2020 (8) TMI 598 - AT - Income Tax

Tribunal affirms recalculated depreciation, rejects higher rates claim for lack of evidence.

GVV Construction Pvt. Ltd. Versus DCIT, Corporate Circle-1 (1), Bhubaneswar

GVV Construction Pvt. Ltd. Versus DCIT, Corporate Circle-1 (1), Bhubaneswar - TMI Issues Involved:1. Validity and justification of the assessment order under section 143(3).2. Application of judicious mind by the Assessing Officer (AO).3. Consideration of submissions and evidence by the AO.4. Claim of depreciation on specific assets.5. Classification of vehicles for depreciation purposes.6. Admissibility of additional/revised grounds of appeal.Issue-wise Detailed Analysis:1. Validity and Justification of the Assessment Order:The appellant challenged the assessment order dated 10.02.2016, arguing it was 'unjustified, arbitrary, hypo-technical and bad in law.' The Tribunal found the assessment to be procedurally valid, rejecting the appellant's claims of arbitrariness.2. Application of Judicious Mind by the AO:The appellant contended that the AO did not apply a judicious mind and had a preconceived notion. The Tribunal reviewed the AO's process and found that the AO had considered the submissions and evidence provided, thus applying a judicious mind.3. Consideration of Submissions and Evidence by the AO:The appellant argued that the AO ignored submissions, documents, case laws, and statements, particularly regarding the claim of depreciation. The Tribunal noted that the AO had indeed reviewed the submissions and evidence but found them insufficient to substantiate the claim for higher depreciation. The AO's observation that the appellant failed to provide adequate proof of hiring out the vehicles was upheld.4. Claim of Depreciation on Specific Assets:The core issue was the appellant's claim of depreciation at 30% on certain assets categorized as motor lorries used for hire. The AO recalculated depreciation at 15%, as the appellant could not demonstrate that the assets were used solely for hire. The Tribunal upheld the AO's decision, noting that the appellant failed to provide agreements, bills, or details substantiating the hire of the vehicles.5. Classification of Vehicles for Depreciation Purposes:The appellant claimed higher depreciation on assets like trucks, tippers, and concrete mixers, arguing they were motor lorries. The AO and Tribunal found that these assets did not qualify as motor lorries under the Income Tax Act and the Motor Vehicles Act. The Tribunal emphasized that higher depreciation is only applicable if the vehicles are used exclusively for hire, which the appellant could not prove.6. Admissibility of Additional/Revised Grounds of Appeal:The Tribunal considered the additional/revised grounds of appeal filed by the appellant but found them to be redundant as they were already covered in the original grounds of appeal. Thus, the Tribunal proceeded to decide the case based on the original grounds.Conclusion:The Tribunal dismissed the appeal, affirming the AO's recalculated depreciation and rejecting the appellant's claims for higher depreciation rates. The Tribunal found that the appellant failed to provide sufficient evidence to prove that the assets were used exclusively for hire, which is a prerequisite for claiming higher depreciation rates under the relevant tax provisions. The appeal was dismissed in its entirety.