M/s Central Coalfield Ltd, Ranchi V. Addl. CIT, Ranchi

WTA 3/RAN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9613 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 22-07-2016
• Court: TRIBUNAL
• Department Lawyers: ABHAY KUMAR
• Assessee Lawyers: S K PODDAR; M K CHOUDHURY
• Keywords: Depreciation; Wholly owned subsidiary

Judgement Text

1 WTA NO. 03/RAN/2016, AY 2002-03 CENTRAL COALFIELDS LTD. IN THE INCOME TAX APPELLATE TRIBUNAL: RANCHI BENCH, RANCHI [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGAN ESH, AM] W.T.A NO. 03/RAN/2016 ASSESSMENT YEAR: 2002-03 M/S. CENTRAL COALFIELDS LTD. VS. ADDL. COMMISSIO NER OF INCOME-TAX DARBHANGA HOUSE, RANCHI, JHARKHAND RANGE-1, RANCHI (PAN: AAACC7476R) (APPELLANT) (RESPONDENT) DATE OF HEARING: 07.09.2016 DATE OF PRONOUNCEMENT: 09.09.2016 FOR THE APPELLANT: S/SHRI S. K. PODDAR & M.K.CHOUDH URY, ADVOCATES FOR THE RESPONDENT: SHRI ABHAY KUMAR, DR ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), RANCHI VIDE APPEAL NO. 606/RAN/CO/2007-08 DATED 04.04.2016. ASSESSMEN T WAS FRAMED BY ADDL.CIT, RANGE-1, RANCHI U/S. 16(3) OF THE WEALTH-TAX ACT, 1 957 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2002-03 VIDE HIS ORDER DATED 26.1 2.2002. 2. THE ONLY ISSUE TO BE DECIDED IN THE APPEAL OF T HE ASSESSEE ON MERITS IS AS TO WHETHER THE VALUE OF JEEP WOULD BE CHARGEABLE TO TA X U/S. 2(EA) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING AND A WHOLLY OWNED SUBSIDIARY OF THE PARENT COMPANY M/S. COAL INDIA LTD., A GOVERNMENT OF INDIA ENTERPRISE. THE ASSESSEE IS EN GAGED IN THE BUSINESS OF MINING/EXTRACTION OF COAL, COAL WASHERY AND SALE OF COAL. THE ASSESSEE HAD SHOWN THE VALUE OF JEEPS IN THE BLOCK OF MOTOR CARS IN TH E DEPRECIATION SCHEDULE AND STATED THAT JEEPS WERE IN THE NATURE OF PLANT WHICH ARE US ED IN THE MINING AREAS AS THE MOTOR CAR CANNOT REACH, SEND THE STORES, SPARES AND NECESSARY MATERIALS REQUIRED FOR MINING TO THE MINING SITE AND ALSO FOR SENDING THE EMPLOYEES TO THE MINING SITE. ACCORDINGLY, IT ARGUED THAT THE JEEPS WERE USED AS PLANT FOR BUSINESS PURPOSES AND, THEREFORE, OUTSIDE THE AMBIT OF TAXABLE ASSET U/S. 2(EA) OF THE ACT. THE LD. AO DID 2 WTA NO. 03/RAN/2016, AY 2002-03 CENTRAL COALFIELDS LTD. NOT APPRECIATE THIS CONTENTION AND BROUGHT THE VALU E OF JEEPS AS A TAXABLE ASSET WHILE COMPUTING THE NET WEALTH OF THE ASSESSEE, WHICH WAS ALSO CONFIRMED BY THE LD. CIT(A) IN FIRST APPEAL. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 2.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE JEEPS WERE USED BY T HE ASSESSEE ONLY FOR ITS MINING BUSINESS AND ARE PART AND PARCEL OF THE PLANT AND A CCORDINGLY, BECOME A PRODUCTIVE ASSET FOR THE ASSESSEE. IT IS WELL SETTLED THAT TH E DEFINITION OF PLANT INCLUDES SHIPS, VEHICLES, BOOKS, SCIENTIFIC APPARATUS AND SURGICAL EQUIPMENTS USED FOR THE PURPOSE OF BUSINESS OR PROFESSION BUT DOES NOT INCLUDE TEA BUSHES OR LIVE STOCK OR BUILDING OR FURNITURE AND FITTINGS. REFERENCE IN THIS REGARD IS DRAWN TO THE PROVISIONS OF SECTION 43(3) OF THE I. T. ACT, 1961. WE ALSO FIND THAT THE RELIANCE PLACED BY THE LD. AR ON THE FOLLOWING DECISIONS ARE VERY WELL FOUNDED : I) CIT VS. ELECON ENGG. CO. LTD. (1974) 96 ITR 672 (GUJ) (APPROVED BY HONBLE SUPREME COURT IN 166 ITR 66; II) CIT VS. TECHNICO ENTERPRISE (P) LTD. (1994) 206 ITR 36 (CAL) III) CIT VS. KIRAN CRIMPERS (1997) 225 ITR 84 (GUJ) ; IV) CIT VS. PUNJAB & SIND BANK LTD. (2000) 111 TAXM AN 496 (DEL); V) CIT VS. KANODIA COLD STORAGE (1975) 100 ITR 155 (ALL); VI) ADDL. CIT VS. MADRAS CEMENTS LTD. (1977) 110 IT R 281 (MAD); VII) TRIBENI TISSUES LTD. VS. CIT (1991) 190 ITR 48 7 (CAL); VIII) CATALYSTS & CHEMICALS INDIA (WEST ASIA) LTD. VS. CIT (1987) 137 ITR 110 (KER) AND IX) SUNDARAM MOTORS P. LTD. VS. CIT (1969) 71 ITR 5 87 (MAD). THE RATIO LAID DOWN IN THE AFORESAID DECISIONS ARE NOT DEALT WITH HEREIN FOR THE SAKE OF BREVITY. WE ALSO FIND THAT THE DEFINITION OF AS SETS U/S. 2(EA) OF THE ACT INCLUDES MOTOR CARS BUT EXCLUDES MOTOR CARS USED AS STOCK IN TRADE FROM THE AMBIT OF WEALTH TAX ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED ON HEREINABOVE, WE HOLD THAT THE VALUE OF JEEPS WOULD NOT FALL UNDER THE PURVIEW OF TAXABLE WEALTH OF THE ASS ESSEE. 3 WTA NO. 03/RAN/2016, AY 2002-03 CENTRAL COALFIELDS LTD. 3. THE OTHER GROUNDS RAISED BY THE ASSESSEE WITH RE GARD TO THE ASSUMPTION OF JURISDICTION U/S. 17 OF THE ACT NEED NOT TO BE GONE INTO IN VIEW OF OUR AFORESAID DECISION. HENCE, THE SAME ARE DISMISSED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.09.2016 SD/- SD/- (N. V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED :9 TH SEPTEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT 2 RESPONDENT 3 . THE CIT(A), 4. 5. CIT DR, ITAT, RANCHI / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .