KEI-RSOS Mari time Ltd., Hyderabad V. DCIT, Hyderabad

ITA 969/HYD/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6391 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 17-09-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL BABU KE
• Assessee Lawyers: C N PRASAD
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.969/H/2007 ASSESSMENT 2003-04 KEI MARITIME LTD, 10-3-316/A, HYDERABAD (PAN AABCK 5882C) VS DY. CIT, CIRCLE 2(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.N. PRASAD RESPONDENT BY : SHRI SUNIL BABU K.E. O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)III, HYDERABAD DATED 12. 7.2007 AND PERTAINS TO ASSESSMENT YEAR 2003-04. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS AB OVE APPEAL IS WITH REGARD TO DISALLOWANCE OF DEPRECIATION ON TUG BOAT MT FOUZ ON THE GROUND THAT RELIANCE INDUSTRIES LTD., ON WHOSE SITE THE TUG BOAT WAS USED DURING THIS YEAR DID NOT CONFIRM ON A LETTER SENT B Y THE ASSESSING OFFICER THAT THE TUG BOAT WAS PUT TO USE IN THEIR OPERATION S DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. 3. THE ASSESSING OFFICER WHILE FRAMING THE ASSES SMENT REQUESTED THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF USE OF BO AT IN ITS BUSINESS. ACCORDING TO THE ASSESSEE THIS BOAT WAS PURCHASED I N THE MONTH OF NOVEMBER, 2002 AND PUT TO USE BY THE RELIANCE INDIA LTD. AT JAMNAGAR BASE. ACCORDING TO THE ASSESSEE, THIS VESSEL WAS C HARTERED AND LATER ON ITA NO.969/HYD/2007 KEI RSOS MARITIME LTD., HYD. 2 PURCHASED AND BILL WAS RAISED AS ON 31.3.2003 BY M/ S PMTS. HOWEVER, THE ASSESSING OFFICER IS OF THE OPINION THAT, THERE WAS A CONTRADICTION. FIRST IT WAS STATED THAT VESSEL WAS CHARTERED FROM M/S PMTS IN JANUARY, 2003 FOR COMMENCEMENT OF OPERATION. HOWEVER, THE ASSES SEE IN ITS LETTER DATED 23.12.2005, IT WAS STATED THAT THIS VESSEL WAS PUR CHASED IN THE MONTH OF NOVEMBER 2002 AND PUT TO USE BY THE RELIANCE INDUST RIES LTD. W.E.F. 4.12.2002. THE ASSESSING OFFICER HAS WRITTEN A LET TER TO THE M/S RIL, MUMBAI REGARDING THE CONFIRMATION OF LETTERS FILED BY THE ASSESSEE FROM THESE PARTIES TO VERIFY THE GENUINENESS OF THESE LE TTERS. M/S RIL DID NOT REPLY TO THE LETTER ISSUED BY THE ASSESSING OFFICER BUT THE ASSESSEE PRODUCED A COPY OF CONFIRMATION LETTER DATED 22.9.2 006 FROM THE M/S RIL STATING THAT M/S RIL HAS CHARTERED THE VESSEL MT FO UZ FOR THE PERIOD FROM DECEMBER 2002 TO FEBRUARY 2003 AS A SAFETY STAND B Y VESSEL FOR DRILLING PROGRAMME NEAR JAMNAGAR. ACCORDING TO ASSESSING OF FICER THE ASSESSEE HAS NOT ABLE TO PRODUCE ANY CREDIBLE EVIDENCE THAT THE VESSEL WAS ACQUIRED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR A ND PUT TO USE BEFORE 31.3.2003. THE EVIDENCE PRODUCED BY ASSESSEE IN TH E FORM OF INVOICES RAISED BY IT TOWARDS M/S RIL AND CERTAIN PAYMENTS V OUCHERS ISSUED BY RIL, MUMBAI NOT CONSIDERED AS GENUINE EVIDENCE. SI NCE THESE VOUCHERS DO NOT INDICATE CLEARLY THAT THESE PAYMENTS ARE MADE T O THE ASSESSEE WITH REFERENCE TO THE USAGE OF ANY PARTICULAR VESSEL/BOA T. EVEN M/S RIL HAS NOT RESPOND TO THE ASSESSING OFFICER ON THIS ISSUE PROPERLY AND IT IS ONLY THE ASSESSEE HAS PRODUCED SOMEWHAT CONFIRMATION FROM TH ESE PARTY BEFORE THE ASSESSING OFFICER AND THE CONFIRMATION LETTERS SHOW S THAT IT WAS INITIALED BY SOME AUTHORISED SIGNATORY, WHOSE NAME AND DESIGNATI ON IS NOT INDICATED AND CONFIRMATION LETTER WAS NOT ACCEPTED AS ITS FAC E VALUE. MORE SO, THERE WAS A CONTRADICTION REGARDING THE DATE OF ACQUISITI ON OF TUG BOATS. ONCE IT WAS STATED THAT IT WAS ACQUIRED FROM M/S PMTS IN JA NUARY 2003 AND SUBSEQUENTLY CHANGED ITS VERSION THAT IT WAS ACQUIR ED IN NOV. 2002 BROUGHT INTO USE W.E.F. DECEMBER 2002. AS SUCH, T HE CLAIM OF ITA NO.969/HYD/2007 KEI RSOS MARITIME LTD., HYD. 3 DEPRECIATION FOR THE ASSESSMENT YEAR UNDER CONSIDER ATION WAS DENIED AND THE SAME WAS CONFIRMED BY THE CIT(A). 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE ASSESSE ES COUNSEL IS THAT THE CIT(A) ERRED IN LAW IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON THE TUG BOAT MT FOUZ ON THE GROUND THAT RELIANCE INDUST RIES LTD., ON WHOSE SITE THE TUG BOAT WAS USED DURING THIS YEAR DID NOT CONFIRM ON A LETTER SENT BY ASSESSING OFFICER THAT THE TUG BOAT WAS PUT TO USE IN THEIR OPERATIONS DURING THE ASSESSMENT YEAR 2003-04. THE AUTHORISED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED T HAT THE CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF DEPRECI ATION ON TUG BOAT MT FOUZ IGNORING THE CONFIRMATION LETTER ISSUED BY RIL CONFIRMING THAT MT FOUZ WAS USED IN THEIR SITE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION BY STATING THAT CREDENCE CANNOT BE GI VEN TO THE SAID CONFIRMATION LETTER. HE FURTHER SUBMITTED THAT THE CIT(A) ERRED IN LAW IN HOLDING THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROD UCE ANY CREDIBLE EVIDENCE THAT THE TUG BOAT MT FOUZ WAS ACQUIRED DUR ING THE RELEVANT PREVIOUS YEAR AND PUT TO USE BEFORE 31.3.2003. ON T HE OTHER HAND, THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE CIT(A). IN OUR OPINION, THE CLAIM OF DEPRECIATION OF THE ASSESSEE HAS TO BE ALLOWED WHEN THE ASSESSEE OWNS THE ASSETS AND USED FOR THE PURPO SE OF ITS BUSINESS. IN THE PRESENT CASE, THE USAGE OF THE ASSETS FOR THE P URPOSE OF BUSINESS IS NOT DENIED. THE ASSESSEE OFFERED RS.52.42 LAKHS INCOME FROM THESE BOATS AND CLAIMED DEPRECIATION OF RS.14 LAKHS. IT SHOWS THAT THE ASSESSEE PUT THE ASSETS INTO USE, THEREAFTER, THERE IS ONLY ONE DOUB T THAT THE OWNING OF THE BOAT. IT IS NOT DISPUTED THAT THE ASSESSEE HAS PAI D ENTIRE PURCHASE CONSIDERATION OF THE BOAT AND THIS ASSET IS ALSO FO RM PART OF BLOCK ASSET. IN OUR OPINION FOR ALL PRACTICAL PURPOSES, THE ASSESSE E IS THE LEGAL OWNER OF THE TUG BOAT. THE DEPRECIATION DENIED ONLY ON THE REAS ON THAT THE ITA NO.969/HYD/2007 KEI RSOS MARITIME LTD., HYD. 4 CONFIRMATION LETTERS ISSUED BY M/S RIL IS NOT GENUI NE AND ALSO THERE IS A CONTRADICTION REGARDING THE DATE OF ACQUISITION OF THE BOAT. IN OUR OPINION, ON THESE TECHNICAL REASONS DEPRECIATION CANNOT BE D ENIED. THE ASSESSEE HAS DONE WHATEVER IT CAN DO AND PRODUCED THE EVIDEN CE IN SUPPORT OF ITS CLAIM. IN OUR OPINION THE ASSESSEE HAS PROVED THE LEGAL OWNERSHIP OF THE BOAT BY FILING ALL THE REQUISITE EVIDENCE LIKE COPY OF LETTER ISSUED BY THE M/S RIL DATED 22.8.2006 WHICH CONFIRMED THE USAGE OF TH E BOAT FROM THE PERIOD 4 TH DECEMBER TO FEBRUARY 29 TH . 2004, CHARTERED PARTY AGREEMENT WITH RIL DATED 20.10.2002, COPY OF INVOICE DATED 4. 2.2003. IN OUR OPINION, THE ASSESSEE HAS DISCHARGED BURDEN CAST UPON IT AND ACCORDINGLY, THE CLAIM OF THE ASSESSEE WITH REGARD TO DEPRECIATION O N THIS ASSET IS TO BE ALLOWED. 5. THE ASSESSEE RAISED ONE MORE GROUND WITH REGA RD TO INVOKING THE PROVISIONS SEC.43(1) FOR THE TUG BOAT ACQUIRED BY THE ASSESSEE. THIS GROUND IS DISMISSED AS NOT PRESSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 31.8.2010 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 31 ST AUGUST, 2010 COPY FORWARDED TO: 1. M/S KEI RSOS MARITIME LTD., 10-3-316/A, MASABTAN K, HYDERABAD 2. DCIT, CIRCLE 2(1), HYDERABAD 3. CIT(A)-III, HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP