Hindumal Balmukund Investment Co.Pvt.Ltd., Pune V. Income tax Officer, Pune

ITA 569/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5833 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.569/PUN/2017 / ASSESSMENT YEAR : 2012-13 HINDUMAL BALMUKUND INVESTMENT CO. PRIVATE LIMITED, 2 ND FLOOR, LOHIA JAIN, HOUSE BHANDARKAR ROAD, SHIVAJINAGAR, PUNE 411 045 PAN :AAACH4226Q VS. ITO, WARD-11(5), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A)-1, PUNE ON 16-01-2017 IN RELATION TO THE ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST CONFIRMATION OF DISALLOWANCE OF RS.2,08,267/-, BEING, DEPRECIATION ON CARS FOR PERSONAL USE BY THE DIRECTORS OF THE ASSESSEE COMPANY. APPELLANT BY SHRI V.L. JAIN RESPONDENT BY SHRI PANKAJ GARG DATE OF HEARING 29-01-2019 DATE OF PRONOUNCEMENT 30-01-2019 ITA NO.569/PUN/2017 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY CLAIMED DEPRECIATION ON CARS AMOUNTING TO RS.4,16, 535/-. THE AO NOTICED THAT THE CARS WERE NOT PURCHASED IN THE NAME OF THE ASSESSEE BUT ITS DIRECTORS. INVOKING THE PROVISIONS OF SE CTION 38(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED `THE ACT), THE AO MADE DISALLOWANCE ON ACCOUNT OF PERSONAL USE OF CARS AT H ALF OF THE AMOUNT OF DEPRECIATION CLAIMED. THIS RESULTED INTO AN ADDITION OF RS.2,08,267/-, WHICH CAME TO BE SUSTAINED IN THE FIRST AP PEAL. 4. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD, IT IS SEEN THAT THE AO HAS BASICALLY MADE DISALLOWANCE U/S. 38(2) OF THE ACT. THE VERY FACT THAT HE ALLOWED DEPRECIATION @ 50% OF THE AMOUNT CLAIMED ON CARS GOES TO PROVE THAT HE ACCEPTED THE OWNERSHIP OF CARS IN THE NAME OF THE A SSESSEE COMPANY. 5. NOW TURNING TO THE DISALLOWANCE ON ACCOUNT OF PERSONA L USE OF CARS U/S. 38(2) OF THE ACT, WE FIND THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THERE IS NO DEARTH OF JUDICIAL PRECEDENTS HOLDING THAT THERE CANNOT BE ANY DISALLOWANCE OF EXPENSES IN THE HANDS OF COMPANY ON ACCOUNT OF PERSONAL USE EVEN BY ITS DIRECTORS. THE HONBLE GUJARAT HIGH COURT IN SAYAJI IRON AND ITA NO.569/PUN/2017 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., 3 ENGINEERING COMPANY VS. CIT (2002) 253 ITR 749 (GUJ) HAS HELD THAT THERE CANNOT BE ANY DISALLOWANCE OF PERSONAL EXPENSES FOR CARS ON ACCOUNT OF PERSONAL USE BY THE DIRECTOR. IT HAS BEEN FURTHER HELD THAT NO DISALLOWANCE CAN BE MADE EVEN BY TREATING SUCH EXPENDITURE AS NOT HAVING BEEN INCURRED FOR THE BUSINESS PURPOSE. SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF THE TRIBUN AL IN SEVERAL CASES INCLUDING DY. CIT VS. HARYANA OXYGEN LTD. (2001) 76 ITD 32 (DEL) . THUS IT IS EVIDENT THAT THERE CAN BE NO DISALLOWANCE ON ACCOUNT OF PERSONAL USE BY THE DIRECTOR-EMP LOYEES OF THE ASSESSEE. SUCH AN AMOUNT CAN BE TREATED AS A PER QUISITE IN THE HANDS OF THE EMPLOYEES. IN VIEW OF THE ABOVE DECISION S, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE TO THIS EXTENT. THE ADDITION IS DELETED. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 30 TH JANUARY, 2019 ITA NO.569/PUN/2017 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., 4 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, PUNE 4. 5. THE PR.CIT-1, PUNE , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 29-01-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 29-01-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *