TaxTMI 
TaxTMI 
2020 (8) TMI 598
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....aim of depreciation to the tune of Rs. 33,42,185/- to the total income of the appellant. Although the appellant has furnished all the evidences and papers that has been asked for during the assessment proceedings. The Learned Assessing Officer has ignored that evidences and explanations of the appellant in totality with a reason and opinion on the body of the order that the explanation of the appellant are not acceptable in nature. 4. That the submission made by the appellant in response to the show cause notice on dt. 15.01.2016 as regards the claim of depreciation with supportive evidences and legal pronouncements has not been accepted by the learned Assessing Officer on preconceived notion and without application of judicious mind. 5. That the appellant carves, leave to add or to amend the grounds before or at the time hearing of this appeal. 2. Further the assessee vide letter dated 07.08.2020 has filed additional/revised grounds of appeal, which read as under :- 1. For that, the learned C.I.T.(A) has committed gross error of fact in not accepting the explanation of the Assessee and in simply confirming the disallowance of depreciation of Rs. 33,42,185.00 made by the lear....
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....s and further the vehicles were not actually given on hire, particularly when, both findings are contrary to the statutory provisions of law and the Appellant is lawfully entitled for depreciation @30% on those vehicles. Impugned addition thus, being not sustainable in the eye of law is liable to be deleted in the interest of justice. 3. That, the order U/s. 143(3) dated 10.02.2016 passed by the learned Assessing Officer for the Assessment year 2013-14 is unjustified, arbitrary, hypo-technical and bad in law. 4. That, the learned Assessing officer has passed the order having all materials and evidences in his hand without application of judicious mind with a preconceived notion. 5. That, the learned Assessing Officer has ignored the submissions made by the Appellant during the course of hearing of the proceeding and more over, have totally ignored the papers, documents, case laws and statement submitted on various date of hearing of the case and thereby added the claim of depreciation to the tune of Rs. 33,42,185.00 to the total income of the Appellant. Although the appellant has furnished all the evidences and papers that has been asked for during the Assessment proceedings.....
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....per Section 32 of the Act. In this regard the AO issued show cause notice dated 04.01.2016 requesting the assessee to show cause as to why the following 14 items should not be treated as plant and machinery, on which admissible rate of depreciation as per I.T.Act, 1961 is 15%. Only, motor buses, motor lorries and motor taxies used in a business of running of them hire is eligible for depreciation @30%. It was also mentioned by the AO that none of the following 14 items are coming under motor buses, motor lorries and motor taxies. It was further mentioned by the AO that no income from hiring the 14 items are shown in the profit and loss account for the F.Y.2012-2013. The pictures of the machineries/assets are as under :- 8. Against the show cause notice issued by the AO the assessee filed written submissions along with picture of the said impugned assets/machineries, which has been incorporated by the AO in the assessment order, are as under :- "Dear Sir, GVV Construction private limited is a private limited company registered with ROC Odisha, Cuttack. The accounts of the company has been drawn up as per the provision of the companies Act . Based on the audited account the depr....
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.... other than 'motor vehicles/buses/lorries would have been given on hire. It was also observed by the AO that the onus lies on assessee to prove that only vehicles eligible for higher depreciation were given on hire. The assessee before the AO referred to the CBDT Circular No.609 dated 29.07.1991 and also cited many judgments by the assessee. The AO further noticed that for claiming higher rate of depreciation the assets must be fallen under the category of motor vehicles/buses/lorries as prescribed in the Income Tax Act. But here there is no such case. Accordingly, the AO recalculated the depreciation @15% as prescribed by the Income Tax Act under the plant and machinery on the 14 items totaling excess depreciation calculated Rs. 33,42,185/- and added back to the total income of the assessee. In addition to the above various other disallowances, the AO assessed the total income of the assessee at Rs. 4,16,88,061/-. 10. Feeling aggrieved from the order of the Assessing Officer, the assessee filed appeal before the CIT(A) and the CIT(A) after considering the submissions of the assessee and findings recorded by the AO, dismissed the appeal of the assessee. 11. Aggrieved from th....
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....hand Bagaria [2002] 120 Taxman 201/249 ITR 720 (Madhya Pradesh): ii) Varindra Construction Company [2012] 19 taxmann.com 244 (Punj & Har); iii) Pradip N. Desai [2012] 21 taxmann.com 151 (Gujarat); and iv) Rural Communication and Marketing (P.) Ltd. [2020] 113 taxmann.com 121 (Delhi-Trib) 14. After hearing both the sides and perusing the entire material available on record and case laws cited by both the sides, we noticed that the assessee is engaged in the civil construction business and has claimed depreciation at a higher rate on 14 impugned machineries which is not prescribed as per the New Appendix I Part-A III(ii) appended to the Income Tax Rules, 1962, as amended from time to time. After going through the assessment order, we found that the assessee has himself accepted that there was a mistake in calculating the depreciation and he submitted correct depreciation chart as per Income Tax Act as Annexure-1 but it was not produced before us for our ready reference. The AO has also observed that the assessee has received hire charges which should have been separately shown in the financial statement but credited to the hire charges account, therefore, it is not clear that ....
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.... entertained because of the reason that the first condition (should be used on hire basis) is not fulfilled in any case. Also for any change in claim of depreciation, the assessee should have filed revise return of income for the said assessment year, which was not done by the assessee company. 15. From the above discussion, it is clear that the AO has disallowed depreciation only on 14 items/machines/assets out of 20 items/assets and calculated the excess depreciation claimed by the assessee on 14 items only which reads as under :- Assets Rate of depreciation Depreciation claimed (in Rs.) Depreciation actual allowable under I. T. Act, 1961 (inRs.) Excess claimed (in Rs.) Excavators 15% 2107286 1505432 601854 Concrete Mixture 15% 157247 115929 41318 Vibrator 15% 61813 43312 18501 Road Roller 15% 318894 180240 138654 Paver Finisher 15% 82152 60566 21586 Stone Crusher 15% 4844691 3418032 1426659 Mobile concrete Mixture 30% 1456832 1075750.52 381081.48 Ajax-2000 15% 220408 162495 57913 EC- 290(Engine) 15% 127715 94157 33558 Conmat Concrete Paver 30% 1004299 761203.68 243095.32 Ex-200 15% 84158 96920 -12762 Schwing Stetter ....
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....ate service vehicle, or educational institution bus other than a motor cycle, invalid carriage, light motor vehicle or heavy passenger motor vehicle; 25. "motorcab" means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward; 26. "motor car" means any motor vehicle other than a transport vehicle, omnibus, road-roller, tractor, motor cycle or invalid carriage; x x x 28. "motor vehicle" or "vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of 1 Subs. & ins. by Act. propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding thirty-five cubic centimetres;" 16. From the above provisions of the Motor Vehicles Act, the assessee was required to obtain registration from some assets as is clear from the picture of the assets showing in the assessment o....
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....the trucks were occasionally, used for hiring but to its sister concern when not in use by the assessee. The. assessee claimed depreciation at 40 per cent. on the trucks which was allowed by the Income-tax Officer, but subsequently the Commissioner of income-tax exercising his power under section 263 of the Income-tax Act came to the conclusion that the rate of depreciation at 40 per cent. is allowable only when the assessee was carrying on the business of running trucks on hire, accordingly, the reference was answered by the court in favour of the Revenue and against the assessee. Similar view was taken in another decision of the Rajasthan High Court in the case of CIT v. Manjeet Stone Co. [1991] 190 ITR 183. The Karnataka High Court has also taken the same view in the case of Veeneer Mills v. CIT [19931 201 ITR 764 , wherein the assessee was a manufacturer of plywood and used to transport the timber which is the raw material in the manufacture of plywood through its own lorries. The dominant purpose of these lorries was the transportation of the material belonging to the assessee in connection with its manufacturing work. However, on some occasions, when the lorries were idle, ....