M/s Road Links India Pvt. Ltd., Bangalore V. ACIT, Bangalore

ITSSA 7/BANG/2014

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2201 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-07-2016
• Assessment Year: misc
• Appeal Filed On: 12-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P CHANDRASHEKAR
• Keywords: Depreciation; Opportunity of being heard; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER (SMC) IT(SS)A NO.7(BANG) 2014 (BLOCK ASSESSMENT YEARS : 1988-89 TO 1999-2000) M/S ROAD LINKS (INDIA.) PV.LTD., NO.99D, 2 ND CROSS, 5 TH BLOCK, KORAMANGALA, BANGALORE-560 095 PAN NO..AAACR 8620C APPELLANT VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-12(4), BANGALORE RE SPONDENT ASSESSEE BY : SHRI SURESH MUTHUKRISHNAN, CA REVENUE BY : SHRI P.CHANDRASHEKAR, CIT DATE OF HEARING : 04-07-2016 DATE OF PRONOUNCEMENT : 2 2-07-2016 O R D E R PER A.K.GARODIA, AM THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF THE LD. CIT(A)-I, BANGALORE DATED 31-01-2014 FOR THE BLOCK PERIOD A. Y. 1988- 89 TO 1999-2000 (UP TO 30-10-1998) 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER; 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR A S HEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, ACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. 2. THE LD CIT*(A) IS NOT JUSTIFIED IN UPHOLDING TH E ASSESSMENT OF UNDISCLOSED INCOME IN RESPECT OF THE DEPRECIATION CLAIMED FOR THE ASSESSMENT YEARS 1996- 97, 1997-98 & 1998-99 COMPRISING THE BLOCK PERIOD ON 2 REFRIGERATED TRUCKS AMOUNTING TO A SUM OF IT(SS)A NO.7(B)/14 2 RS.22,07,200/- ON THE GROUND THAT THE APPELLANT WAS ONLY THE LESSEE OF THE 2 TRUCKS AND NOT THE OWNER U NDER THE FACTS AND IN A THE CIRCUMSTANCES OF THE APPELLA NTS CASE. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE LEASE RENTALS PAYABLE BY THE APPELLANT COMPANY TO THE LESSOR AS ALLOWABLE DEDUCTION IN THE PLACE OF DEPRECIATION AND CONSIDER ING THE SAME OUGHT TO HAVE DETERMINED THE UNDISCLOSED INCOME AT NIL UNDER THE FACTS AND IN THE CIRCUMSTAN CES OF THE APPELLANTS CASE. 4. THE APPELLANT COMPANY DENIES ITSELF LIABLE TO B E CHARGED TO INTEREST U/S 158BFA(1) OF THE ACT, WHICH REQUIRES TO BE CANCELLED UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE. 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOW ED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO OR DER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF T HE COSTS. 3. THE LD. AR OF THE ASSESSEE PLACED RELIANCE O N THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT RENDERED IN THE CA SE OF CIT VS M/S ROAD LINKS (INDIA.) PVT. LTD., IN ITA NO.172 OF 200 2 DATED 12-11-2007, COPY AVAILABLE ON PAGES 19-22 OF THE PAPER BOOK AND IN PARTICULAR, OUR ATTENTION WAS DRAWN TO PARA-5 OF THE JUDGMENT WHERE IN IT WAS HELD BY THE HONBLE HIGH COURT THAT IF THE AO WAS OF THE OP INION THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEPRECIATION ON THE LEASED TRUCKS, HE IT(SS)A NO.7(B)/14 3 WOULD BE ENTITLED TO CLAIM THE EXPENDITURE I.E. THE AMOUNT GIVEN BY THE ASSESSEE AS LEASE AMOUNT TO THE LESSOR. HE SUBMITT ED THAT AS PER THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT, IF IT IS HELD THAT THE ASSESSEE BEING THE LESSEE IS NOT ELIGIBLE TO CLAIM DEPRECIATION, THEN THE DEDUCTION SHOULD BE ALLOWED IN RESPECT OF PAYMENT O F LEASE RENTAL. HE FURTHER SUBMITTED THAT IN PARA- 9 TO 15 OF THE ASSE SSMENT ORDER, THE AO HAS NOTED THAT THE ASSESSEE COMPANY HAS REFLECTED L OAN FROM M/S KARNATAKA FINANCIAL SERVICES LTD., AT RS.30,24,888/ - FOR AY: 1996-97, RS.22,49,878/- FOR AY: 1997-98 AND RS.NIL FOR AY: 1 998-99 AND THEREAFTER, THE AO ALSO NOTED THAT LORRY HIRE CHARG ES WHICH HAD BEEN CLAIMED BY THE ASSESSEE COMPANY BY DEBITING TO P&L ACCOUNT HAS BEEN ALLOWED IN THE RESPECTIVE ASSESSMENT YEARS. IT WA S SUBMITTED BY HIM THAT LORRY HIRE CHARGES IS REGULAR BUSINESS EXPENS ES AND NOT LEASE RENTAL BUT LOAN HAS BEEN CAPITALIZED AND ITS REPAYMENT WAS REDUCED FROM THE LOAN ACCOUNT AND THEREFORE, IF DEPRECIATION IS NOT ALLOWED THEN THE DEDUCTION ON ACCOUNT OF PAYMENT OF LEASE RENTAL SHO ULD BE ALLOWED. 4. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT IN PARA-3 OF THE ASSESSMENT ORDER, IT IS NOTED BY THE AO THAT M/ S KARNATAKA FINANCIAL SERVICES LTD. IN ITS CONFIRMATION LETTER HAD CONTENDED THAT THE TWO TRUCKS WERE OWNED BY THAT COMPANY AND IT WERE L EASED TO THE ASSESSEE COMPANY AND IF THAT BE THE FACT THEN THE A SSESSEE IS NOT ELIGIBLE FOR DEPRECIATION ON THESE TWO TRUCKS BUT IF THE ASS ESSEE HAS MADE IT(SS)A NO.7(B)/14 4 PAYMENT OF LEASE RENTALS IN RESPECT OF THESE TWO TR UCKS TO M/S KARNATAKA FINANCIAL SERVICES LTD. AND SUCH PAYMENT OF LEASE R ENTALS HAS NOT BEEN DEBITED TO THE P&L ACCOUNT THEN DEDUCTION HAS TO BE ALLOWED ON ACCOUNT OF PAYMENT OF SUCH LEASE RENTALS BY THE ASSESSEE CO MPANY TO M/S KARNATAKA FINANCIAL SERVICES LTD., BUT THESE FACTS ARE NOT COMING OUT FROM THE RECORDS AS TO WHETHER ANY LEASE RENTAL WAS PAID BY THE ASSESSEE COMPANY IN RESPECT OF THESE TWO TRUCKS TO M/S KARNA TAKA FINANCIAL SERVICES LTD. AND WHETHER SUCH LEASE RENTAL WAS DEB ITED TO P&L ACCOUNT OR NOT BY INCLUDING THE SAME INTO LORRY HIRE CHARGE S. UNDER THESE FACTS, I FEEL IT PROPER THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR A FRESH DECISION AND ACCORDINGLY, I SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE FOR A FRESH DECISION IN THE LIGHT OF THE ABOVE DISCUSSION AFTER PROVIDING A DEQUATE OPPORTUNITY OF BEING HEARD TO BOTH PARTIES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (A.K.GARODIA) ACOUNTANT MEMBER PLACE: D A T E D : 22-07.2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE IT(SS)A NO.7(B)/14 5 BY ORDER, AR, ITAT, BANGALORE 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER