ACIT 6(3), MUMBAI v. HETAMPURIA IMPEX P.LTD, MUMBAI

ITA 1952/MUM/2013 | 2000-2001
Pronouncement Date: 10-11-2014 | Result: Dismissed

Appeal Details

RSA Number 195219914 RSA 2013
Assessee PAN AAACH1382F
Bench Mumbai
Appeal Number ITA 1952/MUM/2013
Duration Of Justice 1 year(s) 7 month(s) 30 day(s)
Appellant ACIT 6(3), MUMBAI
Respondent HETAMPURIA IMPEX P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 10-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 10-11-2014
Date Of Final Hearing 17-09-2014
Next Hearing Date 17-09-2014
Assessment Year 2000-2001
Appeal Filed On 11-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNALH BENCH MUMB AI !'. $ %& % ' BEFORE SHRI JOGINDER SINGH JM AND SHRI D. KARUNAKARA RAO AM ITA NO. 1951/MUM/2013 ASSESSMENT YEAR-2001-02 ACIT CIR-6(3) ROOM NO.522 5 TH FLOOR AAYAKAR BHAVAN M.K.ROAD MUMBAI-400020 ( ( ( ( / VS. M/S HETAMPURIA IMPEX PVT. LTD. 102 VYAPAR BHAVAN 368/70 NARSHI NATHA STREET MUMBAI-400009 ) %& ./ PAN :AAACH1382F ( )* / APPELLANT ) .. ( + )* / RESPONDENT ) ITA NO. 1952/MUM/2013 ASSESSMENT YEAR-2000-01 ACIT CIR-6(3) ROOM NO.522 5 TH FLOOR AAYAKAR BHAVAN M.K.ROAD MUMBAI-400020 ( ( ( ( / VS. M/S HETAMPURIA IMPEX PVT. LTD. 102 VYAPAR BHAVAN 368/70 NARSHI NATHA STREET MUMBAI-400009 ) %& ./ PAN :AAACH1382F ( )* / APPELLANT ) .. ( + )* / RESPONDENT ) ITA NO. 1954/MUM/2013 ASSESSMENT YEAR-1999-2000 ACIT CIR-6(3) ROOM NO.522 5 TH FLOOR AAYAKAR BHAVAN M.K.ROAD MUMBAI-400020 ( ( ( ( / VS. M/S HETAMPURIA IMPEX PVT. LTD. 102 VYAPAR BHAVAN 368/70 NARSHI NATHA STREET MUMBAI-400009 ) %& ./ PAN :AAFH2701H ( )* / APPELLANT ) .. ( + )* / RESPONDENT ) M/S HETAMPURIA IMPEX PVT. LTD. 2 )* - . % / ASSESSEE BY: SHRI JITENDRA KUMAR DR + )* - . % / RESPONDENT BY : NONE ( - /'& / DATE OF HEARING : 10/11/2014 01 - /'& / DATE OF PRONOUNCEMENT : 10 /11/2014 %2 / O R D E R PER JOGINDER SINGH JM: THIS BUNCH OF THREE APPEALS IS BY THE REVENUE FOR DIFFERENT ASSESSMENT YEARS HAVING IDENTICAL GROUNDS CHALLENGING THE IMPUGNED ORDERS OF THE FIRST APPELL ATE AUTHORITY ALL DATED 06/12/2012. 2. AT THE TIME OF HEARING SHRI JEETENDRA KUMAR LD. DR DEFENDED THE CONCLUSION DRAWN IN THE IMPUGNED ORDER BY SUBMITTING THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WRONGLY ALLOWED DEPRECIATION AT THE RATE OF 40% AS THE ASSESSEE IS NOT ENTITLED FOR THE SAME. 2.1 DURING HEARING NOBODY REPRESENTED THAT ASSESSE E IN SPITE OF APPEARANCE ON THE LAST DATE OF HEARING I.E . 17/09/2014 AS THE APPEALS WERE ADJOURNED AT THE REQ UEST OF THE ASSESSEE ITSELF. IN SUCH A SITUATION WE HAVE NO OPTION BUT TO PROCEED EX-PARTY QUA THE ASSESSEE AND TEND T O DISPOSE OF THESE APPEALS ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. BEFORE COMING TO ANY CONCLUSION WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE CONCLUSION DR AWN BY THE CIT(A) FOR READY REFERENCE:- M/S HETAMPURIA IMPEX PVT. LTD. 3 4.4 IN THE LEASE AS INVOKED BY THE APPELLANT THE LESSER RETAINS THE RIGHT OF OWNERSHIP OF THE ASSET AND WHA T WAS GRANTED WAS THE RIGHT TO USE THE CRANE TO THE LESSE E. ALL THE TAXES ETC. ARE BORNE BY THE APPELLANT. THE COMPENSA TION RECEIVED ON OPERATING LEASE IS NOTHING ELSE BUT HIRE CHARGES ON ASSETS IN THIS CASE BEING CRANES LEASED OUT FOR TH E USE OF A PARTICULAR PERIOD WITHOUT HAVING THE INGREDIENTS OF A FINANCIAL LEASE IN IT. IT IS ALSO SEEN THAT THE ARGUMENT OF T HE APPELLANT THAT THE HIRE AGREEMENT WAS MADE FOR A SPECIFIC PER IOD TO SECURE THE GUARANTEED FINANCIAL INCOME FROM EXISTING SOURCE WOULD NEED TO BE ACCEPTED. AS STATED BY THE APPELLANT IN THE CASE OF CIT VIS MADAN & CO. (254 ITR 445) IT HAS BEEN CLEARLY OBSERVED THAT THERE IS NO QUALITATIVE DIFFERENCE BET WEEN LEASE OF VEHICLE FOR SPECIFIC PERIOD FOR CONSIDERATION AND LETTING THE VEHICLES ON A HIRE FOR SHORT DURATION ON PAYMENT OF HIRE CHARGES. THEREFORE AS PER THE DISCUSSION ABOVE IT STANDS THAT THE CASE OF THE APPELLANT WILL NOT GET COVERED UNDER THE OBSERVATION OF THE HON'BLE JURISDICTIONAL HIGH COUR T AS GIVEN IN THE CASE OF KOTAK MAHINDRA FINANCE LTD. ON WHICH TH E AO HAS RELIED UPON. THE BUSINESS AND THE MODE OF BUSINESS OF BOTH THE CONCERNS BEING DIFFERENT THE JUDGMENT DOES NOT COVER THE CASE OF THE APPELLANT. HOWEVER THE PRINCIPLES AS P RESENT IN THE SAID ORDER HIGHLIGHTING WHAT A FINANCE LEASE IS WOUL D COVER THE CASE OF THE APPELLANT. SIMILARLY THE PRINCIPLES AS ENUMERATED IN THE FOLLOWING CASES WOULD ALSO NEED TO BE CONSID ERED :- 4.5 IT IS SEEN THAT FOLLOWING DECISION IN CIT VS BANSAL CREDITS LTD. (2003) 179 CTR (DEL) 23 : (2003) 259 I TR 69 (DEL) DELHI HIGH COURT HELD IN CIT VS SUIDU TRADE LINKS LTD. (2004) 189 CTR (DEL) 41 AND CIT VS D.O. KHAITA (2005) 197 C TR (DEL) 196 THAT WHERE THE VEHICLES HAD BEEN LEASED OUT BY T HE ASSESSEE FOR RUNNING THEM ON HIRE HE WAS ENTITLED T O A HIGHER RATE OF DEPRECIATION. SIMILAR VIEW HAS BEEN TAKEN BY MADRAS M/S HETAMPURIA IMPEX PVT. LTD. 4 HIGH COURT IN CIT VS SOUTH INDIA VISCOSE LTD. 4.6 IN THE CASE OF CIT VS BPL SANYO FINANCE (PVT.) LTD. (2006) 202 CTR (KAR) 480 IT HAS BEEN HELD THAT SINCE ASSES SEE WAS CARRYING ON THE BUSINESS OF HIRING ITS VEHICLES AND WAS NOT USING THEM FOR ITS OWN OTHER BUSINESS IT WAS ENTIT LED TO 40 PER CENT DEPRECIATION ON MOTOR-VEHICLES AND NOT AT 20 PER CENT. IT WAS HELD THAT 20 PER CENT IS THE DEPRECIATION ALLOWA BLE IN RESPECT OF THE MOTOR-CARS OTHER THAN THOSE USED IN T HE BUSINESS OF RUNNING THEM ON HIRE. WHEREAS 40 PERCE NT CENT IS THE DEPRECIATION ALLOWED IN RESPECT OF MOTOR BUSES L ORRIES AND TAXIS USED IN A BUSINESS OF RUNNING THEM ON HIRE THE STRESS IS ON 'RUNNING THEM ON HIRE'. HERE THE USE MAY BE FOR ITS BUSINESS BUT NOT ' BUSINESS OF HIRING VEHICLES'. IN OTHER WORDS IF THE ASSESSEE USES THE VEHICLES FOR ITS 'OWN USE' OR FOR ITS BUSINESS OTHER THAN THE 'BUSINESS OF RUNNING THE VE HICLES ON HIRE' THEN 20 PER CENT IS THE DEPRECIATION ALLOWABLE WHEREAS IF THE ASSESSEE USES THEM IN ITS 'BUSINESS OF RUNNING THEM ON HIRE' THE DEPRECIATION ALLOWABLE IS 40 PER CENT. LD CIT VERSUS MGF (I) LTD (2006) 285 ITR 142 (DEL) IT WAS HELD THAT WHERE IT IS FOUND THAT VEHICLES WHICH WERE SUBJECT-MATTER OF LEASE AGREEMENTS WERE IN FACT GIVEN BY THE ASSESSEE TO TH IRD PARTIES REQUIREMENT OF LAW HAD BEEN MET AND THERE WAS NO ADD ITIONAL REQUIREMENT ON ASSESSEE TO SHOW THAT THE THIRD PARTI ES HAD USED THOSE VEHICLES FOR HIRE FOR CLAIMING DEPRECIATIO N AT HIGHER RATE OF FORTY PER CENT. 4.7 UNDER THE CIRCUMSTANCES & FROM THE DISCUSSION ABOVE IT IS CLEAR THAT THE OBSERVATION OF THE AO THAT THE AP PELLANT HAS NOT INDULGED IN HIRING OF VEHICLE CANNOT BE UPHELD AN D ACCEPTED. FROM THE DETAILS OF THE APPELLANT'S CASE I T STANDS THAT THE APPELLANT HAS USED THE VEHICLES (CRANES) FO R THE M/S HETAMPURIA IMPEX PVT. LTD. 5 PURPOSE OF BUSINESS AND THE SAID ASSETS HAVE BEEN H IRED OUT UNDER OPERATING LEASE AND NOT FINANCE LEASE CANNOT BE DISPUTED. THE READING OF THE AGREEMENT ESTABLISH THIS. THE ASSESSEE HAS ALSO PROVED NECESSARY CONDITIONS FOR CLAIMING DEPRECIATION WHICH ARE: (1) THAT IT WAS OWN ER OF THE ASSETS LEASED OUT; AND (2) THAT THE ASSETS WERE USED FOR BUSINESS PURPOSES. THE AO HAS THIS FACT. IT IS SEEN THAT HE HAS ALSO ACCEPTED THE FACT THAT THE BUSINESS OF THE APPE LLANT AND THAT OF THE ASSESSEE KOTAK MAHINDRA FINANCE LTD. AR E DIFFERENT IN THEIR MODE AND NATURE. THE BUSINESS OF THE APPELLANT IS OF USING THE SAID CRANES IN THE BUSINES S OF RUNNING THEM ON HIRE. THE APPELLANT NOT BEING A FINANCE COM PANY HAS NOT ENTERED INTO A LEASE FINANCING TRANSACTION. WHAT IT HAS INDULGED IN IS OF ALLOWING THE USAGE OF THE CRANES OW NED BY IT TO VARIOUS PARTIES FOR A TEMPORARY PERIOD BY RETAI NING THE OWNERSHIP WITH ITSELF ON A FINANCIAL PAYMENT I.E. H IRE' CHARGES. THE PERIOD OF TEMPORARY USAGE ALLOWED TO THE PARTY ESTABLISHED THAT THE SAME WAS IN THE NATURE OF LEASE FINANCING TRANSACTION. THE AO I FIND HAS NOT DISCUSSED THIS I SSUE AT ALL IN THE ASSESSMENT ORDER. THE AGREEMENTS MADE WITH T HE PARTY THAT SHOWS THAT THE VEHICLES HAVE BEEN HIRED OUT TO THEM HAS NOT BEEN EXAMINED AFRESH BY THE AO BUT RELIANCE HAS BEEN PLACED ON THE OBSERVATION OF THE AO AS MADE IN THE ORIGINAL ASSESSMENT ORDER DATED 30/8/2006. IT IS ALSO SEEN TH AT THE AO HAS TRIED TO STRENGTHEN HIS ORDER BY HOLDING THAT THE CRANES CANNOT QUALIFY UNDER THE TERM MOTOR LORRIES. HOWEVER IT IS CLEAR FROM THE ORDER OF THE HON'BLE IT AT ON THE BA SIS OF WHICH THIS ASSESSMENT HAS BEEN MADE BY THE AO THAT THIS I SSUE WAS ALREADY SETTLED IN THE FAVOUR OF THE APPELLANT AND TH E AO WAS NOT AT THE LIBERTY TO IT AGAIN. WHAT THE AO WAS REQ UIRED TO DO WAS TO LOOK INTO THE AGREEMENTS AND CONTRACT AS TRAN SACTED BY THE APPELLANT WITH THE PERSONS TO WHOM THE CRANES H AD BEEN M/S HETAMPURIA IMPEX PVT. LTD. 6 GIVEN AND TO COME TO A CONCLUSION WHETHER THE SAID TRANSACTIONS COULD BE TERMED AS A FINANCE LEASE OR HI RE. THIS HAS NOT BEEN DONE BY THE AO. THE NATURE OF CONTRACT HAS NOT BEEN DISCUSSED. COMPLETE RELIANCE HAS BEEN PLACED ON THE FACT THAT THE AGREEMENTS ENTERED INTO IS FOR A PERIOD OF 5 YEARS AND THEREFORE CANNOT BE HIRE AGREEMENT. IT IS ALSO SEEN THAT THE AO HAS ALSO NOT DIFFERENTIATED BETWEEN A FINANCE LEASE AND OPERATING LEASE BEFORE ARRIVING AT A CONCLUSION THA T NO HIRING OUT OF CRANES HAS BEEN UNDERTAKEN BY THE APPELLANT. 4.8 FROM THE DETAILS SUBMITTED BY THE APPELLANT WHICH HAS BEEN DISCUSSED EARLIER ON IN THIS ORDER IT IS CLEAR THAT THE TRANSACTION ENTERED INTO BY THE APPELLANT WOULD QUALI FY AS HIRING OUT OF CRANES AND THEREFORE RESPECTFULLY RELY ING ON THE OBSERVATION AND DIRECTION OF THE HON'BLE TRIBUNAL AS GIVEN IN THEIR ORDER DATED 21/5/2010 IT IS HELD THAT THE APPELLANT IS TO BE ALLOWED DEPRECIATION @ 40% AS CLAIMED AS THE APPELLA NT IS ENGAGED IN THE BUSINESS OF LEASING OR HIRING OUT MOT OR-TRUCKS AND LORRIES AND IS ENTITLED TO CLAIM DEPRECIATION @ 40 % ON SUCH LEASED OUT VEHICLES. RELIANCE HERE IS PLACED ON THE C ASE OF AGARWAL FINANCE CO. (PVT.) LTD. 28 DTR 102 (CAL). UN DER THE CIRCUMSTANCES THE ACTION AND THE DISALLOWANCE MADE BY THE AO CANNOT BE UPHELD AND CONFIRMED. THE GROUND OF APPEAL AS RAISED BY THE APPELLANT IS THEREFORE ALLOWED. 5. THE NEXT GROUND OF APPEAL IS REGARDING THE LEVY OF INTEREST U/S 2348 BY THE AO. 5.1 THIS GROUND OF APPEAL BEING CONSEQUENTIAL IN NATUR E THE AO IS DIRECTED TO TAKE ACTION STRICTLY AS PER TH E PROVISIONS OF THE SAID SECTION. M/S HETAMPURIA IMPEX PVT. LTD. 7 6. APPEALS PARTLY ALLOWED. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R REASONING CONTAINED IN THE IMPUGNED ORDER MATERIAL AVAILABLE ON RECORD AND THE ASSERTION MADE BY THE L D. DR DURING HEARING IF KEPT IN JUXTAPOSITION AND ANALY SED WE FIND THAT THE ONLY GRIEVANCE OF THE REVENUE IS GRAN TING DEPRECIATION ON CRANES AT THE RATE OF 40% INSTEAD O F 25% WITHOUT APPRECIATING THE FACTS AND THE NATURE OF LE ASE. WE FIND THAT THERE IS UNCONTROVERTED FINDING BY THE LD . COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSES SEE USED THE CRANES FOR THE PURPOSES OF ITS BUSINESS. UNDI SPUTEDLY THE ASSESSEE WAS THE OWNER OF THE ASSET WHICH WERE USED FOR BUSINESS PURPOSES AND THIS FACTUM EVEN HAS BEEN ACC EPTED BY THE ASSESSING OFFICER. THE ASSESSEE IS NOT A FI NANCE COMPANY AND MERELY TEMPORARILY ALLOWED THE USE OF C RANES RETAINING THE OWNERSHIP WITH ITSELF ON HIGHER CHARG ES. THUS THE TEMPORARY USE TO OTHER PARTIES CANNOT BE SAID T O BE A LEASE TRANSACTION. ANOTHER REASON MENTIONED IN THE ASSESSMENT ORDER DENYING DEPRECIATION IS THAT CRAN ES DO NOT QUALIFY UNDER THE TERM LORRIES. THE ASSESSING OFFI CER HAS NOT BROUGHT ANY MATERIAL ON RECORD THAT THE ASSESSEE EN TERED INTO LEASE FINANCIAL TRANSACTION WITH ANY THIRD PAR TY. EVEN THE NATURE OF CONTRACT HAS NOT BEEN DISCUSSED. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ALREADY PL ACED RELIANCE UPON THE DECISION IN CIT V/S BPL SANYO FIN ANCE M/S HETAMPURIA IMPEX PVT. LTD. 8 PVT. LTD. (2006) 202 CTR (KAR) 480 BANSAL CREDITS LT.D 179 CTR (DEL.) 23 : 259 ITR 69 CIT VS SUIDO TRADE LINK S LTD. 189 CTR (DEL.) 41 AND CIT VS DD KHAITA 197 CTR (DEL) 19 6 WHEREIN IT WAS HELD THAT THE ASSESSEE IS ENTITLED TO A HIGHER RATE OF DEPRECIATION. IN AGRAWAL FINANCE COMPANY L TD. 28 DTR 102 (KOL) THE ASSESSEE WAS HELD TO ENTITLED D EPRECIATION AT THE RATE OF 40%. IN VIEW OF THESE FACTS AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE WE FIND NO INF IRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IT IS AFFIRMED. SINCE IDENTICAL ISSUE/FACTS ARE INVOLVED IN ALL THE APPEALS THEREFORE THESE ARE DI SMISSED. 3. FINALLY THE APPEALS OF THE REVENUE ARE DISMISSE D. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF HEARING ON 10/11/2014. SD/- SD/- D.KARUNAKARA RAO JOGINDER SINGH ACCOUNTANT MEMBER JU DICIAL MEMBER MUMBAI DATED -10/11/2014 SHEKHAR. PS. %2 %2 %2 %2 - -- - +/3 +/3 +/3 +/3 4%31/ 4%31/ 4%31/ 4%31/ / COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. + )* / THE RESPONDENT. 3. 5 ( ) / THE CIT(A)- 4. 5 / CIT 5. 3 6 +/( / DR ITAT MUMBAI 6. !7 8 / GUARD FILE. M/S HETAMPURIA IMPEX PVT. LTD. 9 %2( %2( %2( %2( / BY ORDER 3/ +/ //TRUE COPY// 9 99 9 / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI