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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -5, Chennai, dated 23.09.2016 and pertains to assessment year 2010-11.
There was a delay of 451 days in filing the appeal by the assessee. The assessee has filed application for condonation of delay. Having heard the Ld.counsel for the assessee and the Ld. D.R., this Tribunal finds that there was a sufficient cause on the part of the assessee in not filing the appeal within the specified time. Therefore, the delay of 451 days in filing the appeal is hereby condoned and the appeal is admitted.
Now coming to the merit of the appeal, Sh. N. Devanathan, the Ld.counsel for the assessee submitted that there are two grounds involved in this appeal. The first issue is with regard to disallowance of depreciation of ₹3,18,550/- on the lorry and the next issue is with regard to disallowance of commission expenses of ₹12,48,980/-. According to the Ld. counsel, it is not a commission. It is hire charges. The Assessing Officer, according to the Ld. counsel, disallowed the claim of the assessee with regard to depreciation on the ground that there was no addition to the capital asset. Referring to page 12 of the paper-book, the Ld.counsel submitted that the assessee purchased a lorry bearing registration No.KA 01 C-4267 on 09.06.2009 for a sum of ₹13,85,000/-. Referring to the judgment of Kerala High Court in CIT v. Nidish Transport Corporation (1990) 185 ITR 669, the Ld.counsel submitted that transfer of registration is not necessary for transfer of ownership of motor vehicle. According to the Ld. counsel, transfer takes effect when the motor vehicle was handed over to the assessee. Even before the transfer is effected in the registration certificate, the assessee used the vehicle as its own.
Therefore, according to the Ld. counsel, the assessee is entitled for depreciation. Hence, the Assessing Officer is not justified in saying that there was no addition to the fixed asset.
Referring to the claim of ₹12,48,980/-, the Ld.counsel submitted 4. that it is hire charges paid to other lorry owners. According to the Ld. counsel, the assessee hired lorry from other owners and paid hire charges. Therefore, it is not a commission. The vouchers and other material are available with the assessee to establish the payment of hire charges. Therefore, according to the Ld. counsel, the matter may be remitted back to the file of the Assessing Officer.
We heard Shri B. Sagadevan, the Ld. Departmental Representative also. With regard to claim of depreciation, the assessee has produced a copy of sale receipt said to be issued by the lorry owners, copy of which is available at page 12 of the paper-book. It is not known whether the copy of sale receipt was available before the Assessing Officer and the CIT(Appeals). As rightly submitted by the Ld.counsel for the assessee, transfer of registration in the name of the assessee may not be required for the purpose of claim of depreciation.
What is required is delivery of motor vehicle to the assessee. In fact, the Kerala High Court in its judgment in the case of Nidish Transport Corporation (supra) observed as follows at paragraph 3:-
“……………The transfer of ownership of the vehicles is not a matter governed by the provisions of the Motor Vehicles Act. A motor vehicle is movable property. The transfer of ownership thereof is governed by the Sale of Goods Act. Transfer takes effect from the date of sale. As between the transferor and the transferee, the sale is complete even before the transfer is effected in the registration certificate. The failure to report the same to the registering authority may entail levy of penalty prescribed under section 31 of the Motor Vehicles Act or section 112 of the Act. Beyond that, it does not affect the passing of title. Law is fairly clear that registration is not necessary to pass title in the motor vehicle. The decisions of the Supreme Court in Panna Lal v. Chand Mal, AIR 1980 SC 871 ; [1980] ACJ 233 and the deci sions of this court in Aliyar Kunju v. Subair Khan [1984] KLT 268, Kunju raman v. Saramma [1986] KLT 742 and M. Swaminathan v. C. K. Jayalakshmi Amma [1989] 66 Comp Cas 503 ; [1987] 2 KLT 292, establish that for the transfer of ownership of a motor vehicle, mutation of the same in the certificate of registration is not necessary and the vehicle can be sold and purchased without following the procedure prescribed under section 31 of the Motor Vehicles Act. In the light of the above decisions, we are of the view that the Appellate Tribunal was justified in holding that the asses sees who purchased the vehicles and used them during the relevant previous years are entitled to the depreciation allowance. The assessees were, no doubt, the owners of the vehicles. They used the vehicles for their business and they are entitled to depreciation on the buses. We, therefore, answer both the questions referred to us in both the cases in the affirmative, against the Revenue and in favour of the assessees.”
In view of the above, this Tribunal is of the considered opinion that the Assessing Officer has to verify the sale receipt, copy of which is available at page 12 of the paper-book and thereafter decide the issue afresh in the light of the judgment of Kerala High Court in Nidish Transport Corporation (supra), in accordance with law, after giving a reasonable opportunity to the assessee.
Now coming to the claim of hire charges of ₹12,48,980/-, the 7.
Assessing Officer disallowed the claim of the assessee on the ground that there was no voucher produced before him. However, the assessee claims that the vouchers were available to substantiate the payment of hire charges. In view of the above, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, orders of both the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer.
The Assessing Officer shall re-examine the matter in the light of the material that may be produced by the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 3rd December, 2018 at Chennai.