M/s . NUTECH CORPORATE SERVICES LTD., MUMBAI V. INCOME TAX OFFICER 8(2)(1), MUMBAI

MA 240/MUM/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5808 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 1993-1994
• Appeal Filed On: 12-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM M A NO. 240 / MUM/20 17 (ARISING OUT OF ITA NO.1363/MUM/2006) ( ASSESSMENT YEAR : 1993 - 94 ) M A NO. 241/ MUM/20 17 (ARISING OUT OF ITA NO.2432/MUM/2 006) ( ASSESSMENT YEAR : 1995 - 96 ) M A NO. 242/ MUM/20 17 (ARISING OUT OF ITA NO.2127/MUM/2006) ( ASSESSMENT YEAR : 1995 - 96 ) M A NO. 243/ MUM/20 17 (ARISING OUT OF ITA NO.2433/MUM/2006) ( ASSESSMENT YEAR : 1996 - 97 ) M A NO. 244/ MUM/20 17 (ARISING OUT OF ITA NO.2128/MUM/20 06) ( ASSESSMENT YEAR : 1996 - 97 ) M A NO. 245/ MUM/20 17 (ARISING OUT OF ITA NO.6091/MUM/2007) ( ASSESSMENT YEAR : 1998 - 99) M A NO. 246/ MUM/20 17 (ARISING OUT OF ITA NO.2302/MUM/2008) ( ASSESSMENT YEAR : 1999 - 00 ) M A NO. 247/ MUM/20 17 (ARISING OUT OF ITA NO.2303/MUM/200 8) ( ASSESSMENT YEAR : 2000 - 01 ) M A NO. 248/ MUM/20 17 (ARISING OUT OF ITA NO.2304/MUM/2008) ( ASSESSMENT YEAR : 2001 - 02 ) M A NO. 249/ MUM/20 17 (ARISING OUT OF ITA NO.2305/MUM/2008) ( ASSESSMENT YEAR : 2002 - 03 ) M A NO. 250/ MUM/20 17 (ARISING OUT OF ITA NO.2204/MUM/2008 ) ( ASSESSMENT YEAR : 1993 - 94 ) M.A.NO.240/MUM/2017 AND OTHER M.AS. M/S. NUTECH CORPORATE SERVICES LIMITED 2 M A NO. 720/ MUM/20 10 (ARISING OUT OF ITA NO.2205/MUM/2008 & 2206/MUM/2008) ( ASSESSMENT YEAR : 1995 - 96 & 1996 - 97 ) M A NO. 552/ MUM/20 11 (ARISING OUT OF ITA NO.2206/MUM/2008) ( ASSESSMENT YEAR : 1996 - 97 ) M A NO. 399/ MUM/20 11 (ARISING O UT OF ITA NO.2205/MUM/2008 & 2206/MUM/2008) ( ASSESSMENT YEAR : 1995 - 96 & 1996 - 97 ) M A NO. 52/ MUM/20 12 (ARISING OUT OF ITA NO. 2206/MUM/2008) ( ASSESSMENT YEAR : 1996 - 97 ) M A NO. 551/ MUM/20 11 (ARISING OUT OF ITA NO.2205/MUM/2008) ( ASSESSMENT YEAR : 1995 - 96 ) M /S. NUTECH CORPORATE SERVICES LTD., FORMERLY IIT CAPITAL SERVICES LTD., 28, RAJABHADUR MANSION, 2 ND FLOOR, BOMBAY SAMACHAR MARG, FORT, MUMBAI 400 001 VS. ITO 8(2)(1), MUMBAI PAN/GIR NO. AAACI3356A APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI AKASH KUMAR REVENUE BY SHRI PURUSHOTTAM KUMAR DATE OF HEARING 01 / 09 /201 7 DATE OF PRONOUNCEME NT 20 / 11 /201 7 / O R D E R PER R.C.SHARMA (A.M) : M.A.NO.240/MUM/2017 AND OTHER M.AS. M/S. NUTECH CORPORATE SERVICES LIMITED 3 THESE M.A. AROSE OUT OF ITA NO.1363/MUM/2006 AND OTHER APPEALS VIDE TRIBUNAL ORDER DATED 23/01/2017. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3. THE ABOVE APPEAL FOR INCOME - TAX ASSESSMENT YEAR 1993 - 94 TOGETHER WITH 13 OTHER APPEALS CAME UP FOR HEARING BEFORE THE HONOURABLE TRIBUNAL, 'E' BENCH, MUMBAI ON 13 TH JANUARY, 2017 AND HAS BEEN DISPOSED OF BY ITS ORDER DATED 21.03.2017. 4. IT WAS POINTED OUT THAT THE HONOURABLE TRIBUNAL IN PARA NO 40 OF THE ORDER HAS DECLINED THE CLAIM OF DEPRECIATION IN RESPECT OF LEASE OF MOTOR CARS AND VEHICLES STATING THAT '...WE FOUND THAT VEHICLES HAVE REGISTERED IN THE NAME OF RESPECTIVE LESSEES IN THE REGISTRATION BOOK ALSO INDICATED THE LESSEE AS THE OWNER OF THE VEHICLE AND NAME OF THE ASSESSEE APPEARS ONLY UNDER THE CAPTION OF 'HYPOTHECATED TO. ' 5. IT WAS POINTED OUT THAT THE ISSUE OF OWNERSHIP AS PER THE PROVISIONS OF SECTION 32 OF THE INCOME TAX ACT VIS - - VIS SECTION 2(3) OF THE MOTOR VEHICLES ACT HAV E BEEN DEALT BY THE HONBLE SUPREME COURT IN THE CASE OF ICDS LTD.,380 ITR 527 AND IT WAS HELD IN PARA 26 THAT 'WE DO NOT FIND MERIT IN THE REVENUE'S ARGUMENT FOR MORE THAN ONE REASON: (I) SECTION 2(30) IS A DEEMING PROVISION THAT CREATS A LEGAL FICTION OF OWNERSHIP IN FAVOUR OF LESSEE ONLY FOR THE PURPOSE OF THE MV ACT. IT DEFINES OWNERSHIP FOR THE PROVISIONS OF THE MV ACT, NOT FOR THE PURPOSE OF LAW IN GENERAL THEREFORE, IF THE MV ACT AT ANY POINT USES THE TERM 'OWNER' IN ANY SECTION, IT MEANS THE ONE IN WHOSE NAME THE VEHICLE IS REGISTERED AND IN THE CASE OF A LEASE AGREEMENT, THE LESSEE. THAT IS ALL. IT IS NOT A STATEMENT OF LAW ON OWNERSHIP IN M.A.NO.240/MUM/2017 AND OTHER M.AS. M/S. NUTECH CORPORATE SERVICES LIMITED 4 GENERAL. PERHAPS, THE REPOSITORY OF A GENERAL STATEMENT OF LAW ON OWNERSHIP MAY BE THE SALE OF GOODS ACT; (II) SECTION 2(30) OF THE MV ACT MUST BE READ IN CONSONANCE WITH SUB - SECTIONS (4) AND (5) OF SECTION 51 OF THE MV ACT. ' THIS REAFFIRMS (HE POSITION THAT THE ASSESSEE IS IN FACT THE OWNER OF THE VEHICLE, INSOFAR AS SECTION 32 IS CONCERNED' LATER IN PARA 29 THE APEX COURT HELD THAT 'THEREFORE, IN THE FACTS OF THE PRESENT CASE, WE HOLD THAT THE LESSOR I.E. THE ASSESSEE IS THE OWNER OF THE VEHICLES. AS THE OWNER, IT USED THE ASSETS IN THE COURSE OF ITS BUSINESS, SATISFYING BOTH THE REQUIREMENTS OF SECTION 32 OF THE ACT AND HENCE, IS ENTITLED TO CLAIM DEPRECIATION IN RESPECT OF ADDITIONS MADE TO THE TRUCKS, WHICH WERE LEASED OUT. ' 6. FURTHER RELIANCE WAS PLACED ON THE DECISION OF RAJASTHAN HIGH COURT IN THE CASE OF BAID LEASING & FINANCE CO. LTD., 359 ITR 413. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ISSUE WITH REGARD TO ALLOWING DEPRECIATION ON LEASED VEHICLE IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT AS WELL AS RAJASTHAN HIGH COURT AS POINTED OUT ABOVE. HONBLE RAJASTHAN HIGH COUR T IN THE CASE OF BAID LEASING & FINANCE CO. LTD., ALLOWED CLAIM OF DEPRECIATION ON LEASED VEHICLE AFTER FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN CASE OF ICDS LTD.,(SUPRA). IN VIEW OF THE ABO VE DECISION OF HONBLE SUPREME COURT, THERE APPEARS TO BE MISTAKE IN THE ORDER OF THE TRIBUNAL DECLINING CLAIM OF DEPRECIATION IN RESPECT OF LEASED VEHICLES . ACCORDINGLY, WE MODIFY THE SAME AND DIRECT THE AO TO ALLOW CLAIM OF DEPRECIATION ON VEHICLE LEASED OUT IN THEIR BUSINESS OF LEASE. WE DIRECT ACCORDIN GLY. 8. SIMILAR GROUNDS HAVE BEEN TAKEN IN ALL THE YEARS UNDER CONSIDERATION. THE FOLLOWING REASONING GIVEN BY US HEREINABOVE IN THE A.Y.1993 - 94, WE M.A.NO.240/MUM/2017 AND OTHER M.AS. M/S. NUTECH CORPORATE SERVICES LIMITED 5 DIRECT THE AO TO ALLOW CLAIM OF DEPRECIATION ON VEHICLES LEASED OUT BY ASSESSEE IN THEIR BUSINESS OF LEAS E. WE DIRECT ACCORDINGLY. 9. IN M.A.NO.250/MUM/2017, ARISING OUT OF IT A NO. 2204/MUM/2008 FOR A.Y. 1993 - 94 DEPARTMENT APPEAL AGAINST CIT(A) ORDER DELETING PENALTY UNDER 271( L)(C). THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUND AGAINST THE DELETION OF PENALTY LEVIED BY THE AO UNDER SECTION 271(1 )(C) OF THE ACT - 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CANCELLING THE PENALTY LEVIED W/V. 27L(L)(C) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FA CTS THAT THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE IS DIFFERENT THAT OF THE CASE OFM/S. ROBRANT INVESTMENT PVT. LTD. ' 10. IN PARA NO. 49 AND 50 ON PAGE NUMBERS 30 TO 33 OF THE ORDER WHILE DEALING WITH PENALTY LEVIED BY THE AO FOR A.Y. 1995 - 96 AND 1996 - 97 WE HAVE REACHED THE CONCLUSION THAT THE PENALTY IMPOSED WITH REGARD TO DISALLOWANCE OF DEPRECIATION ON THE ASSETS LEASED BY THE ASSESSEE IS A DEBATABLE ISSUE AND THAT THE CIT(A) HAS CORRECTLY DELETED THE PENALTY UNDER SECTION 271(L)(C). WE F IND THAT THE FACTS AND CIRCUMSTANCES FOR THE RELEVANT YEAR AY 1993 - 94 ARE THE SAME AS IN THE AFORESAID YEARS AND HENCE, WE CONFIRM THE ORDER OF THE CIT(A) IN DELETING THE PENALTY UNDER SECTION 271(L)(C). WE DIRECT ACCORDINGLY. 11. MA NOS 246 TO 249/MUM/20 17 ARISING OUT OF 1TA NOS 2302/MUM/2008 FOR A.Y 1999 - 2000, 2303/MUM/2008 FOR A.Y. 2000 - 01, 2304/MUM/2008 FOR A.Y. 2001 - 02, 2305/MUM/2008 FOR A.Y. 2002 - 03 - DEPARTMENT A PP EAL AGAINST C I T(A) ORDER IN QUANTUM. M.A.NO.240/MUM/2017 AND OTHER M.AS. M/S. NUTECH CORPORATE SERVICES LIMITED 6 12. WE HAVE GONE THROUGH THE GROUNDS OF APPEAL FI LED BY THE DEPARTMENT AGAINST THE CIT(A) ORDER FOR EACH OF THE FOUR YEARS, I.E AYS 1999 - 2000, 2000 - 01, 2001 - 02 AND 2002 - 03. 13. THE GROUNDS OF APPEAL OF THE DEPARTMENT FOR ALL THE YEARS ARE SIMILAR AND WE EXTRACT THE GROUNDS OF APPEAL FOR INCOME - TAX ASSES SMENT YEAR 1999 - 2000 WHICH IS REPRODUCED HEREIN BELOW - '7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT FULLY UPHOLDING THE DISALLOWANCE OF CLAIM OF DEPRECIATION MADE BY THE ASSESSING OFFICER, WITHOUT APPRE CIATING THE FACTS OF THE CASE '. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT FULLY CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON NON - SALE AND LESE BACK TRANSACTIONS OF THE YEAR UNDER CONSIDERATION, WIT HOUT APPRECIATING THE FACTS OF THE CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING THE A. O TO ALLOW THE DEPRECIATION ON NON - SALE AND LEASE BACK TRANSACTIONS OF THE EARLIER YEARS, WITHOUT APPRECI ATING THE FACTS OF THE CASE. ' 5.3 WE HAVE GONE THROUGH THE CIT(A) ORDERS DATED 8.1.2008 FOR AYS 1999 - 00 TO 2002 - 03 AND FIND THAT THE CIT(A) HAS RELIED IN ALL THE YEARS ON HIS ORDER FOR ASSESSMENT YEAR 1993 - 94 DATED 05.01.2006 AND HAS ACCORDINGLY DISPOSED OF THE APPEALS. 5.4 WE HAVE DEALT WITH THE ISSUES FOR INCOME - TAX ASSESSMENT YEAR 1993 - 94 IN DETAIL FROM PAGE NOS 2 TO 30, PARA NOS 1 TO 48 AND FIND THAT OUR FINDINGS AND CONCLUSION WILL HOLD GOOD FOR THE APPEALS FILED BY THE DEPARTMENT FOR INCOME - TAX ASSES SMENT YEARS 1999 - 2000 TO 2002 - 03 AND HOLD ACCORDINGLY. 5.5 ACCORDINGLY, WE DO NOT FIND ANY MERIT IN DISALLOWANCE OF DEPRECIATION. WE DIRECT THE AO ACCORDINGLY. 14. MA NOS 241 TO 245/MUM/2017 ARISING OUT OF ITA NOS. 2432/MUM /2006 AND 2127/MUM/2006 FO R A.Y. 1995 - 96, 2433/MUM/2006 AND 2128/MUM/2006 FOR A.Y. 1996 - 97 AND 6091/MUM/2007 FOR A.V. 1998 - 99 - CROSS APPEALS AGAINST CIT(A) ORDER IN QUANTUM M.A.NO.240/MUM/2017 AND OTHER M.AS. M/S. NUTECH CORPORATE SERVICES LIMITED 7 15. WE HAVE GONE THROUGH THE GROUNDS OF APPEAL FILED BY THE DEPARTMENT AND THE ASSESSEE AGAINST THE CIT(A) O RDER FOR EACH OF THE THREE YEARS, I.E AYS 1995 - 96, 1996 - 97 AND 1998 - 99. 16. THE GROUNDS OF APPEAL OF THE DEPARTMENT FOR ALL THE YEARS ARE SIMILAR AND WE EXTRACT THE GROUNDS OF APPEAL FOR A.Y. 1995 - 96 WHICH IS REPRODUCED HEREIN BELOW - 'ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT FULLY CONFIRMING THE DISALLOWANCE ON NON - SALE AND LEASE BACK TRANSACTIONS OF THE YEAR RS 1,43,74,591/ - WITHOUT APPRECIATING THE FACTS OF THE CASE. ' 17. FURTHER, THE GROUNDS OF APPEAL OF THE ASSESSEE FOR ALL THE YEARS ARE SIMILAR AND WE EXTRACT THE GROUNDS OF APPEAL FOR A.Y. 1995 - 96 WHICH IS REPRODUCED HEREIN BELOW - 'THE COMMISSIONER OF INCOME TAX (APPEALS) VIII, MUMBAI HEREINAFTER REFERRED TO AS THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON ALL SALE AND LEASE BACK TRANSACTIONS INSPITE OF THE FACT THAT THE APPELLANT SATISFIED THE CONDITIONS LAID DOWN BY THE RON 'BLE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF MIDEAST PORTFO LIO MANAGEMENT LIMITED THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON ALL SALE AND LEASE BACK TRANSACTIONS ENTERED INTO IN EARLIER YEARS EVEN THOUGH TRANSACTIONS WERE SUBJECT TO ASSESSMENT UNDER SECTION 143(3) AND NO SUCH DISALLOWANCE WAS MADE IN THOSE ORDERS. THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON MOTOR VEHICLES GIVEN ON LEASE DURING THE YEAR. 'THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF DEPRE CIATION ON PLANT AND MACHINERY GIVEN ON LEASE DURING THE YEAR ' 18. WE HAVE GONE THROUGH THE CIT(A) ORDERS DATED 08.02.2006 FOR A.Y. 1995 - 96, 15.02.2006 FOR A.Y. 1996 - 97 AND FIND THAT THE C1T(A) HAS RELIED ON HIS ORDER FOR A.Y. 1993 - 94 DATED 05.01.2006 AN D HAS ACCORDINGLY DISPOSED OF THE APPEALS. 19. FURTHER, WE HAVE GONE THROUGH THE CIT(A) ORDER DATED 18,07.2007 FOR A.Y. 1998 - 99 AND FIND THAT HE HAS RELIED ON HIS ORDER DATED 08.02.2006 FOR M.A.NO.240/MUM/2017 AND OTHER M.AS. M/S. NUTECH CORPORATE SERVICES LIMITED 8 A.Y. 1995 - 96 IN WHICH, AS STATED ABOVE, HE HAS RELIED ON HIS ORDE R FOR A.Y. 1993 - 94 DATED 05.01.2006 AND HAS ACCORDINGLY DISPOSED OF THE APPEAL. 20. IN THE RESULT, M.AS FILED BY THE ASSESSEE ARE DISPOSED OF IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 20 / 11 /2017 S D/ - ( AMARJIT SINGH ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 20 / 11 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//