Mr. Jasbir Singh Gill, Amritsar. V. The Asstt .Commissioner of Income Tax, Amritsar.

ITA 389/ASR/2014

• Counselvise Citation: 38920914 RSA 2014
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Question of law
• Section: 32; 131; 10; 10(14)

Judgement Text

ITA NO.389(ASR)/2014 A.Y.2004-05 2 C) SALARY TO DRIVERS 95,000 D) CAR REPAIR EXPENSES 25,748 E) DEPRECIATION 25,717 3,70,065 3. THE LD. C.I.T. (APPEALS) FAILED TO APPRECIATE TH E SUBMISSIONS OF THE APPELLANT HAT THE DEDUCTION CLAIMED FOR THE EXPENSES WERE SPECIFICALLY GRANTED TO MEET THE EXPENSES WHOLLY, N ECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORMANCE OF HIS DUTI ES, AND WERE EXEMPT UNDER SECTION 10(14) AS PER NOTIFICATION NO. GSR606(E) DATED 09.06.1989 ISSUED BY THE GOVT. OF INDIA. 4. THE LD. C.I.T.(APPEALS) FURTHER ERRED IN NOT FO LLOWING THE CASE LAWS RELIED UPON BY THE APPELLANT, WRONGLY HOL DING THAT I TAX RULES ; 1962 WERE AMENDED W.E.F.01.O4.2OO1, WHEREAS RULE 2BB(1)(C) EXISTS AS INSERTED W.E.F. 01.07.1995. 5. THAT ALL THE COMMENTS PASSED BY THE LD. C.I.T. ( APPEALS) IN HIS ABOVE ORDER DATED 02.04.2014, ARE BASED ON SURM ISES AND CONJECTURE ONLY, WITHOUT APPRECIATING THE LAW AND F ACTS OF THE CASE JUDICIOUSLY AND WAS ABSOLUTELY UNJUSTIFIED IN DISMI SSING THE APPEAL THEREBY ARBITRARILY UPHOLDING ORDER OF THE ASSESSIN G OFFICER. 2. GROUND NOS. 1 & 5 ARE GENERAL. 3. GROUND NOS. 2 TO 4 ARE AGAINST THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). 4. THE LD. CIT(A), WHILE UPHOLDING THE DISALLOWANCE HAS OBSERVED AS FOLLOWS: 6. 1 HAVE GONE THROUGH ASSESSEES SUBMISSION, ASSESSME NT ORDER OF AND VARIOUS CASE LAWS SUBMITTED BY THE ASS ESSEE IN THIS REGARD. IN THIS CASE, THE ASSESSEE HAS RECEIVE D CONVEYANCE ALLOWANCE OF RS. 24,120/- AND ALSO RECEIVED ADDITI ONAL CONVEYANCE ALLOWANCE OF RS. 4,04,406/- GRANTED BY L IC OF INDIA DURING THE PERIOD 01.04.2003 TO 31.03.2004. O UT OF IT, THE ASSESSEE HAD CLAIMED RS. 3,70,065/- AS ALLOWANC E EXEMPTED UNDER SECTION 10 OF THE I.T. ACT. IN SUPPO RT OF HIS CLAIM OF EXEMPTION, THE ASSESSEE SUBMITTED COPIES O F LEDGER ACCOUNTS ALONGWITH BILLS AND VOUCHERS FOR CAR REPAI RS AND PETROL ETC. THE ASSESSEE FURTHER SUBMITTED THE CERT IFICATE ISSUED BY THE BRANCH MANAGER, LIC OF INDIA, AMRITSAR CONFI RMING THAT ITA NO.389(ASR)/2014 A.Y.2004-05 4 CASE, NO SUCH DETAILS WERE FURNISHED BEFORE THE AO DESPITE SUFFICIENT OPPORTUNITY ALLOWED NOR EVEN DURING APPE LLATE PROCEEDINGS. IN VIEW OF THE FOREGOING, ESPECIALLY I N VIEW OF AMENDMENT OF RELEVANT PROVISIONS GOVERNING EXEMPTIO N U/S 10(14) OF THE T WITH EFFECT FROM 01.04.2001, RELIAN CE BY THE ID. AR ON THE AFORESAID DECISION OF THE ITAT IS TOTALLY MISPLACED. I FIND THAT IN LIC VS UNION OF INDIA & OTHERS, 260 ITR 41(RAJ), HONBLE RAJASTHAN HIGH COURT HELD THAT DEVELOPMENT OFFICERS IN THE LIFE INSURANCE CORPORATION WERE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 0(14) OF THE ACT IN RESPECT OF CONVEYANCE ALLOWANCE/ADDITIONAL ALLOWANCES LAVE ACT UALLY BEEN SPENT FOR THE PURPOSE FOR WHICH THEY WERE GIVE N WHOLLY, NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF D UTIES. IN CIT VS BRANCH MANAGER, LIC OF INDIA (2008) 298 ITR 358 (P&H) HONBLE HIGH COURT IN THE CONTEXT OF REIMBURSEMENT OF EXPENSES SCHEME, 1997, FOLLOWED THE VIEW TAKEN BY H ONBLE RAJASTHAN HIGH COURT IN LIFE INSURANCE CORPORATION OF INDIAS CASE (2003) 260 ITR 41, HOLDING THAT THE DEVELOPMEN T OFFICERS IN THE LIFE INSURANCE CORPORATION WERE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 10(14) OF THE ACT IN RESPEC T OF CONVEYANCE ALLOWANCE/ADDITIONAL CONVEYANCE ALLOWANC E UPON SATISFYING THE CONDITIONS THAT SUCH ALLOWANCES HAVE ACTUALLY BEEN SPENT FOR THE PURPOSE FOR WHICH THEY WERE GIVE N WHOLLY, NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF D UTIES. IN THE LIGHT OF AFORESAID JUDICIAL VIEW AND CONSIDERING TH E FACTS AND CIRCUMSTANCES, SINCE THE ADDITIONAL CONVEYANCE ALLO WANCE PROVIDED BY THE EMPLOYER TO THE ASSESSEE FOR THE PE RFORMANCE OF HIS DUTIES FALLS WITHIN THE PROVISIONS OF SECTIO N 10(14) READ WITH RULE 2BB(L)(C) OF THE IT RULES 1962 AND THE AS SESSEE DID NOT FILE CONCLUSIVE DETAILS OR EVIDENCE OF EXPENSES WHOLLY, NECESSARILY AND EXCLUSIVELY ACTUALLY INCURRED IN TH E PERFORMANCE OF HIS DUTIES BEFORE THE AO. THE ASSESS EE HAS SUBMITTED VARIOUS CASE LAWS IN THIS REGARD, HOWEVER , ALL OF THESE CASE LAWS PERTAINS TO ASSESSMENT YEAR EARLIER THAN ASSESSMENT YEAR 2001-02, WHEN IT RULE 1962 WERE AME NDED. IN NONE OF THESE CASES LAWS, THE AMENDED PROVISIONS HAVE BEEN DISCUSSED AND IN VIEW OF SAME THE DISCUSSION O F THE HONBLE COURTS ON THE ISSUE IS NOT APPLICABLE. THER EFORE, GROUND NO. 1,2 & 3 IN THE APPEAL IS DISMISSED. LEVY OF INTEREST U/S 234D IS COMPULSORY IN NATURE A ND CONSEQUENTIAL. ASSESSEE HAS NOT ARGUED THIS ISSUE D URING APPELLATE PROCEEDINGS. IN VIEW OF SAME, GR. NO. 4 O F APPEAL IS ALSO DISMISSED. NO ADDITIONAL GROUND HAVING BEEN RA ISED BEFORE ME IN TERMS OF THE RESIDUARY GROUND NO. 5 IN THE APPEAL, ACCORDINGLY, THIS GROUND IS ALSO DISMISSED. ITA NO.389(ASR)/2014 A.Y.2004-05 6 ABOUT THE PERFORMANCE OF THE APPELLANT DURING THE A PPRAISAL YEARS ENDING 31.08.2003 AND 31.08.2004, GIVING THEREIN NUMBER OF AGENTS WORKING UNDER THE APPELLANT, NO. OF LIVES INSURED AND ELIGI BLE FIRST YEAR PREMIUM COLLECTED REPRODUCED HERE UNDER, PHOTO COPY ENCLOSE D. (PAGE 9-10): - DATED: 07.02.2008 TO WHOM SO EVER IT MAY CONCERN 1. THIS IS TO CERTIFY THAT MR. JASBIR SINGH GILL, DEVE LOPMENT OFFICER, CODE NO.0660047, OF OUR BRANCH UNIT-I, CITY CENTRE AMRIT SAR, IS ONE OF THE LEADING MOST RECOGNIZED DEVELOPMENT OFFICER OF L.I.C. OF IN DIA. HIS AREA OF OPERATION COMPRISES OF TEHSIL AJNALA AND TEHSIL AMRITSAR. HIS APPRAISAL PERIOD IS FROM SEPTEMBER TO AUGUST. HIS PERFORMANCE DURING THE APP RAISAL YEARS ENDING 31.08.2003 AND 31.08.2004 WAS AS UNDER :- YEAR ENDING NO. OF AGENTS NO. OF LIVES ELIGIBLE FIRST YEAR PREMIUM 31.08.2003 66 2022 1,22,07,898 31 0822004 79 2192 94,14,974 2. OUT OF THE ABOVE FIGURES PERTAINING TO APPRAISAL YEARS ENDING 31.08 .2003 & 31.08.2004,MONTHWISE SUMMARY FOR NUMBER OF LIVES IN SURED AND AMOUNT OF FIRST YEAR PREMIUM COLLECTED DURING THE PERIOD FROM 01.14.2003 TO 31.03.2004, IS GIVEN HERE UNDER :- MONTH NO. OF SCHEDULED RENEWAL TOTAL LINTS S.F.P.I. S.F.Y.P.I. APRIL 2003 76 2,23,033 1,71,789 3,94,822 MAY 137 5,15,964 3,75,525 8,91,489 JUNE 249 2,81,278 4,60,364 7,41,642 JULY 149 6,28,017 2,69,779 8,97,796 AUG 141 4,07,928 3,08,958 7,16,886 SEPT 144 2,70,269 2,99,564 5,69,833 OCT 163 3,24,427 1,73,616 4,98,043 NOV. 154 3,49,531 1,72,915 4,72,034 DEC. 258 5,74,293 4,72,034 10,46,327 JAN 2004 174 8,04,211 2,22,876 10,27,087 FEB 2004 187 5,04,901 2,18,010 7,42,911 MARCH 2004 403 10.68.887 3.16.261 13.85.148 2,235 59,72,739 34,61,691 94,84,018 3. ON THE BASIS OF THE ABOVE PERFORMANCE, HE WAS PA ID A SUM OF RS.4,28,526, AS CONVEYANCE ALLOWANCE RS.24,120 AND ADDITIONAL CO NVEYANCE ALLOWANCE RS.4,04,406, COMPUTED AS UNDER: ON FIRST RS. 1,50,000 RS. 6,500 ON BALANCE RS. 1,20,57,898 @ 3.5% RS.4.22,026 ITA NO.389(ASR)/2014 A.Y.2004-05 8 CONVEYANCE EXPENSES, TO THE EXTENT OF RS.3,70,065 O UT OF HIS TAXABLE INCOME, INCURRED BY THE DEVELOPMENT OFFICER S. JASB IR SINGH GILL. 6. THE APPELLANT IS WORKING AS DEVELOPMENT OFFICER WITH LIC OF INDIA AND IS PAID CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE ON THE BASIS OF THE PERFORMANCE ACHIEVED DURING HIS APPRAI SAL YEAR I.E. 01.09.2002 TO 31.08.2003. DURING THE SAID PERIOD AS SESSEE HAD WORK FORCE OF BETWEEN 42 TO 66 PERSONS AS HIS AGENTS AND THE F IRST YEAR PREMIUM COLLECTED WAS TO THE TUNE OF RS. 1,22,07,898. 7. IMPORTANT ASPECTS OF THE CASE ARE GIVEN HEREUND ER: - A) THE TOTAL AMOUNT OF CONVEYANCE ALLOWANCE AND ADD ITIONAL CONVEYANCE ALLOWANCE RS.4.28.526 PAID TO THE APPELLANT, BY THE LIC OF INDIA, AS REIMBURSEMENT OF CONVEYANCE EXPENSES INCURRED, WAS COMPUTED AS UNDER, BASED ON THE TOTAL BUSINESS B) IN SUPPORT OF THE ABOVE A CERTIFICATE DATED 28.0 7.2006 ISSUED BY THE BRANCH MANAGER, L.I.C. OF INDIA, UNIT NO.L, AMRITSA R, WAS FILED WITH THE ASSESSING OFFICER, ALONG WITH THE WRITTEN SUBMISSIO NS DATED 04.08.2006 DURING ASSESSMENT PROCEEDINGS, PHOTOCOPIES THEREOF ARE ENCLOSED HEREWITH ( PAGES 6-8). C) FURTHER PLEASE NOTE THAT THE FIGURES OF TOTAL PR EMIUM COLLECTED AND OTHER DATA REQUIRED FOR COMPUTING THE A.C.A. IS PRE PARED BY THE L.I.C. ON THE BASIS OF ITS OWN RECORDS, WITHOUT ANY OBLIGATIO N OF SUBMITTING ANY DOCUMENT OR APPLICATION, ON THE PART OF THE ASSESSE E, FOR CLAIMING THE SAME. THE CONVEYANCE ALLOWANCE IS PAID TO THE ASSES SEE EVERY MONTH AND THE AMOUNT OF ADDITIONAL CONVEYANCE ALLOWANCE WAS P ARTLY PAID ON 18.07.2003 AND FINAL PAYMENT WAS MADE ON 19.09.2003 AFTER THE FINALIZATION OF THE APPRAISAL. D) FOR YOUR HONORS CONVENIENCE AND READY REFERENCE , FIGURES OF THE YEARLY AS WELL AS AVERAGE PER DAY PERFORMANCE AND E XPENSES INCURRED ARE AS UNDER: - PARTICULARS ANNUAL PER DAY A) LIVES INSURED IN 313 WORKING DAYS RS.2,235 7 TO 8 LIVES B) COLLECTION OF FIRST YEAR PREMIUM RS. 94,84,018 RS.30,300 C) REIMBURSEMENT OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE RS. 4,28,526 R S. 1,369 D) COST OF CONVEYANCE EXPENSES CLAIMED RS. 3,70,065 R S. 1,128 E) IT IS IMPERATIVE TO APPRECIATE THAT THE AMOUNT OF A DDITIONAL CONVEYANCE ALLOWANCE PAID TO THE APPELLANT BY LIC IS FIXED WIT H REFERENCE TO BROAD CRITERIA OF EXTRA INSURANCE CANVASSED FOR, AND COMPUTED ON THE BASIS OF THE FIRST YEAR PREMIUM COLLECTED DURING EACH APPRAISAL YEAR, BESIDES PERFORMING ALL THE OTHER DUTIES AS A DEVELOPMENT OFFICER EXPLAINED IN SUB PARAS A TO F) OF PARA 6 ABOVE, THOSE ARE PART AND PARCEL OF HIS JOB. PERFORMING THE SAID DUTIES A LSO INVOLVE EXPENSES ON ACCOUNT ITA NO.389(ASR)/2014 A.Y.2004-05 10 ARE NOT ISSUED BY OUR FIRM M/S AJNALA SERVICE STATI ON, XXXX MORE OVER THE BILLS SHOWN TO ME ARE WITHOUT SERIAL NO. AND WITHOUT SIGN ATURES. C) TO PROVE THAT THE SAID STATEMENT HAS BEEN MADE W RONGLY, TO COVER UP HIS OWN LAPSES OR THE REASONS BEST KNOWN TO HIM, YOUR HONOR S ATTENTION IS DRAWN TO PHOTOCOPIES OF SIMILAR BILLS DATED 31.08.1999, 30.0 9.1999, ISSUED TO SENIOR EXECUTIVE ENGINEER, P.S.E.B., AJNALA, BEARING S. NO S. 000294, 000295 AND 000300 RESPECTIVELY. ENCLOSED AT PAGE NO. ( 1 90-92). ON GOING THROUGH THE SAID BILLS YOUR HONOR WILL FIND THAT ALL THE BILLS BEAR HAND WRITTEN NOS. ALL ARE DATED 31.08.1999 & 30.09.1999, WITHOUT ANY SIGNATURES OF ANY OF THE PARSERS OR EMPLOYEE OF M/S AJNALA SERVICE STATION. THE SAID IN VOICES PROVES THE FACTS M/S. AJNALA SERVICE STATION HAS BEEN IN THE PRACTICE OF USING UNNUMBERED BILLS/STATEMENTS . WRITING BILL NOS. AND OR ISSUING BILLS WITHOUT AN Y NO. AS PER THEIR OWN CONVENIENCE OR ADJUSTMENT. D ) TO SUPPORT THE CLAIM OF THE APPELLANT IN REGARD S TO THE BONAFIED EXPENDITURE INCURRED TOWARDS THE COST OF PETROL FOR RUNNING OF TWO CARS BEARING REGISTRATION NO. PB 02 V 5111, OWNED BY THE APELLANT AND DBB 499 4, HIRED CAR, FIND ENCLOSED NOTARIZED AFFIDAVIT OF MR. ASHWANI KUMAR SHARMA SON OF MR. S.P. SHARMA (PAGE 93-94), CONFIRMING THAT PETROL WAS FILLED IN THE CA RS FROM M/S AJNALA SERVICE STATION, AJNALA. PLEASE NOTE THAT MR. ASHWANI SHARM A, LIC AGENT, IS THE SAME PERSON ABOUT WHOM MR. SONU BAJAJ HAS ADMITTED HAVIN G TAKEN LIC POLICIES FROM HIM, IN REPLY TO QUESTION NO. 11 DURING CROSS EXAMI NATION, ON PAGE 6-7 OF ASSESSMENT ORDER. E) ALSO FIND ENCLOSED NOTARIZED AFFIDAVITS OF MR. D ALJIT SINGH SON OF MR. GURDIAL SINGH, S. PRABHJIT SINGH SON OF S. BAKHSISH SINGH, S. SATNAM SINGH DHILLON SON OF S. BEANT SINGH AND S. HARJIT SINGH SON OF S. HARBHA JAN SINGH (PAGES 95-98), ALL AGENTS WORKING UNDER THE DEVELOPMENT OFFICER S. JAS BIR SINGH (THE APPELLANT) AND REGULARLY ASSESSED TO INCOME TAX. CONFIRMING TH E SAID FACTS ABOUT USING BOTH THE CARS, DRIVEN BY DRIVERS MR. SAVINDER SINGH AND MR. HARPINDER SINGH AND ALSO CONFIRMING THAT THE PETROL WAS FILLED IN THE CARS F ROM M/S AJNALA SERVICE STATION, AJNALA. 10. ALL THESE FACTS PROVE THAT MR. SONU BAJAJ HAS MISLED THE AO BY MAKING A WRONG STATEMENT, WHICH CANNOT BE RELIED UPON. THE A CTION OF THE AO IN DISALLOWING PETROL EXPENSES RS.98.600, ON THE BASIS OF ONLY ONE UNRELIABLE STATEMENT WITHOUT CONSIDERING AND REBUTTING VARIOUS EVIDENCES PLACED ON RECORD BY THE APPELLANT WITHOUT BRINGING FORWARD ANY MATER IAL ON RECORD TO JUSTIFY THE SAID DISALLOWANCE WAS ABSOLUTELY UNFOUNDED. HE FURT HER ERRED IN REJECTING THE CLAIM OF THE APPELLANT OVERLOOKING THE FACT THAT HO W HE COULD MOVE IN THE FIELD AND ACHIEVE THE ABOVE STATED PERFORMANCE WITHOUT PU RCHASE OF PETROL. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) MERELY RELYING ON THE HOSTILE STATEMENT OF MR. SONU BAJAJ, CONCLUDED IN LAST TWO LINES OF PARA 6 ON PAGE 2 OF HIS ORDER: - ITA NO.389(ASR)/2014 A.Y.2004-05 12 12. THE LEARNED C.I.T. (APPEALS), FURTHER UPHELD TH E DISALLOWANCE OF CAR HIRE CHARGES 1,25,000 HOLDING AT PAGE 3: - SIMILARLY ASSESSEE WAS NOT ABLE TO PRODUCE BILLS O F CAR HIRE CHARGES AND WAS NOT ABLE TO PRODUCE SH. KASMIR SINGH TO WHOM HI RE CHARGES HAVE BEEN PAID, DESPITE ISSUE OF NOTICES UNDER SECTION 1 31 OF THE IT ACT. THE ASSESSEE COULD NOT PRODUCE ANY AGREEMENT OR ANY OTH ER EVIDENCE REGARDING HIRING OF THE CAR FORM HIS WIFE THROUGH H IS BROTHER SH. DALBIR SINGH. THE LEARNED C.I.T. (APPEALS), ARRIVED AT THE ABOVE FINDINGS FOLLOWING THE FINDINGS OF THE ASSESSING OFFICER IN PARA 2 ON PAGE 8 OF HIS ASSESSMENT ORDER HOLDING: - 'CAR HIRE EXPENSES OF RS. 1,25,000 WERE CLAIMED TO HAVE BEEN PAID TO S. KASHMIR SINGH AND LATER TO HIS WIFE THROUGH HIS BRO THER S. DALBIR SINGH VIDE ORDER SHEET ENTRY DATED 18.07.2006, THE ASSESS EE WAS ASKED TO PRODUCE BILLS AND VOUCHERS FOR CAR HIRE CHARGES. IN HIS REPLY DATED 04.08.2006 ,THE ASSESSEE HAS SIMPLY STATED THAT CAR HIRE CHARES WERE PAID TO S. KASHMIR SINGH BUT HAS NOT FURNISHED ANY BILLS/VO UCHERS IN SUPPORT OF HIS CONTENTION. IN RESPONSE TO NOTICE UNDER SECTION 131 OF RE INCOME TAX ACT. 1961. S. DALBIR SINGH APPEARED BUT WAS NOT ABL E TO FILE ANY EVIDENCE IN SUPPORT OF THE ASSESSEE'S CLAIM THAT CAR HIRE CH ARGES WERE RECEIVED BY HIM . THROUGH, RECEIPTS TO THE TUNE OF RS. 1,25,000 WER E CLAIMED TO HAVE BEEN RECEIVED, NO INCOME TAX RETURN WAS FILED BY S. KASHMIR SINGH OR HIS WIFE. THERE WAS NO AGREEMENT VIDE WHICH THE CAR WAS HIRED OUT. S. DALBIR SINGH, FURTHER STATED THAT SINCE THE CAR HAS BEEN S OLD, THEREFORE, NO RC ETC COULD BE PRODUCED. IN THE LIGHT OF THE ABOVE, IT IS HELD THAT THE ASSESSEE HAS NOT HIRED ANY VEHICLE AND EXPENSES CLAIMED ARE NOT GENUINE. THEREFORE, RS. 1,25,000 IS ADDED TO HIS INCOME AS D ISALLOWED CAR HIRE EXPENSES. FURTHER, IN PARA 4 ON PAGE 2 OF THE REMAND REPORT, THE ASSESSING OFFICER OBSERVED, MY LEARNED PREDECESSOR HAS RECORDED THE FINDING IN THE ASSESSMENT ORDER AND I FIND THAT THE DISALLOWANCE OF RS. 1,25, 000 WAS RIGHTLY MADE. 13. THE LEARNED C.I.T. (APPEALS), ERRED IN CONFIRMI NG THE DISALLOWANCE OF RS.1,25,000, WITHOUT TRYING TO APPRECIATE THE FACT S AND EVIDENCES PLACED ON RECORD, AS ADMITTED BY THE ASSESSING OFFICER, ABOUT CONFIRMATION OF HIRING CHARGES RS. 1,25,000 AT THE RATE OF RS. 10,000 PER MONTH WERE RECEIVED FOR MARUTI 800 CAR, DURING THE STATEMENT OF MR. DALBIR SINGH, WHO APPEARED ON 26.12.2006, BEING BROTHER OF LATE S. KASHMIR SINGH, EXPIRED IN MAY, 2003. COPY OF STATEMENT RECORDED IS ON PAGE 26 AND LEGIBLE TYPED COPY ON PA GE 27 OF THE PAPER BOOK. LEDGER ACCOUNT FOR CAR HIRE CHARGES WAS ALSO FILED WITH THE ASSESSING OFFICER, COPY AT PAGE 28-29 OF PAPER BOOK. THE SAID FACTS OF HIRING CAR NO. DBB 4994 WERE ALSO CONFIRMED THROUGH NOTARIZED AFFIDAVITS FR OM THE AGENTS OF THE APPELLANT I.E. MR. S.P.SHARMA, MR. DALJIT SINGH, MR . PRABHJIT SINGH, MR. SATNAM ITA NO.389(ASR)/2014 A.Y.2004-05 14 16. WHILE DISCUSSING THE HEAD WISE EXPENSE ACCOUNTS , THE C.I.T. (APPEALS) OMITTED TO CONSIDER AND DISCUSS THE SUBMISSIONS RELATING TO CAR REPAIR EXPENSES RS. 25,748 AND CAR DEPRECIATION RS. 25,717, INCURRED FOR ASSES SEES OWN AS WELL AS HIRED CARS. 17. REGARDING CAR REPAIR EXPENSES LEDGER ACCOUNT IS PLACED AT PAGE 30 AND COPIES OF THE BILLS, IN THE NAME OF THE APPELLANT, BEARING NO. 1407, 1428, 1486, 2420 AND 2440 ARE PLACED AT PAGE NO. 31-35 OF THE P APER BOOK, RELATING TO CAR NO. PB-02-V-5111 OWNED BY THE APPELLANT AND FOR HIR ED CAR NO. DBB-4994, ALL THESE BILLS WERE PRODUCED AND COPIES FILED WITH THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AS WELL AS WITH THE C.I.T. ( APPEAL). 18. THE SAID AMOUNT OF EXPENSES WERE DISALLOWED BY THE ASSESSING OFFICER, ALLEGING IN PARA 3 ON PAGE 8 OF THE ASSESSMENT ORDE R, SUMMONS WERE ISSUED UNDER SECTION 131 TO THE MANAG ER OF KAR SCANNING CENTRE, WHICH WERE RETURNED UN-SERVED WITH THE REPO RT THAT THE CONCERN HAD BEEN CLOSED. A LETTER WAS SENT TO THE REGIONAL MANAGER, MARUTI UDYOG LIMITED REQUESTING HIM TO PROVIDE DETAILS OF THE PERIOD DURING WHICH THE CONCERNED CAR SCANNING CENTRE WAS RUNNIN G AN AUTHORIZED MARUTI SERVICE STATION AND THE NATURE OF THE TRANS ACTIONS CARRIED ON WITH KAR SCANNING CENTRE. VIDE HIS REPLY DATED 12.12.200 6. MARUTI UDYOG LIMITED HAS STATED THAT THE CONCERNED KAR SCANING C ENTRE WAS RUNNING AN AUTHORIZED MARUTI SERVICE STATION FROM 02.03.1998 T O 31.08.2002. IT FURTHER STATED THERE WERE NO TRANSACTION WITH KAR S CANNING CENTRE EXCEPT THE REFUND OF SECURITY DEPOSIT OF RS. 10,000 ON CAN CELLATION OF MASS ON 31.08.2002 19. IN CONNECTION WITH THE ABOVE, YOUR HONORS ATT ENTION IS DRAWN TO PARA 14 ON PAGE 6 OF THE WRITTEN SUBMISSIONS DATED 17.03.20 08, PAGE 105 OF THE PAPER BOOK, FILED WITH THE C.I.T.(A), WHERE IN IT WAS SUB MITTED THAT THE ASSESSING OFFICER WRONGLY DISALLOWED THE CAR REPAIR EXPENSES RS. 25,7 48 PAID TO M/S KAR SCANNING CENTRE, 331-ALBERT ROAD, AMRITSAR. ALLEGING FIRSTLY BECAUSE SUMMONS ISSUED UNDER SECTION 131 COULD NOT BE SERVED UPON SAID CON CERN AND SECONDLY ON THE INFORMATION COLLECTED FROM MARUTI UDYOG LIMITED VID E THEIR LETTER DATED 12.12.2006 THAT THE SAID KAR SCANNING CENTRE WAS NO MORE AN AUTHORIZED MARUTI SERVICE STATION. 20. IT WAS ALSO SUBMITTED THAT THE KAR SCANNING CEN TRE SHIFTED THEIR WORK SHOP FROM 30-31, ALBERT ROAD, NEAR CANAL OFFICE, AMRITSA R TO 101 KRISHNA SQUARE, AMRITSAR, WHERE THE SAID WORKSHOP IS CARRYING ON IT S BUSINESS TILL DATE. IN SUPPORT PHOTOCOPY OF BILL NO. 2411 DATED 30.01.2008 WAS FIL ED, COPY PLACED AT PAGE 36 OF PAPER BOOK, VIDE WHICH THE APPELLANT GOT HIS CAR NO . PB02 V5111 REPAIRED. FURTHER, IT WAS SUBMITTED THAT THE OBSERVATION OF T HE ASSESSING OFFICER, IN THE ASSESSMENT ORDER, WHILE DISALLOWING THE CAR EXPENSE S ARE BASED ON SURMISES AND CONJECTURES ONLY, WITHOUT BRINGING FORWARD ANY MATE RIAL EVIDENCE TO REJECT THE ITA NO.389(ASR)/2014 A.Y.2004-05 16 3. THE ACTION OF THE ASSESSING OFFICER IS DUBIOUS WITH MALA-FIDE MIND, HAVING SENT THE SUMMONS AT OLD ADDRESS, WHERE THE SAID WORKSHOP DO NOT EXIST, THE FACT WHICH IS ON RECORD EVER SINC E 26.12.2006, WHEN THE ASSESSMENT WAS FRAMED BY THE PREDECESSOR OF THE PRE SENT ASSESSING OFFICER. 4. THE SAID CONDUCT ON THE PART OF THE ASSESSING O FFICER CLEARLY PROVES HIS PREJUDICED MIND, TRYING TO SUPPORT THE D ISALLOWANCES AND REFUSAL TO ALLOW THE EXEMPTION IN RESPECT OF THE BO NA-FIDE CONVEYANCE EXPENDITURE INCURRED AND CLAIMED BY THE APPELLANT. TO SUPPORT AND PROVE THE BONA-FIDE CLAIM OF THE APPELLANT, PERMISSION BE GRANTED TO PRODUCE MR. VARINDER PROPRIETOR OF M/S KAR SCANNING CENTRE, BEFORE YOUR HONOR, ON THE NEXT DATE OF HEARING. 22. SIMILARLY, THE LEANED C.I.T.(APPEALS) FURTHER O MITTED TO DISCUSS AND DECIDE ABOUT DEDUCTION OF RS. 25,717 CLAIMED AT 20% OF WDV RS. 1,28,584 ASBEPRECATION ON CANNO. PB 02 V5111, OWNED BY THE A PPELLANT, REFER COPY OF LEDGER ACCOUNTS OF CAR AND DEPRECIATION, AT PAGE NO . 37 OF THE PAPER BOOK, THAT WAS DISALLOWED BY THE ASSESSING OFFICER, AS PER PAR A 5 ON PAGE 9 OF THE ASSESSMENT ORDER, REPRODUCED HERE UNDER: - 'ALLOWANCE UNDER SECTION 10(14) CAN BE ALLOWED ONLY IF THE EXPENSES ARE ACTUALLY INCURRED, W HOLLY, NECESSARILY AND EXCLUSI VELY FOR THE PERFORMANCE OF OFFICIAL DUTIES. VIEWED FROM THIS ANGLE, DEPREC IATION OF RS. 25,717 CLAIMED ON CAR IS NOT AN EXPENDITURE ACTUALLY INCUR RED BY THE ASSESSEE. IT IS A NOTIONAL CLAIM ADMISSIBLE ONLY SECTION 32 OF THE ACT AGAINST PROFIT AND GAINS OF BUSINESS OR PROFESSION OR UNDER SECTIO N 57(2) OF THE ACT AGAINST INCOME FROM OTHER SOURCES. DEPRECIATION ON CAR HAS, THEREFORE, BEING WRONGLY CLAIMED BY THE PETITIONER AGAINST SAL ARY INCOME IN \IEW OF THE ABOVE, DEPRECIATION AT RS. 25,717 IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE.' IN CONNECTION WITH THE ABOVE, YOUR HONORS ATTENTIO N IS DRAWN TO PARA 16 ON PAGE 7 OF THE WRITTEN SUBMISSIONS DATED 17.03.2008, PAGE 106 OF THE PAPER BOOK, FILED WITH THE C.I.T.(A), WHERE IN IT WAS SUBMITTED AS UN DER: - 16. THE ASSESSING OFFICER DISALLOWED RS.25,717, TH E CLAIM OF DEPRECIATION ON CAR, ALLEGING THE SAME IS NOT AN EX PENDITURE ACTUALLY INCURRED BUT A NOTIONAL CLAIM ADMISSIBLE UNDER SECT ION 32 OF THE INCOME TAX ACT, 1961. THE SAID OBSERVATIONS OF THE ASSESSI NG OFFICER ARE ABSOLUTELY UNFOUNDED AS SHE FAILED TO APPRECIATE AN D UNDERSTAND THE INTRICACIES INVOLVED IN THE PROVISIONS OF LAW, FOR ALLOWING THE DEPRECIATION ON FIXED ASSETS. THE SAID DEDUCTION ALLOWED IS NOT A NOTIONAL \ EXPENDITURE BUT IS ALLOWED ON THE ACTUAL COST INCURRED, IN A DE FERRED MANNER OVER A ITA NO.389(ASR)/2014 A.Y.2004-05 18 THE ASSESSEES CONTENTION THAT OUT OF TOTAL PURCHAS ES OF NON-FERROUS METALS OF RS. 2.44 CRORES, THE AO HAD TREATED PURCHASES WORTH RS. 1.49 CRORES ONLY AS BOGUS AND IT WAS IMPOSSIBLE TO MANUFACTURE THE GOODS SHOW N TO HAVE BEEN MANUFACTURED BY IT OUT OF THE REMAINING PURCHASES IF THE AOS CO NCLUSION IS ACCEPTED, ALSO FOUND FAVOUR WITH THE TRIBUNAL. THIS IS A SIMPLE FI NDING OF FACT BASED UPON APPRECIATION OF THE MATERIAL ON RECORD AND, THUS, H ARDLY GIVES RISE TO ANY QUESTION OF LAW. CONCLUSION TRIBUNAL HAVING UPHELD THE CONCLUSION OF THE CIT(A) THAT THE PURCHASES MADE BY THE ASSESSEE FROM SEVEN SCRAP DEALERS COULD NOT BE TREATED AS BOGUS AS THE CONSUMPTION STOOD FULLY PROVED AND THE TRADING RESU LTS OF THE ASSESSEE HAVE BEEN ACCEPTED ALL ALONG AND THE PURCHASES FROM THESE VER Y PARTIES HAVE BEEN ACCEPTED BY THE DEPARTMENT TO A LARGE EXTENT IN THE SUBSEQUE NT ASSESSMENT YEAR, THE FINDING OF THE TRIBUNAL IS A FINDING OF FACT AND NO QUESTIO N OF LAW ARISES. 26. IN VIEW OF THE SAME THE APPELLANT HAVING RIGHT LY CLAIMED THE EXEMPTION OF RS.3,70,065 IN HIS RETURN OF INCOME AND IS FULLY EN TITLED FOR THE SAME, NO MATTER IN CASE HE WAS UNABLE TO PROVE THE GENUINENESS RELATIN G TO FEW OF THE VOUCHERS PRODUCED IN SUPPORT OF THE TOTAL EXPENSES INCURRED. 27. THE LEANED C.I.T.(APPEALS), WHILE PASSING HIS ORDER DATED 02.04.2014, OVERLOOKED ALL THE ABOVE FACTS AND EVIDENCES PLACED ON RECORD AND ARBITRARILY DISMISSED THE APPEAL, WITHOUT GIVING ANY FINDINGS I N REGARDS TO CAR REPAIR EXPENSES AND DEPRECIATION ON CAR. 28. WHILE ARRIVING AT THE ABOVE CONCLUSION, THE C. I.T. (APPEALS) MISCONSTRUED THE PROVISION OF LAW, RELEVANT RULES AND REGULATION S AND VARIOUS CASE LAWS RELIED UPON, APPLICABLE TO THE CASE OF THE APPELLANT, AS P ER WRITTEN SUBMISSIONS DATED 17.03.2008, COPY ON PAGE 100 TO 107 OF PAPER BOOK, REJOINDER DATED 27.02.2009 IN REPLY TO REMAND REPORT, COPY ON PAGE 110 TO 111 OF RAPE: BOOK AS WELL AS THE SUPPLEMENTARY WRITTEN SUBMISSIONS DATED 05.02.2014, COPY ON PAGE112 TO 122 OF PAPER BOOK. IT IS PRAYED THAT ALL THE SAID SUBMISSI ONS MAY PLEASE BE CONSIDERED AS PART OF THESE WRITTEN SUBMISSIONS. 29. FIRSTLY, THE LD. CIT(APPEALS) WAS MISLED ABOUT NOTIFICATION NO. S.0.940(E) DATED 25.09.2001,RULE 3 OF THE INCOME TAX RULES 196 2 W.E.F. 01.04.2001, COPY AT PAGE 127-129 OF PAPER BOOK. THE SAD RULE RELATES TO VALUATION OF PERQUISITES, AS IS EVIDENT FROM THE NOTIFICATION DATED 25.09.2001 AND DO NOT DEAL WITH THE SUBJECT MATTER OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVE YANCE ALLOWANCE. MISCONSTRUING THE SAID PROVISIONS THE C.I.T.( APPEA L) HELD ON PAGE 4 OF HIS ORDER: IN VIEW OF THE FORGOING, A SPECIALLY IN VIEW OF TH E AMENDMENT OF RELEVANT PROVISIONS GOVERNING EXEMPTION UNDER SECTION 10(14) OF THE ACT WITH EFFECT FROM 01.04.2001, RELIANCE BY THE ID. AR ON THE AFOR ESAID DECISION OF IT AT IS TOTALLY MISPLACED. ITA NO.389(ASR)/2014 A.Y.2004-05 20 ON GOING THROUGH THE ABOVE MISCONSTRUED FINDINGS OF THE C.I.T.(APPEALS), HOLDING THAT THE PROVISIONS GOVERNING EXEMPTION UND ER SECTION 10(14) OF THE ACT STOOD AMENDED W.E.F. 01.04.2001 AND FURTHER HOLDING THAT THE RELIANCE BY THE ID. AR ON THE AFORESAID DECISION OF THE ITAT IS TOTALLY MISPLACED. 31. THE LEARNED C.I.T.(APPEAL) ERRED IN NOT APPRECI ATING THE CASE LAWS OF VARIOUS HIGH COURTS AND DIFFERENT BENCHES OF I.T.A. T., LISTED BELOW, RELIED UPON BY THE APPELLANT, SYNOPSIS THEREOF HAVE BEEN G IVEN AT PAGE NOS. 123 TO 126 OF THE PAPER BOOK: - TITLE OF THE CASE CITATION I) C.I.T. VS. D.S.BLACKWOOD (1989) 178 ITR 470 (CAL) II) C.I.T. VS. HARRY DENNIS BOUGHMAN (1995)211 ITR 991 (KER) III) DR. G.G.JOSHI VS. C.I.T. (1994) 209 ITR 324 (GUJ) IV) C.I.T. VS. VANDER C.C. MALEN & ORS. (1997) 225 ITR 41 (AP) V) C.I.T. VS. MADDI SUDARSANAM (1988) 174 ITR 659 (AP) VI) I.T.O. VS. E.P.JAYARAMAN (1989) 33 TTJ (MAD) 36 VII) I.T.O. VS. E.P. JAYARAMAN (1990) 32 ITD (MAD) 152 VIII) P.DAYAKAR VS. I.T.O. (1995)53ITD (HYD) (SB) 25 IX) L.T. MULCHANDANI VS. FIRST I.T.O. (1985) 22 TTJ (NAG) 432 X) I.T.O. VS. PETER RASENAK (1987) 27 TTJ(AHD) 113 XI) K.C.GOKANI VS. INCOME TAX OFFICER (1985) 14 ITD (JP) 461 XII) AMBRIH JAISWAL VS. A.C.I.T. (2004) 87 TTJ (DEL) 777 XIII) S.N.MISHRA VS. INCOME TAX OFFICER (1999) 70 ITD 539 (JAB) XIV) A.C.I.T. VS. CAPT. K.P.SINGH (2007) 107 ITD 82 (MUM) XV) MADANLAL MOHANLAL NARANG VS. A.C.I.T. (2007) 104 ITD 190 (MUM) 32. IN THE LAST PARA ON PAGE 4 OF HIS ORDER, WHILE REFERRING TO THE CASE LAWS OF LIC VS UNION OF INDIA & OTHER, 260 ITR 41, COPY OF JUDGMENT AT PAGES 33-42 AND CIT VS BRANCH MANAGER, LIC OF INDIA (2008) 298 UR 3 58 (P&H), COPY OF JUDGMENT AT PAGES 43-46, UNDER IR.E LIST O: CASE LA WS RELIED UPON. THE C.I.T. (APPEAL) HELD AS UNDER: - THE ASSESSEE HAS SUBMITTED VARIOUS CASE LAWS IN TH IS REGARD, HOWEVER, ALL OF THESE CASE LAWS PERTAIN TO ASSESSMENT YEAR EARLIER THAN ASSESSMENT YEAR 2001-02, WHEN IT RULES 1962 WERE AMENDED. IN NONE OF THESE C ASE LAWS THE AMENDED PROVISIONS HAVE BEEN DISCUSSED AND IN VIEW OF SAME THE DISCUSSION OF THE HONBLE COURTS ON THE ISSUE IS NOT APPLICABLE. THEREFORE, G ROUND NO. 1,2 AND 3 IN THE APPEAL IS DISMISSED. 33. IN SUPPORT OF THE CLAIM OF THE APPELLANT, YOUR HONORS ATTENTION IS FURTHER DRAWN TO THE VARIOUS CASE LAWS RELIED UPON, LISTED BELOW, THEIR SYNOPSIS AND COPIES OF THE JUDGMENTS ALREADY FILED: - ITA NO.389(ASR)/2014 A.Y.2004-05 22 SUCCESSFULLY CHALLENGED BY THE ASSESSEE. IT HAS BEE N CONTENDED THAT THE LD. CIT(A)S HAS OBSERVED THAT THE ADDITIONAL CONV EYANCE ALLOWANCE FALLS WITHIN THE PROVISIONS OF SECTION 10(14) OF THE ACT READ WITH RULE 2BB(1)(C) OF THE I.T. RULES,1962. THE LD. DR HAS SUBMITTED TH AT THE FINDING OF LD. CIT(A) ALSO REMAINED UNHINGED, PARTICULARLY WHEN IT REMAINS UNREBUTTED; THAT THE CASE LAWS RELIED ON BY THE ASSESSEE PERTAI N TO THE PERIOD BEFORE ASSESSMENT YEAR 2001-02, WHEN THE I.T. RULES WERE A MENDED. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR AS REGARDS, THE LD. CIT (A)S OBSERVATION THAT THE AO HAD ESTABLISHED THAT THE ASSESSEE FURNISHED BOGUS BILL FOR CLAIMING PETROL EXPENSES OF RS.98,600/-, THE CATEGO RICAL STAND OF THE ASSESSEE IS THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO HAD SUMMONED ONE MR. SONU BAJAJ, PARTNER OF M/S. AJNALA SERVICE STATION, WHOSE STATEMENT WAS RECORDED AND WHO WAS ALSO CROSS -EXAMINED. THE SAID MR. SONU BAJAJ, DENIED HAVING KNOWN THE ASSES SEE. HE ALSO DENIED THAT M/S. AJNALA SERVICE STATION, ISSUED ANY SUMMAR Y OF CASH BILLS, STATING THAT THE BILLS SHOWN WERE WITHOUT SERIAL NO . AND WITHOUT SIGNATURE. THE AO MADE THE DISALLOWANCE BY MERELY RELYING ON THE STATEMENT OF MR. SONU BAJAJ. THE ASSESSEE HAD STATE D THAT MR. SONU BAJAJ HAD GIVEN FALSE STATEMENT, HAVING BECOME HOST ILE TO THE ASSESSEE, FOR THE REASONS BEST KNOWN TO MR. SONU BAJAJ ONLY AND NOT REVEALED TO THE ASSESSEE. IT IS SEEN THAT AS STATED, THE EVIDEN CES FURNISHED BY THE ASSESSEE IN SUPPORT OF HIS CONTENTION REGARDING ALL EGED FALASITY OF THE ITA NO.389(ASR)/2014 A.Y.2004-05 24 8. FOR THE ABOVE DISCUSSION, EVIDENTLY THE DISALLOW ANCE OF PETROL EXPENSES HAS WRONGLY BEEN CONFIRMED BY THE LD. CIT (A) IN VIOLATION OF THE NATURAL JUSTICE PRINCIPLE OF AUDI ALTERAM PARTEM. T HEREFORE, IN THE INTEREST OF JUSTICE, THIS MATTER IS REMITTED TO TH E FILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW ON DULY CONFR ONTING THE ASSESSEE THAT THE STATEMENT OF MR. SONU BAJAJ, PARTNER, C/O M/S. AJNALA SERVICE STATION, WHICH STATEMENT WAS RECORDED U/S 131 OF TH E ACT ON 24.02.2009 BY THE AO, WHEN THE MATTER WAS REMANDED TO HIM. THE ASSESSEE SHALL BE AFFORDED DUE AND ADEQUATE OPPORTUNITY OF REBUTTAL A ND CROSS- EXAMINATION QUA THE STATEMENT OF MR. SONU BAJAJ. TH E ASSESSEE SHALL ALSO BE AFFORDED DUE AND ADEQUATE OPPORTUNITY TO SU PPORT HIS CASE. HOWEVER, IT CANNOT BE GAINSAID THAT THE ASSESSEE SH ALL COOPERATE IN THE FRESH PROCEEDINGS BEFORE THE AO. 9. SO FAR AS REGARDS, THE CAR HIRE CHARGES DISALLOW ED AT RS.1,25,000/, THE STAND OF THE ASSESSEE IS THAT AS PER FACTS AND EVIDENCE ON RECORD, AS ALSO ADMITTED BY THE AO, HIRING CHARGES OF RS.1,25, 000/- @ RS.10,000/- PER MARLA WERE RECEIVED FOE MARUTI 800 CAR, AS AL SO DEPOSED BY MR. DALJIT SINGH IN HIS STATEMENT (APB 26) BROTHER OF L ATE SH. KASHMIR SINGH, WHO EXPIRED IN MAY, 2003. ACCORDING TO THIS STATEM ENT, HIRING CHARGES OF RS.1,25,000/- @ RS.10,000/- PER MARLA WERE RECEIVED RECEIVED FOR MARUTI 800 CAR. BESIDES, LEDGER ACCOUNT (APB-28-29) CAR HIRE CHARGES WAS ALSO FILED BEFORE THE AO. FURTHER, NOTORISED AF FIDAVITS (APB 93-98) FROM THE AGENTS OF THE ASSESSEE, NAMELY, MR. S.P. S HARMA, MR. DALJIT ITA NO.389(ASR)/2014 A.Y.2004-05 26 GENUINENESS OF THE EXPENSES CLAIMED, IT WAS BEING H ELD THAT THE SALARY PAID TO THE DRIVER HAD BEEN CLAIMED WRONGLY. 13. HERE, THE FACTUM OF THE ASSESSEE HAVING FILED L EDGER ACCOUNT (APB 11-14), CONFIRMATION (APB 15-21) REGARDING RECEIPT OF SALARY, OVERTIME, BONUS AND LEAVE WITH WAGES BY DRIVER S. HARPINDER SINGH S/O S. KARAM SINGH, VIDE HIS STATEMENT DATED 25.05.2015 IS PATEN T ON RECORD. THIS STATEMENT WAS REITERATED BY THE SAID DEPONENT IN HI S STATEMENT (APB 25- 26) DATED 22.12.2006. ALSO THE AGENTS OF THE ASSESS EE IN THEIR NOTORISED AFFIDAVITS (APB 93-98) ALSO CONFIRMED THE FACTS REG ARD USE OF THE TWO CARS AS OBSERVED HEREINABOVE. THE AO, WHILE REDECIDING T HIS DISALLOWANCE, SHALL GO BY THESE DOCUMENTARY EVIDENCES PLACED ON R ECORD BY THE ASSESSEE AND THEN DECIDE THE MATTER IN ACCORDANCE W ITH LAW. 14. TURNING TO THE DISALLOWANCE OF CAR REPAIR EXPEN SES, THE ASSESSEE PLACED ON RECORD LEDGER ACCOUNT (APB 30) AND COPIE S OF BILLS (APB 31- 35), AS FILED BEFORE THE AUTHORITIES BELOW. THE AO MADE THE DISALLOWANCE FOR THE REASON THAT THE SUMMON ISSUED TO THE MANAGE R KAR SCANNING CENTRE WAS RETURNED UNSERVED WITH THE REPORT THAT T HE CONCERN HAD BEEN CLOSED. THE AO OBSERVED THAT THE REGIONAL MANAGER, MARUTI UDYOG LIMITED, HAD STATED THAT THE KAR SCANNING CENTRE HA D BEEN RUNNING AS AUTHORIZED MARUTI SERVICE STATION FROM 02.03.1998 TO 31.08.2002 AND THAT THERE WERE NOT TRANSACTION WITH KAR SCANNING C ENTRE EXCEPT THE REFUND OF SECURITY DEPOSIT OF RS.10,000/- ON CANCEL LATION OF MASS ON 31.08.2002. IN THE REMAND REPORT, THE AO HAD STATED THAT SUMMONS ITA NO.389(ASR)/2014 A.Y.2004-05 28 W.D.V. OF RS.1,28,584/- AS DEPRECIATION ON CAR. THE AO OBSERVED THAT ALLOWANCE UNDER SECTION 10(140 CAN BE MADE ONLY IN CASE OF EXPENSES ACTUALLY INCURRED WHOLLY, NECESSARILY AND EXCLUSIVE LY FOR THE PURPOSE OF THE OFFICIAL DUTIES AND THAT THE DEPRECIATION CLAIM ED WAS NOT SUCH AN EXPENDITURE, BUT WAS A NOTIONAL CLAIM ADMISSIBLE ON LY U/S 32 OF THE ACT AGAINST PROFITS AND GAINS OF BUSINESS OR PROFESSION U/S 57(2), AGAINST INCOME FROM OTHER SOURCES. THE ASSESSEE, ON THE OTH ER HAND, IN HIS WRITTEN SUBMISSIONS DATED 17.03.2008 (APB-106), FIL ED BEFORE THE LD. CIT(A), HAD STATED IN PARA-16 THEREOF THAT THE DEDU CTION CLAIMED WAS NOT A NOTIONAL EXPENDITURE, BUT BEING DEPRECIATION CLAI MED ON FIXED ASSETS BUT WAS TO BE ALLOWED ON THE ACTUAL COST INCURRED, IN A DEFERRED MANNER OVER A PERIOD OF YEARS. THE GRIEVANCE OF THE ASSESS EE IN THIS REGARD IS JUSTIFIED IN AS MUCH AS IN THE REMAND REPORT, THE A O DID NOT MAKE ANY COMMENT ON THIS SUBMISSION OF THE ASSESSEE, WHICH V ITAL OMISSION PREJUDICIAL TO THE ASSESSEE WAS NOT TAKEN INTO CONS IDERATION BY THE DL. CIT(A). NOW, IN THE REMAND PROCEEDINGS, THE AO SHAL L TAKE INTO CONSIDERATION AND DECIDE THE ABOVE ASSERTION OF TH E ASSESSEE AND THEREBY ADJUDICATE THE DISALLOWANCE OR OTHERWISE O F THE DEPRECIATION CLAIMED IN ACCORDANCE WITH LAW. 17. SO FAR AS REGARDS THE ISSUE OF THE INCENTIVE BO NUS SCHEME, 1997 AND REIMBURSEMENT SCHEME, 1997, THE AO SHALL TAKE I NTO CONSIDERATION, THE ASSESSEES CONTENTION CONTAINED IN PARAS 28 TO 32 OF THE WRITTEN SUBMISSIONS FILED BEFORE US, AS REPRODUCE HEREINBEF ORE. TO EMPHASIZE THE