DCIT CIR 3(1)(1), MUMBAI vs. ALD AUTOMOTIVE P.LTD, MUMBAI

आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 27/02/2015 of Ld. Commissioner of Income Tax, Mumbai allowing depreciation to the assessee on vehicles given on lease when the vehicles were not registered in the name of the assessee and were directly delivered to the parties using such vehicles. 2. During hearing of this appeal the learned D.R., Shri Kailash Kanojiya, advanced arguments which are identical to the grounds raised, defending the addition made by the learned Assessing Officer. None was present for the assessee in spite of issuance of registered AD notice. The assessee neither presented itself nor moved any adjournment petition. It seems that the assessee is not interested to pursue its appeal, therefore, we have no option but to proceed ex-parte, qua the assessee and tend to dispose of this appeal on the basis of material available on record. 2.1 We have considered the submissions of learned D.R. and perused the material available on record. The facts in brief are that the assessee claimed to have given vehicles on operating lease basis on which depreciation was claimed on the leased vehicles. The vehicles were registered in the name of the parties who are using them and not in the name of the assessee. The learned Assessing Officer raised a query to the assessee with respect to its claim. The learned Assessing Officer disallowed the claim of depreciation. The claim of the assessee before the learned CIT(A) is as under: -

It was submitted that the maintenance service charges are estimated at the beginning of the leasing contract for the entire contract period and the same is recovered in equal instalments over the period of the leasing contract from the customers are deferred. It is an advance money received against future obligations. Maintenance charge (which includes also the profit margin on maintenance cost) is recognized in line with the normal maintenance cost incurred over the tenure of the contract on a suitable basis as per AS-9. The achieve the matching cost and revenue, statistical formulae is used to determine the proportionate revenue to be recognized in a financial period and then a difference of this with revenue actually billed in the year is found out. This difference amount represents the maintenance income against which costs will be incurred in future. Hence, such amount is not considered as income of the year/period. This is in accordance with AS-9. Reliance was placed by him on the decision in the case of Asst. CIT vs. Mahindra Holiday Resorts (India) Ltd. (2010) 5 taxmann.com 55, CIT vs. Woodward Governor India Ltd. (2010) 195 Taxman 328 (Del), D.E. Sasoon and Company Ltd. vs CIT, 261 ITR 27 (SC), Calcutta Company Ltd. vs CIT, 37 ITR 1 (SC), Bharat Earth Moviers Ltd. vs CIT, 245 ITR 428 (SC), CIT vs BHEL, 239 ITR 756, CIT vs Bank of India, 218 ITR 371 and CIT vs IBM, 161 ITR 673 (Bom).

2.2 We find that, as observed by the learned CIT(A), that the issue is covered by the decision from Hon'ble Apex Court in ICDS Ltd. vs. CIT (2013) 350 ITR 527 wherein it has been held that section 2(3) of the Motor Vehicle Act is a deeming provision that creates a legal fiction of ownership in favour of lessee only for the purpose of the Motor Vehicle Act. It has been held there in that the lessor, the assessee was the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of section 32 of the Act and hence was entitled to claim of depreciation in respect of addition made to the trucks, which were leased out. However, we are making it clear that the learned Assessing Officer is to satisfy himself whether the parties who are using the vehicles may not get the benefit of depreciation and if it is found that the depreciation is claimed by the assessee as well as the parties who are using the vehicles, in that case the learned Assessing Officer is free to take a decision in accordance with law. With these remarks the stand taken by the learned CIT(A) is affirmed. Finally the appeal of the Revenue is having no merits, therefore, disposed of in terms indicated herein above. Consequently the appeal of the Revenue is dismissed. This order was pronounced in the open court in the presence of Ld. Representative from both sides at the conclusion of the hearing on 18/07/2016. Sd/- Sd/- (Rajesh Kumar) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 20/07/2016 ÇAÑA P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT-3, Mumbai. 4. आयकर आयु�त / CIT(A)-8, Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file.