ASHTECH (INDIA) P.LTD,MUMBAI vs. DCIT 4(1), MUMBAI

1. That the learned Commissioner of Income tax (Appeals)-9 as well as the Assessing Officer has erred in law as well as under the circumstances of the case in confirming the disallowance of depreciation amounting to Rs. 28,25,562/- on purchase of trucks between the period from 01.01.2009 to 31.03.2009.

Brief facts of the case are that assessee is engaged in the business of trading & processing of fly Ash and also selling the same in the Indian and International Ashtech (India) Pvt. Ltd. market, filed its return of income for Assessment Year 2010-11 on 15th October 2010 declaring total income of Rs. 4,92,95,300/-. The assessment was completed on 25th February 2013 under section 143(3) of the Act. While passing Assessment Order, the Assessing Officer made certain disallowance, which includes transportation charges of Rs. 5,96,000/- Subsequently, the assessee brought to the notice of Assessing Officer that the assessee has filed revised return of income on 30th March 2012 and that the Assessing Officer has not considered the revise return while computing the assessment on 25th February 2013. Therefore, the Assessing Officer issued notice under section 154 of the Income Tax Act. In the notice the Assessing Officer mentioned the depreciation on written down value of vehicles is allowable only @ 30%, however, it was wrongly allowed @ 50% while passing the Assessment Order. Thus, excess depreciation was allowed to the extent of Rs.28,25,562/-. Therefore, the Assessing Officer made addition of Rs. 28,25,562/- on account of additional depreciation initially allowed by him. Aggrieved, by the order of Assessing Officer, the assessee filed appeal before Commissioner (Appeals), wherein the action of Assessing Officer was confirmed. Thus, further aggrieved by the order of Commissioner (Appeals) the assessee has filed present appeal before us.

We have heard Ld. Authorized Representative (AR) of the assessee and the Ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld AR of the assessee argued that during the relevant period related with the Assessment Year under consideration, the assessee Ashtech (India) Pvt. Ltd. purchased new commercial vehicle amounting to Rs. 1,88,37,082/- and accordingly, depreciation at the rate of 50% was claimed and was allowed by the Assessing Officer. The finding of the Assessing Officer that excess depreciation was allowed to the assessee is wrong. The assessee purchased the vehicles during the period from 1st day of January 2009 to 31st March 2009. The assessee’s case is covered under Entry No. 3(3) (via) of the depreciation Schedule under the Rules. The vehicle was put to use before 31st March 2009 for the purpose of business. All these facts were brought to the notice of Assessing Officer vide letter dated 25th August 2014, during the course of proceeding initiated under section 154 of the Act. However, the Assessing Officer has not considered these facts while passing rectification order. The ld. AR for the assessee submitted that no excess depreciation was claimed by the assessee. The Ld. Commissioner (Appeals) has not appreciated the fact in holding that during the assessment proceeding, the assessee has not brought to the notice of the Assessing Officer about the revise return of income and various other claims and/or the assessee has not discharge its obligation. Further, the finding of ld. Commissioner (Appeals) that no material was available on record to disprove the finding of Assessing Officer about the excess depreciation. The ld AR for the assessee submits that the assessee vide its written submission, it was brought to the notice of ld CIT(A), that CBDT vide its notification No. 10/20109 dated 19.01.2009 amended the Appendix 1, in part –A related to tangible asset, which was again amended vide notification No.37/2009[F.No.142/01/2009-TPL] dated Ashtech (India) Pvt. Ltd. 21.04.2009, by virtue of these two notification a further category as No.(via) under the head Plant and Machinery which include Commercial vehicle was created. By virtue of these two notifications any commercial vehicle purchased during the period 01st January2009 to 30th September 2009 is eligible for depreciation @50%, therefore, the assessee claimed 50% of 50% (25%) depreciation of commercial vehicle purchased during 01 January 2009 to 31st March 2009 for use of less than 182 days. On the contrary, the ld. DR for the Revenue supported the order of authorities below.

We have considered the rival submission of the parties and have gone through the orders of authorities below. The Assessing Officer while passing the order under section 154 concluded that the depreciation was allowable at 30% of opening written down value of vehicle, whereas the assessee was allowed 50% depreciation, thus, excess depreciation of Rs. 28,25,562/- was allowed to the assessee. Therefore, the Assessing Officer disallowed the excess depreciation of Rs. 28,25,562/-. The Ld. Commissioner (Appeals) while considering the contention of the assessee concluded that the assessee should have brought to the notice of the revised return of income and various claim during the assessment proceeding. The assessee has not discharged its obligation and that withdrawal of excess depreciation is in order. We have noted that the assessee has filed copy of Audit Report under Form 3CA, financial statement for the year ended on 31.03.2009. Copy of Audit Report for year ended on 31.03.2010 and statement showing purchase of Trucks during the period from 01.10.2008 to 31.03.2009.

Considering the fact that the lower authority has not considered the contention of the assessee while withdrawing the alleged excess depreciation, we deem it appropriate to restore the issue to the file of Assessing Officer to consider the claim of assessee after considering the revised return of income filed by assessee and the Appendix-1 of Income-tax Rules related with depreciation on written Ashtech (India) Pvt. Ltd. down value of the vehicle in accordance with notification No. 10/20109 dated 19.01.2009 amended the Appendix 1, in part–A related to tangible asset and with amended notification No.37/2009 [F.No.142/01/2009-TPL] dated 21.04.2009, with regard to category No. (via) under the head Plant and Machinery which include Commercial vehicle. Needless to say that Assessing Officer shall grant opportunity before passing the order in accordance with law.

In the result, appeal of the assessee is allowed for statistical purpose.