Mukesh Trends Lifestyle Limited, Ahmedabad V. The Dy.CIT., Circle-2(1)(2), Ahmedabad

ITA 828/AHD/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8564 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-02-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 18-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIPUL CHAVDA
• Assessee Lawyers: VIHAR SONI
• Keywords: Depreciation
• Section: 32; 147; 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No . 828/Ahd/20 23 ( नधा रण वष / As sess ment Year : 2017 -1 8) Muk e sh T re nd s Li f e st y le L i mit ed N . H. N o . -8 , N ar ol - N ar od a R o a d, N ar ol , A h m e dab ad – 38 24 0 5 बनाम/ Vs . T h e Dy . C o m mis si o n er o f I n c o m e T ax C ir c l e - 2 ( 1 ) ( 2) , A h m e da b ad थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A A B C M 0 5 0 0 F (Appellant) . . (Respondent) अपीलाथ ओर से /Appellant by : Shri Vihar Soni, AR यथ क ओर से/Respondent by : Shri Vipul Chavda, Sr. DR D a t e o f H e a r i ng 20/02/2024 D a t e o f P r o n o u nc e me n t 23/02/2024 O R D E R PER Ms. MADHUMITA ROY - JM: Th e instant appeal filed at th e instance o f the assessee is directed against the order dated 31. 08 . 2023 p assed by the Nation al Faceles s App eal Centre (NF AC), Delhi, arising out of the order dated 1 9.12. 2019 passed by t he DCIT, Circl e - 2 (1 )(2), ITA No. 828/Ahd/2023 (Mukesh Trends Lifestyle Limited vs. DCIT) A.Y.– 2017-18 - 2 – Ah medabad , un der Section 143(3) r. w. s. 147 of the Act for As se ss ment Year 2017 -18. 2. Ground Nos. 2, 3 & 4 are not pressed. The same are dismi ss ed as no t pres sed. 3. Ground No. 1 o f app eal relates to the disallowance o f depreciation on car amoun tin g to Rs. 11, 75,823/- on the g ro und th at the car is in the name o f th e Director. 4. Th e brief facts leading to th e case is this th at th e app ellant has clai med dep re ciation on v ehicle b eing Audi Q7, pu rchased in th e n ame o f Sh ri Devkin andan Gopiram Agar wal b eing the Directo r o f the as sessee co mp any. While adjudicating the issue in ord er to ascertaining whether th e car was put to use for the busin ess o f the co mpany , the asse ss ee w as requeste d to fu rn ish explanation with the copy of log bo ok whereupon it was replied th at the car is b eing u sed by the Company wh ich is reflected in the books of the company. The issue w as finalized on the b asis of the fact th at th e Car was purchased in th e name o f the Director and not in th e name of the co mpany an d since not ful filled the cond itio n req uired fo r clai m o f depreciatio n, and furth er that, as th e asse ssee failed to sho w the car wa s used exclusi v ely fo r the busin ess purposes b y supp ortin g d ocuments, the d epreciation @1 5% claim a moun tin g to Rs. 11 ,75, 82 3/- h as been disallowed which was, in turn, confirmed by the First Appellate Autho rity. Hen ce, th e instant appeal before u s. ITA No. 828/Ahd/2023 (Mukesh Trends Lifestyle Limited vs. DCIT) A.Y.– 2017-18 - 3 – 5. Befo re the Fir st A ppellate Au thority, it was su bmitted b y the appellant that the new car was r eg istered in the n ame o f the Directo r of the co mpany but the funds were utilized of the co mpany and the same was sho wn as as set in the finan cial state men t of the co mpan y. In th at view o f th e matter, for all practical p urposes, the co mpany is th e o wner of th e vehicle and has d o minio n o ver the vehicle and, thus, d epreciation was rightly clai med. The v ehicle is further being used wholly and ex clusively fo r the purpo se of the bu siness of the app ellant comp any and denial o f d epreciation, therefore, wa s un warranted in the facts and circu mstan ces o f the case. He fur ther relied upon the judgment passed by the Hon ’ble Apex Co urt in the case o f My sore Minerals Ltd . v s. CIT, reported in [19 99] 106 Tax man 166 (SC) and ITO vs. Electro Ferro Alloys Ltd. , reported in 1 3 ITR 594 (Ahd . -Trib. ). 6. Befo re us in addition to the case made out by the asse ss ee, it was fu rth er sub mi tted by the Ld. AO that the interest on car lo an and the insu rance expenses were allowed. Therefore, the question of disallowance o f the dep reciatio n on the car is not warranted. He finally relied up on the judgment passed by the Hon’ble Jurisdictional High Court in the case of P CIT vs. Asi an Mills (P. ) Ltd ., reported in [20 22] 135 tax mann. com 1 63 (Gujarat). 7. Ld . DR, on th e other hand, relied up on the orders pass ed by th e au thorities b elow. ITA No. 828/Ahd/2023 (Mukesh Trends Lifestyle Limited vs. DCIT) A.Y.– 2017-18 - 4 – 8. We have heard the rival submi ssions mad e by the respective parties and we h ave also peru sed t he relevant materi als available on reco rd. 9. On the narrated facts, we have fu rth er co nsid ered the ju dgment pas sed by th e Hon ’b le Jurisdictional High Co urt in the case o f P CIT vs . Asian Mills (P . ) Ltd. (su pra), wherein the asses see was de nied depreciation and other expen ses on car clai med by th e ap pellan t on the ground that Car was pu rchased and own ed in the name of Directors an d hence, the asset cou ld not be said to be of the co mpany. While dealing with the issue, the Hon ’ble Co urt was plea sed to con sider th e judgment passed b y the Hon ’ble Apex Cou rt in the case o f Mysore Mineral s Ltd. v s. CIT (supra) an d pas sed order finally in favou r o f the app ellant with the fo llo wing o bservations: “15. The CIT(Appeals) held in favour of the assessee by holding thus: “20. Aggrieved assessee preferred an appeal before the learned CIT(A) who allowed the appeal of the assessee by observing as under: Having considered the facts of the case I am inclined to accept the contentions of the Ld.A.R. as admitted by the A.O himself the funds for purchase of the car were provided by the appellant. The Hon’ble Supreme Court in the case of Mysore Minerals Ltd. vs. C.I.T 239 ITR 775(S.C.) has held that the section of the I.T.Act, 1961, confers a benefit of the assessee. The provision should be so interpreted and the words used therein should be assigned such meaning as would enable the assessee to secure the benefit intended to be given by the Legislature to the assessee. It was further held by the Hon’ble Supreme Court that the term owned as occurring in section 32(1) of the Incometax Act must be assigned a wider meaning. The Hon’ble Supreme Court has held as under: “It is well-settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the Legislature in enacting section 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purpose of his business or profession. Assigning any different meaning would not subserve the legislative intent.” 4.3.1 Further, the Ahmedabad I.T.A.T. in ITA No. 828/Ahd/2023 (Mukesh Trends Lifestyle Limited vs. DCIT) A.Y.– 2017-18 - 5 – the case of Ambuja Synthetics Mills Pvt. Ltd. vs. the Dy. C.I.T., Range-1, Ahmedabad, on similar facts, decided the issue in favour of the assessee, by holding. “It is not disputed that funds for purchases of the car- were provided by the assessee company which is also reflected in the accounts of the assessee company. In our opinion, when the car is actually used for the purpose of business of the company depreciation thereon cannot be denied.” As regards the A.O’s observation that the appellant failed to establish that the vehicles were used by the company, it is seen that there are various judicial pronouncements to the effect that the use means kept ready for use and not actually use. The case laws cited at 123 ITR 404 (Delhi, 170 Taxman 407(MP), 187 Taxman 442 (Mad), 201 Taxman 666 ( P & H), 198 Taxman 470 & 199 Taxman 273 are in favour of the appellant.” 16. The Revenue challenged the same before the Tribunal. It also relied on the decision of ITO vs. Electro Ferro Alloys Ltd. in ITA No.2773/Ahd/2009 reported in 25 taxmann.com 458. According to the ITAT, the material available on record, when looked at, the assessee though was not the legal owner of the vehicle, it has made the payment for acquisition of cars and thus, it is a beneficial owner. It is, therefore, held to be entitled for depreciation on the car. It has drawn the support from the decision of ITO vs. Electro Ferro Alloys Ltd.B (supra) and the decision of the Rajasthan High Court in CIT (Appeals) vs. Mohd. Bux Shokat Ali (no.2),[2002] 256 ITR 357(Raj.) and the decision in the case of CIT vs. Basti Sugar Mills Co.Ltd. [2002] 257 ITR 88(Delhi). 17. The Tribunal has rightly distinguished the concept of dominion ownership of the car. The question raised is answered accordingly.” 10. In fact, in the cas e in hand before us, it is also not a disp uted fact that the purchase o f a car was made by the appellant company which is also re fl ected in the books o f acco unt o f t he app ellant co mpany an d therefore it can be well said that the car is co mmercially used for the pu rp ose of busines s o f the co mpany and th e dep reciation thereon can not be denied ; moreso, the interest on car loan and car insuran ce was allowed by the department. Thus, having regard to th e facts an d circumstances o f the matter, we find th at the ap pellan t’s case is squarely covered by the Jurisdictional High Court in th e case of PCIT vs. Asian Mills (P . ) Ltd. (supra), fo llo wing the judg ment p assed b y th e Hon ’b le Apex Cou rt in the ITA No. 828/Ahd/2023 (Mukesh Trends Lifestyle Limited vs. DCIT) A.Y.– 2017-18 - 6 – case o f Mysore Mi n erals Ltd . vs. CIT (supra), we allow this app eal prefer red by the app ellant with a directio n on the Ld . A O to allow depreciation in accordan ce with law. 11. In th e result, the appeal preferred b y the asses see is allowed. This Order pronounced on 23/02/2024 Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 23/02/2024 S. K. SINHA True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. "वभागीय &त&न ध, आयकर अपील)य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड/ फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad