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2018 (5) TMI 435 - AT - Income TaxRate of Depreciation on vehicles 15% or 30% - commercial vehicles - assessee has used the vehicles for the purpose of his own business - evidence to prove that the vehicles used for running them on hire - Held that - The vehicles were put to use for the assessee s business purposes. As per Rule 5 and the schedule of depreciation, the allowable depreciation in the case of vehicles used for the business purpose was 15% but not 30%. D.R. relied on the decision of N.D. Joseph Vs. CIT (2010 (1) TMI 382 - KERALA HIGH COURT), wherein held that where the trucks and JCBs were mainly used for assessee s own business and partly let out to other purpose, since items are predominantly used in the assessee s own business, assessee was entitled for depreciation only at normal rates. There was no evidence to show that the vehicles were used for running them on hire, therefore, we hold that the assessee is not entitled for higher rate of depreciation and entitled for only at normal rate of depreciation. We uphold the order of the CIT(A) and dismiss the appeal of the assessee on this ground. Disallowance u/s 14A r.w. Rule 8D - Held that - No disallowance is called for u/s 14A of the Act in the absence of exempt income. Accordingly, the order of the Ld. CIT(A) on this issue is set aside and this ground of appeal of the assessee is allowed. Credit for TDS - Held that - A.O. allowed the TDS to the extent of income admitted in form No.26AS as per section 199 read with rule 37BA of the Act and disallowed the balance amount of TDS. The assessee filed appeal requesting to allow the entire credit for TDS. As per section 199 read with rule 37B of the Act, the credit for tax is allowed only on the income admitted relatable to the TDS. Therefore, in the absence of the receipt not being admitted for the assessment year under consideration, we do not find any error in the order of the CIT(A) and the same is upheld. Alternate ground with regard to TDS claim restricted by the A.O. A.O. allowed TDS of ₹ 12,12,924/- in the assessment year under consideration out of the TDS amount of ₹ 70,61,000/- made by the DGNP Visakhapatnam. The assessee has requested as an alternate ground to allow the credit for TDS of the balance amount in the subsequent year as and when the income is admitted. A.O. is directed to allow the credit for TDS in the subsequent years as and when the income is admitted as per law. This ground is allowed for statistical purposes.
Issues Involved:
1. Depreciation on vehicles. 2. Disallowance under Section 14A read with Rule 8D. 3. Credit for TDS. Issue-wise Detailed Analysis: 1. Depreciation on Vehicles: - Facts: The assessee, a civil and electrical contractor, claimed depreciation on vehicles at 30% for the assessment year 2013-14. The Assessing Officer (A.O.) restricted this to 15%, as the vehicles were not used for running on hire, and disallowed the balance amount of ?13,07,021/-. - Assessee’s Argument: The assessee argued that once vehicles are included in the block of assets for 30% depreciation, they should continue to receive this rate irrespective of usage. The assessee cited cases like CIT(A) Vs. Oswal Agro Mills and CIT(A) Vs. Yamaha Motor India Limited to support this. - Revenue’s Argument: The Revenue contended that the vehicles were used for the assessee’s business, not for hire, making the eligible depreciation rate 15%. The Revenue relied on the decision of the High Court of Kerala in N.D. Joseph Vs. CIT. - Tribunal’s Findings: The Tribunal held that higher depreciation at 30% is only allowable if vehicles are used for running on hire. Since the assessee failed to provide evidence of such use, the Tribunal upheld the A.O.’s decision to restrict depreciation to 15%. The Tribunal dismissed the assessee’s appeal on this ground. 2. Disallowance under Section 14A read with Rule 8D: - Facts: The A.O. disallowed ?23,61,223/- under Section 14A read with Rule 8D, as the assessee had made investments of ?15.45 crores but did not disallow any expenditure related to exempt income. - Assessee’s Argument: The assessee argued that no disallowance is necessary if no exempt income is earned. The assessee relied on the Tribunal’s decision in D. Veerabhadra Reddy (HUF) Vs. JCIT and the Madras High Court’s judgment in Redington India Limited Vs. Additional CIT. - Tribunal’s Findings: The Tribunal noted that the assessee did not earn any exempt income during the relevant year. Citing similar cases, the Tribunal held that no disallowance under Section 14A is warranted in the absence of exempt income. The Tribunal set aside the CIT(A)’s order on this issue and allowed the assessee’s appeal. 3. Credit for TDS: - Facts: The assessee received advances of ?30.76 crores with TDS deducted on the entire amount. The A.O. allowed TDS credit only to the extent of income admitted in Form 26AS, disallowing the balance. - Tribunal’s Findings: The Tribunal upheld the CIT(A)’s decision, stating that TDS credit is allowed only on the income admitted as per Section 199 read with Rule 37BA. However, the Tribunal directed the A.O. to allow the credit for TDS in subsequent years as and when the income is admitted, allowing this ground for statistical purposes. General Grounds: - Ground Nos. 4 & 5: These were general in nature and did not require specific adjudication. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, upholding the A.O.’s decisions on depreciation and TDS credit, while allowing the appeal on the disallowance under Section 14A. The order was pronounced in the open court on 4th May 2018.
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