M/S. HETAMPURIA IMPEX PVT. LTD, MUMBAI v. THE ACIT 6(3), MUMBAI

ITA 7690/MUM/2007 | 1999-2000
Pronouncement Date: 21-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 769019914 RSA 2007
Bench Mumbai
Appeal Number ITA 7690/MUM/2007
Duration Of Justice 2 year(s) 4 month(s) 20 day(s)
Appellant M/S. HETAMPURIA IMPEX PVT. LTD, MUMBAI
Respondent THE ACIT 6(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 21-05-2010
Date Of Final Hearing 25-02-2010
Next Hearing Date 25-02-2010
Assessment Year 1999-2000
Appeal Filed On 31-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H : MUMBAI BEFORE SHRI D. MANMOHAN HONBLE VICE PRESIDENT AND SHRI RAJENDRA SINGH ACCOUNTANT MEMBER ITA. NO. 7690 7691 AND 7692/MUM/2007 ASSESSMENT YEARS 1999-2000 2000-2001 & 2001-2002 M/S. HETAMPURIA IMPEX PVT. LTD. MUMBAI PAN AAACH-1382-F VS. ACIT 6 (3) MUMBAI. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI K. GOPAL FOR RESPONDENT : SHRI SANDEEP GOEL ORDER PER D. MANMOHAN V.P. 1. THESE APPEALS ARE FILED AT THE INSTANCE OF THE ASSESSEE- COMPANY AND THEY ARE DIRECTED AGAINST THE COMMON OR DER DATED 8/11/2007 PASSED BY THE CIT(A)-XXVI MUMBAI. SINCE ISSUES INVOLVED ARE COMMON WE PROCEED TO DISPOSE-OF THESE APPEALS BY A COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. AS COULD BE NOTICED FROM THE GROUNDS OF APPEAL THE ASSESSEE CHALLENGED THE VALIDITY OF RE-ASSESSMENT PROCEEDING S RATE OF DEPRECIATION ALLOWABLE ON CRANES AND CONSEQUENT LIABILITY TO PAY INTEREST UNDER SECTION 234B AND 234C OF THE ACT. IN THE ASSESSMENT YEARS 1999-2000 AND 2000-2001 INTEREST DISALLOWANCE OF RS.12 000/- AND RS.40 000/- RESPECTIVELY HAVING BEEN UPHELD BY THE LEARNED CIT (A) ASSESSEE OBJECTED TO THE DISALLOWANCE BY RAISING GROUND NO.4 IN THE GROUNDS OF APPEAL. HOWEVER AT THE TIME OF HEARING THESE APPEALS LEAR NED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE MERELY FOCUSED HIS SUBMISSIONS ON THE VALIDITY OF REOPENING OF THE ASSESSMENT AND RAT E OF DEPRECIATION 2 ALLOWABLE ON CRANES AND THUS IMPLIEDLY DID NOT PRE SS FOR CONSIDERATION OTHER ISSUES. 3. FACTS PERTAINING TO THE ISSUES CHALLENGED BEFOR E US ARE STATED IN BRIEF. ASSESSEE IS A DOMESTIC COMPANY ENG AGED IN THE BUSINESS OF HIRING LEASING AND FINANCING. DURING THE YEARS UNDER CONSIDERATION THE ASSESSEE-COMPANY PURCHASED CRANES WHICH WERE MO UNTED ON TRUCKS AND THEY WERE GIVEN ON LEASE TO VARIOUS PARTIES. AS PER THE ASSESSEE EACH CRANE IS AN INTEGRAL PART OF THE TRUCK AND THE SAID CRANES ALONG WITH THE TRUCKS WERE UTILIZED FOR THE TRANSPORTATION OF THE GOODS AND HENCE IT FALLS WITHIN THE DESCRIPTION OF MOTOR LORRIES USED IN A BUSINESS OF RUNNING THEM ON HIRE. THUS IT CLAIMED DEDUCTION TOWARDS DEPRECIATION @ 40% OF THE COST. 3.1. FOR THE ASSESSMENT YEARS 1999-2000 AND 2000-2 001 RETURNS OF INCOME WERE ORIGINALLY PROCESSED UNDER SECTION 1 43 (1) OF THE ACT ON 18-1-2000 AND 8-3-2002 RESPECTIVELY. THEREAFTER VI DE NOTICES DATED 30/3/2006 ISSUED UNDER SECTION 148 OF THE ACT ASS ESSING OFFICER REOPENED THE ASSESSMENTS ON THE GROUND THAT ASSESSE E CLAIMED HIGHER RATE OF DEPRECIATION BY CONSIDERING THE CRANES AS MOTOR VEHICLES WHICH CLAIM IS CONTRARY TO THE DECISION OF THE ITAT MUMB AI BENCH IN THE CASE OF M/S. SIDDHIVINAYAK CRANE SERVICES ITA.NO. 4653/M /2001 DATED 18/05/2005 AND HENCE ASSESSEE HAS NOT MADE TRUE AND FULL DISCLOSURE NECESSARY FOR ASSESSMENT AS A RESULT OF WHICH INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. SIMILARLY FOR THE ASSESSME NT YEAR 2001-2002 RETURN OF INCOME WAS ORIGINALLY PROCESSED UNDER SEC TION 143 (1) OF THE ACT ON 1-7-2002 AND THEREAFTER REGULAR ASSESSMENT W AS COMPLETED UNDER SECTION 143 (3) OF THE ACT ON 28-11-2003 BUT THEREA FTER ASSESSMENT WAS REOPENED BY ISSUING A NOTICE UNDER SECTION 148 DATE D 30-3-2006 ON THE GROUND THAT IN THE LIGHT OF DECISION OF THE ITAT IN THE CASE OF SIDDHIVINAYAK CRANE SERVICES (SUPRA) CLAIM OF DEPRE CIATION AT 40% IS 3 WRONG AND THE ASSESSEE CAN BE SAID TO HAVE NOT MADE TRUE AND FULL DISCLOSURE OF FACTS NECESSARY FOR ASSESSMENT. 3.2. IN RESPONSE THERETO ASSESSEE OBJECTED TO THE REOPENING OF ASSESSMENTS AND ON MERITS IT WAS CONTENDED THAT C LAIM OF DEPRECIATION AT 40% ON CRANES IS IN ACCORDANCE WITH LAW. 3.3. THE ASSESSING OFFICER WAS HOWEVER OF THE OPIN ION THAT IT SHOULD BE TREATED AS MACHINERY ELIGIBLE FOR DEPR ECIATION @ 25%. IN THIS REGARD ASSESSING OFFICER OBSERVED THAT : (A) CRANES ARE USED FOR HOISTING HEAVY WEIGHTS WHEREAS BUSES LORRIES OR TAXIES ARE PREDOMINANTLY USED FOR TRANSPORTATION OF THE GOODS AND PASSENGERS AND THUS A CRANE CANNOT BE EQUATED TO LORRY SO AS TO BE ELIGIB LE FOR HIGHER RATE OF DEPRECIATION. (B) PURPOSE OF A CRANE IS TO LIFT A HEAVY OBJECT IN A S PECIFIC PLACE OVER A VERY SHORT DISTANCE AND IF IT IS TREAT ED ON PAR WITH LORRY IT WOULD RESULT IN CONGRUITY OR ABSU RDITY AND THUS IT SHOULD BE TREATED AS PLANT AND MACHINERY ONLY. (C) BOARD CIRCULARS CONVEY THE FACT THAT HIGHER RATE OF DEPRECIATION IS ALLOWABLE ONLY WHEN LORRIES TAXIES ETC. ARE USED FOR TRANSPORTATION OF GOODS OR PASSENGERS AND NOT ON CRANES WHICH ARE MEANT TO LIFT THE OBJECTS A ND HENCE BY APPLYING FUNCTIONAL TEST IT CANNOT BE EQUATED TO A MACHINE USED FOR TRANSPORTATION. (D) IN THE CASE OF SIDDI VINAYAK CRANE SERVICES ITA. NO . 4653/MUM/2001 DATED 18-5-2005 THE ITAT MUMBAI BENCH OBSERVED THAT IN THE ABSENCE OF A DEFINITION OF THE EXPRESSION MOTOR LORRY DICTIONARIC MEANING OF THE EXPRESSION HAS TO BE CONSIDERED AND GOING BY THE 4 DICTIONARIC MEANING MOTOR LORRY MEANS A VEHICLE CARRYING PASSENGERS AND GOODS FROM ONE PLACE TO ANOTHER WHEREAS A CRANE MOUNTED ON A LORRY CANNOT BE CONSIDERED AS MOTOR LORRY GOING BY THE PRINCIPL E OF INTERPRETATION THAT A WORD IS KNOWN BY THE COMPANY IT KEEPS. IN OTHER WORDS THE EXPRESSION LORRY IS IN THE COMPANY OF THE WORDS BUSES OR TAXIES WHICH ARE USED FOR CARRYING PASSENGERS AND LORRY IS USED FO R CARRYING GOODS. THEREFORE IT SHOULD BE CONSIDERED THAT ANY VEHICLE USED FOR CARRYING PASSENGERS AND GOODS FALL UNDER THAT HEAD AND GOING BY SUCH INTERPRETATION CRANES CANNOT BE CONSIDERED AS MEANT FOR CARRYING GOODS. THE BENCH HAD ALSO TAKEN NOTE OF HONBLE MADRAS HIGH COURT DECISION IN THE CASE OF POPULAR SERVICES 194 ITR 12 WHEREIN IT WAS HELD THAT RIGS MOUNTED ON A LORRY CANNOT BE CONSIDERED AS A MOTOR LORRY FOR THE PURPOSE OF CLAIMING HIGHER DEPRECIATI ON. SIMILAR VIEW WAS TAKEN BY THE HONBLE RAJASTHAN HIG H COURT IN THE CASE OF BHULARAM 260 ITR 381. (E) MERELY BECAUSE A MACHINERY IS MOUNTED ON A LORRY IT DO NOT FORM AN INTEGRAL PART OF MOTOR LORRY SINCE MOUNTING ON A LORRY IS MERELY TO FACILITATE THEIR E ASY AND CONVENIENT TRANSPORT FROM ONE PLACE TO ANOTHER. THE HONBLE RAJASTHAN HIGH COURT HELD THAT THE DOMINANT OBJECT OF USER OF RIGS AND COMPRESSORS IS FOR DRILLING BORE-WELLS AND NOT FOR TRANSPORT AND HENCE ASSESSEE IS NOT ENTITLED TO A HIGHER RATE OF DEPREC IATION. 3.4. EVEN OTHERWISE THE ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE IS NOT ENTITLED TO HIGHER RATE OF DEPRECIA TION BECAUSE IT CANNOT BE CONSIDERED AS HIRE. IN THIS REGARD HE OBSERVE D AS UNDER : 5 EVEN OTHERWISE IT IS ALSO SEEN THAT THE ASSETS (S IC) HAS LET OUT THE CRANE ON HIRE FOR A CONSIDERABLE PERIOD OF TIME COVERING THE EFFECTIVE LIFE OF THE ASSET. A PERUSAL OF THE CRANE HIRING AGREEMENTS SIGNED BY THE ASSESSEE (WITH KHANDESHWAR MOTORS GOYAL TRADERS ISPAT TRADERS ET C. ) SHOW THAT THE AGREEMENTS ARE FOR A PERIOD OF 5 YEAR S WITH AN OPTION TO PURCHASE THE CRANE ON TERMINATION OF T HE AGREEMENT. IN THE CASE OF KOTAK MAHINDRA FINANCE LT D. (265 ITR 114) THE HONBLE BOMBAY HIGH COURT HAS HELD TH AT MERELY BECAUSE THE ASSESSEE LETS OUT MOTOR BUSES MOTOR TRUCKS AND MOTOR VANS TO ITS CUSTOMERS IT CANNOT B E STATED THAT THE ASSESSEE IS USING THE SAID VEHICLES IN THE BUSINESS OF RUNNING THEM ON HIRE. CONSEQUENTLY IN THE ABOV E CASE THE BOMBAY HC HELD THAT THE ASSESSEE WAS NOT ENTITL ED TO ADDITIONAL DEPRECIATION. THE FACTS OF THE CASE BEIN G SIMILAR TO THAT OF OUR ASSESSEE THE ASSESSEE IS HELD TO BE EN TITLED TO DEPRECIATION @ 25% ONLY. 4. AGGRIEVED ASSESSEE CONTENDED BEFORE THE FIRST APPELLATE AUTHORITY THAT ALL THE CONDITIONS REQUIRED FOR CLAI MING DEPRECIATION @ 40% ON THE TRUCKS MOUNTED WITH THE CRANES IS SATISF IED AND HENCE RESTRICTION OF THE CLAIM OF DEPRECIATION TO 25% IS NOT IN ACCORDANCE WITH LAW. 5. DURING THE COURSE OF HEARING IT WAS CONTENDED THAT CRANES WERE PURCHASED AND REGISTERED UNDER THE MOTOR VEHIC LES ACT AS HEAVY MOTOR VEHICLES AND HENCE ASSESSING OFFICER WAS NO T JUSTIFIED IN HOLDING THAT THE CRANES ARE NOT MOTOR VEHICLES. AS REGARDS THE DECISION IN THE CASE OF SIDDHIVINAYAK CRANE SERVICES (SUPRA) IT W AS CONTENDED THAT THE DECISION WAS RENDERED BY THE BENCH WITHOUT CONSIDER ING CERTAIN VITAL FACTS. IN OTHER WORDS IT WAS NOT BROUGHT TO THE N OTICE OF THE ITAT THAT 6 CRANES MOUNTED ON A LORRY ARE REGISTERED AS HEAVY M OTOR VEHICLES UNDER THE MOTOR VEHICLES ACT. IT WAS FURTHER SUBMITTED TH AT CRANES ARE USED FOR THE PURPOSE OF LIFTING AND MOVING GOODS AND FOR THA T PURPOSE THEY ARE FITTED ON A TRUCK SO AS TO HELP THE MAIN INGREDIENT OF MOBILITY. ACCORDING TO THE LEARNED COUNSEL DECISIONS OF THE HONBLE MAD RAS HIGH COURT AS WELL AS RAJASTHAN HIGH COURT (SUPRA) ARE DISTINGUIS HABLE INASMUCH AS THE DECISIONS WERE RENDERED WITH REFERENCE TO THE R IGS MOUNTED ON A TRUCK ; FUNCTION OF A RIG IS DIFFERENT FROM CRANE RIGS ARE NOT MEANT FOR TRANSPORTING THE GOODS FROM ONE PLACE TO ANOTHER WH EREAS CRANES ARE USED FOR MOVING THE GOODS FROM ONE PLACE TO ANOTHER THOUGH FOR A SHORT DISTANCE. HENCE A CRANE MOUNTED ON A LORRY IS A MOT OR VEHICLE. STRONG RELIANCE WAS PLACED UPON THE DECISION OF THE HONBL E GUJARAT HIGH COURT IN THE CASE OF GUJCO CARRIERS V. CIT (2000) 256 ITR 50 IN SUPPORT OF HIS CONTENTION THAT CRANES MOUNTED ON TRUCKS AND HIRED TO VARIOUS PARTIES ARE ELIGIBLE FOR DEPRECIATION AT 40%. 6. LEARNED CIT(A) OBSERVED THAT A WORD IS KNOWN BY THE COMPANY IT KEEPS AND BY APPLYING THE FUNCTIONAL TES T AS WELL AS THE SETTLED PRINCIPLE OF INTERPRETATION I.E. NOSCITUR A SOCIIS A VEHICLE USED FOR CARRYING PASSENGERS OR GOODS IS ELIGIBLE FOR HIGHER RATE OF DEPRECIATION IF THE VEHICLE IS GIVEN ON HIRE WHEREAS IN THE INSTAN T CASE CRANE IS NOT USED FOR CARRYING GOODS EXCEPT FOR LIFTING GOODS AN D THUS IT IS NOT ENTITLED FOR HIGHER RATE OF DEPRECIATION. WITHOUT PREJUDICE TO THE ABOVE HE ALSO AGREED WITH THE ASSESSING OFFICERS ALTERNATIVE CON CLUSION THAT THE ASSESSEE HAS NOT GIVEN CRANES ON HIRE BUT ENTERED I NTO AGREEMENTS FOR A PERIOD OF 5 YEARS WITH AN OPTION TO PURCHASE CRANE ON TERMINATION OF THE AGREEMENT {SEE 265 ITR 114 (BOM.)} AND THUS IT CAN NOT BE CONSIDERED AS USED ON HIRE. THEREFORE HE CONCLUDED ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION ONLY AT 25%. 7 7. IT MAY BE NOTICED THAT THE ASSESSEE HAS ALSO CH ALLENGED REOPENING OF ASSESSMENTS ON THE GROUND THAT IN RESP ECT OF FIRST TWO YEARS THE ASSESSING OFFICER IS NOT EMPOWERED TO REOPEN TH E ASSESSMENTS AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTI CE ISSUED UNDER SECTION 142 AND IT SHOULD ALSO BE SHOWN THAT THE AS SESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESS ARY FOR HIS ASSESSMENT. 8. LEARNED CIT(A) OBSERVED THAT IN SO FAR AS THE A SSESSMENT YEARS 1999-2000 AND 2000-2001 ARE CONCERNED RETURNS OF INCOME WERE MERELY PROCESSED UNDER SECTION 143 (1) OF THE ACT A ND IN THE ABSENCE OF REGULAR ASSESSMENT UNDER SECTION 143 (3) OF THE ACT THE CONTENTION THAT ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS IN THE RETURN AND HENCE REOPENING IS NOT PERMISSIBLE IS NOT APPLICAB LE. IF THE ASSESSING OFFICER ON THE BASIS OF MATERIAL AVAILABLE ON RECO RD OR OTHERWISE REACHES A CONCLUSION THAT INCOME HAD ESCAPED ASSESMENT REO PENING OF ASSESSMENT IS PERMISSIBLE. SINCE ASSESSING OFFICER HAD PROPERLY RECORDED THE REASONS AND CONVEYED TO THE ASSESSEE THE LEARN ED CIT(A) CONCLUDED THAT REOPENING OF ASSESSMENT IS IN ACCORDANCE WITH LAW. IN SO FAR AS ASSESSMENT YEAR 2001-2002 IS CONCERNED THOUGH A REG ULAR ASSESSMENT WAS MADE UNDER SECTION 143 (3) OF THE ACT IN VIEW OF DETAILED REASONS DISCUSSED IN THE ASSESSMENT ORDER IT CAN BE SAID TH AT ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT FOR ASSESSMENT YEAR 2001-2002. AT ANY RATE CLAIM OF EX CESS DEPRECIATION AMOUNTS TO CONCEALMENT OF INCOME AS PER EXPLANATION S 1 AND 2 OF SECTION 147 OF THE ACT AND THUS REOPENING FOR THE ASSESSMENT YEAR 2001- 2002 IS IN ACCORDANCE WITH LAW. 8 9. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) A SSESSEE- COMPANY IS IN APPEAL BEFORE US. LEARNED COUNSEL SUB MITTED THAT REOPENING OF ASSESSMENTS IS BAD IN LAW INASMUCH AS ALL THE FACTS ARE ON RECORD AND NO FRESH FACTS WERE GATHERED AT THE TIME OF RE-ASSESSMENT PROCEEDINGS. THEREFORE IT AMOUNTS TO CHANGE OF OPI NION WHICH IS NOT PERMISSIBLE IN LAW. 10. ON MERITS IT WAS SUBMITTED THAT CRANES WERE RE GISTERED AS HEAVY MOTOR VEHICLES WITH A CLEAR DESCRIPTION IN TH E REGISTRATION CERTIFICATE AS MOBILE CRANE. HE SUBMITTED THAT CR ANES WERE MAINLY USED TO MOVE THE GOODS FROM ONE PLACE TO THE OTHER MOS TLY IN THE DOCK FOR LOADING AND UNLOADING HEAVY AND OVER DIMENSIONAL MA TERIAL THOUGH FOR A SHORT DISTANCE AND UNDISPUTEDLY THEY ARE MOUNTED ON A LORRY AND REGISTERED AS MOBILE CRANES AND HENCE BY APPLYING THE FUNCTIONAL TEST IT HAS TO BE SAID TO HAVE BEEN USED FOR MOVING GOODS F ROM ONE PLACE TO OTHER AND IN SUCH AN EVENT OF THE MATTER UPON USI NG SUCH CRANES ON HIRE ASSESSEE IS ENTITLED TO HIGHER RATE OF DEPRECI ATION I.E. @ 40% OF THE COST. HE STRONGLY RELIED UPON THE DECISION OF THE H ONBLE GUJARAT HIGH COURT IN THE CASE OF GUJCO CARRIERS VS. CIT (SUPRA) TO SUBMIT THAT MOBILE CRANES WOULD FALL WITHIN THE EXPRESSION MOTOR LORR IES AND ENTITLED TO DEPRECIATION AS THAT ALLOWABLE TO MOTOR LORRIES. HE FURTHER SUBMITTED THAT THE AFORECITED DECISION WAS NOT BROUGHT TO THE NOTI CE OF THE ITAT MUMBAI BENCH IN THE CASE OF M/S. SIDDHIVINAYAK CRAN E SERVICES (SUPRA). LEARNED COUNSEL FILED PAPER BOOK CONSISTING OF 133 PAGES AND ADVERTED OUR ATTENTION TO THE WRITTEN SUBMISSIONS FILED BEFO RE THE CIT(A) WHEREIN IT WAS CONTENDED THAT ALL THE CASE LAW RELIED UPON BY THE ASSESSING OFFICER WERE DISTINGUISHABLE ON FACTS INASMUCH AS THEY WERE CONCERNED WITH RIGS WHICH ARE BASICALLY MEANT TO DIG BORE-WELLS AND IS NOT EXPECTED TO MOVE GOODS FROM ONE PLACE TO ANOTHER WHEREAS IN THE INS TANT CASE HEAVY OBJECTS ARE LIFTED AND SHIFTED FROM ONE PLACE TO OT HER WHICH AMOUNTS TO TRANSPORTING GOODS THOUGH FOR A SHORT DISTANCE AN D THUS THE CASE LAW 9 RELIED UPON BY THE ASSESSING OFFICER ARE DISTINGUIS HABLE ON FACTS. SIMILARLY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KOTAK MAHINDRA 265 ITR 114 (SUPRA) WAS WRONGLY APPL IED TO THE CASE ON HAND INASMUCH AS IT WAS NOT A LONG TERM LEASE WITH A RIGHT GIVEN TO THE LESSEE TO PURCHASE THE ASSETS. ADVERTING OUR ATTENT ION TO ONE SUCH AGREEMENT I.E. AGREEMENT WITH RELIANCE PETROL LIMI TED IT WAS SUBMITTED THAT ASSESSEE SUPPLIED CRANES ON HIRE ON A STIPULAT ED MONTHLY RENTAL SUBJECT TO UPPER LIMIT OF USE PER MONTH I.E. 260 H OURS. THE RESPONSIBILITY OF MAINTENANCE OF EQUIPMENT (CRANES) WAS PLACED UPO N THE ASSESSEE WHICH INDICATES THAT IT IS ONLY HIRING OF THE EQUIP MENT AND NOT A LEASE FINANCE TRANSACTION. LEARNED COUNSEL SUBMITTED THAT THE ASSESSING OFFICER AND THE CIT(A) HAVE WRONGLY ASSUMED THAT IT WAS A LEASE FINANCE TRANSACTION WITHOUT MATERIAL IN SUPPORT THEREOF. B Y PLACING RELIANCE UPON THE DECISION OF THE ITAT HYDERABAD BENCH IN T HE CASE OF ANSARI HOLDING AND INVESTMENT PVT. LTD. (2007) 12 SOT 438 (HYD.) (WHEREIN ONE OF US IS A PARTY) LEARNED COUNSEL SUBMITTED THAT ID ENTICAL ISSUE WAS CONSIDERED IN THE AFORECITED DECISION AND BY DISTIN GUISHING THE DECISION OF THE HONBLE MADRAS HIGH COURT ETC. THE BENCH FO LLOWED THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJCO CARRIERS VS. CIT (SUPRA) BY GIVING WEIGHTAGE TO THE FUNCTIONAL CONC EPT. THE OPERATIVE PORTION OF THE ORDER IS EXTRACTED FOR IMMEDIATE REF ERENCE. 11. THE DIFFERENCE BETWEEN THE INTERPRETATION OF THE AB OVE TWO COURTS LIES ON THE MEANING GIVEN TO THE WORDS INTEGRAL PART. THE HONBLE MADRAS HIGH COURT HAS CLEARLY HELD THAT RIGS AND COMPRESSOR DID NOT FORM INTEGRAL PART OF THE MOTOR LORRIES WHEREAS THE HON BLE GUJARAT HIGH COURT HAS HELD THAT THE CRANE WAS INTEGRAL PART OF THE MOTOR LORRY. THUS APPARENTLY THE CASE OF THE APPELLANT IS AKIN TO THAT OF THE CASE I N GUJCO CARRIERS (SUPRA) DECIDED BY THE HONBLE GUJAR AT 10 HIGH COURT. AS COULD BE SEEN FROM PARA 5 OF THE 263 ORDER PASSED BY THE LEARNED CIT THE FACT THAT THE CRANES WERE MOBILE CRANES MOUNTED ON MOTOR LORRIES AND REGISTERED UNDER THE VEHICLES REGISTRATION ACT AND THAT THE SAME WERE GIVEN ON HIRE TO CUSTOMERS ARE FACTS WHICH HAVE NOT BEEN DISPUTED BY THE LEARNED CIT. DEPRECIATION AT THE RATE OF 40 PER CENT WAS NO T ALLOTTED AS THE APPELLANT COULD NOT SUPPORT ITS CLA IM WITH ANY CASE LAW. AS THE HONBLE GUJARAT HIGH COURTS DECISION IN THE CASE OF GUJCO CARRIERS (SUP RA) IS DIRECTLY ON THE ISSUE AND AS THE REVENUE HAS FAI LED TO SHOW THAT ANY OTHER HIGH COURT HAS EXPRESSED A CONTRARY VIEW RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT SUPRA WE HOLD THAT THE APPELLANT IS ENTITLED TO DEPRECIATION AT THE RA TE OF 40 PER CENT ON THE MOBILE CRANES. THIS GROUND OF TH E APPELLANT IS ALLOWED. LEARNED COUNSEL THUS STRONGLY SUBMITTED THAT ASSESS EE IS ENTITLED TO DEPRECIATION @ 40% ON MOBILE CRANES. 11. ON THE OTHER HAND LEARNED DR SUBMITTED THAT RE OPENING OF ASSESSMENT IS IN ACCORDANCE WITH LAW AND IN THIS RE GARD RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F RAJESH ZAVERI 291 ITR 500 AND ALSO PLACED RELIANCE UPON PROVISOS AND EXPLANATIONS TO SECTION 147 OF THE ACT. HE SUBMITTED THAT IN SO FAR AS FIRST TWO YEARS ARE CONCERNED IN THE ABSENCE OF A SCRUTINY ASSESSMENT REOPENING IS PERMISSIBLE IF THE ASSESSING OFFICER HAS REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN RESPEC T OF ASSESSMENT YEAR 2001-2002 REOPENING WAS WITHIN 4 YEARS. THUS FOR BOTH THE YEARS THE ASSESSING OFFICER HAVING RECORDED REASONS AND REOPE NED THE ASSESSMENT 11 IN THE LIGHT OF DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF SIDDHIVINAYAK CRANE SERVICES (SUPRA) REOPENING OF ASSESSMENT IS IN ACCORDANCE WITH LAW. ON MERITS LEARNED DR STRONGLY RELIED UPON THE ORDERS PASSED BY THE ASSESSING OFFICER AS WELL AS T HE CIT(A). HE SUBMITTED THAT CRANES ARE BASICALLY MACHINES AND CA NNOT BE CONSIDERED AS MOTOR LORRIES. BY APPLYING THE PRINCIPLE OF NOSCITUR A SOCIIS AND ALSO BY APPLYING FUNCTIONAL TEST IT CANNOT BE CONSIDERED AS MOTOR LORRY BUT MERELY A MACHINERY. IN THIS REGARD HE ADVERTED OUR ATTENTION TO PAGES 114 AND 115 OF THE PAPER BOOK TO HIGHLIGHT THAT IT WAS CONSIDERED BY THE LESSOR AND LESSEE AS EQUIPMENT WHICH REQUIRED TR ANSPORT AND HIRE CHARGES WERE FIXED NOT WITH REFERENCE TO KILOMETERS RUN BUT NUMBER OF HOURS IT WORKED. AS COULD BE NOTICED FROM GENERAL T ERMS AND CONDITIONS WITH RELIANCE PETROLEUM LIMITED HIRE CHARGES PER MO NTH FOR ACTUAL WORKING OF 260 HOURS PER CRANE IS RS.1 50 000/- A ND FOLLOWING CONDITIONS ALSO INDICATE THAT CRANES ARE NOT MEANT TO TRANSPORT OF GOODS SINCE THEY ARE REQUIRED TO BE TRANSPORTED FROM ONE PLACE TO ANOTHER. 4. TRANSPORTATION OF EQUIPMENT (S) : YOU WILL MAKE NECESSARY TRANSPORT ARRANGEMENTS FOR TRANSPORTATION OF THE EQUIPMENT(S) TO OUR SITE MENTIONED ABOVE AND BACK TO YOUR SITE/WORKSHOP. YOUR EQUIPMENT SHOULD CLEARLY BEAR YOUR COMPANYS NAME. 5. PERIOD OF HIRE : PERIOD OF HIRE WILL BE FROM THE DAY THE EQUIPMENT I S ACCEPTED BY THE ENGINEER-IN-CHARGE TO THE DAY IT IS RELEASED FROM OUR SITE. 12 LEARNED DR HAS ALSO HIGHLIGHTED THAT IN NONE OF THE AGREEMENTS IT WAS MENTIONED AS MOBILE CRANE. HE THUS STRONGLY RELIED UPON THE ORDERS PASSED BY THE TAX AUTHORITIES. 12. JOINING THE ISSUE LEARNED COUNSEL SUBMITTED T HAT REGISTRATION CERTIFICATES WITH REGIONAL TRANSPORT A UTHORITY CLEARLY SHOW THAT THEY ARE MOBILE CRANES. HE ADVERTED OUR ATTE NTION TO PAGES 107 TO 113 WHEREIN IT WAS DESCRIBED AS MOBILE CRANES AND A PICTURE OF THE MOBILE CRANE WAS ALSO PRINTED ON THE LETTERS WHICH SHOWS THAT THEY WERE INTEGRAL PART OF THE TRUCK BEING MOUNTED ON THE TR UCK. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RECORD. WE SHALL FIRST TAKE UP THE ISSUE OF VALIDIT Y OF REOPENING OF ASSESSMENT. IT IS NOT IN DISPUTE THAT IN SO FAR AS FIRST TWO YEARS ARE CONCERNED RETURNS OF INCOME WERE MERELY PROCESSED UNDER SECTION 143 (1) OF THE ACT WITHOUT MAKING A DETAILED ENQUIRY AN D THUS IT CANNOT BE EQUATED TO AN ORDER OF ASSESSMENT. AS RIGHTLY OBSER VED BY THE APEX COURT IN THE CASE OF RAJESH ZHAVERI STOCK BROKERS (SUPRA) THE LEGISLATURE IN ITS WISDOM THOUGH IT FIT TO PROVIDE FOR CORRECTING THE ERRORS EMANATING FROM THE PROCESS OF RETURNS BY EMPOWERING THE ASSESSING OFFICER TO REOPEN SUCH CASES UNDER SECTION 147 OF T HE ACT BY INCORPORATING A DEEMING PROVISION WHEREBY IF AN INC OME CHARGEABLE TO TAX HAS BEEN UNDER-ASSESSED BY REASON OF ALLOWANCE OF EXCESSIVE DEPRECIATION IT WOULD BE TREATED AS DEEMED ESCAPEME NT OF INCOME. THE EXPRESSION REASON TO BELIEVE WAS ALSO CONSIDERED BY THE APEX COURT IN THE AFORECITED DECISION. THE COURT OBSERVED THAT WH AT IS REQUIRED BY THE ASSESSING OFFICER IS TO HAVE A REASONABLE JUSTIFICA TION TO REOPEN THE ASSESSMENT AND IT IS NOT NECESSARY FOR HIM TO ESTAB LISH THE FACT OF ESCAPEMENT OF INCOME AT THE STAGE OF ISSUANCE OF NO TICE. IN THE LIGHT OF DECISION OF THE ITAT MUMBAI BENCH THE ASSESSING O FFICER CAN BE SAID TO HAVE REASON TO BELIEVE THAT INCOME ASSESSABLE TO TA X HAS ESCAPED 13 ASSESSMENT BY VIRTUE OF EXCESSIVE CLAIM OF DEPRECIA TION AT 40% OF CLAIMS INSTEAD OF ELIGIBLE DEPRECIATION AT 25%. IN THE EVE NT OF REOPENING OF AN ASSESSMENT AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR THE SECOND CONDITION IS REQUIRED T O BE FULFILLED I.E. SUCH ESCAPEMENT OF INCOME SHOULD BE ON ACCOUNT OF FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT. IN THE INSTANT CASE THERE IS NO EVIDENC E ON RECORD TO SUGGEST THAT THE ASSESSEE HAS FURNISHED FULL PARTICULARS WI TH REGARD TO NATURE OF THE CLAIM AND THE TERMS OF AGREEMENT WITH REGARD TO HIRING OF THE EQUIPMENT. EVEN IN SCRUTINY PROCEEDINGS COMPLETED F OR THE ASSESSMENT YEAR 2001-2002 IT IS NOT THE CASE OF THE ASSESSEE T HAT THIS SPECIFIC ISSUE WAS CONSIDERED AND ALL THE FACTS CONCERNING THE CLA IM OF DEPRECIATION AT 40% ARE AVAILABLE ON RECORD. ASSESSEE MERELY FURNIS HED STATEMENT OF DEPRECIATION IN RESPECT OF ITS ASSETS WHEREIN DESCR IPTION OF THE IMPUGNED ASSET IS MENTIONED AS CRANE. THERE IS NO FURTHER EVIDENCE TO SHOW AS TO WHETHER THEY WERE CRANES MOUNTED ON THE LORRY OR WH ETHER THEY WERE GIVEN ON LEASE FINANCING BASIS AND IN SPECIFIC TH E NATURE OF USE OF THE CRANES WAS NOT MENTIONED. SUCH BEING THE CASE IN T HE LIGHT OF DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF M/S. SIDDHIVI NAYAK CRANE SERVICES (SUPRA) THE ASSESSING OFFICER WAS JUSTIFI ED IN REOPENING THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF T HE ACT. WE THEREFORE REJECT GROUND OF THE ASSESSEE WITH REGARD TO VALIDI TY OF REOPENING OF ASSESSMENT. 14. NOW WE PROCEED TO CONSIDER THE ISSUE OF ALLOWA BILITY OF DEPRECIATION AT 40% BY ANALYZING THE FACTS AND CIR CUMSTANCES OF THIS CASE. IT IS NOT IN DISPUTE THAT CRANES WERE REGISTE RED UNDER THE BOMBAY MOTOR VEHICLES ACT AS HEAVY MOTOR VEHICLES AND THE DESCRIPTION OF TYPE OF BODY WAS STATED TO BE MOBILE CRANES. ONE OF THE CONDITIONS OF REGISTRATION BY THE REGIONAL TRANSPORT AUTHORITY RE ADS AS UNDER : 14 THE VEHICLE SHALL BE USED ONLY IN DOCK AREA SOLELY FOR LOADING AND UNLOADING HEAVY AND OVER-DIMENSIONAL MATERIALS. 15. PHOTOGRAPHS OF THE MOBILE CRANES WERE PRINTED ON SEVERAL PAGES OF THE PAPER BOOK (PAGES 103 107 ETC. ) WHIC H SHOWS THAT MOBILE CRANES WERE FITTED ON A HUGE TRUCK WHICH RUNS ON IN FLATED TYRES. IT COULD THUS BE SEEN THAT THE CRANES WERE INTEGRAL PART OF THE LORRY AND IT CARRIES OUT THE FUNCTION OF MOVING THE GOODS FROM ONE END T O THE OTHER (THOUGH FOR A SHORTER DISTANCE) IN THE FORM OF LOADING AND UNLOADING HEAVY AND OVER-DIMENSIONAL MATERIALS. IT WAS ALSO MENTIONED I N THE ORDER PASSED BY THE REGIONAL TRANSPORT AUTHORITY (IMPOSED CONDITION S FOR REGISTRATION) THAT THE VEHICLE ON WHICH CRANES ARE FITTED CAN BE PLIED ON THE PUBLIC ROAD WITH THE PRIOR PERMISSION OF THE CONCERNED PWD AND POLICE AUTHORITIES. UNDER IDENTICAL CIRCUMSTANCES THE ITA T HYDERABAD BENCH HELD THAT A CRANE MOUNTED ON A LORRY SHOULD BE TREA TED AS MOTOR LORRY AND IN THE EVENT OF PLYING SUCH MOBILE CRANE ON HI RE DEPRECIATION IS ALLOWABLE @ 40%. IN THE CASE OF SIDDHIVINAYAK CRANE SERVICES (SUPRA) THE ITAT J BENCH MUMBAI HAD OMITTED TO TAKE INTO CO NSIDERATION THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF GUJCO CARRIERS (SUPRA) THOUGH THE SAID DECISION IS THE ONLY DECISI ON WHICH SQUARELY COVERS THE ISSUE ON HAND. THE BENCH HOWEVER TOOK NO TE OF OTHER DECISIONS DEALING WITH RIGS MOUNTED ON A LORRY WHER EIN THE DECISIONS WERE RENDERED IN THE CONTEXT OF THOSE FACTS. RIG MA CHINERY CANNOT BE SAID TO FULFILL THE CONDITIONS OF TRANSPORTING GOODS AND FOR THAT REASON ALONE HIGHER RATE OF DEPRECIATION IS NOT ELIGIBLE BY TREA TING IT AS MOTOR LORRY. HOWEVER IN THE CASE OF GUJCO CARRIERS (SUPRA) THE H ONBLE GUJARAT HIGH COURT HAS CONSIDERED THE ISSUE IN GREAT DETAIL AND CONCLUDED AS UNDER : 14. THUS A MOBILE CRANE MOUNTED ON A TRUCK CONSTI TUTES A SINGLE UNIT KNOWN AS A TRUCK CRANE WHICH IS ADAPTED FOR USE UPON ROADS FOR SPECIAL SERVICES. THE TRUCK ON WHICH THE CRANE IS MOUNTED IS CONSTRUCTED AND ADOPTED SPECIALLY TO CAR RY THE CRANE. 15 14.1. GOODS CARRIAGE AS DEFINED IN S. 2(14) OF TH E MOTOR VEHICLES ACT 1988 MEANS ANY MOTOR VEHICLE CONSTRUCTED OR AD APTED FOR USE SOLELY FOR THE CARRIAGE OF GOODS OR ANY MOTOR VEHI CLE NOT SO CONSTRUCTED OR ADAPTED WHEN USED FOR THE CARRIAGE O F GOODS. THIS DEFINITION IS NOT CONFINED ONLY TO CARRIAGE OF FREI GHT WHICH IS NARROWER THAN THE EXPRESSION CARRIAGE OF GOODS. I N THE INSTANT CASE TRUCK IS ADAPTED FOR USE SOLELY FOR CARRIAGE OF THE CRANE MOUNTED ON IT. THE MOUNTED CRANE IS ATTACHED TO THE TRUCK WHICH CARRIES IT. THE TEST OF CARRYING GOODS SUCH AS POTA TOES AND TOMATOES THAT REQUIRE LOADING AND UNLOADING IN CONT EXT OF CARRIAGE OF FREIGHT WHEN TRANSPORTED AS WAS SUGGESTED ON BE HALF OF THE REVENUE WILL NOT BE DECISIVE. UNLOADING IN THE CO NTEXT OF TRUCK CRANE WHERE THE CRANE REMAINS MOUNTED AND ATTACHED TO THE TRUCK WHEN CARRIED AND EVEN AT THE DESTINATION WHERE IT I S PUT TO USE IS NOT A RELEVANT FACTOR AT ALL. THOUGH NOT REQUIRED T O BE LOADED OR UNLOADED LIKE OTHER GOODS TRANSPORTED IN CARRIAGE O F FREIGHT THE CRANE REMAINS FIXED MOUNTED ON THE TRUCK WHICH HAS BEEN ADOPTED FOR USE SOLELY FOR ITS CARRIAGE AND SUCH TR UCK CRANE IS USED FOR SPECIAL SERVICE OF LIFTING AND MOVING HEAV Y OBJECTS. THIS IS WHY SUCH MOBILE CRANE IS REGISTERED AS A HEAVY MOTO R VEHICLE WHICH IS A HEAVY GOODS VEHICLE AS DEFINED IN S. 2(1 6) OF THE MOTOR VEHICLES ACT. 15. THE APPROACH OF THE TRIBUNAL AND THE AUTHORITIE S BELOW IT THAT CRANES ARE NOT MENTIONED SPECIFICALLY AS AN INDEPEN DENT ITEM FALLING IN THE CATEGORIES FOR WHICH HIGHER DEPRECIA TION ALLOWANCE AT THE RATE OF 40 PER CENT WHEN USED FOR HIRE AND AT 3 0 PER CENT WHEN NOT SO USED HAS BEEN PROVIDED AS AGAINST 10 PE R CENT OF MACHINERY IN GENERAL AND THEREFORE THEY SHOULD BE TREATED AS FALLING IN THE GENERAL CATEGORY OF MACHINERY IS AN OVER- SIMPLIFICATION OF THE MATTER. THE APPROACH OF THE T RIBUNAL THAT THE PLEA TAKEN BY THE ASSESSEE THAT CRANE WAS AN INTEGR AL PART OF THE MOTOR VEHICLE ON WHICH IT IS MOUNTED REQUIRED ASCER TAINMENT OF FACTS AND FRESH INVESTIGATION AMOUNTS TO IMPOSING A BURDEN ON A PERSON TO PROVE SOMETHING OF WHICH COURT OR TRIBUNA L CAN TAKE JUDICIAL NOTICE. FOR EXAMPLE IF A WITNESS DEPOSES THAT HE HAD SEEN A HORSE THE COURT NEED NOT INSIST UPON HIM FOR A P ROOF OF THE ANATOMY OF A HORSE AND CAN TAKE A JUDICIAL NOTICE O F HOUSE AS AN ANIMAL. THE COURTS AND TRIBUNALS ARE NOT REQUIRED T O ACT DUMB OR IGNORANT OF THE FACTS OF WHICH JUDICIAL NOTICE CAN BE TAKEN. THUS JUST AS A COURT CAN PRESUME WHAT A HORSE IS IT CAN AS WELL KNOW WHAT A CRANE IS AND ALSO THAT CRANE IS AN INTEGRAL PART OF A TRUCK- CRANE WHICH IS REGISTERED AS A HEAVY MOTOR VEHICLE. LACK OF EFFECT AND KNOWLEDGE SUFFICIENT FOR TAKING SUCH JUDICIAL N OTICE SHOULD NOT BE A BURDEN ON THE CITIZENS IN JUDICIAL PROCEEDINGS . AS PROVIDED BY S. 56 OF THE EVIDENCE ACT NO FACT OF WHICH THE COU RT WILL TAKE JUDICIAL NOTICE NEED BE PROVED. THIS EQUALLY APPLI ES TO THE TRIBUNALS WHICH ARE NOT IN FACT STRICTLY BOUND BY T HE RULES OF EVIDENCE. 16 16. THE MOBILE CRANE OF THE ASSESSEE WHICH ADMITTED LY WAS REGISTERED AS A HEAVY MOTOR VEHICLE WOULD FOR THE ABOVE REASONS CLEARLY FALL WITHIN THE EXPRESSION MOTOR LORRIES (WHICH MEANS MOTOR TRUCKS) IN ENTRY III E(1A) OF THE TABLE IN AP PENDIX I UNDER R. 5 OF THE SAID RULES SINCE IT WAS USED BY THE ASSES SEE IN ITS BUSINESS OF RUNNING THE CRANE ON HIRE. 16. IT IS WELL SETTLED THAT WHEN THERE IS A DIRECT DECISION OF A HIGHER FORUM AND IN THE ABSENCE OF ANY CONTRARY DEC ISION OF JURISDICTIONAL HIGH COURT ON THE SAME ISSUE THE DE CISION OF HONBLE GUJARAT HIGH COURT DESERVES TO BE FOLLOWED SINCE DE CISION TAKEN BY HONBLE GUJARAT HIGH COURT IN OUR OPINION IS REASO NABLE. EVEN OTHERWISE WHEN TWO REASONABLE VIEWS ARE POSSIBLE ONE WHICH IS IN FAVOUR OF THE ASSESSEE HAS TO BE FOLLOWED. IT IS ALSO NOT OUT OF PLACE TO MENTION THAT ITAT J BENCH MUMBAI IN THE CASE OF M/S. SIDDHIV INAYAK CRANE SERVICES (SUPRA) HAS NOT TAKEN NOTE OF THE IMPORTAN CE OF THE REGISTRATION UNDER THE MOTOR VEHICLES ACT AND THE DESCRIPTION OF THE MOBILE CRANES MENTIONED THEREIN. LEARNED DR SUBMITTED THAT AGREEM ENT BETWEEN THE ASSESSEE AND RELIANCE PETROLEUM LIMITED SPEAKS OF TRANSPORTATION OF EQUIPMENTS WHICH IMPLIES THAT IT IS NOT A TRANSPOR T VEHICLE BUT USED AS EQUIPMENT AND THE FACTUM OF PAYMENT OF HIRE CHARG ES IN TERMS OF NUMBER OF HOURS OF USE AND NOT WITH REFERENCE TO NU MBER OF KILOMETERS RUN WAS ALSO HIGHLIGHTED TO SUBMIT THAT MOBILE CRAN ES CANNOT BE EQUATED TO TRANSPORT VEHICLES. IN OUR OPINION LOOSE DESCRI PTION OF MOBILE CRANES AS EQUIPMENT - BROAD GENERIC TERM - SHOULD NOT BE CONSIDERED IN ISOLATION OVERLOOKING THE REGISTRATION GRANTED BY T HE TRANSPORT AUTHORITIES UNDER THE MOTOR VEHICLES ACT BY TREATING IT AS A M OBILE CRANE AND A HEAVY MOTOR VEHICLE. SINCE THE MOBILITY OF MOBILE CRANE IS LIMITED - AS THEIR MAIN OBJECT IS TO CARRY HEAVY-DIMENSIONAL ART ICLES FROM ONE END TO THE OTHER - FROM THE COMMERCIAL POINT OF VIEW HIRE CHARGES PAYABLE WERE AGREED WITH REFERENCE TO THE ACTUAL WORKING HOURS. IN OUR OPINION THIS CONDITION IN ITSELF CANNOT BE TAKEN IN ISOLATION TO HOLD THAT CRANES DO NOT 17 CARRY ON THE ACTIVITY OF CARRYING GOODS FROM ONE EN D TO THE OTHER OR THEY ARE NOT MOUNTED ON A LORRY AND THEY ARE NOT INTEGRA L PART OF THE LORRY. 17. THE NEXT QUESTION THAT ARISES FOR OUR CONSIDER ATION IS WHETHER LEASE FINANCING TRANSACTION WOULD AMOUNT TO USER OF THE ASSET ON HIRE ? ASSESSING OFFICER CATEGORICALLY OBSERVED THAT HE HAS PERUSED THE AGREEMENTS SIGNED BY THE ASSESSEE WITH KHANDESH WAR MOTORS GOYAL TRADERS ISPAT TRADERS ETC. WHEREIN CRANES WERE LE ASED OUT WITH AN OPTION TO PURCHASE THE CRANES ON TERMINATION OF THE AGREEMENT. THOUGH LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSE E FILED A COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND RELIANCE PETROLE UM LIMITED SPECIFIC AGREEMENTS SIGNED BY THE ASSESSEE WITH KHANDESHWAR MOTORS GOYAL TRADERS ISPAT TRADERS WERE NOT FURNISHED. IN THE L IGHT OF BINDING DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KOT AK MAHINDRA FINANCE LIMITED VS. DCIT (SUPRA) IN THE CASE OF LEA SE IT CANNOT BE EQUATED TO HIRE. HOWEVER PECULIARLY IN THE INSTANT CASE THE ASSESSING OFFICER ALLOWED DEPRECIATION AT 25% ON THE CRANES O WNED BY THE ASSESSEE BY TREATING THEM AS HAVING BEEN USED FOR THE PURPOS E OF BUSINESS. IN OTHER WORDS IF THE ASSESSING OFFICER COMES TO THE CONCLUSION THAT ASSESSEE HAD NOT USED THE CRANES FOR ITS BUSINESS D EPRECIATION CANNOT BE ALLOWED EVEN @ 25% AND THE FACTUM OF ALLOWANCE OF D EPRECIATION AT 25% IMPLIES THAT THE ASSESSING OFFICER AGREED USER OF T HE CRANES BY THE ASSESSEE BY GIVING A LICENSE TO THE HIRER TO USE TH E VEHICLES FOR A TEMPORARY PERIOD. THE HONBLE BOMBAY HIGH COURT HAV ING NOTICED SIMILAR FACTS IN THE CASE OF KOTAK MAHINDRA FINANCE LIMITED VS. DCIT (SUPRA) CLARIFIED AS UNDER : 4. WE DO NOT FIND ANY MERIT IN THIS APPEAL. THERE IS A BASIC DIFFERENCE BETWEEN 'LEASE' AND 'HIRE'. THIS DIFFERE NCE IS BORNE OUT BY THE BASIC DIFFERENCE IN THE MEANING OF THE EXPRE SSION 'PROPERTY' AND THE EXPRESSION 'POSSESSION'. A TRANSACTION OF H IRE IS ESSENTIALLY A CONTRACT OF BAILMENT OF A VEHICLE. IN THE CASE OF A HIRE ONLY A LICENCE IS GIVEN TO THE HIRER TO USE THE VEHICLE FO R A TEMPORARY PERIOD THE VEHICLE SO HIRED - MELLUISH (INSPECTOR OF TAXES ) VS. BMI (NO. 9) 18 LTD. (1996) 218 ITR 547 (HL). IN THE CASE OF HIRE THE HIRER HAS AN OPTION TO BUY THE EQUIPMENT WHICH IS ONE OF THE MA IN DISTINGUISHING FEATURE BETWEEN THE WORDS 'HIRE' AND 'LEASE'. HOWEV ER IT IS ARGUED ON BEHALF OF THE ASSESSEE THAT FOR THE PURPOSES OF THE ABOVE ENTRY THE WORD 'HIRE' AND THE WORD 'LEASE' SHOULD BE READ AS EQUIVALENT. WE DO NOT FIND ANY MERIT IN THIS ARGUMENT. THE ENTR Y READ AS A WHOLE STATES THAT THE ASSESSEE MUST RUN THE VEHICL E ON HIRE OR THAT THE ASSESSEE MUST CARRY ON THE BUSINESS OF RUNNING THE VEHICLES ON HIRE. IN THIS CASE THE ASSESSEE IS A LEASING AND F INANCING COMPANY. ITS INCOME IS FROM LEASE RENT BILL DISCOUNTING AND SERVICE CHARGES. THEREFORE MERELY BECAUSE THE ASSESSEE LETS OUT MO TOR BUSES MOTOR TRUCKS AND MOTOR VANS TO ITS CUSTOMERS IT CANNOT B E STATED THAT THE ASSESSEE IS USING THE SAID VEHICLES IN THE BUSINESS OF RUNNING THEM ON HIRE. IN THE CIRCUMSTANCES WE SEE NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE TRIBUNAL. 5. BEFORE CONCLUDING WE MAY CLARIFY THAT IN THIS C ASE THE ASSESSEE IS GIVEN THE BENEFIT OF NORMAL DEPRECIATION. THAT IN THIS CASE NORMAL DEPRECIATION HAS NOT BEEN DENIED BY THE DEPARTMENT. THAT THE DEPARTMENT HAS NOT IMPUGNED THE GENUINENESS OF THE LEASE. THAT THE ONLY ARGUMENT ADVANCED BEFORE THE DEPARTMENT WA S THAT THE WORD 'HIRE' IN THE ABOVE ENTRY WAS EQUIVALENT TO TH E WORD 'LEASE'. THEREFORE WE ARE CONFINING THE JUDGMENT ONLY TO TH E FACTS OF THIS CASE. THERE IS NO MERIT IN THE ARGUMENT THAT BECAUS E HIGHER DEPRECIATION WAS GRANTED BY THE DEPARTMENT FOR THE EARLIER YEARS THE DEPARTMENT WAS BOUND TO GRANT HIGHER DEPRECIATI ON FOR THE ASSESSMENT YEAR IN QUESTION. UNDER THE IT ACT EACH YEAR IS A SEPARATE EVENT OF ASSESSMENT. THAT THE PRINCIPLE O F RES JUDICATA IS NOT APPLICABLE. IN THE CIRCUMSTANCES WE DO NOT FIN D MERIT IN THIS ARGUMENT OF THE ASSESSEE. 18. IT CAN BE NOTICED FROM THE OBSERVATIONS OF THE HONBLE BOMBAY HIGH COURT THAT THE ISSUE AS TO WHETHER IT I S A HIRE OR LEASE HAS TO BE CONSIDERED WITH REFERENCE TO TERMS OF CONTRAC T AND IN THE EVENT OF TREATING IT AS A LEASE FOR A LONG TERM WITH AN OPTI ON TO BUY THE EQUIPMENT IT SHOULD NORMALLY BE TREATED AS A LEASE FINANCING TRANSACTION. IN THE INSTANT CASE THE LEARNED COUNSEL DID NOT CHOOSE TO FURNISH THE RELEVANT LEASE AGREEMENTS. UNDER THESE CIRCUMSTANCES WE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WHO IS DIRECTED T O RE-EXAMINE THE ISSUE IN THE LIGHT OF DECISION OF THE HONBLE BOMBAY HIGH CO URT CITED (SUPRA). NEEDLESS TO OBSERVE THAT IF IT IS SHOWN THAT THE AS SESSEE HAS GIVEN THE CRANES ON HIRE DEPRECIATION IS ALLOWABLE @ 40%. TH E ASSESSING OFFICER IS 19 DIRECTED TO EXAMINE THE ISSUE AFTER GIVING THE ASSE SSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 19. IN THE RESULT ALL THE APPEALS FILED BY THE AS SESSEE ARE TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 2 1 ST DAY OF MAY 2010. SD/- SD/- (RAJENDRA SINGH) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATED 21 ST MAY 2010 VBP/- COPY TO 1. M/S. HETAMPURIA IMPEX PVT. LTD. 102 VYAPAR BHAVAN 368/70 NARSI NATHA STREET MUMBAI-400 009. PAN AAACH-1382-F 2. AC IT 6 (3) MUMBAI. 3. CIT(A)-XXVI MUMBAI 4. CIT-VI MUMBAI 5. D.R. 'H' BENCH MUMBAI 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI.