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TMI Blog2008 (6) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... t appreciating the facts that the trucks in question were registered in the name of assessee's husband and it was only a sham arrangement to avoid the incidence of tax as no actual transfer of trucks took place. 3. That the learned CIT(A) erred in law and on facts in deleting the addition of Rs. 2,20,979 out of total addition of Rs. 4,56,979 made to the assessee's income on account of unexplained credits, without properly appreciating the facts and the circumstances of the case. 4. That the order of the learned CIT(A) being erroneous in law and on facts be vacated and the order of the AO restored." 3. In assessee's appeal, main ground is against holding that a sum of Rs. 2,36,000 remained unexplained in the hands of the assessee and second ground, which according to the learned Authorised Representative goes to the root of the matter is about making addition of Rs. 2,36,000 which was beyond the scope of limited scrutiny. 4. Now, we take up Revenue's appeal first. 5. The Revenue is aggrieved against the decision of the learned CIT(A) wherein he has allowed the claim of depreciation to the assessee on five trucks which she claims to have been purchased from her husband, Shri Rag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Departmental Representative supported the order of the AO whereas the learned Authorised Representative relied on the order of the learned CIT(A) and various authorities cited by him before the learned CIT(A). 9. We have considered the rival submissions and perused the material on record. In our considered view, there is no case for interference in the order of the learned CIT(A) on this issue. The Hon'ble Delhi High Court in the case of CIT vs. Basti Sugar Mills Co. Ltd. held that even if vehicles are not registered in the name of the assessee but assessee is using them and declaring income, he is entitled for depreciation. In that case, it was held that the transfer of movable property is not a condition precedent for legal ownership. Further, issue is covered in favour of the assessee by several decisions such as CIT vs. Salkia Transport Associates (1983) 33 CTR (Cal) 198 : (1983) 143 ITR 39 (Cal), Continental Construction Ltd. vs. CIT (1990) 85 CTR (Del) 116 : (1990) 185 ITR 178 (Del), CIT vs. Dilip Singh Sardarsingh Bagga (1993) 201 ITR 995 (Bom) and CIT vs. Mirza Ataullaha Baig & Anr. (1993) 202 ITR 291 (Bom). The authorities held that wide meaning must be given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset and is utilising the capital asset and thereby losing gradually the investment caused by wear and tear, and would need to replace the same by having lost its value fully over a period of time. It is well-settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the legislature in enacting s. 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time-being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not subserve the legislative intent." 11. Following the above decision, Hon'ble Delhi High Court (Full Bench) in the case of Gowersons Publishers (P) Ltd. vs. CIT held that assessee, in whose favour sale deed was not executed but it was using factory building for the purposes of its business, it was entitled for depreciation. Once assessee has paid full price for the property and was using the building in quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the records of the authorities under the Motor Vehicles Act." 14. As a result, we hold that mere non-registration of vehicles under Motor Vehicles Act will not disentitle an assessee for claiming depreciation. The purpose of registration under Motor Vehicles Act is different. It permits an assessee to ply the vehicle in any public place. It does not indicate a legal evidence of ownership. If a vehicle is registered in the name of a person, the presumption is that he is a legal owner of the vehicle but where the vehicle is not registered in the name of the assessee then it is not a presumption that assessee is not the owner of the vehicle. The ownership of the vehicle has to be determined from finances utilized in making purchases of vehicles, its control and management, use of the same as an apparatus for earning income. declaring income earned from these vehicles as assessee's in the return of income and their acceptance by the Department and there being no counter claim against such declaration. Since as facts stand, depreciation has been disallowed merely on the ground that vehicles are not registered in the name of assessee and no other facts about investment, transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the AO has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, he shall serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce any evidence or particulars specified therein or on which the assessee may rely, in support of such claim. 2. A notice is to be issued in the prescribed performa for limited scrutiny. Reasons have to be recorded in writing before issue of any notice under s. 143(2)(i). Hence proper maintenance of order sheet is essential. 3. For service of notice under s. 143(2)(i), there is a time-limit of 12 months from the date of receipt of return. This will require prior approval of the Jt. CIT/Addl. CIT range. The range head should monitor it on a regular basis. 4. For completion of assessments under s. 143(3)(i), there is a time-limit of two years (from the end of the year in which the income was first assessable). As such control registers have to be maintained to ensure that within the prescribed time under s. 153(1) assessment is done in all cases, where notices have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 6 of the AO's letter No. ITO/2(4)/Knp/2002-03 dt. 24th Dec., 2002. This Bench asked the learned Departmental Representative as to whether necessary approval has been obtained by the AO from the Addl. CIT, Range II, Kanpur on the second issue pertaining to the sum of Rs. 4,56,979; it was replied by the AO to the senior Departmental Representative vide his letter dt. 9th April, 2007, that documents pertaining to seeking of approval from Addl. CIT, Range II, in respect of second issue are not traceable. The learned Authorised Representative made inference from this that no such approval on the second issue has been obtained. The AO had in continuation of the proceedings of the first issue, sought for information and explanation of the assessee in respect of second issue pertaining to the inheritance of sum of Rs. 4,56,979. 20. The learned Departmental Representative opposed the admission of this ground because this issue has not been taken up by the assessee either before the AO or before the learned CIT(A). He submitted that objection to jurisdiction should have been taken within one month of the issuance of notice as provided under s. 124(3). He referred to the decision of Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether AO could take up the question of inheritance of assets amounting to Rs. 4,56,979 in a limited scrutiny case in which original notice after approval from Addl. CIT was issued on the question of depreciation only, requires to be admitted because it goes to the root of the matter and no further investigation is required to be carried out. It is a legal issue and requires to be adjudicated. We derive support in our decision from the judgment of Hon'ble apex Court in NTPC's case. However, the decision of Hon'ble Madhya Pradesh High Court in the case of CIT vs. Tollaram Hassomal is the only decision on the issue which says that after admission of the new legal ground, matter should be restored to the learned CIT(A) for adjudication. In this regard, we refer to the headnotes from the decision of Tollaram Hassomal as under: "Held, that the Tribunal having permitted the assessee to raise four additional grounds treating them to be legal grounds in appeal for the first time, should have set aside the order of the CIT(A) and remanded the case to the CIT(A) for deciding the appeal afresh on all the issues including on those four grounds raised by the assessee in the appeal before the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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