RMC SERVICES,MANIMAJRA vs. ITO, W-3(4), CHANDIGARH

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ITA 835/CHANDI/2019Status: DisposedITAT Chandigarh28 January 2020AY 2011-125 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the chassis is part of the vehicle and entitled to 40% depreciation, the concrete pump and other equipment fitted on the vehicle are not considered part of the vehicle itself. Therefore, depreciation on these items should be restricted to 15%.

What were the facts?

The assessee claimed depreciation at 40% on concrete pumps, equipment, and vehicles, considering them as heavy commercial vehicles. The Assessing Officer disallowed depreciation on concrete pumps and equipment at 40%, allowing only 15%, but allowed 40% on the chassis.

What were the issues?

The primary issue was the correct rate of depreciation allowable on concrete pumps and equipment fitted on commercial vehicles. The dispute also touched upon whether the AO's change of opinion warranted the assessment and initiation of penalty proceedings.

Which sections of the Income-tax Act were involved?

Section 32

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आदेश/Order

Per Sanjay Garg, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 24.04.2019 of the Commissioner of Income Tax (Appeals)- 1, Chandigarh [hereinafter referred to as ‘CIT (A)’].

2.

The assessee in this appeal has taken following grounds of appeal:-

1. The Ld. Assessing Officer's & Worthy CIT (A) order are contrary to law and facts of the case. -Chnd-2019 Shri RMC Services, Chandigarh 2

2. The Ld. Assessing Officer's & Worthy CIT (A) erred in adding back Rs. 59,25,797/- on account of excessive rate of depreciation claimed on concrete pumps, Equipment & Vehicle at the rate of 40% under provisions of section 32 of the Income Tax Act, 1961. However, the Vehicles were heavy commercial vehicles and registered with RTO as Heavy Commercial Vehicle under the Motor Vehicles Act. But, the Ld. A.O without Independent application of mind regarding the facts of the case and without relied on the decision of Hon'ble Punjab & Haryana High Court in the case of CIT-3 vs. Rakesh Jain and CIT vs. Punjab Leasing Pvt. Ltd. ignoring the real facts of the case passed the Impugned order which is unjustified and illegal and decided the matter against the assessee.

3.

The Ld A.O with the change of opinion on the rate of depreciation on after the original assessment has been framed under section 143(3) also not warranted thus the assessment order passed stand void ab initio.

4.

Initiation of penalty under section 271(1)(c) is also not warranted due to the fact that nothing has been concealed and the additions was only due/to the difference of opinion between Ld. A.O. and the assessee. Nothing was concealed to avoid any tax, so we pray that the very initiation of this penalty proceeding be order to be dropped.

5. The appellant craves leave to add to or amend the aforesaid grounds before disposal of the appeal.

A perusal of the above grounds of appeal reveal that the sole issue 3. raised by the assessee in this appeal is regarding the rate of depreciation on the vehicle allowable to by the assessee. The Assessing Officer observed that assessee had claimed depreciation on Concrete Pump and other equipment installed on the vehicle collectively at the rate of 40%, -Chnd-2019 Shri RMC Services, Chandigarh 3 whereas, the depreciation allowable on Concrete Pump and Boot Pump was 15%. Further, that assessee continuously had been claiming depreciation @ 15% on the Concrete Pump and Boot Pump in earlier years also. That this year the assessee had wrongly claimed the depreciation @ 40% as against allowable rate of 15%. However, the claim of the assessee has been that the Concrete Pump was fixed on the commercial vehicle and was part and parcel of the vehicle, hence, the assessee had claimed depreciation @ 40%, as is allowable on commercial vehicle. However, the Assessing Officer did not agree with the above contention of the assessee. The Assessing Officer also disallowed depreciation claimed @ 40% on ‘Chassis’ attached to the vehicle, whereupon, the Concrete Pump was fixed.

4. Being aggrieved by the above order of the Assessing Officer, the assessee preferred appeal before the Ld. CIT(A), however, remained unsuccessful.

5.

Before us, the Ld. Counsel has submitted that the assessee by fixing the equipment i.e Concrete Pump etc. has made it a mobile Concrete Pump vehicle, which is a requirement for the business of the assessee and that the assessee has rightly claimed the depreciation @ 40%. -Chnd-2019 Shri RMC Services, Chandigarh 4 6. On the other hand, the Ld. DR has relied on the findings of the lower authorities.

7.

We have heard the rival contentions of the Ld. Authorised Representatives of both the parties and have also gone through the record. We are of the view that the Concrete Pump etc. have been fitted by the assessee as per his own convenience but the same cannot be said to be a part of the commercial vehicle, whereas, the ‘Chassis’ fitted on the vehicle is a part and parcel of the vehicle. In view of the above, the claim of the assessee of depreciation @ 40% on Concrete Pump and other related equipment, has rightly been reduced / disallowed by the lower authorities and the same has rightly been allowed @ 15%.

However, so far as the ‘Chassis’ is concerned, since the same is part and parcel of the vehicle, the assessee is entitled to depreciation @ 40%.

We order accordingly. In the result, the appeal of the assessee stands partly allowed. Order pronounced in the Open Court on 30.01.2020

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