TMI Blog2014 (8) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... R Appellant by : Shri R.A. Pant, DR Respondent by : Shri Rahul K. Hakani O R D E R PER D. KARUNAKARA RAO, AM: There are two appeals under consideration. ITA No.8061/M/2011 is filed by the Revenue and Cross Objection No.240/M/2012 is filed by the assessee. Both these appeals are filed against the order of the CIT (A)-32, dated 21.9.2011 for the assessment year 2008-2009. Since, the issues raised in both the appeals are connected, therefore, for the sake of convenience, they are clubbed, heard combinedly and disposed of in this consolidated order. 2. Firstly, we shall take up the appeal ITA No.8061/M/2011 filed by the Revenue on 1.12.2011 against the order of the CIT (A) dated 21.9.2011. In this appeal, Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same was treated as unexplained sales. It is the finding of the AO that no evidence was furnished by the assessee during the assessment proceedings. There were other expenses incurred in cash. Considering the peculiar circumstances of the case, AO made a disallowance of ₹ 80 lakhs of expenses in toto. Matter travelled to the first appellate authority. 4. During the proceedings before the first appellate authority, regarding the said two parties i.e., M/s. Bhakti Trading Co and M/s. Sunrise Enterprises, assessee made various submissions furnishing the banking transactions involving these two suppliers and submitted that the payments were made by these parties through account payee cheques, the copies of the invoices were also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is unsustainable. 6. On the other hand, Ld Counsel for the assessee heavily relied on the order of the CIT (A) and reiterated the submission made before the lower authorities. 7. We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. On perusal of the order of the CIT (A) in general and para 3.3 in particular, we find the same is relevant in this regard. For the sake of completeness of this order, relevant portions from the para 3.3 of the CIT (A)‟s order are reproduced here which read as under: 3.3 In fact, operational profits of past 4 years before depreciation are as under: AY Turnover Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of expenditure of ₹ 80 lakhs, made by the AO cannot be sustained. However, it is noted that substantial portion of the labour expenses are incurred in cash which are not open to verification. Since, the assessee himself had agreed during the assessment proceedings to be taxed at the net income @ 6% before depreciation as against the declared profit before depreciation @ 5.94%. Therefore, if the assessee is assessed at income @ 6% before depreciation, it will cover up the leakage of revenue on account of non-verifiability of cash expenses on labour claimed by the appellant. On the turnover of ₹ 49,80,65,227/- the profit before the depreciation @ 6% comes to ₹ 2,98,83,913/-. Since, the appellant has disclosed the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, during the first appellate proceedings, assessee demonstrated the use of the asset and constructive / beneficial ownership of the asset and he relied on various decisions i.e., Mysore Minerals Ltd 239 ITR 775 (SC), Dilip Singh Sardarsingh Bagga 201 ITR 995 (Bom), Mirza Attaullah Baig Anr 202 ITR 291 (Bom), 240 ITR 191 (Del) (FB), 257 ITR 88 (Del), Atma Ram Trust 45 ITD 556 (Del), Usha Rectifier Corpn 35 TTJ (Del) 602, 17 ITD (Bang) 799, 57 ITD 507 (Del) which are relevant for the proposition that the transfer of the assesset in the name of the sister concern is not a prerequisite for claim of depreciation u/s 32(1) of the Act. 10. We have heard both the parties and perused the orders of the Revenue Authorities as well as the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration under Motor Vehicle Act in name of assessee is not a pre-requisite to claim depreciation u/s 32(1). Under these circumstances, the disallowance of depreciation on the JCB by the AO on grounds of non-registration in assessee‟s name, is not justified and the AO is directed to allow the depreciation of the JCB. 11. Considering the above, the same is self-explanatory and the transfer of asset to the assessee‟s name is not a prerequisite so long as the asset in question is finally used and assessee is constructive and beneficial owner of the same. Therefore, the CIT (A) has rightly adjudicated the issue under consideration and the decision taken by him is fair and reasonable and it does not call for any interference. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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