CREDIT LYONNAIS ( THROUGH THEIR SUCCESSORS CALYAON BANK ), MUMBAI v. DDIT (IT) RG 1(2), MUMBAI

ITA 1546/MUM/2010 | 2004-2005
Pronouncement Date: 08-07-2011 | Result: Allowed

Appeal Details

RSA Number 154619914 RSA 2010
Assessee PAN AACCC3872B
Bench Mumbai
Appeal Number ITA 1546/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 11 day(s)
Appellant CREDIT LYONNAIS ( THROUGH THEIR SUCCESSORS CALYAON BANK ), MUMBAI
Respondent DDIT (IT) RG 1(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 08-07-2011
Date Of Final Hearing 30-06-2011
Next Hearing Date 30-06-2011
Assessment Year 2004-2005
Appeal Filed On 26-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI R V EASWAR PRESIDENT AND SHRI B RAMAKOTAIAH ACCOUNTANT MEMBER I T A NO: 1546/MUM/2010 (ASSESSMENT YEAR: 2004-05) CREDIT LYONNAIS MUMBAI APPELLANT (THROUGH THEIR SUCCESSORS CALYON BANK) (PAN: AACCC3872B) VS DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL RESP ONDENT TAXATION) RANGE 1(2) MUMBAI ASSESSEE BY: MR MADHUR AGARWAL REVENUE BY: MR JITENDRA YADAV O R D E R R V EASWAR PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AND IT RELATES T O THE ASSESSMENT YEAR 2004-05. THE ASSESSEE IS A FOREIGN BANKING INSTITUTION CARRYING ON BUSINESS IN INDIA. 2. THE APPEAL ARISES OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 154 OF THE INCOME TAX ACT 19 61 IN THE FOLLOWING CIRCUMSTANCES. IN THE ASSESSMENT MADE UN DER SECTION 143(3) THE ASSESSING OFFICER ALLOWED DEPRECIATION AT THE RATE OF 50% ON MOTOR CARS ON THE WDV OF ` 41 06 414/-. LATER HE TOOK THE VIEW THAT DEPRECIATION WAS ALLOWABLE ON THE MOTOR C ARS ONLY AT THE RATE OF 20%. HE CONSIDERED THE ALLOWANCE OF DEPREC IATION AT THE RATE OF 50% IN THE ASSESSMENT ORDER TO BE A MISTAKE APPARENT FROM THE RECORD. HE ACCORDINGLY ISSUED NOTICE TO THE AS SESSEE TO RECTIFY THE MISTAKE. IT MAY BE NOTICED THAT UNDER THE DEPR ECIATION TABLE ITA NO: 1546/MUM/2010 2 FOR THE RELEVANT ASSESSMENT YEAR MOTOR CARS OTHER THAN THOSE USED IN A BUSINESS OF RUNNING THEM ON HIRE ACQUIRED OR PUT TO USE ON OR AFTER 01.04.1990 WERE ELIGIBLE FOR DEPRECIATION AT THE RATE OF 20% UNDER ENTRY III.(2). UNDER ENTRY III.(3)(VI) OF TH E SAME TABLE ANY NEW COMMERCIAL VEHICLE ACQUIRED ON OR AFTER 01.04.2 001 BUT BEFORE 01.04.2002 AND PUT TO USE BEFORE 01.04.2002 FOR THE PURPOSE OF BUSINESS OR PROFESSION WAS ELIGIBLE TO DEPRECIATION AT THE RATE OF 50%. OBVIOUSLY THE ASSESSING OFFICER TOOK THE VIEW THAT THE MOTOR CARS OWNED BY THE ASSESSEE WERE ELIGIBLE FOR DEPREC IATION ONLY AT THE RATE OF 20% SINCE THEY WERE USED IN A BUSINESS OTHER THAN THE BUSINESS OF RUNNING THEM ON HIRE. 3. THE ASSESSEE SUBMITTED THAT AS PER ENTRY III.(3) (VI) READ WITH FOOT NOTE 6. OF THE DEPRECIATION TABLE A LIGHT MO TOR VEHICLE AS DEFINED IN SECTION 2(21) OF THE MOTOR VEHICLES ACT 1988 MEANS A TRANSPORT VEHICLE OR OMNIBUS THE GROSS WEIGHT OF W HICH DOES NOT EXCEED 7500 KGS. IT WAS SUBMITTED THAT THE LIGHT M OTOR VEHICLES OR IN OTHER WORDS THE MOTOR CARS WERE USED FOR VARIOUS COMMERCIAL ACTIVITIES RELATED WITH BANKING OPERATIONS SUCH AS CASH TRANSFER MEETINGS WITH CLIENTS REGULATORS ETC. AND THEREFO RE THESE VEHICLES HAVE TO BE CATEGORIZED AS COMMERCIAL VEHICLES AND ACCORDINGLY THE DEPRECIATION WAS RIGHTLY ALLOWED IN THE ASSESSM ENT AT THE RATE OF 50%. 4. THE ASSESSING OFFICER HOWEVER TOOK THE VIEW THAT SINCE THE MOTOR CARS WERE NOT USED IN THE BUSINESS OF RUNNING THEM ON HIRE; DEPRECIATION HAS TO BE ALLOWED ONLY AT THE RATE OF 20%. HE ACCORDINGLY PASSED AN ORDER UNDER SECTION 154 OF TH E ACT ITA NO: 1546/MUM/2010 3 WITHDRAWING THE EXCESS DEPRECIATION I.E. THE DIFFE RENCE BETWEEN DEPRECIATION AT THE RATE OF 50% AND THAT AT THE RAT E OF 20%. THE ORDER WAS PASSED ON 29.10.2008. 5. ON APPEAL THE ASSESSEE POINTED OUT THAT THE ISS UE AS TO WHETHER DEPRECIATION WAS ALLOWABLE AT THE RATE OF 5 0% OR 20% WAS DEBATABLE AND WAS THEREFORE NOT AMENABLE TO SECTION 154 OF THE ACT. THIS CONTENTION WAS REJECTED BY THE CIT(A). THE ASSESSEES CLAIM WAS ALSO REJECTED BY HIM ON MERITS. IN OTHER WORDS HAVING REGARD TO THE USE TO WHICH THE MOTOR CARS WERE PUT THE CIT(A) TOOK THE VIEW THAT THEY CANNOT BE CONSIDERED AS COMMERCI AL VEHICLES ELIGIBLE FOR DEPRECIATION AT 50%. 6. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRI BUNAL TO CONTEND FIRSTLY THAT THE ISSUE IS DEBATABLE AND CAN NOT BE RECTIFIED UNDER SECTION 154 OF THE ACT. IT IS ALSO CONTENDED THAT EVEN ON MERITS THE ASSESSEES CLAIM WAS VALID IN LAW. AFTE R CONSIDERING THE RIVAL SUBMISSIONS WE AGREE WITH THE FIRST CONTENTI ON AND HOLD THAT THE ISSUE INVOLVES INTERPRETATION OF THE TWO ENTRIE S IN THE DEPRECIATION SCHEDULE READ WITH FOOT NOTE 6. OF THE SCHEDULE WHICH ALSO REFERS TO SECTION 2 OF THE MOTOR VEHICLES ACT 1988. THAT THE ISSUE IS DEBATABLE IS ALSO SEEN FROM THE ORDER OF T HE MUMBAI BENCH OF THE TRIBUNAL IN DALEEP S CHANDNANI VS. ACIT (200 7) 14 SOT 233 (MUM) AS ALSO THAT OF THE HYDERABAD BENCH IN AVANTI FEEDS LTD. VS. DCIT (2010) 35 SOT 50 (HYD). IN THE ORDER OF THE M UMBAI BENCH IT WAS HELD THAT SO LONG AS THE CAR IS USED BY AN ASSE SSEE FOR BUSINESS PURPOSES IT WOULD GET DEPRECIATION AS A C OMMERCIAL VEHICLE AT HIGHER RATES. TO THE SAME EFFECT IS THE ORDER OF THE ITA NO: 1546/MUM/2010 4 HYDERABAD BENCH CITED ABOVE. THE DISCUSSION IN THE SE ORDERS SHOWS THAT THE ISSUE AS TO WHICH OF THE TWO ENTRIES WILL APPLY IS NOT FREE FROM DOUBT AND THEREFORE IS NOT A CASE FOR REC TIFICATION UNDER SECTION 154 OF THE ACT. IT IS WELL SETTLED THAT UN DER SECTION 154 ANY ISSUE WHICH REQUIRES A LONG DRAWN ARGUMENT CANNOT B E CONSIDERED AS A MISTAKE APPARENT FROM THE RECORD. IN THIS VIE W OF THE MATTER WE SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFI CER UNDER SECTION 154 OF THE ACT AND ALLOW THE ASSESSEES APP EAL WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JULY 2011. SD/- SD/- (B RAMAKOTAIAH) (R V EASWAR) ACCOUNTANT MEMBER PRESIDE NT MUMBAI DATED 8 TH JULY 2011 SALDANHA COPY TO: 1. CREDIT LYONNAIS CALYON BANK HOECHST HOUSE 11 TH FLOOR NARIMAN POINT MUMBAI 400 021 2. DCIT (INTERNATIONAL TAXATION) RANGE 1(2) MUMBAI 3. DIT-INTERNATIONAL TAXATION 4. CIT(A)-10 MUMBAI 5. DR C BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI