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SEC Industries P. Ltd., Versus DCIT, Circle 3 (1) , Hyderabad

2015 (12) TMI 554 - ITAT HYDERABAD

Revision u/s 263 - denial of depreciation at 50% claimed and allowed by the A.O. on ‘new commercial vehicles’ - Held that:- As seen from the invoices, assessee has purchased EISHER Vehicle with 90PS Max. Eng. Power which was registered as ‘Campers Vans’ on 27.02.2009. The total value of this asset was at ₹ 13,38,235. Since this vehicle was purchased in the previous year relevant for A.Y. 2009-2010, assessee has claimed depreciation in that year at 50% as per the Rules. Since the vehicle wa .....

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incipal CIT, without considering the facts on record cannot be upheld, leave alone on legal principles.

Coming to the other asset which was acquired during the year, it was TATA ACE purchased at cost of ₹ 2,93,444 and registered as ‘goods carriage LMV’ on 27.04.2009. This vehicle was put to use as per the provisions before 1st October, 2009 during the year. Thus, it is entitled for depreciation at 50%. If at all, the Principal CIT would have to consider that there is an error, h .....

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new commercial vehicles acquired between 01.01.2009 to 01.10.2009 are eligible for depreciation at 50%. Nowhere in the Rules it was prescribed that they are to ‘put to use in the business of running them on hire’. The Coordinate Bench in the case of Avanti Feeds Ltd., vs. DCIT, Circle 1(1), Hyderabad (2009 (1) TMI 543 - ITAT HYDERABAD) analysed the Rules as applicable between the period 01.10.1998 and 31.03.1999 and came to the conclusion that new commercial asset acquired during the above perio .....

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to set aside the validly completed assessment under section 143(3). In view of that, the order of Principal CIT u/s 263 is set aside and that of the A.O. is restored. - Decided in favour of assessee. - ITA.No.814/Hyd/2015 - Dated:- 9-10-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Assessee : Mr. A.V. Raghuram For The Revenue : Mr. Konda Ramesh, CIT-DR ORDER PER B. RAMAKOTAIAH, A.M. This is an assessee s appeal against the Order of Principal CIT .....

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₹ 4,01,94,019. A.O. completed the assessment under section 143(3) on 23.01.2013 inter alia, disallowing depreciation on building which was claimed in excess and another disallowance under section 40(a)(ia). The Principal CIT examined the record and has come to a conclusion that A.O. has not verified the claim of depreciation on commercial vehicles at 50% which was allowed at ₹ 6,48,560. Accordingly, he issued a notice under section 263 of the IT Act on 05.03.2015 calling for objecti .....

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. Assessee also relied on the decision of the ITAT in the case of Avanti Feeds Ltd., vs. DCIT, Circle 1(1), Hyderabad (2010) 35 SOT 50 (Hyd.), for the proposition that under the proviso to clause 3(b) to section 32(1), higher rate of 50% depreciation is available for new commercial vehicles acquired in view of Explanation given to the words Commercial Vehicle . It was submitted that the order of the A.O. was not erroneous or prejudicial to the interests of the Revenue. Accordingly, assessee obje .....

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wing grounds : 1. The order of the Learned Principal Commissioner is contrary to the facts and law on the points in dispute. 2. The Learned Commissioner erred in assuming his jurisdiction U/s. 263 based on the audit objection and to that extent the order is not in accordance with law. 3. The Learned Principal Commissioner has erred in not accepting the contention of the appellant that the Commercial Vehicles need not be used for the purpose or letting then on hire to claim depreciation @ 50%. 4. .....

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Principal Commissioner erred in not following the decision of ITAT in the case of Avanti Feeds Ltd vs. DCIT [2010] 35 SOT 50 (HYD) wherein it was held that the new commercial vehicles should be used for the purpose of business or profession and no requirement of letting them on hire to claim higher rate of depreciation. 4. Ld. Counsel submitted that assessee has submitted the detailed depreciation schedules to the A.O. including the vouchers for purchase of assets and A.O. having examined the c .....

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-3(1) in the course of assessment proceedings wherein it was clearly indicated that opening WDV as per the depreciation schedule was ₹ 10,03,676 having been allowed 25% depreciation (50% rate of depreciation) on the actual cost of the assets therein at ₹ 13,38,235. It was also informed that there was only one addition of vehicle valued at ₹ 2,93,444 which was also included in the depreciation schedule during the year. The relevant invoices were placed at pages 53, 54, 55 of the .....

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ay, we are of the opinion that the learned Principal CIT erred in invoking the provisions of section 263 to deny a valid claim. As seen from the depreciation schedule Appendix-I under Rule -5, under the head Machinery and Plant in Part-A, there are motor-cars other than those used in a business of running them on hire, acquired or put to use on or after 1st day of April, 1990 allowing depreciation at 15%. However, in item No.3(via), it was prescribed as under : Block of assets Depreciation allow .....

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that they should be used in a business of running them on hire. As per notes to the Annexure-1, Item-6, commercial vehicle means Heavy Goods Vehicle , Heavy Passenger Vehicle like Motor Vehicle , Minimum Goods Vehicle and Minimum Passenger Motor Vehicle , but does not include Maxi Cab , Motor Cab , Tractor and Road Roller . The expressions used above of various vehicles shall have the same meaning respectively as assigned to them in Section-2 of the Motor Vehicles Act, 1988. As seen from the in .....

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eciation and opening WDV of this year stood at ₹ 10,03,676. Since assessee claim of 50% depreciation on that vehicle was made in earlier year and as no action was undertaken by the Principal CIT to modify that, we are of the opinion that Principal CIT erred in directing the A.O. to restrict the depreciation to 15% in this year. This action of the Principal CIT, without considering the facts on record cannot be upheld, leave alone on legal principles. 7. Coming to the other asset which was .....

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