DR BHAVESH J. VORA, MUMBAI V. ITO 11(2)(2), MUMBAI

ITA 474/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71541 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 29-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 18-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: M M MEHTA
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.474/M/2011 ( / ASSESSMENT YEAR: 2006 - 2007 ) DR. BHAVESH J. VORA, FLAT NO. 5, A WING, BHAVESHWAR MANISON, LT. DILIP GUPTE MARG, MAHIM, MUMBAI 400 016. / VS. ITO - 11(2)(2), MUMBAI. ./ PAN : ABNPV 0722 G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M.M. MEHTA, / RESPONDENT BY : SHRI VIRENDRA OJHA, DR / DATE OF HEARING : 29.10.2013 / DATE OF PRONOUNCEMENT : 29.10.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 18.1.2011 IS AGAINST THE ORDER OF THE CIT (A) - 3, MUMBAI DATED 8.11.2010 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 61,482/ - BEING 20%OF THE AMOUNT OF MOTOR CAR EXPENSES OF RS. 3,07,413/ - INCLUDING INSURANCE PREMIUM OF RS. 10,504/ - RELATING TO MOTOR CA R AND INTEREST ON CAR LOAN RS. 46,909/ - INSTEAD OF 1/7TH OF THE MOTOR EXPENSES OF RS. 2,50,000/ - EXCLUDING INSURANCE PREMIUM RELATING TO MOTOR CAR AND INTEREST ON CAR LOAN AS PER THE SUBMISSIONS MADE TO THE LD CIT (A). 2. IN ANY EVENT, THE INSURANCE PREMIU M OF RS. 10,504/ - RELATING TO MOTOR CAR AND INTEREST OF RS. 46,909/ - ON CAR LOAN BEING STATUTORY DEDUCTIONS, THE LD CIT (A) OUGHT NOT TO HAVE CONFIRMED THE DISALLOWANCE OF 20% MADE THEREFROM. 3. UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 6,645/ - BEING 20% OF THE TELEPHONE EXPENSES OF RS. 33,226/ - OF THE TELEPHONE INSTALLED AT CONSULTING ROOM AT HOME AND OF THE MOBILE TELEPHONE. 4. IN ANY EVENT, UNDER THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE DISALLOWANCE OF 20% OF TELEPHONE EXPENSES ON AD - HOC BASIS BEING ARBITRARY AND EXCESSIVE, SUBSTANTIAL RELIEF BE GRANTED. 2 5. UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 590/ - BEING 20% OF THE AMOUNT OF DEPRECIATION OF RS. 2,951/ - CLAIMED ON MOBILE HANDSET U/S 32(1)(I) OF THE ACT. 6. IN ANY EVENT, THE CLA IM OF DEPRECIATION ON MOBILE HANDSET BEING STATUTORY DEDUCTION THE DISALLOWANCE BEING ARBITRARY AND EXCESSIVE, SUBSTANTIAL RELIEF BE GRANTED. 7. THE ORDER APPEALED FROM IS AGAINST THE WEIGHT OF EVIDENCE ON RECORD AD CONTRARY TO JUSTICE, EQUITY AND CON SC IEN CE. 3. AT THE OUTSET, SHRI M.M. MEHTA, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO GROUNDS NO.1 & 2 AND MENTIONED THAT THE ASSESSEE MADE A CLAIM OF EXPENDITURE AMOUNTING TO RS. 3,07,413/ - ON ACCOUNTS OF (I) RUNNING AND MAINTENANCE OF CAR MOTOR C AR EXPENSES; (II) INSURANCE AND (III) INTEREST ON MOTOR CAR LOAN AND MENTIONED THAT THE AO DISALLOWED 20% OF THE SAID EXPENDITURE AMOUNTING TO RS. 61,482/ - . IN THIS REGARD, LD COUNSEL STATED THAT THE AO HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITURE, H OWEVER, TOWARDS PERSONAL USE OF THE CAR BY THE ASSESSEE, THE AO MADE THE DISALLOWANCE. AS PER THE LD COUNSEL, THE DISALLOWANCE @ 20% OR 1/5TH IS ON HIGHER SIDE AND THE DISALLOWANCE SHOULD BE RESTRICTED TO 1/7TH OF THE EXPENDITURE OF RS. 2 .5 LACS ONLY I.E. , RUNNING AND MAINTENANCE EXPENSES, WHICH INCLUDES PETROL, DRIVER AND CLEANERS SALARY, REPAIR AND MAINTENANCE EXPENSES . THE PAYMENTS MADE TOWARDS THE INSURANCE AGENCY AND THE FINANCIAL INSTITUTIONS TOWARDS INTEREST ON CAR LOAN, NO DISALLOWANCE IS WARRAN TED. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE AO AND THE CIT (A). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE US. REGARDING EXCLUSION OF INSURANCE AND INTEREST PAYMENTS RELATING TO CAR, WE FIND, WHETHER PARTLY USED OR FULLY USED FOR BUSINESS PURPOSES, THESE EXPENSES HAVE TO BE INCURRED. THEREFORE, WE FIND MERIT IN THE ARGUMENT OF THE ASSESSEES COUNSEL. REGARDING PE RCENTAGE FOR DISALLOWANCE, WE FIND THERE IS NO MERIT IN THE ARGUMENT OF THE COUNSEL. ON HEARING BOTH THE SIDES, WE FIND MERIT IN THE ARGUMENTS OF THE LD COUNSEL. THEREFORE, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 1/5TH OF THE CLAIM UNDER RUNNING AND MAINTENANCE EXPENSES AMOUNTING TO RS. 2.5 LACS. ACCORDINGLY, GROUNDS NO.1 AND 2 OF THE APPEALS ARE PARTLY ALLOWED. 3 6. REFERRING TO GROUNDS NO.3 & 4, LD COUNSEL MENTIONED THAT THE SAID GROUNDS RELATE TO DISALLOWANCE OUT OF TELEPHONE EXPENSES. THE GROS S EXPENDITURE INCURRED BY THE ASSESSEE ON THIS ACCOUNT IS RS. 33,227/ - OF WHICH, THE MOBILE TELEPHONE EXPENDITURE WORKS OUT TO RS. 13,763/ - AND RESIDE NTIAL LANDLINE TELEPHONE EXPENDITURE IS KEPT AT RS. 14,871/ - . IT IS THE ARGUMENT OF THE LD COUNSEL THAT A LL THESE EXPENSES WERE INCURRED IN RELATION TO THE MEDICAL PROFESSION OF THE ASSESSEE AND THEREFORE, NO DISALLOWANCE IS CALLED FOR. WITHOUT PREJUDICE, ASSESSEE STATED THAT THE DISALLOWANCE 1/5TH IS ON HIGHER SIDE. AFTER HEARING THE LD DR IN THIS REGARD, W E ARE OF THE OPINION THAT MAKING DISALLOWANCE OUT OF TELEPHONE EXPENSES @ 1/5TH OF THE SAME IS FAIR AND REASONABLE AND THE DECISION OF THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE IN THIS REGARD. ACCORDINGLY, GROUNDS NO.3 AND 4 ARE DISMISSED. 7. GROUNDS NO.5 AND 6 RELATE TO CLAIM OF DEPRECIATION OF RS. 2,951/ - ON THE MOBILE TELEPHONE. THE CLAIM OF THE ASSESSEE BEFORE US IS THAT THE INSTRUMENT BEING A DEPRECIABLE ASSET AND USED FOR BUSINESS PURPOSES, THE SAME IS ENTITLED FOR DEPRECIATION U/S 32 OF THE AC T. ON PERUSAL OF THE RECORDS WE FIND THAT THERE IS NO FINDING OF THE FACT THAT THE INSTRUMENT IS NOT OWNED BY THE ASSESSEE AND NOT USED FOR PROFESSIONAL REASONS PARTLY OR FULLY. IN SUCH CIRCUMSTANCES, THE FINDING OF THE CIT (A) GIVEN IN PARA 2.1.2 IS NOT LEGALLY SUSTAINABLE. ACCORDINGLY, THIS PART OF THE GROUND RAISED BY THE ASSESEE IS ALLOWED. THE OTHER GROUNDS BEING GENERAL IN NATURE, DO NOT CALL FOR ANY SPECIFIC ADJUDICATION. ACCORDINGLY, GROUNDS NO.7 AND 8 ARE DISMISSED AS GENERAL. 8. IN THE RESULT , APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH OCTOBER, 2013. S D/ - S D / - (VIVEK VERMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 29.10 .2013 . . ./ OKK , SR. PS 4 / 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