ACIT, New Delhi v. M/s J.J. Earthmovers Pvt. Ltd.,, New Delhi

ITA 3621/DEL/2011 | 2006-2007
Pronouncement Date: 21-09-2011 | Result: Dismissed

Appeal Details

RSA Number 362120114 RSA 2011
Assessee PAN AABCJ5300L
Bench Delhi
Appeal Number ITA 3621/DEL/2011
Duration Of Justice 2 month(s)
Appellant ACIT, New Delhi
Respondent M/s J.J. Earthmovers Pvt. Ltd.,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-09-2011
Assessment Year 2006-2007
Appeal Filed On 21-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D: NEW DELHI BEFORE SHRI C.L.SETHI JUDICIAL MEMBER AND SHRI A.N. PAHUJA ACCOUNTANT MEMBER I.T. A. NO.3621/DEL/2011 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX M/S. J.J. EARTH MOVERS PVT. LTD. CIRCLE 4(1) NEW DELHI. VS. SOUTH APARTMENT F F-5 SRI AURBINDO MARG NEW DELHI. PAN: AABCJ5300L (APPELLANT) (RESPONDENT) APPELLANT BY : MS. Y. KAKKAR DR. RESPONDENT BY : NONE. O R D E R PER C.L. SETHI JUDICIAL MEMBER: THE REVENUE IS IN APPEAL AGAINST THE COMMISSIONER O F INCOME-TAX (APPEALS)S ORDER DATED 17.05.2011 PASSED BY HIM IN THE MATTER OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SEC. 154 OF T HE INCOME-TAX ACT 1961 (THE ACT) DATED 31.01.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. THE MAIN EFFECTIVE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.32 32 571/- MADE ON ACCOUNT OF EXCES SIVE DEPRECIATION ON VOLVO FM-9. 2.1. THE LD. CIT(A) IGNORED THE FINDING RECORDED B Y THE AO AND THE FACT THAT THE VEHICLES IN QUESTION HAVE BEE N USED BY THE 2 ASSESSEE FOR ITS OWN BUSINESS AND ARE ENTITLED FOR DEPRECIATION @ 15% AND NOT 30% AS CLAIMED BY THE ASSESSEE. 3. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSED THE MATERIAL ON RECORD. 4. IN THIS CASE THE ASSESSEE FILED ITS RETURN OF I NCOME ON 11.11.2006 DECLARING TOTAL INCOME AT RS.46 78 318/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER AFTER HEARING THE ASSESSEE AN ASSE SSMENT ORDER UNDER SEC. 143(3) OF THE ACT WAS PASSED ON 18.12.2008 WHEREBY THE RETURNED INCOME OF RS.46 78 318/- WAS ACCEPTED BY THE AO. THEREAFTER THE AO HAD ISSUED A NOTICE UNDER SEC. 154/155 ON 27.07.2010 PROPOSING T O RECTIFY THE ASSESSMENT ORDER BY DISALLOWING DEPRECIATION TO THE EXTENT OF RS.32 32 571/- IN RESPECT OF VOLVO FM 9 TIPPER. THE ASSESSEE SUBMITTED ITS R EPLY DATED 10.05.2010 AND AFTER CONSIDERING THE ASSESSEES REPLY THE AO PASSED A RECTIFICATION ORDER UNDER SEC. 154 OF THE ACT DATED 31.01.2011 WHERE HE DISALLOWED DEPRECIATION AMOUNTING TO RS.32 31 571/- BY APPLYIN G RATE OF DEPRECIATION AT 15% AS AGAINST 30% CLAIMED IN THE RETURN. 5. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEANED CIT(A) WHO CANCELLED THE AOS ORDER PASSED UNDER S EC. 154 BY CONCLUDING AS UNDER:- 5.5 THE PERUSAL OF THE DEPRECIATION TABLE REPRODU CED ABOVE REVEALS THAT IN RESPECT OF COMMERCIAL VEHICLE S PURCHASED DURING THE ACCOUNTING YEAR RELEVANT TO ASSESSMENT Y EAR 2006- 3 07 NO SPECIAL RATE OF DEPRECIATION HAS BEEN PRESCR IBED THEREIN. THERE IS ALSO NO DISPUTE OVER THE FACT THAT THE ASS ESSEE COMPANY IS ENGAGED IN THE BUSINESS OF HIRING OF MACHINES (W HICH INCLUDE TIPPERS ALSO) TO WESTERN COAL FIELDS (WCL) A SUBSI DIARY OF COAL INDIA LTD. (CIL) AND IT HAS RECEIVED HIRING CH ARGES (WHICH HAS BEEN SHOWN AS TRANSPORTATION CHARGES IN THE PRO FIT AND LOSS ACCOUNT) TO THE EXTENT OF RS.8 58 87 323/- DURING T HE YEAR UNDER CONSIDERATION. THIS MEANS THAT THE TIPPERS WERE US ED BY THE ASSESSEE IN ITS BUSINESS OF RUNNING THEM ON HIRE. U NDER SUB- ITEM 3(II) OF ITEM III HIGHER RATE OF DEPRECIATION IS ADMISSIBLE ON MOTOR BUSES MOTOR LORRIES AND TRUCKS USED IN A BUSINESS OF RUNNING THEM ON HIRE. WHAT IS RELEVANT FOR CONSIDER ATION UNDER SUB-ITEM 3(II) OF ITEM III OF NEW APPENDIX I TO THE INCOME-TAX RULES 1962 IS WHETHER THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF HIRING OUT ITS MOTOR BUSES MOTOR LORRI ES AND TRUCKS. THE SUPPORTING EVIDENCES SUCH AS LETTER OF INTENT & AWARD OF WORK FOR THE HIRING OF HEMM TIPPERS DRILLS AND DO ZERS ETC. CLEARLY INDICATE THAT THE ASSESSEE WAS ENGAGED IN T HE BUSINESS OF HIRING OUT ITS TIPPERS AND THE TIPPERS WERE USED IN THE SAID BUSINESS. IN VIEW OF THE AFORESAID IT IS HELD THAT THE APPELLANT IS ENTITLED TO DEPRECIATION AT THE RATE OF 30% WHICH I S ADMISSIBLE ON MOTOR BUSES MOTOR LORRIES AND MOTOR TAXIS USED IN A BUSINESS OF RUNNING THEM ON HIRE. AS A RESULT GRO UNDS OF APPEAL NO.2 TO 6 ARE ALLOWED. 6. IN THIS CASE WE FIND THAT THE AO HAS REDUCED TH E RATE OF DEPRECIATION FROM 30% TO 15% ON VOLVO FM 9 TIPPER BY WAY OF RECT IFICATION ORDER PASSED UNDER SEC. 154 OF THE ACT. IT IS WELL SETTL ED THAT A MISTAKE WHICH IS APPARENT FROM RECORD CAN ONLY BE RECTIFIED BY WAY OF AN ORDER UNDER SEC. 154 OF THE ACT. THE QUESTION AS TO WHETHER VOLVO F M 9 TIPPER ARE CLASSIFIED UNDER THE ITEMS (MOTOR BUSES MOTOR LORR IES AND MOTOR TAXIS) USED IN A BUSINESS OF RUNNING THEM ON HIRE IN RESPECT O F WHICH DEPRECIATION @ 30% IS PRESCRIBED IN THE ACT IS A DEBATABLE AND CA N ONLY BE DECIDED AFTER A 4 DUE PROCESS OF REASONING IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE GIVEN CASE. IN THE PRESENT CASE THE ASSESSEE CLAI MED DEPRECIATION @ 30% AND IN THE ASSESSMENT ORDER U/S 143(3) THE ASSESSE ES CLAIM WAS ACCEPTED. THE AO HAS STATED IN THE ORDER UNDER SEC. 154 OF TH E ACT THAT SINCE THE ASSESSEE BEING A TRANSPORT CONTRACTOR WAS USING T HE VEHICLE FOR ITS OWN USE IT WOULD NOT BE ENTITLED TO THE HIGHER RATE OF DEPR ECIATION WHICH IS AVAILABLE TO THE CASES OF VEHICLES USED IN A BUSINESS OF RUN NING THEM ON HIRE. IN THE PRESENT CASE THE ASSESSEE COMPANY IS ENGAGED IN TH E BUSINESS OF TRANSPORTATION AND LOADING OF COAL AND ALLIED MATER IAL WITH WESTERN COAL FIELDS A SUBSIDIARY OF COAL INDIA LTD. THE TRANSP ORTATION WORK HAS BEEN DONE WITH THE HELP OF TIPPERS/TRUCKS ATTACHED WITH HYDRAULIC JACK. THE LD. CIT(A) HAS EXAMINED THE LETTER OF INTENT AND AWARD OF WORK FOR THE HIRING OF HEMM TIPPERS DRILLS AND DOZERS ETC. AND HAS COME TO A CONCLUSION THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF HIRING OUT ITS TIPPERS AND THE TIPPERS WERE USED IN THE SAID BUSINESS. IN THESE C IRCUMSTANCES THE QUESTION AS TO WHETHER THE ASSESSEE USED TIPPERS IN A BUSINE SS OF RUNNING THEM ON HIRE OR THE ASSESSEE USED THEM FOR ITS OWN USE IS A MAT TER OF DEBATE AND CAN ONLY BE DECIDED AFTER DUE PROCESS OF REASONING. THIS AS PECT OF THE MATTER CANNOT BY ANY STRETCH OF IMAGINATION BE CONSIDERED TO BE A MATTER COVERED BY EXPRESSION `MISTAKE APPARENT FROM RECORD. IN THIS VIEW OF THE MATTER WE 5 ARE THEREFORE OF THE CONSIDERED VIEW THAT THE ORD ER UNDER SEC. 154 OF THE ACT PASSED BY THE AO WAS BEYOND THE SCOPE AND AMB IT OF THE PROVISIONS CONTAINED IN SEC. 154 OF THE ACT AND IS LIABLE TO B E CANCELLED. WE THEREFORE CANCEL THE AOS ORDER PASSED UNDER SEC. 154 AND DIS MISS THIS APPEAL FILED BY THE REVENUE. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 8. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 21 ST SEPTEMBER 2011 IMMEDIATELY AFTER THE HEARING WAS OVER. SD/- SD/- (A.N. PAHUJA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH SEPTEMBER 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.