Doongursee Salt Woks Pvt.Ltd., Ahmedabad V. The Dy.CIT.,(OSD)Range-1, Ahmedabad

CO 188/AHD/2012

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4015 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Earning of tax free income; Rule 8D; Set aside
• Section: 14A; 201; 191; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 1872 & C.O. NO. 188/AHD/2012 (ASSESSMENT YEAR: 2009-130) D.C.I.T., (OSD), RANGE-1, AHMEDABAD M/S. DOONGURSEE SALT WORKS PVT. LTD. 9B SUMATINAGAR SOCIETY, USMANPURA, AHMEDABAD V/S V/SS M/S. DOONGURSEE SALT WORKS PVT. LTD. 9B SUMATINAGAR SOCIETY, USMANPURA, AHMEDABAD D.C.I.T., (OSD), RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACC0134G APPELLANT BY : SHRI JAMES KURIAN, SR. D.R . RESPONDENT BY : SHRI TUSHAR P. HEMANI, A.R. ( )/ ORDER DATE OF HEARING : 20 -07-201 6 DATE OF PRONOUNCEMENT : 22 -07-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 2 1. ITA NO. 1872/AHD/2012 & C.O. NO. 188/AHD/2012 ARE A PPEAL BY THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE PREFERR ED AGAINST THE ORDER OF LD. CIT(A)-VI, AHMEDABAD DATED 08.06.2012 PERTAINING TO A.Y. 2009-10. 2. THE APPEAL AND THE CROSS OBJECTION ARE BEING DISPOS ED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1872/AHD/2012 REVENUES APPEAL FOR A.Y. 200 9-10 3. THE FIRST GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF REPAIRING EXPENSES TO THE EXTENT OF RS. 1,48,98,415/-. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING RAW SALT AND IS ALSO ENGAGED IN TRADING OF SALT. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. FOUND THAT THE ASSESSEE HAS MADE PAYMENT FOR REPAIR S AND MAINTENANCE AT RS. 2,27,01,717/- DURING THE YEAR UN DER CONSIDERATION AS COMPARED TO THE IMMEDIATELY PRECEDING FINANCIAL YEAR RS. 56,52,581/-. THE A.O. ASKED ASSESSEE TO SUBSTANTIAT E ITS CLAIM OF EXPENDITURE. IT WAS EXPLAINED THAT ALL EXPENSES ARE WELL SUPPORTED BY THE VOUCHERS DULY SIGNED BY THE RECIPIENTS AND AUTH ORIZED BY THE DIRECTOR OF THE COMPANY GIVING NECESSARY DETAILS ON THE FACE OF THE VOUCHERS. IT WAS FURTHER CONTENDED THAT THE RECIPIE NTS ARE ILLITERATE AND THE TRANSACTIONS HAVE BEEN WELL RECORDED IN THE BOO KS OF ACCOUNTS AND THE BOOKS OF ACCOUNTS HAVE BEEN AUDITED U/S. 44AB O F THE ACT. IT WAS ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 3 BROUGHT TO THE NOTICE OF THE A.O. THAT THE EXPENDIT URES ARE NEITHER OF CAPITAL NATURE NOR INCURRED FOR PERSONAL USE NOR DI VERTED TO SISTER CONCERNS NOR IN CASH IN EXCESS OF RS. 20,000/-. THE EXPENSES ARE GENUINE EXPENSES MADE TO ILLITERATE AND RURAL PERSO NS HAVING NO BANK ACCOUNTS AND HAVING NO BANK BRANCHES IN THEIR VILLA GES. 6. THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE DID N OT FIND ANY FAVOUR WITH THE A.O. WHO MADE A TOTAL DISALLOWANCE OF RS. 1,56,82,543/- WHICH INCLUDED- (A ) LAKE REPAIR EXPENSES RS. 62,54,700/- (B)MAFAR REPAIR EXPENSES RS. 82,95,000/- (C)ROAD REPAIR EXPENSES RS. 11,32,843/- 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CLAIM OF THE GENUINENESS OF THE EXPENSES. IT WAS ST RONGLY CONTENDED THAT THE A.O. HAS MADE THE DISALLOWANCE WITHOUT BRI NGING ON RECORD THAT CERTAIN PAYMENTS WERE FICTITIOUS AND WERE NOT MADE TOWARDS BUSINESS OF THE ASSESSEE. IT WAS STRONGLY CONTENDED THAT ALL THE PAYMENTS ARE DULY SUPPORTED BY VOUCHERS AUDITED BY A CHARTERED ACCOUNTANT. ASSESSEE FILED DETAILS OF GROSS PROFIT AND NET PROFIT RATIO OF EARLIER FINANCIAL YEAR AND POINTED OUT THAT DURING THE YEAR UNDER CONSIDERATION, THERE IS A SUBSTANTIAL INCREASE IN T HE GROSS PROFIT AND THE NET PROFIT OF THE ASSESSEE COMPANY. 8. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) OBSERVED THAT THE FINANCIAL RESULTS OF THE A SSESSEE ARE MUCH BETTER THAN THE FINANCIAL RESULTS OF EARLIER YEARS. THE LD. CIT(A) FURTHER OBSERVED THAT CONSIDERING THE NATURE OF WORK, REQUI REMENT OF THE BUSINESS AND INCREASE IN GROSS PROFIT AND NET PROFI T, DISALLOWANCE OF ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 4 ENTIRE CASH EXPENSES IS NOT JUSTIFIED. THE LD. CIT( A) RESTRICTED THE DISALLOWANCE TO 5% OF CASH REPAIRS EXPENSES. 9. AGGRIEVED BY THIS, THE REVENUE IS BEFORE U S. 10. THE ASSESSEE HAS ALSO IN ITS CROSS OBJECTION VIDE G ROUND NO. 1 HAS CHALLENGED THE RESTRICTION OF THE DISALLOWANCE TO 5% BY THE LD. CIT(A) BY CONTENDING THAT THE ENTIRE EXPENDITURE SH OULD BE ALLOWED. 11. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE RE LEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD BEFORE US. BEFORE PROCE EDING FURTHER, LET US, EXAMINE THE FINANCIALS OF THE ASSESSEE WHICH IS AS UNDER:- DETAILS OF GROSS PROFIT & NET PROFIT RATIOS PARTICULARS FINANCIAL YEAR 2008-09 2007-08 2006-07 2005-06 TURNOVER RS. IN LACS GROSS PROFIT RS. IN LACS G.P. RATIO NET PROFIT RS. IN LACS N.P. RATIO 1546.86 889.80 845.81 963.05 348.31 132.27 114.43 7.38 22.52% 14.87% 13.53% 0.77% 94.67 22.28 18.84 19.43 6.12% 2.50% 2.23% 2.02% 12. A PERUSAL OF THE ABOVE CLEARLY SHOWS THAT THE PROFI TS OF THE ASSESSEE HAVE REASON SUBSTANTIALLY COMPARED TO EARL IER YEARS, THEREFORE, ANY INFLATION OF THE EXPENDITURE ON THE PART OF THE ASSESSEE IS EASILY RULED OUT. 13. SECONDLY, THE NATURE OF EXPENDITURE IS SUCH THAT IT HAS TO BE INCURRED IN CASH CONSIDERING THE STATUS OF THE RECI PIENTS. ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 5 14. THE NATURE OF THE BUSINESS OF THE ASSESSEE IS SUCH THAT SALT WORK IS SPREAD OVER THOUSANDS ACRES OF LAND WHERE STRUCT URES ARE MADE OF SAND AND SOIL AND OBVIOUSLY GETS DAMAGED FREQUENTLY WHICH NEEDS CONSTANT REPAIRS AND MAINTENANCE. THE SALT PANS AR E MADE OF SAND, SOIL AND CLAY ETC. AND ON ACCOUNT OF CONTINUOUS USE THE SALT PANS GET DAMAGED BY WEAR AND TEAR WHICH REQUIRED FREQUENT RE PAIRS. SAME IS THE SITUATION WITH THE ROADS WHICH ARE SPREAD IN KI LOMETERS. 15. ASSUMING, YET NOT ACCEPTING, THERE MAY BE SOME DRAW BACKS IN THE MAINTENANCE OF VOUCHERS, THE LD. CIT(A) HAS RES TRICTED THE DISALLOWANCE TO 5% WHICH SHOULD MEET THE ENDS OF JU STICE. CONSIDERING THE FACTS IN TOTALITY AND KEEPING IN MIND THE FINAN CIALS OF THE ASSESSEE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIN DINGS OF THE FIRST APPELLATE AUTHORITY. GROUND NO. 1 OF THE REVENUE AN D GROUND NO. 1 OF THE CROSS OBJECTION ARE ACCORDINGLY DISMISSED. 16. THE SECOND GROUND OF THE REVENUE RELATES TO THE DEL ETION OF THE ADDITION OF RS. 21,83,749/- MADE U/S. 40A(2)(B) OF THE ACT. 17. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E A.O. FOUND THAT THE ASSESSEE HAS PAID INTEREST OF RS. 1,52,86, 242/- TO PERSONS COVERED U/S. 40A(2)(B) OF THE ACT @ 14% PER ANNUM. 18. ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE INTE REST PAID TO RELATED PARTIES SHOULD NOT BE REDUCED AS THE RATE O F INTEREST @ 14% PER ANNUM IS EXCESSIVE. 19. ASSESSEE STRONGLY AGITATED TO THIS MOVE OF THE A.O. BY POINTING OUT THAT IT HAS PAID INTEREST TO THE BANKS @ 14.25 PER ANNUM AND HAVE ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 6 CHARGED INTEREST @ 15% PER ANNUM FROM THE UNRELATED PARTIES. THEREFORE, INTEREST OF 14% CANNOT BE SAID TO BE EXC ESSIVE. THIS EXPLANATION OF THE ASSESSEE WAS DISMISSED BY THE A. O. WHO PROCEEDED BY COMPUTING THE DISALLOWANCE AT RS. 21,83,749/- BY REDUCING THE INTEREST FROM 14% TO 12% PER ANNUM. 20. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION, THE LD. CIT(A) FOUND FORCE IN THE C LAIM OF THE ASSESSEE AND DELETED THE DISALLOWANCE MADE BY THE A.O. 21. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 22. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. HAVING HEARD THE RIVAL CONTENTIONS, WE FIND THAT TH E ASSESSEE HAS PAID INTEREST TO THE BANKS @ 14.25% AND TO THE UNRELATED PARTIES @ 15% PER ANNUM. THIS CLEARLY SHOWS THAT THE ASSESSEE HAS PAID A LESSER RATE OF INTEREST TO ITS RELATED PARTIES. 23. IN OUR CONSIDERED OPINION, PROVISIONS OF SECTION 40 A(2)(B) DO NOT APPLY ON THE AFORE-STATED FACTS OF THE CASE, WE, TH EREFORE, DECLINE TO INTERFERE. GROUND NO. 2 IS DISMISSED. C.O. NO. 188/AHD/2012 FOR A.Y. 2009-10 24. GROUND NOS. 1 & 2 RELATES TO THE RESTRICTION OF THE DISALLOWANCE OF EXPENDITURE TO 5%. ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 7 25. THIS ISSUE HAS BEEN DISCUSSED BY US IN DETAIL IN RE VENUES APPEAL (SUPRA) QUA GROUND NO. 1. FOR OUR DETAILED DISCUSSI ON THEREIN, THE GROUND NOS. 1 & 2 ARE DISMISSED. 26. GROUND NO. 3 RELATES TO THE UPHOLDING OF THE DISALL OWANCE OF RS. 3,61,547/- MADE IN RESPECT OF DEPRECIATION ON CARS NOT REGISTERED IN THE NAME OF THE ASSESSEE. 27. WHILE SCRUTINIZING THE STATEMENT OF ACCOUNTS, THE A .O. FOUND THAT THE ASSESSEE HAS PURCHASED MOTOR CARS AMOUNTING TO RS. 24,10,314/- IN THE NAME OF THE DIRECTORS AND HAS CLAIMED DEPREC IATION ON THE SAME. SINCE, THE CARS WERE NOT REGISTERED IN THE NA ME OF THE ASSESSEE. THE A.O. DENIED THE CLAIM OF DEPRECIATION ON SUCH C ARS AND MADE AN ADDITION OF RS. 3,61,547/-. 28. THE A.O. FURTHER DISALLOWED RS. 7,34,889/- ON ACCOU NT OF CAR EXPENSES CLAIMED BY THE ASSESSEE. 29. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). 30. INSOFAR AS THE CLAIM OF DEPRECIATION IS CONCERNED, THE LD. CIT(A) CONFIRMED THE FINDINGS OF THE A.O. AND INSOFAR AS T HE CAR EXPENSES ARE CONCERNED, THE LD. CIT(A) RESTRICTED THE DISALLOWAN CE TO 1/3 RD OF TOTAL CAR EXPENSES OF RS. 7,34,889/-. 31. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 8 32. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY PLACED RE LIANCE ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF AF LON ALPALST PVT. LTD. IN ITA NO. 1186/AHD/2012 AND PLEADED THAT THE CLAIM OF DEPRECIATION SHOULD BE ALLOWED. 33. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FI NDINGS OF THE REVENUE AUTHORITIES. 34. INSOFAR AS THE CLAIM OF DEPRECIATION IS CONCERNED, WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE CO-ORDINATE BENCH (SUPRA) HAD CONSIDERED A SIMILAR ISSUE AND HAS HELD AS UNDER:- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O HAS DISALLOWED THE CLAIM OF DEPRECIAT ION ON MOTOR CARS MAINLY FOR THE REASON THAT THE MOTOR CAR WAS IN THE NAME OF TH E DIRECTOR AND NOT IN THE NAME OF THE ASSESSEE. HE HAS FURTHER DISALLOWED THE CLAI M OF THE ASSESSEE FOR EXPENSES FOR THE REASON THAT ASSESSEE COULD NOT PROVE THAT T HE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND WERE NOT IN PERSONAL IN NATURE. ON PERUSING THE BALANCE SHEET PLACED BY THE ASSESSEE IN THE PAPER BOOK, IT IS SEEN THAT THE MOTOR CAR IS REFLECTED IN THE S CHEDULE OF FIXED ASSETS. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO C ONTROVERT THE SUBMISSIONS OF ASSESSEE THAT THE FUNDS OF ASSESSEE HAS BEEN USED F OR THE PURCHASE OF MOTOR CAR. WE FURTHER FIND THAT ON IDENTICAL FACTS, IN THE CAS E OF SWATI AUTOLINK PVT. LTD. VS. ITO (SUPRA), THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH BY HOLDING AS UNDER:- 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT THE VEHICLE IS S TANDING IN THE NAME OF THE DIRECTOR OF THE COMPANY BUT THE SAME IS CONSIDERED AS PART O F FIXED ASSET OF THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT FOR THE PURCHAS E OF VEHICLE, THE FUNDS OF THE ASSESSEE HAS BEEN USED COULD NOT BE CONTROVERTED BY THE REVENUE BY BRINGING ANY MATERIAL ON RECORD. WE FIND THAT THE CO-ORDINATE BE NCH IN THE CASE OF STUDIO-3 ARCHITECT PVT LTD (SUPRA) HELD AS UNDER:- ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 9 '5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. THE RELEVANT PROVISIONS OF SECTION 32 OF THE ACT STIPUL ATE DEPRECIATION IN RESPECT OF BUILDING, MACHINERY, PLANT OR FURNITURE 'OWNED BY T HE ASSESSEE' AND 'USED' FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. INDISPU TABLY, THE INNOVA CAR WAS PURCHASED WITH THE FUNDS OF THE COMPANY AND USED BY THE ASSESSEE FOR THE PURPOSES OF ITS BUSINESS. THE CONTROVERSY IS IN REG ARD TO OWNERSHIP OF THE CAR. THE CONTENTION OF THE ASSESSEE IS THAT CAR BEING NOT RE GISTERED UNDER THE MOTOR VEHICLES ACT IN THE NAME OF THE COMPANY, BY ITSELF IS NOT SUFFICIENT TO HOLD THE CONTRARY. THE FACTUAL POSITION AS STATED BY THE ASS ESSEE IS NOT DISPUTED BY THE REVENUE. THE CONTENTION OF THE REVENUE IS THAT UNLE SS THE CAR IS REGISTERED IN THE NAME OF THE ASSESSEE UNDER THE MOTOR VEHICLES ACT, THE ASSESSEE WOULD NOT BE ENTITLED TO DEDUCTION OF DEPRECIATION ALLOWANCE IN RESPECT THEREOF. WE ARE OF THE OPINION THAT THE ASSESSES, WHO HAD PURCHASED THE CA R FOR VALUABLE CONSIDERATION AND USED THE SAME FOR ITS BUSINESS, CANNOT BE DENIE D THE BENEFIT OF DEPRECIATION ON THE GROUND THAT THE TRANSFER WAS NOT RECORDED UNDER THE MOTOR VEHICLES ACT OR THAT THE VEHICLE STOOD IN THE NAME OF A DIRECTOR OF THE ASSESSEE COMPANY IN THE RECORDS OF THE AUTHORITIES UNDER THE MOTOR VEHICLES ACT. 5.1 THE AFORESAID VIEW IS SUPPORTED BY THE DECISION IN THE CASE OF CIT VS. NAVDURGA TRANSPORT CO., 235ITR 150 (ALL), WHEREIN T HE ISSUE WAS AS TO WHETHER FIRM WAS ENTITLED TO DEPRECIATION ON CARS, BROUGHT IN TO THE FIRM FOR USE OF BUSINESS OF THE FIRM, EVEN THROUGH CARS CONTINUED T O BE REGISTERED IN THE NAME PARTNERS. HON 'BLE ALLAHABAD HIGH COURT HELD THAT T HE TRIBUNAL RIGHTLY REACHED THE CONCLUSION THAT THE ASSESSEE OWNED AND USED THE THREE VEHICLES WITHIN THE MEANING OF S. 32 OF THE ACT. SIMILAR VIEW WAS TAKEN IN THE CASE OF CIT VS, MOHD. BUS SHOKAT ALI (NO.2), 256 ITR 357 (RAJ), CIT VS FA ZILKA DABWALI TPT CO. LTD (2004) 270 ITR398 (P & H), CIT V. SALKIA TRANSPORT ASSOCIATES [1983] 143 ITR 39/13 TAXMAN 191 (CAL), CIT V. NIDISH TRANSPORT COR PN. [1910] 185 ITR 669/[1989] 44 TAXMAN 351(KER.), CITV. DILIP SINGH B AGGA [1993] 201 ITR 995/11994] 77 TAXAMAN 66 (BOM), CIT V NAVDURGA TRAN SPORT CO. [1999] 235 ITR 158 (ALL.) AND CIT V BASTI SUGAR MILLS CO. LTD. [2002] 257 ITR 88/123 TAXMAN 693 (DELHI) AS ALSO BY THE ITAT IN THEIR DEC ISION IN THE CASE OF THE ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 10 CURIOUS HOUSE (P) LTD. V ITO (1980) 9 TTJ 348 (INDO RE) AND ITO VS. MODI AGENCY, ITA NO. 198/GAU/L977-78 (GAUHATI). 5.2. IN THE LIGHT OF THE VIEW TAKEN IN THE AFORESAI D DECISIONS, MERE NON-REGISTRATION OF A VEHICLE IN THE NAME OF THE COMPANY UNDER THE M OTOR VEHICLES ACT, CANNOT DISENTITLE IT IN REGARD TO ITS CLAIM OF DEPRECIATIO N, WHEN THE FACTS ON RECORD ARE UNDISPUTED THAT THE ASSES SEE COMPANY HAS, IN FACT, MADE THE INVESTMENT IN PURCHASE OF THE VEHICLE AND SUCH VEHICLE IS BEING U SED FOR ITS BUSINESS. THE REQUIREMENT OF SECTION 32 IS THAT THE VEHICLE MUST BE OWNED BY THE ASSESSEE AND NOT THAT THE ASSESSEE MUST BE A 'REGISTERED OWNER' OF THE SAME UNDER THE MOTOR VEHICLES ACT. THEREFORE, WE HAVE NO HESITATION IN U PHOLDING THE FINDINGS OF THE ID. CIT(A). CONSEQUENTLY GROUND NO. 1 RELATING TO DISAL LOWANCE OF DEPRECIATION ON MOTOR CAR IS DISMISSED. 8. BEFORE US, REVENUE HAS NOT BEEN BROUGHT ANY CONT RARY BINDING DECISION IN ITS SUPPORT NOR COULD POINT ANY DISTINGUISHABLE FEATURE OF THE PRESENT CASE TO THAT OF SWATI AUTOLINK (SUPRA). WE THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF SWATI AUTOLINK PVT . LTD. (SUPRA) HOLD THAT THE CLAIM OF DEPRECIATION AND EXPENDITURE COULD NOT HAV E BEEN DISALLOWED IN THE PRESENT CASE. THUS THIS GROUND OF ASSESSEE IS ALLOW ED. 35. INSOFAR AS THE CLAIM OF CAR EXPENSES IS CONCERNED, WE FIND THAT THE A.O. HAS DISALLOWED CAR EXPENSES ON THE GROUND THAT THE CARS ARE NOT OWNED BY THE ASSESSEE COMPANY. 36. IN OUR CONSIDERED OPINION, THIS CANNOT BE A GROUND FOR MAKING THE DISALLOWANCE AS THERE IS NO MENTION THAT THE CA RS WERE NOT USED FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE. SINCE , THERE IS NO DENIAL OF THE FACT THAT ASSESSEE USED CARS FOR ITS BUSINES S, WE DO NOT FIND ANY REASON FOR MAKING THE IMPUGNED DISALLOWANCE WHICH W ERE RESTRICTED BY THE LD. CIT(A) TO 1/3 RD OF THE TOTAL CAR EXPENSES. ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 11 37. EVEN, IF IT IS ASSUMED THAT PERSONAL ELEMENT CANNO T BE RULED OUT FOR THE USES OF THE CAR, IN ALL FAIRNESS, WE RESTRI CT THE DISALLOWANCE TO 15% OF THE TOTAL CAR EXPENSES WHICH SHOULD MEET THE ENDS OF JUSTICE. ASSESSEE WOULD GET A PARTIAL RELIEF IN THIS GROUND AND THE SAME IS PARTLY ALLOWED. 38. GROUND NO. 6 RELATES TO THE DISALLOWANCE OF RS. 2,5 4,381/- MADE U/S. 14A OF THE ACT. 39. ON PERUSAL OF THE BALANCE SHEET, THE A.O. FOUND THA T THE ASSESSEE HAS MADE INVESTMENT OF RS. 45,00,100/- AND ON THIS BASIS, THE A.O. COMPUTED THE DISALLOWANCE U/S. 14A READ WI TH RULE 8D AT RS. 2,54,381/-. 40. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 41. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAS NOT EARNED ANY EXEMPT INCOME AND, THEREFORE, NO DISALLOWANCE U /S. 14A READ WITH RULE 8D IS CALLED FOR. 42. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE REVENUE AUTHORITIES. 43. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. WE FIND THAT THE REVENUE AUTHORITIES HAVE FOLLOWED THE DECISION OF THE TRIBUNAL SPECIAL BENCH, DELHI IN THE CASE OF CHEMIN VEST LTD. HOWEVER, ITA NO. 1872 & 188/AHD/2012 . A.Y. 2009- 10 12 THE ORDER OF THE SPECIAL BENCH HAS BEEN REVERSED BY THE HONBLE HIGH COURT OF DELHI IN 378 ITR 33. 44. WE, THEREFORE, FIND NO REASON FOR MAKING THE DISALL OWANCES U/S. 14A, WHEN THERE IS NO EXEMPT INCOME EARNED BY THE A SSESSEE DURING THE CURRENT YEAR. 45. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF DELHI (SUPRA), WE SET ASIDE THE FINDINGS O F THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION OF RS. 2,54, 381/- . GROUND NO. 6 IS ALLOWED. 46. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 22 - 07 - 2016. SD/- SD/- (S. K. YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD