DCIT, New Delhi v. Sanjvik Cargo & Trading Ltd.,, New Delhi

ITA 1596/DEL/2013 | 2008-2009
Pronouncement Date: 14-11-2014 | Result: Dismissed

Appeal Details

RSA Number 159620114 RSA 2013
Assessee PAN AABCS7765D
Bench Delhi
Appeal Number ITA 1596/DEL/2013
Duration Of Justice 1 year(s) 7 month(s) 26 day(s)
Appellant DCIT, New Delhi
Respondent Sanjvik Cargo & Trading Ltd.,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 14-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 14-11-2014
Date Of Final Hearing 18-09-2014
Next Hearing Date 18-09-2014
Assessment Year 2008-2009
Appeal Filed On 19-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I. C. SUDHIR JUDICIAL MEMBER AND SHRI T.S. KAPOOR ACCOUNTANT MEMBER I.T.A. NO.1596 /DEL/2013 ASSESSMENT YEAR : 2008-09 DCIT CIRCLE 7(1) VS. M/S. SANJIVIK CARGO & TRA DING NEW DELHI. LTD. 61 SWATI APARATMENTS 12 MOTHER DAIRY PATPARGANJ NEW DELHI. GIR / PAN:AABCS7765D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BRR KUMAR SR. DR RESPONDENT BY : SHRI A K SRIVASTAVA CA SHRI AM M BHASIN CA ORDER PER T.S. KAPOOR AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD.CIA DATED 04.01.2013. THE REVENUE HAS RAISED TWO GROUN DS OF APPEAL ONE OF WHICH RELATES TO THE ACTION OF LD. CIT(A) BY WHICH HE HAD ALLOWED DEPRECIATION ON 22 TANKERS WHEREAS THE A.O. HAD ALL OWED DEPRECIATION ONLY ON 10 VEHICLES. THE SECOND GRIEVANCE OF THE REVENU E IS THE ACTION OF LD. CIT(A) BY WHICH HE HAD RESTRICTED THE DISALLOWANCE ON ACCOUNT OF REPAIR & MAINTENANCE CLAIMED BY THE ASSESSEE AT RS.1 45 760/ - AGAINST DISALLOWANCE OF RS.16 64 665/- MADE BY THE A.O. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT THE ASSESSEE HA D PURCHASED 25 NEW TANKERS OUT OF WHICH HE HAD CLAIMED DEPRECIATION ON 22 TANKERS. THE A.O. ITA NO.1596/DEL/2013 2 OBSERVED THAT THE BODY OF TANKERS WAS MANUFACTURED ONLY FOR 17 TANKERS AND OUT OF THESE 17 TANKERS HE OBSERVED THAT 4 TANKERS WERE READY FOR COMMERCIAL DEPLOYMENT BEFORE THE END OF FINANCIAL YEAR 2007-08 HOWEWVER THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THAT THESE 4 TANKERS WERE COMMERCIALLY DEPLOYED BEFORE 31.03.2008. THEREFORE THE A.O. HE LD THAT ASSESSEE WAS NOT ELIGIBLE FOR DEPRECIATION ON 12 TANKERS AND THEREF ORE HE DISALLOWED A PROPORTIONATE CLAIM OF DEPRECIATION RELATING TO 12 TANKERS. 3. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAD CLAIMED REPAIR AND MAINTENANCE EXPENDITURE TO THE TUNE OF RS.41 61 663 /- BUT ON EXAMINATION OF REPAIR AND MAINTENANCE EXPENSES THE A.O. OBSERVED THAT SOME OF THE PAYMENTS WERE MADE IN CASH EXCEEDING RS.20 000/- AN D SOME OF THE PAYMENTS CLAIMED BY THE ASSESSEE WERE NOT REPRESENT ING REPAIR & MAINTENANCE. THE A.O. HAS LISTED 5 INSTANCES OF SU CH PAYMENTS AT PAGE 5 OF HIS ASSESSMENT ORDER AND THEREFORE HE DISALLOWED AN AMOUNT OF RS.16 64 665/- REPRESENTING 40% OF THE CLAIM MADE B Y THE ASSESSEE. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AND MADE VARIOUS SUBMISSIONS. LD. CIT(A) ON THE BASIS OF TH ESE SUBMISSIONS AND FURTHER FINDINGS ALLOWED THE CLAIM OF DEPRECIATION AND RESTRICTED THE DISALLOWANCE ON ACCOUNT OF REPAIR AND MAINTENANCE T O RS.1 45 760/- BY OBSERVING AS UNDER: 2.3. AFTER GOING THROUGH THE FACTS OF THE CASE OB SERVATIONS OF THE AO AND SUBMISSIONS OF THE A.R. OF THE APPELLANT THIS GROUND OF THE APPELLANT IS BEING DECIDED AFTER MAKING THE FOLLOWI NG OBSERVATIONS: (A) ON GOING THROUGH THE FACTS OF THE CASE IT IS O BSERVED THAT THE APPELLANT COMPANY HAD AN AGREEMENT WITH M/S RMPL FO R HIRING OF 25 TRUCK TANKERS. THIS MOU WAS MADE W.E.F. 6TH FEBRUAR Y 2007. AS PER THIS AGREEMENT THE SPECIFICATIONS FOR EACH OF THE VEHICLES REQUIRED BY RMPL WILL BE COMPLIED TO BY THE APPELLANT COMPANY W ITHIN SUCH TIME ITA NO.1596/DEL/2013 3 FRAME AS DESIRED BY RMPL. IT WAS FURTHER MENTIONED IN THE MOU THAT THE HIRE CHARGES SHALL BE PAYABLE FROM THE DATE OF DEPLOYMENT OF VEHICLES. ACCORDINGLY DURING THIS YEAR THE APPELLA NT COMPANY HAD PURCHASED TANKERS AND DEPLOYED THE SAME WITH M/S RM PL FROM TIME TO TIME. IN THIS REGARD THE ASSESSING OFFICER HAS SPECIFICALLY POINTED OUT THAT WITH REGARD TO 4 TANKERS THE DATE OF PROVI DING BILLS FOR FABRICATION WERE BEYOND THE END OF THE FINANCIAL YE AR WHICH CLEARLY IMPLIED THAT THESE TANKERS WERE NOT USED DURING THE FINANCIAL YEAR. FURTHER THE A.O. POINTED OUT THAT WITH REGARD TO 8 OTHER TANKERS NO DETAILS HAD BEEN PROVIDED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. ACCORDINGLY THE A.O. DISALLOWED PROPOR TIONATE DEPRECIATION FOR 12 VEHICLES RESULTING IN A DEPRECI ATION DISALLOWANCE OF RS.19 77 152/-. ON GOING THROUGH THE ARGUMENTS OF THE A.R. OF THE A PPELLANT ON THE BASIS OF THE SUPPORTING LETTERS DATED 23-12-12 AND 25-12-12 IT IS OBSERVED THAT VARIOUS DETAILS RELATING TO INSURANCE CHARGES CHASSIS NUMBER ENGINE NUMBER AS WELL AS LEASE RENTS RECEIV ED ON ACCOUNT OF NUMBER OF TANKERS HAD ALSO BEEN PROVIDED TO THE ASS ESSING OFFICER. FURTHER THE COPIES OF RCS HAD ALSO BEEN PROVIDED T O THE ASSESSING OFFICER WHICH CLEARLY ESTABLISHES THAT THE TANKERS WERE READY FOR USE. THE ASSESSING OFFICER HAS NOT DISPUTED THE DOCUMENT S FILED BY THE A.R. OF THE APPELLANT EVEN DURING THE ASSESSMENT PROCEED INGS AND IF IT IS A MATTER OF FACT THAT RCS HAVE BEEN ISSUED FOR 22 TAN KERS AND AT THE SAME TIME LEASE RENT HAS ALSO BEEN RECEIVED AGAINST THESE TANKERS IT CANNOT BE DISPUTED THAT THE VEHICLES HAVE BEEN PUT TO USE DURING THE YEAR. IF THIS WOULD HAVE BEEN THE ARGUMENT OF THE A O THAT THE TANKERS WERE NOT PUT TO USE THEN THE AMOUNTS RECEIVED TOWA RDS LEASE RENT FROM THESE TANKERS SHOULD ALSO NOT HAVE BEEN ACCEPT ED AS PART OF BUSINESS INCOME OF THE ASSESSEE. (B) THE A.R. OF THE APPELLANT HAS CONTENDED THE ONL Y REASON WHY THE A.O. HELD THAT TANKERS WERE NOT READY FOR USE W AS THAT THE DATE OF BILLS TOWARDS FABRICATION CHARGES OF 4 VEHICLES WAS BEYOND THE FINANCIAL YEAR. IT WAS SUBMITTED BY THE A.R. OF THE APPELLANT THAT THE ACTUAL FABRICATION WORK HAD BEEN DONE WITHIN THE FI NANCIAL YEAR AND ONLY AFTER THE VEHICLES HAVE BEEN COMPLETED AFTER S PECIFICATION OF M/S RMPL THAT THE RCS WERE PROVIDED BY THE RTO AND THE INSURANCE ALSO ITA NO.1596/DEL/2013 4 HAVE BEEN PAID. KEEPING IN VIEW THE SPECIFIC FACTS OF THE CASE AND CONSIDERING THAT VARIOUS DOCUMENTS RELATING TO RCS INSURANCE AND DETAILS OF LEASE RENTAL FOR THESE TANKERS RECEIVED BY THE ASSESSEE HAD ALSO BEEN PROVIDED THE ASSESSING OFFICER HAS NOT D ISPUTED THESE DOCUMENTS WHICH HAVE BEEN ISSUED BY THE GOVERNMENT AUTHORITIES. ACCORDINGLY MERELY TO DISALLOW THE DEPRECIATION ON GROUNDS THAT SOME BILLS OF FABRICATION WERE SUBSEQUENTLY RECEIVE D AND PAID THE AMOUNTS TO HAVING A SELF-CONTRADICTORY STAND BY TAK ING THE LEASE RENT INTO THE BUSINESS INCOME OF THE ASSESSEE AND AT THE SAME TIME NOT ALLOWING ANY DEPRECIATION ON THE SAME VEHICLE ON WH ICH DEPRECIATION HAS BEEN DISALLOWED. (C) APART FROM THE ABOVE ARGUMENTS IT IS ALSO PERT INENT TO NOTE THE ISSUE OF BLOCK OF ASSETS ON WHICH DEPRECIATION HAS TO BE ALLOWED. AS STRONGLY ARGUED BY THE A. R. OF THE APPELLANT THAT THE TANKERS HAVE MERGED INTO A BLOCK OF ASSETS AND THE DEPRECIATION IS ALLOWED ON THE BLOCK OF ASSETS AND NOT ON A PARTICULAR ITEM OF THE BLOCK OF ASSETS. IN VIEW OF THESE ARGUMENTS ALSO THE A.R. OF THE APPEL LANT HAS STRONG GROUND TO ARGUE THAT DEPRECIATION HAS TO BE ALLOWED ON THE BLOCK OF ASSETS ON WHICH THESE TRUCK TANKERS FORM A PART. AC CORDINGLY KEEPING IN VIEW THE FACTS THAT THE APPELLANT HAS ONLY CLAIM ED DEPRECIATION ON THE AMOUNT WHICH HAS BEEN PAID TOWARDS ACQUISITION OF THESE ASSETS AND LEASE RENT HAS BEEN RECEIVED FROM THESE TRUCK T ANKERS TO THAT EXTENT THE CLAIM OF DEPRECIATION MADE BY THE APPELL ANT APPEARS TO BE JUSTIFIED. SINCE THE ASSESSING OFFICER HAS NOT CLEA RLY POINTED OUT AS TO WHY THE DEPRECIATION SHOULD NOT BE ALLOWED ON A PAR TICULAR VEHICLE EVEN WHEN ITS RC INSURANCE AS WELL AS LEASE RENTAL S HAVE BEEN ACCOUNTED FOR BY THE APPELLANT DURING THE YEAR THE DISALLOWANCE MADE BY THE ASSESSING OFFICER DOES NOT APPEAR TO BE FULLY JUSTIFIED HE A.O. IS DIRECTED TO ALLOW DEPRECIATION ON 22 TANKER S AFTER VERIFYING THE DETAILS WHICH HAVE ALREADY BEEN PROVIDED BY THE APP ELLANT AT THE TIME OF ASSESSMENT THE A.O. MAY VERIFY THE PERIOD OF USE AND ALSO THE OTHER DETAILS REGARDING RCS INSURANCE AS WELL AS LEASE R ENT RECEIVED TO COMPUTE THE ACTUAL DEPRECIATION ON THESE TANKERS. A S A RESULT THIS GROUND OF THE APPELLANT IS TREATED AS PARTLY ALLOWE D. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. ITA NO.1596/DEL/2013 5 6. AT THE OUTSET THE LD. D.R. READ FROM RELEVANT F INDINGS OF THE A.O. AND ALSO READ RELEVANT FINDINGS OF LD. CIT(A) AND ARGUE D THAT THE ASSESSEE HAD NOT PRODUCED RELEVANT DOCUMENTS AND LD. CIT(A) WIT HOUT GOING INTO THE FACTS OF THE CLAIM HAS ALLOWED THE RELIEF. 7. LD. A.R. ON THE OTHER HAND SUBMITTED THAT THE AS SESSEE IN TOTAL HAD PURCHASED 25 TANKERS AND OUT OF WHICH HE HAD CLAIME D DEPRECIATION ON 22 TANKERS AS REGISTRATION OF 22 VEHICLES WERE COMPLET ED AND REGISTRATION CERTIFICATE CLEARLY MENTIONS THAT REGISTRATION WAS FOR TANKER AND NOT FOR CHASSIS AND IN THIS RESPECT WE WERE TAKEN TO PAGES 67-105 OF THE PAPER BOOK WHERE COPIES OF REGISTRATION CERTIFICATES WERE PLAC ED. HE ALSO ARGUED THAT THE ASSESSEE HAD DECLARED INCOME OF LEASE RENT IN RESPE CT OF THESE 22 TANKERS AND FOR THE REMAINING 3 TANKERS HE HAD RECEIVED AN AMO UNT EQUIVALENT TO EMI AS MINIMUM STIPULATED AMOUNT AS PER AGREEMENT. AS REG ARDS THE REPAIR & MAINTENANCE LD. A.R. ARGUED THAT THE AMOUNT MENTIO NED IN THE ASSESSMENT ORDER REGARDING CASH PAYMENTS WERE ONLY FOR OBTAINI NG DIESEL ON THE WAY AND ADVANCES GIVEN TO DRIVERS FOR EXPENDITURE ON TH E WAY TO DESTINATION AND THE SAME ARE ADJUSTED AT THE END OF THE TRIP. 8. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT LD. CIT(A) HAS PASSED A VE RY ELABORATE AND SPEAKING ORDER IN WHICH HE HAS DETAILED ALL FACTS A ND CIRCUMSTANCES OF THE CASE AND HAS REMITTED THE FIRST ISSUE OF DEPRECIATI ON TO THE OFFICE OF A.O. WITH A DIRECTION TO ALLOW DEPRECIATION AFTER VERIFICATIO N OF DOCUMENTS. WE DO NOT UNDERSTAND HOW THIS ACTION OF LD. CIT(A) HAS CAUSED GRIEVANCE TO ASSESSEE. 9. IN VIEW OF THE FACTS AND CIRCUMSTANCES GROUND N O.1 IS DISMISSED. AS REGARDS ISSUE OF REPAIRS AND MAINTENANCE LD. CIT(A ) HAD RESTRICTED THE ITA NO.1596/DEL/2013 6 DISALLOWANCE TO THE AMOUNT OF SPECIFIC INSTANCES BR OUGHT IN NOTICE BY A.O. WITH WHICH WE ARE IN AGREEMENT. THEREFORE GROUND NO.2 IS ALSO DISMISSED. 10. IN VIEW OF ABOVE THE APPEAL FILED BY THE REVEN UE IS DISMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH NOV. 2014. SD./- SD./- ( I. C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 14 TH NOV. 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER (ITAT NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER