Shri. Dinesh Kumar Agarwal, Muzaffarnagar V. ITO, Muzaffarnagar

ITA 5636/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0439 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREM
• Assessee Lawyers: SANJEEV MITTAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH B BENCH B BENCH B BENCH B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI SHAMIM YAHYA, AM C.L.SETHI, JM AND SHRI SHAMIM YAHYA, AM C.L.SETHI, JM AND SHRI SHAMIM YAHYA, AM C.L.SETHI, JM AND SHRI SHAMIM YAHYA, AM ITA NO. ITA NO. ITA NO. ITA NO. 5636/DEL/2010 5636/DEL/2010 5636/DEL/2010 5636/DEL/2010 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2008 2008 2008 2008 - -- - 09 0909 09 SHRI DINESH KUMAR AGARWAL, SHRI DINESH KUMAR AGARWAL, SHRI DINESH KUMAR AGARWAL, SHRI DINESH KUMAR AGARWAL, PROP. M/S AGARWAL CYCLE STORE, PROP. M/S AGARWAL CYCLE STORE, PROP. M/S AGARWAL CYCLE STORE, PROP. M/S AGARWAL CYCLE STORE, ROORKEE ROAD, ROORKEE ROAD, ROORKEE ROAD, ROORKEE ROAD, MUZAFFARNAGAR MUZAFFARNAGAR MUZAFFARNAGAR MUZAFFARNAGAR (UP). (UP). (UP). (UP). PAN NO. PAN NO. PAN NO. PAN NO.AANPA9323M. AANPA9323M. AANPA9323M. AANPA9323M. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -1(1), 1(1), 1(1), 1(1), MUZAFFARNAGAR. MUZAFFARNAGAR. MUZAFFARNAGAR. MUZAFFARNAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJEEV MITTAL, ADVOCATE. RESPONDENT BY : MS.BANITA DEVI NAOREM, SR.DR. ORDER ORDER ORDER ORDER PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI, J , J, J , JM : M : M : M : THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 7.9.2010 PASSED BY LEARNED CIT(A) FOR THE AY 2008-09. 2. GROUND NO.1 IS DIRECTED AGAINST CIT(A)S ORDER I N RESTRICTING THE DISALLOWANCE AT `17,884/- OUT OF TOTAL DISALLOWANCE OF `23,846/- MADE BY THE AO FOR ALLEGED PERSONAL USE OF CAR RUNNING AND ITS MAINTENANCE EXP ENSES, DEPRECIATION ON CAR AND TELEPHONE EXPENSES. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE ASSESSEE HAS SUBMITTED A WRITTEN SUBMISSION IN SUPP ORT OF THE GROUNDS TAKEN BEFORE US. IN THE WRITTEN SUBMISSION, THE ASSESSEE HAS SU BMITTED THAT DISALLOWANCE FOR PERSONAL USE OF CAR AND MAINTENANCE EXPENSES AS WEL L AS DEPRECIATION ON CAR MAY ONLY BE RESTRICTED TO 10% AS SO APPLIED IN THE CASE OF ANOTHER ASSESSEE, NAMELY, ITA-5636/DEL/2010 2 SHRI RAJIV KUMAR OF MUZAFFARNAGAR BY THE LEARNED CI T(A). WE HAVE CONSIDERED THE ASSESSEES SUBMISSION AND FOUND THAT THE DISALLOWAN CE HAS BEEN MADE BY THE AO ON ESTIMATED BASIS. AO HAS DISALLOWED 20% OF EXPEN SES WHICH HAS BEEN REDUCED TO 15% BY THE LEARNED CIT(A). CONSIDERING THE TOTA LITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE SUBMISSION OF THE ASSESSEE, WE RESTRICT THE DISALLOWANCE TO 10% OF TOTAL EXPENSES ON CAR EXPENS ES AND OUT OF DEPRECIATION. 4. THE AO HAS ALSO DISALLOWED 20% OF TELEPHONE EXPE NSES FOR PERSONAL USE WHICH HAS BEEN REDUCED TO 15% BY THE LEARNED CIT(A) . AFTER CONSIDERING THE FACT THAT THE ASSESSEE HAS ALREADY INCURRED SEPARATELY T ELEPHONE EXPENSES INSTALLED AT THE RESIDENCE TO THE EXTENT OF `11,934/- WHICH HAS NOT BEEN CLAIMED AS BUSINESS DEDUCTION, WE ARE OF THE CONSIDERED VIEW THAT NO DI SALLOWANCE OUT OF TELEPHONE EXPENSES IS CALLED FOR. THUS, THE DISALLOWANCE MAD E OUT OF TELEPHONE EXPENSES IS DELETED. 5. NEXT GROUND IS DIRECTED AGAINST CIT(A)S ORDER I N CONFIRMING THE DISALLOWANCE OF INTEREST PAID TO SMT.GEETA RANI, MOTHER OF THE A SSESSEE. 6. THE ASSESSEE HAD PAID INTEREST AT THE RATE OF 18 % ON BORROWINGS FROM HER MOTHER SMT.GEETA RANI. THE AO ALLOWED THE INTEREST EXPENSES ONLY TO THE EXTENT OF 12% AND THUS DISALLOWED THE SUM OF `24,592/-. THE LEARNED CIT(A) HAS CONFIRMED THE DISALLOWANCE BY SAYING THAT INTEREST PAID TO SM T.GEETA RANI AT THE RATE OF 18% IS ON HIGHER SIDE. HOWEVER, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND THE BACKGROUND OF THE MATTER, WE FIND THAT THE INTEREST PAID AT THE RATE OF 18% ON BORROWINGS TAKEN FROM SMT.GEETA RANI CANNOT BE SAID TO BE EXCESSIVE OR UNREASONABLE WITHIN THE MEANING OF PROVISIONS CONTA INED IN SECTION 40A(2)(A) OF THE ACT. WE, THEREFORE, DELETE THE DISALLOWANCE OUT OF INTEREST PAID TO SMT.GEETA RANI. THUS, GROUND NO.2 RAISED BY THE ASSESSEE IS DECIDED IN HIS FAVOUR. ITA-5636/DEL/2010 3 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN THE MANNER AS INDICATED ABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY, 2011. SD/- SD/- (SHAMIM YAHYA (SHAMIM YAHYA (SHAMIM YAHYA (SHAMIM YAHYA ) )) ) (C.L.SETHI (C.L.SETHI (C.L.SETHI (C.L.SETHI ) )) ) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 18.02.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR ITA-5636/DEL/2010 4