P.S. RAMASWAMY, MUMBAI V. ITO 24(1)(2), MUMBAI

ITA 2026/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92756 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2014
• Court: TRIBUNAL
• Department Lawyers: V K BORA SR
• Assessee Lawyers: ISHWAR RATHI
• Keywords: Depreciation; Rule of consistency

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 2026/M/2014 ( AY: 2009 - 2010 ) MR. P.S. RAMASWAMY, A - 203, PRABHU DARSHAN, 173 - D, S.V. ROAD, JOGESHWARI (W), MUMBAI 400 102. / VS. THE INCOME TAX OFFICER, WARD 24(1)(2), PRATYAKSH KAR BHAVAN, BKC, BANDRA (E), MUMBAI - 51. ./ PAN : AALPP5444J ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MR. ISHWAR RATHI / RESPONDENT BY : SHRI V.K. BORA, SR. AR / DATE OF HEARING : 16.6.2015 / DATE OF PRONOUNCEMENT :16.6.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 25.3.2014 IS AGAINST THE ORDER OF THE CIT (A) - 34, MUMBAI DATED 12.2.2014 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO OF DEPRECIATION OF RS. 1,55,369/ - ON SECOND CAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN CONFIRMING THE DISALLO WANCE MADE BY THE AO OF INTEREST OF RS. 42,462/ - PAID ON LOAN TAKEN FOR BUYING A CAR. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO OF SOCIETY MAINTENANCE CHARGES OF RS. 60,061/ - . 2. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A CHARTERED ACCOUNTANT (CA) AND OWNS TWO CARS OF WHICH ONE IS PURCHASED DURING THE YEAR UNDER CONSIDERATION. IN THE ASSESSMENT, IN R ESPECT OF THE OLD CAR, AO DISALLOWED 20% OF THE DEPRECIATION AND THE CIT (A) REDUCED THE SAID DISALLOWANCE TO 10% OF THE DEPRECIATION. ASSESSEE ACCEPTED THE 2 DECISION OF THE CIT (A) AND THE ISSUE HAS REACHED THE FINALITY. REGARDING THE SECOND CAR, PURCHAS ED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, AO IS OF THE OPINION THAT THE DEPRECIATION IN RESPECT OF THIS CAR SHOULD BE DISALLOWED ENTIRELY. IN THE PROCESS, AO OPINED THAT THE DEPRECIATION ON ONLY ONE CAR SHOULD BE ALLOWED NOT ON THE SECOND NE W CAR. CIT (A) AGREED WITH THE VIEWS OF THE AO. AGGRIEVED, ASSESSEE FIELD THE PRESENT APPEAL BEFORE THE TRIBUNAL. 3. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE CARS ARE USED BY THE PROFESSIONAL IN THE C OURSE OF HIS PROFESSION, AND THEREFORE, DEPRECIATION SHOULD BE ALLOWED IN RESPECT OF BOTH THE CARS. HOWEVER, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT CONSIDERING THE FACT OF USE OF BOTH THE CARS BY THE CA FOR THE PROFESSIONAL AS WELL AS PERSONAL PURPOSE S, A PART OF THE DEPRECIATION CAN BE DISALLOWED IN LINES OF THE OLD CAR I.E., 10% OF THE DEPRECIAIOTN . SIMILARLY, REFERRING TO THE INTEREST PAYMENT RELATABLE TO THE CAR FINANCE, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR VIEW MAY BE TAKEN IN RESPE CT OF THE SAID INTEREST DEBIT INSTEAD OF DISALLOWING THE ENTIRE INTEREST CLAIM AS DONE BY THE AO / CIT (A). 4. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, I FIND THE AOS DECISION OF DENIAL OF ENTIRE DEPRECIATION IN RESPECT OF THE NEW CAR IS NOT PROPER AND THEREFORE, UN SUSTAINABLE IN LAW. AS SUCH, THE AO HAS NOT BROUGHT ANYTHING ON TO THE RECORD TO DEMONSTRATE THAT THE SECOND CAR WAS NOT USED FOR PROFESSIO NAL REASONS. IN MY OPINION, AS IN THE CASE OF OLD CAR, A PERCENTAGE OF DISALLOWANCE OF DEPRECIATION FOR PERSONAL USE IN RESPECT OF THE NEW CAR SHOULD BE REASONABLE. SIMILAR IS THE CASE QUA THE INTEREST DEBIT TO THE P & L ACCOUNT. I HAVE NOTICED THAT THE DEPARTMENT ACCEPTED THE DECISION OF THE CIT (A) WHO REST RICTED THE DISALLOWANCE TO 10% OF DEPRECIATION ON THE OLD CAR AS WELL AS THE DISALLOWANCE OF 10% OF THE RELATED CAR EXPENSES. CONSIDERING THE PRINCIPLE OF CONSISTENCY, I AM OF THE OPINION, SPECIFIC TO THE YEAR UNDER CONSIDERATION, SIMILAR DISALLOWANCE @ 10% OF DEPRECIATION ON THE NEW CAR AS WELL AS THE INTEREST DEBIT SHOULD BE FAIR AND REASONABLE. ACCORDINGLY, I DIRECT THE AO TO RESTRICT THE DISALLOWANCE ON NEW CAR AND THE INTEREST DEBIT TO 10% OF THE CLAIM. ACCORDINGLY, GROUND NOS.1 AND 2 ARE PARTLY AL LOWED. 5. GROUND NO.3 RELATES TO THE SOCIETY MAINTENANCE CHARGES. BRIEFLY STATED, RELEVANT FACTS IN THIS REGARD ARE THAT THE ASSESSEE USED HIS RESIDENCE BOTH FOR THE 3 PROFESSIONAL USE AS WELL AS FOR RESIDENCE. IN RESPECT OF THE SAID PREMISES, THE A SSESSEE PAID THE SOCIETY MAINTENANCE CHARGES AMOUNTING TO RS. 60,601/ - . THE SAME WAS CLAIMED AS PROFESSIONAL EXPENDITURE, WHICH WAS NOT ALLOWED BY THE AO. ON APPEAL, CIT (A) CONFIRMED THE SAID DISALLOWANCE. AGGRIEVED, ASSESSEE RAISED THE ISSUE VIDE GROUND NO. 3 OF THE PRESENT APPEAL. 6. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD REPRESENTATIVES OF BOTH THE PARTIES AGREED TO THE FACT THAT THE FLAT WAS USED BOTH FOR RESIDENCE AS WELL AS PROFESSIONAL PURPOSE. FURTHER, THEY MENTIONED THAT THE SAID EXPENDITURE SHOULD BE APPORTIONED ON 50 : 50 BASIS BETWEEN THE RESIDENCE AND THE PROFESSIONAL PURPOSE. 7. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, I FIND, RESTRICTING THE DISALLOWANCE TO 50% OF THE CLAIM SHOULD MEET BOTH T HE ENDS OF JUSTICE. ACCORDINGLY, AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 30,300/ - . THUS, GROUND NO.3 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16TH JUNE, 2015. SD/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 16.6 .201 5 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT - 4. / 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI