9911796707
TMI Blog2016 (7) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... of the road tax and insurance premium as capital expenditure, in the facts and circumstances of the present case, was proper and calls for no interference. Depreciation in respect of the Oil Tanker - Held that:- CIT(A) has proceeded on the basis that the Hindustan Petroleum Corporation Ltd has to give permission for use of the oil tanker by the assessee for transporting petroleum products and since such permission was not given, it cannot be said that the tanker was kept ready for use. In our view this conclusion of the CIT(A) cannot be sustained. The circumstances viz., absence of permission of HPCL, can at best lead to the conclusion that the assessee was unable to persuade Hindustan Petroleum Corporation Ltd., to give permission for use of the oil tanker for transporting petroleum products. It cannot however be said that the oil tanker was not kept ready to put to use. There was no impediment for use of the oil tanker for transporting petroleum products and this fact is not disputed by the revenue. In the given facts and circumstances of the case we are of the view that the assessee has successfully established that the vehicle in question was ready for use though it was not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were wrongly included with purchases. If those two figures were deducted, the purchase figure would stand reconciled. The Assessee claimed that the increase in purchases shown is neutralized by corresponding reduction in the value of closing stock and therefore there would be no effect on the profit shown by the Assessee. 5. The AO however did not accept the stand taken by the Assessee. He held that the Assessee failed to properly reconcile the figures in the purchase account. The following were his findings: "(5.1)The assessee's explanation is not tenable. In submission dated 23/11/2011 (received in this Office on 28/11/2011), it was mentioned that purchase amount was inadvertently inflated by misposting of an invoice dated 03/10/2008 in Oil account by ₹ 4,20,818.91; whereas repayment of working capital of ₹ 1,17,454/- (Rs.18,586/- on 18/03/2009, 40,000/- on 18/03/2009, 40,000/- on 27/03/2009 and ₹ 18,868/- on 27/03/2009) were wrongly included in purchases. From the copy of purchase register, submitted by the assessee in course of assessment proceedings, the total purchase figure of oil arrives at ₹ 25,42,14,840/-. By way of misposting of ₹ 5,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if complete quantity records are not maintained, there is every possibility that any excess debit of purchase may not be reflected in the closing stock. This is also in view of the fact that in case of most of the businessmen, closing stock is physically verified at the end of year and valued and the same figure is adopted in the trading account. The detailed exercise of tallying stock with each and every instance of purchase and sale is normally not made. With these considerations in mind, the appellant was asked as to whether the fact of duplication of invoice entry in the stock records and its inclusion in the closing stock can be established by stock statement or any other evidence. Vide order sheet entry dated 08.11.2012, the authorized representative of the appellant expressed inability to do so. He was, nevertheless, given one more opportunity for furnishing such evidence. In the subsequent hearing he has only produced a statement of transactions for the month of October 2008 However, this statement contains only amounts and has no details of quantity. Obviously, from such a statement, it is not possible to ascertain whether the quantity of material purchased vide the invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that road tax or insurance premium in respect of the vehicle is a capital and not a revenue expenditure and thereby wrongly refused to allow the deduction; V. The Appellate Commissioner is wrong to reject the Ground No 7 before him taken to accept and declare that the resources against the Depreciation enjoyed by deduction from the revenue actually lies in the business in any form available for the replacement of the asset in question and for that the corresponding credit essentially is attributable to the Capital Account in absence of the Depreciation Reserve Account." Additional Grounds raised by the Assessee: "1. That in the facts and circumstances of the case the Ld CIT(A) XXXIII Kolkata is wrong to hold that the failure to dispose of the Rectification petition of the assessee-appellant against the Order u/s 143(1) has not prejudiced the assessee-appellant alleging wrongly that the scrutiny assessment is not thereby vitiated; 2. That the Ld CIT(A) misguided himself in not holding that the provisions of section 44AE are not applicable in absence of any finding that the Oil Tanker has been given on hire to any third party;" 11. The facts and circumstances under whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch a claim without filing a valid revised return of income cannot be entertained. In this regard the AO made reference to the decision of the Hon'ble Supreme Court in the case of Goetze India Limited vs CIT 157 Taxman 1 (SC) wherein it was laid down that the AO cannot entertain any claim by the assessee without a revised return being filed. Without prejudice to the aforesaid conclusion the AO also dealt with the contention of the assessee that the oil tanker in question was ready for use and therefore it has to be construed as actual user of the oil tanker to enable the assessee to claim depreciation. The assessee had in this regard placed reliance on the decision of the Hon'ble Calcutta High Court in the case of CIT vs Union Carbide (P)Ltd 254 ITR 488 (Cal) wherein it was held that if an asset was ready for use depreciation is allowable. The AO however held that the assessee failed to prove that the oil tanker was ready for use though not actually put to use during the previous year. For all the aforesaid reasons the claim of the assessee for deduction on account of road tax, insurance and depreciation was disallowed by the AO. 15. On appeal by the assessee the CIT(A) agreed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly of a period much after the end of the previous year. No correspondence evidencing that the appellant had requested for permission from HPCL during the year under consideration has been produced. It has been mentioned by the appellant herself, that unless HPCL gives such permission, it is not possible for the appellant to use the tanker for carrying oil. The appellant has not been able to substantiate the claim that permission had been sought during the year and was awaited. Therefore, it cannot be said that the tanker was really ready to be used. Hence-even if one accepts the plea that an assessee can claim depreciation on the assets which are ready to be used (and not actually used) the appellant has not been able to show such readiness to use to support her claim for depreciation. 5.3. Furthermore, without prejudice to the above finding, the legal position on this issue has been examined. The appellant has made her claim relying upon certain decisions cited earlier. One of these decisions viz. Union Carbide Pvt. Ltd. (supra) has been delivered by the jurisdictional High Court. However, on going through the decision, it is seen that it was undisputed fact in that case that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as additional ground no.1 is concerned the law is well settled that an order of assessment passed u/s 143(3) of the Act will have the effect of superseding the order u/s 143(1) of the Act. The said additional grounds raised by the assessee are therefore found to be without any merit. 19. As far as the road tax and insurance premium which was treated as capital expenditure by the AO is concerned, the cost of acquisition of a capital asset as per the definition contained in section 43(1) of the Act means that actual cost to the assessee. When a new vehicle is acquired the insurance premium and the road tax paid would assume the character of the cost paid in acquiring the asset. But for incurring these expenses, the vehicle cannot be put to use by the assessee. We are therefore of the view that the treatment of the road tax and insurance premium as capital expenditure, in the facts and circumstances of the present case, was proper and calls for no interference. 20. As far as the claim of depreciation made by the assessee is concerned the facts with regard to the acquisition of the oil tanking on 03.06.2008 and its registration with the Government authorities and payment of road ..... X X X X Extracts X X X X X X X X Extracts X X X X
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