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Income Tax Appellate Tribunal, BENCH: COCHIN
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against the order of NFAC dated 21.7.2020 for the assessment year 2012-13. The grounds of appeal raised in this appeal are as follows:
1) “The order of the Commissioner of Income Tax (Appeals), is against law and facts and circumstances of the case. Tax Effect - 4,47,481 2) The Commissioner of Income Tax (Appeal) erred in upholding the decision of restricting the 30% depreciation claimed on trailers to 15%
ITA No.356 /Cochin/2020 M/s. Cargomar P. Ltd., Ernakulam
Page 2 of 4 Depreciation despite the fact that the transportation business is carried out by the appellant. - Tax Effect -4,47,481 3) Without prejudice to the Ground no. 2, The Commissioner of Income Tax (Appeal) erred in concluding that the Clearing and forwarding agent does not include providing trailers on hire. This has resulted in wrong application of the Appendix 1 to the Rule 5(1) Income Tax Rules r.w.s 32 of the Income Tax Act, 1961 - Tax effect - 4,47,481
4) Without prejudice to the ground no 1,2 and 3, The Commissioner of Income Tax (Appeal) ought to have directed the Assessing Officer to give corresponding effect in the subsequent years depreciation computation.”
Facts of the case are that it was noticed by the AO that assessee claimed depreciation @ 30% on Trailer. It was also observed by AO that in the assessment year 2011-12, the depreciation on Trailer was allowed at 15% by AO and the assessee has not challenged the same before Ld. CIT(A). Accordingly, for this assessment year 2012-13 also it was restricted to 15% . Against this assessee is in appeal before us.
The Ld. A.R. submitted that in assessment year 2014-15, the depreciation has been allowed at 30% on the Trailer and the same to be allowed in this assessment year also.
The contention of the Ld. D.R. is that assessee has not done the business of hiring of Trucks and Trailer but has used it in its own business for hiring the equipments.
We have heard the rival submissions and perused the materials available on record. In assessment year 2014-15, higher rate of depreciation allowed by Ld. CIT(A) by observing in his order dated 29.12.2021 as follows:
ITA No.356 /Cochin/2020 M/s. Cargomar P. Ltd., Ernakulam
Page 3 of 4 6.2 It is seen that the appellant has been consistently claiming higher rate of depreciation of 30% in the preceding assessment years as well as in the succeeding assessment years, wherein the results have not been disturbed and the higher rate of depreciation in scrutiny assessments in these year's has been duly allowed by the department. Once the appellant is consistently claiming higher depreciation which has also been allowed by the department, hence in opinion to disturb it in a particular year, the claim of the appellant for higher depreciation would not be lawful and thus the higher claim of depreciation @ 30% claimed by the appellant during the assessment year under consideration is held to be a genuine claim. The Central Board of Direct Taxes in a circular number 652 dated 14-6-1993 wherein it has clarified that even if the assessee is using the motor lorries in its own business of transportation of goods, then also higher rate of depreciation would be allowed to them.
6.3 In view the CBDT circular as well as the consistent claim of the appellant for higher rate of depreciation in all the years throughout, we delete the disallowance so done by the Ld. A.O. and sustained by the Ld. CIT(A). Thus, the higher rate of depreciation at 30% is allowed to the appellant and accordingly this ground of appeal is allowed.”
5.1 Being so, in our opinion, the issue in dispute to be re-examined by the AO in the light of earlier and subsequent orders of Ld. CIT(A) in the case of present assessee. Accordingly, the issue is remitted back to the file of AO for fresh consideration.
Ground No.3 & 4, which do not require adjudication since we have remitted the main issue of depreciation to the file of AO for fresh consideration.
ITA No.356 /Cochin/2020 M/s. Cargomar P. Ltd., Ernakulam
Page 4 of 4 7. In the result, the assessee’s appeal is allowed for statistical purposes. Order pronounced in the open court on 15th Sept, 2022
Sd/- Sd/- (Beena Pillai) (Chandra Poojari) Judicial Member Accountant Member
Bangalore, Dated 15th Sept, 2022. VG/SPS
Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order
Asst. Registrar, ITAT, Bangalore.