SRI MANORANJAN MAITY,PURBA MEDINIPUR vs. ITO, WD-1, HALDIA, PURBA MEDINIPUR

The first issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO of Rs.2,75,600/-.

Briefly stated facts are that the AO during the course of assessment proceedings noticed that there is deposit of Rs.2,75,600/- in assessee’s bank account, hence he requested the assessee to explain the same. The assessee explained that one Smt. Ashru Kana Jana has purchased bus from the assessee and she deposited the sum of Rs.2,75,600/- in his savings bank account. But the AO disbelieved this explanation and made addition of this amount. Aggrieved, assessee preferred appeal before CIT(A), who also disbelieved the explanation and confirmed the addition. Aggrieved, assessee is in second appeal before Tribunal.

I have heard rival submissions and gone through facts and circumstances of the case. I find that before the lower authorities the assessee filed an affidavit sworn by Smt. Ashru Kana Jana, the purchaser of the bus wherein she had deposed that she purchased the bus from the assessee for an amount of Rs.2,75,600/- and deposited the aid amount in the savings bank account of the assessee. It is also a fact recorded by CIT(A) that this bus was transferred in the name of Smt. Ashru Kana Jana vide para 6.2 of his order as under: “6.2. I have gone through the appellant's reply. The appellant's submission regarding the income taxable under section 44AE is acceptable. However as regards the depreciation and capital gains in respect of the motor bus, I find that the appellant has not disputed that the ownership of the motor bus had been transferred on 18.03.2009. It is also not disputed that an amount of Rs. 4,20,000/- was received from Smt. Ashru Kana Jana. The appellant claims that the consideration was actually Rs.275600/- as discussed above in para no. 4 above, but as held earlier, the motor bus was actually transferred for a consideration of Rs. 4,20,000/- and the undisputed date of transfer of ownership was 18.03.2009. The appellant's claim that the possession was with the appellant even after transfer of the ownership is not supported by any evidence. As the appellant did not own the asset on the last date of the previous year and the block had ceased to exist no depreciation is allowable on the motor 2 Manoranjan Maity AY 2009-10 bus and short term capital gain of Rs.9147/- as proposed in the show cause letter as per the provisions of section 50(2) of the Income-tax Act, 1961 has to be brought to tax. Hence the Assessing Officer is directed to disallow deprecation of Rs. 123256/- claimed on the motor bus and, bring to tax short term capital (i.e. sales proceeds of Rs.4,20,000 – w.d.v of Rs.410853) in respect of the ceased block of asset of motor bus. The appellant has agreed that double deduction of Rs.66,183/- on account of depreciation in respect of mini truck has been claimed. Hence the Assessing Officer is directed to disallow the excess deduction of Rs.66183/- claimed by the appellant.” I find that once this bus is transferred for an amount of Rs.4.20 lacs and assessee has deposited this amount of Rs.2,75,600/- in assessee’s savings bank account, the amount itself is explained. In term of the above, we delete the addition. This issue of assessee’s appeal is allowed.

Coming to second issue of assessee’s appeal in regard to disallowance of depreciation on this bus amounting to Rs.1,23,256/-.

I have heard rival submissions and gone through facts and circumstances of the case. I find that in the above para I have already noted that the motor bus was transferred in the name of Smt. Ashru Kana Jana on 18.03.2009 and once this is the position, the assessee is not entitled to depreciation and CIT(A) has rightly disallowed the same. This issue of revenue’s appeal is dismissed.