The DCIT, Circle-5,, Ahmedabad v. Nabros Transport Pvt. Ltd.,, Ahmedabad

ITA 1588/AHD/2010 | 2006-2007
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 158820514 RSA 2010
Assessee PAN AAACN3724D
Bench Ahmedabad
Appeal Number ITA 1588/AHD/2010
Duration Of Justice 8 month(s) 15 day(s)
Appellant The DCIT, Circle-5,, Ahmedabad
Respondent Nabros Transport Pvt. Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-01-2011
Date Of Final Hearing 21-01-2011
Next Hearing Date 21-01-2011
Assessment Year 2006-2007
Appeal Filed On 13-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. N. PAHUJA AM) ITA NO. 1588/AHD/2010 A. Y.: 2006-07 THE D. C. I. T. CIRCLE-5 2 ND FLOOR C. U. SHAH CHAMBERS ASHRAM ROAD AHMEDABAD 380 009 VS M/S. NABROS TRANSPORT PVT. LTD. 333/1 ANAND DRIVEPIN ROAD NAVRANGPURA AHMEDABAD PA NO. AAACN 3724D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ANURAG SHARMA SR. DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XI AHMEDA BAD DATED 03 RD MARCH 2010 FOR ASSESSMENT YEAR 2006-07 ON THE FOL LOWING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF ENTRY T AX AND INTEREST OF RS.11 35 740/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (A) XI AHMEDAB AD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF BOTH THE AUTHORITIES BELOW. HOWEVER NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF THE NOTICE THROUGH REGI STERED POST. A/D ITA NO.1588/AHD/2010 DCIT CIR-5 AHMEDABAD VS M/S. NABROS TRANSPORT (P) LTD. 2 CARD DULY SERVED ON THE ASSESSEE IS AVAILABLE ON RE CORD. THE ASSESSEE IS THEREFORE PROCEEDED EX-PARTE. 3. THE AO NOTED THAT THE AMOUNT OF ENTRY TAX AND IN TEREST OF RS.14 99 400/- AND RS.3 93 500/- WAS THE VEHICLE TA X/SALES TAX LEVIED AT THE POINT OF PURCHASE OF VEHICLES BY THE GOVERN MENT. IT WAS THEREFORE PART OF THE PURCHASE PRICE AND WAS TREAT ED AS CAPITAL EXPENDITURE OF THE VEHICLES. THE AO THEREFORE NOT ED THAT THE AMOUNTS WERE NOT DEDUCTIBLE AS REVENUE EXPENDITURE. IT WAS FOUND THAT THE ASSESSEE HAD NOT PAID THE ENTRY TAX AT THE RELEVANT TIME OF PURCHASE AND THEREFORE THE STATE GOVERNMENT HAS CH ARGED INTEREST THEREON AND ALSO HAS LEVIED PENALTY FOR THE FAILURE TO MAKE THE PAYMENT AT THE POINT OF PURCHASE OF THE VEHICLES. T HE ASSESSEES CONTENTION THAT ENTRY TAX WAS NOT LEVIABLE IN THE Y EAR OF PURCHASE WAS THEREFORE NOT FOUND TENABLE. THE AMOUNT OF TAX AND INTEREST WERE TREATED AS CAPITAL EXPENDITURE AND DISALLOWED THE S AME AFTER GRANT OF DEPRECIATION THEREON. THE LEARNED CIT(A) NOTED THAT 3 VEHICLES WERE PURCHASED AT BANGALORE AND WERE REGISTERED AT GUJAR AT IN THE EARLIER YEARS. THE VEHICLES WERE OPERATIONAL IN THE EARLIER YEARS AND THE ASSESSEE WAS INFORMED OF THE LIABILITY TO PAY THE I MPUGNED AMOUNT BY THE NOTICE DATED 31-03-2005 RECEIVED BY THEM DURING THE PREVIOUS YEAR. THE LEARNED CIT(A) NOTED THAT THE ASSESSEE IS FOLLO WING MERCANTILE SYSTEM OF ACCOUNTING AND SINCE THE LIABILITY AROSE DURING THE PREVIOUS YEAR WHICH RELATE TO THE DATE OF PURCHASES AND REGI STRATION THEREFORE IT WAS CONSIDERED AS REVENUE EXPENDITURE AND ADDITI ONS WERE DELETED. ITA NO.1588/AHD/2010 DCIT CIR-5 AHMEDABAD VS M/S. NABROS TRANSPORT (P) LTD. 3 4. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) FAILED TO NOTE THAT THE ABOVE TAXES WERE LEVIED AT THE POINT OF PU RCHASE OF THE VEHICLES AND WERE PART OF THE CAPITAL EXPENDITURE O F THE VEHICLES. MERELY BECAUSE THE SAME WERE PAID LATER ON WOULD NO T CHANGE THE CHARACTER OF THE EXPENDITURE. THE LEARNED DR SUBMIT TED THAT NO FINDING IS GIVEN BY THE LEARNED CIT(A) WHETHER THE EXPENDITURE WAS CAPITAL OR REVENUE IN NATURE. HE HAS SUBMITTED THAT THE ABOVE EXPENDITURE SHOULD BE TREATED AS PART OF THE PURCHA SE AND RELIED UPON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS NOROTH OIL MILL CO. LTD. 140 ITR 173 IN WHICH IT WAS HELD AS UNDER: BUSINESS EXPENDITURE CURRENT REPAIRS CAPITAL O R REVENUE EXPENDITURE FISHING BOATS FITTED WITH IMPORTED ENGINES REPLACEMENT OF ENGINES AFTER FOUR YEARS WITH ENGINES OF HIGHER HORSE POWER EXPENDITURE NOT ALLOWABLE AS CURRENT REPAIRS. 5. ON CONSIDERATION OF THE ABOVE FACTS WE ARE OF T HE VIEW THAT THE MATTER REQUIRES RE-CONSIDERATION AT THE LEVEL OF TH E LEARNED CIT(A). THE AO HAS SPECIFICALLY NOTED THAT THE ABOVE TAXES ARE LEVIED BY THE GOVERNMENT AT THE TIME OF PURCHASE OF THE VEHICLES AND ARE THEREFORE UNDOUBTEDLY PART OF THE PURCHASE PRICE A ND TO BE TREATED AS CAPITAL EXPENDITURE OF THE VEHICLES. THE LEARNED CI T(A) HAS ALSO NOTED THAT THE VEHICLES WERE PURCHASED AT BANGALORE WHICH WERE REGISTERED AT GUJARAT AND THE VEHICLES WERE OPERATI ONAL IN THE EARLIER YEARS. THE AMOUNT UNDER LIABILITY WAS PAID LATTER O N. THUS IT IS CLEAR THAT PAYMENT OF THE ENTRY TAX AND INTEREST HAS DIRE CT CONNECTION WITH THE PURCHASE OF THE VEHICLES. THEREFORE THE LEARNE D CIT(A) BEFORE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE SHOULD HAVE VERIFIED THE ITA NO.1588/AHD/2010 DCIT CIR-5 AHMEDABAD VS M/S. NABROS TRANSPORT (P) LTD. 4 FACT AND SHOULD HAVE GIVEN THE FINDING WHETHER THE ENTRY TAX AND INTEREST THEREON HAVE NEXUS WITH THE PURCHASE OF TH E VEHICLES AND WHETHER THE SAME ARE CAPITAL EXPENDITURE OR PART OF THE PURCHASE PRICE. THE LEARNED CIT(A) HOWEVER WITHOUT VERIFYIN G THE FACTS AND WITHOUT GIVING ANY FINDING OF FACT ON THE MATTER IN ISSUE DELETED THE ADDITIONS WITHOUT ANY JUST CAUSE. WE ACCORDINGLY S ET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH DIRECTION TO RE-DECIDE THE ISSUE BY GIVING REASONABLE SUFFICI ENT OPPORTUNITY OF BEING HEARD TO THE AO AND THE ASSESSEE. THE GROUNDS OF APPEAL OF THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT THE DEPARTMENTAL APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 28-01-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 28-01-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD