M/s Kolluri Kanakayya & Co., Machilipatnam V. Income Tax Officer, Ward-I, Machilipatnam

ITTA/97/2002

AI Insights

The case involves M/s Kolluri Kanakayya & Co., Machilipatnam, the appellant, who appealed against the order of the Income Tax Appellate Tribunal, Visakhapatnam Bench, which denied their claim for depreciation on a tanker for the assessment year 1996-1997. The tanker, registered as No.AP-16-V/676, was allegedly used for transporting water on hire to a hotel in Vijaywada. However, the Assessing Officer and the Tribunal found no evidence supporting the use of the tanker for any business purpose related to the appellant's dealings with petroleum products. The Tribunal's decision was based on the lack of evidence for the tanker being used or hired out for any purpose that would qualify for depreciation under Section 32 of the Income Tax Act.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 796112 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 05-08-2014
• Assessment Year: misc
• Other Referred Cases: CIT Vs. O.P. Khanna & Sons
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: J V PRASAD
• Assessee Lawyers: SHIVA KARTHIKEYA
• Keywords: Assessment year 1996-1997; Depreciation; Income tax appellate tribunal; Tanker; Visakhapatnam Bench
• Section: 32(1)

Judgement Text

" * HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM + I.T.T.A No.97 of 2002 % 5th August, 2014 # M/s Kolluri Kanakayya & Co., Machilipatnam. … Appellant AND $ Income Tax Officer, Ward-I, Machilipatnam. … Respondent ! Counsel for the Appellant : Sri Shiva Karthikeya ^ Counsel for the respondent : Sri J.V. Prasad, Learned Standing Counsel for the Income Tax < Gist: > Head Note: ? Cases referred: 140 ITR 558 HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A. No.97 of 2002 JUDGMENT:- (per CKR,J) This appeal is preferred by the assessee, against the order dated 06.11.2001 in I.T.A. No.756/H/97, passed by the Income Tax Appellate Tribunal, Visakhapatnam Bench (in short “the Tribunal”). The subject matter is the returns filed by the respondent for the assessment year 1996-1997. The short question involved is as to whether the assessee is entitled to claim depreciation on the tanker No.AP-16-V/676 for the assessment year 1996-1997. The assessee is a firm and a dealer of M/s Bharat Petroleum Corporation (in short “BPCL”). In the case of assessment proceedings, appellant claimed depreciation on the vehicle. On verification of the account books produced, the Assessing Officer noticed that the assessee claimed to have conducted a trial run of the tanker on 30th and 31st March, 1996 for supply of water to a hotel at Vijaywada. The Assessing Officer disallowed the claim for depreciation by quoting Section 32 (1) of the Income Tax Act (for short “the Act”) and observing that the depreciation is allowable only on the buildings, machinery, plant or furniture owned by the assessee and used for the purpose of business or profession. He recorded a finding that the assessee is a dealer in petroleum products and supply of water is not the business of the assessee and thus the claim for depreciation is not in order. In the appeal preferred by the assessee the appellate authority concurred with the version of the Assessing Officer. On further appeal, the Tribunal held that the claim of the assessee that the tanker was given on hire for the purpose of supply of water is not supported by evidence and concurred with the finding of the assessing authorities below that the claim of receipt of hire charges was not proved. It has also recorded a finding that no work of transport of petroleum products before 31.03.1996 by BPCL was entrusted to the assessee muchless the tanker in question was put to trial use. It observed that simply because the tanker was registered and kept ready for use, it does not qualify the depreciation under Section 32 of the Act. Sri Shiva Karthikeya, learned counsel for the assessee submits that the predominant view expressed in various judicial pronouncements is to the effect that it would be sufficient if the asset is made ready and kept for use and depreciation is allowable even for passive usage. He relied on the judgment of CIT Vs. O.P. Khanna & Sons[1] to support his contention. Sri J.V. Prasad, learned standing counsel for the department submits that the finding of the fact recorded by the Tribunal that the vehicle was not used during the relevant accounting year, has not been challenged by raising any plea of perversity. He contends that in the absence of such challenge, the appeal is liable to be dismissed as the finding of fact by the Tribunal which happens to be the last authority on facts, cannot be interfered with and prays for dismissal of the appeal. We have perused the orders of the assessing authority, appellate authority as well as the Tribunal. All the authorities had categorically held that the tanker in question was not used during the accounting year. The Tribunal has also had recorded a finding that there was a discrepancy even about the in the hire charges said to have been received by the assessee for transport of water. The explanation that was offered on behalf of the assessee that the tanker was used for transporting water on hire, to check the leakages, if any, the hire charges were allowed to be taken by the driver. Even this was disbelieved for want of supporting material. In other words the categorical finding of the authorities below as affirmed by the Tribunal is to the effect that the tanker in issue was not used during the closure of the accounting year. In the face of such finding the orders of the Tribunal confirming the assessment order denying the depreciation benefit does not call for interference and accordingly, appeal is liable to be dismissed. We, therefore, dismiss the appeal. There shall be no order as to costs. __________________________ L. NARASIMHA REDDY, J ____________________________ CHALLA KODANDA RAM, J Date:05.08.2014 Ssv HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.97 of 2002 Date: 05.08.2014 Ssv [1] 140 ITR 558 "