ACIT 11(1), MUMBAI V. SOHA ALI KHAN, MUMBAI

ITA 7676/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92712 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 31-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Assessee Lawyers: B D AGARWAL
• Keywords: Depreciation
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI R. C. SHARMA, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 7676/MUM/2013 ASSESSMENT YEAR: 2010-11 ACIT 11(1) R. NO. 439, AAYAKAR BHAVAN MUMBAI 400 020 .(APPELLANT) VS. SOHA ALI KHAN 1901, OYSTER BUILDING, NEAR BEAMS HOSPITAL, 19 TH ROAD, KHAR (W) MUMBAI 400 052 PAN:ACEPS 9990 C (RESPONDENT) APPELLANT BY : SHRI M. RAJAN RESPONDENT BY : SHRI B. D. AGARWAL DATE OF HEARING : 03.06.2015 DATE OF PRONOUNCEMENT : 05.06.2015 O R D E R PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE CIT(A)-3, MUMBAI DATED 23.10.2013 RELATING TO ASSESSMENT YEAR 2010-11 AGAINST ORDER PASSED U/S 154 OF THE I.T. ACT. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING DEPRECIATION ON NE W CAR @ 50% EVEN WHEN THE CAR WAS NOT USED COMMERCIALLY. ITA NO. 7676/MUM/2013 ASSESSMENT YEAR: 2010-11 2 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RE LATION TO CLAIM OF DEPRECIATION OF CAR. 4. BRIEFLY IN THE FACTS OF THE PRESENT CASE, THE AS SESSEE HAD CLAIMED DEPRECIATION OF NEW CAR PURCHASED @ 50% AMOUNTING T O RS.26,74,900/-. THE AO NOTED THAT AS PER NOTIFICATION NO. 10/2009 DATED 19.01.2009 THE SAID DEPRECIATION AT 50% IS TO BE ALLOWED ON PURCHASE OF NEW COMMERCIAL VEHICLE, BETWEEN THE TIME LIMIT PROVIDED THEREIN. THE AO WAS OF THE VIEW THAT THE NEW MOTOR CAR PURCHASED BY THE ASSESSEE DOES NOT FALL W ITHIN THE DEFINITION OF COMMERCIAL VEHICLE AGAINST WHICH ENHANCED DEPRECIAT ION @ 50% IS TO BE ALLOWED. THE AO RESTRICTED THE DEPRECIATION TO 15% AND DISALLOWED 20% AND SAID DEPRECIATION FOR PERSONAL USE. THE ASSESSEE HA D ALSO DISALLOWED 20% ON ACCOUNT OF PERSONAL USE OF CAR. 5. THE CIT(A) ALLOWED CLAIM OF THE ASSESSEE IN TURN RELYING ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF TRIBUNAL IN DILIP S. CH ANDANI 14 SOT 233 (MUM). 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF T HE CIT(A). 7. THE LD. A.R. FOR THE ASSESSEE POINTED OUT THAT T HE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY PLACING RELIAN CE ON THE RATIO LAID DOWN BY THE TRIBUNAL IN DILIP S. CHANDANI VS. ACIT (SUPRA) AND ALSO IN THE CASE OF SHRI SHAHRUKH KHAN VS. DCIT IN ITA NO. 1489/MUM/2006, OR DER DATED 23.07.2009. ANOTHER RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF TRIBUNAL IN BLUE STEEL ENGINEER PVT. LTD. VS. DCIT IN ITA NO. 6411/MUM/2010, RELATING TO A.Y. 2005-06, ORDER DATE D 11.05.2012. 8. THE LD. D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE AO. 9. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE RECORD, THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS AGAINST THE CLAIM OF DEPRECIATION AT ENHANCED RATE OF 50% ON NEWLY PURCHASED CAR BY THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION. ITA NO. 7676/MUM/2013 ASSESSMENT YEAR: 2010-11 3 10. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEPRECIA TION ON CAR @ 50% AROSE BEFORE THE TRIBUNAL IN M/S. BLUE STEEL ENGINEER PVT . LTD. VS. DCIT (SUPRA) AND IT WAS HELD AS UNDER- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS OF THE PARTIES AND ALSO PERUSED THE ORDERS OF THE LEARNED CIT(A) AS WELL AS THE ASSESSING OFFICER. THE ASSESSEE COMPANY HAD PURCHASED THREE HYUNDAI ACCENT CARS ON 11-2-2002 WHICH WAS PR IOR TO 1-4- 2002. ADMITTEDLY, THESE CARS HAVE BEEN PURCHASED IN THE NAME OF THE ASSESSEE COMPANY AND HAVE BEEN USED FOR THE PUR POSE OF ASSESSEES BUSINESS. THE SHORT CONTROVERSY INVOLVED WHETHER THE DEPRECIATION ON THESE CARS SHOULD BE ALLOWED @ 20% OR @ 50%. CLAUSE 2 OF PART III OF APPENDIX I PROVIDES MOTOR CARS ACQUIRED OR PUT TO USE ON OR AFTER 1ST DAY OF APRIL, 1990, T HE RATE OF DEPRECIATION FROM THE ASSESSMENT YEAR 2003-2004 TO 2005-2006 WAS ALLOWABLE @ 20%. SUB-CLAUSE (VI) AND (VIA) OF C LAUSE 3 OF PART III OF APPENDIX I PROVIDES THAT NEW COMMERCIAL VEHI CLE, WHICH IS ACQUIRED ON OR AFTER 1ST DAY OF APRIL, 2001 BUT BEF ORE ITA NO : 6411/MUM/2010 5 M/S BLUE STEEL ENG.P.LTD. 1ST DAY O F APRIL, 2002 OR PUT TO USE ON OR AFTER 1ST DAY OF APRIL, 2002 FO R THE PURPOSE OF BUSINESS, THE RATE OF DEPRECIATION IS 50%. THE DEFI NITION OF COMMERCIAL VEHICLE HAS BEEN GIVEN IN NOTE 6 OF THE APPENDIX I, WHICH DEFINES COMMERCIAL VEHICLE AS UNDER :- 6. COMMERCIAL VEHICLE MEANS HEAVY GOODS VEHICLE, HEAVY PASSENGER MOTOR VEHICLE, LIGHT M OTOR VEHICLE, MEDIUM GOODS VEHICLE, AND MEDIUM PASSE NGER MOTOR VEHICLE BUT DOES NOT INCLUDE MAXI-CAB, MOT OR-CAB, TRACTOR AND ROAD-ROLLER. THE EXPRESSIONS HEAVY GOODS VEHICLE, HEAVY PASSENGER MOTOR VEHICLE, LIGHT M OTOR VEHICLE, MEDIUM GOODS VEHICLE, MEDIUM PASSENGER MOTOR VEHICLE, MAXI-CAB, MOTOR-CAB, TRACTOR AND ROAD-ROLLER SHALL HAVE THE MEANINGS RESPECTIVELY AS ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988 (59 OF 1988). 8.1 THE ASSESSEES CARS BEING LIGHT MOTOR VEHICLES AND THE DEFINITION OF LIGHT MOTOR VEHICLE HAS BEEN GIVEN IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988, WHICH DEFINES AS UNDER :- 2(21)- LIGHT MOTOR VEHICLE MEANS A TRANSPORT VEHICLE OR OMNIBUS THE GROSS VEHICLE WEIGHT OF EITH ER OF MOTOR ITA NO. 7676/MUM/2013 ASSESSMENT YEAR: 2010-11 4 CAR OR TRACTOR OR ROAD ROLLER, UNLADEN WEIGHT OF AN Y OF WHICH, DOES NOT EXCEED [7500] KGS. THUS, THE DEFINITION OF COMMERCIAL VEHICLE HAD IT SELF BEEN GIVEN IN THE RULES WHICH ALSO INCLUDES LIGHT MOTOR VEHICLE HAVING UNLADEN WEIGHT OF LESS THAN 7,500KGS. NOWHERE IT HA S BEEN DEFINED THAT THE COMMERCIAL VEHICLE SHOULD BE USED ONLY F OR THE PURPOSE OF HIRE. ON THE CONTRARY SUB-CLAUSE 6 OF CLAUSE 3 O F PART III OF APPENDIX-I, PROVIDES THAT COMMERCIAL VEHICLE SHOULD BE USED FOR THE PURPOSE OF M/S BLUE STEEL ENG.P.LTD. BUSINESS O R PROFESSION. ONCE A DEFINITION HAS BEEN PROVIDED IN THE APPENDIX TO THE INCOME TAX RULES ITSELF, THERE IS NO NEED FOR LOOKING OTHE R DEFINITION OF COMMERCIAL VEHICLE AS GIVEN IN VARIOUS DICTIONARI ES. THE REPORT OF NEWSPAPERS AS HAVE BEEN REFERRED BY THE ASSESSIN G OFFICER HAS NO RELEVANCE HERE OR GIVES ANY SEPARATE MEANING WIT H REGARD TO DEFINITION OF COMMERCIAL VEHICLE. IN THIS CASE, T HE GROSS WEIGHT OF THE VEHICLE AS PER THE REGISTRATION CERTIFICATE IS 820 KG, WHICH IS MUCH LESS THAN 7500 KGS AND, THEREFORE, IT COMES WI THIN THE PURVIEW OF LIGHT MOTOR VEHICLE. 8.2 SIMILAR ISSUE HAS BEEN CONSIDERED BY THE ITAT MUMBAI BENCH IN THE CASE OF SHAH RUKH KHAN (SUPRA), WHEREI N THE SAME ANALYSIS HAS BEEN CONSIDERED BY THE ITAT AND CAME T O THE FOLLOWING CONCLUSION :- 4.3 WE HAVE PERUSED THE RECORDS AND CONSIDERED TH E RIVAL CONTENTIONS CAREFULLY. DISPUTE IS REGARDING THE RAT E OF DEPRECIATION ON THE BMW CAR PURCHASED BY THE ASSESSEE. THE CLAUS E (1A) OF PART III OF APPENDIX-I PRESCRIBES DEPRECIATION @20% IN C ASE OF MOTOR CARS OTHER THAN THOSE USED IN A BUSINESS OF RUNNING THEM AT HIRE. IN CASE OF MOTOR BUSES, MOTOR LORRIES AND MOTOR TAXIES USED IN A BUSINESS OF RUNNING THEM ON HIRE, THE DEPRECIATION HAS BEEN PROVIDED AT A HIGHER RATE OF 40% AS PER CLAUSE 2(II ) OF PART III. HOWEVER, CLAUSE 2(IID) WAS INSERTED W.E.F. 1.4.2002 AS PER WHICH A NEW COMMERCIAL VEHICLE WHICH IS ACQUIRED ON OR AFTE R 1.4.2001 BUT BEFORE 1.4.2002 AND IS USED BEFORE FIRST DAY OF APR IL, 2002 FOR THE PURPOSES OF BUSINESS OR PROFESSION WOULD BE ENTITLE D FOR DEPRECIATION @ 50%.THE NOTE (3A) DEFINES THE COMMER CIAL VEHICLE WHICH INCLUDES LIGHT MOTOR ITA NO : 6411/MUM/2010 7 M/S BLUE STEEL ENG.P.LTD. VEHICLES AS DEFINED IN SECTION 2 O F THE MOTOR VEHICLES ACT, 1988. THE LIGHT MOTOR VEHICLE UNDER T HE MOTOR VEHICLE ACT HAS BEEN DEFINED TO MEAN DIFFERENT TRAN SPORT VEHICLES INCLUDING THE MOTOR CAR THE WEIGHT OF WHICH DOES NO T EXCEED 7500KG. IN CASE OF THE ASSESSEE, IT IS NOT IN DISPU TE THAT THE MOTOR CAR HAD BEEN ACQUIRED BETWEEN 1.4.2001 TO 1.4.2002. THE WEIGHT OF ITA NO. 7676/MUM/2013 ASSESSMENT YEAR: 2010-11 5 THE CAR AS PER THE RC BOOK PLACED ON RECORD IS 2170 KG AND THEREFORE, IT IS A LIGHT MOTOR VEHICLE AS PER THE D EFINITION UNDER THE MOTOR VEHICLE ACT. THERE IS ALSO NO DISPUTE THAT TH E VEHICLE HAD BEEN USED IN THE PROFESSION OF THE ASSESSEE. THE CO MMERCIAL VEHICLE HAS BEEN SPECIFICALLY DEFINED IN THE APPENDIX AND T HE SAID DEFINITION DOES NOT REQUIRE THAT THE VEHICLE SHOULD BE REGISTERED AS A COMMERCIAL VEHICLE UNDER THE MOTOR VEHICLE ACT. T HE BMW CAR PURCHASED BY THE ASSESSEE IS COVERED BY THE DEFINIT ION OF COMMERCIAL VEHICLE AND HAD BEEN PURCHASED BETWEEN 1 .4.2001 TO 1.4.2002 AND USED BEFORE 1.4.2002 IN THE PROFESSION OF THE ASSESSEE. IT THUS SATISFIES ALL THE CONDITIONS FOR ALLOWANCE OF DEPRECIATION @ 50%. IN OUR VIEW IT WOULD BE ENTITLE D TO DEPRECIATION @ 50%. THE ORDER OF CIT(A) DENYING THE CLAIM OF THE ASSESSEE FOR HIGHER RATE OF DEPRECIATION CANNOT BE SUSTAINED AND THE SAME IS SET ASIDE AND THE CLAIM OF THE ASSESSEE IS ALLOWED. THUS, RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENT , WE DIRECT THE ASSESSING OFFICER TO ALLOW THE DEPRECIAT ION @ 50%. ACCORDINGLY, THE GROUND OF APPEAL NO.1 AS RAISED BY THE ASSESSEE IS ALLOWED. 11. THE ISSUE ARISING BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE MUMBAI BENCH OF TRIBUNAL IN BLUE STEEL ENGINEER VS. ACIT ( SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE HAS SATISFIED THE CONDITION FOR CLAIM OF ENHANCED DEPRECIATION AT 50% ON THE NE W MOTOR CAR PURCHASED BY HER. UPHOLDING THE ORDER OF THE CIT(A) WE DISMISS T HE GROUND OF APPEAL RAISED BY THE REVENUE. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JUNE, 2015. SD/- SD/- (R. C. SHARMA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATED: 05.06.2015 *SRIVASTAVA ITA NO. 7676/MUM/2013 ASSESSMENT YEAR: 2010-11 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.