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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. SANJAY ARORA & SH. N. K. CHOUDHRY
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. No. 600/(Asr)/2015 Assessment Year: 2007-08
Lt. Jasbir Singh vs. Income Tax Officer, s/o Sh. Tek Chand, Ward No. 2, Hoshiarpur V&PO Chohal, Distt. Hoshiarpur (through L/H Vijay Kumar) [PAN: AFSPS 9490P] (Appellant) (Respondent)
Appellant by : Sh. J. K. Passi (Adv.) Respondent by: Sh. Charan Dass (D.R.) Date of Hearing: 20.11.2018 Date of Pronouncement: 02.01.2019 ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-1, Jalandhar ‘(CITA)’ for short) dated 18.11.2014, dismissing the assessee’s appeal contesting his assessment under section 143(3) read with sec. 147 of the Income Tax Act, 1961 (‘the Act’ hereinafter) dated 30.11.2010 for Assessment Year (A.Y.) 2007-08.
The appeal being time-barred, the first issue is if the delay could be condoned, and the appeal admitted. The delay is explained as on account of non- receipt of the appellate order by the assessee’s counsel, Sh. J.K. Passi, Advocate, whose address was stated in Form 35, i.e., the memo of the appeal before the first
2 ITA No. 600/Asr/2015 (AY 2007-08) Jasbir Singh v. ITO appellate authority, for communication purposes. An affidavit dated 28/6/2016 by Sh. Vijay Kumar, the assessee’s – who expired on 09.02.2013, legal heir, who has also made the condonation application dated 13/11/2015, states of the order being not received by him, and that he came to know about the passing of the said order only on being approached by the Income Tax authorities for recovery. The order was immediately applied for through the counsel, Sh. Passi, and copy received on 02/11/2015. There is, similarly, an affidavit of even date by the ld. counsel, averring that the impugned order was not received by him. The delay being substantial, with the appeal having been filed on 17/11/2015 while the impugned order is dated 18/11/2014, the record of the first appellate authority was called for by the Bench and examined during hearing. There is no document evidencing the service either on the assessee or his counsel on record. The impugned order, as a perusal of the record shows, was served on the assessee (through registered post) through his counsel, stating the addresses of both. If two addresses, as it appears, are mentioned on the envelope (containing the order), it is possible to have been delivered at the first, i.e., the assessee’s address. Where so, it cannot be said to have not been served on the assessee even if his address is not stated in Form 35 (for communication purposes). Documents conveyed through registered post, unless received back, are presumed to have been duly delivered in due course. There is no such return back on record. The assessee, however, having expired, the import of the said order may have been lost on his legal heir, and perhaps that is why, i.e., absence of a responsible person, which had led the ld. counsel to mention his address in Form 35 for communication. Two, as argued by the ld. Departmental Representative (DR), there is clearly laches on the part of the assessee’s counsel in the matter. This is as he would not only but be aware that the hearing in the matter before the first appellate authority stands completed by 18.11.2014, as well as of his address being mentioned in Form 35 for communication (of order). As such,
3 ITA No. 600/Asr/2015 (AY 2007-08) Jasbir Singh v. ITO where the order was not received by him in a reasonable time, i.e., say 2 months thereafter, he ought to have approached the office of the ld. CIT(A) which, where so done, would have made him aware of the order having been passed on 18.11.2014. Again, however, it would not be proper to penalize the assessee for the fault of his counsel (refer: Concord of India Ins. Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507 (SC)). We, therefore, consider it to be a fit case for condoning the delay. The hearing in the matter was accordingly proceeded with.
On merits, the sole issue arising in the instant case is the rate of depreciation eligible on forklift as being used for carrying out the work of Reliance Industries Ltd., with whom the asessee is in agreement for loading and unloading work. While the assessee claims the said rate to be 80%, the Revenue has allowed it at 15%, i.e., as applicable to the general class of plant & machinery. The ld. CIT(A) has confirmed the disallowance of additional depreciation on the ground that no such claim for depreciation was made by the assessee per his return or revised return of income. Two, the said equipment/s stands given on hire by the assessee to M/s. Reliance Industries Ltd., which has also deducted tax at source on the payments to the assessee treating the same as rent, with in fact the assessee having returned the said income as income from other sources. Thirdly, on merits, the assessee’s claim for depreciation fell under the category of general plant and machinery, eligible for depreciation at the rate of 15%, at which rate it stands allowed. The ld. counsel, Sh. Passi, would before us vehemently object, stating that even the Assessing Officer (AO) had in fact regarded the same as business income, allowing other incidental expenditure toward the said income. On a query by the Bench as to if the claim was raised by the assessee in the assessment proceedings, he would draw our attention to the assessee’s letter dated 30/11/2010, reproduced at para 6.4 of the assessment order, where the assessee has pressed for a claim for
4 ITA No. 600/Asr/2015 (AY 2007-08) Jasbir Singh v. ITO depreciation on forklift/s at the enhanced rate of 80%, i.e., under item III(8)(xiii)(o) of the depreciation schedule, which reads as under: Rates of Depreciation III. MACHINERYAND PLANT (1) Machinery and plant other than those covered by sub-items (2), (3) and (8) below: (2) Motor cars, …. …… 8 (xiii) Renewal energy devices being- (o) Electrically operated vehicles including battery powered or fuel-cell powered vehicles.
We have heard the parties, and perused the material on record. In our clear view, where the claim stands pressed by the assessee during the assessment proceedings, the same deserves to be considered on merits, as indeed it has been. There is as such no gainsaying that the said claim was not pressed per the return/s of income. The only rider in such a case is that the assessee should be called upon to make a verification, i.e., as comprised in the return of income. This is as, where not so done, the assessee could, without risking penalty u/s. 271(1)(c), raise frivolous claims in the assessment proceedings. The Revenue authorities are, thus, in our view, not correct in stating of this as one of the grounds on which the assessee’s claim for (additional) depreciation fails. On merits, both the Revenue authorities have stated of depreciation being eligible on the forklift at 15% without informing the basis on which they state so. On a query by the Bench, the ld. counsel would, from his file, show us the relevant purchase voucher (certified copy on record), which clearly indicates the forklifts, two in number, rate of depreciation on which is under dispute, as battery operated. That it is battery operated is also evident from the cost of the ‘additional battery’ (for Rs.1.10 lacs) supplied by the manufacturer, M/s. Godrej & Boyce Mfg. Co. Ltd. Even as indicated during hearing, it is on account of it being battery operated that a forklift is regarded as renewable energy device, eligible for a higher rate of depreciation. The battery, it may be appreciated, is rechargeable and, hence, renewable. The said purchase bill
5 ITA No. 600/Asr/2015 (AY 2007-08) Jasbir Singh v. ITO (dated 15.05.2006), it was submitted by the ld. counsel at bar, stands duly provided by the assessee in the assessment proceedings. The argument by the ld. DR that the forklift would not qualify to be a vehicle, so as to fall under item III(8)(xiii)(o) of the depreciation schedule, cannot be accepted. The forklift is used to access or place goods at a height, relocating them, including their movement from one place to another, even if within a limited range, as from one place in the works to another. Two, the assessment of the charges received as ‘business income’ or as ‘income from other sources’ would require examination of the relevant agreement. The same is, however, rendered irrelevant as in either case the assessee is eligible for depreciation (at the prescribed rate) as well as the other related expenditure, admittedly allowed. And such, nothing of consequence turns on the payer recording the charges paid as ‘rent’, deducting tax at source thereon u/s. 194J. We, accordingly, have no hesitation in holding the assessee’s forklifts as eligible for depreciation at the rate of 80%. The actual allowance of depreciation, which, as it appears, works to Rs. 18.40 lacs, would though have to be restricted to an amount equal to that required to bring the assessee’s assessed income at par with that originally assessed, i.e., Rs. 1,38,900/-, as returned by the assessee. This is in view of the decision in CIT v. Sun Engineering Works (P.) Ltd. [1992] 197 ITR 297 (SC), wherein it stands clarified by the Apex Court that the reassessment proceedings are for the benefit of the Revenue, i.e., to bring the escaped income to tax, so that even in cases where the claims of the assessee (in reassessment proceedings) relating to escaped income are accepted, the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. It is indeed unfortunate that the fact of the instant assessment being in pursuance to a notice u/s. 148 was not brought to our notice during hearing by the parties, particularly by the ld. counsel for the assessee. Further, needless to add, the
6 ITA No. 600/Asr/2015 (AY 2007-08) Jasbir Singh v. ITO written down value (WDV) of the block of assets, which is the base figure for computing depreciation for the subsequent periods, would stand to be computed accordingly, i.e., deducting the depreciation actually allowed. We decide accordingly.
In the result, the assessee’s appeal is allowed on the aforesaid terms. Order pronounced in the open court on January 02, 2019 Sd/- Sd/- (N. K. Choudhry) (Sanjay Arora) Judicial Member Accountant Member Date: 02.01.2019 /GP/Sr Ps. Copy of the order forwarded to: (1) The Appellant: Vijay Kumar, L/R of Lt. Jasbir Singh s/o Sh. Tek Chand, V& PO Chohal, Distt. Hoshiarpur] (2) The Respondent: Income Tax Officer, Ward 2, Hoshiarpur (3) The CIT(Appeals)-1, Jalandhar (4) The CIT concerned True Copy (5) The Sr. DR, I.T.A.T. By Order