GREAT WHITE GOAL P. LTD.,MUMBAI vs. THE ASSTT. CIT -CC-7(2), MUMBAI

This appeal is filed by the assessee against the order passed by the learned Commissioner of income-tax (Appeals)-14, Mumbai [in short CIT(A)] dated 12th April, 2021 for Assessment Year 2017-18, wherein the learned CIT(A) has confirmed the disallowance of depreciation on Speed Boat claimed by the assessee amounting to ₹1,48,983/-. This is only issue involved in this appeal.

Assessee has raised following grounds :-

Brief fact of the case shows that the assessee is a company engaged in the business of manufacturing & marketing of electrical goods and accessories, writing instruments and shaving blade. The assessee has administrative office at Mumbai and factories at Valsad, Gujarat and Haridwar, Uttarakhand. It has sales Depot and branches across the country. It also has more than

The assessee has filed its return of income on 30.10.2017 declaring a total income of ₹25,50,45,580/-. This was subsequently revised on 27.06.2018 at ₹25,51,41,840/-. The case of the assessee was picked up for scrutiny.

The Assessing Officer noted that assessee has claimed depreciation of ₹1,48,983/- on Speed Boat. The assessee was asked to furnish the details that how the same was allowable to the assessee. The assessee submitted that company has purchased the Speed Boat jointly with another party and assessee share in it is 50%. This Speed Boat was purchased in Financial Year 2011-12 relevant to Assessment Year 2012-13. The Speed Boat is landed at Gateway of India and used for entertaining the agents and dealers across India, who regularly visits the office of the assessee. The assessee further stated that this depreciation has been allowed by the Assessing Officer in Assessment Year 2012-13. There is no change in the facts and circumstances. Thus, according to assessee it is allowable.

The learned Assessing Officer rejected the contention of the assessee and found that there is no evidence to show that the Speed Boat has been used for the purpose of entertaining agents and dealers. He also took note of the manufacturing unit of the assessee situated at different locations. Therefore, he held that it is not used for the

The assessee preferred the appeal before the learned CIT (A) who confirmed the disallowance.

On appeal before us, the learned Authorised Representative submitted that assessee has been claiming the depreciation on this asset since Assessment Year 2012-13 and allowed. For Assessment Year 2013-14, though the depreciation was disallowed but assessee has not preferred any appeal. It was further stated that for Assessment Year 2014-15, the income was computed under section 115JB of the Act and therefore, there was no question of any disallowance. For Assessment Years 2015-16 & 2016-17 no disallowance has been made. It is submitted that the impugned appeal for Assessment Year 2017-18, where the depreciation was disallowed but for Assessment Year 2018-19 there is no disallowance made by the Assessing Officer. He further submitted that as the assessee is a company there could not be any personal use of the above asset. With respect to the user of the Speed Boat, he explained the same reason of entertaining guests and customers as explained before lower

The learned DR vehemently supported the orders of the lower authorities.

We have carefully considered the rival contentions and perused the orders of the lower authorities. Facts already culled out shows that assessee is a manufacturer has purchased a speed boat where the share of the assessee is 50% and is claiming depreciation thereon Under the pretext that it is being used by assessee for the purposes of its business for entertaining its dealers and customers whenever they come to Mumbai. The speedboat is anchored at Gateway of India. However no evidences produced before the learned assessing officer or before the learned CIT – A that the speedboat is used for the purpose which has been stated by the assessee. No doubt, the depreciation has been allowed to the assessee in assessment year 2012 – 13. For assessment year 2013 – 14 depreciation on speed boat was disallowed amounting to ₹ 312,247/- where the assessment order was passed u/s 143 (3) of the act. No doubt, the income of the assessee was computed for that year by applying the provisions of the book profit, however, fact remains, that assessee has accepted the disallowance of the above

We find that speed boards are specially covered Under IV of appendix – 1 of the table of depreciation rates provided as per rule [5] of The Income Tax Rules 1962. It is the only asset in the block of the asset on which depreciation is claimed by the assessee. For the allowability of depreciation on any asset, it should be owned by the assessee as well as it should be used for the purposes of the business. The learned lower authorities have categorically held that the assessee has failed to show any evidence that speed boat has been used by the assessee for the purposes of the business of the assessee. Therefore, user test for claim of the depreciation on speedboat fails.

The other financial parameters such as turnover et cetera or the number of dealership and agents are of no relevance, thus, do not support the case of the assessee in absence of any evidence that the speedboat is used for the purpose of the business of the assessee.

In view of this, we confirm orders of the lower authorities and upheld action of ld Assessing Officer of disallowance of depreciation on the speed boat.

In the result, the appeal of the assessee is dismissed.