The ACIT, Circle-5, Surat V. Shri Ravjibhai P.Patel, Surat

ITA 2658/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6774 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH K DAS
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Business income; Depreciation; Income from undisclosed sources
• Section: 143(3); 50C; 260A; 6

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI M.K. SHRAWAT, JM AND D.C.AGRAWAL, AM ASSTT. CIT, CIRCLE-5, SURAT. VS. SHRI RAVJIBHAI P. PATEL, 201, ROYAL NEST APARTMENT, B/H ASHWIN MEHTA PARK, ATHWALINES, SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI RIGNESH K. DAS, DR RESPONDENT BY:- SHRI M. K. PATEL, AR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THE APPEAL HAS BEEN FILED BY THE REVENUE AND THE C ROSS OBJECTION BY THE ASSESSEE. THE FOLLOWING GROUNDS HAVE BEEN RA ISED BY THE REVENUE:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-III, SURAT HAS ERRED IN DELETING THE ADD ITION OF RS.8,39,325/- MADE ON ACCOUNT OF UNACCOUNTED INVEST MENT IN PURCHASE OF LAND U/S 69B OF THE ACT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-III, SURAT HAS ERRED IN DELETING THE ADD ITION OF RS.30,825/- MADE U/S 50C OF THE ACT. ITA NO.2658/AHD/2009 ALONG WITH C.O. NO.18/AHD/2010 ASST. YEAR 2006-07 ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 2 (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-III, SURAT HAS ERRED IN DELETING THE 20% OF INTEREST ON CAR LOAN AND CAR INSURANCE PREMIUM. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-III, SURAT OUGHT TO HAVE UPHELD THE ORDE R OF THE AO. WHEREAS THE ASSESSEE HAS RAISED FOLLOWING GROUNDS I N THE CROSS OBJECTION:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AS WELL AS LAW ON THE SUBJECT, THE LD. CIT(A)-III, SURAT HAS RIGHT LY DELETED THE ADDITION OF RS.8,39,325/- MADE ON ACCOUNT OF UNACCO UNTED INVESTMENT IN PURCHASE OF LAND U/S 69B OF THE ACT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AS WELL AS LAW ON THE SUBJECT, THE LD. CIT(A)-III, HAS RIGHTLY DE LETED THE ADDITION OF RS.30,825/- MADE U/S 50C. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LD. CIT(A)-III HAS RIGHTLY DELE TED THE ADDITION MADE TO THE EXTENT OF 20% IN RESPECT OF CAR LOAN AN D CAR INSURANCE PREMIUM. 2. DURING THE COURSE OF HEARING THE LD. AR FOR THE ASSESSEE DID NOT PRESS THE CROSS OBJECTION AND HENCE THE SAME IS DIS MISSED AS NOT PRESSED. 3. RELATING TO REVENUES APPEAL THE FACTS ARE THAT THE ASSESSEE IS A LAND DEVELOPER AND BUILDER AND ALSO A PARTNER IN VA RIOUS FIRMS DOING BUSINESS AS BUILDER/DEVELOPER. 4. THE FIRST GROUND RELATES TO ADDITION OF RS.8,39, 325/- BEING ALLEGED UNACCOUNTED INVESTMENT IN A PROPERTY. DURING THE CO URSE OF ASSESSMENT ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 3 PROCEEDINGS THE AO FOUND THAT ASSESSEE HAD PURCHASE D IMMOVABLE PROPERTY AT BHESTAN BEING SURVEY NO.153 ALONG WITH OTHER CO-OWNERS FOR RS.1,51,91,000/- WHEREAS THE DECLARED SALE PRICE WA S SHOWN ONLY AT RS.40 LACS. THE FIGURE OF RS.1,51,91,000/- WAS THE JANTRI PRICE AT WHICH STAMP DUTY WAS PAID. SINCE THE ASSESSEE HAD A SHARE OF 7 .5% IN THE PROPERTY THE AO TREATED THE DIFFERENCE OF RS.1,11,91,000/- AS UN DISCLOSED IN THE GROUND AND ASSESSEES SHARE THEREIN AT RS.8,39,325/ - WHICH WAS ADDED BY HIM U/S 69B OF THE ACT. THE LD. CIT(A) DELETED THE ADDITION BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI BH ARATKUMAR N. PATEL VS. ACIT FOR ASST. YEAR 2005-06 DATED 29/8/2008 WHEREIN AN IDENTICAL ISSUE WAS INVOLVED AND IT WAS HELD THAT UNDER SUCH CIRCUM STANCES ADDITION U/S 69B CANNOT BE MADE. THE DEPARTMENT HAS, HOWEVER, CH ALLENGED THE CASE OF OTHER CO-OWNER I.E. THE PRESENT ASSESSEE FOR THE FOLLOWING REASONS :- THE LD. CIT(A) HAS NOT APPRECIATED THAT SECTION 50 C OF THE IT ACT MAY BE A DEEMING PROVISION FOR THE PURPOSE OF COM PUTATION OF CAPITAL GAIN, YET IT LAYS DOWN A VERY BASIC PRINCIPLE THAT :- (I) ANY TRANSACTION WITHIN A PARTICULAR AREA WILL HAVE TO MATCH WITH THE JANTRI PRICE FIXED BY THE STAMP DU TY AUTHORITIES GOVERNED BY GOVT. OF GUJARAT FIXED FOR THE AREA AND THE SALE CONSIDERATION WOULD BE THE RATE A T WHICH THE PROPERTY IS EXPECTED TO BE SOLD IN THE SA ID AREA. (II) ONCE IT IS DEEMED AND ACCEPTED THAT THE PROPERT Y HAS BEEN SOLD FOR A PARTICULAR PRICE WHICH IS THE F AIR MARKET VALUE IN A GIVEN AREA THEN IT WOULD ALSO HAV E TO BE DEEMED AND ACCEPTED THAT THE PURCHASER HAS PAID THE SAME AMOUNT. ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 4 (III) WHEN A PROPERTY IS SOLD FOR A PARTICULAR SUM IT FOL LOWS AS A NATURAL COROLLARY THAT IT HAS BEEN BOUGHT AT THE SAME PRICE AS WELL. THE LD. CIT(A) HAS NOT APPRECIATED THAT THE JANTRI RATES ARE FIXED BY THE FIELD STAMP DUTY AUTHORITIES AFTER TAKING INTO ACCOUNT/CONSIDERATION ALL RELEVANT FACTORS LIKE ROAD FACILITY, THE DEVELO PMENT STAGE OF THAT AREA AND THE AMENITIES AVAILABLE IN THE SAID AREA. IT IS OBSERVED BY ALL HUMAN BEING THAT THE PREVAILING MARKET RATES OF THE LAND REMAIN FAR GREATER THAN THE JANTRI RATE FIXED BY THE STAMP DUTY AUTHORITIES . 5. THE LD. DR HAD ARGUED THAT THE DEPARTMENT HAS NO T PREFERRED ANY APPEAL U/S 260A ON ACCOUNT OF LOW REVENUE EFFECT FO LLOWING THE INSTRUCTION NO.5 OF 2008 DATED 15.5.2008 ISSUED BY THE CBDT BUT IN PRINCIPLE THE DECISION OF THE TRIBUNAL IS NOT ACCEP TED FOR THE ABOVE REASONS. 6. THE LD. AR ON THE OTHER HAND RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF CO-OWNER AS REFERRED TO BY THE LD. CIT( A) IN HIS ORDER. 7. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VIE W THERE IS NO REASON TO TAKE A DIFFERENT VIEW THAT WHAT HAS BEEN TAKEN BY THE TRIBUNAL IN THE CASE OF THE CO-OWNER NAMELY SHRI BHARATKUMAR N. PATEL (SUPRA). IN THAT CASE THE TRIBUNAL HAS OBSERVED AS UNDER :- '10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF LAW AS WELL AS DECISION(S) OF HON'BLE SUPREME COURT AND VARIOUS BENCHES RETTED UPON BY THE PARTIES, W E ARE OF THE OPINION THAT THE CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION BY DRA WING THE ANALOGICAL PROVISIONS OF SECTION 50C OF THE ACT. THE CIT(APPEA LS) CONFIRMED THE ADDITION BY OBSERVING THAT IF THIS PROPOSITION IS TO BE ACCEPTE D, THEN THE DEEMING PROVISIONS OF SECTION 50C OF THE ACT WILL BECOME INOPERABLE. HE, FURTHER, HELD THAT SECTION 50C OF ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 5 THE ACT IS APPLICABLE TO THE SELLER AND PROVIDES TH AT THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY IS TO BE DEEMED AS THE CONSIDER ATION RECEIVED BY THE SELLER. HAVING SAID SO, THE CIT(APPEALS) FURTHER HELD THAT 'THE CONVERSE WILL ALSO HAVE TO BE ACCEPTED AS TRUE, I.E., THE VALUATION OF THE STAMP VALUATION AUTHORITY WILL HAVE TO BE DEEMED AS THE CONSIDERATION PAID BY THE PURCHASER O F THE PROPERTY AS WE!!.' 10.1. WE ARE UNABLE TO AGREE WITH THE AFORESAID ANALOGY DRAWN BY THE CIT(APPEALS) BECAUSE HAD THE LEGISLATURE INTENDED TO, IT COULD HAVE EASILY SPECIFIED SUCH A PROPOSITION IN THE PROVISION ITSELF. 11. IN VIEW OF THE SETTLED PROPOSITION OF LAW THAT THE APPELLATE AUTHORITY HAS NO RIGHT EITHER TO ADD OR TO DELETE ANY WORD FROM THE PROVISIONS OF LAW UNLESS AND UNTIL THE SAME ARE FOUND TO HP HAVING SOME AMBIGUITY, WE ARE UNABLE TO SUSTAIN THE STAND OF THE CIT(APPEALS) F THERE BEING NO AMBIGUITY IN THE SECTION 50C OF THE ACT, WE ARE OF THE OPINION THAT THESE PROVISIONS ARE NOT APPLICABLE TO THE PURCHASER.' THE LD. AR HAD REFERRED TO THE JUDGMENT OF ANOTHER CO-OWNER NAMELY SHRI BHAGWANBHAI PREMJIBHAI PATEL, HUF IN ITA NO.1273/AH D/201 FOR ASST. YEAR 2006-07 PRONOUNCED ON 15.10.2010 WHEREIN ALSO FOLLOWING THE DECISION IN THE CASE OF SHRI BHARATKUMAR N. PATEL S UCH ADDITION WAS DELETED. THE RELEVANT OBSERVATIONS IN THE CASE OF S HRI BHAGWANBHAI PREMJIBHAI PATEL, HUF (SUPRA) ARE AS UNDER :- 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS A HUF DERIVING INCOME FROM INTEREST AND AGRICULTURE. FOR THE ASSES SMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TOT AL INCOME OF RS.1,31,487/-. THE AO COMPLETED THE ASSESSMENT UNDE R SECTION 143(3) ON 19.12.2008 DETERMINING TOTAL INCOME OF RS.15,44,792 /- WHEREIN HE MADE ADDITION OF RS.12,20,456/- AS UNEXPLAINED INVESTMEN T IN PROPERTY UNDER SECTION 69B ON THE BASIS OF THE VALUE ASSESSED BY T HE STAMP DUTY AUTHORITY AND TREATED THE AGRICULTURAL INCOME OF RS.1,92,849/ - AS INCOME FROM UNDISCLOSED SOURCES. 3. ON APPEAL, THE LD. CIT(A)-IV, SURAT IN THE IMPUG NED ORDER DELETED THE ADDITION OF RS.12,20,456/- MADE UNDER SECTION 6 9B RELYING ON THE DECISION DATED 29.8.2008 OF ITAT, AHMEDABAD IN THE CASE OF SHRI BHARATKUMAR N. PATEL VS. ACIT, CIRCLE-3, SURAT VIDE ITA NO.1749/AHD/2008 ON THE GROUND THAT DEEMING PROVISI ON OF SECTION 50C OF THE INCOME-TAX ACT IS APPLICABLE ONLY IN CASE OF SELLER. ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 6 8. THE PROPOSITION LAID DOWN IN THE ABOVE DECISION OF THE CO-OWNER IS THAT PROVISION OF SECTION 50C ARE NOT APPLICABLE IN THE CASE OF PURCHASER OF THE PROPERTY. SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI TRIBUNAL IN THE CASE OF FITWELL LOGIC SYSTEM (P) LTD. (2010) 1 ITR 286 (DEL) (TRIB) WHEREIN ALSO THE PROPOSITION HAS BEEN LAID DOWN THA T THE DIFFERENCE BETWEEN THE CONSIDERATION SOLD IN THE SALE DEED AND VALUATION TAKEN FOR STAMP PURPOSES CANNOT BE ADDED AS UNEXPLAINED INVES TMENT IN THE HANDS OF THE PURCHASER. THE PROPOSITION THAT PROVISION OF SECTION 50C DO NOT APPLY TO THE PURCHASER OF PROPERTY IS ALSO HELD IN THE CASE OF SMT. KUSUM GULATI IN ITA NO.1576/DEL/2008 (BCAJ A 16 VOLUME 41 B PART VI MARCH, 2010). IN VIEW OF ABOVE, WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THIS GROUND OF REVENUE. 9. GROUND NO.2 RELATES TO ADDITION OF RS.30,825/- M ADE U/S 50C. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE HAD SOLD A PROPERTY FOR RS.32,00,000/- WHEREIN JANT RI PRICE FOR THE STAMP DUTY PURPOSES WAS FIXED AT RS.33,23,300/-. THUS A D IFFERENCE OF RS.1,23,300/- WAS WORKED OUT AND ASSESSEES SHARE A T 25% THEREIN WAS DETERMINED AT RS.30,825/-. IT WAS ADDED BY THE AO U /S 50C. THE LD. CIT(A) DELETED THE ADDITION BY HOLDING THAT PROPERT Y SOLD IS ONLY A ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 7 TRADING ASSET AND NOT A CAPITAL ASSET. IN THIS REGA RD LD. CIT(A) OBSERVED AS UNDER :- 10. ON CAREFUL CONSIDERATION OF THE FACTS OF THE C ASE, I FIND THAT THE CONTENTIONS OF THE APPELLANT ARE JUSTIFIED. SECTION 50C FORMS PART OF CHAPTER IV-E OF THE ACT, WHICH DEALS WITH CAPITAL G AINS. AS PER SECTION 50C(1), FOR THE PURPOSE OF SECTION 48, IN RESPECT O F TRANSFER OF CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IF THE SALE CONSIDERATION SHOWN OR DECLARED IS LESS THAN THE VALUE ADOPTED FOR SUCH AS SET BY THE STAMP VALUATION AUTHORITY, THEN SUCH VALUE SHALL BE TAKEN AS THE FULL VALUE OF CONSIDERATION RECEIVED BY THE ASSESSEE ON TRANSFER OF THE CAPITAL ASSET. THE LANGUAGE OF SECTION 50C IS, THEREFORE, CLEAR AN D EXPLICIT. FURTHER, ON PERUSAL OF CIRCULAR NO.8 OF 2002 DTD.27.8.2002 OF T HE CBDT (CLARIFYING THE PROVISIONS OF FINANCE ACT, 2002 IN REGARD TO TH E NEWLY INSERTED SECTION 50C), IT IS ABUNDANTLY CLEAR THAT THE BASIC INTENTION FOR INSERTION OF SECTION 50C IS FOR THE PURPOSE OF DETERMINING TH E FULL VALUE OF SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAP ITAL GAINS U/S 48 OF THE ACT. THUS, SECTION 50C HAS APPLICATION ONLY FOR DETERMINATION OF SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAP ITAL GAINS UNDER CHAPTER IV-E OF THE ACT. IN THE INSTANT CASE, THE S ALE OF THE PROPERTY (BEING A BUSINESS/TRADING ASSET) IS SHOWN AS BUSINE SS INCOME OF THE ASSESSEE AND NOT AS CAPITAL GAIN, WHICH FACT IS NOT IN DISPUTE. IN VIEW OF THE ABOVE FACTS AND THE LEGAL POSITION DISCUSSED AB OVE, THE PROVISIONS OF SECTION 50C OF THE ACT ARE NOT APPLICABLE AND THE A DDITION OF RS.30,825/- IS, THEREFORE, DELETED. THIS GROUND OF THE APPEAL I S ALLOWED. 10. THE LD. DR SUPPORTED THE ORDER OF AO WHEREAS TH E LD. AR RELIED ON THE ORDER OF LD. CIT(A). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL BEFORE US. IN OUR CONSIDERED VIEW, THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). THE REASONS ARE THAT PROVISION S OF SECTION 50C FALL UNDER CHAPTER IV-E AND RELATE TO CAPITAL GAINS AND NOT TO COMPUTATION OF INCOME UNDER THE HEAD BUSINESS. THEREFORE, SECTIO N 50C CAN BE INVOKED ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 8 ONLY IN A CASE WHERE CAPITAL GAIN IS BEING WORKED O UT FOR CHARGING U/S 45. THE LD. DR COULD NOT CONTROVERT THE FINDING GIVEN B Y LD. CIT(A) THAT ASSESSEE HAS DECLARED THE PROFIT FROM SALE OF PROPE RTY UNDER THE HEAD BUSINESS MEANING THEREBY THAT PROPERTY HAS BEEN S OLD AS BUSINESS ASSET. FROM THE ASSESSMENT ORDER AND COMPUTATION OF INCOME MADE AT THE END OF IT, WE DO NOT FIND ANY REFERENCE TO CHARGING OF CAP ITAL GAINS ON THE SALE OF THIS PROPERTY. FURTHER, WE HOLD THAT NO SEPARATE AD DITION U/S 50C CAN BE MADE AS DONE BY THE AO IN THE COMPUTATION AS UNDER :- RETURNED INCOME SHOWN BY THE ASSESSEE RS.627 780/- ADD: I.UNDISCLOSED INVESTMENT IN PROPERTY RS .8,39,325/- ADD:II. UNDER DISCLOSURE OF SALE RECEIPT SECTION 50 C RS.30,825/- ADD:III.DISALLOWANCE OF PERSONAL EXP. RS.5 5773/- ----------------- --- TOTAL INCOME ASSESSED RS.1553703/- ---------------- --- 12. IN FACT SECTION 50C ENABLES THE AO TO SUBSTITUT E THE DECLARE SALE CONSIDERATION IN THE DOCUMENTS BY THE VALUATION DON E BY STAMP VALUATION AUTHORITIES IN CASE IT IS HIGHER AND COMPUTE CAPITA L GAINS ACCORDINGLY. THUS EVEN WHILE COMPUTING CAPITAL GAIN NO SEPARATE ADDITION AS SUCH ON ACCOUNT OF DIFFERENCE IN VALUATION OF THE PROPERTY SHOWN BY THE ASSESSEE AND DONE BY STAMP VALUATION AUTHORITIES CAN BE MADE . IT IS ONLY A CASE OF SUBSTITUTION OF ONE VALUATION (SHOWN BY THE ASSE SSEE IN THE DOCUMENTS) BY ANOTHER VALUATION AS MADE BY STAMP VALUATION AUT HORITIES. THEREFORE, THE BASIC PREMISE ON WHICH THE AO HAS PROCEEDED IS LEGALLY ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 9 UNSUSTAINABLE. SIMILAR VIEW HAS BEEN TAKEN BY HON. MADRAS HIGH COURT IN THIRU VENGADAN INVESTMENT PVT. LTD. (2010) DTR 8 1, 320 ITR 345, 229 CTR 285 (MAD). IT IS HELD THEREIN THAT PROVISIO NS OF SECTION 50C CAN BE APPLIED ONLY TO FIND OUT THE TRUE VALUE OF CAPIT AL ASSET AND NOT FOR COMPUTING BUSINESS INCOME AND HENCE THE SAME CANNOT BE APPLIED WHEN THERE IS SALE OF STOCK-IN-TRADE. IN VIEW OF ABOVE, WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THIS GROUND OF REVENUE. 13. GROUND NO.3 RELATES TO DISALLOWANCE @ 20% OUT O F INTEREST ON CAR LOAN AND CAR INSURANCE PREMIUM. THE AO HAD DISALLOW ED 20% OF EXPENSES OUT OF VEHICLE EXPENSES, VEHICLE LOAN, INT EREST, CAR INSURANCE PREMIUM AND CAR DEPRECIATION ON THE GROUND OF NON-B USINESS USE OF THE VEHICLE. 14. THE LD. CIT(A) AFTER CONSIDERING THE ARGUMENTS OF THE ASSESSEE HELD AS UNDER :- 13. ON CAREFUL CONSIDERATION OF THE FACTS OF THE C ASE, I FIND THAT THE CONTENTIONS OF THE APPELLANT ARE NOT ENTIRELY ACCEP TABLE. IN SO FAR AS THE INTEREST PAID ON VEHICLE LOAN IS CONCERNED, THE SAI D EXPENDITURE HAS BEEN INCURRED FOR ACQUIRING A BUSINESS ASSET OF THE APPE LLANT AND THE INTEREST PAID THUS CONSTITUTES AN ALLOWABLE BUSINESS EXPENSE U/S 36(1)(III) OF THE ACT. ONCE IT IS ESTABLISHED THAT CAPITAL WAS BORROW ED FOR THE PURPOSE OF BUSINESS, THE INTEREST EXPENDITURE THEREON HAS TO B E ALLOWED AS A DEDUCTION U/S 36(1)(III). THIS IS A WELL ESTABLISHE D PRINCIPLE, WHICH HAS ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 10 BEEN LAID DOWN BY THE COURTS IN SEVERAL JUDGMENTS. THERE IS, THEREFORE, NO JUSTIFICATION IN MAKING ANY ESTIMATED DISALLOWAN CE FOR PERSONAL USER OF THE VEHICLE OUT OF THE INTEREST PAID ON VEHICLE LOAN. SIMILARLY, PAYMENT OF CAR INSURANCE PREMIUM IS A STATUTORY REQUIREMEN T, UNDER THE LAW (MOTOR VEHICLE ACT) AND NO DISALLOWANCE FOR PERSONA L USER OF VEHICLE IS, THEREFORE, CALLED FOR OUT OF CAR INSURANCE PREMIUM PAID. AS REGARDS VEHICLE EXPENSES AND DEPRECIATION, THE CONTENTIONS OF THE APPELLANT ARE NOT ACCEPTABLE AS PERSONAL USER OF THE CAR CANNOT B E ENTIRELY RULED OUT. THE DISALLOWANCE OF 20% MADE BY THE AO OUT OF THE A FORESAID VEHICLE EXPENSES AND DEPRECIATION FOR PERSONAL USER OF THE CAR ARE, IN MY OPINION, REASONABLE IN THE FACTS AND CIRCUMSTANCES OF THE CA SE. THE AO IS, THEREFORE, DIRECTED TO RE-COMPUTE THE DISALLOWANCE FOR PERSONAL USER OF THE CAR @ 20% OF THE VEHICLE EXPENSES & DEPRECIATIO N ONLY. THE DISALLOWANCE OF 20% MADE OUT OF THE VEHICLE LOAN IN TEREST AND CAR INSURANCE PREMIUM ARE DELETED. THIS GROUND OF APPEA L IS PARTLY ALLOWED. 15. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VI EW, THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). THE RE ASONING GIVEN BY HER ARE CONVINCING. THE INTEREST AND INSURANCE HAS TO BE AL LOWED IN FULL WHICH DEPENDS ON THE USE OF THE VEHICLE FOR THE BUSINESS PURPOSE EVEN IF MADE FOR PART OF THE YEAR. THIS GROUND OF REVENUE IS AC CORDINGLY DISMISSED. 16. GROUND NO.4 IS GENERAL AND REQUIRES NO ADJUDICA TION. SAME IS ACCORDINGLY REJECTED. ITA NO.2658/AHD/2009 ALONG WITH CO NO.18/AHD/2010 ASST. YEAR 2006-07 11 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 4/5/11. SD/- SD/- (M. K. SHRAWAT) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 4/5/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 28/4/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 3/5/ 2011 MEMBER .OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..