M/s Vallabh Yarns Pvt. Ltd., Ludhiana V. JCIT, R-2, Ludhiana

ITA 1250/CHANDI/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5053 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1250/CHD/2017 (ASSESSMENT YEAR : 2010-11) M/S VALLABH YARNS PVT. LTD., VS. THE J.C.I.T., B-XXIV/353/1, SUNDER NAGAR, RANGE-2, LUDHIANA. PAN: AAACV5322K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMARJIT KAMBOJ, CA RESPONDENT BY : SMT.CHANDERKANTA, SR.DR DATE OF HEARING : 22.03.2018 DATE OF PRONOUNCEMENT : 28.03.2018 ORDER PER ANNAPURNA GUPTA, A.M.: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS )-2, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(APPEALS) ] DATED 17.5.2017 RELATING TO ASSESSMENT YEAR 2010-11. 2. THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEE REA D AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, LUDHIANA HAS ERRED IN LAW AND ON FACTS OF THE CASE:- A) BY ARBITRARILY AND WRONGLY CONFIRMED THE DISALLOWAN CE OF RS.46514/-, MADE BY THE LD. A.O @ L/6 IN OUT OF TELEPHONE EXPENSES OF RS.2,79,084/-, ON ADHOC BASIS TOWARDS NON BUSINESS PURPOSE, WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE IS A CORPORATE ASSESSEE. B) BY ARBITRARILY AND WRONGLY CONFIRMED THE DISALLOWAN CE OF RS.1,91,275/-, MADE BY THE LD. A.O @ L/6 TH FOR PERSONAL USE OUT OF CAR REPAIR & MAINTENANCE EXPENSES RS.4,75,233/-, CAR INSURANCE RS.35,815/- AND DEPRECI ATION 2 ON CAR RS.6,36,604/- TOTALING RS.11,47,652/-, ON AD HOC BASIS TOWARDS NON BUSINESS PURPOSE, WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE IS A CORPORA TE ASSESSEE. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS R ELATING TO THE ADHOC DISALLOWANCE OF TELEPHONE AND CAR EXPE NSES FOR THE REASON THAT THEY WERE INCURRED FOR PERSONAL USE OF THE ASSESSEE. 4. BRIEFLY STATED, THE ASSESSING OFFICER HAD DISALL OWED 1/6 TH OF THE TELEPHONE EXPENSES CLAIMED BY THE ASSESSEE AMOUNTING TO RS.46,514/- & 1/6 TH OF THE CAR EXPENSES INCURRED BY THE ASSESSEE AMOUNTING TO THE RS.1,91,2 75/- FOR THE REASON THAT NO LOG BOOK HAD BEEN MAINTAINED BY THE ASSESSEE FOR THE SAME AND, THEREFORE, THE POSSIBILI TY OF INCURRING THE SAID EXPENSES FOR PERSONAL PURPOSES C OULD NOT BE RULED OUT. 5. THE LD. CIT(APPEALS) UPHELD THE DISALLOWANCE SO MADE. 6. BEFORE US, THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE ASSESSEE WAS A COMPANY AND NO PERSONAL USE OF ANY ASSET COULD BE ATTRIBUTED TO IT. LD. COUNSEL F OR ASSESSEE RELIED UPON THE FOLLOWING DECISIONS IN SUP PORT OF ITS CONTENTION: 1) CIT V/S DINESH MILLS LTD. (2005) 148 TAXMAN 76. 2) M/S MITSUI AND COMPANY INDIA PVT. LTD. VS. ADDL. CIT, RANGE 6, NEW DELHI ITA NO. 1362/DEL/2011 DATED 03- 06-2011. 3 3) PRINCIPLE CIT V/S RIMJHIM ISPAT LTD. (2016) 282 ITR 152 (ALL). 7. LD. DR, ON THE OTHER HAND, VEHEMENTLY SUPPORTED THE ORDER OF THE CIT(APPEALS). 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S AND WE FIND MERIT IN THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE THAT NO DISALLOWANCE ON ACCOUNT OF PERSONA L USE OF CAR AND TELEPHONE EXPENSES CAN BE MADE IN THE CASE OF COMPANY ASSESSES THAT TOO ON AN ADHOC BASIS. THE RE LIANCE PLACED BY THE ASSESSEE IN THIS REGARD ON THE DECISI ON OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. D INESH MILLS LTD. (2005) 148 TAXMAN 76 (GUJ) WHEREIN IT HA S BEEN CATEGORICALLY HELD THAT NO PERSONAL USE OF CAR OR T ELEPHONE EXPENSES CAN BE ATTRIBUTED TO COMPANY ASSESSEE AND, THEREFORE, CANNOT FORM THE BASIS FOR DISALLOWING TH E EXPENSES. THIS PROPOSITION HAS BEEN REITERATED IN A NUMBER OF OTHER DECISIONS ALSO AS POINTED OUT BY THE LD. C OUNSEL FOR THE ASSESSEE. THE LD. DR HAS NOT BROUGHT TO OUR NO TICE ANY CONTRARY DECISION IN THIS REGARD. IN VIEW OF THE AB OVE, WE DELETE THE DISALLOWANCE MADE OF 1/6 TH OF TELEPHONE AND CAR EXPENSES INCURRED BY THE ASSESSEE AMOUNTING TO RS.46,514/- & RS.1,91,275/- RESPECTIVELY. GROUND NO. 1(A) & (B) RAISED BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 4 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 28 TH MARCH, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH