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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI AMIT SHUKLA & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM
This appeal has been preferred by the assessee against the order dated 25.03.2022 passed by the Ld. Commissioner of Income- tax (Appeals)-53, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2013-14, raising following grounds:
M/s Sunshine Communication Pvt. Ltd. M/s Sunshine Communication Pvt. Ltd. 2 ITA No. 1294/M/2022
1. The Ld. CIT(A) has erred in law & on facts in upholding the Ld. The Ld. CIT(A) has erred in law & on facts in upholding the Ld. The Ld. CIT(A) has erred in law & on facts in upholding the Ld. AO’s action of disallowing loss claimed on sale of TDR of AO’s action of disallowing loss claimed on sale of TDR of AO’s action of disallowing loss claimed on sale of TDR of ₹4,40,966/ 4,40,966/-.
The Ld. CIT(A) has erred in law & on facts in upholding the Ld. The Ld. CIT(A) has erred in law & on facts in upholding the Ld. The Ld. CIT(A) has erred in law & on facts in upholding the Ld. AO’s action of disallowing excess claim of depreciation on AO’s action of disallowing excess claim of depreciation on AO’s action of disallowing excess claim of depreciation on vehicle to the extent of vehicle to the extent of ₹12,28,993/- 2. Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its return of income on 30.09.2013 declaring Nil income. In the income on 30.09.2013 declaring Nil income. In the income on 30.09.2013 declaring Nil income. In the assessment completed u/s 143(3) of the Income assessment completed u/s 143(3) of the Income-tax Act, 1961 (in tax Act, 1961 (in short ‘the Act’) on 30.03.2016, t short ‘the Act’) on 30.03.2016, the Assessing Officer disallowed he Assessing Officer disallowed claim of loss on account of sale of TDS and also disallo claim of loss on account of sale of TDS and also disallo claim of loss on account of sale of TDS and also disallowed the claim of depreciation on vehicle. vehicle.
On On On further further further appeal, appeal, appeal, the the the Ld. Ld. Ld. CIT(A) CIT(A) CIT(A) uph upheld uph the additions/disallowances. Aggrieved additions/disallowances. Aggrieved, the assessee is in appeal before the assessee is in appeal before the Tribunal raising the grounds as reproduced above. the Tribunal raising the grounds as reproduced above. the Tribunal raising the grounds as reproduced above.
Before us, the Ld. Counsel of the assessee has filed a Paper Before us, the Ld. Counsel of the assessee has filed a Pape Before us, the Ld. Counsel of the assessee has filed a Pape Book containing pages 1 to 68. Book containing pages 1 to 68.
M/s Sunshine Communication Pvt. Ltd. M/s Sunshine Communication Pvt. Ltd. 3 ITA No. 1294/M/2022
The ground No. 1 of the appeal was not pressed, therefore, The ground No. 1 of the appeal was not pressed, therefore, The ground No. 1 of the appeal was not pressed, therefore, same is dismissed as infructuous. same is dismissed as infructuous.
5.1 The ground No. 2 of the appeal relates to disallowance of The ground No. 2 of the appeal relates to disallowance of The ground No. 2 of the appeal relates to disallowance of depreciation of ₹12,28,993/ 12,28,993/- on vehicle, which was registered i which was registered in the name of the Director of the Company name of the Director of the Company, Shri Hetin R. Sakhuja, R. Sakhuja, who purchase the vehicle the vehicle by way of loan from ICICI Bank. According to by way of loan from ICICI Bank. According to the Assessing Officer, the assessee the Assessing Officer, the assessee-company was neither was neither a registered owner nor a beneficial owner and therefore, he decl registered owner nor a beneficial owner and therefore, he decl registered owner nor a beneficial owner and therefore, he declined the claim of the depreciation of the as the claim of the depreciation of the assessee. The Ld. CIT(A) also sessee. The Ld. CIT(A) also upheld the disallowance on the ground that EMI payment was also ld the disallowance on the ground that EMI payment was also ld the disallowance on the ground that EMI payment was also made by the Director Shri Hetin R. Sakhuja. made by the Director Shri Hetin R. Sakhuja.
5.2 However, we find that the Tribunal in the case of the assessee However, we find that the Tribunal in the case of the assessee However, we find that the Tribunal in the case of the assessee in o. 2754/M/2017, in the immediate preceding assessment in the immediate preceding assessment year i.e. AY 2012-13 13, has allowed the claim of the depreciation of has allowed the claim of the depreciation of M/s Sunshine Communication Pvt. Ltd. M/s Sunshine Communication Pvt. Ltd. 4 ITA No. 1294/M/2022 very same vehicle. The relevant finding of the Tribunal is very same vehicle. The relevant finding of the Tribunal is very same vehicle. The relevant finding of the Tribunal is reproduced as under: reproduced as under:
“5. We heard the rival submissions and perused the mate 5. We heard the rival submissions and perused the material on record. The rial on record. The sole disputed issue as envisaged by the Ld.AR that the CIT(A) has erred in sole disputed issue as envisaged by the Ld.AR that the CIT(A) has erred in sole disputed issue as envisaged by the Ld.AR that the CIT(A) has erred in confirming the disallowance of depreciation on the vehicle. The confirming the disallowance of depreciation on the vehicle. The confirming the disallowance of depreciation on the vehicle. The contentions of the Ld.AR that the depreciation has to allowed irrespective contentions of the Ld.AR that the depreciation has to allowed irrespective contentions of the Ld.AR that the depreciation has to allowed irrespective of the fact that it is of the fact that it is in the name of the director and the vehicle was used for in the name of the director and the vehicle was used for the purpose of business and is part of the Block of assets. We found that the the purpose of business and is part of the Block of assets. We found that the the purpose of business and is part of the Block of assets. We found that the assessee has disclosed the asset in the schedule of the Audited balance assessee has disclosed the asset in the schedule of the Audited balance assessee has disclosed the asset in the schedule of the Audited balance sheet under the Companies Act and the depreciati sheet under the Companies Act and the depreciation was claimed. Further on was claimed. Further we find on the similar/ identical issue Honble Tribunal of Ahmadabad we find on the similar/ identical issue Honble Tribunal of Ahmadabad we find on the similar/ identical issue Honble Tribunal of Ahmadabad Bench in the case of M/S Shivam Water Treaters PVt Ltd Vs. ACIT in ITA Bench in the case of M/S Shivam Water Treaters PVt Ltd Vs. ACIT in ITA Bench in the case of M/S Shivam Water Treaters PVt Ltd Vs. ACIT in 1447/Ahd /2014 and 187 / Ahd / 2020 dated 6 Nos. 1320, 1447/Ahd /2014 and 187 / Ahd / 2020 dated 6 Nos. 1320, 1447/Ahd /2014 and 187 / Ahd / 2020 dated 6-05-2022 has allowed the claim of depr allowed the claim of depreciation and dealt at page 12. Para 20.5 to 20.08 eciation and dealt at page 12. Para 20.5 to 20.08 of the order, which is read as under: of the order, which is read as under:
20.5. For the remaining 2 cars, we find that the ownership of these 20.5. For the remaining 2 cars, we find that the ownership of these 20.5. For the remaining 2 cars, we find that the ownership of these cars were not in dispute. It was disputed by the authorities below cars were not in dispute. It was disputed by the authorities below cars were not in dispute. It was disputed by the authorities below that the cars are registered in that the cars are registered in the name of the directors and the the name of the directors and the assessee was not maintaining the logbook. Therefore the AO was of assessee was not maintaining the logbook. Therefore the AO was of assessee was not maintaining the logbook. Therefore the AO was of the view that the possibility of personal use of the car cannot be the view that the possibility of personal use of the car cannot be the view that the possibility of personal use of the car cannot be ruled out. There is no dispute to the fact that all the cars were ruled out. There is no dispute to the fact that all the cars were ruled out. There is no dispute to the fact that all the cars were purchased in the name o purchased in the name of the directors but the payment was made f the directors but the payment was made through the assessee company. Thus it is through the assessee company. Thus it is transpired that the legal transpired that the legal ownership though vest with the individual directors but the ownership though vest with the individual directors but the ownership though vest with the individual directors but the Dominion ownership rest with the assessee. For the reason that, the Dominion ownership rest with the assessee. For the reason that, the Dominion ownership rest with the assessee. For the reason that, the assessee has made th assessee has made the payment for the purchase of the car from its e payment for the purchase of the car from its M/s Sunshine Communication Pvt. Ltd. M/s Sunshine Communication Pvt. Ltd. 5 ITA No. 1294/M/2022 books of accounts. Therefore the assessee is very much eligible for books of accounts. Therefore the assessee is very much eligible for books of accounts. Therefore the assessee is very much eligible for depreciation on these cars. The assessee being a body corporate, depreciation on these cars. The assessee being a body corporate, depreciation on these cars. The assessee being a body corporate, there is no possibility for the directors to use the car for the there is no possibility for the directors to use the car for the there is no possibility for the directors to use the car for the personal pu personal purposes. Assuming the assessee doesn’t maintain the rposes. Assuming the assessee doesn’t maintain the logbook and the director of the company uses the car for the logbook and the director of the company uses the car for the logbook and the director of the company uses the car for the personal purposes. Then in such a situation, at the most such facility personal purposes. Then in such a situation, at the most such facility personal purposes. Then in such a situation, at the most such facility extended by the company to the directors can be treated as extended by the company to the directors can be treated as extended by the company to the directors can be treated as perquisites un perquisites under the provisions of section 17(2) of the Act which der the provisions of section 17(2) of the Act which can be brought to tax in India hands of the director as part of can be brought to tax in India hands of the director as part of can be brought to tax in India hands of the director as part of salary. salary.
20.6 It is also interesting to note that the depreciation is an 20.6 It is also interesting to note that the depreciation is an 20.6 It is also interesting to note that the depreciation is an allowance and not an expenditure which has to be allowed in allowance and not an expenditure which has to be allowed in allowance and not an expenditure which has to be allowed in pursuance to the provisions of section 32 of the Act irrespective of nce to the provisions of section 32 of the Act irrespective of nce to the provisions of section 32 of the Act irrespective of its use by the director or the company. its use by the director or the company.
20.7 It is also important to note that the assessee cannot be denied 20.7 It is also important to note that the assessee cannot be denied 20.7 It is also important to note that the assessee cannot be denied the depreciation merely on the reasoning that the cars were the depreciation merely on the reasoning that the cars were the depreciation merely on the reasoning that the cars were registered in the name o registered in the name of the directors. It is for the reason that f the directors. It is for the reason that there is no dispute raised by the Revenue as far as the payments for there is no dispute raised by the Revenue as far as the payments for there is no dispute raised by the Revenue as far as the payments for the purchase of the car is concern. Thus, we are interpreting that the purchase of the car is concern. Thus, we are interpreting that the purchase of the car is concern. Thus, we are interpreting that the payments made by the assessee, as reflected in the books of the payments made by the assessee, as reflected in the books of the payments made by the assessee, as reflected in the books of accounts, amo accounts, amounts to beneficial owner ship of the assessee and unts to beneficial owner ship of the assessee and eligibility to claim depreciation. In this regard we find support from eligibility to claim depreciation. In this regard we find support from eligibility to claim depreciation. In this regard we find support from the judgment of the Hon’ble Gujarat High Court in the case of PCIT the judgment of the Hon’ble Gujarat High Court in the case of PCIT the judgment of the Hon’ble Gujarat High Court in the case of PCIT vs. Asian Mills (P.) Ltd reported in [2022] 135 taxmann.com 163 vs. Asian Mills (P.) Ltd reported in [2022] 135 taxmann.com 163 vs. Asian Mills (P.) Ltd reported in [2022] 135 taxmann.com 163 (Guj) where in was held as under: ) where in was held as under:
The Revenue challenged the same before the Tribunal. It 16. The Revenue challenged the same before the Tribunal. It also relied on the decision of ITO v. Electro Ferro Alloys also relied on the decision of ITO v. Electro Ferro Alloys
M/s Sunshine Communication Pvt. Ltd. M/s Sunshine Communication Pvt. Ltd. 6 ITA No. 1294/M/2022 Ltd.[2012] 25 taxmann.com 458 (Ahd. - Trib.). According to Trib.). According to the ITAT, the material available on record, when looked at, the ITAT, the material available on record, when the assessee though was not the legal owner of the vehicle, it the assessee though was not the legal owner of the vehicle, it has made the payment for acquisition of cars and thus, it is a has made the payment for acquisition of cars and thus, it is a beneficial owner. It is, therefore, held to be entitled for beneficial owner. It is, therefore, held to be entitled for depreciation on the car. It has drawn the support from the depreciation on the car. It has drawn the support from the decision of Electro Ferro Alloys Ltd. (supra) and the decision decision of Electro Ferro Alloys Ltd. (supra) and the decision of the Rajasthan High Court in CIT v. Mohd. Bux Shokat Ali of the Rajasthan High Court in CIT v. Mohd. Bux Shokat Ali [2001] 118 Taxman 712/[2002] 256 ITR 357 and the [2001] 118 Taxman 712/[2002] 256 ITR 357 and the decision in the case of CIT v. Basti Sugar Mills Co. Ltd. [2002] decision in the case of CIT v. Basti Sugar Mills Co. Ltd. [2002] 123 Taxman 693/257 ITR88 (Delhi).
17. The Tribunal has ITR88 (Delhi).
The Tribunal has rightly distinguished the concept of dominion ownership of rightly distinguished the concept of dominion ownership of the car. The question raised is answered accordingly. raised is answered accordingly.
20.8 Thus we are of the view that there cannot be any disallowance 20.8 Thus we are of the view that there cannot be any disallowance 20.8 Thus we are of the view that there cannot be any disallowance on adhoc basis as far as depreciation is on adhoc basis as far as depreciation is concerned. In view of the concerned. In view of the above and after considering the facts in totality, the ground of above and after considering the facts in totality, the ground of above and after considering the facts in totality, the ground of appeal of the assessee is partly allowed for the statistical purposes appeal of the assessee is partly allowed for the statistical purposes appeal of the assessee is partly allowed for the statistical purposes in the manner as indicated above. in the manner as indicated above.
6. We found that the facts of the present case are similar 6. We found that the facts of the present case are similar 6. We found that the facts of the present case are similar to the decision discussed in the above paragraphs. We are convinced with the Ld.AR discussed in the above paragraphs. We are convinced with the Ld.AR discussed in the above paragraphs. We are convinced with the Ld.AR submissions and are of the opinion that the depreciation disallowance submissions and are of the opinion that the depreciation disallowance submissions and are of the opinion that the depreciation disallowance cannot be sustained and fallow the judicial precedence and direct the cannot be sustained and fallow the judicial precedence and direct the cannot be sustained and fallow the judicial precedence and direct the Assessing officer to delete the d officer to delete the disallowance of depreciation and allow this isallowance of depreciation and allow this ground of appeal in favour of the assessee. ground of appeal in favour of the assessee.”
5.3 As the issue-in in-dispute is covered by the decision of the dispute is covered by the decision of the Hon’ble Tribunal (supra), therefore, respectfully following the same, Hon’ble Tribunal (supra), therefore, respectfully following the same, Hon’ble Tribunal (supra), therefore, respectfully following the same,
M/s Sunshine Communication Pvt. Ltd. M/s Sunshine Communication Pvt. Ltd. 7 ITA No. 1294/M/2022 the disallowance of depreciation mad the disallowance of depreciation made by the Assessing Officer and e by the Assessing Officer and sustained by the Ld. CIT(A) in the year under consideration is sustained by the Ld. CIT(A) in the year under consideration is sustained by the Ld. CIT(A) in the year under consideration is deleted. The ground No. 2 of the appeal of the assessee is deleted. The ground No. 2 of the appeal of the assessee is deleted. The ground No. 2 of the appeal of the assessee is accordingly allowed. accordingly allowed.
In the result, the appeal of the assessee is allowed partly. In the result, the appeal of the assessee is allowed partly. In the result, the appeal of the assessee is allowed partly.