M/S. NABROS TRANSPORT PVT. LTD.,AHMEDABAD vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), AHMEDABAD

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ITA 2847/AHD/2017Status: DisposedITAT Ahmedabad28 May 2019AY 2011-125 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CBDT notification allowed depreciation at 50% on new commercial vehicles acquired within the stipulated period. The AO's restriction of the higher depreciation to only the first year was contrary to the notification.

What were the facts?

The assessee claimed 50% depreciation on commercial vehicles purchased in FY 2009-10, having already claimed it in AY 2010-11. The AO disallowed the depreciation for AY 2011-12, stating the accelerated rate was only for one year.

What were the issues?

Whether the accelerated depreciation rate of 50% on new commercial vehicles is applicable for subsequent assessment years beyond the first year of acquisition, as per CBDT notifications.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 43(6)(c),Section 295

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI PRADIP KUMAR KEDIA

For Appellant: DR यथ क ओर से /

PER PRADIP KUMAR KEDIA - AM:

The captioned appeal has been filed at the instance of the assessee against the order of the CIT(A)-7, Ahmedabad (‘CIT(A))’ in short), dated 08.09.2017 arising in the assessment order dated 24.11.2016 passed by the Assessing Officer (AO) under s. 143(3) r.w.s 147 of the Income Tax Act, 1961 (the Act) concerning A.Y. 2011-12.

ITA No.2847/Ahd/2017 [M/s. Nabros Transport Pvt. Ltd. vs. DC IT] A.Y. 2011-12 - 2 - 2. The solitary issue in the present appeal is towards disallowance

of depreciation amounting to Rs. 38,07,910/-.

3.

The assessee is a private limited company carrying on business

of transportation services. The return filed by the assessee for A.Y.

2011-12 was reopened and subjected to scrutiny assessment. The AO inter alia noticed that assessee has claimed depreciation of Rs.

54,39,870/- @ 50% on written down value of Rs. 1,08,79,739/- on

vehicles categorized under plant and machinery. It was further

noticed by the AO that the vehicles in question were purchased in

earlier F.Y. 2009-10 on which assessee has already claimed

depreciation @ 50% in A.Y. 2010-11. The assessee has continued to

claim depreciation @ 50% in the impugned assessment order 2011-12

as well on the remaining WDV. In an explanation called for towards

the accelerated depreciation claimed @ 50%, the assessee relied upon

a Notification No. 37/2009/F. No. 142/01/2009-TPL read with

Notification No. 10/2009 dated 19.01.2009 whereby the CBDT has

amended the Table to the New Appendix-I prescribing the rates at

which depreciation is admissible. As per the aforesaid notifications,

new commercial vehicle which is acquired on or after 01.01.2009 but

before 01.10.2009 and is put to use before 01.10.2009 for the purposes

of business or profession will get 50% depreciation. The assessee thus

claimed depreciation at higher rate on acquisitions of commercial

vehicles during the window period. However, the AO did not find the

enhance claim of depreciation @ 50% valid for the subsequent A.Y.

ITA No.2847/Ahd/2017 [M/s. Nabros Transport Pvt. Ltd. vs. DC IT] A.Y. 2011-12 - 3 - 2011-12 presently in question. The AO observed that the enhanced

depreciation was valid for only one year i.e. preceding assessment

order 2010-11 only on the ground that no separate block for claiming

depreciation @ 50% has been inserted in this regard. The AO

accordingly adopted normal rate of depreciation @ 15% and

consequently disallowed excess depreciation to the tune of Rs.

38,07,910/- and added the same to the total income of the assessee.

4.

The first appeal of the assessee before the CIT(A) against the

aforesaid action of the AO also went without success.

5.

Further aggrieved, the assessee is in appeal before the tribunal.

6.

The Ld. AR for the assessee referred to Clause 32(1)(ii) to

submit that the assessee is entitled to such percentage of depreciation

on written down value of assets as may be prescribed for any block of

assets. It was contended by the Ld. AR for the assessee with reference

to Sec. 43(6)(c) that once the asset falls in any block of assets, the

assessee will be entitled to the rate applicable for the assets falling

within the block for the purposes of granting depreciation. It was

further contended with reference to the decision of CIT vs. Sonal Gum

Industries [2010] 322 ITR 542 (Gujarat) that once it is found that

assets are used for business, it is not necessary that all items falling

within that block have to be simultaneously used for being entitled to

depreciation. The Ld. AR, therefore, referred to the original

Notification No. 10/2009, dated 19.01.2009 and subsequent

ITA No.2847/Ahd/2017 [M/s. Nabros Transport Pvt. Ltd. vs. DC IT] A.Y. 2011-12 - 4 - modification therein to submit that the notification in unequivocal

terms enables depreciation at accelerated rate on all new commercial

vehicles acquired within the specified period of 01.01.2009 and

01.10.2009 and put to use for the purposes of business or profession

within that period. It was contended that in view of express

stipulations made in the notification by seeking to amend the Table to

New Appendix-I, there was no warrant for the AO to take a different

view and restrict the depreciation at 15% artificially without any

rationale.

7.

The Ld. DR on the other hand relied upon the order of the lower

authorities.

8.

We have carefully considered the rival submissions. The

eligibility of depreciation at accelerated rate on new commercial

vehicles acquired between 01.01.2009 to 01.10.2009 is in controversy.

As noted extensively in earlier paras, Notification No. 10/2009 issued

by the CBDT dated 19.01.2009 along with subsequent modification

therein (towards period of acquisition of asset), the assessee is

entitled to depreciation @ 50% on all new commercial vehicles

acquired within the stipulated time frame. The Table to New

Appendix-I prescribing the rates at which depreciation is admissible

has also been simultaneously amended by the CBDT in excise of

powers conferred to it by Sec. 295 of the Income Tax Act, 1961.

Therefore, applying lower rate of depreciation in variance with the

ITA No.2847/Ahd/2017 [M/s. Nabros Transport Pvt. Ltd. vs. DC IT] A.Y. 2011-12 - 5 - special rate of depreciation allowance do not resonate with the

amended position of law. We thus, find considerable merit in the plea

taken on behalf of the assessee as noted in preceding paragraph. The

action of Revenue to restrict the higher depreciation to only first year

where assets were acquired is devoid of sound basis and contrary to

the notification. Consequently, we set aside the order of the CIT(A)

and direct the AO to restore the claim of depreciation allowance on

commercial vehicles at accelerated percentage.

9.

In the result, appeal of the assessee is allowed.

This Order pronounced in Open Court on 28/05/2019

Sd/- Sd/- (MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 28/05/2019 TANMAY TRUE COPY आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file.

By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।

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