Loading judgment…
Facts
The assessee claimed depreciation at 30% on plant and machinery. The Assessing Officer (AO) disallowed the depreciation, restricting it to 15%, and also rejected the books of accounts. The Commissioner of Income-tax (Appeals) upheld the AO's decision. The assessee argued that higher depreciation was allowed in previous years and submitted written submissions.
Held
The Tribunal noted that the assessment order was contradictory as it was framed under Section 143(3) but the AO had rejected the books of accounts, indicating a proceeding under Section 144. Since no proper adjudication was made by the AO, the matter was restored back to the AO for a fresh assessment.
Key Issues
Whether the assessee is eligible for 30% depreciation on plant and machinery, and whether the assessment order was validly passed.
Sections Cited
147, 144, 143(2), 142(1), 250, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & DR. DINESH MOHAN SINHA
ORDER Per, Dr. Dinesh Mohan Sinha, JM: Captioned appeal filed by assessee pertaining to Assessment Year 2012-13, is directed against the order passed under Section-250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by the Learned Commissioner of Income-tax (Appeal), (in short ‘Ld. CIT(A)’), dated 16.05.2023, which in turn arises out of assessment order passed by Assessing Officer u/s. 147 r.w.s. 144 of the Act on 27.02.2015.
The grounds of appeal raised by the assessee are as under:
The Ld. AO has erred in law and facts for passing order without issue of show cause notice. The Ld. AO has erred in law and facts in rejection of books of accounts without any causes on records. The Ld. AO has erred in law and facts in not allowing depreciation at 30%. Ld. AO erred in law and fact in considering the fact that there is no addition during the year in the block of asset and previously Ld. AO has already allowed 30% depreciation in the block. Ld. AO has erred in law and facts in considering dumper as not road transport vehicles and not allowing depreciation at 30%. Any other ground which may deem fit or raised letter on for dropping addition made or any other order deem in the beneficial to the assessee. Appellant craves leave to add, amend, alter or withdraw any grounds of appeal.
The brief facts of the case are that The assessee has filed original return of income on 28-09-2012 declaring therein total income of Rs.37,68,510/ This case was subsequently selected for scrutiny through CASS and notice u/s 143(2) dated 23-09-2013 & 142(1) along-with questionnaire dated 02-04-2014 was issued. In response to the notices, Shri Nikunj Thacker, CA duly Authorized Representative of the assessee attended on 24-09-2014 and submitted the details/explanations as called for vide notice dated 02-04-2014. The Authorized Representative of the assessee was discussed with him. The assessee is sole proprietor of M/s. AD Rathod and is engaged in the business of civil construction.
Disallowance of depreciation claimed @ 30%.
During the course of assessment proceedings it was noticed that the assessee was wilfully and deliberately avoiding to submit the depreciation chart along-with the rate of depreciation claimed in accordance with the provisions of the IT Act. On perusal of the depreciation chart it was noticed that the assessee has claimed depreciation 30% on plant & machinery as against normal depreciation allowable @ 15%. The assessee has not submitted the complete details of the block of asset Page 2 of Salim Abdullah Rathod v. DCIT on which depreciation @ 30% has been claimed. The total depreciation claimed by the assessee 30% is Rs.36,82,966/-
The assessee submitted the justifications for claiming depreciation @ 30% vide letter dated 15-01-2015. The submissions of the assessee have been considered carefully and the same are found to be erroneous, unconvincing and untenable. In the trading and P & L account the assessee has not shown any transportation income therefore it is clear that the assessee has received no transportation income during the year under consideration and hence the assessee it not eligible to claim depreciation 30%. That the assessment was computed with following observation:
Add: Following addition made on account of: Rs.37,68,510/- 1) Disallowance of depreciation claim @30% Rs.18,41,483/- Total income assessed u/s. 143(3) Rs. 56,09,993/- Round off to Rs. 56,09,990/-
Aggrieved by the order of the AO, the assessee came in appeal before the Ld. CIT(A) That the Ld.CIT(A) has decided the appeal with following observation: “6.9. Thus, considering the discussion made above and case laws relied upon, I find no reason to alter the action of the Ld AO and therefore, upheld the disallowance of depreciation and restrict it to 15% which is Rs.18,41,483/- instead of 30% as claimed by the appellant assessee.”
Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us.
a. During the course of hearing, Ld. AR for the assessee submitted written submission.
Page 3 of Salim Abdullah Rathod v. DCIT b. On the other hand, Ld. DR for the Revenue submitted that the findings of the AO that 30% rate of depreciation only in case where the motor lorries are used for running them on hire and income was derived from hiring the vehicle however in this case the income was received from mining and excavation removal of stacking etc. That Ld. DR relied on the order of Ld.CIT(A).
We have heard both the parties, perused the material available on record. Before us, written submission was filed by the AR of the assessee, whereby it was submitted that in earlier year the assessment completed u/s. 143(3) of the Act and higher depreciation was allowed by AO, copies of the assessment order was annexed for 10-11, 9-10, 7-8, 6-7. The Ld. DR for the revenue has also relied on the judgment “Hon'ble Supreme Court in case of Gupta Global Exim 305 ITR 132 has laid down the real test for claiming depreciation at higher rates applicable for "motor lorring used in business of running them on hire. We note that at perusal the order of assessment, the AO has framed an order under Section-143(3) of the Act, however in the assessment proceeding, the AO has rejected the books of accounts and assessee has submitted books of accounts no supporting voucher were submitted that payment cash for labour payments, salary wages, labour and staff welfares. However, no addition has been made the addition was due to disallowance of depreciation @ 30% as claimed by the assessee. Further, we note that CIT has allowed partly to the extent of 15%. We are of the view after rejecting the books of accounts, no addition has been made by the AO under Section-143(3). The assessment has taken place under Section-144 of the Income Tax Act. We are of the view that no proper adjudication has been made by the AO that was a contradictory order of the assessment as to whether it should be u/s. 143(3) of 144 of the Act. We restore the matter back to the file of the Assessing Officer for Page 4 of Salim Abdullah Rathod v. DCIT proper adjudication which a direction to frame an assessment order according to law after giving due opportunities to the assessee.
In the result, the appeal of the assessee is allowed, for statistical purposes.
Order pronounced in the open court on 07/04/2026.