NEW GOLDEN TRANSPORT COMPANY,MUMBAI vs. ITO WD 13(3)(2), MUMBAI

Briefly stated the facts are, assessee, a partnership firm is engaged in the business of transportation of goods. For the 2 Shah Bector And Sons assessment year under consideration, assessee filed its return of income on 30th October 2007, declaring total income of ` 5,42,301. In the course of assessment proceedings, Assessing Officer noticed that during the relevant previous year, assessee had purchased two galas (shops) and claimed depreciation of ` 7,83,665. He further noticed that these two galas were given on rent and rental income derived therefrom was offered for taxation under the head income from house property. Assessing Officer was of the view that as the income from galas were offered for taxation under the head income from house property, the claim of depreciation is not allowable. Accordingly, he disallowed depreciation claimed of ` 7,60,000, on the two galas. Assessee also accepted the disallowance by not preferring any further appeal. On the basis of addition made as aforesaid, the Assessing Officer initiated penalty proceedings under section 271(1)(c) by issuing notice under section 274 of the Act. In response to the said notice, though, assessee objected to the initiation of proceedings under section 271(1)(c) but the Assessing Officer rejecting the explanation of the assessee passed an order imposing penalty of ` 2.60 lakh. Being aggrieved of the penalty order, assessee preferred appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) also confirmed the penalty. The assessee being further aggrieved, is in appeal before the Tribunal.

Learned Authorised Representative submitted, though the assessee had not contested the disallowance of depreciation made by the Assessing Officer, however, certain discrepancies in facts which are very much relevant for the purpose of penalty including needs to be considered. He submitted, though the assessee had purchased two galas during the relevant previous year, but he had given on rent only one gala, that too, not for the entire previous year. He, therefore, submitted imposition of penalty on the basis that depreciation is not admissible on rental income derived from two galas which were offered for tax under the head income from house property, is factually incorrect. In support of such contention, he relied upon the ledger account of rent received which he sought to produce as additional evidence. He, therefore, submitted that when the rental income offered is not in respect of both the galas, assessee’s claim of depreciation cannot be considered to be totally inadmissible. He, therefore, submitted, the issue may be restored back to the file of the Assessing Officer for deciding afresh after considering the additional evidence.

Learned Departmental Representative has no objection for restoring the matter back to the file of the Assessing Officer.

In the result, appeal stands allowed for statistical purposes. Order pronounced in the open Court on 11.03.2016