BAKIR B JAVERI, MUMBAI V. ITO WD 8(1)(1), MUMBAI

ITA 1403/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49645 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 29-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K SINGH
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, J BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A NO.1403/ MUM/2010 ASSESSMENT YEAR: 2006-07 BAKIR B JAVERI, SUBHAM SHOPPING CENTRE 1 .. APPE LLANT C.G.ROAD, ANDHERI(EAST), MUMBAI-400 093 PA NO.AAAPJ 6490K VS INCOME TAX OFFICER 8(1)(1) ,. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: S.S.AGARWAL, FOR THE APPELLANT S.K.SINGH, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO Q UESTION CORRECTNESS OF CIT(A)S ORDER DATED 22.12.2009, IN THE MATTER OF ASSE SSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2006 -07. 2. GROUND NOS.1 & 2 READ AS UNDER: 1. THE LD CIT(A) WAS HIGHLY UNJUSTIFIED IN CONFIRMIN G THE DISALLOWANCE OF 50% DEPRECIATION AMOUNTING TO ` .1,03,898 AS CLAIMED BY YOUR APPELLANT. THE CARS WERE USED BY YOUR APPELLANT FOR THE PURPOSE OF TH E MANAGEMENT OF WEIGHING SCALES OF YOUR APPELLANT SITUATED AT DIFFERE NT PLACES. 2. THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISA LLOWANCE OF 50% TELEPHONE EXPENSES AMOUNTING TO ` .19,063 AS CLAIMED BY YOUR APPELLANT. THE I.T.A NO.1403/ MUM/2010 ASSESSMENT YEAR: 2006-07 2 EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF YOUR APPELLANT. 3. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE LIK E THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT T HE ASSESSEE HAD DERIVED TOTAL INCOME OF ` .1,42,238, INTER ALIA, FROM PROPRIETORSHIP OF ` .44,228 AND ` .65,336 FROM MAKARPURA WEIGH BRIDGE AND ALBAMA GROUP, RESPEC TIVELY ALONGWITH BANK INTEREST OF ` .755 AND MISCELLANEOUS INCOME OF ` .31,920. FROM THE ABOVE INCOME, THE ASSESSEE HAD CLAIMED 50% DEPRECIATION OUT OF TOTAL EXPENSES, WHICH WORKS OUT TO ` .1,03,8989 AND TELEPHONE EXPENSES OF ` .19,063. THE AO FURTHER NOTICED THAT THE DEPRECIATION CLAIMED WAS ON ASSETS I.E. 4 MOTOR CARS AND ONE MUSIC SYSTEM, THAT DID NOT BELONG TO ANY PROPRIETORSHIP. SINCE THE ASSETS AR E IN THE PERSONAL CAPACITY, THE AO DID NOT ALLOW DEPRECIATION AND DISALLOWED THE EX PENSES OF ` .1,03,898 ON ACCOUNT OF DEPRECIATION AND ` .19,063 ON ACCOUNT OF TELEPHONE EXPENSES. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. 4. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PER USED THE MATERIAL ON RECORD, WE FIND THAT WHILE BOTH THE REVENUE AUTHORI TIES HAVE DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSETS ARE NOT IN THE NAME OF PROPRIETORSHIP CONCERN AND, THEREFORE, THEY ARE NOT USED EXCLUSIVELY FOR THE BUSINESS PURPOSES, THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO SUB STANTIATE THAT THE MOTOR CARS AND TELEPHONE ARE USED WHOLLY AND EXCLUSIVELY FO R THE PURPOSE OF BUSINESS. IT IS NOT EVEN THE CASE OF THE REVENUE THAT THE CARS AND PHONE HAVE NOT BEEN USED FOR THE PURPOSES OF BUSINESS, OR THAT THE ASSESSEE WAS USING OTHER CARS AND PHONES. WE ALSO FIND THAT THE ASSESSEE IS PROPRIETOR OF THE FIRMS AN D HAS CLAIMED 50% OF THE EXPENSES TOWARDS DEPRECIATION AND TELEPHONE EXPENSES. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT SOME BUSINESS USE OF CARS AND TELEPHONE CANNOT BE RULED OUT, AND INDEED W ARRANTED ON THE FACTS OF THIS CASE. THEREFORE, TO MEET THE ENDS OF JUSTICE, IT WOU LD BE APPROPRIATE TO REDUCE THE DISALLOWANCE OF 25% OF DEPRECIATION AND TELEPHONE EX PENSES, AS AGAINST 50% CLAIMED BY THE ASSESSEE. . THE ASSESSEE GETS RELIEF ACCORDI NGLY. 5. GROUND NOS.1 & 2 ARE THUS PARTLY ALLOWED. I.T.A NO.1403/ MUM/2010 ASSESSMENT YEAR: 2006-07 3 6. IN GROUND NO.3, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: 3. THE CIT(A) WAS NOT CORRECT IN CONCLUDING THAT ALL THE EXPENSES WERE INCURRED BY YOUR APPELLANT ON 31.3.2006. YOUR APPE LLANT INCURRED EXPENSES ON DAY TO DAY BASIS MONTH TO MONTH BASIS AND HENCE NONE OF THE EXPENSES IN A DAY EXCEEDED ` .20,000. THEREFORE, THE DISALLOWANCE U/S.40A(3) HAS WRONGLY BEEN MADE BY THE AO AND THE WRONGLY CONFIRM ED BY THE CIT(A). 7. HAVING HEARD THE RIVAL CONTENTIONS, WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE CIT(A) TO INTERFERE. THE EXPENDITURE INCUR RED IN CASH WAS IN EXCESS OF ` .20,000. BEFORE THE AUTHORITIES BELOW, THE ASSESSEE WAS NOT ABLE TO FURNISH ANY EXPLANATION WITH REGARD TO THE EXPENDITURE INCURRED IN EXCESS OF ` .20,000 IN A DAY. THE FINDINGS OF THE AUTHORITIES BELOW REMAIN UNCONT ROVERTED BEFORE US AS WELL. WE, THEREFORE, SEE NO REASONS TO DISTURB THE IMPUGNED ORDER , AND, WE ACCORDINGLY, CONFIRM THE SAME. 8. GROUND NO.3 IS THUS DISMISSED. IN THE RESULT, APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2011 SD/- (V. DURGA RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 29 TH JULY, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),16, MUMBAI 4. COMMISSIONER OF INCOME TAX, VIII , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI