Shri A.Balakrishnan, Alappuzha v. DCIT, Alappuzha

ITA 582/COCH/2009 | 2006-2007
Pronouncement Date: 07-05-2010

Appeal Details

RSA Number 58221914 RSA 2009
Assessee PAN ABXPR4268B
Bench Cochin
Appeal Number ITA 582/COCH/2009
Duration Of Justice 4 month(s) 15 day(s)
Appellant Shri A.Balakrishnan, Alappuzha
Respondent DCIT, Alappuzha
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 07-05-2010
Date Of Final Hearing 30-03-2010
Next Hearing Date 30-03-2010
Assessment Year 2006-2007
Appeal Filed On 22-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE T RIBUNAL COCHIN BENCH COC HIN BEFORE S/SHRI N.VIJAYAKUMARAN JM AND SANJAY ARORA AM I.T.A. NO. 582 /COCH./2009 ASSESSMENT YEAR : 2006-07 SHRI A. BALAKRISHNAN M/S. SREELAKSHMI DISTRIBUTORS ALLEPPEY. [PAN: ABXPR 4268B] VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1 ALLEPPEY. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI R.SREENIVASAN CA REVENUE BY SHRI T.J.VINCENT DR O R D E R PER SANJAY ARORA AM : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV KOCHI (CIT(A) FOR SHORT) DATED 9.11.2009 AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2006-07. 2. THE APPEAL RAISES A SINGLE ISSUE AND TOWARD WHI CH IT WOULD BE IN ORDER TO ADVERT TO THE RELEVANT FACTS. THE ASSESSEES RETURN FOR THE YEAR STOOD PROCESSED U/S. 143(1) OF THE INCOME-TAX ACT 1961 (THE ACT HEREINAFTER) GRANTI NG DEPRECIATION ON MOTOR CAR AS CLAIMED I.E. AT THE RATE OF 50%. THE SAME STOOD CLAIMED BY THE ASSESSEE AS IN THE PAST I.E. A.Y. 2002-03 ONWARDS WITH IT CLAIMING ITS PU RCHASE ON 31/3/2002 AND OF IT CONSTITUTING THE LONE ASSET OF A SEPARATE BLOCK OF ASSETS ENTITLED TO THE CLAIM FOR DEPRECIATION ALLOWANCE U/S. 32(1) OF THE ACT AT A S EPARATE RATE IN ITS RESPECT SINCE. SUBSEQUENTLY A NOTICE U/S. 154(3) STOOD ISSUED BY THE ASSESSING OFFICER (AO) PROCEEDING TO DISALLOW DEPRECIATION TO THE EXTENT O F 35% AS THE INCOME TAX RULES 1962 (THE RULES HEREINAFTER) STOOD AMENDED WITH EFFECT FROM THE CURRENT YEAR PRESCRIBING THE RATE OF DEPRECIATION @ 15% ON MOTOR CARS. HE ACCOR DINGLY DISALLOWED THE ALLEGED EXCESS DEPRECIATION BY WORKING OUT THE ADMISSIBLE AMOUNT @ 15% OF THE OPENING WDV DISALLOWING THE BALANCE WHICH WORKED TO RS. 56737/ -. IN APPEAL THE SAME STOOD ITA. NO. 582/COCH./2009 2 CONFIRMED BY THE LD. CIT(A) ON THE BASIS THAT NO DE BATABLE ISSUE IS INVOLVED AS WITH EFFECT FROM THE CURRENT YEAR I.E. A.Y. 2006-07 T HE RELEVANT SCHEDULE (NEW APPENDIX I) U/R. 5 OF THE RULES STANDS AMENDED PROVIDING DEPREC IATION @ 15% ON ANY MOTOR CAR OTHER THAN THOSE USED IN THE BUSINESS OF RUNNING ON HIRE ACQUIRED AND PUT TO USE ON OR AFTER 1/4/1990. THAT BEING THE CASE THERE WAS AN APPARE NT ERROR IN THE PROCESSING OF THE ASSESSEES RETURN WHICH STOOD THEREFORE RECTIFIED B Y THE AO U/S. 154 OF THE ACT. AGGRIEVED THE ASSESSEE IS IN APPEAL. 3. BEFORE US THE ASSESSEES COUNSEL DRAWING OUR A TTENTION TO THE TABLE OF RATES UNDER RULE 5 OF THE RULES AS APPLICABLE FOR THE CU RRENT YEAR SUBMITTED THAT THE ASSESSEES ASSET I.E. MOTOR CAR FELL UNDER ENTRY III (3)(VI ) OF PART A (TANGIBLE ASSETS) OF THE TABLE. THE SAME IT WAS POINTED OUT PERTAINS TO A NEW COM MERCIAL VEHICLE ACQUIRED ON OR AFTER 1.4.2001 BUT BEFORE 1.4.2002 AND FURTHER PUT TO USE DURING THIS PERIOD AND FOR W HICH A RATE OF 50% STANDS PRESCRIBED. THERE HAS BEEN NO CH ANGE IN THE RATE APPLICABLE FOR THE SAID ASSET FROM THE EARLIER YEARS I.E. FROM AY 20 02-03 ONWARDS SO THAT THE ASSESSEE HAD BEEN CONTINUALLY CLAIMING AND BEING ALLOWED DEPRECI ATION ON ITS CAR A LIGHT COMMERCIAL VEHICLE COMPRISING THE RELEVANT BLOCK OF ASSET AT THE RATE OF 50%. FURTHER HE HAD SOLD THE SAID ASSET IN THE IMMEDIATELY SUCCEEDING YEAR RETURNING THE EXCESS OVER THE WRITTEN DOWN VALUE AS A SHORT TERM CAPITAL GAINS U/S. 50 OF THE ACT FOR THAT YEAR; THE SAID BLOCK CEASING TO EXIST. UNDER THE CIRCUMSTANCES THE DEPR ECIATION STOOD RIGHTLY CLAIMED AND ALLOWED. IN ANY CASE IF THE MATTER COULD BE SAID TO BE DEBATABLE I.E. TO SAY THAT TWO VIEWS ARE POSSIBLE THE SAME WOULD BE TAKE THE MATT ER OUTSIDE THE AMBIT OF SECTION 154 OF THE ACT AS OPINED BY THE TRIBUNAL IN THE REVENUES APPEAL IN THE CASE OF DY. CIT V . GAC SHIPPING (INDIA) (P.) LTD . (I.T.A NO. 728/COCH/08 DATED 15.9.2009) PLACING A COPY THEREOF ON RECORD. THE LD. DR ON THE OTHER HAND WOULD CONTEND THAT THE RATE OF 50% IS APPLICABLE ONLY FOR A.Y. 2002-03 AND NO FURTHER. IN REJOINDER IT WAS SUBMITTED BY THE LD. AR THAT THERE WAS NO QUESTION OF THE SAID ENTRY CO NTINUING TO BE A PART OF THE REVISED TABLE APPLICABLE FROM AY 2006-07 ONWARDS IF IT WA S SO. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. THE ASSESSEE IT IS NOT IN DISPUTE HAD BEEN CONTINUALLY CLAIMING AND A LSO BEING ALLOWED DEPRECIATION ON THE ITA. NO. 582/COCH./2009 3 RELEVANT BLOCK OF ASSETS COMPRISING A SINGLE CAR PURCHASED ON 31.3.2002 AT THE RATE OF 50% I.E. EVEN SUBSEQUENT TO AY 2002-03. AS SUCH THE QUESTION OF THE ASSESSEES CAR NOT BEING ELIGIBLE FOR FORMING PART OF THE RELEVANT BLO CK OF ASSETS DOES NOT ARISE. FURTHER THE SAID ASSET CONTINUES TO CONSTITUTE A SEPARATE ENTRY IN THE RELEVANT SCHEDULE U/R. 5 OF THE RULES PRESCRIBING THE RATES OF DEPRECIATION AS ELI GIBLE UNDER THE ACT FOR THE VARIOUS CLASSES OF DEPRECIABLE ASSETS. THE RATE FOR THE SAI D BLOCK OF ASSETS I.E. 50% IN FACT REMAINS UNCHANGED SINCE AY 2002-03 THE FIRST YEAR OF ITS OPERATION; IT COMPRISING ASSET(S) COMING INTO OWNERSHIP AND FIRST USER DURIN G THE RELEVANT PREVIOUS YEAR ONLY. THE DEPRECIATION RATE OF 15% WHICH STANDS REVISED FROM THE ERSTWHILE 20% IS IN RESPECT OF A DIFFERENT BLOCK OF ASSETS I.E. FALLING UNDER ENTR Y III (2) OF PART A. THERE IS NOTHING ON RECORD TO SHOW I.E. APART FROM ASSERTION THAT TH E ASSESSEES ASSET STANDS MISCLASSIFIED IN THE PAST AND ACTUALLY FALLS UNDER THE SAID ENTRY TO WHICH THE RATE OF 20% WAS APPLICABLE PRIOR TO THE CURRENT YEAR SO THAT THE PAST ALLOWAN CE FORMING PART OF THE RECORD BEING NOT IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF LAW WOULD NOT BE RELEVANT. WE THEREFORE FIND THE ASSESSEES CLAIM AS VALID. IT THEREFORE CANNOT BE DISTURBED IN THE LEAST U/S. 154 OF THE ACT WITH THE REVENUE FAILING TO PO INT OUT ANY MISTAKE THEREIN WITH REFERENCE TO THE MATERIAL ON RECORD. IT IS THIS TH AT PREVAILED WITH THE TRIBUNAL IN THE CASE OF GAC SHIPPING (INDIA) (P.) LTD . (SUPRA) AND THE ISSUE OF WHETHER THE RESPONDENT- ASSESSEES ASSET FELL WITHIN THE PURVIEW OF `NEW CO MMERCIAL VEHICLE CONSIDERED DEBATABLE AND THUS NOT LIABLE FOR ANY AMENDMENT B Y THE REVENUE U/S. 154 OF THE ACT. THE REVENUES ARGUMENT OF THE ASSESSEES CAR BEING ENTITLED TO THE ENHANCED DEPRECIATION RATE OF 50% ONLY FOR AY 2002-03 AND NO FURTHER IS SERIOUSLY FLAWED AS THERE IS AS NOTED EARLIER NO CHANGE IN THE PRESCRIBED DEPRECIATION R ATE IN RESPECT OF THE RELEVANT BLOCK OF ASSETS SINCE THAT YEAR. AS WOULD BE APPARENT THE R EFERENCE TO THE DATES (YEAR) IN ENTRY III(3)(VI) IS QUA THE ASSET(S) QUALIFYING FOR FORMING PART OF THE R ELEVANT BLOCK OF ASSETS AND NOT QUA THE DEPRECIATION RATE WHICH CONTINUES TO BE PRESC RIBED AT THE SAME RATE SINCE AY 2002-03 UNDER ENTRY III(3)(IID) (AY 2002-03) AND III(3)(VI) (AY 2003-04 ONWARDS). THAT THE RELEVANT ASSET STOOD SOLD IN THE SUCCEEDIN G YEAR WITH THE ASSESSEE RETURNING THE SALE PROCEEDS AS CAPITAL GAINS U/S. 50 OF THE ACT IS FIRSTLY NOT BORNE OUT BY THE RECORD AND SECONDLY NOT AT ALL RELEVANT TO THE ISSUE AT HAND EVEN AS IT IF SO REVEALS THE REVENUES WORKING AS INTERNALLY INCONSISTENT. SO HOWEVER THE SAME IS OF NO CONSEQUENCE IN VIEW OF ITA. NO. 582/COCH./2009 4 OUR FINDING OF THE ASSSSEES CLAIM BEING CONSISTENT WITH THE MATERIAL ON RECORD AND IN THE VERY LEAST NOT AMENABLE TO AMENDMENT U/S. 154. WE D ECIDE ACCORDINGLY. 5. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 07TH MAY 2010 GJ COPY TO: 1. SHRI A.BALAKRISHNAN M/S. SREELAKSHMI DISTRIBUTO RS ALLEPPEY. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1 ALLEPPEY. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV KOC HI. 4. THE COMMISSIONER OF INCOME-TAX KOTTAYAM. 5. D.R./I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. BY ORDER ( ASSISTANT REGISTRAR)