M/s Aakruti Holdings, Hubli V. ACIT, Hubli

ITA 998/BANG/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1338 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-05-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 13-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DAS J
• Assessee Lawyers: S V RAVISHANKAR
• Keywords: Depreciation; Principle of natural justice; Commercial expediency; TDS
• Section: 143(3); 40(a)(ia); 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, BENGALURU BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 998 /BANG/201 6 (ASSESSMENT YEAR: 2012-13) M/S.AAKRUTI HOLDINGS, CTS NO.122/91, SRINATH CHAMBERS, NEW COTTON MARKET, HUBLI. PAN:AAOFA 3722 H VS. APPELLANT ASST. COMMISSIONER OF INCOME - TAX, HUBLI. RESPONDENT APPELLANT BY : SHRI S.V.RAVISHANKAR, ADVOCATE. RESPONDENT BY : MS. SWAPNA DAS, JCIT(DR) DATE OF HEARING: 07/05/2019 DATE OF PRONOUNCEMENT: 14/06/2019 O R D E R PER PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A) HUBLI, PASSED U/S 143(3) AND 250 OF THE INCOME- TAX ACT,1961 ['THE ACT' FOR SHORT]. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, NATURAL JUSTICE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. ITA NO.998/BANG/2016 PAGE 2 OF 6 2. THE AUTHORITIES BELOW ERRED IN ASSESSING THE APPELL ANT ON A TOTAL INCOME OF RS.1,17,50,230/- AS AGAINST THE R ETURNED INCOME OF RS.1,04,59,060/- UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 3. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN SUSTAINI NG A SUM OF RS.6,42,166/- CLAIMED TOWARDS DEPRECIATION DESER VES TO BE DELETED UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 4. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN SUSTAINI NG A SUM OF RS.3,49,008/- 5. CLAIMED TOWARDS INTEREST PAID ON LOANS DESERVES TO BE DELETED UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 7. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPEL LANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTERES T OF JUSTICE AND EQUITY. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE -FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOP ERS. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2012-13 ON 28/09/2012 WITH TOTAL INCOME OF RS.1,04, 59,060/- AND THE RETURN OF INCOME WAS PROCESSED U/S 143(1) O F THE ACT ON 16/2/2013. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S 143(2) AND 142( 1) OF THE ACT WERE ISSUED. IN COMPLIANCE, LEARNED AR APPEARE D FROM TIME TO TIME AND PRODUCED BOOKS OF ACCOUNT, BILLS, VOUCHERS AND DETAILS. AO, IN THE COURSE OF SCRUTINY PROCEED INGS, FOUND ITA NO.998/BANG/2016 PAGE 3 OF 6 THAT TWO CARS WERE REFLECTED IN THE BALANCE-SHEET R EGISTERED IN THE NAME OF THE PARTNER AND LOAN WAS OBTAINED IN TH E NAME OF THE PARTNER, REGISTRATION FEE AND LIFE TIME TAX WAS PAID IN THE NAME OF THE PARTNER. THEREFORE, AO IS OF THE VIEW AS TO WHY DEPRECIATION, LIFE TIME TAX AND INTEREST ON CAR SHO ULD NOT BE DISALLOWED. THE LEARNED AR FILED EXPLANATION ON 12/1/2015 REFERRED AT PARA.3 OF THE ASSESSMENT ORDER. BUT AO WAS NOT SATISFIED WITH THE EXPLANATIONS AND THE ASSESSEE FI RM COULD NOT PROVE THAT CARS WERE USED EXCLUSIVELY FOR THE P URPOSE OF THE BUSINESS. THEREFORE, MADE DISALLOWANCE OF DEP RECIATION OF RS.6,42,166/- ON CARS AND DISALLOWED INTEREST ON CAR LOAN OF RS.3,49,008/-. SIMILARLY, DISALLOWED RS 3 LAKHS BE ING PAID TOWARDS GARDEN EXPENSES AND APPLIED PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS AND M ADE ADDITION AND ASSESSED THE TOTAL INCOME AT RS.1,17,5 0,230/- VIDE ORDER U/S 143(3) DATED 18/2/2015. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED APPEAL WITH THE CIT(A). THE CIT(A) HAVING CONSIDERED THE GROUND S OF APPEAL, SUBMISSIONS AND THE FINDING OF THE AO, HAS CONFIRMED THE DISALLOWANCE OF DEPRECIATION AND INTEREST ON CA R LOAN AND GRANTED RELIEF IN RESPECT OF GARDEN EXPENSES BY DEL ETING ADDITION AND PARTLY ALLOWED THE APPEAL. ITA NO.998/BANG/2016 PAGE 4 OF 6 5. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS F ILED AN APPEAL WITH THE TRIBUNAL. AT THE TIME OF HEARING, LEARNED AR SUBMITTED THAT CARS ARE PURCHASED BY THE PARTNERS F OR THE BUSINESS AND DISCLOSED IN THE BALANCE-SHEET OF THE FIRM. CAR ARE USED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AN D THEREFORE, THE CLAIM OF DEPRECIATION ON CARS AND IN TEREST ON CAR LOAN SHOULD BE ALLOWED. THE LEARNED AR ALSO SUBSTANTIATED HIS ARGUMENT BY FILING PAPER BOOK CON SISTING OF THE FINANCIAL STATEMENT AND LEDGER EXTRACT AND BILL S IN RESPECT OF CARS. CONTRA, LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LEARNED ARS SUBMISSIONS T HAT CARS HAVE BEEN PURCHASED FOR BUSINESS AND ARE USED EXCLU SIVELY FOR BUSINESS OPERATIONS AND THE INTEREST ON CAR LOAN WA S TO BE ALLOWED ON COMMERCIAL EXPEDIENCY. THE LEARNED AR RE FERRED TO PAGE 17 OF THE PAPER BOOK WHERE LEDGER ACCOUNTS AND PARTNERS CAPITAL ACCOUNTS HAVE BEEN FILED. ON PER USAL OF LEDGER ACCOUNTS OF BOTH PARTNERS, WE FOUND THAT PAR TNERS HAVE ALSO MADE DRAWING AND THERE IS REFUND OF ADVANCE PA YMENT OF CARS. WHEN CLARIFICATION WAS SOUGHT, LEARNED ARS SUBMISSIONS ARE NOT SATISFACTORY AND FURTHER EMPHASIZED THAT TH E AO ALSO HAS DISALLOWED INTEREST ON CAR LOAN WITHOUT ANY BAS IS. ON ITA NO.998/BANG/2016 PAGE 5 OF 6 PERUSAL OF FINANCIAL STATEMENTS AND THE SUBMISSIONS OF THE LEARNED AR, WE FOUND THAT THESE ASPECTS ARE NOT DIS CUSSED BY THE AO IN THE ASSESSMENT ORDER AND NEW FACTS ARE EM ERGING IN THE COURSE OF HEARING PROCEEDINGS. WHEREAS AO, I N THE ASSESSMENT ORDER HAS NOT GIVEN PROPER FINDINGS IN R ESPECT OF DISALLOWANCE OF DEPRECIATION EXCEPT MAKING OBSERVAT ION THAT CARS ARE NOT USED FOR BUSINESS PURPOSE. WE FOUND T HERE IS NO CLARIFY IN RESPECT OF USAGE OF CAR, OBTAINING OF LO AN AND INTEREST. THEREFORE, WE ARE OF THE OPINION THAT TH ESE FACTS ARE TO BE EXAMINED AND ACCORDINGLY, WE RESTORE THIS DIS PUTED ISSUE TO THE FILE OF THE AO FOR LIMITED PURPOSE TO VERIFY EVIDENCE FILED IN THE COURSE OF HEARING ABOUT USAGE OF CAR AND ALSO IN RESPECT OF INTEREST ON CAR LOAN. ACCORDINGL Y, THESE GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPO SES. 7. IN THE RESULT, THE ASSESSEES APPEAL IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE, 2019. SD/- SD/- (B.R. BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 14/06/2019 SRINIVASULU, SPS ITA NO.998/BANG/2016 PAGE 6 OF 6 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE