING THEM ON HIRE THE ASSESSEE WOULD BE 3 ENTITLED TO HIGHER RATE OF DEPRECIATION AS PER ENTR Y NO.III(3)(II). WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AGARWAL FINANCE CO.(P)LTD (SUPRA) ALLOW THE ASSESSEES APPEAL. 6.1. RESPECTFULLY FOLLOWING THE SAME WE DISMISS THE FIRST ISSUE RAISED BY THE REVENUE IN THIS APPEAL. 7. THE SECOND ISSUE RAISED BY THE REVENUE IN THIS A PPEAL IS RELATING TO EMPLOYERS CONTRIBUTION TO PROVIDENT FUND. 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, THE LD. CIT(A) OBSERVED THAT T HE PAYMENTS TOWARDS EMPLOYEES CONTRIBUTION TO P.F. WAS MADE WITHIN THE DUE DATE O F FILING OF RETURN OF INCOME BY THE ASSESSEE COMPANY. WE FIND THAT THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS M/S.VIJAY SHREE LIMITED VIDE ITAT NO.245 OF 2011 IN GA NO.2607 OF 201 DATED 7 TH SEPTEMBER, 2011 HAS HELD AS UNDER :- AFTER HEARING MR. SINHA,LEARNED ADVOCATE, APPEARIN G ON BEHALF OF THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COU RT IN THE CASE OF COMMISSIONER OF INCOME TAX VS ALOM EXTRUSION LTD., WE FIND THAT THE SUPREME COURT IN THE AFORESAID CASE HAS HELD THAT THE AMENDMENT TO THE SECOND PROV ISO TO DIE SEC. 43(B) OF THE INCOME TAX ACT, AS INTRODUCED BY FINANCE ACT, 2003, WAS CURATIVE IN NATURE AND IS REQUIRED TO BE APPLIED RETROSPECTIVELY WITH EFFECT FROM 1 APRIL, 1988. SUCH BEING THE POSITION, THE DELETION OF THE AMOUNT PAID BY THE EMPLOYEES CONTRIBUTION BEYOND DUE DATE WAS DEDUCTIBLE BY INVO KING THE AFORESAID AMENDED PROVISIONS OF SECTION 43(B) OF THE ACT. WE, THEREFORE, FIND THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL AND CONSEQUENTLY, WE DISMISS THIS APPEAL. 8.1. RESPECTFULLY FOLLOWING THE DECISION OF THE JUR ISDICTIONAL HIGH COURT (SUPRA) THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASS ESSEE AND DISMISS THE APPEAL OF THE REVENUE. 4 9 IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED.. ORDER PRONOUNCED IN THE COURT ON 28.03.2012. SD/- SD/- . .. . , , , , % % % % N.VIJAYAKUMARAN, JUDICIAL MEMBER . .. . ! ! ! !. .. . , ,, , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 28.03.2012. '5 1 /%% 6''7- COPY OF THE ORDER FORWARDED TO: 1.M/S.MAGMA FINCORP. LTD (FORMERLY M/S.MAGMA SHRACH I FINANCE LTD., 24, PARK STREET, KOLKATA-700016. 2. D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA 3. CIT. 4. CIT(A)-CENTRAL-I, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA 0 /%/ TRUE COPY, '5/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)