FIRDAUS E KHATRI, MUMBAI V. ASST CIT CEN CIR 9, MUMBAI

ITA 6938/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4541 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R C JAIN
• Keywords: Business income; Depreciation; Earning of tax free income
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO.6938/MUM/2013 ASSESSMENT YEAR: 2010-11 FIRDAUS E. KHATRI. 638, GORI HOUSE, TPS III, 8 TH ROAD, KHAR (W), MUMBAI- 400052. PAN : AHDPK9168K VS. THE ASSTT. CIT CENTRAL CIRCLE - 9, 6 TH FLOOR, C.G.O. ANNEXE, M.K.ROAD, MUMBAI- 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. R.C.JAIN RESPONDENT BY : SHRI. CHANDIP SINGH DATE OF HEARING: 12/10/2015 DATE OF PRONOUNCEMENT: 12/01/2016 O R D E R PER RAM LAL NEGI, JM THE PRESENT APPEAL HAS BEEN FILED BY THE APPEL LANT ASSESSEE AGAINST ORDER DT. 02/09/2013 PASSED BY LD. CIT(APPE ALS)-37 MUMBAI FOR ASST. YEAR 2010-11. 2. THE FACTS AND MATERIAL WHICH NEED NECESSARY MEN TION FOR THE PURPOSE OF DECIDING THE ISSUES INVOLVED IN THE PRES ENT CASE ARE THAT THE ASSESSEE BEING A PARTNER IS M/S BASERA CONSTRUCTION AND M/S RAWASSA CONSTRUCTION FILED ITS RETURN FOR ASST. YEA R 2010-11 ON 24/02/2011, DECLARING THE TOTAL INCOME OF RS. 5,80, 856/-. THE CASE WAS SELECTED FOR SCRUTINY AND ORDER U/S 143(3) OF T HE INCOME TAX ACT ( IN SHORT THE ACT) WAS PASSED BY THE ASSESSING OFFIC ER. VIDE THE SAID 2 ITA NO.6938/MUM/2013 ASSESSMENT YEAR: 2010-11 ORDER, AO MADE DISALLOWANCE OF RS. 2,73,036/- IN R ESPECT OF CLAIM OF DEPRECIATION ON MOTOR CAR AND INTEREST ON CAR LOAN . 2.1 AGGRIEVED BY THE IMPUGNED ASSESSMENT ORDER THE APPELLANT CHALLENGED THE SAME BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE AND RELYING ON THE VARIOUS DECISION PASSED BY THE ITAT BENCHES DISMISSED THE APPEAL HOLDING THAT THE APPEL LANT HAS FAILED PROVED THAT THE CAR WAS USED FOR BUSINESS BY PRODUC ING LOG BOOK. THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL AGAINST THE ORDER OF LD. CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE AO. 2.2 THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING THE FOLLOWING DISALLOWANCES MAD E BY THE AO. (I) DEPRECIATION OF CAR U/S 32 OF RS. 2,14,214/- (II) INTEREST U/S 36(1)(III)OF RS. 58,822/- ( TOTA L RS. 2,73,036/-) 2.3 BEFORE US THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE CAR WAS USED BY THE FIRM IN WHICH THE APPELLANT IS A PARTNER AND HENCE FUEL AND MAINTENANCE EXPENSES ARE MET BY THE FIRM. SINCE THE CAR IS USED FOR BUSINESS OF THE FIRM, THE APPELLANTS CLAI M OF DEDUCTION OF THE DEPRECIATION U/S 32 AND DEDUCTION U/S 36 (1) (III) OF THE ACT NEED TO BE ALLOWED. THE AO AND THE LD. CIT(A) HAS IGNORED THE FACT THAT THE CAR WAS NOT USED FOR EARNING EXEMPT INCOME. THE ASSESSE E HAS CLAIMED THE DEDUCTION BEING OWNER OF THE CAR. THE LD. COUNSEL F URTHER SUBMITTED THAT THE CASE OF THE ASSESSEE IS COVERED BY THE DEC ISION OF MUMBAI TRIBUNAL PASSED IN ITA 6939/M/13 SHRI. YUNUS E. KHA TRI VS. ASST. CC-9. 3 ITA NO.6938/MUM/2013 ASSESSMENT YEAR: 2010-11 3. ON THE OTHER HAND THE LD. DR RELYING ON THE O RDERS PAST BY THE AUTHORITIES BELOW CONTENDED THAT THE CIT(A) HAS RIG HTLY CONFIRMED THE DISALLOWANCE MADE BY THE AO. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE RELEVANT DOCUMENTS IN THE LIGHT OF THE RIVAL SUBMIS SIONS. IN YUSUF E. KHATRI VS. ASSTT. CC-9(SUPRA) THE APPELLANT HAD CHA LLENGED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE DIS ALLOWANCE OF DEPRECIATION OF RS. 92,320/- ON MOTOR CAR CLAIME D AS DEDUCTION UNDER THE HEAD BUSINESS INCOME. 1.2 IN DISALLOWING THE SAME THE LD. CIT(APPEALS) ER RED IN NOT CONSIDERING THE SUBMISSION MADE BEFORE HIM IN T HEIR ENTIRELY. 1.3 THE LD. CIT(APPEALS) ERRED IN RELYING UPON JUDI CIAL PRONOUNCEMENTS WITHOUT APPRECIATING THE FACTS IN AP PELLANTS CASE. 5. THE CO-ORDINATE BENCH PARTLY ALLOWED THE APPEA L OF THE ASSESSEE HOLDING AS UNDER:- WE HAVE HEARD THE LD. COUNSEL FOR THE ASSESSEE AS WELL AS THE DR REPRESENTING THE REVENUE AND HAVE PERUSED THE RECORD AS WELL AS THE ORDERS OF REVENUE. WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS A PARTNER O F M/S. RAWASSA CONSTRUCTION, ALTHOUGH THE CAR IN QUESTION IS IN THE NAME OF THE ASSESSEE. THE UNDISPUTED FACTS INCLUDE THAT THE CAR IS OWNED BY THE ASSESSEE AND HOWEVER, PETROL, R EPAIRS ETC. RELATED TO THE CAR ARE MET BY THE FIRM, LOG-BO OK IS NOT 4 ITA NO.6938/MUM/2013 ASSESSMENT YEAR: 2010-11 MAINTAINED. THE A.O. HAS NOT MADE OUT A CASE TO CO NCLUDE THAT CAR IS NOT USED BY THE FIRM FOR BUSINESS PURPO SE. ON THESE FACTS, WE ARE OF THE OPINION THAT THE CAR IN QUESTION WAS PARTLY USED BY THE ASSESSEE HIMSELF AND PARTLY FOR HIS PARTNERSHIP FIRMS. THEREFORE, DENIAL OF ENTIRE CLAIM OF ASSESSEE APPEARS VERY HARSH; THEREFORE, WE FIND IT APPROPRIATE TO RESTRIC T THE CLAIM TO 50%. ACCORDINGLY, AO IS DIRECTED TO AMEND HIS ORDER S AND RESTRICT THE DISALLOWANCE ACCORDINGLY. 6. IN OUR CONSIDERED OPINION THE CO-ORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE PARTLY IN FAVOUR OF THE ASSESSEE. T HEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO- ORDINATE BENCH WE RESTRICT THE CLAIM OF THE ASSESSEE 50%. AND DIRECT TO AO TO AMEND HIS ORD ER ACCORDINGLY. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS PART LY ALLOWED. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY,2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 12 /01/2016 5 ITA NO.6938/MUM/2013 ASSESSMENT YEAR: 2010-11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. '#$ % , %' , / DR, ITAT, MUMBAI 6. $() * / GUARD FILE. + + + + / BY ORDER, + //TRUE COPY// , ,, ,/ // /+- . +- . +- . +- . (DY./ASSTT. REGISTRAR) %' %' %' %', , , , / ITAT, MUMBAI PRAMILA