ITO, New Delhi v. Shri Sarkar Nath Oberoi, New Delhi

ITA 4727/DEL/2012 | 2009-2010
Pronouncement Date: 29-04-2014 | Result: Dismissed

Appeal Details

RSA Number 472720114 RSA 2012
Assessee PAN APRIL2008T
Bench Delhi
Appeal Number ITA 4727/DEL/2012
Duration Of Justice 1 year(s) 7 month(s) 23 day(s)
Appellant ITO, New Delhi
Respondent Shri Sarkar Nath Oberoi, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 29-04-2014
Date Of Final Hearing 17-04-2014
Next Hearing Date 17-04-2014
Assessment Year 2009-2010
Appeal Filed On 05-09-2012
Judgment Text
ITA NO. 4727.DEL.12 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI G. D. AGRAWAL VICE PRESIDENT AND SMT DIVA SINGH JUDICIAL MEMBER I.T.A .NO.-4727/DEL/2012 (ASSESSMENT YEAR-2009-10) ITO WARD-38(3) ROOM NO. 176 C. R. BUILDING I. P. ESTATE NEW DELHI (APPELLANT) VS SARKAR NATH OBEROI PROP. B.N. OBEROI & SONS. K 935 5 OAK DRIVE DLF CHATTARPUR NEW DELHI AAFP05107P (RESPONDENT) APPELLANT BY: SH. GAGAN SOOD SR. DR RESPONDENT BY: SH. SANJEEV JAIN C.A ORDER PER DIVA SINGH JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER DATED 28/6/2012 OF CIT XXVIII NEW DELHI PERTAINING TO 2009-10 ASSESSM ENT YEAR ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) GROSSLY ERRED IN DELETING THE AD DITION MADE BY THE AO U/S 40A(IA) OF IT ACT ON THE GROUND THAT THERE WAS NO CONTRACT/ SUB-CONTRACT BETWEEN THE ASSESSEE AND THE PAYEES SO AS TO OBLIGE THE ASAESSE E TO DEDUCT TDS ON PAYMENTS MADE TO THE PAYEES. 2. THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE EXISTENCE OF A CONTRACT IS IMPLICIT ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE WHICH IS FURTHER FORTIFIED BY THE ACT OF THE ASSESSEE IN DEDUCTING T HE TDS ON PAYMENTS MADE TO THE PAYEES BUT DEFAULTED IN DEPOSIT OF THE SAME BEFORE THE SPECIFIED DUE DATE. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE DEDUCTED T DS DEPOSITED BEFORE DUE DATE OF FILING OF RETURN DID NOT ATTRACT THE DISALLOWANC E U/S 40A(IA) OF IT ACT IGNORING THE FACT THAT THE AMENDMENT OF THE SECTION TO THIS EFFECT CAME ON THE STATUTE FOR A.Y 2009-10 WITH PROSPECTIVE EFFECT. ITA NO. 4727.DEL.12 2 4. THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON AC COUNT OF EXCESS DEPRECIATION ON VEHICLES CLAIMED BY THE ASSESSEE SINCE THE LD. C IT(A) HAS NOT EXAMINED ANY EVIDENCE FILED BY THE ASSESSEE TO GIVE A FINDING T HAT THE ASSESSEE HAD BEEN PLYING ITS VEHICLES FOR HIRE ENTITLING THEM FOR CLAIM OF H IGHER DEPRECIATION AND HAS MERELY RELIED ON SUBMISSIONS OF THE ASSESSEE. 5. THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESS EE IN THE YEAR UNDER CONSIDERATION DECLARED AN INCOME OF RS.18 63 930/- WHICH WAS SEL ECTED FOR SCRUTINY AFTER ISSUANCE OF NOTICE U/S 143(2) ALONG WITH 142(1) WIT H QUESTIONNAIRE ETC. CONSEQUENT TO THIS THE ASSESSING OFFICER IN HIS ORD ER PASSED U/S 143(3) MADE AN ADDITION OF RS.32 98 804/-. THE AO CONSIDERING THE FACT THAT FROM THE PAYMENTS MADE TO SUB CONTRACTORS TDS WAS DEDUCTED BUT DEPOSI TED IN THE NEXT FINANCIAL YEAR DISALLOWED THE SAME RELYING ON THE PROVISIONS OF SE CTION 40(A)(IA). THE DETAILS OF THE PAYMENTS TO SUB-CONTRACTORS ON WHICH DISALLOWAN CE WAS MADE ARE AS UNDER:- S/NO. NAME OF THE SUB-CONTRACTOR PAYMENT MADE DUR ING APRIL 2008 TO FEBRUARY 2009 ON WHICH TDS DEPOSITED IN THE NEXT FY 1. M/S SHIV SHAKTI MINERALS 1254355 2. M/S PANNA TRANSPORT CO. 597826 3. M/S EAST INDIA MINERALS CO. LTD. 1100000 4. M/S MAHAKUD & BROTHERS 346623 TOTAL 3298804 2. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY T HE ASSESSEE ASSAILED THE ACTION OF THE AO ON VARIOUS COUNTS INCLUDING THE AR GUMENT THAT THE DISALLOWANCE U/S 40 (A)(IA)OF THE ACT COULD NOT BE MADE AS THE A MOUNT OF TDS WAS DULY DEPOSITED BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME . IT WAS ARGUED THAT THIS FACT HAD BEEN TAKEN NOTE OF BY THE ASSESSING O FFICER HIMSELF IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAD DEDUCTED AND DEPOSITED TDS FOR THE PERIOD APRIL 2008 TO FEBRUARY 2009 BEFORE DUE DATE OF FILING OF RETUR N U/S 139 91). RELIANCE WAS PLACED UPON CIT VS. VIRGIN CREATIONS (2011) (HC) (KOLKATA) AND ITA NO. 4727.DEL.12 3 PIYUSH C MEHTA VS. ACIT (2012) (ITAT MUMBAI) 3. CONSIDERING THE ARGUMENTS ADVANCED THE CIT(A) HE LD THAT SINCE THE AMOUNT OF TDS WAS DULY DEPOSITED BEFORE THE DUE DATE OF FI LING THE RETURN DISALLOWANCE U/S 40(A)(IA) COULD NOT BE MADE. APART FROM THAT H E ALSO HELD THAT THE PROVISIONS OF SECTION 194C (1) AND 194C(2) DO NOT APPLICABLE TO T HE FACTS OF THE CASE. 4. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFO RE THE TRIBUNAL THE LD. SR. DR PLACES RELIANCE UPON THE ASSESSMENT ORDER. THE A UTHORIZED REPRESENTATIVE OF THE ASSESSEE ON THE OTHER HAND PLACES RELIANCE ON THE I MPUGNED ORDER AND FURTHER RELIANCE ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NARESH KUMAR 262 CTR 389 (DELHI) (COPY FILED IN THE COURT). 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED T HE MATERIAL AVAILABLE ON RECORD ON A CONSIDERATION OF THE SAME AND TAKING NO TE OF THE FINDING OF FACT RECORDED BY THE AO THAT THE TDS DEDUCTED FOR THE PE RIOD APRIL 2008 TO FEBRUARY 2009 WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN U/S 139 (1) OF THE ACT WE FIND NO INFIRMITY IN THE IMPUGNED ORDER. IT IS SEEN THAT THE SAID VIEW IS SUPPORTED BY THE JUDGMENT OF THE JURISDICTIONAL HIG H COURT IN CIT VS. NARESH KUMAR (CITED SUPRA) WHICH HAS HELD THAT THE AMENDME NT MADE TO SECTION 40(A)(IA) BY THE FINANCE ACT 2010 SHOULD BE GIVEN RETROSPECTI VE EFFECT. THE ASSESSMENT YEAR TAKEN INTO CONSIDERATION BY THE SAID JUDGMENT IS Y 2008-09 A.Y AS SUCH THE SAID JUDGMENT SHALL APPLY ON EQUAL FORCE TO A.Y 2009-10 WHICH IS THE RELEVANT ASSESSMENT YEAR IN THE FACTS OF THE PRESENT CASE. ACCORDINGLY THE GRIEVANCE AGITATED BY THE REVENUE VIDE GROUND NO. 1 TO 3 IS R EJECTED AND THE IMPUGNED ORDER IS UPHELD. 6. THE NEXT ISSUE AGITATED BY THE REVENUE IS FOUND DISCUSSED BY THE ASSESSING OFFICER IN PARA 12 OF HIS ORDER AND FOR THE SAKE OF BREVITY THE SAME IS REPRODUCED FOR READY REFERENCE:- ITA NO. 4727.DEL.12 4 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS W HILE GOING THROUGH THE DETAILS OF FIXES ASSETS SCHEDULE IT WAS NOTICED THAT THE ASSE SSEE HAD CLAIMED DEPRECIATION ON TRUCKS @ 30% OF THE WDV AMOUNTING TO RS.2284973/- INSTEAD OF THE ALLOWABLE DEPRECIATION @15%. THE AR WAS DULY CONFRONTED ON T HE DISCREPANCY NOTICED AND ASKED TO EXPLAIN THE SAME SINCE NO INCOME FROM LETTING TH ESE TRUCKS ON HIRE WAS DECLARED. IN RESPONSE TO THE SAME IT WAS STATED VIDE LETTER DAT ED 27/12/2011 THAT THE ASSESSEES NATURE OF BUSINESS WAS CONTRACTOR OF TRANSPORTATION INCLUD ING LOADING & UNLOADING AS WELL AS MINING AND GENERATION OF REVENUE IS OF TWO LIMBS I .E. FIRST IS HIRING OF MACHINES AND SECOND IS HIRING OF LABOUR AND IN SUCH CASE CONTR ACT IS BASICALLY OF COMPOSITE NATURE. IT WAS ALSO SUBMITTED THAT THE APPLICABLE RATE OF DEPR ECATION ON TRUCKS WAS 30% AS PER RATES OF DEPRECIATION APPLICABLE FOR MOTOR BUSES M OTOR LORRIES AND MOTOR TAXIS USED IN A BUSINESS OF RUNNING THEM ON HIRE. HOWEVER IT IS S EEN FROM THE RECORDS THAT THE ASSESSEE HAS NOT DECLARED ANY INCOME FROM LETTING THE TRUCKS ON HIRE AND PRIMA-FACIE THE ASSESSEE HAS USED THESE TRUCKS OWNED BY HIM FOR HIS OWN BUSIENSS PURPOSE AND DID NOT LET THESE OUT ON HIRE WHEREBY IT WOULD HAVE EARNED INCOME FROM SUCH LETTING. AS SUCH THE TRUCKS OWNED BY THE ASSESSEE AND USED FOR HIS O WN BUSINESS PURPOSES AND WHICH WERE NOTE LET OUT ON HIRE ARE ENTITLED TO DEPRECIA TION @15% ONLY. ACCORDINGLY A SUM OF RS.1142486/- BEING THE EXCESSIVE DEPRECATION CLAIM ED ON TRUCKS WHICH WERE NOT LET OUT ON HIRE WILL BE DISALLOWED AS BUSINESS EXPENDITURE AFTER RESTRICTING THE DEPRECIATION CLAIM TO 15% OF THE WDV AND THE SAME WILL BE ADDED BACK TO THE INCOME OF THE ASSESSEE. 7. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE ASSAILED THE ACTION OF THE ASSESSING OFFICER CONTENDING THAT THE ASSESS ING OFFICER IN PARA 12 HAS TRIED TO OVERRIDE THE BASIC NATURE OF THE TRANSACTION AND CONSEQUENTLY DISALLOWED THE CLAIM FOR HIGH DEPRECIATION. IT WAS SUBMITTED THAT THE ASSESSEE HAS BEEN ENGAGED IN THE BUSINESS OF TRANSPORTATION WHICH INCLUDES LOADI NGS AS WELL AS UNLOADING OF IRON ORE MINERALS ETC. FROM THE MINES. IT WAS SUBMITTE D THAT THE ASSESSEE ENTERED INTO TRANSPORTATION CONTRACT WITH M/S EAST INDIA MINERAL S LTD. FOR TRANSPORTATION OF IRON ORE MINERALS ETC. FROM CRUSHER STOCKPILE TO RAILWA Y SIDINGS. ATTENTION WAS INVITED TO THE CORRESPONDENCE WITH EAST INDIA MINERALS LTD. IN REGARD THERETO ON THE BASIS OF THESE COPIES EMPHASIS WAS LAID ON THE FACT THAT THE PAYMENTS AGREED TO BETWEEN THE PARTIES ALSO CONSISTED OF HIRE CHARGES FOR TRAN SPORTATION OF MATERIAL FROM ONE PLACE TO ANOTHER. RELIANCE WAS PLACED UPON CIRCULA R NO. 652 DATED 14/6/1993 IN SUPPORT OF ITS CLAIM THAT HIGHER DEPRECATION WILL B E ADMISSIBLE ON MOTOR LORRIES USED IN THE ASSESSEES BUSINESS OF TRANSPORTATION O F GOODS ON HIRE. RELYING ON THE ITA NO. 4727.DEL.12 5 SAME IT WAS ARGUED THAT THERE IS NO BAR IF THE ASSE SSEE USED ITS OWN COMMERCIAL ASSETS IE. VEHICLE FOR BUSINESS PURPOSES KEEPING IN VIEW THE COMMERCIAL EXPEDIENCY. THE USE OF THE VEHICLES IT WAS CONTENDE D HAS RESULTED INTO SAVINGS IN REVENUE OUTGO WHICH WOULD HAVE BEEN DUE TO PAYMENT OF HIRE CHARGES TO OUTSIDERS. IT WAS ARGUED THAT THE ASSESSEE HAS BEEN ABLE TO SA VE AND INDIRECTLY EARN MORE PROFIT OUT OF THE USE OF ITS OWN ASSETS FOR TRANSPORTATION . RELIANCE WAS PLACED UPON THE FOLLOWING DECISIONS:- CIT VS. S. C. THAKUR & BROS. (2009) 18 DTR 271 (B OM) CIT VS. SHARMA MOTOR SERVICE 148 CTR 75 (HC) MP 7.1 RELYING UPON THE PRINCIPLE LAID DOWN IN THE CIR CULAR AS WELL AS THE JUDICIAL PRECEDENTS IT WAS SUBMITTED ADDRESSED THE LEGISLAT IVE INTENT TO ALLOW THE BENEFIT OF HIGHER DEPRECIATION TO THE PERSONS INVOLVED IN THE BUSINESS OF RUNNING MOTOR CARS MOTOR LORRIES ON HIRE AS WELL AS THOSE USING THEIR OWN VEHICLES FOR TRANSPORTING GOODS ON HIRE WHICH HAS BEEN DONE IN THE PRESENT CA SE. IT WAS SUBMITTED THAT THE ASSESSEE HAS USED ITS OWN TIPPERS FOR COMMERCIAL PU RPOSES AND THESE ARE REGISTERED AS HEAVY GOODS VEHICLE WITH THE REGISTERING AUTHORI TY SUPPORTED BY CERTIFICATES OF THE REGISTRATION AUTHORITY WHICH WAS PLACED ON RECO RD. IT WAS FURTHER ARGUED THAT THE ALLEGATION OF THE ASSESSING OFFICER THAT THE AS SESSEE HAS NOT DECLARED ANY INCOME FROM TRUCKS ON HIRE WAS TOTALLY UNJUSTIFIED AS THE INCOME EARNED FROM TRANSPORTATION OF GOODS ON HIRE STANDS INCLUDED IN THE BUSINESS INCOME OF THE ASSESSEE AS THE ASSESSEE HAS ENTERED INTO A COMPOSI TE CONTRACT AND HIRE CHARGES ARE DULY INCLUDED IN THE BUSINESS OF THE ASSESSEE. REL IANCE WAS ALSO PLACED ON DR. K. R JAYACHANDRAN 212 ITR 637 (KER) FOR THE FOLLOWING PROPOSITION:- PLYING OF THE AMBULANCE VAN ON HIRE ITSELF CONSTI TUTED THE BUSINESS OF THE ASSESSEE THOUGH IT MAY BE INCIDENTAL TO THE RUNNING OF THE HOSPITAL. THE HIRE CHARGES RECEIVED WERE ASSESSED UNDER THE HEAD BUSIN ESS. HENCE THE ASSESSEE IS ENTITLED TO DEPRECIATION AT THE RATE OF 40%. ITA NO. 4727.DEL.12 6 8. CONSIDERING THE EXPLANATION OFFERED THE CIT CAME TO THE FOLLOWING CONCLUSION:- I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT AS WELL AS THE CASE LAWS AND CIRCULAR RELIED UPON. THE CONTENTION THE ASSESSING OFFICER IS INCORRECT AS HE HAS NOT APPRECIATED THE FACTS OF THE CASE. PRINCIPLE LAID DOWN IN THE CIRCULAR AND JUDICIAL PRECEDENTS CLEARLY REITERATES INTENTION OF LEGISLAT URE TO ALLOW BENEFIT OF HIGHER DEPRECIATION TO THE PERSONS INVOLVED IN THE BUSINES S OF RUNNING MOTOR CARS MOTOR LORRIES ETC. ON HIRE AS WELL AS USING THESE VEHICLE FOR TRA NSPORTING GOODS ON HIRE. THE WORD HIRED USED BY STATUTE WAS ONLY TO INDICATE THAT S OME INCOME SHOULD BE RENDERED TO TAXATION BY UTILIZATION OF THOSE ASSETS IN FACT TIP PERS/TRUCKS WERE USED IN APPELLANTS BUSINESS OF TRANSPORTATION AND INCOME FROM SUCH ACT IVITY WAS DULY INCLUDED IN BUSINESS INCOME AS APPELLANT HAD ENTERED INTO A COMPOSITE C ONTRACT. THE TAX AUDITOR HAS DULY CERTIFIED DEPRECIATION CLAIM OF THE APPELLANT. THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING AN ADDITION OF RS.1142486/- HOLDING THAT THE DEPRECIATION SHOULD BE CHARGED @ 15% INSTEAD OF 30%. I THEREFORE DELETE THE ADDITI ON. APPEAL ON THIS GROUND IS ALLOWED. 9. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFO RE THE TRIBUNAL. THE LD. SR. DR PLACED RELIANCE UPON THE ASSESSMENT ORDER. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ON THE OTHER HAND PLACING RELIANCE UPON THE IMPUGNED ORDER AND THE SUBMISSIONS ADVANCED BEFORE THE BENCH PLACED FURTHE R RELIANCE ON CIRCULAR 652 RELIED UPON BEFORE THE CIT(A) ON THE BASIS OF WHICH IT WAS CONTENDED THAT THE ASSESSEE HAD ENTERED INTO A COMPOSITE CONTRACT WHER EIN IT WAS ALSO TASKED WITH TRANSPORTATION OF IRON ORE/MINERALS ETC FROM THE C RUSHER STOCKPILE TO THE RAILWAY SIDINGS . ACCORDINGLY PLACING RELIANCE UPON THE I MPUGNED ORDER IT WAS HIS SUBMISSION THAT THE DEPARTMENTAL APPEAL DESERVES TO BE DISMISSED. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE SAME WHEREIN THE FACTS ARE NOT IN DISPUTE IN AS MUCH AS THAT THE ASSESSEE ENTERED INTO A TRANSPORTATION CON TRACT WITH M/S EAST INDIA MINERALS LTD. FOR TRANSPORTATION OF IRON ORE ETC. F ROM CRUSHER STOCKPILE TO RAILWAY SIDINGS WHICH HAS NOT BEEN ASSAILED BY THE REVENUE BY WAY OF ANY ARGUMENT ON FACT OR ANY EVIDENCE LED TO SHOW THAT A FACT HAS BEEN WR ONGLY TAKEN INTO CONSIDERATION IN THE ABSENCE OF THE SAME WE ARE UNABLE TO COME T O A CONTRARY FINDING WHEREIN ADMITTEDLY THE COMMERCIAL HEAVY GOODS VEHICLES BELO NGING TO THE ASSESSEE HAVE ITA NO. 4727.DEL.12 7 BEEN USED FOR HIRE FOR TRANSPORTING THE GOODS FROM ONE PLACE TO THE OTHER . CONSIDERING THE CIRCULAR NO. 652 DATED 14/6/1993 AN D THE JUDICIAL PRECEDENT RELIED UPON BEFORE THE CIT(A) IN THE ABSENCE OF ANY CONTRA RY DECISION CITED BY THE REVENUE WE FIND NO GOOD REASON TO INTERFERE WITH TH E FINDING ARRIVED AT IN THE IMPUGNED ORDER. BEING SATISFIED BY THE REASONING A ND FINDING ARRIVED AT IN THE IMPUGNED ORDER. GROUND NO. 4 OF THE REVENUE IS DISM ISSED. 11. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH OF APRIL 2014. SD/- SD/- (G. D. AGRAWAL) (DIVA SINGH) VICE PRESIDENT J UDICIAL MEMBER DATED: 29/04/2014 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT RE GISTRAR ITAT NEW DELHI ITA NO. 4727.DEL.12 8