2013 (11) TMI 1443 - HC - Income Tax

Depreciation - Held that - Following assessee s own case - Depreciation is allowed on all the trucks as the trucks were given to hirers on the same date when they were purchased and taken delivery - Decided against Revenue. Hiring receipts - Held that - The assessee is liable to tax only in respect of the income part. The assessee has rightly shown 50% of the amount received as assessee has received 50% towards purchase price and 50% towards lease income - Decided against Revenue. Unexplained cash credit - Held that - The assessee has not taken any deposits from the said 5 parties but has made repayment of deposits taking in the earlier years - The repayment was made by cheques - The repayment cannot be said to be unaccounted payment on the part of the firm - In the absence of any contrary material brought on record by the revenue against the aforesaid finding of the learned CIT(A) - Decided against Revenue.

Summary

Issues:
1. Depreciation allowance on vehicles used for business purposes.
2. Tax treatment of lease rental income and security deposit.
3. Addition of unexplained cash credit under Section 68 of the Income Tax Act.
4. Deletion of unaccounted income arising from bogus payments.

Depreciation Allowance on Vehicles Used for Business Purposes:
The appeal raised questions regarding the finding of the appellate Tribunal concerning the purchase of vehicles by the assessee and lending them on hire. The Tribunal allowed depreciation on all four trucks, emphasizing that they were used for the assessee's business as they were given to hirers on the same date of purchase and delivery. The revenue did not challenge the earlier decision of the Tribunal in the assessee's own case, which supported the allowance of depreciation based on the trucks' business use.

Tax Treatment of Lease Rental Income and Security Deposit:
Regarding the addition of 50% of hire receipts as the assessee's income, the Tribunal followed its previous decision, stating that the assessee should be taxed only on the income portion. The Tribunal considered that 50% of the amount received was towards the purchase price and the other 50% as lease income, concluding that the principal amount for the vehicle price should not be taxed. Consequently, the addition of Rs. 2,62,583 was deleted based on this reasoning.

Addition of Unexplained Cash Credit Under Section 68 of the Income Tax Act:
The Tribunal found that the unexplained credit of Rs. 1 lakh under Section 68 was properly explained, leading to the deletion of this addition. The Tribunal's factual determination on this matter could not be overturned by the Court under its jurisdiction, as per the Income Tax Act, 1961.

Deletion of Unaccounted Income Arising from Bogus Payments:
In addressing the deletion of unaccounted income from bogus payments, the Tribunal noted that the assessee did not receive deposits from certain parties during the relevant year but repaid deposits from previous years, all done through cheques. The Tribunal, supported by the CIT(A)'s findings, concluded that these repayments were not unaccounted for and could not be considered as unaccounted income. As there was no contrary material presented by the revenue against this finding, the Tribunal upheld the deletion of the addition made by the Assessing Officer. The Court declined to admit the appeal, citing that it involved factual findings and upheld the dismissal of the appeal.

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