1 ITA No. 4727.Del.12
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `G' NEW DELHI
BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT
AND
SMT DIVA SINGH, JUDICIAL MEMBER
I.T.A .No.-4727/Del/2012
(ASSESSMENT YEAR-2009-10)
ITO vs Sarkar Nath Oberoi
Ward-38(3), Room No. 176, Prop. B.N. Oberoi & Sons.
C. R. Building, I. P. Estate K 935, 5, Oak Drive, DLF
New Delhi Chattarpur
(APPELLANT) New Delhi
AAFP05107P
(RESPONDENT)
Appellant by: Sh. Gagan Sood, Sr.
DR
Respondent by: Sh. Sanjeev Jain, C.A
ORDER
PER DIVA SINGH, JM
This is an appeal filed by the Revenue against the order dated 28/6/2012 of
CIT XXVIII, New Delhi pertaining to 2009-10 assessment year on the following
grounds:-
"1. The Ld. CIT(A) grossly erred in deleting the addition made by the AO u/s 40a(ia)
of IT Act on the ground that there was no contract/sub-contract between the
assessee and the payees so as to oblige the asaessee to deduct TDS on payments
made to the payees.
2. The Ld. CIT(A) erred in ignoring the fact that the existence of a contract is
implicit on the basis of facts and circumstances of the case which is further
fortified by the act of the assessee in deducting the TDS on payments made to the
payees but defaulted in deposit of the same before the specified due date.
3. The Ld. CIT(A) erred in holding that the deducted TDS deposited before due date
of filing of return did not attract the disallowance u/s 40a(ia) of IT Act ignoring
the fact that the amendment of the section to this effect came on the statute for
A.Y 2009-10 with prospective effect.
2 ITA No. 4727.Del.12
4. The Ld. CIT(A) erred in deleting the addition on account of excess depreciation
on vehicles claimed by the assessee since the Ld. CIT(A) has not examined any
evidence filed by the assessee to give a finding that the assessee had been plying
its vehicles for hire entitling them for claim of higher depreciation and has merely
relied on submissions of the assessee.
5. The grounds of appeal are without prejudice to each other."
The relevant facts of the case are that the assessee in the year under consideration
declared an income of Rs.18,63,930/- which was selected for scrutiny after
issuance of notice u/s 143(2) along with 142(1) with questionnaire etc.
Consequent to this the Assessing Officer in his order passed u/s 143(3) made an
addition of Rs.32,98,804/-. The AO considering the fact that from the payments
made to sub contractors TDS was deducted but deposited in the next financial year
disallowed the same relying on the provisions of Section 40(a)(ia). The details of
the payments to sub-contractors on which disallowance was made are as under:-
S/No. Name of the Sub-Contractor Payment made during April, 2008 to
February, 2009, on which TDS
deposited in the next FY
1. M/s Shiv Shakti Minerals 1254355
2. M/s Panna Transport Co. 597826
3. M/s East India Minerals Co. Ltd. 1100000
4. M/s Mahakud & Brothers 346623
Total 3298804
2. In appeal before the First Appellate Authority the assessee assailed the
action of the AO on various counts including the argument that the disallowance
u/s 40 (a)(ia)of the Act could not be made as the amount of TDS was duly
deposited before the due date of filing the return of income . It was argued that
this fact had been taken note of by the Assessing Officer himself in the assessment
order that the assessee had deducted and deposited TDS for the period April 2008
to February 2009 before due date of filing of return u/s 139 91). Reliance was
placed upon
CIT VS. Virgin Creations (2011) (HC) (Kolkata) and
3 ITA No. 4727.Del.12
Piyush C Mehta Vs. ACIT (2012) (ITAT Mumbai)
3. Considering the arguments advanced the CIT(A) held that since the amount
of TDS was duly deposited before the due date of filing the return disallowance
u/s 40(a)(ia) could not be made. Apart from that he also held that the provisions of
Section 194C (1) and 194C(2) do not applicable to the facts of the case.
4. Aggrieved by this, the Revenue is in appeal before the Tribunal the Ld. Sr.
DR places reliance upon the assessment order. The authorized representative of the
assessee on the other hand places reliance on the impugned order and further
reliance on the judgment of the jurisdictional High Court in the case of CIT VS.
Naresh Kumar 262 CTR 389 (Delhi) (copy filed in the Court).
5. We have heard the rival submission and perused the material available on
record on a consideration of the same and taking note of the finding of fact
recorded by the AO that the TDS deducted for the period April 2008 to February
2009 was deposited before the due date of filing of return u/s 139 (1) of the Act,
we find no infirmity in the impugned order. It is seen that the said view is
supported by the judgment of the Jurisdictional High Court in CIT vs. Naresh
Kumar (cited supra) which has held that the amendment made to Section 40(a)(ia)
by the Finance Act 2010 should be given retrospective effect. The assessment year
taken into consideration by the said judgment is Y 2008-09 A.Y as such the said
judgment shall apply on equal force to A.Y 2009-10 which is the relevant
assessment year in the facts of the present case. Accordingly the grievance
agitated by the Revenue vide Ground NO. 1 to 3 is rejected and the impugned
order is upheld.
6. The next issue agitated by the Revenue is found discussed by the Assessing
Officer in para 12 of his order and for the sake of brevity the same is reproduced
for ready reference:-
4 ITA No. 4727.Del.12
"12. During the course of assessment proceedings, while going through the details of
Fixes assets schedule, it was noticed that the assessee had claimed depreciation on
Trucks @ 30% of the WDV, amounting to Rs.2284973/-, instead of the allowable
depreciation @15%. The AR was duly confronted on the discrepancy noticed and asked
to explain the same since no income from letting these Trucks on hire was declared. In
response to the same, it was stated vide letter dated 27/12/2011 that the assessee's nature
of business was Contractor of Transportation including loading & unloading as well as
mining and generation of Revenue is of two limbs, i.e. first is hiring of machines and
second is hiring of Labour, and in such case, contract is basically of composite nature. It
was also submitted that the applicable rate of deprecation on Trucks was 30%, as per
Rates of depreciation applicable for Motor Buses, motor lorries and motor taxis used in a
business of running them on hire. However, it is seen from the records that the assessee
has not declared any income from letting the Trucks on Hire and prima-facie, the
assessee has used these Trucks owned by him for his own busienss purpose and did not
let these out on hire, whereby it would have earned income from such letting. As such,
the Trucks owned by the assessee and used for his own business purposes, and which
were note let out on Hire, are entitled to depreciation @15% only. Accordingly, a sum of
Rs.1142486/-, being the excessive deprecation claimed on Trucks, which were not let out
on Hire, will be disallowed as business expenditure after restricting the depreciation
claim to 15% of the WDV and the same will be added back to the income of the
assessee."
7. In appeal before the first appellate authority, the assessee assailed the action
of the Assessing Officer contending that the Assessing Officer in Para 12 has tried
to override the basic nature of the transaction and consequently disallowed the
claim for high depreciation. It was submitted that the assessee has been engaged in
the business of transportation which includes loadings as well as unloading of iron
ore, minerals etc. from the mines. It was submitted that the assessee entered into
transportation contract with M/s East India Minerals Ltd. for transportation of iron
ore, minerals etc. from crusher stockpile to Railway sidings. Attention was invited
to the correspondence with East India Minerals Ltd.in regard thereto on the basis
of these copies emphasis was laid on the fact that the payments agreed to between
the parties also consisted of hire charges for transportation of material from one
place to another. Reliance was placed upon Circular No. 652 dated 14/6/1993 in
support of its claim that higher deprecation will be admissible on motor lorries
used in the assessee's business of transportation of goods on hire. Relying on the
5 ITA No. 4727.Del.12
same it was argued that there is no bar if the assessee used its own commercial
assets ie. vehicle for business purposes keeping in view the commercial
expediency. The use of the vehicles it was contended has resulted into savings in
revenue outgo which would have been due to payment of hire charges to outsiders.
It was argued that the assessee has been able to save and indirectly earn more profit
out of the use of its own assets for transportation. Reliance was placed upon the
following decisions:-
" CIT Vs. S. C. Thakur & Bros. (2009) 18 DTR 271 (Bom)
CIT Vs. Sharma Motor Service 148 CTR 75 (HC) MP
7.1 Relying upon the principle laid down in the circular as well as the judicial
precedents, it was submitted addressed the legislative intent to allow the benefit of
higher depreciation to the persons involved in the business of running motor cars,
motor lorries on hire as well as those using their own vehicles for transporting
goods on hire which has been done in the present case. It was submitted that the
assessee has used its own tippers for commercial purposes and these are registered
as heavy goods vehicle with the Registering Authority supported by Certificates of
the Registration Authority which was placed on record. It was further argued that
the allegation of the Assessing Officer that the assessee has not declared any
income from trucks on hire was totally unjustified as the income earned from
transportation of goods on hire stands included in the business income of the
assessee as the assessee has entered into a composite contract and hire charges are
duly included in the business of the assessee. Reliance was also placed on Dr. K.
R Jayachandran 212 ITR 637 (Ker) for the following proposition:-
" Plying of the ambulance van on hire itself constituted the business of the
assessee though it may be incidental to the running of the hospital. The hire
charges received were assessed under the head Business. Hence the
assessee is entitled to depreciation at the rate of 40%.
6 ITA No. 4727.Del.12
8. Considering the explanation offered the CIT came to the following
conclusion:-
" I have carefully considered the contention of the appellant as well as the case laws and
circular relied upon. The contention the Assessing Officer is incorrect as he has not
appreciated the facts of the case. Principle laid down in the circular and judicial
precedents clearly reiterates intention of legislature to allow benefit of higher
depreciation to the persons involved in the business of running motor cars, motor lorries
etc. on hire as well as using these vehicle for transporting goods on hire. The word
`hired' used by statute was only to indicate that some income should be rendered to
taxation by utilization of those assets in fact tippers/trucks were used in appellant's
business of transportation and income from such activity was duly included in business
income as appellant had entered into a composite contract. The Tax Auditor has duly
certified depreciation claim of the appellant. The Assessing Officer is not justified in
making an addition of Rs.1142486/- holding that the depreciation should be charged @
15% instead of 30%. I therefore, delete the addition. Appeal on this ground is allowed."
9. Aggrieved by this, the revenue is in appeal before the Tribunal. The Ld.
Sr. DR placed reliance upon the assessment order. The authorized representative
of the assessee on the other hand placing reliance upon the impugned order and the
submissions advanced before the Bench placed further reliance on Circular 652
relied upon before the CIT(A) on the basis of which it was contended that the
assessee had entered into a composite contract wherein it was also tasked with
transportation of iron ore/minerals etc from the crusher stockpile to the railway
sidings . Accordingly, placing reliance upon the impugned order, it was his
submission that the departmental appeal deserves to be dismissed.
10. We have heard the rival submissions and perused the material available on
record. Considering the same wherein the facts are not in dispute in as much as
that the assessee entered into a transportation contract with M/s East India
Minerals Ltd. for transportation of Iron ore etc. from crusher stockpile to railway
sidings which has not been assailed by the revenue by way of any argument on fact
or any evidence led to show that a fact has been wrongly taken into consideration,
in the absence of the same, we are unable to come to a contrary finding wherein
admittedly the commercial heavy goods vehicles belonging to the assessee have
7 ITA No. 4727.Del.12
been used for hire for transporting the goods from one place to the other .
Considering the Circular No. 652 dated 14/6/1993 and the judicial precedent relied
upon before the CIT(A) in the absence of any contrary decision cited by the
Revenue we find no good reason to interfere with the finding arrived at in the
impugned order. Being satisfied by the reasoning and finding arrived at in the
impugned order. Ground No. 4 of the revenue is dismissed.
11. In the result, the appeal of the Revenue is dismissed.
The order is pronounced in the open court on 29th of April, 2014.
Sd/- Sd/-
(G. D. AGRAWAL) (DIVA SINGH)
VICE PRESIDENT JUDICIAL MEMBER
Dated: 29/04/2014
*R. Naheed*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
8 ITA No. 4727.Del.12
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