SANDRA A MERCHANT, MUMBAI V. ITO 11(1)(4), MUMBAI

ITA 1653/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79313 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 02-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: A S JAIN
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI . . , , BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 1653/MUM/2011 ( / ASSESSMENT YEAR: 2006-07) SANDRA A. MERCHANT CORPORATE COMMUNICATION SERVICES C/O. MERCHANTS OF INDIA, 43, PROSPECT CHAMBERS ANNEXE, 4 TH FLOOR, D. N. ROAD, FORT, MUMBAI-400 001 / VS. INCOME TAX OFFICER-11(1)(4), ROOM NO.467, AAYAKAR BHAVAN, M. K. MARG, MUMBAI-400 020 ./ ./PAN/GIR NO. AADPM 2283 L ( /APPELLANT ) : ( !' / RESPONDENT ) # $ / APPELLANT BY : SHRI A. S. JAIN !' # $ / RESPONDENT BY : SHRI PITAMBAR DAS % &'( # )* / DATE OF HEARING : 02.07.2014 DATE OF ORDER : 02.07.2014 + / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI (CIT(A) FOR SHO RT) DATED 13.12.2010, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2006-07 VIDE ORDER DATED 31.12.2008. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PROPRIETOR OF A FIRM, M/S. CORPORATE COMMUNICATION SERVICES, ENGAGED IN THE BU SINESS OF EDITING, WRITING AND 2 ITA NO. 1653/MUM/2011 (A.Y. 2006-07) SANDRA A. MERCHANT VS. ITO COMPILING INDUSTRIAL MAGAZINES. IT WAS, DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE RELEVANT YEAR, OBSERVED TO HAVE INCURRED EXPENS ES TOTALING TO RS.6.34 LACS UNDER THE FOLLOWING HEADS OF ACCOUNT: (AMOUNT IN RS.) HEADS OF INCOME AMOUNT BOOKS AND PERIODICALS 28,378 TELEPHONE CHARGES 51,811 ELECTRICITY CHARGES 72,373 MOTOR CAR EXPENSES 1,15,190 DEPRECIATION ON MOTOR CAR 2,77,490 INTEREST ON MOTOR CAR LOAN 59,604 TRAVELING AND CONVEYANCE 29,376 6,34,222 BEING LIABLE TO BE USED FOR PERSONAL PURPOSES, I.E. , APART FROM BUSINESS PURPOSES, WITH THE ASSESSEE BEING UNABLE TO ADDUCE EVIDENCE AS TO NON- USER OF ANY OF THOSE FOR PERSONAL PURPOSES, THE SAME WAS ESTIMATED AT 1/5 TH , EFFECTING DISALLOWANCE, AS A RESULT, AT RS.1,26,844/-. THE SAME STOOD CONFIRMED IN APPEAL. AS OBSERVED BY THE LD. CIT(A), THE ASSESSEES ENTIRE PLEADINGS BEFORE HER WERE WITH RE GARD TO THE GENUINENESS AND THE VERIFIABILITY OF THE EXPENDITURE. THE ASSESSING OFF ICER (A.O.) HAD NOT DOUBTED THE SAME, BUT ONLY CONSIDERED A PART OF IT AS BEING NOT ALLOW ABLE FOR THE REASON OF HAVING BEEN NOT INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOS ES, I.E. TO THAT EXTENT, BUT FOR PERSONAL PURPOSES OF THE ASSESSEE AND TOWARD WHICH NO CASE S TOOD MADE OUT BY THE ASSESSEE, BEFORE HER. THE DISALLOWANCE BEING CONFIRMED, THE A SSESSEE IS IN SECOND APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. IT IS APPARENT THAT THE A.O. HAS NOT EXAMINED THE DETAILS OF THE EXPENS ES IN ARRIVING AT HIS ESTIMATION, BUT INFERRED THE PERSONAL USER ON THE BASIS OF THE NATU RE OF THE EXPENSE, AS WHERE THERE WAS PROPENSITY FOR BEING USED FOR OTHER THAN BUSINESS P URPOSES IN-AS-MUCH AS NO SEPARATE ASSETS FOR PERSONAL PURPOSES HAD CORRESPONDINGLY BE EN SPECIFIED BY THE ASSESSEE. IN THIS REGARD, THEREFORE, WE FIND SOME MERIT IN THE CASE O F EITHER PARTY. THERE IS NOTHING TO SHOW 3 ITA NO. 1653/MUM/2011 (A.Y. 2006-07) SANDRA A. MERCHANT VS. ITO OF ANY PERSONAL USER IN RESPECT OF BOOKS AND PERIOD ICAL AND TRAVELLING AND CONVEYANCE EXPENSES, FOR THE REVENUE TO HAVE INFERRED ANY PERS ONAL ELEMENT THEREIN. WITH REGARD TO THE ELECTRICITY CHARGES, AS ALSO CLAIMED BEFORE US, THE SAME ARE ONLY IN RESPECT OF THE ELECTRICITY CONNECTION AT THE OFFICE PREMISES. IT I S UNFORTUNATE THAT EVEN SUCH BASIC FACTS STAND NOT DETERMINED EVEN UP TO THE FIRST APPELLATE STAGE, SO THAT THE COUNTER CONTENTIONS COME TO BE MADE BEFORE US. THE A.O. SHALL, WHILE GI VING EFFECT TO THIS ORDER, VERIFY THE THE ASSESSEES CLAIM WITH REGARD TO THE ELECTRICITY CONNECTION/S, AND IF IN RESPECT OF OFFICE PREMISES ONLY, NO PART THEREOF WOULD STAND TO BE DI SALLOWED. FURTHER, IF ANY PART OF IT RELATES TO THE ASSESSEES RESIDENCE, NO CONTENTION IN ITS RESPECT HAVING BEEN RAISED AT ANY STAGE, THE ENTIRE OF IT, I.E., THE SAID PART, WOULD STAND TO BE DISALLOWED. WITH REGARD TO TELEPHONE CHARGES AND MOTOR CAR EXPENSES, WE CONSID ER THE NON-BUSINESS (PERSONAL) ELEMENT, ESTIMATED AT 1/5 TH BY THE REVENUE, IN THE ABSENCE OF CALL RECORDS OR USER DETAILS BEING MAINTAINED BY THE ASSESSEE, AS APPOSITE. THE DEPRECIATION ON MOTOR CAR WOULD FOLLOW SUIT. AS REGARDS THE INTEREST ON MOTOR CAR L OANS, AS CLARIFIED BY THE LD. AR BEFORE US, THE SAME IS ALSO APPLICABLE TO AL1 THE THREE CA RS FOR WHICH MAINTENANCE EXPENSES HAVE BEEN CLAIMED. SO, HOWEVER, IN OUR CLEAR VIEW, THE M OTOR CARS, DESPITE A PART USER FOR OTHER THAN BUSINESS PURPOSES, ARE PRINCIPALLY BUSINESS AS SETS AND, THEREFORE, NOTWITHSTANDING A PART USER FOR OTHER THAN BUSINESS PURPOSES, DISQUAL IFYING THE DIRECT, MAINTENANCE EXPENDITURE TO THAT EXTENT, NO PART OF THE INTEREST OF LOANS ASSUMED TO ACQUIRE THE SAME IS LIABLE TO BE CONSIDERED AS INCURRED FOR NON-BUSINES S PURPOSES. DISALLOWANCE IN ITS RESPECT IS DELETED. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ,-). &/0,) # 1+ ' 2 ) # ) 34 ORDER PRONOUNCED IN THE OPEN COURT ON JULY 2, 2014 AT THE CONCLUSION OF THE HEARING ITSELF. SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % ( MUMBAI; 5& DATED : 08.07.2014 4 ITA NO. 1653/MUM/2011 (A.Y. 2006-07) SANDRA A. MERCHANT VS. ITO '.&../ ROSHANI , SR. PS !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. % 6) ( ) / THE CIT(A) 4. % 6) / CIT - CONCERNED 5. 9':; !)&( / GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , % ( / ITAT, MUMBAI