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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ B ’
Before: SMT. ASHA VIJAYARAGHAVAN & SHRI JASON P. BOAZ
O R D E R Per Shri Jason P. Boaz, A.M. : This appeal by Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-4, Bangalore dt.5.2.2015 for Assessment Year 2008-09.
The facts of the case, briefly, are as under :- 2.1 The assessee (Prop. Swatchatha Corporation) carries out the business of transporting municipal waste for the Municipality. For Assessment Year 2008-09, the assessee filed its return of income on 29.9.2008 declaring income of Rs.1,14,10,140. The return was processed under Section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was subsequently taken up for scrutiny. The Assessing Officer completed the assessment under Section 143(3) of the Act vide order dt.1.7.2010 wherein the income of the assessee was determined at Rs.1,16,60,140. The Assessing Officer subsequently initiated proceedings under Section 147 of the Act and took up re-assessment proceedings by issue of notice under Section 148 of the Act dt.19.11.2012. On scrutiny of the assessee's accounts pertaining to the business of transportation of municipal waste, the Assessing Officer observed that the assessee had various vehicles, namely, wheel tippers, push carts, light goods vehicles, etc. and had claimed depreciation thereon @ 30%. The Assessing Officer required the assessee to show cause as to why the assessee's claim for depreciation on vehicles not be restricted @ 15%. The assessee's explanations that, in view of the activities carried out, his vehicles depreciation is to be allowed @ 30% was not accepted by the Assessing Officer. The Assessing Officer was of the view that since the assessee was neither using his vehicles for running them on hire nor in the business of transportation of goods on hire, the depreciation is to be restricted to 15%, thereby leading to disallowance of depreciation claimed by the assessee to the extent of Rs.39,44,826. The assessment was accordingly completed under Section 143(3) rws 147 of the Act vide order dt.19.2.2014 wherein the income of the assessee was determined at Rs.1,56,04,966. 2.3 Aggrieved by the order of assessment dt.19.2.2014 for Assessment Year 2008-09, the assessee preferred an appeal before the CIT (Appeals) – 4, Bangalore. The learned CIT (Appeals) allowed the assessee's appeal vide order dt.5.2.2015; holding that the assessee was entitled to the claim for higher depreciation @ 30% on his vehicles used on hire for transporting the solid waste of the municipality on hire. In holding so, the learned CIT (Appeals) followed Tribunal in the assessee's own case for Assessment Year 2009-10 in dt.21.11.2014. 3. Revenue, being aggrieved by the order of CIT (Appeals) – 4, Bangalore dt.5.2.2015 for Assessment Year 2008-09, has preferred this appeal raising the following grounds :- “
1. The order of the learned CIT (Appeals) is opposed to the law and facts of the case.
2. On the facts and circumstances of the case, thelci has erred in holding that there is commercial exploitation of the vehicles for transporting of goods on hire and therefore the assessee is entitled for higher rate of depreciation.
3. The learned CIT (Appeals) erred in not appreciating the fact that the assessee is not lending vehicles on hire and is a municipal contractor for solid waste management. Higher depreciation cannot be claimed merely on the fact that the vehicles deployed were registered under the category of vehicle used on hire. The assessee had deployed its vehicles for its own business of MSW collection and transportation while discharging its contractual obligation. As such, the question of hire does not arise at all to allow higher rate of depreciation @ 30%.
4. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (Appeals) in so far as it is relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
5. The appellant craves leave to add, alter, amend and/or delete any of the grounds that may be urged.”
4. The Grounds t S.Nos.1, 4 and 5 being general in nature, no adjudication is called for thereon.
5. Grounds at S.Nos. 2 & 3 : Depreciation on vehicles. 5.1 In these grounds, Revenue contends that the learned CIT (Appeals) erred in holding that there is commercial exploitation of vehicles for transporting of goods on hire, entitling the assessee to higher rate of depreciation @ 30%. It is contended that the assessee, a municipal contractor for solid waste collection and transportation was not hiring out his vehicles and therefore just because the vehicles deployed were registered under the category of vehicles used on ‘hire’ would not entitle the assessee to be allowed higher rate of depreciation @ 30%. The learned Departmental Representative was heard in support of the grounds raised.
5.2 Per contra, the learned Authorised Representative for the assessee contended that Revenue’s appeal on this issue is liable to be dismissed since this issue of the assessee being allowed depreciation @ 30% on its vehicles is covered in favour of the assessee by the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2009- 10 in dt.21.11.2014. It was also submitted that Revenue’s appeal before the Hon'ble Karnataka High Court was dismissed by the Court’s order in ITA No.167/2015(T-IT) dt.11.9.2015. 5.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2009-10 (supra). We find, that the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2009-10 in ITA No.261/Bang/2014 dt.21.11.2014 had considered the very same issue, of the assessee's claim for higher depreciation @ 30% on his vehicles used on hire for transportation of municipal solid waste and allowed the assessee's claim for being allowed higher depreciation @ 30% on assessee's vehicles holding as under at para 7 of its order :-
7. If we peruse the facts of the present case in the light of the Hon'ble Bombay High Court decision as well as in the light of the circulars of the Board, then it would reveal that the learned CIT (A) has failed to construe the circular in right perspective. According to the learned CIT (A) the circular is applicable if an assessee has used the motor vehicle for transporting the goods on hire or the higher rate of depreciation would be applicable or given on hire like Taxis. In the present case, the assessee has been transporting the solid waste of municipality on hire. Thus, the very nature of the assessee’s business is such which bring him in the ambit of the circular. It is not the case where a person is running any consultancy firm and used a motor car for himself. Here the vehicles are used for transporting the goods of third concern by virtue of a contract. There is a commercial exploitation of the vehicles for transporting the goods on hire. Therefore, the assessee is entitled for higher rate of depreciation. We allow the appeal of the assessee and delete the disallowance. As far as charging of interest is concerned, no arguments were advanced. The interest would be consequential, hence rejected.
5.3.2 It is also seen that Revenue’s appeal against the aforesaid order of the co-ordinate bench for Assessment Year 2009-10 (supra) has been dismissed by the Hon'ble High Court of Karnataka in (IT-T) dt.11.9.2015. 5.3.3 Respectfully following the decisions of the Hon'ble High Court of Karnataka in ITA No.167/2015 (T-T) dt.11.9.2015 and of the co-ordinate bench of this Tribunal in ITA No.261/Bang/2014 dt.21.11.2014 in the assessee's own case for Assessment Year 2009-10, we uphold the impugned order of the learned CIT (Appeals) in allowing the assessee higher depreciation @ 30% on its vehicles used on hire for transporting municipal solid waste. Consequently, Revenue’s grounds t S.Nos.2 and 3 are dismissed.
In the result, Revenue’s appeal for Assessment Year 2008-09 is dismissed. Order pronounced in the open court on 29th October, 2015.