INCOME TAX OFFICER, NASHIK vs. TRAMBAK RUBBER INDUSTRIES PRIVATE LIMITED, SINNAR, NASHIK

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “SMC” BENCH : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A.No.845/PUN./2023 [E-APPEAL] Assessment Year 2010-2011

The Income Tax Officer, Ward-1(1), Room No.A-7, Trambak Rubber Industries Income Tax Office, Private Limited, A-83, Sinnar Kendriya Rajaswa Tal Industrial Estate, vs. Bhawan, Gadkari Chowk, Musalgaon Sinnar, NASHIK. Old Agra Road, NASHIK. PIN - 422 103. PIN – 422 002. Maharashtra. Maharashtra. PAN AABCT0453C (Appellant) (Respondent)

For Revenue : Shri Manish Mehta For Assessee : -None-

Date of Hearing : 18.03.2024 Date of Pronouncement : 10.05.2024 ORDER

This assessee’s appeal for assessment year 2010-11,

arises against the National Faceless Appeal Centre [in short

the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/

2023-24/1053340239(1), dated 31.05.2023, in proceedings

u/s. 143(3) r.w.s.147 of the Income Tax Act, 1961 (in short

“the Act”).

Case called twice. None appears at assessee’s

behest. It is accordingly proceeded ex-parte.

grounds in the instant appeal :

2 ITA.No.845/PUN./2023

case, and in law the learned CIT(A) is justified in deleting

the disallowance on new Honda City car of Rs.3,62,525/-.

and in law the learned CIT(A) is justified in deleting the

disallowance ignoring that as per Rule 5 if Income tax

Rules, 1962, the claim of depreciation of the assessee @

50% on new Honda City car as per New Appendix-I, III, 3

(via) of Plant & Machinery are not fulfilled.

and in law the learned CIT(A) is justified in deleting the

disallowance ignoring the fact that the assessee has not

furnished any documentary evidence that the new car

was put to use before 1st Oct 2009 as per conditions laid

down in Rule 5 of Income Tax Rules New Appendix-I, III, 3

(via) of Plant & Machinery to claim depreciation @ 50%.

and in law the disallowance of depreciation is covered

under exception 10(c) as amendment to CBDT Circular 3 of

2018 dated 11.07.2018.

any ground (s) of appeal.”

NFAC’s detailed discussion accepting the assessee’s

arguments on merits reading as under :

3 ITA.No.845/PUN./2023

“7.8. At this juncture, it is important to look at the

Notification No.10/2009 dated 19.01.2009 & Notification

No.37/2009 dated 21.04.2009 issued by CBDT by making

amendment to the Appendix 1 in Income Tax Rules (IT

Rules for short). The extract of the notifications is placed

below for ready reference.

INCOME-TAX (THIRD AMENDMENT) RULES,2009- AMENDMENT IN NEW APPENDIX-1 NOTIFICATION NO. 10/2009, DATED 19-1-2009 In exercise of the powers conferred by section 295 of the

Income-tax Act, 1961 (43 of 1961), the Central Board of

Direct Taxes hereby makes the following rules further to

amend the Income-tax Rules, 1962, namely:—

(1) These rules may be called the Income-tax (Third

Amendment) Rules, 2009

(2) They shall come into force on the 1st day of April,

2009.

In the Income-tax Rules, 1962, in the Table to New

Appendix 1, in Part-A relating to TANGIBLE ASSETS,

under the heading III. MACHINERY AND PLANT, in item

(3), after sub- item (vi) and entries relating thereto, the

following shall be inserted, namely:—

"(via) New commercial vehicle which is acquired on or after

the 1st day of January, 2009 but before the 1st day of

April, 2009 and is put to use before the 1st day of April,

2009 for the purposes of business or profession [See

paragraph 6 of the Notes below this Table] 50".

4 ITA.No.845/PUN./2023

[F. No. 142/01/09-TPL]

INCOME-TAX (ELEVENTH AMENDMENT) RULES, 2009 - AMENDMENT IN NEW APPENDIX 1 NOTIFICATION NO. 37/2009 [F.No.142J01/2009-TPL], DATED 21-4-2009

In exercise of the powers conferred by section 295 of the

Income-tax Act, 1961 (43 of 1961), the Central Board of

Direct Taxes hereby makes the following rules further to

amend the Income-tax Rules 1962. Namely:-

(1) These rules may be called the Income-tax (Eleventh

Amendment) Rules, 2009.

(2) They shall come into force with effect from the 1st

day of April, 2010.

In the Income-tax Rules, 1962, in the Table to New

Appendix 1, in Part-A relating TANGIBLE ASSETS, under

the heading III, MACHINERY AND PLANT, in sub-item (via)

of item (3), for the words and figures "1st day of April,

2009", the words and figures "1st day of October, 2009"

shall be substituted at both the places.

7.9. The crux of the above notifications is that in

order to get the depreciation at the rate of 50%, the New

Commercial Vehicle is to be purchased between

01.04.2009 to 30.09.2009 and, mainly, in order to claim

the depreciation as per the CBDT Notification(supra) the

Vehicle should be put to use before the 1st day of October,

2009 for the purposes of business or profession and in the

5 ITA.No.845/PUN./2023

absence of Vehicle being put to use, there is no question of

depreciation being allowed on it. In the instant case,

briefly, the appellant relied on purchase date of car &

payment of car insurance on purchase date in order to

claim the depreciation at full rate i.e., 50% and the AO

relied on registration date of Car for restricting the

depreciation rate to 7.5% i.e., 50 percent of the

depreciation allowable for Plant & Machinery i.e., 15%.

During the course of assessment proceedings, the

appellant also submitted before AO that the motor was put

to use immediately on its purchase and there was no

reason for the company to halt to put the care to use till the

registration of Car with RTO Authority.

7.10. Therefore, the only dispute remaining in the

instant appeal is whether the appellant should be treated

to have ‘used’ and ‘put in use’ the Vehicle immediately

from the date of purchase notwithstanding the AO’s

contention that the Vehicle could not be operated till the

time of registration of Vehicle with RTO Authority. In the

light of CBDT Notifications as specified in the previous

paras, I am of the opinion that the word "put in use"

appearing in the IT Rules should be given a reasonable

meaning and the degree of utilisation of assets will not be

considered while determining whether the asset is put to

use or not. By introducing and amending the said

6 ITA.No.845/PUN./2023

provision, the CBDT wanted to give the benefit of

depreciation of the New Commercial Vehicle purchased by

the appellant and used for the purpose of business. There

is no dispute in the fact that appellant is the owner of the

Vehicle and the Vehicle was insured on the same day of

date of purchase i.e., 30.09.2009 and, therefore, any

damage the Vehicle could have caused to any third party

on date of purchase of insurance and the said damage is

claimable effectively from the said date. Further, the

Registration of Vehicle with RTO Authority is to determine

the legal ownership, hence for the purpose of claiming

depreciation, beneficial ownership is to be considered. The

same was held by the Apex Court in the case of Mysore

Minerals Ltd. Vs Commissioner of Income-tax [1999] 106

Taxman 166 (SC) / [1999] 239 ITR 775 (SC) / [1999].

Therefore, taking into considering the ratio laid down by

the CBDT in the Notification, I am of the considered opinion

that the submission made by appellant that the Vehicle

acquired by the appellant company was put to use

immediately is acceptable in the light of the fact the

Insurance Policy is effective immediately from the date of

purchase and, hence, the appellant is entitled to get relief

of deprecation rate. Accordingly, I hereby direct the AO to

delete the addition made to the tune of Rs.3,62,525/-. The

grounds of appeal on this issue are accordingly allowed.”

7 ITA.No.845/PUN./2023

Revenue’s pleadings and assessee’s stand adopted throughout

regarding the instant sole issue of disallowance of

depreciation. The Revenue’s case in light of the assessment

findings is that once the assessee’s corresponding vehement

had been registered after 01.10.2009, the impugned

depreciation had been rightly restricted to 50% as per Rule 5

of Income Tax Rules, 1962; New Appendix-1; III Plant &

Machinery (3)(via) in very terms. I find no merit in Revenue’s

arguments since it clearly appears to be an instance of change

of opinion not sustainable in law going by CIT vs. Kelvinator of

India Limited [2010] 187 Taxman 312 (SC). It is deemed

appropriate to observe herein that the assessment order

herein is assessment year 2010-2011 and the Assessing

Officer had framed his sec.143(3) assessment on 26.03.2013

followed by his sec.148 notice issued in the year 2017. This

chronology of events makes it clear that the Assessing Officer

had initiated his impugned action beyond a period of four

years from the end of the relevant assessment year without

even satisfying that assessee had not disclosed the relevant

particulars “fully” and “truly” in the foregoing former round.

That being the case, I quote Hindustan Lever Ltd. v. R.B.

Wadkar (2004) 137 Taxman 479 (Bom-HC) that such

reopening reasons have to be read on standalone basis

8 ITA.No.845/PUN./2023

without any scope of improvement or substitution or addition

therein; as the case may be.

4.1. The Revenue’s case hardly carries any merit as well

once it is evident that the assessee had duly got it’s vehicle(s)

insured on 30.09.2009 which has been treated “put to use” in

absence of any evidence to the contrary. Be that as it may, I

find no merit in the Revenue’s vehement arguments regarding

validity of the impugned reopening as well as on merits. It fails

in it’s instant appeal in very terms.

Order pronounced in the open Court on 10.05.2024.

Sd/- [SATBEER SINGH GODARA] JUDICIAL MEMBER Pune, Dated 10th May, 2024

VBP/- Copy to 1. The appellant 2. The respondent 3. The Pr. CIT, Pune concerned 4. D.R. ITAT, “SMC” Bench, Pune. 5. Guard File.

//By Order//

//True Copy //

Sr. Private Secretary, ITAT, Pune Benches, Pune.