BRAJ MINING CORPORATION PVT. LTD.,KEONJHAR vs. PRINCIPAL CIT, CUTTACK

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.177/CTK/2016 Assessment Year :2011-12

Vs. PR. CIT, Cuttack Braj Mining Corporation (P) Ltd.,Hudi Sahi, Joda, Keonjhar. PAN/GIR No. AADCB 5114 G (Appellant) .. ( Respondent)

Assessee by : Shri S.K.Agarwalla, AR Revenue by : Shri Kunal Singh, CIT DR

Date of Hearing : 27/07/ 2017 Date of Pronouncement : /07/ 2017

O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order u/s.263 of

the Act of the Pr. CIT, Cuttack, dated 8.3.2016, for the assessment year

2010-2011.

the Pr CIT erred in directing the Assessing Officer to restrict the

depreciation @ 15% in place of 30% charged by the assessee on the vehicle

running them on hire.

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assessment records, found that the assessee company has claimed excess

depreciation @ 30% instead of 15%. According to the Ld Pr. CIT, the

assessee has used its own trucks in its own business and not used the

trucks in the business of running them on hire for which it is entitled to get

depreciation @ 15%. He relied on the decision of Hon’ble Rajasthan High

Court in the case of CIT vs. Manjeet Stone Co.(1991) 190 ITR 183 (Raj),

wherein, it was held that even if the trucks are used partly in assessee’s

own business and occasionally been let out on hire, the depreciation is

restricted to 15%. Therefore, he held that excess depreciation which works

out to Rs.55,92,992/- has not been properly examined by the Assessing

Officer at the time of regular assessment and, accordingly, directed the

Assessing Officer to restrict the claim of depreciation of the assessee of

trucks to 15%.

business of transporting and running its trucks on hire for transportation of

goods of customers from and to the place as desired by customers.

Further, a major part of the revenue of the assessee i.e. approx. 40% of

the turnover is generated from such transporting business. It was further

submitted that in some cases, the Hon’ble High Courts have expressed their

opinion that if the trucks are being used for running them on hire then the

higher rate of depreciation is allowable. Further, he relied on the CBDT

Circular No.652 dated 14.6.1993, copy of which is placed on record and

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point out therefrom that the CBDT in its circular has stated that higher

depreciation will also be admissible on motor lorries used in assessee’s

business of transportation of goods on hire. The higher rate of depreciation

will not apply if the motor lorries are used in some other non-hiring

business of the assessee. Hence, he prayed that as the assessee was using

the trucks in question in hiring business of the assessee and, therefore, was

allowable for higher depreciation @ 30%.

that since it has used the trucks in question in the business of hire as well

as in its own business, therefore, is eligible for higher depreciation @ 30%.

The assessee has contended that it will be observed from its account that

approximately 40% of its turnover pertains to hire charges. In the above

facts and circumstances of the case, we are of the considered view that the

ld Pr. CIT at the time of passing the order has not considered the CBDT

Circular No.652 dated 14.6.1993, which has been filed before us and has

not looked into the fact that the trucks in question are claimed by the

assessee to be used for the business on hire as well as in its own business

and that it has shown revenue of approximately 40% of the total turnover

from hiring business. We are of the considered view that the matter should

be restored back to the file of the Pr. CIT to examine the issue in the light

of above facts and CBDT circular and re-adjudicate the same afresh as per

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law. Accordingly, this ground of appeal of the assessee is allowed for

statistical purposes.

the Pr. CIT is not justified in setting aside the issue regarding expenses

incurred under the head “donations” to the file of the Assessing Officer for

verification.

assessment records that the assessee has claimed deduction of

Rs.9,01,057/- as donations in its profit and loss account. He observed that

the Assessing Officer has not examined admissibility of this expenditure

and, accordingly, requires further examination. Therefore, he restored

back the issue to the file of the Assessing Officer to call details of

expenditure on account of donation and examine the genuineness and

allowability of the same u/s.37 of the Act.

before us.

paid by the truck drivers while transporting the goods to the local area

people for smooth functioning of its business. He argued that same was

for business necessity and smooth conducting of its business and hence,

the same should be allowed as deduction u/s.37 (1) of the Act.

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deduction in the profit and loss account by the assessee has been filed

before us. Therefore, we are unable to examine the nature of expenses

incurred by the assessee. However, we find force in the submission of ld

A.R. of the assessee that payment of donation is business necessity and

required to be paid by the truck drivers during the course of transportation

of goods to the local area people for smooth conduct of the business.

Therefore, in our considered view, it has nexus with the carrying on of the

business by the assessee and hence, is allowable deduction to the assessee

u/s.37(1) of the Act. However, as we do not have details of the donations

paid by the assessee, we are not able to adjudicate the same. Hence, in

the above circumstances, we restore this issue back to the file of Pr. CIT,

who shall examine the details and if he finds that expenses are incurred by

the assessee for smooth conduct of its business, allow the same as

deduction to the assessee. Thus, this issue is restored back to the file of

the Pr. CIT for adjudication afresh in the light of discussion made

hereinabove.

purposes.

Order pronounced on 28 /07/2017 . Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 28 /07/2017

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B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Braj Minining Corporation (P) Ltd.,Hudi Sahi, Joda, Keonjhar 2. The Respondent. PR. CIT, Cuttack 3. The CIT(A) Cuttack 4. Pr.CIT, 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack