Murtuza Mustnasir Hathi, Wankaner, RAJKOT-GUJARAT V. The Income Tax Officer, (OSD), Range-1, RAJKOT-GUJARAT

ITA 313/RJT/2014

• Counselvise Citation: 31324914 RSA 2014
• Duration Of Justice: 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 08-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: DR ADHIA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO.313/RJT/2014 ASSESSMENT YEAR : 2008-09 MURUTZA MUSTNASIR HATHI, PROP. M/S. A.M. TRADERS, WANKANER, RAJKOT PAN : ABUPH 6335 A ( / APPELLANT) THE I.T.O. (OSD) RANGE-1 RAJKOT / RESPONDENT / ASSESSEE BY SHRI D.R. ADHIA, AR / REVENUE BY SHRI M.K. SINGH, DR / DATE OF HEARING 28.05.2014 !'# / DATE OF PRONOUNCEMENT 29.05.2014 / ORDER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 04.03.2014 OF CIT (A)-I, RAJKOT FOR THE ASSESSMENT YEAR 2008-09. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN BUSINESS OF TRADING IN KATHI SUTHAR, DORI ETC. FOR THE ASSES SMENT YEAR UNDER APPEAL, HE FILED RETURN OF INCOME ON 31.03.2009, DECLARING TOTAL INC OME AT RS.45,650/-. THE ASSESSING OFFICER FRAMED ASSESSMENT U/S 143(3) OF T HE ACT ON 15.12.2010, WHEREIN HE MADE FOLLOWING TWO ADDITIONS:- I. DISALLOWANCE OF CAR LOAN INTEREST RS.61,518/- II. ADDITION ON ACCOUNT OF LOW HOUSEHOLD EXPENSES RS.42,000/- ON APPEAL, IN THE IMPUGNED ORDER, LD. CIT(A) UPHELD BOTH THE ADDITIONS. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE ASSESSE E IS NOW IN APPEAL BEFORE THIS TRIBUNAL, ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CO NFIRMING DISALLOWANCE OF AN AMOUNT OF RS.61,518/- IN RESPECT OF CAR LOAN INT EREST. THE ADDITION NEEDS DELETION. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CON FIRMING DISALLOWANCE OF AN AMOUNT OF RS.42,000/- TOWARDS HOUSE HOLD EXPENDI TURE. THE ADDITION NEEDS DELETION. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E, SHRI D.R. ADHIA, AR, APPEARED AND POINTED OUT WITH REGARD TO GROUND NO.1 THAT THE ASSESSEE PURCHASED A CAR WHICH IS USED FOR OFFICIAL AS WELL AS PERSONAL PURPOSES. ON THE CAR LOAN, THE ASSESSEE HAS PAID INTEREST OF RS.61,518/- WHICH IS DISALLOWED BY THE ASSESSING OFFICER. FURTHER, ON APPEAL THIS DISALLOWANCE IS CO NFIRMED BY THE LD. CIT(A) MERELY ON 2 313-RJT-2014 - MURTAZA MUSTNASIR HATHI 143(3) (SMC) THE GROUND THAT THIS ADDITION WAD MADE ON AGREED BA SIS. THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT AR OF THE ASSESSEE MERELY ADMITTED THAT SOME DISALLOWANCES BE MADE FOR PERSONAL USE AND NOT THE ENTIRE INTEREST AS THE CAR IS ALSO USED FOR PERSONAL AS WELL AS BUSINESS PURPOSES. HE ACCORDINGLY SUGGESTED THAT ONLY 20% INTEREST BE DISALLOWED AND NOT THE ENTIRE INTER EST. AS AGAINST THIS, LD. DR APPEARED ON BEHALF OF REVENUE SUBMITTED THAT SINCE THIS ADDITION HAS BEEN MADE ON AGREED BASIS, THE APPEAL OF THE ASSESSEE IS NOT MAI NTAINABLE. 3. RIVAL SUBMISSIONS WERE CONSIDERED. IT APPEARS TH AT THE CAR IN QUESTION WAS USED FOR PERSONAL AS WELL AS OFFICIAL PURPOSES. TH EREFORE, THE ENTIRE INTEREST PAID ON CAR LOAN AMOUNTING TO RS. 61,518/- CANNOT BE DISALL OWED. IN MY OPINION, IT WILL MEET THE ENDS OF JUSTICE IF DISALLOWANCE OF INTEREST IS RESTRICTED TO 25% OF RS.61,518/-. ON THIS BASIS, THE DISALLOWANCE WORKS OUT TO RS.15,380 /-. I HOLD ACCORDINGLY, AND DIRECT THE ASSESSING OFFICER TO DELETE THE BALANCE DISALLO WANCE OF RS.46,139/-. 4. WITH REGARD TO GROUND NO.2, THE LD. COUNSEL OF T HE ASSESSEE POINTED OUT THAT WITHDRAWAL FOR HOUSEHOLD EXPENSES OF RS.18,000/- IS REASONABLE. AS AGAINST THIS, LD. DR POINTED OUT THAT KEEPING IN VIEW THE FACT THAT T HE ASSESSEE HAS MAINTAINED A CAR, THE HOUSEHOLD EXPENSES MUST BE AT LEAST RS.5000/- P ER MONTH I.E. RS.60,000/- IN A YEAR. 5. I HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD. IN MY OPINION, THE ESTIMATED HOUSEHOLD EXPENSES AT RS.5,000/- IS EXCESSIVE. I ESTIMATE THE SAME AT RS.4,000/- PER MONTH I.E. RS.4 8,000/- IN A YEAR. ON THIS BASIS, THE DISALLOWANCE WORKS OUT TO RS.30,000/- (I.E. DIF FERENCE OF RS.48,000/- AND RS.18,000/-). ON THIS BASIS, THE ADDITION TO THE T UNE OF RS.30,000/- IS CONFIRMED AS AGAINST RS.42,000/- MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 29.05.2014 !$ /RAJKOT *BT 3 313-RJT-2014 - MURTAZA MUSTNASIR HATHI 143(3) (SMC) / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- MURUTZA MUSTNASIR HATHI, M/S. A.M. TR ADERS, WANKANER, RAJKOT 2. / RESPONDENT- THE I.T.O. (OSD), RANGE-1, RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT-I, RAJKOT 4. * * 2- / CIT(A)-I, RAJKOT 5 . 567 1, * 1#, !$ / DR, ITAT, RAJKOT 6 . 79 :; / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT