BEEKAY TEX, MUMBAI V. ADDL CIT 20(1), MUMBAI

ITA 5118/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56158 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Keywords: Question of law; Deemed dividend
• Section: 2(22)(e); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI PRAMOD KUMAR (A.M) ITA NO.5118/MUM/2010(A.Y. 2006-07) M/S. BEEKAY TEX, 105, KANCHAN INDUSTRIAL ESTATE, SAKI NAKA, MUMBAI 400 093 PAN:AAAFB 1733F (APPELLANT) VS. THE ADDL. CIT, RANGE 20(1), MUMBAI. (RESPONDENT) APPELLANT BY : SHRI VIPUL JOSHI RESPONDENT BY : SHRI P.C.MAURYA DATE OF HEARING : 20/12/2011 DATE OF PRONOUNCEMENT : /12/2011 ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 17/3/2010 OF CIT(A) 31, MUMBAI RELATING TO ASSESSMENT YEAR 20 06-07. GROUND NO.1.1 TO 1.3 READ AS FOLLOWS: 1.1 THE COMMISSIONER OF INCOME TAX 31 [THE CI T (A)) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER [TH E A.O.) WHEREBY THE A.O. TREATED THE LOAN OF RS. 10,15,751/- TAKEN FRO M ANISH SYNTHETICS P. LTD. AS DEEMED. DIVIDEND U/S. 2 (22) (E) OF THE INCOME TAX ACT, 1961 (THE ACT). 1.2 WHILE DOING SO, THE A.O. FAILED TO APPRECIATE T HAT ON FACTS OF THE APPELLANT CASE, THE PROVISIONS OF SECTION 2 (22) ( E) OF THE ACT WERE NOT ATTRACTED. 1.3 IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, AND IN LAW, NO SUCH ACTION WAS CALLED FOR. ITA NO.5118/MUM/2010(A.Y. 2006-07) 2 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF MANUFACTURING AND DEALING TEXTILE AND FABRICS. TH ERE WERE FOUR PARTNERS IN THE ASSESSEE FIRM, VIZ., MR. L.K.BHANDARI, MR. RAJE EV BHANDARI, MR. RAMAN BHANDARI AND MRS. RAMA BHANDARI. THE ASSESSEE HAD TAKEN A LOAN OF RS.10,15,751/- FROM M/S.ANISH SYNTHETICS (P) LTD., IN WHICH PARTNERS OF THE ASSESSEE VIZ. MR. L.K.BHANDARI, MR. RAJEEV BHANDARI AND MR. RAMAN BHANDARI HAD SUBSTANTIAL INTEREST I.E. HAVING 25 % SHAREHOLDING BY EACH PARTNER. THE SURPLUS OR ACCUMULATED PROFITS OF IN T HE HANDS OF M/S.ANISH SYNTHETICS (P) LTD AS ON 01.04.1996 WAS MORE THAN T HE LOAN TAKEN OR ACCEPTED BY THE ASSESSEE. BESIDES, M/S. ANISH SYNTH ETICS (P) LTD IS A CONCERN IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTER ESTED. THE SHARE HOLDING PATTERN OF THE COMPANY AS ON 1.4.2006 IS AS UNDER : - I. MR. L.K. BHANDARI 34% II. MR. RAJEEV BHANDARI 33% III MR. RAMAN BHANDARI 33% THE PROVISION OF SECTION 2(22)(E) OF THE ACT AS APP LICABLE FOR THE RELEVANT ASSESSMENT YEAR TREATED THE FOLLOWING RECEIPT AS DE EMED DIVIDEND AND THOSE PROVISIONS READ AS UNDER :- (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WH ETHER AS REPRESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE)( MADE AFTER THE 31 ST DAY OF MAY,1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL O WNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND W HETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR IN WHICH SUCH SHAREHOL DER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTERES T (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID ,/ CONCERN)J OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS ITA NO.5118/MUM/2010(A.Y. 2006-07) 3 THE AO, THEREFORE, TREATED THE SUM OF RS. 10,15,751 /- AS DEEMED DIVIDEND AND BROUGHT THE SAME TO TAX IN THE HANDS OF THE ASS ESSEE. ON APPEAL BY THE ASSESSEE THE CIT(A) UPHELD THE ORDER OF THE AO GIVI NG RISE TO GROUND NO.1.1 TO 1.3 BY THE ASSESSEE BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING IT WAS SUBMITTED THAT THE SPECIAL BENCH OF THE ITAT IN THE CASE OF ACIT VS. BHAUMIK COLOUR (P). LT D. 118 ITD PG.1 (MUM) (SB) HAS HELD THAT DEEMED DIVIDEND CAN BE TAXED ONL Y IN THE HANDS OF A PERSON WHO IS A REGISTERED AND BENEFICIAL SHAREHOLD ER OF THE SHARES IN A COMPANY. IT WAS FURTHER SUBMITTED THAT THE SPECIAL BENCH IN THE AFORESAID CASE HAS ALSO CONSIDERED THE QUESTION OF TAXABILITY OF LOANS AND ADVANCES GIVEN TO A CONCERN BY A COMPANY WHERE THE CONCERN T O WHICH THE LOAN IS GIVEN BY THE COMPANY IS NOT A SHAREHOLDER BUT THERE IS A COMMON PERSON WHO HAS SUBSTANTIAL INTEREST IN THE CONCERNS AS WEL L AS COMPANY. EVEN IN SUCH CASE THE SPECIAL BENCH HAS TAKEN A VIEW THAT T HE LOAN OR ADVANCES CAN BE TAXED ONLY IN THE HANDS OF THE SHAREHOLDER (WHO HAS SUBSTANTIAL INTEREST IN THE CONCERN AS WELL AS IN THE COMPANY) AND NOT I N THE HANDS OF THE CONCERN AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) O F THE INCOME TAX ACT, 1961 (THE ACT). IT WAS THE ARGUMENT OF THE LD. COU NSEL FOR THE ASSESSEE THAT IN THE PRESENT CASE SINCE ONLY THREE OF THE FOUR PA RTNERS OF THE ASSESSEE HELD SHARES IN M/S. ANISH SYNTHETIC PVT. LTD. IN THEIR I NDIVIDUAL CAPACITY AND NOT ON BEHALF OF THE FIRM. THE CONDITION THAT THE ASSE SSEE IS NOT THE REGISTERED AND BENEFICIAL SHAREHOLDER IS NOT SATISFIED AND, TH EREFORE, THE AMOUNT IN QUESTION CANNOT BE TAXED AS DEEMED DIVIDEND. IT WA S FURTHER SUBMITTED THAT DEEMED DIVIDEND CANNOT BE TAXED IN THE HANDS OF THE PERSON WHO IS NOT A SHAREHOLDER OF THE LENDER COMPANY AS LAID DOWN BY T HE SPECIAL BENCH IN THE DECISION REFERRED TO ABOVE. IT WAS ALSO SUBMITTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. UNIVERSAL MEDICAR E PVT. LTD., 324 ITR ITA NO.5118/MUM/2010(A.Y. 2006-07) 4 263(BOM) HAS ALSO TAKEN A VIEW THAT DEEMED DIVIDEND IS ASSESSABLE ONLY IN THE HANDS OF THE SHARE HOLDER. FURTHER RELIANCE WA S PLACED ON THE DECISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HOTEL HILL TOP, 217 CTR 527(RAJ). THE FACTS OF THE CASE BEFORE THE HONBLE COURT WERE AS FOLLOWS. THE ASSESSEE WAS ONE M/S.HOTEL HILLTOP A PARTNERSHIP FI RM. THIS FIRM RECEIVED AN ADVANCE OF RS.10 LACS FROM A COMPANY M/S.HILLTOP PALACE HOTESLS (P) LTD. THE SHAREHOLDING PATTERN OF M/S.HILLLTOP PALACE HOT ELS (P) LTD., WAS AS FOLLOWS: 1. SHRI ROOP KUMAR KHURANA : 23.33% 2. SMT.SAROJ KHURANA : 4.67% 3. VIKAS KHURANA : 22% 4. DESHBANDHU KHURANA: 25% 5. SHRI.RAJIV KHURANA : 25% THE CONSTITUTION OF THE FIRM HOTEL HILL TOP WAS AS FOLLOWS: 1. SHRI ROOP KUMAR KHURANA: 45% 2. SHRI.DESHBANDHU KHURANA: 55% THE AO ASSESSED THE SUM OF RS.10 LACS AS DEEMED DIV IDEND U/S.2(22)(E) OF THE ACT IN THE HANDS OF THE FIRM BECAUSE THE TWO PA RTNERS OF M/S.HOTEL HILL TOP WERE HOLDING SHARES BY WHICH THEY HAD 10% VOTIN G POWER IN M/S.HILL TOP PALACE HOTESL (P) LTD. THEY WERE ALSO ENTITLED TO 20% OF THE INCOME OF THE FIRM M/S.HOTEL HILL TOP. THEREFORE THE LOAN BY M/S .HILL TOP PALACE HOTELS (P) LTD. TO THE FIRM M/S.HOTEL HILL TOP WAS TREATED AS DEEMED DIVIDEND IN THE HANDS OF M/S.HOTEL HILL TOP, THE FIRM UNDER THE SEC OND LIMB OF SEC.2(22)(E) OF THE ACT. THE CIT(A) HELD THAT SINCE THE FIRM W AS NOT THE SHAREHOLDER OF THE COMPANY THE ASSESSMENT AS DEEMED DIVIDEND IN TH E HANDS OF THE FIRM WAS NOT CORRECT. THE ORDER OF THE CIT(A) WAS CONFI RMED BY THE TRIBUNAL. ON REVENUES APPEAL BEFORE THE HONBLE HIGH COURT, THE FOLLOWING QUESTION OF LAW WAS FRAMED FOR CONSIDERATION. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LEARNED TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE ORDER OF LEARNED ITA NO.5118/MUM/2010(A.Y. 2006-07) 5 CIT(A) DELETING THE ADDITION OF RS.10 LACS AS DEEME D DIVIDEND UNDER SECTION 2(22)(E) OF THE IT ACT? THE HONBLE COURT HELD AS FOLLOWS: THE IMPORTANT ASPECT, BEING THE REQUIREMENT OF SEC TION 2(22)(E) IS, THAT THE PAYMENT MAY BE MADE TO ANY CONCERN, IN WH ICH SUCH SHAREHOLDER IS A MEMBER, OR THE PARTNER, AND IN WHI CH HE HAS SUBSTANTIAL INTEREST, OR ANY PAYMENT BY ANY SUCH CO MPANY, ON BEHALF OR FOR THE INDIVIDUAL BENEFIT OF ANY SUCH SHAREHOLD ER . THUS, THE SUBSTANCE OF THE REQUIREMENT IS THAT THE PAYMENT SH OULD BE MADE ON BEHALF OF OR FOR THE INDIVIDUAL BENEFIT OF ANY SUCH SHAREHOLDER, OBVIOUSLY, THE PROVISION IS INTENDED TO ATTRACT THE LIABILITY OF TAX ON THE PERSON, ON WHOSE BEHALF, OR FOR WHOSE INDIVIDUAL BE NEFIT, THE AMOUNT IS PAD BY THE COMPANY, WHETHER TO THE SHAREHOLDER, OR TO THE CONCERNED FIRM. IN WHICH EVENT, IT WOULD FALL WITHIN THE EXPR ESSION DEEMED DIVIDEND. OBVIOUSLY, INCOME FROM DIVIDEND, IS TAXA BLE AS INCOME FROM THE OTHER SOURCES UNDER SECTION 56, AND IN THE VERY NATURE OF THINGS THE INCOME HAS TO BE OF THE PERSON EARNING THE INCO ME. THE ASSESSEE IN THE PRESENT CASE IS NOT SHOWN TO BE ONE OF THE P ERSONS, BEING SHAREHOLDER. OF COURSE, THE TWO INDIVIDUALS BEING R AND D. ARE THE COMMON PERSONS, HOLDING MORE THAN REQUISITE AMOUNT OF SHAREHOLDING AND ARE HAVING REQUISITE INTEREST, IN THE FIRM, BUT THEN, THEREBY THE DEEMED DIVIDEND WOULD NOT BE DEEMED DIVIDEND IN THE HANDS OF THE FIRM, RATHER IT WOULD OBVIOUSLY BE DEEMED DIVIDEND IN THE HANDS OF THE INDIVIDUALS, ON WHOSE BEHALF, OR ON WHOSE INDIVIDUA L BENEFIT, BEING SUCH SHAREHOLDER, THE AMOUNT IS PAID BY THE COMPANY TO THE CONCERN. THUS, THE SIGNIFICANT REQUIREMENT OF SECTION 2(22)( E) IS NOT SHOWN TO EXIST. THE LIABILITY OF TAX, AS DEEMED DIVIDED, COU LD BE ATTRACTED IN THE HANDS OF THE INDIVIDUALS, BEING THE SHAREHOLDERS, A ND NOT IN THE HANDS OF THE FIRM. IT WAS ARGUED THAT THE AFORESAID DECISION OF THE HO NBLE RAJASTHAN HIGH COURT HOLDING THAT DEEMED DIVIDEND CAN BE ASSESSED ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY A ND NOT IN THE HANDS OF A PERSON OTHER THAN A SHAREHOLDER WILL SQUARELY APPLY TO THE FACTS OF THE PRESENT CASE BEFORE THE TRIBUNAL. ITA NO.5118/MUM/2010(A.Y. 2006-07) 6 4. THE LD. D.R HOWEVER RELIED ON THE DECISION OF TH E HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NATIONAL TRAVEL SERVIC ES, ITA NO.223/DEL/2010 ORDER DATED 11/7/11. THE FACTS OF THE CASE BEFORE THE HONBLE DELHI HIGH COURT WERE AS FOLLOWS: THE ASSESSEE WAS A PARTNERS HIP FIRM CONSISTING OF THREE PARTNERS BEING NARESH GOYAL, SURINDER GOYAL A ND JET ENTERPRISES PVT. LTD. THE ASSESSEE WAS THE BENEFICIAL OWNER OF 48. 18% OF THE SHARE CAPITAL OF JETAIR PVT. LTD WHICH WERE HELD IN THE NAME OF I TS PARTNERS NARESH GOYAL AND SURINDER GOYAL. THE ASSESSEE TOOK A LOAN OF RS. 28.52 CRORES FROM JETAIR PVT. LTD. THE AO HELD THAT THE SAID LOAN WAS ASSESS ABLE AS DEEMED DIVIDEND U/S 2(22)(E) IN THE HANDS OF THE ASSESSEE WHICH WAS REVERSED BY THE TRIBUNAL. BEFORE THE HIGH COURT, THE ASSESSEE A RGUED, RELYING ON ANKITECH PVT. LTD , UNIVERSAL MEDICARE 324 ITR 363 (BOM) AND BHAUMIK COLOUR 118 ITD 1 (MUM) (SB), THAT S. 2(22) COULD ONLY APP LY IN THE HANDS OF THE SHAREHOLDER AND AS THE ASSESSEE WAS NOT A SH AREHOLDER (ITS PARTNERS WERE), S. 2(22)(E) COULD NOT APPLY. THE HONBLE D ELHI HIGH COURT HELD REJECTING THE ASSESSEES PLEA, THAT THE FIRST LIMB OF S. 2(22)(E) IS ATTRACTED IF THE PAYMENT IS MADE BY A COMPANY BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL O WNER OF SHARES. WHILE IT IS CORRECT THAT THE PERSON TO WHOM THE PAYMENT IS M ADE SHOULD NOT ONLY BE A REGISTERED SHAREHOLDER BUT A BENEFICIAL S HARE HOLDER, THE ARGUMENT THAT A FIRM CANNOT BE TREATED AS A SHAREH OLDER ONLY BECAUSE THE SHARES ARE HELD IN THE NAMES OF ITS PARTNERS IS NOT ACCEPTABLE . IF THIS CONTENTION IS ACCEPTED, IN NO CASE A PARTNERSHIP FI RM CAN COME WITHIN THE MISCHIEF OF S. 2 (22)(E) BECAUSE THE SHARES WOU LD ALWAYS BE HELD IN THE NAMES OF THE PARTNERS AND NEVER IN THE NAME OF THE FIRM . THIS WOULD FRUSTRATE THE OBJECT OF S. 2(22)(E) AND LEAD TO ABS URD RESULTS. ACCORDINGLY, FOR S. 2(22)(E), A FIRM HAS TO BE TREATED AS THE SHARE HOLDER EVEN THOUGH IT IS NOT THE REGISTERED SHAREHOLDER . ITA NO.5118/MUM/2010(A.Y. 2006-07) 7 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION. IN OUR VIEW THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BHAUMIK COLOUR LTD .(SUPRA) WOULD APPLY TO THE FACTS OF THE PRESENT CASE. ADMITTEDLY THE ASSE SSEE FIRM WAS NOT A REGISTERED OR BENEFICIAL SHAREHOLDER IN M/S. ANISH SYNTHETICS PVT. LTD.. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE THREE PARTN ERS HELD SHARES IN M/S. ANISH SYNTHETIC PVT. LTD. FOR AND ON BEHALF OF THE FIRM. IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT THE FUNDS FOR PURCHASE OF TH E SHARES BY THE PARTNERS WERE PROVIDED BY THE FIRM. IN SUCH CIRCUMSTANCES W E ARE OF THE VIEW THAT THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF NATIONAL TRAVEL SERVICES WOULD NOT BE APPLICABLE. THE FACTS AS NOT ICED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF NATIONAL TRAVEL SERVICES WOULD NOT BE APPLICABLE. THE FACTS AS NOTICED BY THE HONBLE DELHI HIGH COUR T IN THE CASE OF NATIONAL TRAVEL SERVICES WERE AS FOLLOWS: 7. THE RESPONDENT/ASSESSEE IS A PARTNERSHIP FIRM C ONSISTING OF THREE PARTNERS NAMELY MR. NARESH GOYAL, MR. SURINDER GOYA L AND M/S JET ENTERPRISES PVT. LTD. HAVING PROFIT SHARING RATIO O F 35%, 15% AND 50% RESPECTIVELY. THE ASSESSEE FIRM HAD TAKEN A LOAN OF ` 28,52,41,516/- FROM M/S JETAIR PVT. LTD. NEW DELHI. IN THIS COMPANY THE ASSESSEE HAS INVESTED BY SUBSCRIBING TO THE EQUITY SHARE NUM BERING 1,43,980 OF ` 100 EACH WHICH CONSTITUTE 48.18%. HOW EVER, THE SHARES WERE PURCHASED IN THE NAME OF THE TWO PARTNE RS NAMELY MR. NARESH GOYAL AND MR. SURINDER GOYAL. THUS, WHEREAS, MR. NARESH GOYAL AND MR. SURINDER GOYAL ARE THE RESPECT IVE SHARE HOLDERS, THE ASSESSEE IS THE BENEFICIAL SHARE HOLDER. ON THE SE FACTS, IN THIS APPEAL WE ARE CONCERNED WITH THE FIRST LIMB [IN CON TRADICTION TO SECOND LIMB THAT FELL FOR INTERPRETATION IN ANKITECH (SUPR A)] AND ARE CALLED UPON TO EXAMINE AS TO WHETHER THIS FIRST LIMB OF SE CTION 2(22)(E) OF THE ACT HAS BEEN SATISFIED. WE SHOULD POINT OUT AT THE OUTSET THAT IT IS AN ADMITTED POSITION THAT ALL OTHER CONDITIONS STIPULA TED IN SECTION 2(22)(E) OF THE ACT ARE FULFILLED. THE EXTENT OF SHARE HOLDING IS ALSO SO HIGH THAT THE ASSESSEE HAS INDUBITABLY SUBSTANTIAL INTEREST IN JETAIR PVT. LTD. (UNDERLINING BY US FOR EMPHASIS) AS WE HAVE ALREADY SEEN THE FACTS OF THE ASSESSEES CASE ARE DIFFERENT. WE ALSO FIND THAT THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO CASE DECIDED BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF HOTEL HILL TOP (SUPRA). IN THE CIRCUMSTANCES FOLLOWING THE DECISION OF THE SPE CIAL BENCH OF ITAT AND ITA NO.5118/MUM/2010(A.Y. 2006-07) 8 HONBLE RAJASTHAN HIGH COURT REFERRED TO ABOVE, WE HOLD THAT THE AMOUNT IN QUESTION CANNOT BE ASSESSED IN THE HANDS OF THE ASS ESSEE AS THE ASSESSEE WAS NOT THE REGISTERED OR BENEFICIAL HOLDER OF SHAR ES IN M/S. ANISH SYNTHETICS PVT. LTD. 6. GROUND NO.2.1, 2.2 3.1 AND 3.2 READ AS FOLLOW S: 2.1 THE A.O. ERRED IN MAKING AD HOC DISALLOWANCE O F RS. 20,000/- OUT OF TELEPHONE EXPENSES OF RS. 2, 56,666/- INCURRED B Y THE APPELLANT. 2.2 IT. IS SUBMITTED THAT IN THE FACTS AND CIRCUMST ANCES OF THE CASE, AND IN LAW, NO SUCH DISALLOWANCE WAS CALLED FOR. 3.1 THE A.O. ERRED IN MAKING AD HOC DISALLOWANCE OF RS. 30,588/- BEING 10% OUT OF THE MOTORCAR EXPENSES AND DEPRECIA TION CLAIMED BY THE APPELLANT. 3.2 IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, AND IN LAW, NO SUCH DISALLOWANCE WASH CALLED FOR. 7. THE DISALLOWANCE CHALLENGED IN THE AFORESAID GR OUNDS WERE MADE FOR THE REASON THAT THE PERSONAL USE OF THE TELEPHONE AND MOTOR VEHICLES BY THE VARIOUS PARTNERS AND FAMILY MEMBERS WERE NOT DISPU TED AND THAT NO DETAILS WERE MAINTAINED REGARDING USE OF THESE FACILITIES W HOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE DISALLOWANCE IS REASONABLE AND CA LLS FOR NO INTERFERENCE. CONSEQUENTLY THESE GROUND ARE DISMISSED. 8. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23 RD DAY OF DEC. 2011. SD/- SD/- (PRAMOD KUMAR ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 23 RD DEC.2011 ITA NO.5118/MUM/2010(A.Y. 2006-07) 9 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RB BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.5118/MUM/2010(A.Y. 2006-07) 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 20/12/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21/12/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER