Sri Indukuri Srinivasa Raju, Tanuku V. The ITO, Ward-2, Tanuku

ITA 95/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50272 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 14-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Depreciation
• Section: 28

Judgement Text

ITA NO95 OF 2011 INDUKURI SRINIVASA RAJU TANUKU PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 95/VIZAG/2011 ASSESSMENT YEAR: 2008-09 INDUKURI SRINIVASA RAJU, TANUKU VS. ITO WARD-2, TANUKU (APPELLANT) PAN NO: AALPI 3931 M (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, SR.DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 07.01.2011 PASSED BY LEARNED CIT(A), RAJAHMUNDRY AN D IT RELATES TO THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS AND AD DITIONAL GROUND: I) THE FIRST APPELLATE AUTHORITY VIZ., COMMISSIONER OF INCOME TAX (APPEALS), RAJAHMUNDRY SHOULD NOT HAVE CONFIRMED THE ORDERS OF THE ASSESSING AUTHORITY VIZ ., INCOME-TAX OFFICER, WARD-2, TANUKU. II) THE ASSESSING AUTHORITY VIZ., INCOME-TAX OFFICER, WA RD- 2 TANUKU SHOULD HAVE CONSIDERED THE CONTENTION RAIS ED BY THE APPELLANT. III) THE ASSESSMENT IS ILLEGAL AND IMPROPER. IV) THE ASSESSING OFFICER VIZ., INCOME-TAX OFFICER, WARD -2 TANUKU SHOULD HAVE ALLOWED THE DEPRECIATION AS CLAIMED BY THE APPELLANT. V) ANY OTHER GROUNDS OF APPEAL THAT MAY BE URGED AT TH E TIME OF HEARING. ITA NO95 OF 2011 INDUKURI SRINIVASA RAJU TANUKU PAGE 2 OF 6 ADDITIONAL GROUND: IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE OF DEPRECIATION OF RS.10,81,450/- IS N OT JUSTIFIED AS THE SAID DISALLOWANCE RESULTED IN COMPUTATION OF INCOME OF THE APPELLANT FROM THE BUSINESS OF PLYING LORRIES AT A SUM HIGHER THAN THE MAXIMUM AMOUNT STIPULATED UNDER SECTION 44AE OF THE INCOME TAX ACT, 1961. 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF HIRING OF TIPPERS (LORRI ES) FOR TRANSPORTATION OF GOODS. THE ASSESSEE INITIALLY OWNED 4 TIPPERS (LORR IES) AND PURCHASED 3 MORE TIPPERS IN MARCH, 2007 AND THE NEW TIPPERS WER E PUT TO USE FROM APRIL, 2007. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE CLAIMED DEPRECIATION ON THE VEHICLES C ITED ABOVE @ 40%. THE ASSESSING OFFICER NOTICED THAT THE ELIGIBLE RAT E OF DEPRECIATION, AS PER THE DEPRECIATION SCHEDULE PRESCRIBED UNDER THE ACT, IS ONLY 30%. ACCORDINGLY HE DISALLOWED THE EXCESS AMOUNT OF DEPR ECIATION CLAIMED BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE SAID ACTION O F THE ASSESSING OFFICER BEFORE THE LEARNED CIT (A) BUT COULD NOT SUCCEED. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. THE ORIGINAL GROUNDS RAISED BY TH E ASSESSEE RELATE TO THE ISSUE OF DEPRECIATION ONLY. IN THE ADDITIONAL GROUN D, THE ASSESSEE IS TAKING AN ALTERNATIVE STAND WITH THE SUBMISSION THAT THE I NCOME RETURNED BY THE ASSESSEE IS MORE THAN THE LIMITS PRESCRIBED UNDER S ECTION 44AE OF THE ACT AND HENCE THE DISALLOWANCE OF EXCESS DEPRECIATION I S NOT JUSTIFIED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE DECLARED INCOME FOR THE IMMEDIATELY PRECEDING YEAR UNDER SECTION 44AE OF THE ACT AND FOR THE YEAR UNDER CONSIDERATION, HE HA S FILED THE RETURN OF INCOME ON THE BASIS OF THE BOOKS OF ACCOUNT. HOWEV ER, THE INCOME SO DECLARED IS MORE THAN THE STANDARD INCOME PRESCRI BED UNDER SECTION 44AE ITA NO95 OF 2011 INDUKURI SRINIVASA RAJU TANUKU PAGE 3 OF 6 OF THE ACT. ACCORDINGLY HE CONTENDED THAT THE ASSE SSING OFFICER IS NOT JUSTIFIED IN DISALLOWING PART OF DEPRECIATION CLAIM ED BY THE ASSESSEE. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT THE ASSESSEE HAS DECLARED THE INCOME ON THE BASIS OF THE BOOKS OF ACCOUNT MAINTAINED BY HIM. IN THE COMPUTAT ION OF INCOME, THE ASSESSING OFFICER HAS NOTICED A MISTAKE IN THE DEDU CTION CLAIMED TOWARDS DEPRECIATION BY THE ASSESSEE, I.E., THE ASSESSEE HA S CLAIMED DEPRECIATION @ 40% WHEREAS THE ELIGIBLE RATE OF DEPRECIATION IS ON LY 30%. HENCE THE ASSESSING OFFICER HAS ONLY CORRECTED THE MISTAKE BY DISALLOWING THE EXCESS CLAIM OF DEPRECIATION. ACCORDINGLY HE SUBMITTED TH AT SEC.44AE OF THE ACT DOES NOT COME IN THE WAY OF MAKING SAID DISALLOWANC E. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. WITH REGARD TO THE ADMISSIBLE RATE OF DEPR ECIATION ON THE IMPUGNED VEHICLES, THE LEARNED CIT(A) HAS, AFTER MAKING REFE RENCE TO THE DEPRECIATION SCHEDULE, GIVEN FINDING THAT THE RATE OF DEPRECIATI ON ADMISSIBLE IS ONLY 30%. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE R ELEVANT OBSERVATIONS OF THE LEARNED CIT (A). AFTER HEARING THE LEARNED AUTHORISED REPRESENTATIV E, ON PERUSAL OF THE RECORDS, AND ON A CAREFUL CONSIDERAT ION OF THE FACTS RELATING TO THE ISSUE, IT MAY BE STATED THAT NEITHER DURING THE ASSESSMENT PROCEEDINGS NOR DURING THE AP PELLATE PROCEEDINGS HAS ANY EVIDENCE BEEN LED TO SHOW THAT THE VEHICLES OWNED BY THE APPELLANT ARE HEAVY GOODS COM MERCIAL VEHICLES SO AS TO ENTITLE THE APPELLANT TO DEPRECIA TION @40% INSTEAD OF 30%. EVEN ASSUMING THAT THE VEHICLES OWN ED BY THE APPELLANT ARE HEAVY GOODS COMMERCIAL VEHICLES, YET SUCH VEHICLES ARE NOT ENTITLED TO HIGHER RATE OF DEPRECI ATION ON THE REASONING THAT FOR CLAIMING HIGHER RATE OF DEPRECIA TION @ 40%, COMMERCIAL VEHICLES SHOULD HAVE TO BE PUT TO U SE BEFORE 1 ST APRIL, 1999 OR BEFORE 1 ST APRIL, 2000 OR BEFORE 1 ST APRIL, 2002 IN REPLACEMENT OF CONDEMNED VEHICLES OF OVER 15 YEARS OF AGE. SINCE THE APPELLANT DOES NOT FULFILL THE CRITERIA ITA NO95 OF 2011 INDUKURI SRINIVASA RAJU TANUKU PAGE 4 OF 6 MENTIONED IN III (III) (IV) (V) (VI) OF THE DEPRECIAT ION SCHEDULE EFFECTIVE FROM ASSESSMENT YEAR 2006-07, THE APPELLA NTS CLAIM FALLS FLAT. ACCORDINGLY, NO INTERFERENCE IS CALLED FOR WITH REGARD TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. WE HAVE ALSO GONE THROUGH THE DEPRECIATION SCHEDULE APPLICABLE FOR THE YEAR UNDER CONSIDERATION. AS PER CLAUSE III (2) OF PAR T A OF THE DEPRECIATION SCHEDULE, THE RATE OF DEPRECIATION APPLICABLE FOR M OTOR LORRIES IS 30%. HOWEVER, AS PER CLAUSE III (III) OF THE SCHEDULE, THE DEPRECIATION IS ADMISSIBLE @ 40% FOR THE FOLLOWING TYPES OF VEHICLE S: III. COMMERCIAL VEHICLE WHICH IS ACQUIRED BY THE ASSESSEE ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998, BUT BEFORE THE 1 ST DAY OF APRIL, 1999 AND IS PUT TO USE FOR ANY PERIOD BEFORE THE 1 ST DAY OF APRIL, 1999 FOR THE PURPOSES OF BUSINESS OR PROF ESSION IN ACCORDANCE WITH THE THIRD PROVISO TO CLAUSE (II) OF SUB-SECTION (1) OF SECTION 32. THE ASSESSEE COULD NOT BRING ON RECORD ANY MATERIAL TO SHOW THAT THE VEHICLES OWNED BY HIM FALL IN THE CATEGORY CITED AB OVE. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LEARNED CIT (A). 7. IN THE ADDITIONAL GROUND OF APPEAL, THE ASSESSEE IS CONTESTING THE ADDITION OF EXCESS DEPRECIATION CLAIMED BY TAKING S UPPORT FROM THE PROVISIONS OF SECTION 44AE OF THE ACT. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW SUB-SECTION 1 & 2 OF SECTION 44AE: 44AE. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 28 TO 43C, IN THE CASE OF AN A SSESSEE, WHO OWNS NOT MORE THAN TEN GOODS CARRIAGES (AT ANY TIME DURING THE PREVIOUS YEAR) AND WHO IS ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING SUCH GOODS CARRIAGES, THE INCOME OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL BE DEEME D TO BE THE AGGREGATE OF THE PROFITS AND GAINS, FROM ALL TH E GOODS CARRIAGES OWNED BY HIM IN THE PREVIOUS YEAR, COMPUT ED IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (2). (2) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFIT S AND GAINS FROM EACH GOODS CARRIAGE:- ITA NO95 OF 2011 INDUKURI SRINIVASA RAJU TANUKU PAGE 5 OF 6 (I) BEING A HEAVY GOODS VEHICLE, SHALL BE AN AMOUNT EQUAL TO (THREE THOUSAND FIVE HUNDRED) RUPEES FOR EVERY MONTH OR PART OF A MONTH DURING WHICH THE HEAVY GOODS VEHICLE IS OWNED BY THE ASSESSEE IN THE PREVI OUS YEAR OR, AS THE CASE MAY BE, AN AMOUNT HIGHER THAN THE AFORESAID AMOUNT AS DECLARED BY HIM IN HIS RETU RN OF INCOME. (II) OTHER THAN A HEAVY GOODS VEHICLE, SHALL BE AN AMOUNT EQUAL TO THREE THOUSAND ONE HUNDRED AND FIFTY RUPEE S FOR EVERY MONTH OR PART OF A MONTH DURING WHICH THE GOODS CARRIAGE IS OWNED BY THE ASSESSEE IN THE PREVIOUS YEAR OR, AS THE CASE MAY BE, AN AMOUNT HIGHER THAN THE AFORESAID AMOUNT AS DECLARED BY HIM IN HIS RETURN OF INCOME. ON A CAREFUL PERUSAL OF THE PROVISIONS OF SUB SEC.2 , IT MAY BE NOTICED THAT THE PROFITS & GAINS FROM EACH GOODS CARRIAGE SHALL BE THE STANDARD RATE PRESCRIBED IN THAT SUB SECTION OR AN AMOUNT HIGHER THAN THE STANDARD RATE AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME . IF THE ASSESSEE DECLARES AN INCOME WHICH IS HIGHER THAN THE STANDAR D RATE PRESCRIBED IN THE ABOVE SAID SECTION, THEN THE SAID HIGHER INCOME IS TAKEN FOR THE PURPOSES OF SEC.44AE. THUS THE SEC. 44AE DOES NOT RESTRICT THE INCOME FROM GOOD CARRIAGES AT THE STANDARD RATE PRESCRIBED UNDER IT. 8. IN THE INSTANT CASE, THE STANDARD RATE PRESCR IBED IN THE SUB SECTION 2 OF SEC. 44AE SHALL NOT APPLY, AS THE ASSESSEE HAS DECL ARED INCOME WHICH IS HIGHER THAN THE STANDARD RATE. WHILE ARRIVING AT S UCH INCOME, THE ASSESSEE HAS CLAIMED DEPRECIATION @ 40% WHEREAS THE ADMISSIB LE RATE OF DEPRECIATION IS ONLY 30%. THERE CANNOT BE ANY DISPU TE THAT AN ASSESSEE IS ENTITLED TO CLAIM STATUTORY DEDUCTIONS ONLY AT THE RATES PRESCRIBED IN THE ACT. HENCE THE DEPRECIATION ADMISSIBLE TO THE VEHICLES O WNED BY THE ASSESSEE IS ONLY 30%. THERE CANNOT BE ANY DISPUTE THAT THE ASS ESSING OFFICER IS ENTITLED TO CORRECT THE MISTAKES IN THE COMPUTATION OF INCOME FURNISHED BY THE ASSESSEE. IN THE INSTANT CASES, THE ASSESSING O FFICER HAS ONLY CORRECTED ITA NO95 OF 2011 INDUKURI SRINIVASA RAJU TANUKU PAGE 6 OF 6 THE DEPRECIATION WORKINGS AND THUS DISALLOWED THE E XCESS AMOUNT OF DEPRECIATION CLAIMED BY THE ASSESSEE. IN VIEW OF TH E ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ADDITIONAL GROUND RAIS ED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT M EMBER PVV/SPS VISAKHAPATNAM, DATE:29-06-2011 COPY TO 1 SHRI INDUKURI SRINIVASA RAJU SHOP NO.8 RAMABHADRA COMPLEX, TANUKU, WEST GODAVARI DISTT. 2 THE ITO WARD-2, TANUKU 3 4. THE CIT RAJAHMUNDRY THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM