BPC Projects and Infrastructure Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-1(2), Ahmedabad

ITA 1274/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6870 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 31-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: SN SOPARKARAR
• Keywords: Depreciation; Initiation of penalty proceedings
• Section: 40A(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI BHAVNESH SAINI,JM & SHRI A N PAHUJA,AM ITA NO.1274/AHD/2009 (ASSESSMENT YEAR:-2005-06) BPC PROEJCTS & INFRASTRUCTURE PRIVATE LIMITED,DARSHAK 14A, SWASTIK SOCIETY,PUNJABI HALL LANE, NAVRANGPURA, AHMEDABAD . V/S INCOME TAX OFFICER, WARD 1(2), AHMEDABAD . PAN: AADCA 0018 L [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI S.N.SOPARKAR,AR REVENUE BY:- SHRI R.K. DHANESTA, DR ( (( ( )/ )/)/ )/ ORDER A.N. PAHUJA : THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 27-1-2009 OF THE LD. C.I.T.(A)-VI, AHMEDABAD RAISES THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A)-VI HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE WHILE PASSING AN APPELLATE ORDER DATED 27-1- 2009 FOR ASSESSMENT YEAR 2005-06. 2. THAT THE LD. C.I.T (A ) VI HAS ERRED IN CONFIRMING THE FOLLOWING DISALLOWANCES MADE BY THE ASSESSING OFFIC ER. OUT OF SALARY EXPENSES RS.2,09,500 DISALLOWANCE U/S.40A (3) OF THE I.T. ACT. RS. 4 ,237 ITA.NO.3163/AHD/2009 2 3. THAT THE LD. CIT (A) VI HAS ERRED IN CONFIRMING THE DISALLOWANCE: (A) DEPRECIATION ON MOTOR CAR RS. 2,50,232 (B) INTEREST ON MOTOR CAR RS. 36,276 (C ) VEHICLE EXPENSES @ 1/6 TH RS. 1,05,297 4. THE LD. CIT(A) HAS ERRED IN CONFIRMING DISALL OWANCE OF DEPRECIATION ON TRUCKS OF RS.4,94,058/-. 5. THE LD. CIT (A) VI HAS ERR ED IN CONFIRMING THE INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C ) OF THE I. T. AC T. 6. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, OMIT ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE THE APPEAL IS F INALLY HEARD AND DECIDED. 2. ADVERTING FIRST TO GROUND NO.2 IN THE AP PEAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING LOSS OF R S.9,16,821/- FILED ON 30- 10-2005 BY THE ASSESSEE, ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF READY MIXED CONCRETE BESIDES CIVIL CONST RUCTION, AFTER BEING PROCESSED U/S. 143(1) OF THE ACT (HEREINAFTER REFER RED TO AS THE ACT), WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S. 143(2) OF THE ACT ON 9-6-2006. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE DEBI TED SALARY PAID TO SHRI MAHESHBHAI L. PATEL EVERY MONTH AND TOTAL AMOUNT PA ID WAS RS.98,500/-. HOWEVER, ON 30-3-2005 THE ASSESSEE AGAIN DEBITED S ALARY OF RS.1,01,500/- TO THE SAME PERSON. LIKEWISE, THE ASS ESSEE DEBITED SALARY OF RS.1,08,000/- PAID TO SHRI ASHOKBHAI VORA ON 30- 3-2005 WHILE THERE WAS NO CORRESPONDING ENTRY ON ACCOUNT OF MONTHLY SA LARY PAID TO HIM. THE AO WAS OF THE OPINION THAT THE ASSESSEE CLAIMED DOU BLE DEDUCTION OF SALARY PAID TO SHRI MAHESHBHAI L. PATEL WHILE IT WA S NOT POSSIBLE THAT EMPLOYEE WAS NOT CLAIMING SALARY. TO A QUERY BY THE AO, THE ASSESSEE EXPLAINED THAT ONLY AN ADJUSTMENT ENTRY HAD BEEN MA DE AT THE END OF THE YEAR WHEREBY PAYMENT TOWARDS ALLOWANCES WAS SEGREG ATED. HOWEVER, ITA.NO.3163/AHD/2009 3 THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESS EE ON THE GROUND THAT THE ASSESSEE CLAIMED DOUBLE DEDUCTION FOR SALA RY PAID TO SHRI MAHESHBHAI L. PATEL WHILE THERE WERE NO ENTRIES IN BOOKS FOR MONTHLY SALARY PAID TO SHRI ASHOK VORA AND ONLY AN ENTRY WA S MADE AT THE YEAR END. ACCORDINGLY THE AO DISALLOWED AN AMOUNT OF RS. 2,09,500/-. 3. ON APPEAL, THE LD. C.I.T.(A) UPHELD THE FINDING OF THE AO IN THE FOLLOWING TERMS:- KEEPING IN VIEW THE AFORESAID FACT S AND CIRCUMSTANCES, THE FACT EMERGES THAT IN THE CASE OF SHRI MAHESH K. PATEL, SALARY HAS BEEN DEBITED TWICE (I.E. MONTH-WISE AND AGAIN IN THE MONTH OF MARCH) IN SALARY ACCOUNT, THEREBY, THERE I S DOUBLE DEDUCTION OF SALARY. IN THE GIVEN FACTS AND CIRCUMS TANCES THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE SALARY OF RS.1,01,500/- DEBITED IN THE MONTH OF MARCH,2005 BY J.V. FURTHER, IT IS A FACT THAT THERE ARE NO ENTRIES OF MONTH-WISE SALARY IN THE SALARY ACCOUNT PERTAINING TO SUM OF RS.1,08, 000/- (I.E. PERTAINING TO SHRI ASHOKBHAI VORA). IN THE GIVEN FA CTS AND CIRCUMSTANCES, THE ASSESSING OFFICER HAS RIGHTLY DI SALLOWED THE TOTAL AMOUNT OF RS.2,09,500/- (I.E. RS.1,01,500 + 1 ,08,000) ON THIS GROUND AND ADDED BACK TO THE TOTAL INCOME OF T HE APPELLANT. WITH THE RESULT, THE ACTION OF THE ASSESSING OFFICE R IS HEREBY CONFIRMED ON THIS GROUND. 4. THE ASSESSEE IS NOW IN APPEAL BEFOR E US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT (A). THE LD. AR ON BEHALF O F THE ASSESSEE WHILE DRAWING OUR ATTENTION TO PAGE 3 AND 4 OF THE PAPER BOOK, SUBMITTED THAT THERE WAS NO CLAIM FOR DOUBLE DEDUCTION OF SALARY T O SHRI MAHESH K. PATEL OR ASHOKBHAI AND THAT THE LD. C.I.T.(A) DID NOT APP RECIATE THE FACTS. TO A QUERY BY THE BENCH, THE LD. A.R. ADDED THAT MATTER MAY BE RESTORED TO THE FILED OF THE AO FOR NECESSARY VERIFICATION. ON THE OTHER HAND, THE DR SUPPORTED THE FINDING OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE LD, C.I.T. (A) UPHELD TH E FINDINGS OF THE AO ON THE GROUND THAT IN THE CASE OF SHRI MAHESHBHAI L. P ATEL SALARY HAS BEEN ITA.NO.3163/AHD/2009 4 DEBITED TWICE WHILE IN THE CASE OF SHRI ASHOKBHAI V ORA, MONTHLY ENTRIES OF SALARY WERE NOT APPEARING IN HIS ACCOUNT. ON THE O THER HAND, THE AR CLAIMED BEFORE US THAT NO SUCH DOUBLE CLAIM HAS BEE N MADE ON ACCOUNT OF SALARY PAID TO THE AFORESAID TWO PERSONS AND MERELY ADJUSTMENT ENTRIES WERE MADE. IN VIEW OF THE FOREGOING, ESPECIALLY WHE N THE FACTUAL VERIFICATION OF CLAIM OF THE ASSESSEE IS NECESSAR Y, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A ) AND RESTORE THE ISSUE RAISED IN GROUND NO. 2 IN RESPECT OF DISALLOWANCE OF SALARY, TO HIS FILE FOR DECIDING THE MATTER AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY TH AT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PASS A SPEAKING OR DER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6 ) OF THE ACT, BRINGING OUT CLEARLY AS TO HOW THE ACCOUNTS HAVE BEEN RECONCILED , IF THE ASSESSEE MADE DOUBLE CLAIM OF SALARY TO THE AFORESAID TWO PE RSONS. WITH THESE DIRECTIONS, GROUND NO. 2 IN RELATION TO DISALLOWAN CE OF SALARY IS DISPOSED OF. 6. NEXT ISSUE IN GROUND NO.2 IN RESPECT OF DISALLOWANCE U/S. 40A(3) OF THE ACT WAS NOT PRESSED BEFORE US BY THE LD. AR ON BEHALF OF THE ASSESSEE. ACCORDINGLY, GROUND NO.2 IN RELATION TO DISALLOWANCE OF RS.4,237/- U/S 40A(3) OF THE ACT IS DISMISSED . 7. GROUND NO.3 RELATES TO DISALLOWANCE OF DEPRE CIATION OF RS.2,50,232/- ON MOTOR CAR, INTEREST OF RS.36,276/- ON CAR LOAN AND 1/6 TH OF VEHICLE EXPENSES-RS.1,05,297/-. THE AO NOTICED DURING THE A SSESSMENT PROCEEDINGS THAT THE ASSESSEE PURCHASED A NEW CAR A T A COST OF RS.12,51,159/-ON 7-6-2004 AND CLAIMED DEPRECIATION @ 20% THEREON. HOWEVER, THE CAR WAS IN THE NAME OF SHRI PRAHLAD SH IVRAM PATEL, A DIRECTOR OF THE COMPANY WHILE THE ADDRESS ON THE BI LL WAS HIS RESIDENTIAL ADDRESS. SINCE THE ASSESSEE WAS NOT THE OWNER OF TH E CAR, THE AO DISALLOWED THE CLAIM FOR DEPRECIATION OF RS.2,50,23 2/-. BESIDE, THE AO DISALLOWED INTEREST OF RS.36,276/- PAID ON LOAN TAK EN BY THE COMPANY FOR ITA.NO.3163/AHD/2009 5 THE PURCHASE OF CAR AND EXPENSES RELATED TO THE C AR. THE AO ALSO DISALLOWED 1/5 TH OF THE VEHICLE EXPENSES OF RS.6,31,356/- FOR THE R EMAINING VEHCILES. 8. ON APPEAL, THE LD. CIT(A) ADJUDICATED THE ISSUE IN THE FOLLOWING TERMS:- KEEPING IN VIEW THE AFORESAID FACTS; CI RCUMSTANCES AND VARIOUS JUDICIAL PRONOUNCEMENTS, THE FACT EMERGES T HAT THE CAR IN QUESTION ON WHICH DEPRECIATION OF RS.2,50,232/- HAS BEEN CLAIMED BY THE APPELLANT @ 20% IS IN FACT IN THE NAME OF TH E DIRECTOR OF THE APPELLANT I.E. SHRI PRAHLAD SHIVRAM PATEL; CAR IS N EVER TRANSFERRED IN THE NAME OF THE APPELLANT. WITH THE RESULT, THE APP ELLANT HAS NEVER BEEN THE OWNER OF CAR IN QUESTION. THUS, ONE OF THE PRESCRIBED CONDITIONS I.E. OWNERSHIP OF AN ASSET; FOR CLAIMING DEPRECIATION IS NOT FULFILLED. IN ORDER TO AVAIL DEPRECIATION, TH E FOLLOWING CONDITIONS MUST BE FULFILLED: (A) ASSET MUST BE OWNED BY THE ASSESSEE; (B) IT MUST BE USED FOR THE PURPOSE OF BUSINESS OR PROFESSION; AND (C) IT SHOULD BE USED DURING THE RELEVANT ACCOUNTING YEAR. FIRST OF ALL ASSET MUST BE OWNED BY THE ASSESSEE IN ORDER TO BE ENTITLED TO DEPRECIATION ALLOWANCE, THE ASSES SEE HAS TO SHOW THAT THE ASSET IS OWNED BY HIM OR ASSESSEE IS THE C O-OWNER OF THE ASSET. IT IS ONLY THE OWNER OF THE ASSETS WHO IS EN TITLED TO CLAIM DEPRECIATION ON THEM. SECONDLY, ASSET MUST BE USE D FOR BUSINESS OR PROFESSION. THE ASSET, IN RESPECT OF WHICH DEPRECIATION IS CLAI MED, MUST HAVE BEEN USED FOR THE PURPOSE OF BUSINESS OR PROFESSION . THIRDLY, ASSET MUST BE USED DURING THE RELEVANT ACCOUNTING YEAR. DEPRECIATION IS ALLOWED ONLY IF THE ASSET IS USED FOR THE PURPOSE OF BUSINESS OR PROFESSION AT LEAST FOR SOME TIME DURING THE PREVIOUS YEAR. HOWEVER, FROM THE A.Y. 1992-93, WHER E AN ASSET IS ACQUIRED AND PUT TO USE, FOR THE PURPOSE OF BUSIN ESS OR PROFESSION FOR LESS THAN 180 DAYS DURING THE PREVIOUS YEAR IN WHICH IT IS ACQUIRED, DEPRECIATION THERE ON SHALL BE ALLOWED @ 50% OF THE DEPRECIATION ALLOWABLE ACCORDING TO THE PERCENTAGE PRESCRIBED IN RESPECT OF BLOCK OF ASSET COMPRISING SUCH ASSET. ITA.NO.3163/AHD/2009 6 KEEPING IN VIEW THE AFORES AID FACTS AND CIRCUMSTANCES AS WELL AS VARIOUS JUDICIAL PRONOUNCEMENTS; THE FACT E MERGES THAT THE APPELLANT HAS PURCHASED A NEW CAR AT THE COST OF RS .12,51,159/- IN THE NAME OF SHRI PRAHLAD S. PATEL, WHO IS ONE OF T HE DIRECTORS OF THE APPELLANT. AS THE CAR IS PURCHASED IN THE NAME OF THE DIRECTOR,. THEREBY, IT CANNOT BE SAID TO BE OWNED BY THE APPEL LANT. CONSEQUENTLY, IT IS NOT PUT TO USE FOR APPELLANTS BUSINESS PURPOSES. IN THE GIVEN FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED APPELLANTS CLAIM OF DEPRECIATIO N OF RS.2,50,232/- ON THE CAR IN QUESTION AND ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT. WITH THE IDENTICAL FACTS AND CIRCUMSTANC ES; WITH IDENTICAL REASONING, THE PAYMENT OF INTEREST OF RS.36,276/- B Y THE APPELLANT HAS RIGHTLY BEEN DISALLOWED BY THE ASSESSING OFFICE R AND ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT. IT IS AL SO A FACT THAT THE APPELLANT HAS DEBITED THE AMOUNT OF RS.6,31,780/- O N ACCOUNT OF VEHICLE EXPENSES. AS DISCUSSED ABOVE, ONE OF THE VE HICLE IS NOT OWNED BY THE APPELLANT, THEREBY, PERSONAL ELEMENT C ANNOT BE ELIMINATED WHOLLY AND EXCLUSIVELY. WITH THE RESULT, THE ASSESSING OFFICER HAS RIGHTLY MADE THE DISALLOWANCE ON THIS A CCOUNT. HOWEVER, KEEPING IN VIEW THE VOLUME, MAGNITUDE AND SIZE OF THE BUSINESS, THE DISALLOWANCE OF 1/5 TH OF VEHICLE EXPENSES OF RS.6,31,780/- APPEARS TO BE ON THE HIGHER SIDE, THE REBY, THE SAME IS RESTRICTED TO 1/6 TH OF VEHICLE EXPENSES. WITH THE RESULT, THE APPEAL IS PARTLY ALLOWED ON THIS GROUND. 9. THE ASSESSEE IS NOW IN APPEAL BEFORE US A GAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSESSEE WHILE RELYING ON THE DECISIONS IN CIT VS. DILIP SINGH SAR DAR SINGH BAGGA, 201 ITR 995(BOM.), CIT VS. NAVDURGA TRANSPORT CO.,235 I TR 158 (ALL) AND SAYAJI IRON & ENGG. CO. V CIT ,253 ITR 749 (GUJ) CO NTENDED THAT NO DISALLOWANCE COULD BE MADE IN RESPECT OF CAR PURCHA SED BY THE ASSESSEE IN THE NAME OF THE DIRECTOR NOR EXPENSES CAN BE DIS ALLOWED FOR PERSONAL USER OF THE CAR . ON THE OTHER HAND, THE DR SUPPO RTED THE FINDINGS OF THE LD. CIT(A). 11. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. THE RELEVAN T PROVISIONS OF SECTION 32 OF THE ACT STIPULATE DEPRECIATION IN RESPECT OF BUILDING, MACHINERY, PLANT ITA.NO.3163/AHD/2009 7 OR FURNITURE 'OWNED BY THE ASSESSEE' AND 'USED' FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. INDISPUTABLY, THE INNOVA CA R WAS PURCHASED WITH THE FUNDS OF THE COMPANY AND USED BY THE ASSESSEE F OR THE PURPOSES OF ITS BUSINESS. THE CONTROVERSY IS IN REGARD TO OWNER SHIP 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 ASSESSEE IS NOT DISPUTED BY THE REVENUE. THE CONTENTION OF THE REVE NUE IS THAT UNLESS THE CAR IS REGISTERED IN THE NAME OF THE ASSESSEE U NDER THE MOTOR VEHICLES ACT, THE ASSESSEE WOULD NOT BE ENTITLED TO DEDUCTIO N OF DEPRECIATION ALLOWANCE IN RESPECT THEREOF. WE ARE OF THE OPIN ION THAT THE ASSESSEE, WHO HAD PURCHASED THE CAR FOR VALUABLE CONSIDERATIO N AND USED THE SAME FOR ITS BUSINESS, CANNOT BE DENIED THE BENEFIT OF D EPRECIATION 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 V EHICLES ACT. 11.1 THE AFORESAID VIEW IS SUPPORTED BY THE DEC ISION IN THE CASE OF CIT VS. NAVDURGA TRANSPORT CO.,235 ITR 150(ALL), WH EREIN THE 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 THOUGH C ARS CONTINUED TO BE REGISTERED IN THE NAME PARTNERS. HONBLE ALLAHABAD HIGH COURT HELD THAT THE TRIBUNAL RIGHTLY REACHED THE CONCLUSION THAT TH E 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. BUX SHOKAT ALI(NO.2), 256 ITR357(RAJ), CIT VS FAZILKA DABWALI TPT CO. LTD. ( 2004) 270 ITR 398 (P&H), CIT V. SALKIA TRANSPORT ASSOCIATES [1983] 14 3 ITR 39/13 TAXMAN 191 (CAL.), CIT V. NIDISH TRANSPORT CORPN. [1910] 1 85 ITR 669/[1989] 44 TAXMAN 351(KER.), CIT V. DILIP SINGH SARDAR SINGH B AGGA [1993] 201ITR 995/[1994] 77 TAXMAN 66(BOM.), AND CIT V. BASTI SUGAR MILLS CO. LTD. [2002] 257 ITR 88/123 TAXMAN 693 (DELHI) AS ALSO BY THE ITAT IN THEIR ITA.NO.3163/AHD/2009 8 DECISION IN THE CASE OF THE CURIOUS HOUSE (P) LTD. V ITO (1980) 9 TTJ 348(INDORE) AND ITO VS. MODI AGENCY, ITA NO. 198/GA U/1977- 78(GAUHATI). 11.2 IN THE LIGHT OF VIEW TAKEN IN THE AFORE SAID DECISIONS, MERE NON- REGISTRATION OF A VEHICLE IN THE NAME OF THE COMPAN Y UNDER THE MOTOR VEHICLES ACT, CANNOT DISENTITLE THE ASSESSEE IN RE GARD TO ITS CLAIM OF DEPRECIATION, WHEN THE FACTS ON RECORD ARE UNDISPUT ED THAT THE ASSESSEE COMPANY HAS, IN FACT, MADE THE INVESTMENT IN PURCHA SE OF THE VEHICLE AND SUCH VEHICLE IS BEING USED FOR ITS BUSINESS. THE RE QUIREMENT OF SECTION 32 IS THAT THE VEHICLE MUST BE OWNED BY THE ASSESSEE A ND NOT THAT THE ASSESSEE MUST BE A REGISTERED OWNER OF THE SAME U NDER THE MOTOR VEHICLES ACT. THEREFORE, WE HAVE NO HESITATION IN V ACATING THE FINDINGS OF THE LD. CIT(A) . THE AO IS DIRECTED TO ALLOW THE CL AIM OF THE ASSESSEE FOR DEPRECIATION AND INTEREST ON FUNDS BORROWED FOR PUR CHASE OF CAR. CONSEQUENTLY, GROUND NOS. 3(A) & (B) RELATING TO DI SALLOWANCE OF DEPRECIATION ON MOTOR CAR AND INTEREST ON LOAN FO R PURCHASE OF CAR IS ALLOWED. 11.3 AS REGARDS DISALLOWANCE OF EXPENSES ON RUN NING AND MAINTENANCE OF CAR IN THE CASE OF A COMPANY ,HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF SAYAJI IRON & ENGG. CO. V CIT, 172 CTR 339 (GUJ), HELD THAT A PRIVATE LIMITED COMPANY IS A DISTINCT ASSESSABLE EN TITY AS PER THE DEFINITION OF 'PERSON' UNDER SECTION 2(31) OF THE ACT AND THER EFORE, IT CANNOT BE STATED THAT WHEN THE VEHICLES ARE USED BY THE DIREC TORS, 'EVEN IF THEY ARE PERSONALLY USED BY THE DIRECTORS,' THE VEHICLES ARE PERSONALLY USED BY THE COMPANY, BECAUSE A LIMITED COMPANY BY ITS VERY NATU RE CANNOT HAVE ANY ' PERSONAL USE'. THE LIMITED COMPANY IS AN INANIMATE PERSON AND THERE CANNOT BE ANYTHING PERSONAL ABOUT SUCH AN ENTITY. IN THE LIGHT OF THE SAID DECISION, DISALLOWANCE OF EXPENSES ON RUNNING AND M AINTENANCE OF CARS IS DELETED. THEREFORE, GROUND NO.3(C) IS ALLOWED. ITA.NO.3163/AHD/2009 9 12. NEXT GROUND NO.4 RELATES TO RESTRICTION OF DEPRECIATION @ 25% ON TRUCKS INSTEAD OF 40% CLAIMED BY THE ASSESSEE. THE AO DISALLOWED THE CLAIM FOR DEPRECIATION @ 40% ON TRUCKS ON THE GROU ND THAT THE TRUCKS WERE NOT BEING USED IN THE BUSINESS OF HIRE AND WE RE USED FOR TRANSPORTING READY MADE MIXUTURE. 13. ON APPEAL, THE LD. CIT (A) UPHELD THE FINDINGS OF THE ASSESSING OFFICER IN FOLLOWING TERMS:- KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTANCES AS WELL AS VARIOUS JUDICIAL PRONOUNCEMENTS, THE FACT E MERGES THAT THE APPELLANT HAS CLAIMED DEPRECIATION ON TRUCKS @ 40% WHOSE WDV IS RS.1,05,39,906/- AND IT IS A FACT THAT THE T RUCKS IN QUESTION ARE EXCLUSIVELY USED FOR APPELLANTS OWN B USINESS ONLY. CONSEQUENTLY, THE APPELLANTS CLAIM OF DEPRECIATION @ 40% IS NOT AT ALL CORRECT AS TRUCKS IN QUESTION ARE NOT AT ALL USED FOR HIRE. CONSEQUENTLY, EXCESS CLAIM OF DEPRECIATION ON TRUCK S HAS TO BE DISALLOWED. IN THE GIVEN FACTS AND CIRCUMSTANCES, T HE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE EXCESS CLAIM OF DEPRECIATION TO THE EXTENT OF RS.4,94,058/- AND ADDED BACK TO THE T OTAL INCOME OF THE APPELLANT. WITH THE RESULT, THE ACTION OF TH E ASSESSING OFFICER IS HEREBY CONFIRMED ON THIS GROUND. 14. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSESSEE CONTENDED THAT THE ASSESSEE CLAIMED DEPRECIATION AT THE NORMA L RATES ONLY AND NOT @ 40% AS CONCLUDED BY THE AO OR THE LD. CIT (A) . HE ADDED THAT THE MATTER NEEDS TO BE RESTORED TO THE FILE OF THE AO FOR NECE SSARY VERIFICATION. THE LD. DR DID NOT OPPOSE THESE SUBMISSIONS OF THE LD. AR 15. WE HAVE HEARD BOTH THE PARTIES AND GO NE THROUGH THE FACTS OF THE CASE. THE AO & THE LD. CIT(A) NOTICED THAT AS SESSEE CLAIMED DEPRECIATION @ 40% ON TRUCKS AS AGAINST NORMAL RAT E OF 25% WHILE THE AR OF THE ASSESSEE CLAIMED THAT DEPRECIATION HAS BE EN CLAIMED ONLY AT THE NORMAL RATE OF 25%. SINCE THE FACTS ARE DISP UTED, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. C IT(A) AND RESTORE THE ITA.NO.3163/AHD/2009 10 ISSUE RAISED IN GROUND NO. 4 IN RESPECT OF DEPRECI ATION @40% ON TRUCKS, TO THE FILE OF THE AO WITH THE DIRECTIONS TO VERIF Y AS TO WHETHER OR NOT DEPRECIATION ON TRUCKS HAS BEEN CLAIMED @ 25%. IF N OT ,DEPRECIATION IN EXCESS OF NORMAL RATES SHOULD BE DISALLOWED AFTER A LLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. WITH THESE DIRECTIONS, GROUND NO.4 IS DISPOSED OFF. 16. GROUND NO.5 RELATES TO INITIATION OF PENALTY PROCEEDINGS U/S. 271(1) (C) OF THE ACT. SINCE MERE INITIATION OF PEN ALTY U/S 271(1)(C) OF THE ACT IS NOT APPEALABLE, THIS GROUND IS DISMISSED. . 17. GROUND NO.1 BEING GENERAL IN NATURE NOR ANY S UBMISSIONS HAVING BEEN MADE BEFORE US, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN T ERMS OF RESIDUARY GROUND NO. 6 IN THE APPEAL , ACCORDINGLY, THESE GRO UNDS ARE DISMISSED. 18. NO OTHER PLEA OR SUBMISSIONS HAVE BEEN MADE BEFORE US. 19. IN THE RESULT, APPEAL IS PARTLY ALLOWED, BUT F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 8 -04-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 8-4-2011 COPY OF THE ORDER FORWARDED TO: 1. BPC PROEJCTS & INFRASTRUCTUREPRIVATE LIMITED,DA RSHAK 14A, SWASTIK SOCIETY,PUNJABI HALL LANE, NAVRANGPURA,AHME DABAD . 2. INCOME TAX OFFICER,WARD 1(2),INSURANCE BUILDING, ASHRAM ROAD, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-VI, AHMEDABADVALSAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR /ASISTANT REGISTRAR ITAT, AHMEDABAD