RISHABH METAL SUPPLY CORPORAITON, MUMBAI V. ACIT CEN CIR 38, MUMBAI

ITA 4104/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0430 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DURGA DATT
• Assessee Lawyers: SHAILESH N DOSHI
• Keywords: Depreciation; Search and seizure; Opportunity of being heard; Source of fund
• Section: 143(3); 132; 2

Judgement Text

P A G E | 1 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 4104 /MUM/2016 ( / ASSESSMENT YEAR: 2012 - 13 ) M/S RISHABH METAL SUPPLY CORPORATION 45/10, 2 ND FLOOR 1 ST CARPENTER STREET, C.P. TANK ROAD, MUMBAI - 400004 / VS. ACIT CENTRAL CIRCLE - 38, AIR INDIA BUILDING, NARIMAN POINT MUMBAI - 400021 ./ ./ PAN/GIR NO. AA AFR 2336Q ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SHAILESH N. DOSHI, A .R. / RESPONDENT BY : SHRI DURGA DATT, D .R. / DATE OF HEARING : 23 /05/2017 / DATE OF PRONOUNCEMENT : 11 /08 /2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER T HE PRE SENT APPEAL IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - 52 , MUMBAI, DATED 2 2.03.2016 , WHICH IN ITSELF ARISES FROM THE ASSESSMENT ORDER PASSED BY THE A.O U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), DATED 20 . 03 . 2014 . THE ASSESSEE ASSAILING P A G E | 2 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING G ROUNDS OF APPEAL BEFORE US: - 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS LD. CIT (A)'] HAS ERRED IN UPHOLDING THE ORDER OF THE LD. ASSESSING OFFICER AN D DISALLOWING INTEREST EXPENSE OF RS. 5,23,872/ - AND TAXED ACCORDINGLY WITHOUT GIVING SUFFICIENT OPPORTUNITY. 2. THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) HAS ERRED IN TREATING THE EXPENSES AS PERSONAL IN NATURE TO THE EXTENT OF RS. 31,057/ - AND ADDED BACK TO THE TOTAL IN COME WHICH IS TAXED ACCORDINGLY WITHOUT APPRECIATI NG THE FACTS AND CIRCUMSTANCES OF THE CASE AND WITHOUT GIVING SUFFICIENT OPPORTUNITY . T HE APPELLANT CRAVES LEAVE TO ADD, ALTER, RESCIND OR AMEND ANY OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEFLY STATED , THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM WHICH IS DERIVING INCOME FROM BROKERAGE AND COMMISSION, RENT AL RECEIPTS ALONG WITH OTHER SOURCES OF INCOME , HAD FILED ITS RETURN OF INCOME ON 28.09.2012, DECLARING TOTAL INCOME OF RS.88,68,570/ - . SEARCH AND SEIZURE PROCEEDINGS U/S. 132 OF THE ACT WERE CONDUCTED ON 12.10.2011 ON M/S PIPAVAV DEFENCE AND OFFSHORE ENGINEERING COMPANY LTD., (FOR SHORT PDOECL) AN D ITS ASSOCIATE CONCERNS , AND THE ASSESSEE CONCERN WAS THEREIN COVERED. 3. THAT THE CASE OF THE ASSESSEE WAS THEREAFTER TAKEN UP FOR SCRUTINY PROCEEDING S U/S. 143(2). THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O OBSERVED THAT THE ASSESSEE HAD RAISED INTEREST BEARING LOANS AGAINST WHICH INTEREST E XPENDITURE OF RS.5,23,872/ - WAS CLAIMED IN THE PROFIT & LOSS ACCOUNT. THE A.O WHILE DELIBERATING ON THE ALLO WABILITY OF THE AFORESAID INTEREST EXPENDITURE OBSERVED THAT THE ASSESSEE HAD ADVANCED INTEREST FREE AMOUNTS TO CERTAIN PARTIES, AS WELL AS THE PARTNERS OF THE ASSESSEE FIRM P A G E | 3 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY HAD SUBSTANTIALLY OVERDRAW N THEIR CAPITAL ACCOUNTS, WHICH HAD RESULTED TO DEBIT BALANCES OF RS.97,16,752/ - AND RS.1,77,96, 789/ - IN THE IR RESPECTIVE CAPITAL ACCOUNTS. ACCORDINGLY, THE A.O HOLDING A CONVICTION THAT THE ASSESSEE HAD UTILISED THE INTER E ST BEARING LOANS NOT IN ITS BUSINESS, BUT FOR ADVANCING OF INTEREST FREE AMOUNTS TO THIRD PARTIES AND FACILITATING OVERDRAWING OF THE CAPITAL ACCOUNTS BY THE PARTNERS, THEREFORE, DISALLOWED THE INTEREST EXPENDITURE OF RS.5,23,872/ - CLAIMED BY THE ASSESSEE U/S. 36(1)(III). THE A.O FURTHER BEING OF THE VIEW THAT THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE INCURRED BY WAY OF VEHICLE EXPENSES WAS NOT FULLY SUPPORTED BY CREDIBLE EVIDENCE, AND FURTHER IN THE ABSENCE OF ANY LOG BOOK MAINTAINED BY THE AS SESSEE IN RESPECT OF THE VEHICLES EXPENSES, THE PERSONAL USAGE OF THE VEHICLES BY THE PARTNERS OF THE ASSESSEE FIRM AND THEIR FAMILY MEMBERS COULD NOT BE RULED OUT, THUS DISALLOWED 20% OF THE VEHICLE EXPENSES AND DEPRECIATION ON MOTOR CARS AND MADE A CONSE QUENTIAL ADDITION OF RS.31,057/ - IN THE HANDS OF THE ASSESSEE. THE A.O THUS DELIBERAT ING ON THE AFORESAID ISSUE S ASSESSED THE INCOME OF THE ASSESSEE AT RS.94,23,299/ - , VIDE HIS ORDER PASSED U/S 143(3) OF THE ACT. 4. THE ASSESSEE BEING AGGRIEVED WITH THE ASSESSMENT ORDER CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM IN THE BACKDROP OF THE FACTS OF THE CASE HELD THAT AS THE ASSESSEE FIRM HAD FAILED TO ESTABLISH THAT THE I N TEREST FREE ADVANCES WERE NOT GIVEN OUT OF THE INTEREST BEARING FUNDS SO RAISED BY IT, T HEREFORE, THE A.O HAD RIGHTLY CONCLUDED THAT THE INTEREST BEARING LOAN S WERE UTILISED BY THE ASSESSEE FOR ADVANCING INTEREST FREE LOANS TO THIRD PARTIES. THE A.O THUS O N THE BASIS OF HIS AFORESAID OBSERVATIONS UPHELD THE DISALLOWANCE OF INTEREST P A G E | 4 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY EXPENDITURE OF RS.5,23,872/ - MADE BY THE A.O. THE CIT(A) FURTHER OBSERV ED THAT AS THE ASSESSEE HAD NOT MAINTAINED PROPER BILLS AND VOUCHERS IN RESPECT OF THE VEHICLE EXPENSES, WH ILE FOR SOME OF THE VOUCHERS WERE FOUND TO BE SELF MADE , THERE FORE , IN THE BACKDROP OF THE NATURE OF THE EXPENSES AND THE FACT THAT NO LOG BOOK IN RESPECT OF THE VEHICLE EXPENSES WAS MAINTAINED BY THE ASSESSEE, NEITHER THE SAID EXPENSES WERE VERIFIABLE TO THE HILT, NOR THE ELEMENT OF CERTAIN PERSONAL EXPENSES HAVING BEEN INCLUDED IN THE AFORESAID EXPENDITURE COULD BE RULED OUT. THE CIT(A) THUS ON THE BASIS OF HIS AFORESAID CONVICTION UPHELD THE DISALLOWANCE OF 20% OF THE VEHICLE EXPENSES MADE BY THE A.O. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THAT DURING THE COURSE OF THE HEARING OF APPEAL IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R.) FOR THE ASSESSEE , THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT HAD VIDE ITS LETTER DATED 28.02.2014 (FILED WITH THE A.O ON 10.03.2014) SPECIFICALLY BROUGHT TO THE NOTICE OF THE A.O THAT THOUGH THE ASSESSEE HAD INCURRED INTEREST EXPENDITURE OF RS.5,23,872/ - IN RESPECT OF THE INTEREST BEARING LOANS SO RAISED BY IT, BUT IT WAS DURING THE YEAR UNDER CONSIDERATION ALSO IN RECEIPT OF INTEREST OF RS.3,93,569/ - ON LOANS ADVANCED BY IT TO CERTAIN PARTIES. IT WAS FURTHER SUBMITTED BY THE LD. A.R. THAT THE ASSESSEE HAD VIDE ITS AFORESA ID LETTER FURTHER BROUGHT TO THE NOTICE OF THE A.O THAT AS IT HAD RECEIVED INTEREST FREE LOANS FROM CERTAIN PARTIES, THEREFORE, IT HAD NOT CHARGED AN Y INTEREST ON CERTAIN AMOUNT S THAT WERE ADVANCED BY IT TO CERTAIN PARTIES. IT WAS THUS SUBMITTED BY THE LD. A.R. THAT THE A.O WHILE DISALLOWING THE ENTIRE SUM OF RS.5,23,872/ - CLAIMED BY THE ASSESSEE AS INTEREST EXPENDITURE IN ITS PROFIT AND LOSS ACCOUNT, HAD P A G E | 5 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY GRAV E LY ERRED IN FAILING TO TAKE COGNIZANCE OF THE INTEREST OF RS.3,93,569/ - (SUPRA) WHICH WAS RECEIVED BY THE ASSESSEE ON THE AMOUNTS ADVANCED BY IT TO CERTAIN PARTIES , AS WELL AS THE SUBSTANTIAL INTEREST FREE FUNDS WHICH WERE AVAILABLE WITH THE ASSESSEE . THAT IN THE BACKDROP OF THE AFORESAID FACTS , IT WAS FURTHER SUBMITTED BY THE LD. A.R. THAT NO W WHEN THE ASSESSEE HAD SUBSTANTIAL INTEREST FREE FUNDS AVAILABLE WITH IT, THEREFORE, THE A.O HAD GRAVELY ERRED IN DISALLOWING THE INTEREST EXPENDITURE WITHOUT ESTABLISHING ANY NEXUS BETWEEN THE INTEREST BEARING LOANS RECEIVED AND THE INTEREST FREE ADVANC ES GIVEN BY THE ASSESSEE. THE LD. A.R. FURTHER SUBMITTED THAT THE APPEALS OF THE ASSESSEE INVOLVING THE COMMON ISSUE PERTAINING TO DISALLOWANCE OF INTEREST U/S. 36(1)(III) FOR A.Y. 2008 - 09, A.Y. 2010 - 11 AND A.Y. 2012 - 13 ( I.E YEAR UNDER CONSIDERATION) WERE PENDING ADJUDICATION BEFORE THE SAME CIT(A) . IT WAS SUBMITTED BY THE LD. A.R THAT THE AFORESAID THREE APPEALS TO THE UNDERSTANDING OF THE ASSESSEE WERE SUPPOSED TO BE HEARD ON 30.03.2016, HOWEVER THE CIT(A) PASSED THE APPELLATE ORDERS FOR A.Y 2008 - 09 AND A .Y. 2012 - 13 ON 22.03.2016 , WITHOUT AFFORDING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE LD. A.R. IN ORDER TO FORTIFY HIS AFORESAID CONTENTION SUBMITTED THAT THE FACT THAT THE ASSESSEE HAD REMAINED DIVESTED OF AN OPPORTUNITY OF BEING HEARD DURING THE COURSE OF THE APPELLATE PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION , VIZ. AY: 2012 - 13 AND A.Y.2008 - 09 , COULD BE GATHERED FROM A PERUSAL OF PARA 6 AND PARA 8 OF THE ORDER S PASS ED BY THE CIT(A) FOR THE SAID RESPECTIVE YEARS . IT WAS AVERRED BY THE LD. A.R THAT THOUGH THE CIT(A) ON SIMILAR LINES AS WERE RECORDED BY HIM IN HIS ORDER FOR A.Y. 2010 - 11 HAD STATED THAT THE ASSESSEE HAD ATTENDED THE PROCEEDINGS AND THE FACTS OF THE CASE WERE HEARD AND DISCUSSED WITH HIM, BUT UNLIKE AS IN A.Y 2010 - 11, WHEREIN THE CIT(A) AFTER PERUSING THE WRITTEN SUBMISSIONS FURNISHED BY THE ASSESSEE HAD GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE IN RESPECT OF INTEREST DISALLOWED BY P A G E | 6 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY THE A.O U/S. 36(1)(III) , AND RESTRICTED THE DISALLOWANCE OF RS.4,49,896/ - MADE BY THE A.O TO AN AMOUNT OF RS.1,07,342/ - ON THE BASIS OF THE NEXUS THEORY SUBMITTED BY THE ASSESSEE BEFORE HIM, HAD HOWEVER SUMMARILY UPHELD THE SIMILAR DISALLOWANCE IN A.Y. 2008 - 09 AND A.Y. 2012 - 13 ( YEAR UNDER CONSIDERATION) FOR THE REASON THAT THE ASSESSEE HAD FAILED TO ESTABLISH THAT THE INTEREST FREE LOANS HAD NOT BEEN ADVANCED OUT OF THE INTEREST BEARING FUNDS. IT WAS AVERRED BY THE LD. A.R THAT THOUGH THE ASSESSEE HAD PREPARED WRITTEN SUBMISSION S IN HIS CASE FOR THE YEAR UNDER CONSIDERATION , VIZ. A.Y. 2012 - 13 AND A.Y 2008 - 09 ON SIMILAR LINES, BUT HOWEVER THE CIT(A) DECLINED TO TAKE THE SAME ON RECORD FOR THE REASON THAT THE SAID APPEAL S HAD BEEN DISPOSED OF BY HIM ON 22.03.2016. THE LD. A.R IN ORDER TO SUBSTANTIATE HIS AFORESAID CONTENTIONS TOOK US THROUGH PAGE 3 AND PAGE 7 OF HIS PAPER BOOK ( APB ) , WHICH REVEALED INTEREST FREE LOANS AVAILABLE WITH THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE LD. A.R FURTHER TOOK US TO PAGE 4 AND PAGE 8 OF THE APB WHICH REVEALED THE INTEREST RECEIVED BY THE ASSESSEE ON THE LOANS ADVANCED TO THE PARTIES. THE LD. A.R THUS TAKING US TO CERTAIN NOTINGS AT PAGE 8 OF THE APB SUBMITTED THAT AS AGAINST THE INTEREST FREE AMOUNTS ADVANCED BY THE ASSESSEE AND CAPITAL ACCOUNT OF PARTNERS ( D EBIT BALANCE) , WHICH AGGREGAT ED TO RS.5,01,57,292/ - , INTEREST FREE LOANS OF RS.5,25,04,133/ - WERE AVAILABLE WITH THE ASSESSEE . IT WAS THUS AVERRED BY THE LD. A.R THAT IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION NO DISALLOWANCE OF ANY PART OF THE INTEREST EXPENDITURE OF RS. 5,23,872/ - (SUPRA) WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. PER CONTRA, THE LD. D.R RELIED ON THE ORDERS OF THE CIT(A) AND SUBMITTED THAT THE LATTER HAD RIGHTLY UPHELD THE DISALLO WANCE MADE BY THE A.O. 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL P A G E | 7 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY AVAILABLE ON RECORD . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND THAT A PERUSAL OF THE RELEVANT PAGES OF THE APB, VIZ. PAGE 3 PAGE 4 PAGE 7 AND PAGE 8 TO WHICH OUR ATTENTION WAS DRAWN BY THE LD. A.R PRIMA FACIE SUPPORT S HIS CONTENTION, VIZ. (I) THAT THE ASSESSEE WAS IN RE CEIPT OF INTEREST INCOME OF RS.3,93,569/ - PERTAINING TO THE AMOUNTS ADVANCED BY IT TO THE THIRD PARTIES, AND (II) THE ASSESSEE WAS HAVING SUBSTANTIAL FUNDS AVAILABLE WITH HIM BY WAY OF INTEREST FREE LOANS . WE THOUGH ARE NOT PERSUADED TO SUBSCRIBE TO THE UNSUBST ANTIATED CLAIM OF THE ASSESSEE THAT THE APPEALS OF THE ASSESSEE FOR AY: 2008 - 09 AND AY:2012 - 13(YEAR UNDER CONSIDERATION) WHICH WERE FIXED FOR HEARING ON 30.03.2016, HAD HOWEVER BEEN DISPOSED OF BY THE CIT(A) ON 22.03.2016. BE THAT AS IT MAY, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD REMAINED DIVESTED OF SUFFICIENT OPPORTUNITY TO SUBSTANTIATE HIS AFORESAID CLAIM IN RESPECT OF THE ISSUE PERTAINING TO DISALLOWANCE OF INTEREST U/S 36(1)(III) FOR THE YEAR UNDER CONSIDERATION. WE FIND THAT THE AFORE SAID CONTENTION OF THE ASSESSEE FURTHER FINDS SUPPORT FROM THE FACT THAT ON THE SIMILAR ISSUE PERTAINING TO DISALLOWANCE OF INTEREST O N BORROWED CAPITAL U/S. 36(1)(III), SUBSTANTIAL RELIEF HAD BEEN GIVEN BY THE CIT(A) WHILE DISPOSING OF THE APPEAL OF THE ASSES SEE FOR A.Y. 2010 - 11 . WE THUS IN THE TOTALITY OF THE FACTS INVOLVED IN THE PRESENT APPEAL ARE OF THE CONSIDERED VIEW THAT WHILE FOR THE SUBMISSIONS FILED BY THE ASSESSEE WITH THE A.O HAD NOT BEEN ADVERTED TO BY HIM , IT FURTHER ALSO REMAINED DIVESTED OF BEI NG AFFORDED SUFFICIENT OPPORTUNITY OF BEING HEARD BY THE CIT(A). WE THUS IN ALL FAIRNESS RESTORE THE ISSUE TO THE FILE OF THE A.O WITH A DIRECTION TO VERIFY THE FACTS AS HAD BEEN AVERRED BY THE LD. A.R BEFORE US. THE A.O IS DIRECTED TO CONSIDER THE CLAIM OF THE ASSESSEE IN RESPECT OF INTEREST OF RS.3,93,569/ - (SUPRA) WHICH IS CLAIMED BY HIM TO HAVE BEEN RECEIVED IN RESPECT OF THE AMOUNTS ADVANCED TO THIRD PARTIES, AS WELL AS VERIFY THE AVAILABILITY OF INTEREST FREE FUNDS WITH THE ASSESSEE AT THE TIME WHEN P A G E | 8 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY THE INTEREST FREE ADVANCES WERE GIVEN BY HIM TO CERTAIN PARTIES. THAT IN CASE IF THE CLAIM OF THE ASSESSEE THAT IT HAD RECEIVED INTEREST OF RS.3,93,569/ - (SUPRA) FROM THE PARTIES TO WHOM AMOUNTS HA D BEEN ADVANCED IS FOUND TO BE IN ORDER , THEN THE DISALLOWAN CE OF THE INTEREST EXPENDITURE OF RS.5,23,872/ - (SUPRA) MADE BY THE A.O SHALL BE SCALED DOWN/REDUCED TO THE SAID EXTENT. STILL FURTHER , IN CASE IF THE ASSESSEE IS ABLE TO SUBSTANTIATE THE AVAILABILITY OF INTEREST FREE FUNDS WITH HIM AT THE TIME OF ADVANCING OF THE INTEREST FREE LOANS/ADVANCES, THEN TO THE SAID EXTENT NO DISALLOWANCE OF THE INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE U/S. 36(1)(III) WOULD BE LIABLE TO BE MADE. WE THUS RESTORE THE MATTER TO THE FILE OF THE A.O FOR FRESH ADJUDICATION IN THE BA CKDROP OF OUR AFORESAID OBSERVATIONS. THE G ROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE IS THUS ALLOWED FOR STATISTICAL PURPOSE S . 8. THE LD. A.R FURTHER ASSAILING THE DISALLOWANCE OF RS.31,057/ - (SUPRA) MADE BY THE A.O IN RESPECT OF THE VEHICLE EXPENSES SUBMITTED THAT AS THE EXPENSES HAD BEEN INCURRED BY THE ASSESSEE EXCLUSIVELY IN THE COURSE OF HIS BUSINESS, THEREFORE , NO DISALLOWANCE OF ANY PART OF THE SA ID EXPENDITURE WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. ALTERNATIVELY, IT WAS AVERRED BY THE LD . A.R THAT AS DEPRECIATION WAS A STATUTORY ALLOWANCE, THEREFORE, NO PART OF THE SAME COULD BE DISALLOWED BY ATTRIBUTING THE SAME TO THE PERSONAL USAGE BY THE ASSESSEE. THE LD. A.R IN ORDER TO DRIVE HOME HIS AFORESAID CONTENTION , RELIED ON THE ORDER PASSE D BY THE ITAT, MUMBAI B BENCH IN THE CASE OF MUKESH K. SHAH VS. ITO (2005) 92 ITD 349 (MUM), WHEREIN THE TRIBUNAL HAD DELETED THE PROPORTIONATE DISALLOWANCE OF DEPRECIATION IN RESPECT OF THE CAR USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS , FOR T HE REASON THAT THE SAME BEING A STATUTORY ALLOWANCE , THUS , THE SAME CANNOT BE P A G E | 9 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY RESTRICTED ON ACCOUNT OF PERSONAL US AGE OF THE VEHICLE BY THE ASSESSEE. THE TRIBUNAL IN THE AFORESAID CASE HAD OBSERVED AS UNDER: - 13. BUT AS FAR AS THE DEPRECIATION IS CONCERNED, THERE IS NO JUSTIFICATION IN MAKING ANY DISALLOWANCE. IF THE CAR IS USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS, THEN THE DEPRECIATION NEED TO BE ALLOWED AS PER THE RATE SUGGESTED BY THE STATUTE. DE PRECIATION IS A STATUTORY ALLOWANCE. THE STATUTORY ALLOWANCE CANNOT BE RESTRICTED ON THE BASIS OF THE VOLUME OF BUSINESS USE AND VOLUME OF PERSONAL USE. THE CONDITION TO BE SATISFIED IS THAT THE ASSET SHOULD BE OWNED BY THE ASSESSEE AND IT SHOULD BE USED F OR THE BUSINESS OR PROFESSION. BOTH THE CONDITIONS ARE SATISFIED HERE. PERSONAL USE OF THE CAR CANNOT FETTER THE GRANTING OF STATUTORY ALLOWANCE. THEREFORE, THE DISALLOWANCE MADE ON ACC OUNT OF DEPRECIATION IS DELETED. PER CONTRA, THE LD. D.R. RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND AVERRED THAT THE DISALLOWANCE OF 20% HAD RIGHTLY BEEN MADE BY THE A.O AND THEREAFTER SUSTAIN ED BY THE CIT(A). 7. WE HAVE HEARD THE A UTHORIZED R EPRESENTATIVE S FOR BOTH THE PARTIES , P ERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD . WE THOUGH FIND OURSELVES TO BE IN AGREEMENT WITH THE VIEW ARRIVED AT BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MUKESH K. SHAH(SUPRA) THAT AS DEPRECIATION IS A STATUTORY ALLOWANCE, THE SAME HAS TO BE GIVEN EFFECT AND CONSEQUENTLY ALLOWED IN THE HANDS OF THE ASSESSEE , SUBJECT TO THE CONDITION THA T THE SAME HAD BEEN USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS , BUT HOWEVER , ARE OF THE CONSIDERED VIEW THAT THE FACTS INVOLVED IN THE PRESENT CASE ARE TO SOME EXTENT DISTINGUISHABLE . THAT IN THE CASE OF THE PRESENT ASSESSEE THE A.O HAD CARRIED O UT DISALLOWANCE OF VEHICLE EXPENSES NOT MERELY FOR THE REASON THAT SOME PART OF US AGE OF THE MOTOR CARS COULD SAFELY BE ATTRIBUT ED TO THE PERSONAL USAGES BY THE PARTNERS OF THE ASSESSEE FIRM AND THEIR F AMILY MEMBERS, BUT ALSO ON THE GROUND THAT THE DOCUM ENTARY EVIDENCE SUPPORTING INCURRING OF THE VEHICLE EXPENSES BY THE ASSESSEE NEITHER DID INSPIRE MUCH CONFIDENCE, P A G E | 10 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY NOR THE AUTHENTICITY OF THE SAME COULD BE PROVED TO THE HILT BY THE ASSESSEE. WE THUS IN THE TOTALITY OF THE FACTS INVOLVED IN THE CASE OF THE PRESENT ASSESSEE , IN ALL FAIRNESS RESTRICT THE DISALLOWANCE MADE BY THE A.O. I N RESPECT OF VEHICLE EXPENSES TO 10%. THE ORDER OF T HE CIT(A) UPHOLDING THE DISALLOWANCE OF VEHICLE EXPENSES AT THE RATE OF 20% IS THUS MODIFIED IN LIGHT OF OUR AFORESAID OB SERVATIONS . THE GROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 8. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCE D IN THE OPEN COURT ON 11 .08.2017 SD/ - SD/ - ( G.S. PANNU ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 11 .0 8 .2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 11 ITA NO. 4104/MUM/2016 M/S. RISHABH METAL SUPPLY