Ita/96/2015 Of Usha Johnson v. The Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, THE 25TH DAY OF NOVEMBER 2020/4THAGRAHAYANA,1942 ITA.No.96 OF 2015 AGAINST THE ORDER IN ITA 123/2012 DATED 14-11-2014 OFINCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH APPELLANT/APPELLANT IN ITA: USHA JOHNSONPROPRIETRIX, M/S.GLOBAL ROADWAYS, (NOW KNOWN ASMARUTHAYATH TRANSPORTS), MARUTHAYATH BUILDINGS,PALLIMUKKU, KUNDARA, KOLLAM. BY ADVS.SRI.M.GOPIKRISHNAN NAMBIARSRI.P.BENNY THOMASSRI.K.JOHN MATHAISRI.JOSON MANAVALANSRI.KURYAN THOMAS RESPONDENT/RESPONDENT: THE COMMISSIONER OF INCOME TAXAAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. BY ADV. SRI.CHRISTOPHER ABRAHAM INCOME TAX DEPARTMENTBY ADV. SRI.K.M.V.PANDALAI INCOME TAX DEPARTMENT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON25.11.2020, ALONG WITH ITA.100/2015, THE COURT ON THE SAMEDAY DELIVERED THE FOLLOWING: I.T.A.Nos.96 & 100 of 2015 -2- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, THE 25TH DAY OF NOVEMBER 2020/4TH AGRAHAYANA, 1942 ITA.No.100 OF 2015 AGAINST THE ORDERIN ITA 124/2012 DATED 14-11-2014 OF INCOMETAX APPELLATE TRIBUNAL,COCHIN BENCH APPELLANT/APPELLANT IN ITA: USHA JOHNSONPROPRIETRIX, M/S.GLOBAL ROADWAYS, (NOW KNOWN AS MARUTHAYATH TRANSPORTS), MARUTHAYATH BUILDINGS, PALLIMUKKU, KUNDARA, KOLLAM. BY ADVS.SRI.M.GOPIKRISHNAN NAMBIARSRI.P.BENNY THOMASSRI.K.JOHN MATHAISRI.JOSON MANAVALANSRI.KURYAN THOMAS RESPONDENT/RESPONDENT: THE COMMISSIONER OF INCOME TAXAAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. BY ADV. SRI.CHRISTOPHER ABRAHAM INCOME TAX DEPARTMENTBY ADV. SRI.K.M.V.PANDALAI INCOME TAX DEPARTMENT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON25-11-2020, ALONG WITH ITA.96/2015, THE COURT ON THE SAMEDAY DELIVERED THE FOLLOWING: I.T.A.Nos.96 & 100 of 2015 K.VINOD CHANDRAN & T.R. RAVI,JJ. ------------------------------------------------ I.T.A.Nos.96 & 100 of 2015 -------------------------------------------------- Dated this the 25[th] day of November, 2020JUDGMENT T.R.Ravi, J. These two appeals have been filed by the assessee under Income-tax Act, challenging the orders dated 14.11.2014 of theIncome Tax Appellate Tribunal, Cochin Bench, Cochin inI.T.A.Nos.123 and 124 of 2012. The dispute relates toassessments for the years 2006-07 and 2007-08. The only legalissue which arises for consideration in these appeals is whetherthe petitioner is entitled to claim depreciation on the vehicleswhich have been supplied to the Indian Oil Corp. Ltd. and BharatPetroleum Corporation Ltd., under a contract for transporting LPGcylinders, at the rate of 30% instead of 15%. According to theassessee, the nature of the business is hiring of vehicles whichentitles her to claim depreciation at the higher rate of 30%. T.R.Ravi, J. These two appeals have been filed by the assessee under Income-tax Act, challenging the orders dated 14.11.2014 of theIncome Tax Appellate Tribunal, Cochin Bench, Cochin inI.T.A.Nos.123 and 124 of 2012. The dispute relates toassessments for the years 2006-07 and 2007-08. The only legalissue which arises for consideration in these appeals is whetherthe petitioner is entitled to claim depreciation on the vehicleswhich have been supplied to the Indian Oil Corp. Ltd. and BharatPetroleum Corporation Ltd., under a contract for transporting LPGcylinders, at the rate of 30% instead of 15%. According to theassessee, the nature of the business is hiring of vehicles whichentitles her to claim depreciation at the higher rate of 30%. According to the Department, the nature of the business is"transport contract business" and hence the assessee is entitledto claim depreciation only at the rate of 15%. The AssessingOfficer in Annexure A order dated 20.2.2009, found that theassessee had claimed depreciation at the rate of 40% as against30% admissible. The Commissioner of Income Tax, in exercise ofpowers under Section 263 of the Income Tax Act, revised theassessments as per Annexure B order dated 28.1.2011, on theground that they are prejudicial to the revenue. According to theCommissioner, depreciation was allowable only at the rate of15% and not 30%. The assessee challenged the order in appealbefore the Tribunal. The Tribunal by order Annexure E dated26.4.2013 dismissed the appeal on the ground of delay. ByAnnexure F order in ITA Nos.194 and 195 of 2013, this Court setaside the order of the Tribunal and remitted the appeal to theTribunal for disposal on merits. Thereafter the Tribunal issuedAnnexure G order dated 14.11.2014. The Tribunal found that theassesse is not engaged in the business of running the vehicles on -5- hire and rejected the claim of the assessee. 2.Heard Sri Kuryan Thomas on behalf of the Appellantand Sri Christopher Abraham, Standing Counsel for the IncomeTax department. 3.The relevant entry in the table of rates at whichdepreciation is admissible reads thus: "Motor buses, motor lorries and motor taxis used in a business of running them on hire" 4.The rate of depreciation admissible for the abovevehicles is 30%. The counsel for the appellant placed before usCircular No.652 dated 14.6.1993, issued by the Central Board ofDirect Taxes to all Chief Commissioners of Income tax and allDirectors General of Income tax, which has been extracted inAnnexure G order also, clarifying that higher depreciation will beadmissible on motor lorries used in the assesse's business oftransportation of goods on hire and that the same will not beavailable if motor buses, motor lorries etc. are used in someother non-hiring business of the assessee. Read along with thecircular, the entry does not leave any room for doubt. Whether the business of the assessee is use of motor lorries in thebusiness of running them on hire or whether it has to be treatedas a transport contract business, will not make any difference,and in either case, the assessee will be entitled to claimdepreciation at the rate of 30%. 5.The Counsel for the appellant relied on the decision ofthe Hon'ble Supreme Court in Commissioner of Income Tax, the business of the assessee is use of motor lorries in thebusiness of running them on hire or whether it has to be treatedas a transport contract business, will not make any difference,and in either case, the assessee will be entitled to claimdepreciation at the rate of 30%. 5.The Counsel for the appellant relied on the decision ofthe Hon'ble Supreme Court in Commissioner of Income Tax, Gujarat vs. Gupta Global Exim Private Ltd. reported in[(2008) 17 SCC 87], wherein the Hon'ble Supreme Court laiddown that the user of the vehicles in the business of theassessee, of transportation, is the test for deciding whether anassessee is entitled to claim higher depreciation at the rate of30%. Applying the said test to the facts of this case, admittedly,the assessee is involved in supplying her vehicles on the basis ofa contract, for the purpose of transportation of LPG Cylinders ofM/s. Indian Oil Corporation and Bharat Petroleum CorporationLtd. This clearly shows that the business of the appellant is,facilitating transportation. The consideration is paid by the hirers on the basis of rates per kilometre. It was also pointed out by thecounsel for the appellant that following the dictum laid down inthe above judgment, the Bombay High Court had dismissed anappeal filed by the Department, in the decision inCommissioner of Income Tax v. S.C.Thakur and Bros.reported in [(2010) 322 ITR 463 (Bom)], holding that higherrate of depreciation is applicable to motor lorries used intransportation business. 6.We are convinced that going by the provision of law andthe Circular issued by the department and the dictum laid downby the Hon'ble Supreme Court in Gupta Global (supra), theorder Annexure B issued by the Commissioner of Income Taxunder Section 263 of the Income Tax Act, Annexure C orderissued giving effect to Annexure B order and Annexure G orderissued by the Tribunal cannot be sustained and we set aside thesame. Annexure A order of the Assessing Authority shall berestored. The questions of law raised in the appeals are decidedin favour of the assessee and against the Department. The I.T.A.Nos.96 & 100 of 2015 -8- Income Tax Appeals are allowed. The parties shall bear theirrespective costs. Sd/-K. VINOD CHANDRAN JUDGE Sd/- T.R. RAVI JUDGE dsn I.T.A.Nos.96 & 100 of 2015 -9- APPENDIX IN ITA 96/2015 APPELLANT'S ANNEXURES: ANNEXURE A:TRUE COPY OF ASSESSMENT ORDER DATED20.2.09.ISSUED TO THE APPELLANT BY THE INCOMETAX OFFICER, WARD-4, KOLLAM.20.2.09.ISSUED TO THE APPELLANT BY THE INCOMETAX OFFICER, WARD-4, KOLLAM. ANNEXURE B:TRUE COPY OF ORDER DT.28.1.2011 ISSUED TO THEAPPELLANT BY THE COMMISIONER OF INCOME TAX,THIRUVANANTHAPURAMAPPELLANT BY THE COMMISIONER OF INCOME TAX,THIRUVANANTHAPURAM ANNEXURE C:TRUE COPY OF PROCEEDINGS BEARING NO.IAP/W-4/KLM/2011-12 DATED 28.6.2011 ISSUED TO THEAPPELLANT BY THE INCOME TAX OFFICER.4/KLM/2011-12 DATED 28.6.2011 ISSUED TO THEAPPELLANT BY THE INCOME TAX OFFICER. ANNEXURE D:TRUE COPY OF APPEAL DT.21.4.2012 FILED BY THEAPPELLANT BEFORE THE INCOME TAX APPELLATETRIBUNAL, COCHIN IN RESPECT OF ASSESSMENT YEAR2006-07APPELLANT BEFORE THE INCOME TAX APPELLATETRIBUNAL, COCHIN IN RESPECT OF ASSESSMENT YEAR2006-07 ANNEXURE E:TRUE COPY OF COMMON ORDER IN ITA Nos.123 AND124/COCH/2012 DT.26.4.2013 ISSUED TO THEAPPELLANT BY THE INCOME TAX APPELLATE TRIBUNAL.124/COCH/2012 DT.26.4.2013 ISSUED TO THEAPPELLANT BY THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE F:TRUE COPY OF COMMON JUDGMENT DT.5.2.2014 ISSUEDTO THE APPELLANT BY THE HON'BLE HIGH COURT OFKERALA IN ITA NOS.194 AND 195/2013TO THE APPELLANT BY THE HON'BLE HIGH COURT OFKERALA IN ITA NOS.194 AND 195/2013 ANNEXURE G:TRUE COPY OF COMMON ORDER IN ITA Nos.123 AND124/COCH/2012 DT14.11.2014 ISSUED TO THEAPPELLANT BY THE HON'BLE INCOME TAX TRIBUNAL.124/COCH/2012 DT14.11.2014 ISSUED TO THEAPPELLANT BY THE HON'BLE INCOME TAX TRIBUNAL. I.T.A.Nos.96 & 100 of 2015 -10- ANNEXURE E:TRUE COPY OF COMMON ORDER IN ITA Nos.123 AND124/COCH/2012 DT.26.4.2013 ISSUED TO THEAPPELLANT BY THE INCOME TAX APPELLATE TRIBUNAL.124/COCH/2012 DT.26.4.2013 ISSUED TO THEAPPELLANT BY THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE F:TRUE COPY OF COMMON JUDGMENT DT.5.2.2014 ISSUEDTO THE APPELLANT BY THE HON'BLE HIGH COURT OFKERALA IN ITA NOS.194 AND 195/2013TO THE APPELLANT BY THE HON'BLE HIGH COURT OFKERALA IN ITA NOS.194 AND 195/2013 ANNEXURE G:TRUE COPY OF COMMON ORDER IN ITA Nos.123 AND124/COCH/2012 DT14.11.2014 ISSUED TO THEAPPELLANT BY THE HON'BLE INCOME TAX TRIBUNAL.124/COCH/2012 DT14.11.2014 ISSUED TO THEAPPELLANT BY THE HON'BLE INCOME TAX TRIBUNAL. I.T.A.Nos.96 & 100 of 2015 -10- APPENDIX IN ITA 100/2015 APPELLANT'S ANNEXURES: ANNEXURE A:TRUE COPY OF ASSESSMENT ORDER DATED20.2.09.ISSUED TO THE APPELLANT BY THE INCOMETAX OFFICER, WARD-4, KOLLAM.20.2.09.ISSUED TO THE APPELLANT BY THE INCOMETAX OFFICER, WARD-4, KOLLAM. ANNEXURE B:TRUE COPY OF ORDER DT.28.1.2011 ISSUED TO THEAPPELLANT BY THE COMMISIONER OF INCOME TAX,THIRUVANANTHAPURAMAPPELLANT BY THE COMMISIONER OF INCOME TAX,THIRUVANANTHAPURAM ANNEXURE C:TRUE COPY OF PROCEEDINGS BEARING NO.IAP/W-4/KLM/2011-12 DATED 28.6.2011 ISSUED TO THEAPPELLANT BY THE INCOME TAX OFFICER.4/KLM/2011-12 DATED 28.6.2011 ISSUED TO THEAPPELLANT BY THE INCOME TAX OFFICER. ANNEXURE D:TRUE COPY OF APPEAL DT.21.4.2012 FILED BY THEAPPELLANT BEFORE THE INCOME TAX APPELLATETRIBUNAL, COCHIN IN RESPECT OF ASSESSMENT YEAR2007-08APPELLANT BEFORE THE INCOME TAX APPELLATETRIBUNAL, COCHIN IN RESPECT OF ASSESSMENT YEAR2007-08 ANNEXURE E:TRUE COPY OF COMMON ORDER IN ITA Nos.123 AND124/COCH/2012 DT.26.4.2013 ISSUED TO THEAPPELLANT BY THE INCOME TAX APPELLATE TRIBUNAL.124/COCH/2012 DT.26.4.2013 ISSUED TO THEAPPELLANT BY THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE F:TRUE COPY OF COMMON JUDGMENT DT.5.2.2014 ISSUEDTO THE APPELLANT BY THE HON'BLE HIGH COURT OFKERALA IN ITA NOS.194 AND 195/2013TO THE APPELLANT BY THE HON'BLE HIGH COURT OFKERALA IN ITA NOS.194 AND 195/2013 ANNEXURE G:TRUE COPY OF COMMON ORDER IN ITA Nos.123 AND124/COCH/2012 DT14.11.2014 ISSUED TO THEAPPELLANT BY THE HON'BLE INCOME TAX TRIBUNAL.124/COCH/2012 DT14.11.2014 ISSUED TO THEAPPELLANT BY THE HON'BLE INCOME TAX TRIBUNAL.