Income Tax Officer, Nashik V. Trambak Rubber Industries Private Limited, Sinnar, Nashik

ITA 845/PUN/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7265 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 17-03-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 20-07-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH MEHTA
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “SMC” BENCH : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A.No.845/PUN./2023 [E-APPEAL] Assessment Year 2010-2011 The Income Tax Officer, Ward-1(1), Room No.A-7, Income Tax Office, Kendriya Rajaswa Bhawan, Gadkari Chowk, Old Agra Road, NASHIK. PIN – 422 002. Maharashtra. PAN AABCT0453C vs. Trambak Rubber Industries Private Limited, A-83, Sinnar Tal Industrial Estate, Musalgaon Sinnar, NASHIK. PIN - 422 103. Maharashtra. (Appellant) (Respondent) For Revenue : Shri Manish Mehta For Assessee : -None- Date of Hearing : 18.03.2024 Date of Pronouncement : 10.05.2024 ORDER This assessee’s appeal for assessment year 2010-11, arises against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/ 2023-24/1053340239(1), dated 31.05.2023, in proceedings u/s. 143(3) r.w.s.147 of the Income Tax Act, 1961 (in short “the Act”). Case called twice. None appears at assessee’s behest. It is accordingly proceeded ex-parte. 2. The Revenue pleads the following substantive grounds in the instant appeal : 2 ITA.No.845/PUN./2023 1. “Whether on the facts and in the circumstances of the case, and in law the learned CIT(A) is justified in deleting the disallowance on new Honda City car of Rs.3,62,525/-. 2. Whether on the facts and in the circumstances of the case and in law the learned CIT(A) is justified in deleting the disallowance ignoring that as per Rule 5 if Income tax Rules, 1962, the claim of depreciation of the assessee @ 50% on new Honda City car as per New Appendix-I, III, 3 (via) of Plant & Machinery are not fulfilled. 3. Whether on the facts and in the circumstances of the case and in law the learned CIT(A) is justified in deleting the disallowance ignoring the fact that the assessee has not furnished any documentary evidence that the new car was put to use before 1 st Oct 2009 as per conditions laid down in Rule 5 of Income Tax Rules New Appendix-I, III, 3 (via) of Plant & Machinery to claim depreciation @ 50%. 4. Whether on the facts and in the circumstances of the case and in law the disallowance of depreciation is covered under exception 10(c) as amendment to CBDT Circular 3 of 2018 dated 11.07.2018. 5. The appellant craves leave to add, alter, amend and delete any ground (s) of appeal.” 3. Mr. Mehta invited my attention to the learned NFAC’s detailed discussion accepting the assessee’s arguments on merits reading as under : 3 ITA.No.845/PUN./2023 “7.8. At this juncture, it is important to look at the Notification No.10/2009 dated 19.01.2009 & Notification No.37/2009 dated 21.04.2009 issued by CBDT by making amendment to the Appendix 1 in Income Tax Rules (IT Rules for short). The extract of the notifications is placed below for ready reference. INCOME-TAX (THIRD AMENDMENT) RULES,2009- AMENDMENT IN NEW APPENDIX-1 NOTIFICATION NO. 10/2009, DATED 19-1-2009 In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:— (1) These rules may be called the Income-tax (Third Amendment) Rules, 2009 (2) They shall come into force on the 1st day of April, 2009. In the Income-tax Rules, 1962, in the Table to New Appendix 1, in Part-A relating to TANGIBLE ASSETS, under the heading III. MACHINERY AND PLANT, in item (3), after sub- item (vi) and entries relating thereto, the following shall be inserted, namely:— "(via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table] 50". 4 ITA.No.845/PUN./2023 [F. No. 142/01/09-TPL] INCOME-TAX (ELEVENTH AMENDMENT) RULES, 2009 - AMENDMENT IN NEW APPENDIX 1 NOTIFICATION NO. 37/2009 [F.No.142J01/2009-TPL], DATED 21-4-2009 In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules 1962. Namely:- (1) These rules may be called the Income-tax (Eleventh Amendment) Rules, 2009. (2) They shall come into force with effect from the 1st day of April, 2010. In the Income-tax Rules, 1962, in the Table to New Appendix 1, in Part-A relating TANGIBLE ASSETS, under the heading III, MACHINERY AND PLANT, in sub-item (via) of item (3), for the words and figures "1st day of April, 2009", the words and figures "1st day of October, 2009" shall be substituted at both the places. 7.9. The crux of the above notifications is that in order to get the depreciation at the rate of 50%, the New Commercial Vehicle is to be purchased between 01.04.2009 to 30.09.2009 and, mainly, in order to claim the depreciation as per the CBDT Notification(supra) the Vehicle should be put to use before the 1st day of October, 2009 for the purposes of business or profession and in the 5 ITA.No.845/PUN./2023 absence of Vehicle being put to use, there is no question of depreciation being allowed on it. In the instant case, briefly, the appellant relied on purchase date of car & payment of car insurance on purchase date in order to claim the depreciation at full rate i.e., 50% and the AO relied on registration date of Car for restricting the depreciation rate to 7.5% i.e., 50 percent of the depreciation allowable for Plant & Machinery i.e., 15%. During the course of assessment proceedings, the appellant also submitted before AO that the motor was put to use immediately on its purchase and there was no reason for the company to halt to put the care to use till the registration of Car with RTO Authority. 7.10. Therefore, the only dispute remaining in the instant appeal is whether the appellant should be treated to have ‘used’ and ‘put in use’ the Vehicle immediately from the date of purchase notwithstanding the AO’s contention that the Vehicle could not be operated till the time of registration of Vehicle with RTO Authority. In the light of CBDT Notifications as specified in the previous paras, I am of the opinion that the word "put in use" appearing in the IT Rules should be given a reasonable meaning and the degree of utilisation of assets will not be considered while determining whether the asset is put to use or not. By introducing and amending the said 6 ITA.No.845/PUN./2023 provision, the CBDT wanted to give the benefit of depreciation of the New Commercial Vehicle purchased by the appellant and used for the purpose of business. There is no dispute in the fact that appellant is the owner of the Vehicle and the Vehicle was insured on the same day of date of purchase i.e., 30.09.2009 and, therefore, any damage the Vehicle could have caused to any third party on date of purchase of insurance and the said damage is claimable effectively from the said date. Further, the Registration of Vehicle with RTO Authority is to determine the legal ownership, hence for the purpose of claiming depreciation, beneficial ownership is to be considered. The same was held by the Apex Court in the case of Mysore Minerals Ltd. Vs Commissioner of Income-tax [1999] 106 Taxman 166 (SC) / [1999] 239 ITR 775 (SC) / [1999]. Therefore, taking into considering the ratio laid down by the CBDT in the Notification, I am of the considered opinion that the submission made by appellant that the Vehicle acquired by the appellant company was put to use immediately is acceptable in the light of the fact the Insurance Policy is effective immediately from the date of purchase and, hence, the appellant is entitled to get relief of deprecation rate. Accordingly, I hereby direct the AO to delete the addition made to the tune of Rs.3,62,525/-. The grounds of appeal on this issue are accordingly allowed.” 7 ITA.No.845/PUN./2023 4. I have given my thoughtful consideration to the Revenue’s pleadings and assessee’s stand adopted throughout regarding the instant sole issue of disallowance of depreciation. The Revenue’s case in light of the assessment findings is that once the assessee’s corresponding vehement had been registered after 01.10.2009, the impugned depreciation had been rightly restricted to 50% as per Rule 5 of Income Tax Rules, 1962; New Appendix-1; III Plant & Machinery (3)(via) in very terms. I find no merit in Revenue’s arguments since it clearly appears to be an instance of change of opinion not sustainable in law going by CIT vs. Kelvinator of India Limited [2010] 187 Taxman 312 (SC). It is deemed appropriate to observe herein that the assessment order herein is assessment year 2010-2011 and the Assessing Officer had framed his sec.143(3) assessment on 26.03.2013 followed by his sec.148 notice issued in the year 2017. This chronology of events makes it clear that the Assessing Officer had initiated his impugned action beyond a period of four years from the end of the relevant assessment year without even satisfying that assessee had not disclosed the relevant particulars “fully” and “truly” in the foregoing former round. That being the case, I quote Hindustan Lever Ltd. v. R.B. Wadkar (2004) 137 Taxman 479 (Bom-HC) that such reopening reasons have to be read on standalone basis 8 ITA.No.845/PUN./2023 without any scope of improvement or substitution or addition therein; as the case may be. 4.1. The Revenue’s case hardly carries any merit as well once it is evident that the assessee had duly got it’s vehicle(s) insured on 30.09.2009 which has been treated “put to use” in absence of any evidence to the contrary. Be that as it may, I find no merit in the Revenue’s vehement arguments regarding validity of the impugned reopening as well as on merits. It fails in it’s instant appeal in very terms. 5. This Revenue’s appeal is dismissed in above terms. Order pronounced in the open Court on 10.05.2024. Sd/- [SATBEER SINGH GODARA] JUDICIAL MEMBER Pune, Dated 10 th May, 2024 VBP/- Copy to 1. The appellant 2. The respondent 3. The Pr. CIT, Pune concerned 4. D.R. ITAT, “SMC” Bench, Pune. 5. Guard File. //By Order// //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.