Income Tax Appellate Tribunal - Chennai
C.Chandrasekar, Chennai vs Acit Non Corporate Circle 7(1), Chennai on 7 January, 2019
आयकर अपील य अ धकरण, 'सी' यायपीठ, चे नई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH: CHENNAI
ी जॉज माथन, या यक सद य एवं ी इंटूर रामा राव, लेखा सद य के सम&
BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND
SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.2339/Chny/2018
नधा रण वष /Assessment Year: 2009-10
Shri C.Chandrasekar, Vs. The Asst. Commissioner of
Flat No.943, 54th Street, TVS Colony, Income Tax,
Anna Nagar West Extension, Non-Corporate Circle-7(1),
Chennai - 600 101. Chennai-600 034.
[PAN: ACRPC 2025N]
(अपीलाथ(/Appellant) ()*यथ(/Respondent)
अपीलाथ( क+ ओर से/ Appellant by : Mr. Jharta B. Harilal, FCA
)*यथ( क+ ओर से /Respondent by : Mrs. D. Rohini, Addl. CIT
सन
ु वाई क+ तार ख/Date of Hearing : 31.12.2018
घोषणा क+ तार ख /Date of Pronouncement : 07.01.2019
आदे श / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER:
This is an appeal filed by the Assessee directed against the Order of the Commissioner of Income Tax (Appeals)-7, Chennai ('CIT(A)' for short) dated 12.06.2010 for the Assessment Year (AY) 2009-10.
2. The Assessee raised the following grounds of appeal:
1. The order of the Assessing officer and the Commissioner of Income Tax (Appeals) [CIT(A)], are opposed to law and contrary to the facts and circumstances of the case.
2. The addition sustained by the Learned CIT(A) is erroneous in Law.ITA No.2339/Chny/2018 (AY 2009-10)
Shri C. Chandrasekar :- 2 -:
3. The Learned CIT(A)erred in not considering the CBDT Notifications, Income tax Rules.
4. The Learned CIT(A) failed to appreciate that the appellant is entitled for 50% depreciation on car as per the CBDT notification.
5. The Learned CIT(A) erred in not considering the judicial pronouncements produced during the course of appellate proceedings.
3. The brief facts of the case are as under:
The appellant is an individual and deriving income under head 'business'. The assessment for the AY 2009-10 was completed u/s. 143(3) of the Income Tax Act, 1961 (for short 'the Act') vide order dated 23.12.2011 at a total income of Rs. 1,35,94,873/-. Subsequently, it was noticed by the Assessing Officer (AO) that excess depreciation on car was allowed and accordingly a notice u/s. 154 of the Act was issued proposing to rectify the assessment order. In response to the said notice, it is submitted by the assessee that the Toyota Innova Car, which was classified on a commercial vehicle by Registration Authorities is used for business purpose and therefore, entitled for depreciation i.e., @ 50%. The said explanation was rejected by the AO by holding as under:
"3. It is pertinent to point out here that in exercise of powers available to the Central Board of Direct Taxes in prescribing the rates for depreciation, depreciation for commercial vehicles acquired on or after January 1, 2009 and put to use before April 1, 2009, has been increased to 50 per cent vide Notification No.10 of 2009 dated January 19, 2009. There has been an increase in depreciation for commercial vehicles from 40 per cent to 50 per cent. Commercial vehicle, should ordinarily mean any vehicle used for the purpose of commerce which includes profession. But "commercial vehicle" is understood in the Notes to the Depreciation Schedule as under:
"6. "Commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle" and "medium passenger motor vehicle" but does not include "maxi-cob", "motor-cab", "tractor" and "rood-roller". The expressions ITA No.2339/Chny/2018 (AY 2009-10) Shri C. Chandrasekar :- 3 -:
"heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle", "medium passenger motor vehicle", "maxi- cob ", "motor- cab ", "tractor" and "road-roller" shall hove the meanings respectively assigned to them in Sec. 2 of the Motor Vehicles Act, 1988 (59 of 1988)."
However, the classification in the Appendix prescribed under Rule 5 in pursuance of Sec. 32(1) for the purpose of understanding the entry. Entries under Item ill of Part A of the Appendix are relevant in this context. Entry 2 for which the prescribed rate is 15 per cent reads as under:
"(2) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after April 1, 1990."
Entry 3(11) for which the prescribed rate of depreciation is 30 per cent reads as under:
"(ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire." It may, therefore, be seen that motor cars qualify for depreciation at 20 per cent unless run on hire to merit depreciation at 30 per cent.
Entry 3(via) as inserted by the Income-tax (Third Amendment) Rules, 2009, reads: "(via) New commercial vehicle which is acquired on or after January 1, 2009, but before April 1, 2009, and is put to use before April 1, 2009, for purposes of business or profession, (See paragraph 6 of the Notes of the depreciation 'Table]".
In the tight of the above, the item 'commercial vehicles' as well as the entries as prescribed under the, depreciation schedule, would mean that commercial vehicles referred in the depreciation schedule are other than cars falling under Entry 2 and 3(11). The amendment to the rule is obviously intended to. cover only trucks and other heavy vehicles, besides other commercial vehicles hitherto entitled to depreciation at 30 per cent.
In the instant case, the assessee has claimed depreciation on Skoda Car which is not a commercial vehicle and therefore, the excess depreciation claimed required be disallowed. Accordingly, the allowable depreciation is. computed as under and accordingly, the assessment in this case for the Assessment Year 2009-10 is rectified u/s 154 of the Income-tax Act, 1961.
As the assessee's vehicle was not given on hire, it is not a commercial vehicle and that depreciation is allowable at 15% only. Further, it is seen that the said car was purchased after 30.09.2008, the deprecation had to be claimed at 50% of 15% i.e. at 7.5% only.
It is also seen from the records that the assessee had claimed depreciation on UPS battery at 60% which is not allowable for the reason that the UPS and battery is like any other plant and machinery, and that the allowable depreciation is 15% only."
4. Being aggrieved, an appeal was preferred before the ld. CIT(A), who vide impugned order dismissed the claim in respect of motor vehicle car by ITA No.2339/Chny/2018 (AY 2009-10) Shri C. Chandrasekar :- 4 -:
approving the reasoning of the AO. On perusal of orders of lower authorities, we do not find any reason to interfere with the orders of the lower authorities. Accordingly, we, dismiss the appeal filed by the assessee.
5. In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on the 07th day of January, 2019 in Chennai.
Sd/- Sd/-
(जॉज माथन) (इंटूर रामा राव)
(GEORGE MATHAN) (INTURI RAMA RAO)
या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
चे नई/Chennai,
2दनांक/Dated: 07th January, 2019.
EDN, Sr. P.S
आदे श क+ ) त3ल4प अ5े4षत/Copy to:
1. अपीलाथ(/Appellant 4. आयकर आयु6त/CIT
2. )*यथ(/Respondent 5. 4वभागीय ) त न ध/DR
3. आयकर आयु6त (अपील)/CIT(A) 6. गाड फाईल/GF