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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA
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/-.
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.
The first appeal of the assessee before the CIT(A) against the
aforesaid action of the AO also went without success.
Further aggrieved, the assessee is in appeal before the tribunal.
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.
The Ld. DR on the other hand relied upon the order of the lower
authorities.
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.
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 ।