Smt. Maitreyee Das, Purba Medinipur V. I.TO Wd - 1,Haldia, Haldia

ITA 780/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4466 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 12-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2013
• Court: TRIBUNAL
• Department Lawyers: DINABANDHU NASKAR
• Assessee Lawyers: K L BHOWMICK
• Keywords: Bogus purchase; Capital asset; Depreciation; Corroborative evidences; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3); 133(6); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI WASE EM AHMED, AM] I.T.A NO.780/KOL/2013 ASSESSMENT YEAR : 2009-1 0 SMT. MAITREYEE DAS -VS.- I.T.O., WARD-1 , PURBA MEDINIPUR HALDIA [PAN : AEFPD 0377 Q] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI K.L.BHOWMICK, ADVOCATE FOR THE RESPONDENT : SHRI DINABANDHU NASKAR, JCIT, SR.DR DATE OF HEARING : 12.07.2016. DATE OF PRONOUNCEMENT : 15.07.2016. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 05.12.2012 OF CIT(A)- XXXIII, KOLKATA, RELATING TO AY 2009-10. 2. GROUND NO.1 RAISED BY THE ASSESSEE READS AS F OLLOWS :- I THE LEARNED CIT(A) XXXIII ERRED IN REJECTING THE CLAIM THAT THE CLOSING STOCK CALLS FOR REDUCTION TO THE EXTENT OF THE REDUCTION OF PURCHAS ES DUE TO WRONG ENTRY AS RAISED IN GROUND NO. 1 BEFORE HIM; 3. THE ASSESSEE IS AN INDIVIDUAL. SHE CARRIES O N THE BUSINESS OF TRADING IN HIGH SPEED DIESEL, PETROL, LUBRICANTS ETC IN THE NAME AND STY LE OF M/S BARGABHIMA FUEL CENTRE. FOR A.Y. 2009-10 THE ASSESSEE FILED RETURN OF INCOME DE CLARING TOTAL INCOME OF RS.9,91,370/-. 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S.143 (3) OF THE INCOME TAX ACT, 1961 (ACT), THE ASSESSING OFFICER (AO) NOTICED THAT IN T HE TRADING ACCOUNT FOR THE YEAR 2 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 2 ENDED 31 ST MARCH 2009 , THE ASSESSEE HAD SHOWN PURCHASES OF HSD, POWER FUEL, TURBO ETC. TO THE RS.25,47,53, 113/-. AS PER CONFIRMATIO N RECEIVED FROM HINDUSTAN PETROLEUM CORPORATION LTD. TWICE ON 27/07/2011 AND ON 15/11/2 011, IN RESPONSE TO INFORMATION SOUGHT UNDER SECTION 133(6) OF THE ACT, THE AMOUNT OF PURCHASES MADE BY THE ASSESSEE FROM THEM WAS INFORMED AS RS.25,42,14,840/-. THE AO WAS THEREFORE OF THE VIEW THAT THE ASSESSEE HAS DECLARED PURCHASES IN EXCESS IN HI S TRADING ACCOUNT BY RS.5,38,272/- WHICH HAS THE EFFECT OF REDUCING THE INCOME DECLARE D BY THE ASSESSEE BY THE SAID SUM. ACCORDING TO THE AO, THE DIFFERENCE OF RS. 5,38,272 /- HAD TO BE TREATED AS BOGUS PURCHASE AND HAD TO BE BE ADDED BACK TO THE TOTAL I NCOME. THE ASSESSEE WHEN CALLED UPON BY THE AO TO EXPLAIN THE ABOVE DISCREPANCY SUB MITTED THAT A SUM OF RS.4,20,818/- WAS INADVERTENTLY INFLATED BY MISPOSTING OF AN INVO ICE DATED 03/10/2008 IN OIL ACCOUNT. ANOTHER INSTANCE OF REPAYMENT OF WORKING CAPITAL LO AN OF RS.1,17,454/- WAS WRONGLY INCLUDED IN THE OIL ACCOUNT. BOTH THE AFORESAID AMO UNTS TOGETHER MAKE UP THE DIFFERENCE OF RS.5,38,272/-. THOSE FIGURES WERE WRONGLY INCLU DED WITH PURCHASES. IF THOSE TWO FIGURES WERE DEDUCTED, THE PURCHASE FIGURE WOULD ST AND RECONCILED. THE ASSESSEE CLAIMED THAT THE INCREASE IN PURCHASES SHOWN IS NEU TRALIZED BY CORRESPONDING REDUCTION IN THE VALUE OF CLOSING STOCK AND THEREFORE THERE W OULD BE NO EFFECT ON THE PROFIT SHOWN BY THE ASSESSEE. 5. THE AO HOWEVER DID NOT ACCEPT THE STAND TAKEN B Y THE ASSESSEE. HE HELD THAT THE ASSESSEE FAILED TO PROPERLY RECONCILE THE FIGURES I N THE PURCHASE ACCOUNT. THE FOLLOWING WERE HIS FINDINGS: (5.1)THE ASSESSEE'S EXPLANATION IS NOT TENABLE. IN SUBMISSION DATED 23/11/2011 (RECEIVED IN THIS OFFICE ON 28/11/2011), IT WAS MEN TIONED THAT PURCHASE AMOUNT WAS INADVERTENTLY INFLATED BY MISPOSTING OF AN INVO ICE DATED 03/10/2008 IN OIL ACCOUNT BY RS. 4,20,818.91; WHEREAS REPAYMENT OF WO RKING CAPITAL OF RS.1,17,454/- (RS.18,586/- ON 18/03/2009, 40,000/- ON 18/03/2009, 40,000/- ON 27/03/2009 AND RS.18,868/- ON 27/03/2009) WERE WRON GLY INCLUDED IN PURCHASES. FROM THE COPY OF PURCHASE REGISTER, SUBMITTED BY TH E ASSESSEE IN COURSE OF 3 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 3 ASSESSMENT PROCEEDINGS, THE TOTAL PURCHASE FIGURE O F OIL ARRIVES AT RS.25,42,14,840/-. BY WAY OF MISPOSTING OF RS.5,38, 272/-, THE ASSESSEE HAS INFLATED THE PURCHASE FIGURE, CAUSING SLASH OF GROS S PROFIT BY THE EXACT AMOUNT. EVEN IF THE AMOUNT OF RS.5,38,272/- IS DEDUCTED FRO M THE PURCHASES AND A TRADING ACCOUNT IS REDRAWN, KEEPING OTHER CONSTANTS (EXCEPT GROSS PROFIT) REMAINING THE SAME, THE TRADING RESULT INCREASES BY RS.5,38,272/-, IN THE FOLLOWING MANNER- TRADING ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH, 2009 (AS PER AUDITED ACCO UNTS) PARTICULARS AMOUNT (RS.) PARTICULARS AM OUNT (RS.) TO OPENING STOCK 28,29,665.25 BY SALES 26,05,93,440.44 HSD,POWER,TURBO, PETROL HSD,POWER,TURBO, PET ROL & LUBRICANTS & LUBRICANTS TO PURCHASES OF HSD, 25,47,53,113.82 BY NORM AL LOSS NIL POWER, TURBO HSD, POWER, TURBO TO PURCHASE OF LUBRICANTS 10,23,574.72 BYCLOSI NGSTOCK 21,99,141. 75 TO GROSS PROFIT B/D 41,86,228.40 HSD,POWER, TURBO & LUBRICANTS TOTAL 26,27,92,582.19 TOTAL 26,27,92 582.19 TRADING ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH, 2 009 (AFTER DEDUCTING OF RS.5,38 272/- FROM PURCHASE) PARTICULARS AMOUNT (RS.) PARTICULARS AM OUNT (RS.) TO OPENING STOCK 28,29,665.25 BY SALES 26,05,93,440.44 HSD,POWER,TURBO, PETROL HSD,POWER,TURBO, PET ROL & LUBRICANTS & LUBRICANTS TO PURCHASES OF HSD, 25,42,14,841.82 BY NORMA L LOSS NIL POWER, TURBO HSD, POWER, TURBO TO PURCHASE OF LUBRICANTS 10,23,574.72 BY CLOS ING STOCK 21,99,141.75 TO GROSS PROFIT B/D 47,24,500.40 HSD,POWER, TURBO & LUBRICANTS TOTAL 26,27,92 582.19 TOTAL 26,27,92,582 .19 4 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 4 THEREFORE, EITHER WAY IT IS LOOKED INTO, DIFFERENCE OF RS.5,38,272/- PERSISTS AND AS SUCH THE ASSESSEE IS NOT IMMUNE OF INFLATED PURCHAS E FIGURE. THE GROSS PROFIT IS DIRECTLY HIT BY SUCH REDUCTION IN PURCHASE. UNDER THE CIRCUMSTANCE THE DIFFERENCE OF RS.5,38,27 2/- IS TREATED AS BOGUS PURCHASE AND ACCORDINGLY IS ADDED BACK TO THE TOTAL INCOME. 6. BEFORE CIT(A) THE ASSESSEE REITERATED THE SUBMI SSIONS THAT WERE MADE BEFORE THE AO. CIT(A) HOWEVER CONFIRMED THE ORDER OF AO BY OBS ERVING AS FOLLOWS :- 3.2. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MA DE. THE APPELLANT HAS STATED THAT IF THERE IS EXCESS DEBIT OF PURCHASE, CLOSING STOCK WO ULD AUTOMATICALLY GO UP BY THE SAME AMOUNT. HOWEVER, THIS IS TRUE ONLY IN CASE WHERE CO MPLETE QUANTITY RECORDS ARE' MAINTAINED IN RESPECT OF PURCHASE, SALES AND STOCK AND THE SAME ARE METICULOUSLY TALLIED. ON THE OTHER HAND, IF COMPLETE QUANTITY RECORDS ARE NOT MAINTAINED, THERE IS EVERY POSSIBILITY THAT ANY EXCESS DEBIT OF PURCHASE MAY N OT BE REFLECTED IN THE CLOSING STOCK. THIS IS ALSO IN VIEW OF THE FACT THAT IN CASE OF MO ST OF THE BUSINESSMEN, CLOSING STOCK IS PHYSICALLY VERIFIED AT THE END OF YEAR AND VALUED A ND THE SAME FIGURE IS ADOPTED IN THE TRADING ACCOUNT. THE DETAILED EXERCISE OF TALLYING STOCK WITH EACH AND EVERY INSTANCE OF PURCHASE AND SALE IS NORMALLY NOT MADE. WITH THESE CONSIDERATIONS IN MIND, THE APPELLANT WAS ASKED AS TO WHETHER THE FACT OF DUPLICATION OF INVOICE ENTRY IN THE STOCK RECORDS AND ITS INCLUSION IN THE CLOSING STOCK CAN BE ESTABLISHED B Y STOCK STATEMENT OR ANY OTHER EVIDENCE. VIDE ORDER SHEET ENTRY DATED 08.11.2012, THE AUTHOR IZED REPRESENTATIVE OF THE APPELLANT EXPRESSED INABILITY TO DO SO. HE WAS, NEVERTHELESS, GIVEN ONE MORE OPPORTUNITY FOR FURNISHING SUCH EVIDENCE. IN THE SUBSEQUENT HEARING HE HAS ONLY PRODUCED A STATEMENT OF TRANSACTIONS FOR THE MONTH OF OCTOBER 2008 HOWEVER, THIS STATEMENT CONTAINS ONLY AMOUNTS AND HAS NO DETAILS OF QUANTITY. OBVIOUSLY, FROM SUCH A STATEMENT, IT IS NOT POSSIBLE TO ASCERTAIN WHETHER THE QUANTITY OF MATER IAL PURCHASED VIDE THE INVOICE UNDER CONSIDERATION WAS REALLY TAKEN TWICE IN STOCK. ALSO , DURING THE ORAL DISCUSSION, THE AUTHORIZED REPRESENTATIVE ALSO STATED THAT THE DUPL ICATION IN DEBITING OF THE INVOICE WAS SUBSEQUENTLY REVERSED. IT IS SEEN THAT NO SUCH CONT ENTION WAS MADE AT THE TIME OF ASSESSMENT. MOREOVER, HAD SUCH BEEN THE CASE, IT WO ULD HAVE NO NET IMPACT ON THE AMOUNT OF PURCHASE DEBITED AND THUS WOULD NOT, IN ANY WAY, EXPLAIN THE DISCREPANCY IN PURCHASE POINTED OUT BY THE ASSESSING OFFICER. THUS, IT IS C LEAR THAT THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE HER CLAIM THAT THE EXCESS DEBITING OF PURCHASE OF RS.4,20,818 RESULTED IN A NEUTRALIZING ENTRY IN CLOSING STOCK. THEREFORE, THE SAME CANNOT BE ACCEPTED FOR WANT OF SUPPORTING EVIDENCE. THIS GROUND IS ACCORDINGLY REJ ECTED. 7. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE H AS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 5 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 5 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITIES. THE LD. DR RELIED ON THE ORDER O F CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS CLEAR FROM THE ORDER OF CIT(A) THAT THE ASSESSE WAS NOT ABLE TO SUBSTANTIATE THE FACT T HAT BY REASON OF THE INFLATION OF PURCHASES THERE WAS NEUTRALIZING ENTRY WHEREBY THER E WAS INCREASE IN THE VALUE OF THE CLOSING STOCK AND THEREFORE THERE CANNOT BE ANY IN FERENCE OF SUPPRESSION OF INCOME. EVEN BEFORE US NO FRESH MATERIAL IS BROUGHT TO OUR NOTICE TO EITHER DISLODGE THE FINDINGS OF CIT(A) OR TO COME TO A CONCLUSION CONTRARY TO TH E ONE REACHED BY CIT(A). WE THEREFORE DISMISS GROUND NO.1 RAISED BY THE ASSESSE E. 10. GROUND NOS. 2,3,4 AND 5 RAISED BY THE ASSESSEE AND ADDITIONAL GROUND RAISED BY THE ASSESSEE READ AS FOLLOWS :- IL THAT THE LD. CIT(A) IS WRONG TO REJECT THE CLAI M FOR DEPRECIATION IN RESPECT OF THE OIL TANKER ACQUIRED THIS YEAR AND AFTER PERFORMING ALL NECESSARY FORMALITIES FACTUAL AND LEGAL FOR ITS BUSINESS USE AND KEEPING A DRIVER EVER READ Y AT THE WHEEL; III THAT THE LD. CIT(A) IS WRONG TO HOLD THAT THE T ANKER WAS NOT READY FOR INSTANT USE FOR BUSINESS AND HE IS ABSOLUTELY WRONG IN REJECTING TH E CALCUTTA HIGH COURT DECISION IN THE CASE OF CIT V UNION CARBIDE(P) LTD 254 ITR488 REFER RING TO SOME OTHER DECISIONS INCLUDING THE CAL .HIGH COURT DECISION AS REPORTED IN 206 ITR 682 IN THE CASE OF CIT V ORIENTAL COAL CO. LTD.; IV THAT THE LD' COMMISSIONER IS ABSOLUTELY MISGUIDE D HIMSELF IN HOLDING THAT ROAD TAX OR INSURANCE PREMIUM IN RESPECT OF THE VEHICLE IS A CA PITAL AND NOT A REVENUE EXPENDITURE AND THEREBY WRONGLY REFUSED TO ALLOW THE DEDUCTION; V. THE APPELLATE COMMISSIONER IS WRONG TO REJECT TH E GROUND NO 7 BEFORE HIM TAKEN TO ACCEPT AND DECLARE THAT THE RESOURCES AGAINST THE D EPRECIATION ENJOYED BY DEDUCTION FROM THE REVENUE ACTUALLY LIES IN THE BUSINESS IN ANY FO RM AVAILABLE FOR THE REPLACEMENT OF THE ASSET IN QUESTION AND FOR THAT THE CORRESPONDING CR EDIT ESSENTIALLY IS ATTRIBUTABLE TO THE CAPITAL ACCOUNT IN ABSENCE OF THE DEPRECIATION RESE RVE ACCOUNT. ADDITIONAL GROUNDS RAISED BY THE ASSESSEE: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) XXXIII KOLKATA IS WRONG TO HOLD THAT THE FAILURE TO DISPOSE OF THE RE CTIFICATION PETITION OF THE ASSESSEE- 6 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 6 APPELLANT AGAINST THE ORDER U/S 143(1) HAS NOT PREJ UDICED THE ASSESSEE-APPELLANT ALLEGING WRONGLY THAT THE SCRUTINY ASSESSMENT IS NOT THEREBY VITIATED; 2. THAT THE LD CIT(A) MISGUIDED HIMSELF IN NOT HOLD ING THAT THE PROVISIONS OF SECTION 44AE ARE NOT APPLICABLE IN ABSENCE OF ANY FINDING T HAT THE OIL TANKER HAS BEEN GIVEN ON HIRE TO ANY THIRD PARTY; 11. THE FACTS AND CIRCUMSTANCES UNDER WHICH THE AF ORESAID GROUNDS OF APPEAL ARISE FOR CONSIDERATION ARE AS FOLLOWS. WE HAVE ALREADY SEEN THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN HIGH SPEED DIESEL, FUEL ETC. THE ASSE SSEE PURCHASED ONE OIL TANKER ON 03.06.2008. THE SAME WAS REGISTERED IN THE MOTOR VE HICLES DEPARTMENT ON 04.08.2008 AND ROAD TAX WAS PAID ON 26.11.2008. THE VEHICLE WA S INSURED WITH NATIONAL INSURANCE COMPANY ON 04.06.2008. ACCORDING TO THE ASSESSEE TH IS OIL TANKER WAS MEANT FOR USE BY THE ASSESSEE IN HER BUSINESS OF TRADING IN PETROLEU M PRODUCTS AND WAS READY FOR USE BUT WAS NOT ACTUALLY PUT TO USE. THE ASSESSEE CLAIMED A S DEDUCTION THE DEPRECIATION ON OIL TANKER AMOUNTING TO RS.4,02,990/- , REGISTRATION CH ARGES OF RS.5,00,045/-, ROAD TAX PAID OF RS.41,320/- AND INSURANCE PREMIUM OF RS.37,130/- AS DEDUCTION WHILE COMPUTING THE INCOME FROM BUSINESS. ACCORDING TO THE ASSESSEE THO UGH THE OIL TANKER WAS NOT ACTUALLY USED, IT WAS KEPT READY FOR USE AND IN THIS REGARD RELIED ON THE CIRCUMSTANCE THAT SALARY OF DRIVER MEANT TO DRIVE THE OIL TANKER WAS ALSO PA ID AND CLAIMED AS DEDUCTION BY THE ASSESSEE. 12. THE AO HOWEVER NOTICED THAT IN RESPECT OF THE OIL TANKER OWNED BY THE ASSESSEE THE ASSESSEE HAD DECLARED INCOME OF RS.42,000/- AS PER THE PROVISION OF SECTION 44AE OF THE ACT. THE AO WAS OF THE VIEW THAT SINCE THE INCO ME OF THE ASSESSEE WAS DECLARED U/S 44AE OF THE ACT NO DEDUCTION ALLOWABLE UNDER THE PR OVISION OF SECTIONS 30 TO 38 OF THE ACT COULD BE ALLOWED AS LAID DOWN IN THE PROVISION OF SECTION 44AE (3) OF THE ACT. AO THEREFORE DID NOT ALLOW THE CLAIM OF THE ASSESSEE F OR DEDUCTION OF THE AFORESAID SUMS. 13. THE ASSESSEE CLAIMED BEFORE THE AO THAT THE DE CLARATION OF INCOME FROM OIL TANKER AT RS.42,000/- U/S44AE OF THE ACT WAS A MISTAKE COM MITTED BY THE ACCOUNTANT. IN THIS 7 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 7 REGARD THE ASSESSEE POINTED OUT THAT THE PROVISION OF SECTION 44AE OF THE ACT WILL APPLY ONLY TO AN ASSESSEE WHO OWNS GOODS, CARRIAGE AND WH O IS ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING SUCH GOODS CARRIAGES. THE ASSESSEE POINTED OUT THAT SINCE THE OIL TANKER IN QUESTION WAS PURCHASED BY THE ASSESSEE FO R USE IN ITS OWN BUSINESS AND SINCE THE OIL TANKER WAS NOT ENGAGED IN THE BUSINESS OF P LYING, HIRING OR LEASING, THE DECLARATION OF INCOME U/S 44AE OF THE ACT WAS ERRON EOUS. 14. THE AO HOWEVER DID NOT AGREE WITH THE STAND TA KEN BY THE ASSESSEE AND WAS OF THE VIEW THAT SUCH A CLAIM WITHOUT FILING A VALID REVIS ED RETURN OF INCOME CANNOT BE ENTERTAINED. IN THIS REGARD THE AO MADE REFERENCE T O THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA LIMITED V S CIT 157 TAXMAN 1 (SC) WHEREIN IT WAS LAID DOWN THAT THE AO CANNOT ENTERTAIN ANY C LAIM BY THE ASSESSEE WITHOUT A REVISED RETURN BEING FILED. WITHOUT PREJUDICE TO T HE AFORESAID CONCLUSION THE AO ALSO DEALT WITH THE CONTENTION OF THE ASSESSEE THAT THE OIL TANKER IN QUESTION WAS READY FOR USE AND THEREFORE IT HAS TO BE CONSTRUED AS ACTUAL USER OF THE OIL TANKER TO ENABLE THE ASSESSEE TO CLAIM DEPRECIATION. THE ASSESSEE HAD IN THIS REG ARD PLACED RELIANCE ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS UNION CARBIDE (P)LTD 254 ITR 488 (CAL) WHEREIN IT WAS HELD THAT IF AN ASSET WAS READY FOR USE DEPRECIATION IS ALLOWABLE. THE AO HOWEVER HELD THAT THE ASSESSEE FA ILED TO PROVE THAT THE OIL TANKER WAS READY FOR USE THOUGH NOT ACTUALLY PUT TO USE DURING THE PREVIOUS YEAR. FOR ALL THE AFORESAID REASONS THE CLAIM OF THE ASSESSEE FOR DED UCTION ON ACCOUNT OF ROAD TAX, INSURANCE AND DEPRECIATION WAS DISALLOWED BY THE AO . 15. ON APPEAL BY THE ASSESSEE THE CIT(A) AGREED TO THE SUBMISSIONS OF THE ASSESSEE THAT THE INCOME FROM OIL TANKER WAS WRONGLY DECLARED BY THE ASSESSEE U/S 44AE OF THE ACT. CIT(A) HELD THAT THE OIL TANKER IN QUESTION WAS NOT USED OR EVEN MEANT TO PUT TO USE FOR THE PURPOSE OF PLYING, HIRING AND LEASING OF THE SA ME AND WAS MEANT FOR EXCLUSIVE USE BY THE ASSESSEE. THE CIT(A) WAS THEREFORE OF THE VI EW THAT INTEREST PAID ON LOANS 8 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 8 BORROWED FOR THE PURPOSE OF ACQUIRING THE OIL TANKE R AND SALARY OF DRIVER OF THE FIVE TANKERS COULD HAVE BEEN DISALLOWED BY THE AO AND TH ESE ADDITIONS WERE DELETED. THE REVENUE IS NOT IN APPEAL AGAINST THE SAID FINDINGS OF THE CIT(A) AND THE SAME HAS NOW BECOME FINAL. HOWEVER, WITH REGARD TO THE INSURANC E AND ROAD TAX, THE CIT(A) HELD THAT THE SAME WAS CAPITAL EXPENDITURE AND IT HAD TO BE C APITALIZED AS PART OF THE COST OF THE OIL TANKER AND DIRECTED THE AO TO ALLOW DEPRECIATION ON THE VALUE OF THE OIL TANKER AFTER CAPITALIZATION OF THE AFORESAID EXPENSES. 16. WITH REGARD TO THE CLAIM OF THE ASSESSEE FOR D EPRECIATION OF THE OIL TANKER, THE CIT(A) HELD THAT THE ASSESSEE FAILED TO ESTABLISH T HE OIL TANKER WAS KEPT READY FOR USE. THE FOLLOWING WERE THE CONCLUSIONS DRAWN BY THE CIT (A) :- 5.2. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MA DE. THE ISSUE OF DEPRECIATION IS BEING TAKEN UP FIRST. THE TWO PRIMARY CONDITIONS FOR CLAI MING DEPRECIATION ARE OWNERSHIP OF ASSET AND PUTTING IT TO USE FOR PURPOSE OF BUSINESS . THERE IS NO DISPUTE OVER THE FACT THAT THE ASSET I.E TANKER ACQUIRED DURING THE YEAR WAS N OT ACTUALLY PUT TO USE. HOWEVER, THE CONTENTION OF THE APPELLANT IS THAT IT WAS KEPT REA DY FOR USE AND THEREFORE DEPRECIATION SHOULD BE ALLOWED IN LIGHT OF DECISIONS CITED BY HE R. THE APPELLANT WAS ASKED TO SUPPORT THE CONTENTION THAT THE TANKER WAS KEPI READY FOR U SE BY PRODUCING EVIDENCE. IT WAS INFORMED BY THE APPELLANT THAT THE TANKER WAS ACQUI RED IN THE MONTH OF JUNE 2008 AND ALL FORMALITIES LIKE REGISTRATION ETC WERE DULY COMPLET ED IN AUGUST 2008. HOWEVER, THE TANKER COULD NOT BE ACTUALLY USED, AS BEFORE THE TANKER CO ULD BE USED FOR BRINGING OIL FROM HINDUSTAN PETROLEUM, PERMISSION OF HINDUSTAN PETROL EUM WAS REQUIRED. THE APPELLANT WAS ASKED TO PRODUCE DOCUMENTS IN RESPECT OF SUCH P ERMISSION SOUGHT BY HER. IN RESPONSE, A LETTER DATED 05.10.2009 FROM HPCL ADDRESSED TO TH E APPELLANT INFORMING THE RATES OFFERED AND A BANK GUARANTEE DATED 29.10.2009 WAS P RODUCED. THESE DOCUMENTS ARE OBVIOUSLY OF A PERIOD MUCH AFTER THE END OF THE PRE VIOUS YEAR. NO CORRESPONDENCE EVIDENCING THAT THE APPELLANT HAD REQUESTED FOR PER MISSION FROM HPCL DURING THE YEAR UNDER CONSIDERATION HAS BEEN PRODUCED. IT HAS BEEN MENTIONED BY THE APPELLANT HERSELF, THAT UNLESS HPCL GIVES SUCH PERMISSION, IT IS NOT P OSSIBLE FOR THE APPELLANT TO USE THE TANKER FOR CARRYING OIL. THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE THE CLAIM THAT PERMISSION HAD BEEN SOUGHT DURING THE YEAR AND WAS AWAITED. THEREFORE, IT CANNOT BE SAID THAT THE TANKER WAS REALLY READY TO BE USED. HENCE- EVEN IF ONE ACCEPTS THE PLEA THAT AN ASSESSEE CAN CLAIM DEPRECIATION ON THE ASSETS WHICH ARE READY TO BE USED (AND NOT ACTUALLY USED) THE APPELLANT HAS NOT BEEN ABLE TO SHOW SUCH READINESS TO USE TO SUPPORT HER CLAIM FOR DEPRECIATION. 5.3. FURTHERMORE, WITHOUT PREJUDICE TO THE ABOVE FI NDING, THE LEGAL POSITION ON THIS ISSUE HAS BEEN EXAMINED. THE APPELLANT HAS MADE HER CLAIM RELYING UPON CERTAIN DECISIONS CITED EARLIER. ONE OF THESE DECISIONS VIZ. UNION CARBIDE PVT. LTD. (SUPRA) HAS BEEN DELIVERED BY 9 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 9 THE JURISDICTIONAL HIGH COURT. HOWEVER, ON GOING TH ROUGH THE DECISION, IT IS SEEN THAT IT WAS UNDISPUTED FACT IN THAT CASE THAT THE MACHINERY UNDER CONSIDERATION HAD BEEN ACTUALLY USED FOR TRIAL RUN. THIS FACTUAL POSITION WAS NOT C ONTESTED BY THE REVENUE. THEREFORE RATIO OF THAT CASE CANNOT BE APPLIED IN THE PRESENT CASE WHERE THERE IS NO USE AT ALL OF THE ASSET. ANOTHER CASE RELIED UPON BY THE ASSESSEE IS THAT OF SIV INDUSTRIES LTD. (SUPRA). IT IS SEEN THAT IN THAT CASE FIRST USAGE OF THE ASSET WAS NOT AT ALL DISPUTED. THE ONLY DISPUTE WAS REGARDING NUMBER OF DAYS FOR WHICH THE ASSET WAS US ED AND IN THAT CONTEXT IT WAS HELD THAT ALL THE DAYS AFTER FIRST USAGE SHALL BE CONSIDERED FOR THE PURPOSE. THIS RATIO ALSO HAS NO APPLICABILITY ON THE FACTS OF THE PRESENT CASE. ON THE CONTRARY, IT HAS BEEN HELD IN SEVERAL CASES THAT MERELY KEEPING AN ASSET READY FOR USE IS NOT SUFFICIENT FOR CLAIMING DEPRECIATION. SOME SUCH DECISIONS ARE IN THE CASES OF CIT VS JIVA JI RAO SUGAR COMPANY LTD 71 ITR 319 (MP), CIT VS JK TRANSPORT 231 ITR 798 (MP), CIT VS MAPS TOURS AND TRAVELS 260 ITR 655 (MAD.), DINESH KUMAR GULABCHAND AGARWAL VS CIT 267 ITR 768 (BOM.), CIT VS. ORIENTAL COAL CO. LTD. 206 ITR 682 (CAL), DCIT VS Y ELLAMMA DASAPPA HOSPITAL 290 ITR 353 (KAR.). IN PARTICULAR, THE CASE OF DINESH K UMAR GULABCHAND AGARWAL (SUPRA) SPECIFICALLY DEALT WITH ISSUE OF DEPRECIATION ON TR UCKS KEPT READY FOR USE BUT NOT ACTUALLY USED. THUS, A LARGE NUMBER OF THE JUDICIAL AUTHORIT IES HAVE TAKEN A CONSIDERED VIEW, THAT DEPRECIATION IS ALLOWABLE ONLY ON ACTUAL USAGE AND NOT MERELY FOR THE ASSET BEING KEPT READY FOR USE. THEIR RATIO IS IN CONSONANCE OF THE FACT, THAT THE TERM USED IN SECTION 32 OF 1.T.ACT, 1961 IS 'USED FOR PURPOSES OF BUSINESS' AN D NOT 'KEPT READY FOR USE'. IT IS UNDISPUTED THAT-THE TANKER WAS NOT ACTUALLY USED DU RING THE YEAR. CONSIDERING THE FOREGOING DISCUSSION, THE DISALLOWANCE OF DEPRECIAT ION ON TANKER IS CONFIRMED. 17. AGGRIEVED BY THE ACTION OF CIT(A) IN SUSTAININ G THE DISALLOWANCE TO THE DEDUCTION OF DEPRECIATION AND NOT ALLOWING THE EXPENDITURE OF ROAD TAX AND INSURANCE AS REVENUE EXPENDITURE THE ASSESSEE HAS RAISED GROUND NOS. 2 T O 5 AND THE ADDITIONAL GROUNDS BEFORE THE TRIBUNAL. 18. WE MAY, AT THE OUTSET, POINT OUT THAT GROUND N O.5 RAISED BY THE ASSESSEE AND THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE GENER AL ARGUMENTS. IN FACT ADDITIONAL GROUND NO.2 HAS BEEN DECIDED IN FAVOUR OF THE ASSES SEE BY THE CIT(A) AND THE ASSESSEE COULD NOT HAVE ANY GRIEVANCES WHATSOEVER. AS FAR AS ADDITIONAL GROUND NO.1 IS CONCERNED THE LAW IS WELL SETTLED THAT AN ORDER OF ASSESSMENT PASSED U/S 143(3) OF THE ACT WILL HAVE THE EFFECT OF SUPERSEDING THE ORDER U /S 143(1) OF THE ACT. THE SAID ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE THERE FORE FOUND TO BE WITHOUT ANY MERIT. 10 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 10 19. AS FAR AS THE ROAD TAX AND INSURANCE PREMIUM W HICH WAS TREATED AS CAPITAL EXPENDITURE BY THE AO IS CONCERNED, THE COST OF ACQ UISITION OF A CAPITAL ASSET AS PER THE DEFINITION CONTAINED IN SECTION 43(1) OF THE ACT ME ANS THAT ACTUAL COST TO THE ASSESSEE. WHEN A NEW VEHICLE IS ACQUIRED THE INSURANCE PREMIU M AND THE ROAD TAX PAID WOULD ASSUME THE CHARACTER OF THE COST PAID IN ACQUIRING THE ASSET. BUT FOR INCURRING THESE EXPENSES, THE VEHICLE CANNOT BE PUT TO USE BY THE A SSESSEE. WE ARE THEREFORE OF THE VIEW THAT THE TREATMENT OF THE ROAD TAX AND INSURANCE PR EMIUM AS CAPITAL EXPENDITURE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WAS PR OPER AND CALLS FOR NO INTERFERENCE. 20. AS FAR AS THE CLAIM OF DEPRECIATION MADE BY TH E ASSESSEE IS CONCERNED THE FACTS WITH REGARD TO THE ACQUISITION OF THE OIL TANKING ON 03. 06.2008 AND ITS REGISTRATION WITH THE GOVERNMENT AUTHORITIES AND PAYMENT OF ROAD TAX ON 26.11.2008 AND ALSO PAYMENT OF INSURANCE ON 04.06.2008 IS NOT DISPUTED BY THE REVE NUE. THE REVENUE HAS ALSO NOT DISPUTED THE FACT THAT THE DRIVER HAS BEEN EMPLOYED FOR WHOM THE SALARY IS PAID TO PLY THE OIL TANKER. IN THE LIGHT OF THE ABOVE FACTS BE ING ADMITTED, WE ARE OF THE VIEW THAT IT CANNOT BE SAID THAT THE VEHICLE WAS NOT READY FOR U SE. THE CIT(A) HAS PROCEEDED ON THE BASIS THAT THE HINDUSTAN PETROLEUM CORPORATION LTD HAS TO GIVE PERMISSION FOR USE OF THE OIL TANKER BY THE ASSESSEE FOR TRANSPORTING PET ROLEUM PRODUCTS AND SINCE SUCH PERMISSION WAS NOT GIVEN, IT CANNOT BE SAID THAT TH E TANKER WAS KEPT READY FOR USE. IN OUR VIEW THIS CONCLUSION OF THE CIT(A) CANNOT BE SUSTAI NED. THE CIRCUMSTANCES VIZ., ABSENCE OF PERMISSION OF HPCL, CAN AT BEST LEAD TO THE CONCLUSION THAT THE ASSESSEE WAS UNABLE TO PERSUADE HINDUSTAN PETROLEUM CORPORATION LTD., TO GIVE PERMISSION FOR USE OF THE OIL TANKER FOR TRANSPORTING PETROLEUM PRODUCTS. IT CANNOT HOWEVER BE SAID THAT THE OIL TANKER WAS NOT KEPT READY TO PUT TO USE. THERE WAS NO IMPEDIMENT FOR USE OF THE OIL TANKER FOR TRANSPORTING PETROLEUM PRODUCTS AND THIS FACT IS NOT DISPUTED BY THE REVENUE. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE ASSESSEE HAS SUCCESSFULLY ESTABLISHED THAT THE VEHICLE IN QUESTI ON WAS READY FOR USE THOUGH IT WAS NOT ACTUALLY PUT TO USE. WE THEREFORE ARE OF THE VIEW T HAT THE CLAIM OF THE ASSESEE FOR 11 ITA NO.780/KOL/2013 SMT. MAITREYEE DAS A.YR.2009-10 11 DEDUCTION ON ACCOUNT OF DEPRECIATION OUGHT TO HAVE BEEN ALLOWED AND THE SAME IS DIRECTED TO BE ALLOWED. GROUND NOS. 2 AND 3 RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 21. IN THE RESULT THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 15.07.2016. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15.07.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SMT. MAITREYEE DAS, VILL P.O. CHAKDWIP, PURBA MED INIPUR, PIN : 721606. 2. ITO, WARD-I, HALDIA.. 3. CIT(A)-XXXIII, KOLKATA 4. CIT-XVIII, KO LKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES