M/s. Vaibhavi & Co., Ahmedabad V. The ACIT, (OSD), Circle-9, Ahmedabad

ITA 414/AHD/2015

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 7751 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 26-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH HEARING CONCLUDE
• Assessee Lawyers: S N DIVETIA
• Keywords: Depreciation; Principle of natural justice
• Section: 143(3); 32

Judgement Text

ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 VAIBHAVI & CO., ............ APPELLANT 401, APM SHOPPING MALL, OPP. SUN & STEP CLUB, SOLA ROAD, AHMEDABAD 61. [PAN: AAFFV 1362 D] VS. ASSTT. COMMISSIONER OF INCOME TAX (OSD), CIRCLE -9, AHMEDABAD. ....................... RESPONDENT APPEARANCES BY S.N. DIVETIA FOR THE APPELLANT SAURABH SINGH FOR THE RESPONDENT HEARING CONCLUDED ON: 28.06.2018 ORDER PRONOUNCED ON : 27.09.2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 15 TH DECEMBER, 2014, PASSED BY THE LEARNED CIT(A), IN T HE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT, 1961, FOR THE ASSESSMENT YEAR 2011-12. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S :- 1.1 THE ORDER PASSED U/S.250 ON 15.12.2014 FOR A.Y . 2011-12 BY CIT(A)- 10, AHMEDABAD UPHOLDING THE DISALLOWANCE OF DEPRECI ATION OF RS.25,71,487/- IS WHOLLY ILLEGAL, UNLAWFUL AND AGAI NST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGN ED DISALLOWANCE. ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 2 OF 8 2.1 THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN CONFIRMING THAT MOTOR CARS WERE NOT USED FOR THE PU RPOSE OF BUSINESS OF THE APPELLANT AND THEREBY CONFIRMING THE DISALLOWAN CE OF DEPRECIATION OF RS.25,71,487/-, CAR INSURANCE EXPENSES OF RS.1,08,8 05/- AND 60% OF CAR REPAIRS AND RUNNING EXPENSES I.E. RS.3,11,840/-. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THAT MOTOR CARS WERE NOT USED FOR THE PURPOSE OF BUSINESS OF THE APPELLANT AND THEREBY CO NFIRMING THE DISALLOWANCE OF DEPRECIATION OF RS.25,71,487/-, CAR INSURANCE EXPENSES OF RS.1,08,805/- AND 60% OF CAR REPAIRS AND RUNNING EX PENSES I.E. RS.3,11,840/- 3.1 THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE APPELLANT HAD FAILED TO PRODUCE EVIDENCE RELATING TO THE USAGE OF MOTOR CAR S FOR BUSINESS PURPOSES. IT IS THEREFORE PRAYED THAT THE DISALLOWANCE UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON FIVE LUXURY CARS, I.E. AUDI , BMW-X6, BMW-Z4, MERCEDES BENZ AND POLO CARS. HE ALSO NOTICED THAT OUT OF THESE F IVE CARS, THE ASSESSEE HAD CLAIMED DEPRECIATION ONLY FOR THREE CARS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. WHEN HE PROBED THE MATTER, IT WAS FOUND THAT THERE ARE O NLY TWO KEY PERSONS, INVOLVED WITH DAY TO DAY WORK, NAMELY SURESHBHAI C PATEL AND PART H SURESHBHAI PATEL, AND THAT, IN ADDITION TO THESE TWO PARTNERS, THE ONLY OTHER PERS ONS WORKING FOR BUSINESS WERE ONE PERSON HANDLING MARKETING AND CUSTOMER RELATIONS, O NE SUPERVISOR AND ONE TELEPHONE OPERATOR. THE ASSESSING OFFICER WAS NOT SATISFIED THAT ALL THE CARS HAVE BEEN USED FOR BUSINESS PURPOSES. WHEN ASSESSEE WAS CONFRONTED WI TH THIS POSITION, HE TOOK THE PLEA THAT ONCE AN ASSET GETS INTO BLOCK OF ASSETS, IT IS NOT REALLY NECESSARY THAT EACH PART OF THE BLOCK MUST BE USED. TAKING NOTE OF THIS PLEA A ND DISPOSING OF THE SAME, THE ASSESSING OFFICER OBSERVED AS FOLLOWS :- 4.8. HOWEVER, LATER ON IN ITS SUBMISSIONS IT HAS B EEN CONTENDED THAT 'USED FOR THE PURPOSE OF BUSINESS' WHEN APPLIED TO THE BLOCK OF ASSETS WOULD MEAN USE OF BLOCK OF ASSETS AND NOT ANY SPECI FIC ITEMS AND THAT INDIVIDUAL ASSETS LOSE THEIR IDENTITY AFTER BECOMIN G PART OF THE BLOCK. IT IS ALSO CONTENDED THAT EVEN THOUGH THE ASSETS REMAIN I DEAL DEPRECIATION IS ALLOWABLE IF IT IS PART OF THE BLOCK. FURTHER ON IT IS ALSO CONTENDED THAT IT IS NOT NECESSARY THAT THE ASSETS SHOULD HAVE BEEN USED FOR THE PURPOSE OF BUSINESS OR PROFESSION THROUGHOUT THE PREVIOUS YEAR , EVEN USING IT FOR A PART OF THE YEAR WOULD MAKE ASSETS ELIGIBLE FOR CLA IM OF DEPRECIATION FOR THE ENTIRE YEAR. ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 3 OF 8 4.9. THIS LOGIC OF THE ASSESSEE THAT IT IS NOT NEC ESSARY FOR THE ASSETS TO BE USED FOR CLAIMING DEPRECIATION IS TOTALLY CONTRARY TO THE PROVISIONS OF SECTION 32 OF THE I.T. ACT. IT IS NOTEWORTHY TO ME NTION THAT IN THE RETURN OF INCOME FOR A.Y. 2010-11 THE ASSESSEE HAS MADE A NOT E UNDER THE STATEMENT OF INCOME THAT THE DEPRECIATION ON THE MOTOR CAR WH ICH WAS PURCHASED FOR RS.66,32,998/- HAS BEEN TAKEN AS NIL AS THE CAR IS NOT BEING USED IN THE BUSINESS AND ALSO THAT THE DEPRECIATION WILL BE CLA IMED IN THE YEAR OF ITS USE FOR BUSINESS. ONLY WHEN THE THREE BASIC CONDITI ONS RELATING TO ALLOWANCE OF DEPRECIATION IS SUCCESSFULLY MET, THE DEFINITION OF BLOCK OF ASSETS COMES IN TO PICTURE. A BLOCK OF ASSETS IS JU ST A GROUP OF ELIGIBLE ASSETS IN RESPECT OF WHICH THE SAME PERCENTAGE OF D EPRECIATION IS PRESCRIBED. 5. ON THIS ISSUE SEVERAL JUDICIAL PRONOUNCEMENT AR E AVAILABLE WHICH MAKE IT AMPLE CLEAR THAT THE THREE BASIC CONDITIONS OF OWNERSHIP, USE FOR THE PURPOSE OF BUSINESS AND USE DURING THE RELEVANT PREVIOUS YEAR ARE PARAMOUNT FOR CLAIMING OF DEPRECIATION. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS ON THE SUBJECT. 1) '[2007] 108 ITD 613 (JODH.) ITAT JODH PUR BENCH SUSHIL KUMAR JALANI V. ASSISTANT COMMISSIONER OF INCOME-TA X, CIRCLE-1, JODHPUR IN THIS CASE IT HAS BEEN HELD THAT THE CONTENTION OF THE ID. A.R. FOR NOT CONSIDERING DEPRECIATION FOR MAKING DISALLOWANC E IS SANS MERITS BECAUSE OF THE SPECIFIC LANGUAGE OF SECTION 38(2) W HICH PROVIDES AS UNDER: 'WHERE ANY BUILDING, MACHINERY, PLANT OR FURNITURE IS NOT EXCLUSIVELY USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION , THE DEDUCTIONS UNDER SUB-CLAUSE (II) OF CLAUSE (A) AND CLAUSE (C) OF SECTION 30, CLAUSES (I) AND (II) OF SECTION 31 AND CLAUSE (II) OF SUBSECTION (1) OF SECTION 32 SHALL BE RESTRICTED TO A FAIR PROPORTION ATE PART THEREOF WHICH THE ASSESSING OFFICER MAY DETERMINE, HAVING R EGARD TO THE USER OF SUCH BUILDING MACHINERY, PLANT OR FURNITURE FOR THE PURPOSES OF THE BUSINESS OR PROFESSION.' FURTHER, THE HON'BLE BENCH HELD THAT A BARE PERUSAL OF THIS SUB- SECTION LEAVES NOTHING TO DOUBT THAT IF AN ASSET IS NOT EXCLUSIVELY USED FOR THE BUSINESS PURPOSE, THE DEDUCTIONS, INCL UDING DEPRECIATION UNDER SECTION 32, HAVE TO BE RESTRICTE D TO FAIR PROPORTIONATE PART 2) [2006] 102 ITD 128 (MUM.) ITAT MUMBAI BENCH 'A' , ASSISTANT COMMISSIONER OF INCOME-TAX (OSD) RANGE 3(3), MUMBAI V. RISHIROOP POLYMERS (P.) LTD. THE HON'BLE BENCH HELD THAT THE CASE LAWS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE AND ALSO RELIED UPON BY TH E CIT(A) ARE NO LONGER APPLICABLE IN THE PRESENT CASE BECAUSE OF CL EAR DECISION OF ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 4 OF 8 HON'BLE BOMBAY HIGH COURT IN DINESHKUMAR GULABCHAND AGRAWAL V. CIT [2004] 267 ITR 768. ...... .. HON'BLE BOMBAY HIGH COURT, IN DINESHKUMAR GULABCHAN D AGRAWAL V. CIT [2004] 267 ITR 768, ON WHICH THE LEARNED DR REL IED, HELD THAT DEPRECIATION ON ASSET READY FOR USE BUT NOT ACTUALL Y USED, CANNOT BE ALLOWED. THE HON'BLE BOMBAY HIGH COURT IN THE ABOVE CASE HEL D AS UNDER: THE WORD 'USED' IN SECTION 32 OF THE INCOME-TAX AC T, 1961, DENOTES THAT THE ASSET HAS BEEN ACTUALLY USED AND NOT THAT IT IS MERELY READY FOR USE. THE EXPRESSION 'USED' MEANS ACTUALLY USED FOR THE PURPOSES OF THE BUSINESS.' [THE SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE ASSESSEE AGAINST THIS JUDGMENT: SEE [2004] 266 ITR (ST.) 106-ED.] THUS, AS PER THIS LATEST DECISION OF HON'BLE BOMBAY HIGH COURT, THE ASSESSEE WILL NOT BE ENTITLED FOR DEPRECIATION ON T HE PASSIVE USE OR ON THE PLANT AND MACHINERY READY FOR USE. IT SHOULD BE AN ACTUAL USE OF THE ASSET FOR IT TO BE ELIGIBLE FOR DEPRECIATION . 3) IN THE CASE OF CIT V. ORIENTAL COAL CO. LTD. [19 94] 206 ITR 682, HON'BLE CALCUTTA HIGH COURT HELD AS UNDER: 'SECTION 32(1) OF THE INCOME-TAX ACT, 1961, LAYS DO WN TWO CONDITIONS TO BE SATISFIED BY AN ASSESSEE BEFORE CLAIMING ANY DEPRECIATION. THESE TWO CONDITIONS ARE, FIRSTLY, THAT THE PLANT A ND MACHINERY MUST BE OWNED BY THE ASSESSEE AND, SECONDLY, THE PLANT A ND MACHINERY MUST BE USED FOR THE PURPOSES OF BUSINESS OF THE AS SESSEE. THEREFORE, UNDER SUB-SECTION (1) OF SECTION 32, THE RE SHOULD BE ACTUAL USER OF PLANT AND MACHINERY FOR THE PURPOSES OF BUS INESS. IN CERTAIN CASES OF A POOLING ARRANGEMENT OR WHERE PLANT AND/O R MACHINERY IS KEPT AS STANDBY TO PROVIDE AGAINST BREAKDOWN, EVEN A PASSIVE USER MAY ENTITLE THE ASSESSEE TO CLAIM DEPRECIATION UNDE R SECTION 32 BECAUSE IN BOTH THESE CASES, THE MACHINERY IS KEPT READY FOR USE IN THE FACTORY. WHERE THE FACTORY OF THE ASSESSEE REMAINED UNDER LO CK-OUT THROUGHOUT THE TWO PREVIOUS YEARS RELEVANT TO THE A SSESSMENT YEARS 1983-84 AND 1984-85 AND DURING THE LOCK-OUT PERIOD, THE PLANT AND MACHINERY HAD NOT BEEN ACTUALLY USED FOR THE PURPOS ES OF THE BUSINESS : HELD, THAT DEPRECIATION UNDER SECTION 32 OF THE ACT WAS NOT ALLOWABLE ON SUCH PLANT AND MACHINERY.' 5.1 IN VIEW OF THE FACTS DISCUSSED ABOVE, IT IS EVI DENT THAT THE ASSESSEE HAS NOT MAINTAINED ANY RECORDS REGARDING THE USES O F MOTOR CAR FOR THE ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 5 OF 8 PURPOSE OF BUSINESS AND THEREFORE IT COULD NOT PROD UCE THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER, THE ASSESSEE ITSELF HAS TAKEN DIFFERENT STAND IN TWO DIFFERENT ASSESSMENT Y EARS IN ITS OWN CASE. IN THE A.Y. 2010-11 THE ASSESSEE HAS NOT CLAIMED DEPRE CIATION ON MOTOR CAR ON THE GROUND THAT IT WAS NOT USED FOR THE PURPOSE OF BUSINESS DURING THAT YEAR. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTA NCES, PROVISIONS OF SECTION 32 AND UNDERLYING PRINCIPLES IN THE JUDICIA L DECISIONS DISCUSSED ABOVE, THE ASSESSEE'S CLAIM OF DEPRECIATION ON THE MOTOR CAR REQUIRES TO BE DISALLOWED. OUT OF THE FIVE MOTOR CARS ON WHICH DEP RECIATION HAS BEEN CLAIMED DEPRECIATION ON TWO MOTOR CARS WITH RESPECT TO TWO KEY PERSONS OF THE FIRM IS ALLOWED AND THE REMAINING IS DISALLOWED . THE WORKING OF THE DEPRECIATION IS AS BELOW :- NAME OF ASSETS 2011-12 WDV DEP. DEP. ALLOWED DEP. DISALLOWED AUDI CAR 2805000 420750 420750 0 BMW CAR-X6 6632998 994950 0 994950 BMW CAR-Z4 6043135 906470 0 906470 MERCEDES BENZ 4467114 670067 0 670067 POLO CAR 836577 62743 62743 0 TOTAL 3054980 483493 2571487 5.2. ACCORDINGLY, THE DEPRECIATION ON TWO MOTOR CARS, TOTALING TO RS.4,83,493/-IS ALLOWED AND THE REMAINING CLAIM OF RS.25,71,487/- IS HEREBY DISALLOWED. [DISALLOWANCE OF RS.25,71,487/-] 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER AND OBSERVED AS FOLLOWS :- 5.1. ALL THE GROUNDS OF APPEAL ARE INTERLINKED AND RELATED TO DISALLOWANCE OF DEPRECIATION, INSURANCE AND PETROL & DIESEL EXPE NSES OF RS.25,71,487/-, RS.1,08,805/- AND RS.5,19,732/- RESPECTIVELY PERTAI NING TO THREE (3) CARS. 5.2 DURING THE ASSESSMENT PROCEEDINGS, THE AO OBSE RVED THAT THE APPELLANT HAD CLAIMED DEPRECIATION OF RS.30,97,619/ - ON FIVE (5) CARS. THE AO ASKED THE APPELLANT TO PRODUCE DOCUMENTARY EVIDE NCE TO SHOW THAT THE CARS WERE USED FOR THE PURPOSE OF BUSINESS. HOWEVER , THE APPELLANT FAILED TO PRODUCE ANY SUCH DOCUMENTARY EVIDENCES. THE AO OBSERVED THAT THE APPELLANT FAILED TO PRODUCE RECORD OF SUPERVISORY W ORK DONE FOR DOING ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 6 OF 8 WHICH THE CARS WERE PURPORTEDLY USED. INSTEAD OF PR ODUCING DOCUMENTARY EVIDENCE OF SUPERVISORY WORK, THE APPELLANT TRIED T O EXPLAIN THE PROVISIONS OF INCOME TAX ACT 1961 PERTAINING TO DEPRECIATION T O SHOW HOW THE CLAIM OF DEPRECIATION BY THE APPELLANT WAS JUSTIFIED. SINCE THE APPELLANT FAILED TO PRODUCE DOCUMENTARY EVIDENCE REGARDING USE OF CARS FOR SUPERVISORY/BUSINESS WORK, THE AO DISALLOWED DEPREC IATION OF RS.25,71,487/- ON THREE (3) CARS OUT OF DEPRECIATIO N CLAIMED ON FIVE(5) CARS. THE AO RELIED ON SEVERAL CASE LAWS TO ESTABLISH AS TO WHY DEPRECIATION CLAIMED BY THE APPELLANT CANNOT BE ALLOWED. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT SUB MITTED THAT BUSINESS OF THE FIRM SUBSTANTIALLY INCREASED DURING YEAR UNDER CONSIDERATION REFLECTED BY INCREASE IN GROSS RECEIP T FROM RS13.34 LAKHS IN THE IMMEDIATELY PRECEDING YEAR TO RS.3 CORERS IN TH E YEAR CONSIDERATION. THIS HAS BEEN MADE POSSIBLE BY EFFORTS OF THE PARTN ERS WHO USED THE CARS FOR THE PURPOSE OF THE BUSINESS OF THE FIRM. THE AP PELLANT FURTHER SUBMITTED THAT LOOKING AT THE STATUS OF THE PARTNERS IN THE R EAL ESTATE BUSINESS, THE NATURE OF THE WORK EXECUTED AND THE CUSTOMERS AND A UTHORITIES WITH WHOM BUSINESS DEALS WERE TO BE NEGOTIATED, IT WAS BUSINE SS EXPEDIENCY THAT THE PARTNERS AND THE STAFF OF THE FIRM MOVED IN PRESTIG IOUS VEHICLES. HOWEVER, NO DETAILS OR RECORD OF BUSINESS ACTIVITIES CARRIED OUT BY THE PARTNERS AND THE STAFF USING THE CARS WAS PRODUCED. NO DOCUMENTA RY EVIDENCE WAS PRODUCED SHOWING RECORD OF USAGE OF CAR BY THE PART NERS OR STAFF FOR CARRYING OUT ACTIVITIES. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE OP INION THAT THE AO WAS JUSTIFIED IN DISALLOWING DEPRECIATION OF RS.25, 71,487/- CLAIMED ON TWO(2) BMW AND ONE(1) MERCEDES BENZ CAR OUT OF TOTAL DEPRE CIATION RS.30,54,980/- CLAIMED ON FIVE (5) CARS. THE AO WHILE DISALLOWING DEPRECIATION HAS RELIED ON THE FOLLOWING JUDGMENTS TO EMPHASIZE THAT THREE BASIC CONDITIONS OF OWNERSHIP, USE FOR THE PURPOSE OF BUSINESS AND USE DURING THE RELEVANT PREVIOUS YEAR ARE PARAMOUNT FOR CLAIMING DEPRECIATI ON:- - HON'BLE ITAT, JODHPUR BENCH IN SUSHIL KUMAR JALAN I VS. ACIT, CIRCLE- 1, JODHPUR. - HON'BLE ITAT, MUMBAI BENCH 'A' IN ACIT (OSD) RANG E-3(3), MUMBAI VS. RISHIROOP POLYMERS PVT. LTD. - HON'BLE CALCUTTA HIGH COURT IN CIT VS. ORIENTAL C OOL CO. LTD. (1994) 206 ITR 682. I AM INCLINED TO AGREE WITH THE AO THAT THE RATIO O F JUDGMENTS IN ABOVE CASES ARE APPLICABLE TO THE CASE OF THE APPEL LANT. IN ALL THE ABOVE JUDGMENTS, IT HAS BEEN LAID DOWN THAT TO CLAIM DEPR ECIATION THE ASSETS MUST BE OWNED BY THE ASSESSEE, AND MUST BE USED FOR THE PURPOSE OF THE BUSINESS. THE APPELLANT IN THE PRESENT CASE HAS FAI LED TO PROVE THAT THREE (3) CARS ON WHICH AO DISALLOWED DEPRECIATION, WERE USED FOR THE PURPOSE OF BUSINESS. IN VIEW OF THIS I HOLD THAT THE AO WAS J USTIFIED IN DISALLOWING DEPRECIATION OF RS.25,71,487/-. THE ADDITION OF RS .25,71,487/- IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 7 OF 8 5.3 THE AO ALSO DISALLOWED INSURANCE EXPENSE OF RS. 1,08,805/- CLAIMED ON ONE OF THE BMW CARS ON WHICH DEPRECIATION WAS DI SALLOWED. AS DISCUSSED IN DETAIL IN PARA 5.1 ABOVE, IT IS CLEAR THAT THIS CAR WAS NOT USED FOR THE PURPOSE OF THE BUSINESS DURING THE YEAR UND ER CONSIDERATION. HENCE, THE AO WAS JUSTIFIED IN DISALLOWING INSURANC E EXPENSE OF RS.1,08,805/-. 5.4 THE AO ALSO DISALLOWED 60% OF THE TOTAL EXPENDI TURE OF RS.5,19,732/- CLAIMED ON ACCOUNT OF CAR REPAIR AND PETROL & DIESE L. AS DISCUSSED IN DETAIL IN PARA 5.2 ABOVE, THE APPELLANT HAS FAILED TO PROV E THAT ALL THE CARS ON WHICH VARIOUS EXPENDITURES HAVE BEEN CLAIMED WERE U SED FOR THE PURPOSE OF BUSINESS. IN VIEW OF THIS I HOLD THAT THE AO WA S JUSTIFIED IN DISALLOWING EXPENDITURE OF RS.3,11,840/- OUT OF CAR REPAIR AND PETROL & DIESEL EXPENDITURE PERTAINING TO THREE(3) CARS ON WHICH DE PRECIATION HAS BEEN DISALLOWED. THE ADDITION OF RS.3,11,840/- IS CONFIR MED. THIS GROUND OF APPEAL IS DISMISSED. 5. WE SEE NO REASONS TO INTERFERE IN THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE NOTED THAT THERE ARE ONLY TWO PARTNERS AND THERE AR E 5 CARS ON WHICH DEPRECIATION IS CLAIMED. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THESE CARS HAVE BEEN USED BY THE EMPLOYEES HANDLING CUSTOMER RELATIONS, BY THE SUPER VISOR AND BY THE TELEPHONE OPERATOR, THIS STORY IS HARD TO BE BELIEVED. IT IS IMPORTANT TO BEAR IN MIND THE FACT THAT THE CARS ON WHICH DEPRECIATION IS CLAIMED ARE LUXURY CA RS NAMELY AUDI, BMW-X6, BMW-Z4, MERCEDES BENZ AND POLO CARS AND THE PERSONS WHO ARE SAID TO HAVE BEEN USED THE CARS ARE LOW PAID EMPLOYEES OF THE COMPANY. IT IS PREPOSTEROUS TO SUGGEST THAT THESE LOW PAID EMPLOYEES WERE ALLOWED TO USE LUXURY CARS. WE DECLINE TO ACCEPT THIS EXPLANATION. ONCE IT IS NOT IN DISPUTE THAT THE CA RS ARE NOT USED IN BUSINESS, IN OUR CONSIDERED VIEW THERE IS NO OCCASION THE DEPRECIATI ON CAN BE ALLOWED ON THE SAME. IN VIEW OF THIS DISCUSSION AND BEARING IN MIND ENTIRET Y OF THE CASE, WE APPROVE AND AFFIRM THE WELL REASONED CONCLUSIONS ARRIVED AT BY THE AUT HORITIES BELOW AND DECLINE TO INTERFERE IN THE MATTER. 6. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON THE 27 TH SEPTEMBER, 2018. SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEM BER) DATED: 27 TH SEPTEMBER, 2018 PBN/* ITA NO.414/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 8 OF 8 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD