C.R. Satish (HUF), Tumkur v. ACIT, Tumkur

ITA 97/BANG/2011 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 9721114 RSA 2011
Assessee PAN AAAHC4029B
Bench Bangalore
Appeal Number ITA 97/BANG/2011
Duration Of Justice 1 year(s) 1 month(s) 27 day(s)
Appellant C.R. Satish (HUF), Tumkur
Respondent ACIT, Tumkur
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-03-2012
Date Of Final Hearing 28-03-2012
Next Hearing Date 28-03-2012
Assessment Year 2006-2007
Appeal Filed On 02-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N BARATHVAJA SANKAR VICE RESIDENT AND SMT. P MADHAVI DEVI JUDICIAL MEMBER ITA NO.97/BANG/ 2011 (ASST. YEAR - 2006-07) SHRI C.R SATISH (HUF) PROP. SATISH AGENCIES IST MAIN NEW MANDIPET TUMKUR. . . APPELLANT PAN NO. AAAHC4029 B. VS. THE COMMISSIONER OF INCOME-TAX CIRCLE-I TUMKUR. . RESPONDENT APPELLANT BY : SHRI S VENKATESAN C.A RESPONDENT BY : SHRI SARAVANAN B JCIT DATE OF HEARING : 28-03-2012 DATE OF PRONOUNCEMENT : 30-03-2012 O R D E R PER P MADHAVI DEVI JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) - III ITA NO.97/B/11 2 AT BANGALORE DATED 11.10.2010. THE APPEAL ARISES O UT OF THE ORDER U/S 154 OF THE INCOME-TAX ACT 1961. 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN CONFIRMING THE ORDER OF THE AO PASSED U/S 154 OF THE INCOME-TAX ACT. 3. AT THE OUTSET IT IS NOTICED THAT THE APPEAL IS B ARRED BY LIMITATION AS THERE IS A DELAY OF 01 DAY IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED PETITION FOR CONDONATION OF DELAY STATING THAT THE DELAY IS ON ACCOUNT OF ASSESSEE BEING OUT OF ST ATION. HAVING GONE THROUGH THE FACTS OF THE CASE WE ARE INCLINED TO C ONDONE THE DELAY OF 01 DAY IN FILING THE APPEAL BEFORE THE TRIBUNAL. 4. COMING TO THE FACTS OF THE CASE IT IS NOTICED T HAT THE ASSESSEE IS IN THE BUSINESS OF DEALERSHIP OF G.I PIPES. THE ASS ESSEE FILED ITS RETURN OF INCOME AND THAT THE ASSESSMENT WAS COMPETED U/S 143(3) ON 11.6.2008. THEREAFTER THE AUDIT PARTY OF THE DEPART MENT OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 30% ON ITS VEHICLES AS AGAINST THE ELIGIBLE PERCENTAGE OF 15% BECAUSE THE ASSESSEE WAS NOT IN THE BUSINESS OF HIRING OF THE VEHICLES. THE ASSESS ING OFFICER ITA NO.97/B/11 3 THEREAFTER ISSUED A NOTICE U/S 154 OF THE INCOME-TA X ACT TO RECTIFY THE SAME. THE ASSESSEE FILED ITS LETTER DATED 11.2.201 0 STATING THAT THE ASSESSEE ARRANGES FOR TRANSPORTATION OF GOODS FROM THE GODOWN TO THE CUSTOMER DOOR BY THE USE OF ITS VEHICLE AND THOUGH IT IS NOT CHARGING LORRY HIRE CHARGES SEPARATELY BUT IT IS INCLUDED IN THE PRICE OF THE GOODS WHICH PROVES THAT THE ASSESSEE IS IN THE BUSINESS O F HIRING OF THE VEHICLES. HE THEREFORE JUSTIFIED THE CLAIM OF DE PRECIATION ON THE VEHICLES @ 30% AND SOUGHT FOR DROPPING OF THE PROPO SED RECTIFICATION. THE AO WAS HOWEVER NOT SATISFIED BY THE EXPLANATION OF THE ASSESSEE AND HELD THAT 30% DEPRECIATION IS APPLICABLE ONLY W HEN THE VEHICLES ARE RUN ON HIRE WHEREAS THE ASSESSEE HAS USED THE V EHICLES FOR TRANSPORTATION OF ITS GOODS FROM THE GODOWN TO THE CUSTOMER DOOR ONLY AND NOT FOR RUNNING ON HIRE. 5. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A) STATING THAT THE CHARGES FOR TRANSPORTATION OF GOO DS TO THE DOOR STEP OF THE CUSTOMER ARE SEPARATELY CHARGED IN THE INVOICE UNDER THE HEAD LOADING AND FORWARDING CHARGES WHICH ARE IN FACT HIRE CHARGES RECEIVED AND FOR THE YEAR ENDING 31.3.2006 THE LOA DING AND FORWARDING CHARGES COLLECTED WERE RE.64 63 431/- AN D THEY WERE SHOWN IN THE PROFIT AND LOSS ACCOUNT. THUS ACCORDI NG TO HIM THE ITA NO.97/B/11 4 DEPRECIATION ON MOTOR LORRIES WERE CORRECTLY CLAIME D @ 30%. THE CIT(A) HOWEVER WAS NOT CONVINCED WITH THE EXPLANAT ION OF THE ASSESSEE AND HELD THAT IN THE PRESENT CASE THE MOT OR LORRIES WERE USED FOR TRANSPORTATION OF ASSESSEES GOODS TO THE CUSTO MERS DOOR AND ON FEW OCCASIONS FOR OTHER GOODS AND RECEIVED TRANSPOR TATION CHARGES AND NOT HIRE CHARGES AND THEREFORE THE ASSESSEE HAS NOT USED THE MOTOR LORRIES ON HIRE AND IS NOT ELIGIBLE FOR 30% DEPREC IATION. HE HELD THAT THE ASSESSEE IS ENTITLED FOR NORMAL DEPRECIATION I. E 15% OF THE COST OF THE LORRIES. HE ACCORDINGLY UPHELD THE DISALLOWANC E MADE BY THE AO. 6. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI S VEN KATESAN WHILE REITERATING THE SUBMISSIONS MADE BY THE AUTHORITIES BELOW SUBMITTED THAT U/S 154 OF THE INCOME-TAX ACT ONLY MISTAKES A PPARENT FROM RECORD CAN BE RECTIFIED AND NOT THE MISTAKES WHICH ARE DEBATABLE. HE SUBMITTED THAT WHETHER THE ASSESSEE WAS USING THE VEHICLES FOR HIRE PURPOSE OR WAS USING THE VEHICLE FOR ITS OWN PURPOS ES WAS A DEBATABLE ISSUE AND THEREFORE IT CANNOT BE RECTIFIED U/S 15 4 OF THE INCOME-TAX ACT. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD FU RNISHED THE DETAILS SUCH AS PROFIT AND LOSS ACCOUNT BEFORE THE ASSESSI NG AUTHORITY TO ITA NO.97/B/11 5 SUBSTANTIATE HIS CLAIM THAT THE TRANSPORTATION CHAR GES OR HIRE CHARGES ARE INCLUDED IN THE PRICES OF THE GOODS BUT BOTH TH E AO AS WELL AS THE CIT(A) HAVE FAILED TO CONSIDER THE SAME. HE HAS DR AWN OUR ATTENTION TO PAGES 2 AND 3 OF THE PAPER BOOK FILED BY HIM TO DEMONSTRATE THAT THE FREIGHT AND HIRE CHARGES HAVE BEEN QUOTED AS PART OF THE PRICE OF THE GOODS AND HAVE BEEN REFLECTED IN THE ASSESSEES BOOKS OF ACCOUNTS. HE FURTHER SUBMITTED THAT THE ASSESSING AUTHORITY S HOULD DISCOVER THE MISTAKE BY HIMSELF AND NOT ON THE BASIS OF AUDIT OB JECTION. THEREFORE ACCORDING TO HIM THE RECTIFICATION PROCEEDING INIT IATED ON AUDIT OBJECTION IS NOT MAINTAINABLE. 8. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT NO DOUBT THE M ISTAKE APPARENT FROM RECORD ONLY CAN BE CORRECTED U/S 154 OF THE IN COME-TAX ACT BUT IT IS NOT NECESSARY THAT THE MISTAKE SHOULD BE DISCOVE RED BY THE ASSESSING OFFICER HIMSELF. HE SUBMITTED THAT THE MI STAKE CAN BE BROUGHT TO THE NOTICE OF THE ASSESSING AUTHORITY BY THE ASSESSEE HIMSELF OR BY ANY OTHER SOURCE AND AS LONG AS IT IS A MISTA KE APPARENT FROM RECORD IT CAN BE CORRECTED U/S 154 OF THE INCOME-T AX ACT. HE SUBMITTED THAT WHEN THE FACT IS CLEAR THAT THE ASSE SSEE IS NOT IN THE BUSINESS OF HIRING OF VEHICLES THEN ALLOWING OF C LAIM OF DEPRECIATION ITA NO.97/B/11 6 @ 30% IS MISTAKE APPARENT FROM RECORD AND THEREFOR E AMENABLE TO JURISDICTION U/S 154 OF THE INCOME-TAX ACT. IN SUP PORT OF HIS CONTENTION HE PLACED RELIANCE UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ITO VS. ASOK TEXTILES LTD. REPORTED IN 41 ITR 732 WHEREIN SECS. 18A AND 35 OF 1922 ACT W ERE CONSIDERED AND IT WAS HELD THAT THE INCOME-TAX ACT OFFICER HAS POWER U/S 35 OF THE ACT TO EXAMINE THE RECORD AND IF HE DISCOVERS T HAT HE HAD MADE A MISTAKE HE COULD RECTIFY THE ERROR AND THE ERROR WH ICH CAN BE CORRECTED MIGHT BE AN ERROR OF FACT OR OF LAW. 9. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS WE FIND THAT THE ASSESSEES CLAIM OF D EPRECIATION ON A MOTOR LORRIES @ 30% WAS ALLOWED IN THE PROCEEDINGS U/S 143(3) OF HE INCOME-TAX ACT. THE AUDIT PARTY HAD RAISED AN OBJE CTION THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION @ 30% OF THE COST OF VEHICLES ONLY WHEN THOSE VEHICLES ARE USED IN A BUSINESS OF RUNNING THEM ON HIRE BUT AS THE ASSESSEE HAS NOT DERIVED OR DECLAR ED ANY INCOME FROM HIRING OF THE VEHICLES AS CAN BE SEEN FROM THE PROF IT AND LOSS ACCOUNT THE EXCESS CLAIM AND ALLOWANCES OF DEPRECIATION HAS RESULTED IN SHORT LEVY OF TAX. SUBSEQUENTLY THE AO HAS ISSUED A NOTI CE U/S 154 AND DISALLOWED THE EXCESS DEPRECIATION CLAIMED. ITA NO.97/B/11 7 10. NOW THE QUESTION BEFORE US IS WHETHER ALLOWING OF DEPRECIATION @ 30% ON ASSESSEES VEHICLES IS A MIST AKE APPARENT FROM RECORD OR IS IT A DEBATABLE ISSUE WHICH CANNOT BE R ECTIFIED U/S 154 OF THE I.T ACT. WHERE THE ISSUE WOULD BE OF SIMPLY CO RRECTING THE RATE OF DEPRECIATION WHEN THERE IS NO DISPUTE REGARDING THE NATURE OF SERVICES BEING RENDERED BY THE ASSESSEE THEN IT IS CLEARLY A MISTAKE APPARENT FROM RECORD WHICH IS AMENABLE TO JURISDICTION U/S 1 54 OF THE I.T ACT. AS FAR AS THE ISSUE OF THE RATE OF DEPRECIATION ON THE MOTOR VEHICLES IS CONCERNED WE FIND THAT AS PER THE DEPRECIATION TAB LE HIGHER RATE OF DEPRECIATION @ 30% IS ALLOWABLE ONLY ON MOTOR LORRI ES WHICH ARE USED IN A BUSINESS OF RUNNING THEM ON HIRE. IN THE CASE BEFORE US THE ASSESSEE IS USING THE VEHICLE FOR TRANSPORTING THE GOODS FROM HIS OWN BUSINESS PREMISES TO THE CUSTOMERS DOOR STEP AND TH E ASSESSEES CONTENTION IS THAT HE IS HIRING THE VEHICLE TO THE CUSTOMER FOR DELIVERY OF GOODS AND FOR OTHERS ALSO. WHETHER IT CAN BE SA ID THAT THE ASSESSEE IS IN THE BUSINESS OF HIRING OF VEHICLES? CONSIDERI NG THE CASE OF CIT VS. MANJEET STONE CO. REPORTED IN 190 ITR 183 (RAJ) WHERE THE TRUCKS WERE PRIMARILY USED FOR ASSESSEES OWN BUSI NESS AND NOT LET OUT ON HIRE IT WAS HELD THAT IT WILL NOT FALL UNDER TH IS ENTRY UNLESS THE ASSESSEE CARRIES ON THE BUSINESS OF RUNNING THEM ON HIRE. ITA NO.97/B/11 8 11. THE WORD HIRE USED IN THE DEPRECIATION TABL E IS ONLY MEANT TO DENOTE THAT THE USE OF VEHICLES IS NOT BY THE OW NER HIMSELF FOR HIS OWN PURPOSES BUT IT IS GIVEN TO ANOTHER FOR USE FO R A LIMITED PERIOD OF THAT OTHER FOR A CONSIDERATION AND FOR THIS PURPOS E THERE IS NO QUALITATIVE DIFFERENCE BETWEEN LEASE OF THE VEHICLE FOR A SPECIFIED PERIOD FOR CONSIDERATION AND LETTING THE VEHICLE ON HIRE FOR SHORT DURATION ON PAYMENT OF HIRE CHARGES AS HELD BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. MADAN AND CO. RE PORTED IN 254 ITR 445. IN THE CASE BEFORE US THE CLAIM OF THE A SSESSEE IS THAT THE ASSESSEE IS NOT USING THE VEHICLE FOR ITS OWN BUSIN ESS PURPOSES BUT IS HIRING THE VEHICLE TO THE CUSTOMER FOR THE SUPPLY O F GOODS PURCHASED BY THEM AND MERELY BECAUSE THE HIRE CHARGES ARE ALS O INCLUDED IN THE PRICE OF GOODS IT CANNOT BE SAID THAT THEY ARE NOT BEING COLLECTED. THE ASSESSEE HAD PRODUCED BEFORE US THE COPY OF THE PRO FIT AND LOSS ACCOUNT AND ALSO THE COPIES OF THE INVOICES WHEREIN HIRE CHARGES ARE BEING COLLECTED. THIS FACT HAS NOT BEEN CONSIDERED EITHER BY THE AO OR THE BY CIT(A). HENCE IT CAN BE SEEN THAT IT IS N OT A SIMPLE CASE OF CORRECTION/RECTIFICATION OF THE RATE OF DEPRECIATIO N BUT IT IS A CASE WHERE IN THE PROCEEDINGS U/S 154 OF THE I.T ACT TH E AO ALSO HAS TO DECIDE THE NATURE OF USE OF MOTOR LORRIES BY THE AS SESSEE WHETHER IT IS FOR OWN USE OR IT IS FOR HIRE PURPOSES. WHEN ALL T HESE DETAILS HAVE TO ITA NO.97/B/11 9 BE LOOKED INTO AND VERIFIED IT IS CLEARLY A DEBATA BLE ISSUE AND NOT SIMPLE RECTIFICATION AS BEING PORTRAYED BY THE REVE NUE. A DEBATABLE ISSUE CANNOT BE RECTIFIED U/S 154 OF THE I.T ACT. IN THE RESULT WE SET ASIDE THE PROCEEDINGS OF THE AO U/S 154 OF THE I.T ACT. ASSESSEES APPEAL IS ACCORDINGLY ALLOWED ON THE PRELIMINARY I SSUE ITSELF AND THEREFORE WE DO NOT SEE ANY REASON TO ADJUDICATE T HE ISSUE ON MERITS. 12. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH MAR 2012. SD/- SD/- (N BARATHVAJA SANKAR) (P MADHAVI DEVI ) VICE PRESIDENT JUDICIAL MEMBER VMS. BANGALORE DATED : /03/2012 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR I TAT BANGALORE.