El-O-Matic (India)Pvt.Ltd, Pune V. ACIT, Pune

ITA 739/PUN/2010

• Counselvise Citation: 73924514 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Keywords: Depreciation; Opportunity of being heard
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 739/PN/10 (ASSTT. YEAR: 2006-07) EI-O MATIC (INDIA) LTD., .. APPELLANT 16-B/1 SAROSH BHAVAN, DR AMBEDKAR ROAD, PUNE -1 PAN AAACE3847J VS. ASSTT. COMMISSIONER OF INCOME-TAX, .. RESPONDENT CIR. 1(2), PUNE AND ITA NO 823/PN/10 (ASSTT. YR. 2006-07) DY. COMMISSIONER OF INCOME-TAX, .. APPELLANT CIR. 1(2), PUNE VS. EI-O MATIC (INDIA) LTD., .. RESPONDEN T PUNE ASSESSEE BY: SHRI NIKHIL PATHAK RESPONDENT BY: SHRI S K. AMBASTHA DATE OF HEARING : 13.10.2011 DATE OF PRONOUNCEMENT : 21.10.2011 ORDER PER G.S. PANNU, AM THE CAPTIONED CROSS-APPEALS, ONE EACH BY THE ASSESSEE AND T HE REVENUE PERTAINING TO SAME ASSESSEE, WERE HEARD TOGETHER AND AR E BEING DISPOSED OFF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BR EVITY. 2. BOTH THE CAPTIONED APPEALS ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, PUNE DATED 26.2 .2010, WHICH IN TURN, HAS ARISEN FROM THE ORDER OF THE ASSESSING OFFICER DATED 2 4.12.2008 PASSED 2 UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SH ORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2006-07. 3. WE SHALL FIRST TAKE UP ASSESSEES APPEAL, VIDE ITA NO 73 9/PN/10. THE FIRST ISSUE RAISED IN GROUND NOS. (1) TO (3) RELATES TO THE DI SALLOWANCE OF AIRCRAFT EXPENSES AND ISSUE IN GROUND NO. (4) RELATES TO DEPRECIAT ION AT THE RATE OF 50% ON THE GROUND THAT THE AIRCRAFT WAS NOT USED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. 4. BEFORE US, IT WAS A COMMON GROUND BETWEEN THE PAR TIES THAT THIS ISSUE HAS BEEN SUBJECT-MATTER OF APPEAL IN THE CASE OF INTERVA LVE (I) LTD. IN ITA NO 659/PN/10 AND ALSO IN ASSESSEES OWN CASE IN ITA NO 658/PN/ 09 FOR THE ASSESSMENT YEAR 2005-06 AND OUR CO-ORDINATE BENCH, BY FOL LOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF AVINASH N. BHOSALE VIDE ITA NO 1425/PN/08 DATED 24.9.2010, HAS SET ASIDE THE MATTER TO THE FILE OF TH E ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE TRIBUNAL IN THE CASE OF AVINASH N. BHOSALE (SUPRA). ACCORDINGLY, ON SIMILA R PARITY OF REASONING, WE HEREBY REMAND THE ISSUES INVOLVED IN GROUNDS NO (1 ) TO (3) & (4) TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTIONS TO DECIDE THE SAME IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE TRIBUNAL IN THE CASE OF AVINASH N. BHOSALE (SUPRA) AFTER PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. GROUND NO. 5 & (6) RELATE TO THE AD HOC DISALLOWA NCE OF RS 25,000/- EACH OUT OF EXPENSES INCURRED ON TRAVELLING AND CONVEYANCE AN D EXPENSES INCURRED UNDER THE HEAD MISCELLANEOUS EXPENSES. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AN D HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND T HAT OUT OF TOTAL EXPENDITURE OF RS 31,08,470/- UNDER THE HEAD TRAVEL & CONVEYAN CE AND OF RS 1,12,42,711/- UNDER THE HEAD MISCELLANEOUS EXPENSES, THE ASSESSING OFFI CER MADE AD HOC DISALLOWANCE OF RS 50,000/- EACH, WHICH WAS REDUCED IN AP PEAL BY THE COMMISSIONER OF INCOME-TAX (APPEALS) TO RS 25,000/- EACH. WE DO NOT FIND ANY 3 REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN THIS REGARD. WE, ACCORDINGLY, AFFIRM HIS DECISION AND TH E ASSESSEE FAILS ON THESE GROUNDS. 7. GROUND NO. 7 RELATES TO THE GRANTING OF DEDUCTION UNDER SECTION 43B OF THE ACT IN RESPECT OF THE LEAVE ENCASHMENT PROVISION OF RS 3, 31,167/-. AFTER HEARING BOTH THE SIDES, WE FIND THAT SIMILAR ISSUE HAS BEEN DECIDE D IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN THE CASE OF INTERVALV E (INDIA) P LTD IN ITA NO 659/PN/09 AND 676/PN/09 DATED 16.12.2010. THEREF ORE, FOLLOWING THE PRECEDENT, AND ON THE SIMILAR PARITY OF REASONING, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE ASSESSING OFFI CER IS DIRECTED TO GRANT DEDUCTION UNDER SECTION 43B OF THE ACT IN RESPECT OF THE LEAVE ENCASHMENT OF RS 3,31,167/-. AS A RESULT, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL, VIDE ITA NO 739/P N/10 FOR THE ASSESSMENT YEAR 2006-07 IS PARTLY ALLOWED. 9. VIDE ITA NO 823/PN/10 FOR THE ASSESSMENT YEAR 2006- 07, EVEN THOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BU T ESSENTIALLY THE SOLITARY ISSUE INVOLVED IS REGARDING CORRECT RATE OF DEPRECIATION ALLOWABLE ON THE AIRCRAFT. SIMILAR ISSUE WAS SUBJECT-MATTER OF CONSIDERATION BY OUR CO-ORDINATE BENCH IN REVENUES APPEAL IN THE CASE OF INTERVALVE (INDIA) P, LTD. (SUPRA) AND THE TRIBUNAL VIDE ORDER DATED 16.12.2010 AFFIRMED THE V IEW OF THE COMMISSIONER OF INCOME-TAX (APPEALS), BY HOLDING AS UNDER: 10. ONLY ISSUE IN THAT IS RAISED IN THIS APPEAL OF THE REVENUE RELATES TO THE ALLOWABLE CORRECT RATE OF DEPRECIATION TO THE AIRCRAFT IN QUE STION. ASSESSEE CLAIMED THE DEPRECIATION AT THE RATE OF 40% ON THE AIRCRAFT WHEREAS THE AO A LLOWED DEPRECIATION AT THE RATE OF 25%ONLY. DURING THE PROCEEDINGS LD. COUNSEL MENTION ED THAT THE AIRCRAFT IN QUESTION WAS OWNED COLLECTIVELY BY FOUR CO-OWNERS, WHERE THE ASS ESSEE IS ONE AMONGST THEM WITH THE SHARE OF 7.5% OUT OF THE CAPITAL OUTLET FOR ACQUISI TION OF THE AIRCRAFT. LD. COUNSEL FURTHER MENTIONED THAT REVENUE HAS ALLOWED THE CLAIM OF DEP RECIATION AT THE RATE OF 40% IN REST OF THE FOUR CO-OWNERS OF THE AIRCRAFT. IT IS ONLY I N THIS CASE, THE AO DISTURBED THE RATE OF DEPRECIATION. LD. DR RELIED ON THE ORDERS OF THE RE VENUE. WE HAVE PERUSED THE RELEVANT ORDERS AS WELL AS THE PAPER BOOK FILED BEFORE US IN PARA 3.3 OF THE IMPUGNED ORDER IT IS NOTICED THAT CIT(A) GAVE A FINDING THAT THE MEMORAN DUM OF UNDERSTANDING (MOU) DATED 27.5.2004, STATES THAT AIRCRAFT IS PURCHASED COLLEC TIVELY BY FOUR PARTIES NAMELY, 1) SERUM INSTITUTE OF INDIA LTD, 2) EI-O-MATIC INIA LTD., 3) M/S ARKI AVIATIONS AND 4) INTERVAL (INDIA) PVT. TD. WHERE THE ASSESSEE CONTRIBUTED 7.5% TOWARD S THE CAPITAL OUTLAY AS SEEN FROM PARA 3.3.2 THE CIT(A) HAS RIGHTLY COME TO THE CONCL USION THAT ASSESSEE IS NTO ONLY THE CO- OWNER OF THE AIRCRAFT BUT ALSO IN FACT HAS THE RIGH T TO USE IT. IN SUCH CIRCUMSTANCES WE FIND 4 NO REASON TO INTERFERE IN THE ORDER OF THE CIT(A). ACCORDINGLY, GROUNDS RAISED IN THE REVENUES APPEAL ARE DISMISSED. THE FACTS AND CIRCUMSTANCES OF THE CASE BEING IDENTICAL TO THAT OF M/S INTERVALVE (INDIA) P, LTD (SUPRA), WE FOLLOW THE PRECEDENT AND U PHOLD THE VIEW TAKEN BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ASPECT. AS A RESULT, REVENUE FAILS ON THIS GROUND OF APPEAL. 10. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 21 ST OCTOBER, 2011. SD/- SD/- (I C SUDHIR) (G .S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE, DATED: 21 ST OCTOBER, 2011 B COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT (A)-I, PUNE 4) CIT-I, PUNE 5) DR, A BENCH, ITAT, PUNE. 6) GUARD FILE TRUE COPY BY ORDER ASST. REGISTRAR, I.T.A.T., PUNE