THINGNA & CONTRACTOR, MUMBAI V. ITO WD 11(3)(4),

ITA 5349/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7789 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 25-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR SINGH
• Assessee Lawyers: D B SHAH PARTNER
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M.JAGTAP, AM & SMT. P.MADHAVI DEVI, JM I.T.A.NO.5349/MUM/2008 - A.Y 2005-06 THINGNA & CONTRACTOR G-3, T.V.INDUSTRIAL ESTATE 248/A, S.K.AHIRE MARG, WORLI MUMBAI 400 030 PAN NO. AAAFT1050D VS. INCOME TAX OFFICER WARD 11 (3)(4) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.B.SHAH (PARTNER) REVENUE BY : SHRI ANIL KUMAR SINGH. O R D E R PER P.MADHAVI DEVI, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST CI T(A)S ORDER DATED 18-6-2008. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L IS THAT THE CIT[A] HAS ERRED IN CONFIRMING ADHOC DISALLOWANCES MADE BY THE AO OUT OF TELEPHONE EXPENSES, CAR EXPENSES AND DEPRECI ATION ON CAR, BY HOLDING THAT THE ASSESSEE HAS FAILED TO DEMONSTRATE THAT IT WAS MAINTAINING ANY VERIFIABLE RECORD SEGREGATING PERSO NAL AND PROFESSIONAL USER OF THE VEHICLES OR TELEPHONES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PARTNERSHIP FIRM. IT FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9,18,230/-. DURING THE ASSESSMENT PROCEEDINGS U/ S.143(3), AO PERUSED DETAILS OF THE EXPENSES CLAIMED BY THE ASS ESSEE AND NOTICED THAT IN RESPECT OF TELEPHONE/TELEX AND CAR EXPENSES POSSIBILITY OF 2 PERSONAL USES CANNOT BE RULED OUT. HE, THEREFORE, D ISALLOWED 10% OF THE TELEPHONE EXPENSES AND 15% OF THE CAR EXPENSES AND DEPRECIATION ON CAR. THE TOTAL DISALLOWANCE WAS OF RS.1,07,378/- . 4. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE C IT[A] STATING THAT THE ASSESSEE HAS PROVIDED ALL THE DETAILS AND EVIDENCES OF EXPENSES INCURRED, WHICH CLEARLY SUPPORTED THE ACTU AL EXPENDITURE INCURRED ON TELEPHONE AND THAT IT IS INCURRED ONLY IN RESPECT OF THE LANDLINES INSTALLED AT THE OFFICE PREMISES AND RESI DENCE OF THE PARTNERS. IT WAS FURTHER SUBMITTED THAT THE PARTNERS WERE MAK ING OFFICIAL CALLS FROM THEIR RESIDENCE FOR WHICH NO COST IS CHARGED T O THE PROFITS. AS REGARDS THE DISALLOWANCE ON ACCOUNT OF CAR EXPENSES AND DEPRECIATION ON CAR, IT WAS SUBMITTED THAT THE DISALLOWANCE IS M ADE ON MERE ASSUMPTION THAT THERE IS POSSIBILITY OF PERSONAL US E BUT ACTUALLY THE CAR HAS BEEN USED MAINLY FOR THE PURPOSE OF BUSINESS ON LY AND THE EXPENDITURE ON THE PERSONAL USE IS NOT CHARGED TO T HE ACCOUNTS. THUS, ACCORDING TO THE ASSESSEE, ALL THE EXPENDITURE WAS FOR THE PURPOSE OF BUSINESS AND THEREFORE NOT DISALLOWABLE. HE HAS ALS O PLACED RELIANCE UPON THE DECISION OF THE HON'BLE SUPREME COURT IN T HE CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT REPORTED IN 26 ITR 775. THE CIT[A] HOWEVER DISMISSED THE APPEAL, HOLDING THAT THE ASSESSEE IS NOT MAINTAINING ANY LOG BOOK NOR HE IS ABLE TO DEMONSTR ATE THAT IT IS FOR THE PURPOSE OF BUSINESS AND SOME ELEMENT OF PERSONA L USER OF THE SAME CANNOT BE RULED OUT. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US. 3 5. SHRI D.B.SHAH, PARTNER OF THE ASSESSEE FIRM APPE ARED BEFORE US AND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTH ORITIES BELOW AND ALSO PLACED RELIANCE ON THE DECISIONS OF THE SUPREM E COURT IN THE CASES OF LALCHAND BHAGAT AMBIKA RAM VS. CIT, BIHAR AND OR ISSA 37 ITR 288 AND DHAKESWARI COTTON MILLS LTD. CITED SUPRA. 6. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE MATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY THE A SSESSEE IS NEITHER MAINTAINING ANY CALL REGISTER FOR RECORDING THE TEL EPHONE CALLS, NOR IS IT MAINTAINING ANY LOG BOOK FOR RECORDING THE CAR EXPE NSES. THE ONUS IS ON THE ASSESSEE TO PROVE THAT ALL THE EXPENSES CLAI MED BY IT ARE FOR THE PURPOSE OF ITS BUSINESS AND IN THE ABSENCE OF THE S AME, AO IS JUSTIFIED IN MAKING THE ADHOC DISALLOWANCE FOR THE PERSONAL U SE OF THE TELEPHONE AND CAR BY THE PARTNERS OF THE ASSESSEE FIRM. IN VI EW OF THE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER O F THE CIT[A] AND THE ASSESSEES GROUND OF APPEAL IS REJECTED. 8. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 11TH DAY OF FEBRUARY, 2010 . SD/- SD/- (P.M.JAGTAP) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI:11 TH FEBRUARY, 2010. P/-* 4 COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY /ASST.REGISTRAR,ITAT MUMBAI. SR.NO. PARTICULARS DATE INITIALS 1 DRAFT DICTATED ON 2-2-10 P 2 DRAFT PLACED BEFORE AUTHOR 3-2-10 P 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO SR.PS/PS 6 ORDER KEPT FOR PRONOUNCEMENT 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER