KETAN BALWANTRAI MEHTA, THANE V. ASST CIT CIR 1, THANE

ITA 6377/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9199 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 30-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: JITENDRA S SANGHAVI
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) . . , , ./ I.T. A. NO. 6377 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 8 - 09 ) KETAN BALWANTRAI MEHTA PROP: M /S SUPER INDUSTRIAL GAS D/2 NANDANVAN INDUSTRIAL ESTATE L, B S MARG NAVPADA, THANE - 4000604, MAHARASHTRA. / VS. ASST. COMMISSIONER OF INCOME TAX, CI RCLE - 1, ASHAR I T PARK, ROAD, NO.16 Z WAGLE IND. ESTATE, THANE - 400604 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAVPM4662P / A SSESSEE BY SHRI JITENDRA S SANGHAVI / RE VENUE BY SHRI LOVE KUMAR / DATE OF HEARING : 19 .3. 201 5 / DATE OF PRONOUNCEMENT : 25. 3. 201 5 / O R D E R PER B.R. BASKARAN (AM) THE ASSESSEE HAS FILED THIS APP EAL CHALLENGING THE ORDER DATED 22.8.2013 PASSED BY LD CIT(A) - 2 , THANE FOR ASSESSMENT YEAR 200 8 - 09 . 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1 ) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF TELEPHONE EXPENSES TO THE TUNE OF RS .29,438/ - IN AS MUCH AS SAME WAS ALLOWED IN FULL IN AY - 2007 - 08; 2 ) THE LD.CIT(A) H A S ERRED IN CONFIRMING T HE DISALLOWANCE OF MOTOR CAR EXPENSES TO THE TUNE OF RS.2,74,800/ - IN A S MUCH AS SAME I.T.A. NO. 6377 / MUM/201 3 2 IS WORKED OUT ON WDV OF GROSS BLOCK OF MOTOR CAR WHICH IS ILLOG ICAL AND UNJUSTIFIABLE. 3 ) ALTERNATIVELY THE LD.CIT(A) H A S FAILED TO APPRECIATE THAT MOTOR CAR EXPENSES WAS ALLOWED IN FULL FOR AY 2007 - 08 BY SAME INCOME TAX OFFICER, 4 ) ALTERNATIVELY THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT VEHICLE EXPE NSES HAS GONE DOWN FROM RS.87,63,458/ - IN AY 2007 - 08 TO RS.56,41,020/ - IN AY 2008 - 09 IN SPITE OF INFLATIONARY TREND IN COUNTRY; 5 ) ALTERNATIVELY THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT THERE IS NO CHANGE IN MATERIAL FACTS BUT MERELY CHANGE IN OPINION O F INCOME TAX OFFICER IN AS MUCH AS BOTH ASSESSMENT I.E. AY 2007 - 08 AND AY 2008 - 09 ARE COMPLETED BY SAME INCOME TAX OFFICER; 6 ) THE LD.CIT(A) HAS E R RED IN CONFIRMING DISALLOWANCE OF DEPRECIATION ON CAR TO THE TUNE OF RS.,20,610/ - 3. WE HAVE HEARD THE P ARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING IN INDUSTRIAL GASES UNDER THE NAME AND STYLE OF M/S SUPER INDUSTRIAL GASES . DURING THE COURSE OF ASSE S SMENT PROCEEDINGS, THE AO NOTICED THAT THE EXPENSES CLAIMED BY THE ASSE SSEE ARE SUPPORTED BY SELF MADE VOUCHERS. ACCORDINGLY , HE MADE DISALLOWANCE OF OUT OF 10% OF THE EXPENSES CLAIMED BY THE ASSESSEE. THE LD CIT(A) CONFIRMED 10% OF TELEPHONE EXPENSES AND DELETED THE BALANCE AMOUNT OF DISALLOWANCE. STILL AGGRIEVED, THE ASSE SSEE IS AGITATING THE SAME BEFORE US. THE MAIN CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE HAS BEEN INCURRING SUCH TYPE OF EXPENSES FOR THE PAST SEVERAL YEARS AND IT WAS ALLOWED IN FULL IN THE IMMEDIATELY PRECE DING YEAR . HOWEVER, WE NOTICE THAT THE L D CIT(A) HAS CONFIRMED ADDITION OF 10% OF TELEPHONE EXPENSES ON THE REASONING THAT THE ASSESSEE COULD HAVE USED TELEPHONE S FOR PERSONAL PURPOSE ALSO . BEFORE US , THE ASSESSEE COULD NOT CONTROVERT THE VIEW I.T.A. NO. 6377 / MUM/201 3 3 EXPRESSED BY LD CIT(A). ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD.CIT(A) WAS JUSTIFIED IN DISALLOWING 10% OF TELEPHONE EXPENSES. 4. THE NEXT ADDITION RELATES TO DISALLOWANCE MADE UNDER THE HEAD VEHICLE EXPENSES. THE ASSESSEE HAD INCURRED A SUM OF RS.56,41,020/ - TOWARDS VEHICLE EXPENSES. THE AO NOTICED THAT THE VEHICLE EXPENSES INCLUDED EXPENSES INCURRED ON FOUR CARS , VIZ., HONDA, SKODA, WAGON R AND SWIFT . THE AMOUNT INCURRED IN RESPECT OF ABOVE SAID FOUR CARS WAS DETERMINED AT RS.27,48,007/ - BY THE AO AND HE DISALLOWED 10% OUT OF THE SAME ON THE REA SONING THAT THEY WOULD NOT HAVE NECESSARILY PUT FOR THE PURPOSES OF BUSINESS. THE LD.CIT(A) ALSO CONFIRMED THE SAID DISALLOWANCE. 5. BEFORE US, THE LD. COUNSEL SUB MITTED THAT THE CAR EXPENSES HAVE ACTUALLY GONE DOWN DURING THE YEAR IN SPITE OF INFLATIONAR Y TREND PREVAILING IN THE COUNTRY. HE SUBMITTED THAT IN THE IMMEDIATELY PRECEDING YEAR THE ASSESSEE HAD INCURRED A SUM OF RS.87.63 LAKHS AND THE SAME WAS ALLOWED FULLY . HOWEVER DURING THE YEAR UNDER CONSIDERATION , T HE ASSESSEE HAS INCURR ED A SUM OF RS.56. 41 LAK HS ONLY TOWARDS VEHICLE EXPENSES. ACCORDINGLY HE SUBMITTED THAT THE DISALLOWANCE OF RS.2.74 LAKHS OUT OF THE VEHICLE EXPENSES IS NOT JUSTIFIED. HE F URTHER SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING A PORTION OF DEPRECIATION CLAIMED ON CA R , I.E., RS.20,610/ - . HE ALSO SUBMITTED THAT THE LD CIT(A) SHOULD NOT HAVE CONFIRMED THE SAID DISALLOWANCES. 6. HOWEVER, THE LD D.R SUBMITTED THAT THE USE OF CARS FOR NON - BUSINESS PURPOSES IS NOT RULED OUT. WE FIND MERIT IN THE CONTENTIONS OF THE LD D.R. WE NOTICE THAT THE AO HAS QUANTIFIED THE VEHICLE EXPENSES INCURRED ON THE FOUR CARS AND HAS DISALLOWED 10% OF THE SAME AS RELATABLE TO NON - BUSINESS PURPOSES. THE ASSESSEE HAS, HOWEVER, CONTENDED THAT THE ASSESSING OFFICER HAS TAKEN THE WDV VALUE OF CARS FOR THE PURPOSE OF MAKING DISALLOWANCE. HOWEVER, A READING OF ASSESSMENT ORDER WOULD SHOW THAT I.T.A. NO. 6377 / MUM/201 3 4 THE ASSESSING OFFICER HAS CLEARLY STATED THAT THE DISALLOWANCE IS MADE OUT OF EXPENSES INCURRED ON FOUR CARS. HENCE, WE ARE UNABLE TO ACCEPT THE CONTENTI ONS OF THE ASSESSEE. FURTHER, I N THE CASE OF CARS, POSSIBILITY OF USING THEM FOR PERSONAL PURPOSES OR NON - BUSINESS PURPOSES CANNOT BE RULED OUT. HENCE, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE OUT OF CAR EXP ENSES. FOR THE SAME REASON, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN MAKING DISALLOWANCE OUT OF CAR DEPRECIATION MADE IN TERMS OF SEC. 38(2) OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE AB OVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25TH MARCH, 2015 . 25TH MARCH, 2015 SD SD ( / AMIT SHUKLA ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 25TH MARCH,2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCER NED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI