ADVANCE BUSINESS FORMS, MUMBAI V. ITO WD 16(2)(4), MUMBAI

ITA 5628/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1418 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-07-2010
• Assessment Year: misc
• Appeal Filed On: 16-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: ASHWIN S CHHAG
• Keywords: Depreciation
• Section: 32; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI A L GEHLOT, AM ITA NO 5628/MUM/2009 (ASSESSMENT YEAR 2005-06) M/S ADVANCE BUSINESS FORMS, 35, HANUMAN SHARAN, BOMANJI PETIT ROAD, MUMBAI -400 036 PAN: AAAFA 3819 M VS. IT O 1 6 ( 2 ) - 4 , MUMBAI APPELLANT RESPONDENT APPELLANT BY : SHRI ASHWIN S CHHAG RESPONDENT BY : SHRI S K SINGH ORDER THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF TH E ORDER PASSED BY THE CIT (A)-XVI ON 31.7.2009 IN RELATION TO THE ASSESSMENT YEAR 2005-06. 2. FIRST GROUND IS IN RESPECT OF DISALLOWANCE OF RS 25 ,000/- OUT OF SALE PROMOTION, CONVEYANCE, OFFICE EXPENSES, STA FF WELFARE ETC. FOR WANT OF DETAIL, THE DISALLOWANCE MADE BY THE AS SESSING OFFICER WAS CONFIRMED BY THE CIT (A). 3. LEARNED AUTHORISED REPRESENTATIVES SUBMITTED THAT T HE ASSESSING OFFICER HAS ALREADY DISALLOWED RS 15,275/ - ON ACCOUNT OF PERSONAL EXPENSES IN COMPUTATION OF TOTAL INCOME. THE SAID SUO MOTU DISALLOWANCE BY THE ASSESSEE IS ON THE BASIS OF AUD ITORS REPORT U/S 44AB. THE LEARNED AUTHORISED REPRESENTA TIVE SUBMITTED THAT THE ASSESSING OFFICER HAS FURTHER DISALLOWED R S 25,000/- WITHOUT ANY BASIS. LEARNED DEPARTMENTAL REPRESENTA TIVE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE REVENUE A UTHORITIES. 4. I HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PAR TIES RECORD PERUSED. I FIND SUBSTANCE IN ASSESSEES SUB MISSION THAT THE ITA 5628/M/2009 M/S ADVANCE BUSINESS FORMS ================== 2 ASSESSING OFFICER HAS DISALLOWED RS 15,275/- ON ACC OUNT OF PERSONAL EXPENSES. THERE ARE NO GOOD REASONS WITH THE ASSES SING OFFICER FOR FURTHER DISALLOWING RS 25,000/- OUT OF VARIOUS EXPE NSES. I, THEREFORE, DELETE ADDITION OF RS 25,000/- MADE BY T HE ASSESSING OFFICER OUT OF VARIOUS EXPENSES. 5. THE SECOND GROUND OF THE APPEAL IS IN RESPECT OF DI SALLOWANCE OF MOTOR-CAR DEPRECIATION RS 97,367/-, MOTOR-CAR LO AN RS 26,165/-, MOTOR-CAR EXPENSES RS 38,990/- AND MOTOR-CAR INSURA NCE RS 31,189/-. 6. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTICED THAT THE VEHICLE WAS REGISTERED IN THE NAME OF SMT JAYASHREE DILIP SHAH. ASSESSING OFFICER FURTHER NO TICED THAT THE CLAIM OF THE DEPRECIATION ON MOTOR VEHICLE IS ALLOW ABLE ONLY IN CASE THAT THE ASSET IS OWNED BY THE ASSESSEE AND IT IS P UT TO USE IN THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER WA S OF THE VIEW THAT THE ASSESSEE-FIRM WAS NOT THE OWNER OF THE VEH ICLE, BUT, THE CONDITION REGARDING USE OF THE VEHICLE HAS BEEN SAT ISFIED BUT THE CONDITION REGARDING OWN IS NOT SATISFIED, THEREFO RE, DEPRECIATION CANNOT BE ALLOWED. THE ASSESSING OFFICER FURTHER N OTICED THAT SMT JAYASHREE DILIP SHAH WHO IS A NOMINAL PARTNER OF 10 % SHARE. THE ASSESSING OFFICER ALSO DISALLOWED INTEREST AND MOTO R-CAR EXPENSES IN ADDITION TO DEPRECIATION CLAIM OF THE ASSESSEE. 7. THE CIT (A) CONFIRMED THE ORDER OF THE ASSESSING OF FICER. THE CIT (A) REFERRED A DECISION OF MUMBAI BENCH WIT H REGARD TO DEEPAK K MEHTA VIDE ITA 5451/M/2004 AY 2000-01 WHER EIN CIT (A) STATED THAT DEPRECIATION WOULD BE ALLOWED WHERE THE ASSET OWNED BY THE PARTNER EVEN IF IT IS USED BY THE FIRM S BUSINESS DEPRECIATION HAS TO BE CLAIMED BY THE PARTNER. 8. I HAVE HEARD LEARNED REPRESENTATIVES OF THE PARTIE S AND GONE THROUGH THE RECORDS. ON PERUSAL OF FINANCIAL STATEMENTS, I ITA 5628/M/2009 M/S ADVANCE BUSINESS FORMS ================== 3 NOTICED THAT THE MOTOR-CAR IS PART OF THE DEPRECATI ON CHART ANNEXURE-III FORMING PART OF FORM 3CD OF WHICH COPY HAS BEEN PLACED AT PAGE 12 OF THE PAPER-BOOK. ACCORDING TO THAT CHART, THE MOTOR-CAR WAS PURCHASED IN EARLIER YEAR AND WRITTEN DOWN VALUE AS ON 1.4.2004 WAS SHOWN AT RS 4,86,835.20. THE DEPRE CATION FOR THE YEAR UNDER CONSIDERATION HAS BEEN CLAIMED ON THAT R ETURNED DOWN VALUE AS ON 1.4.2004. THE ASSESSEE HAS SHOWN AS SA ID MOTOR-CAR AS ASSET IN THE BALANCE-SHEET. IT HAS BEEN STATED THAT THE DEPRECIATION AND EXPENSES IN EARLIER YEARS HAS BEEN ALLOWED TO THE ASSESSEE. THE COPY OF THE ORDER OF THE ITAT REFERR ED BY THE CIT (A) HAS NOT BEEN PROVIDED SINCE CASE WAS NOT REPORTED I N LEADING JOURNALS, THEREFORE, I DO NOT KNOW UNDER WHAT FACTS AND CIRCUMSTANCES THE ITAT HAS HELD AS SAID BY THE CIT (A). HOWEVER, IN RESPECT OF REGISTRATION OF VEHICLE IN THE NAME O F ASSESSEE, IT IS A SETTLED LAW THAT IT IS NOT NECESSARY THAT VEHICLE S HOULD BE REGISTERED IN THE NAME OF THE ASSESSEE AS HELD IN CASE OF CIT VS DILIP SINGH SARDARSINGH BAGGA 201 ITR 995 (BOM) AND JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD VS CIT 239 ITR 775 (SC). 9. CONSIDERING THE FACTS OF THE CASE, I DO NOT FIND AN Y JUSTIFICATION IN DISALLOWING THE CLAIM OF THE ASSES SEE, PARTICULARLY, WHEN THE ASSESSEE HAS ESTABLISHED THAT THE ASSESSEE OWNED THE VEHICLE, AS EVIDENT FROM THE FINANCIAL STATEMENT AN D THAT VEHICLE WAS USED FOR THE PURPOSE OF BUSINESS. THEREFORE, D EPRECIATION AND MOTOR-CAR EXPENSES ARE ALLOWABLE U/S 32 AND SECTION 37 OF THE ACT. ACCORDINGLY, I DELETE THE ADDITION ON ACCOUNT OF DE PRECIATION AND OTHER EXPENSES MADE BY THE ASSESSING OFFICER. 10. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE DATE OF HE ARING ITSELF. SD/ - ( A L GEHLOT ) ACCOUNTANT MEMBER MUMBAI, DATED 8TH JULY, 2010 ITA 5628/M/2009 M/S ADVANCE BUSINESS FORMS ================== 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XVI, MUMBAI 4. THE CIT, CITY XVI, MUMBAI 5. THE DR SMC BENCH. //TRUE COPY// / / TRUE COPY / / BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES, MUMBAI *CHAVAN ITA 5628/M/2009 M/S ADVANCE BUSINESS FORMS ================== 5 DATE INITIALS DRAFT DICTATED ON 08 .0 7 .2010 SR. P.S. DRAFT PLACED BEFORE THE AUTHOR 08 . 0 7 .2010 SR. P.S. DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER AM/JM DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM APPROVED DRAFT COMES TO THE SR. PS SR. P.S. KEPT FOR PRONOUNCEMENT ON SR. P.S. FILE SENT TO THE BENCH CLERK SR. P. S. DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE OF DISPATCH