Akbar Qureshi, Delhi V. ITO, Faridabad

ITA 816/DEL/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3192 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 16-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: D M SINHA
• Keywords: Depreciation; Commercial expediency; TDS
• Section: 40(a)(ia); 194C; 292BB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 816/DEL/2016 ASSTT. YEAR: 2011-12 AKBAR QURESHI DINESH MOHAN SINHA, ADVOCATE 108/109, PARMESH BUSINESS CENTRE PLOT NO. 20, COMMUNITY CENTRE, KARKARDOOMA, DELHI. VS ITO WARD 1(1) FARIDABAD. (APPELLANT) (RESPONDENT) PAN NO. AACPQ0549C ASSESSEE BY : SH. D.M. SINHA, ADV. REVENUE BY : MS. ASHIMA NEB, SR. DR DATE OF HEARING: 0 3 . 1 2 .2019 DATE OF PRONOUNCEMENT: 03 .1 2 .2019 ORDER PER DR. B.R.R. KUMAR, A.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A), FARIDABAD DATED 04.01. 2016. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT THE ORDER IS BAD IN LAW AND FACTS OF THE CASE SINCE THE GROUND NO. 1, 2 AND 9 REMAIN UN-DISPOSED OFF, THE LD . CIT(A) HAS WRONGLY UPHOLD THE ORDER OF THE ASSESSING OFFICER WHILE IGNORING THE ABOVE MENTIONED GROUNDS; 2. BECAUSE THE LD. CIT(A) HAS WRONGLY UPHOLD THAT LD. AS SESSING OFFICER HAS JURISDICTION IN FRAMING AN ASSESSMENT, SINCE NO NOTICE HAS EVER BEEN SENT AT THE ADDRESS GIVEN ON RETURN; ITA NO. 816/DEL/2016 AKBAR QURESHI 2 3. BECAUSE THE ADDITION AS CONFIRMED U/S 40(1)(A) OF THE IN COME TAX ACT, 1961 IS BAD SINCE THE PETITIONER WAS NOT IN DEF AULT WITHIN THE MEANING OF SEC. 201(1); AND HAD SECURE THE REQUISIT E DOCUMENTS; 4. BECAUSE SECTION 194C SUB-SECTION (6) SPECIFICALLY SPEAKS ABOU T NON DEDUCTION OF TDS IN CASE OF PLAYING HIRING ON LEAS ING GOODS CARRIAGE; 5. BECAUSE DISALLOWANCE OF EXPENSES CONFIRMED ON ESTIMATED BASI S IS BAD AND THERE IS NO MATERIAL/MATERIAL FACTS AVAILAB LE ON RECORD; 6. BECAUSE THE ORDER IS BAD WHILE CONFIRMING THE DECISION TH AT GROUND NO. 4 CRANE RUNNING EXPENSES (RS. 6,26,336.00) GROUND NO. 5 EXPENSES DISALLOWED (RS. 1,08,572.00) GROUND NO. 8 REPAIR & MAINTENANCE (RS. 1,25,000.00) IGNORE OR LACK THE COMMERCIAL EXPEDIENCY IN MAKING THE EXPENSES. 7. BECAUSE WHILE MAKING AN ORDER OR FRAMING AN OPINION R EGARDING AN EXPENSE, WITHOUT LOOKING TO THAT WHETHER EXPENSES W AS WHOLLY OR EXCLUSIVELY FOR THE BUSINESS PURPOSES; 8. BECAUSE OF CONFIRMING THE DISALLOWANCE OF DEPRECIATION I S BAD SINCE THE CRANE FITTED TRUCK AND OPERATE THROUGH ENGINE ; 9. 40(A)(IA) IS INTERPRETED TO MEAN THAT IT APPLIES ONLY TO AMOUNT PAYABLE KIND ATTENTION IS HEREBY DRAW ON THE SPECIAL BENCH CASES MERLYM, SHIPPING & TRANSPORTS. 10. THAT THE CONFIRMATION OF PENALTY IS BAD. 3. THE GROUND NO. 1 IS GENERAL IN NATURE. 4. GROUND NO. 2 PERTAINS TO JURISDICTION IN FRAMING TH E ASSESSMENT. THE LD. AR ARGUED THAT NO NOTICE HAS EVER BEEN SENT AT THE ADDRESS GIVEN ITA NO. 816/DEL/2016 AKBAR QURESHI 3 ON THE INCOME TAX RETURN. IT WAS ARGUED THAT WHILE T HE ADDRESS OF THE ASSESSEE AS PER THE INCOME TAX RETURN IS DELHI, THE ASSESSING OFFICER STATIONED AT FARIDABAD DO NOT HOLD THE JURISDICTION AN D HENCE, THE ASSESSMENT MADE IS BAD IN LAW. LD. DR ARGUED THAT THE I SSUE OF NOTICE AND JURISDICTION CANNOT BE RAISED AT THIS JUNCTURE IN VIEW OF THE PROVISIONS OF SEC. 292BB AND ALSO RELIED ON THE JUDGMENT OF HONBL E DELHI HIGH COURT IN THE CASE OF ABHISHEK JAIN VS. ITO IN WP (CIVIL ) NO. 11844/2016 DATED 01.06.2018. 5. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE NOTICE HAS BEEN DULY SERVED ON THE ASSESSEE AND THE ASSESSEE HAS NOT RAISED ANY OBJECTION ON THE JURISDICTION WITH ITO, FARIDABAD WITHIN ONE MONTH OF THE ISSUE OF NOTICE U/S 143(2). HENCE, WE HEREBY DISMISS THE APPEAL OF THE A SSESSEE ON THIS GROUND. 6. GROUND NO. 3, 4 AND 9 RELATE TO NON-DEDUCTION OF TDS AND SUBSEQUENT ADDITION U/S 40(IA) FOR THE DEFAULT U/S 201( 1). BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF HIRING OF CRANES. DURING THE YEAR THE ASSESSEE HAS PAID AN AMOUNT OF RS. 1, 04,87,799/- TO VARIOUS PARTIES ON ACCOUNT OF THE CRANE HIRE CHARGES. THE ASSESSING OFFICER HELD THAT THE PROVISIONS OF THE TDS HAVE NOT B EEN OBSERVED BY THE ASSESSEE AND HENCE THE AMOUNT PAID BY THE ASSESSEE WITH OUT DEDUCTING THE TDS HAS BEEN TREATED U/S 40(A)(IA) OF TH E ACT. DURING THE ITA NO. 816/DEL/2016 AKBAR QURESHI 4 PROCEEDINGS BEFORE LD. CIT(A) THE ASSESSEE HAS RAISED THE G ROUND AT SL. NO. 3 THAT THERE WAS NO TDS DEFAULT. THE LD. CIT(A) ADJUDICATED THE ISSUE TAKING INTO CONSIDERATION THE JUDGMENTS OF VARIOUS COURTS ON THE ISSUE OF AMOUNTS PAID AND PAYABLE AND APPLICABILITY OF SECTION 40(A)(IA) THEREOF. THE LD. CIT(A) HELD THAT THE PROVISIONS OF SEC. 40(A)(IA) IS APPLICABLE TO THE AMOUNTS PAID AND AS WELL AS PAYABLE. HOWEVER, THE MOOT ISSUE OF WHETHER OR NOT THE ASSESSEE IS LIABLE TO DED UCT TAX ON THE PAYMENTS MADE TO VARIOUS CRANE OPERATORS HAS NOT BEEN AD JUDICATED. HENCE, WE REMIND THIS ISSUE BACK TO THE FILE OF THE LD. C IT(A) TO ADJUDICATE ON THE CORE ISSUE OF APPLICABILITY OF SEC. 194C (6) TO THE PAYMENTS MADE BY THE ASSESSEE. 7. GROUND NO. 5, 6 AND 7 RELATE TO DISALLOWANCE ON ACCO UNT OF CRANE RUNNING EXPENSES, REPAIR & MAINTENANCE EXPENSES AND OTH ER EXPENSES. THE ASSESSING OFFICER HAS DISALLOWED 25% OUT OF THE CRANE R UNNING EXPENSES, 25% OUT OF REPAIR AND MAINTENANCE EXPENSES AND 20% OUT OF OTHER EXPENSES. BEFORE THE ASSESSING OFFICER, NO DETAILS H AVE BEEN PRODUCED ON THE PLEA THAT THERE WAS LOSS OF BOOKS OF ACCO UNTS AND AN FIR HAS BEEN FILED. THE ASSESSING OFFICER CLEARLY OBSERVED THA T THE FIR DO NOT DEPICT ANY LOSS OF BOOKS OF ACCOUNTS AND IT PERTAINS TO ONLY LOSS OF CHEQUE BOOK, BILL BOOK AND LETTER HEAD. EVEN BEFORE THE LD. CIT(A) NO DETAILS HAVE BEEN PRODUCED. THE ASSESSEE COULD NOT PROV E OR BRING ANYTHING ON RECORD PERTAINING TO LOSS OF BILLS AND VOUC HERS WITH REGARD TO ITA NO. 816/DEL/2016 AKBAR QURESHI 5 THE EXPENSES WHICH ARE GENERALLY MAINTAINED AND KEPT AT THE OFFICE PREMISES. EVEN DURING THE HEARING BEFORE US, NO DIRECT OR INDIRECT EVIDENCES TO PROVE THE EXPENSES INCURRED HAVE BEEN FILED . HENCE, IN THE ABSENCE OF ANY OTHER EVIDENCE, WE DECLINE TO INTERFERE IN THE REASONED ORDER OF THE LD. CIT(A) ON THIS ISSUE. 8. GROUND NO. 8 RELATES TO DEPRECIATION ALLOWABLE ON THE CRANES. THE ASSESSING OFFICER ALLOWED DEPRECIATION @ 15% ON THE GROUN DS THAT THE CRANES ARE NOT COMMERCIAL VEHICLES. THE LD. CIT(A) CONF IRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUNDS THA T IT WAS NOT CLEAR WHETHER THE CRANES ARE MOUNTED ON VEHICLE OR TRU CK. BEFORE US, IT WAS ARGUED THAT THE CRANES DO NOT MOVE ON THEIR OWN UN LESS THEY ARE MOUNTED ON THE VEHICLES WHICH MAKE THEM MOBILE. THE L D. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 9. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CRANES ARE REGISTERED AS A MOTOR VEHICLE UNDER THE MOTOR VEHICLE ACT AND ARE USED FOR COMMERCIAL PURPOSE . THOUGH IT IS NOT USED AS A TRANSPORT VEHICLE, CRANE IS A FOUR WHEELE D EXCAVATOR-CUM- TRANSPORT VEHICLE USED FOR EXCAVATION OF EARTH AND MOV EMENT OF THE SAME, THOUGH FOR LIMITED DISTANCES AND FOR LIFTING OF EQUIPMENTS. EVEN THOUGH THE PURPOSE OF MOTOR LORRY WHICH IS A HEAVY MOT OR VEHICLE USED FOR TRANSPORT OF GOODS FROM PLACE TO PLACE, CANNOT BE SER VED BY A CRANE, WE ARE OF THE VIEW THAT THE EXPRESSION MOTOR LORRY CO VERED BY THE ITA NO. 816/DEL/2016 AKBAR QURESHI 6 INCOME TAX RULES PROVIDING FOR HIGHER RATE OF DEPREC IATION CAN BE BASICALLY USED FOR A HEAVY VEHICLE SUCH AS CRANE WHICH IS ALSO USED FOR TRANSPORT OF EXCAVATED SOIL, SAND OR OTHER GOODS, FOR A LIMITED DISTANCE. THEREFORE IT SERVES AS A TRANSPORT EQUIPMENT AS WELL AND SO LONG AS IT IS REGISTERED UNDER THE MOTOR VEHICLES ACT, IT IS A MOTOR VEHICLE WITHIN THE MEANING OF THE SAID TERM AS HELD BY THE HONBLE HIGH CO URT OF KERALA IN THE CASE OF CIT VS. GAYLORD CONSTRUCTIONS AND HONBLE HIGH COURT OF GUJARAT IN THE CASE OF GUJCO CARRIERS VS. CIT 122 TAXMA N 206 AND BOSE ABRAHAM VS. STATE OF KERALA (2001) 9 KTR 366 (SC) 10. GROUND NO. 10 IS PREMATURE AT THIS JUNCTURE AND H ENCE, NOT ADJUDICATED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/12/2019 SD/- SD/- (BHAVNESH SAINI) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED: 03/12/2019 *KAVITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO. 816/DEL/2016 AKBAR QURESHI 7