M/s Partap Fabrics Pvt. Ltd., Ambala Cantt. V. DCIT, Circle, Ambala

ITA 1269/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0306 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 18-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, . , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B CHANDIGARH , , , BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO. 1269/CHD/2019 / ASSESSMENT YEAR : 2016-17 M/S PARTAP FABRICS PVT. LTD., VILLAGE KESRI, SHAHABAD SAHA ROAD AMBALA CANTT. VS THE DCIT, CIRCLE, AMBALA. ./ PAN /TAN NO: AAFCP5213Q / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI ROHIT GOYAL, CA / REVENUE BY : SHRI DAYA INDER SINGH SIDHU, ADDL. CIT / DATE OF HEARING : 1 6.06.2020 / DATE OF PRONOUNCEMENT : 17.06.2020 / ORDER PER DIVA SINGH BY THE PRESENT APPEAL, THE ASSESSEE ASSAILS THE ORD ER DATED 19.06.2019 OF CIT(A) PANCHKULA PERTAINING TO 2016-17 ASSESSMENT YEAR ON THE FOLLOWING GROUND : THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING LUMP SUM DISALLOWANCE OF 10% VEHICLE EXPENSES AMOUNTING TO RS. 2,04,936/-. 2. INVITING ATTENTION TO THE ASSESSMENT ORDER, THE LD. AR SUBMITTED THAT GENERAL OBSERVATIONS HAVE BEEN GIVEN FOR MAKING DISALLOWANCE @ 1/6 TH OF THE TOTAL VEHICLE EXPENSES CLAIMED. FOR READY REFERENCE, PARA 4 OF THE ASSESSM ENT ORDER TO ITA 1269 /CHD/2019 A.Y. 2016-17 PAGE 2 OF 4 WHICH OUR SPECIFIC ATTENTION WAS INVITED IS REPRODU CED HEREUNDER : 4. DISALLOWANCES OUT OF VEHICLE EXPENSES:- THE ASSESSEE HAS DEBITED RS 20,49,365/- AS VEHICLE EXPENSE. SINCE TH E USE OF CAR BY THE ASSESSEE AND HIS FAMILY MEMBERS FOR PERSONAL USAGE AND NON-BUSINESS PURPOSES IS NOT ALTOGETHER RULED OUT, HENCE, L/6 TH OF THESE EXPENSES WHICH COMES TO RS 3,41,560/- IS DISALLOWED AND ADDED TO T HE INCOME OF THE ASSESSEE. 3. INVITING ATTENTION TO PARA 5.2 OF THE IMPUGNED O RDER, IT WAS HIS SUBMISSION THAT THE LD. CIT(A) HAS REDUCED THE DISALLOWANCE TO THE EXTENT OF 1/10 TH OF THE EXPENSES CLAIMED. IT WAS HIS SUBMISSION THAT THE ASSESSEE IS A PRIVAT E LIMITED COMPANY AND IN TERMS OF THE SETTLED LEGAL PRINCIPLE S, A DISALLOWANCE OF PERSONAL USER CANNOT BE MADE. ATTE NTION WAS INVITED TO THE ORDER DATED 28.03.2018 IN ITA 1250/C HD/2017 IN THE CASE OF M/S VALLABH YARNS PVT. LTD. (COPY FI LED AT PAGES 39-42) DRAWING SPECIFIC ATTENTION TO PARAGRAPH 8 O F THE ORDER, IT WAS HIS SUBMISSION THAT NO DISALLOWANCE, INFACT, COULD HAVE BEEN MADE. THE SPECIFIC PARA IS REPRODUCED HEREUND ER : 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PA RTIES AND WE FIND MERIT IN THE CONTENTION OF LD, COUNSEL FOR THE ASSESSEE THAT NO DISALLOWANCE ON ACCOUNT O F PERSONAL USE OF CAR AND TELEPHONE EXPENSES CAN BE M ADE IN THE CASE OF COMPANY ASSESSES THAT TOO ON AN ADHO C BASIS. THE RELIANCE PLACED BY THE ASSESSEE IN THIS REGARD ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF CIT VS. DINESH MILLS LTD. (2005) 148 TAXMAN 76 (GUJ) WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT N O PERSONAL USE OF CAR OR TELEPHONE EXPENSES CAN BE ATTRIBUTED TO COMPANY ASSESSEE AND, THEREFORE, CANN OT FORM THE BASIS FOR DISALLOWING THE EXPENSES. THIS PROPOSITION HAS BEEN REITERATED IN A NUMBER OF OTHE R DECISIONS ALSO AS POINTED OUT BY THE LD. COUNSEL FO R THE ITA 1269 /CHD/2019 A.Y. 2016-17 PAGE 3 OF 4 ASSESSEE. THE LD. DR HAS NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISION IN THIS REGARD. IN VIEW OF THE AB OVE, WE DELETE THE DISALLOWANCE MADE OF L/6 TH OF TELEPHONE AND CAR EXPENSES INCURRED BY THE ASSESSEE AMOUNTING TO RS.4 6,5 14/- & RS. 1.9 1,275/- RESPECTIVELY. GROUND NO. 1(A) & (B) RAISED BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 4. THE LD. AR FURTHER SUBMITTED ON QUERY THAT THE A SSESSEE HAS BEEN IN EXISTENCE FOR THE LAST 15-16 YEARS AND NO SUCH DISALLOWANCE HAS EVERY BEEN MADE. ON READING OF PA RA 4 OF THE AFORESAID ORDER OF THE ITAT, IT IS SEEN THAT IN THE FACTS OF THE SAID CASE, THE DISALLOWANCE WAS MADE ON THE GROUNDS THAT .NO LOG BOOK HAD BEEN MAINTAINED BY THE ASSESSEE FOR THE SAME AND, THEREFORE, THE POSSIBILITY OF INCURRING T HE SAID EXPENSES FOR PERSONAL PURPOSES COULD NOT BE RULED O UT. 5. THE LD. DR RELIED UPON THE IMPUGNED ORDER. ON A SPECIFIC QUERY AS TO WHETHER ANY DISALLOWANCE HAS BEEN MADE IN THE PAST, HE STATED HE WAS NOT IN A POSITION TO ADDRESS THE SAME. 6. IN THE LIGHT OF THE FACTS AVAILABLE ON RECORD AN D IN THE ABSENCE OF ANY REBUTTAL ON THE POSITION OF LAW AS C ONSIDERED BY THE CO-ORDINATE BENCH WHERE NO LOGBOOK WAS BEING MA INTAINED, THE DISALLOWANCE PROPOSED STOOD QUASHED ON THE GROU NDS THAT NO PERSONAL USER CAN BE ATTRIBUTED TO THE ASSESSEE COMPANY AS HELD IN THE CASE OF CIT VS DINESH MILLS LTD. (2005) 148 TAXMAN 76 (GUJ). ACCORDINGLY, CONSIDERING THE FACTS OF TH E PRESENT ITA 1269 /CHD/2019 A.Y. 2016-17 PAGE 4 OF 4 CASE WHERE THE PAST HISTORY IS IN ASSESSEE'S FAVOUR AND OBSERVATIONS MADE ARE GENERAL RELYING ON THE PRECED ENT CITED WHERE THERE IS NO REBUTTAL BY THE REVENUE, THE GROU ND IS ALLOWED. THE APPEAL OF THE ASSESSEE, CONSEQUENTLY IS ALLOWED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE,2020. SD/- SD/- ( ) ( ) (ANNAPURNA GUPTA) (DIVA SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER POONAM / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR