Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
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.
In Ground No.1 of the appeal, the grievance of the assessee is that
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.
2 ITA No. 177/CT K/ 2016 Asse ssment Year :20 11- 12
The brief facts of the case are that the Pr. CIT, on verification of
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%.
Before us, ld A.R. of the assessee argued that the assessee is in the
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
3 ITA No. 177/CT K/ 2016 Asse ssment Year :20 11- 12
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%.
Ld D.R. on the other hand supported the order of Pr. CIT.
We find that in the instant case, the submission of the assessee is
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
4 ITA No. 177/CT K/ 2016 Asse ssment Year :20 11- 12
law. Accordingly, this ground of appeal of the assessee is allowed for
statistical purposes.
In Ground No.2 of the appeal, the grievance of the assessee is that
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.
The brief facts of the case are that the Pr. CIT observed from
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.
Being aggrieved by the order of the Pr. CIT, the assessee is in appeal
before us.
Before us, ld A.R. of the assessee argued that the donations were
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.
5 ITA No. 177/CT K/ 2016 Asse ssment Year :20 11- 12
We find that no details of donations of Rs.9,01,057/- claimed as
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.
In the result, the appeal filed by the assessee is allowed for statistical
purposes.
Order pronounced on 28 /07/2017 . Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 28 /07/2017
6 ITA No. 177/CT K/ 2016 Asse ssment Year :20 11- 12
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