THE DCIT, MEHSANA Circle, Mehsana v. M/S. JIGAR TRANSPORT CO., Mehsana

ITA 351/AHD/2011 | 2007-2008
Pronouncement Date: 27-11-2014 | Result: Dismissed

Appeal Details

RSA Number 35120514 RSA 2011
Assessee PAN AADFJ8758K
Bench Ahmedabad
Appeal Number ITA 351/AHD/2011
Duration Of Justice 3 year(s) 9 month(s) 20 day(s)
Appellant THE DCIT, MEHSANA Circle, Mehsana
Respondent M/S. JIGAR TRANSPORT CO., Mehsana
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 27-11-2014
Date Of Final Hearing 12-11-2014
Next Hearing Date 12-11-2014
Assessment Year 2007-2008
Appeal Filed On 07-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI N. S. SAINI ACCOUNTANT MEMBER. ITA.NO.351/AHD/2011 (ASSESSMENT YEAR:2007-08) DCIT MEHSANA CIRCLE MEHSANA APPELLANT VS. JIGAR TRANSPORT COMPANY 10 GOVERDHAN PARK SOCIETY RADHANPUR ROAD MEHSANA RESPONDENT PAN: AADFJ8758K /BY APPELLANT : SHRI B. KULSHRESTHA SR. D.R. /BY RESPONDENT : SHRI TUSHAR P. HEMANI A.R. !'# /DATE OF HEARING : 12.11.2014 $%& !'# /DATE OF PRONOUNCEMENT : 27.11.2014 I.T.A. NO. 351/AHD/2011 A.Y. 2007-08 (DCIT VS. JIGAR TRANSPORT COMPANY) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) GAND HINAGAR DATED 30.11.2010 FOR A.Y. 2007-08 ON THE FOLLOWING GROUNDS: (1) THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AN D ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS.43 81 612/- CLAIMED AT HIGHER RATE I.E. 30% WHEN THE ASSESSEE IS ELIGIBLE FOR A NORMAL RATE OF DEPRECIATION I.E. @15% ONLY. (2) THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AN D ON FACTS IN HOLDING THAT CBDTS CIRCULARS NO. 609 AND 652 ARE APPLICABLE IN THE CASE OF THE ASSESSEE. 2. ASSESSEE IS A PARTNERSHIP FIRM DOING BUSINESS OF TRANSPORTATION OF VEHICLES HIRING TO ONGC AND OTHER CORPORATES AND ALSO DOING WORK OF MUNICIPAL CORPORATIONS. ASS ESSEE IS DOING THE WORK OF GARBAGE COLLECTION AND ITS DISPOS AL. ASSESSEE HAS SHOWN INCOME FROM THE WORK OF GARBAGE COLLECTIO N AND ITS DISPOSAL DONE AS PER TENDER DOCUMENTS ON THE BASIS OF KILOMETER CUM TONNAGE IN SOME CONTRACTS AND ON TONN AGE OF GARBAGE COLLECTED AND SHIFTED IN OTHER CONTRACTS. DURING COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER FELT THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON WDV OF VEH ICLES @ 30% (HIGHER RATE) AS AGAINST CORRECT AND ALLOWABLE DEPRECIATION @ 15%. HAVING CALLED FOR EXPLANATION IN THIS REGARD AND I.T.A. NO. 351/AHD/2011 A.Y. 2007-08 (DCIT VS. JIGAR TRANSPORT COMPANY) PAGE 3 CONSIDERING THE SAME ASSESSING OFFICER OBSERVED TH AT ASSESSEE IS ENGAGED IN BUSINESS OF DOOR TO DOOR COLLECTION O F GARBAGE AND ITS DISPOSAL AND UTILIZING VEHICLES IS INCIDENTAL T O THE EXECUTION OF CONTRACT AND CANNOT BE TERMED AS BUSINESS OF 'RU NNING THE VEHICLES ON HIRE' THE REASONS FOR WHICH HAD BEEN G IVEN IN PARA.6.2 OF ITS ORDER WHICH READS AS UNDER: 'IN VIEW OF THE ABOVE DISCUSSION IT IS HELD THAT T HE CONTRACT WITH VMC/SMC IS ESSENTIALLY A CONTRACT FOR COLLECTIO N OF GARBAGE AND ITS DISPOSAL NOT A CONTRACT IN THE NATU RE OF 'HIRING OF VEHICLES'. THE USE OF VEHICLES IN THE EXECUTION OF WORK IS INCIDENTAL AND THE SAME WERE USED BY THE AS SESSEE IN ITS OWN BUSINESS OF EXECUTION OF CONTRACT AND CA NNOT BE TREATED AS 'VEHICLES GIVEN ON HIRE'. HENCE THE ASS ESSEE IS ELIGIBLE FOR NORMAL RATE OF DEPRECIATION I.E. @ 15% ALLOWABLE IN CASE OF PLANT & MACHINERY INSTEAD OF CLAIM OF TH E ASSESSEE FOR HIGHER RATE @ 30%. HOWEVER IN CASE OF VEHICLES GIVEN ON HIRE TO ONGC THE CLAIM OF THE ASSESSEE @ 30% IS FOUND ACCEPTABLE HENCE ALLOWED. THE WORKING OF CORRECT AMOUNT OF DEPRECIATION ALLOWABLE TO THE ASSESSEE IS GIVEN IN ANNEXURE A WHICH IS PART OF THE ASSESSMENT ORDER. AS PER THIS WORKING CORRECT AMOUNT OF DEPRECIATION COMES TO RS.52 09 669/- AS AGAINST RS.95 91 281/- CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. HENCE THE EXCE SS CLAIM OF DEPRECIATION AMOUNTING TO RS.43 81 612/- IS DISA LLOWED AND ADDED TO THE TOTAL INCOME. ' ACCORDINGLY ADDITION OF RS.43 81 612/- WAS MADE. 3. MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHOR ITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) HAS GRANTED R ELIEF TO THE ASSESSEE AS PRAYED. SAME HAS BEEN OPPOSED BEFORE U S ON BEHALF OF REVENUE INTER ALIA SUBMITTING THAT CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION MADE ON ACCOUNT OF D ISALLOWANCE I.T.A. NO. 351/AHD/2011 A.Y. 2007-08 (DCIT VS. JIGAR TRANSPORT COMPANY) PAGE 4 OF DEPRECIATION AMOUNTING TO RS.43 81 612/- CLAIMED AT HIGHER RATE I.E. 30% WHEN ASSESSEE WAS ELIGIBLE FOR A NO RMAL RATE OF DEPRECIATION I.E. @ 15%. SO THE ORDER OF CIT(A) O N THE ISSUE GRANTING RELIEF TO THE ASSESSEE BE SET ASIDE TO THA T OF ASSESSING OFFICER ON THE ISSUE BE RESTORED. ON THE OTHER HAN D LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CI T(A) AND SUBMITTED THAT IN SUBSEQUENT YEARS ASSESSEE HAS BE EN GRANTED DEPRECIATION ON HIGHER RATE FOR SIMILAR VEHICLES. SO THE ORDER OF CIT(A) BE UPHELD. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD WE FIND THAT ASSESSING OFFICER HAS REJECTED THE CLAIM OF ASSESSEE FOR HIGHER DEPRECIATION MAINLY BECAUSE THE VEHICLES IN QUESTION WERE NOT HANDED OVER TO THE CLIENT BUT WER E USED BY ASSESSEE HIMSELF TO PROVIDE SERVICES INCLUDING COLL ECTION AND TRANSPORTATION AS PER CONTRACTS. THE BUSINESS OF RUNNING MOTOR VEHICLE ON HIRE INCLUDES BUSINESS OF TRANSPOR TATION ON HIRE WHERE BUSINESS CAN BE SAID TO BE SUBSTANTIALLY INCLUDE RECEIPTS FOR TRANSPORTATION OF GOODS OF THIRD PARTI ES. THE BUSINESS OF HIRE NOT ONLY INCLUDE CASES WHEN VEHICL ES OWNED BY ASSESSEE ARE HIRED OUT DIRECTLY BUT ALSO HAVE BEEN USED FOR BUSINESS OF TRANSPORTATION ON HIRE WHERE BUSINESS C AN BE SAID TO BE SUBSTANTIALLY INCLUDE RECEIPTS FOR TRANSPORTA TION OF GOODS OF THIRD PARTIES. IN ASSESSEES CASE SOME OF THE CONTRACTS THE PAYMENTS WERE DIRECTLY BASED ON KILOMETERS AND TONN AGE AND IN SOME ALLOTTED AFTER SURVEY OF THE AREA AND HOUSE S AND LANES FROM WHICH GARBAGE TO BE COLLECTED COMPOSITE PAYMEN T WAS I.T.A. NO. 351/AHD/2011 A.Y. 2007-08 (DCIT VS. JIGAR TRANSPORT COMPANY) PAGE 5 MADE FOR COLLECTION TRANSPORTATION AND DUMPING AT THE DESIRED DISTANT POINTS BY USING REQUIRED NUMBER OF VEHICLES OF REQUIRED TYPE. IT IS EVIDENT THAT GARBAGE DOES NOT BELONG TO ASSESSEE BUT TO CLIENTS AND THE RECEIPTS OF THE ASSESSEE INCLUDE VERY SUBSTANTIALLY THE CHARGES FOR TRANSPORTING THE GARB AGE FROM VARIOUS LOCATIONS TO COMMON POINTS AND THEREAFTER T O THE DUMPING POINTS. THIS IS THE BASIC BUSINESS OF ASSES SEE AND VEHICLES ARE BASICALLY USED FOR TRANSPORTATION OF G ARBAGE OF THE CLIENTS ONLY. THE TRUCKS WITH SPECIAL TYPE OF BODIE S WERE USED MAINLY FOR TRANSPORTING THE GARBAGE THROUGHOUT THE PERIOD. MOST OF THE TRUCKS WERE SO SPECIALLY DESIGNED THAT THESE COULD NOT HAVE BEEN USED FOR ANY OTHER PURPOSE. THE OWNER SHIP OF PARTICULAR NUMBER AND TYPE OF TRUCKS WAS THE BASIC REQUIREMENT OF THE CONTRACTS AWARDED WHICH SHOWS TH AT MAIN SERVICES REQUIRED BY THE CLIENTS WAS TRANSPORTATION OF ITS GARBAGE BY THESE VEHICLES. HONBLE BOMBAY HIGH COU RT IN CASE OF CIT VS. S. C. THAKUR AND BROS. (2010) 322 ITR 4 63 (BOM.) WHEREIN ASSESSEE WAS A CIVIL CONTRACTOR WHOSE RECEI PTS INCLUDED SUBSTANTIALLY CHARGES FOR TRANSPORTATION O F EARTH FROM ONE PLACE TO ANOTHER AND NOT HIRING THE TRUCKS DIRE CTLY HONBLE BOMBAY HIGH COURT HELD THAT IT IS ENTITLED TO DEPRE CIATION AT HIGHER RATES AS IT IS DOING BUSINESS OF TRANSPORTAT ION ON HIRE. THEREFORE IN VIEW OF ABOVE CIT(A) WAS JUSTIFIED I N HOLDING THAT ASSESSEE WHOSE RECEIPTS INCLUDED SUBSTANTIALLY CHAR GES FOR TRANSPORTATION OF GARBAGE FROM ONE POINT TO ANOTHER IS ENTITLED TO DEPRECIATION AT HIGHER RATES ON VEHICLES USED FO R THE PURPOSE OF THIS BUSINESS; AS IT IS DOING THE BUSINESS OF TR ANSPORTATION I.T.A. NO. 351/AHD/2011 A.Y. 2007-08 (DCIT VS. JIGAR TRANSPORT COMPANY) PAGE 6 ON HIRE. THEREFORE THE APPEAL OF THE ASSESSEE ON T HIS GROUND WAS RIGHTLY ALLOWED BY CIT(A). THIS REASONED FINDI NG OF CIT(A) WHEREBY CIT(A) HAS DELETED THE ADDITION MADE ON ACC OUNT OF DISALLOWANCE OF DEPRECIATION NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. AS A RESULT APPEAL FILED BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF NOVEMBER 2014. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R TRUE COPY S.K.SINHA ' ' ' ' !( !( !( !( )(&! )(&! )(&! )(&! / COPY OF ORDER FORWARDED TO:- 1. - / REVENUE 2. / ASSESSEE 3. 00! 1 / CONCERNED CIT 4. 1- / CIT (A) 5. (56 ! / DR ITAT AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER / ' =/ 0 ?