ITO, New Delhi V. Vishal Khosla, Delhi

ITA 881/DEL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3060 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Keywords: Depreciation
• Section: 143(3); 142(1); 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T . A . NO. 881 /DEL/20 1 3 A.Y. 200 9 - 10 INCOME TAX OFFICER, WARD 35(4), NEW DELHI VS. SH. VISHAL KHOSLA, K-12A/13, DLF PHASE-II, GURGAON (PANAKAPK2843B) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. UMESH CHAND DUBEY, SR.DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXVII, NEW DEL HI DATED 09.11.2012 PERTAINING TO ASSESSMENT YEAR 2009-10 O N THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF LD. CIT(A) IS BAD IN LAW AND NOT IN CONSON ANCE WITH FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD ERRED IN LAW BY DELETING THE ADDITION MA DE BY 2 AO U/S. 41(1) OF RS. 84,10,126/- IN RESPECT OF CESS ATION OF LIABILITY IN RESPECT OF SUNDRY CREDITORS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS IGNORED THE OBSERVATION OF AO BY DELETIN G THE ADDITION MADE BY AO OF RS. 17,200/- ON ACCOUNT OF EXPENSES UNDER SALE PROMOTIONS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IGNORED THE OBSERVATION OF THE AO, BY RESTRI CTED THE ADDITION MADE BY AO FOR EXPENSES OF THE CAR RUNNING EXPENSE AND DEPRECIATION ON CAR UPTO 30% THAT RS. 1,54,519/- TO RS. 1,03,012/- I.E. 20% AND THEREBY G IVING THE RELIEF OF RS. 51,507/- ON THIS ACCOUNT TO ASSES SEE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS IGNORED THE OBSERVATION OF AO BY DELETIN G THE ADDITION MADE BY AO OF RS. 11,165/- ON ACCOUNT OF EXPENSES UNDER TOUR AND TRAVELLING EXPENSES. 6. THE APPELLANT CRAVE LEAVE TO ADD, ALLOW OR AMEND AN Y / ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS FURNISHED A RETURN ON 25.9.2009 BY DECLARING NET TAXABLE INCOME OF RS. 4,74,906/- AND CLAIMED A REFUND OF RS. 1,794/- OUT OF TDS OF R S. 61,185/-. THE RETURN WAS PROCESSED U/S. 143(1) ON 21.2.2011. THE ASSESSEES RETURN WAS SELECTED FOR SCRUTINY UNDER CASS. ACCORDINGLY, NOTICE U/S. 143(2) OF THE I.T. ACT, 1961 DATED 24.8.2010 WAS ISSUED BY A CIT, CIRCLE 35(1), NEW DELHI. THE NOTICE U/S. 143(2) OF THE I.T. ACT, 1961 DATED 28.9.2010 WAS ALSO ISSUED TO THE ASSESSEE BY THE AO, WARD 35( 4), NEW DELHI. THE CASE WAS TRANSFERRED FROM ACIT, CIRCLE 35(1), NEW D ELHI TO ITO, WARD 3 35(4), NEW DELHI. ACCORDINGLY, A DETAILED QUESTIONN AIRE NO. 1 DATED 6.9.2011 ALONGWITH NOTICES U/S. 143(2) OF THE ACT A ND 142(1) OF THE ACT, 1961 WERE ALSO ISSUED AND SERVED. A 2 ND QUESTIONNAIRE DATED 3.10.2011 WAS ISSUED AND SERVED. IN RESPONSE TO STATUTORY NOT ICES, THE A.R. OF THE ASSESSEE ATTENDED THE PROCEEDINGS AND FILED THE WRI TTEN SUBMISSIONS. AFTER EXAMINING THE REPLIES, A 3 RD QUESTIONNAIRE DATED 28.11.2011 WAS ISSUED. THE AR FURNISHED A REPLIES ON 5.12.2011. T HE BOOKS OF ACCOUNTS WHICH WERE RELIED ON BY THE TAX AUDITOR ALONGWITH B ANK STATEMENTS MAINTAINED WITH CITI BANK, NOIDA WERE PRODUCED FOR EXAMINATION. THE ASSESSEE IS DOING THE BUSINESS OF TIBER AND PLYWOOD UNDER THE NAME AND STYLE OF LAKSHMI FURNITURE AND DECORATORS. THE TOT AL TURNOVER AMOUNTED TO RS. 5,62,31,467/- WITH GROSS PROFIT OF RS. 60,48 ,676/- (10.76%). THE NET PROFIT DECLARED IS RS. 5,74,905/- (1.02%). THE NET PROFIT INCLUDED MISC. INCOME OF RS. 20,554/-. AO OBSERVED THAT SINC E THE ASSESSEE GP RATIO IS ONLY 10.76% THE LIABILITIES DID NOT EXIST AT ALL ON 31.3.2009. ACCORDINGLY, RS. 84,10,126/- WAS ADDED BACK TO THE INCOME OF THE ASSESSEE AND ALSO VARIOUS OTHER ADDITIONS WERE ALSO MADE AND ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECT ION 143(3) OF THE I.T. ACT, 1961 AT AN INCOME OF RS. 90,84,890/- ON 27.12 .2011. AGGRIEVED WITH THE ASSESSMENT ORDER, ASSESSEE FILED THE APPEA L BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 09.11.2012 DELETED THE ADDITIONS BY PARTLY ALLOWING THE APPEAL OF THE ASS ESSEE. 3. AGGRIEVED WITH THE IMPUGNED ORDER OF THE LD. CIT (A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE P RESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THEREFORE, WE ARE DECID ING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEARING THEA LD. DR AND PERUSING THE RECORDS. 6. WE HAVE HEARD LD. DR AND PERUSED THE RELEVANT RE CORDS, ESPECIALLY THE ORDER OF THE LD. CIT(A). WE FIND THAT LD. FIRS T APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED AND ADJUDICATED THE ISSUES NO . 2 TO 5 VIDE PARA NO. 9 TO 18 AT PAGE NO. 7 TO 11 IN THE IMPUGNED NO. 1, WHICH READ AS UNDER:- 9. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS MADE BY THE AO IN THE ASSESSMENT ORDER AND FACTS OF THE CASE. IN TERMS OF SECTION 41(1) OF THE ACT IF A BENEFIT IS OBTAINED BY AN ASSESSEE BY WAY OF REMISSION OR CESSATION IN REST O F TRADING LIABILITY IN RESPECT OF WHICH ALLOWANCE / DEDUCTION HAS BEEN MADE IN AN EARLIER YEAR THAN IN THE YEAR OF SUCH BENEFIT THE VALUE OF THE BENEFIT IS DE EMED 5 AS PROFITS AND GAINS OF THE ASSESSEES BUSINESS. IN THE APPELLANTS CASE, NEITHER THERE WAS REMISSION NOR WAS THERE ANY CESSATION OF THE LIABILITIES WHICH WERE B EING SHOWN BY THE APPELLANT AS PAYABLE, THEREFORE, THE APPELLANT HAD NOT OBTAINED ANY BENEFIT IN RESPECT O F THE VARIOUS LIABILITIES AS NOTED ABOVE. THE ONLY REASON MENTIONED BY THE A.O. FOR MAKING THIS ADDITION IS T HAT THE BALANCE IN THE ACCOUNTS OF THESE SUNDRY CREDITO RS WAS THE SAME AS ON 31.3.2009 AS IT WAS ON 31.3.2008 . THEREFORE, ACCORDING TO THE A.O. THESE LIABILITIES HAD CEASED TO EXISTS AS THE APPELLANT HAD NOT MADE PAYM ENT IN RESPECT OF THESE LIABILITIES. IN CASE OF ONE OF THE CREDITORS I.E. IN THE CASE OF M/S UTSAV PLYWOOD EVE N WHEN A PAYMENT OF RS. 3,00,000/- WAS MADE BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION STILL THE BALANCE OUTSTANDING IN THE ACCOUNT OF THIS PARTY WA S ALSO HELD TO HAVE CEASED TO EXIST AND WAS ADDED TO THE APPELLANT'S INCOME. THE APPELLANT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS HAD FILED COMPLETE DETAI LS GIVING THE NAMES AND ADDRESSES OF THE CREDITORS TO SHOW THAT NOT ONLY THE LIABILITIES WERE OUTSTANDING BUT ALSO- THAT THE SAME WERE DULY ACKNOWLEDGED BY THE SUNDRY CREDITORS AS WELL. MOREOVER, A COPY OF THE BANK-ACC OUNT OF THE APPELLANT HAS ALSO BEEN PLACED ON RECORD OUT OF 6 WHICH ALL THESE SUNDRY CREDITORS HAVE BEEN PAID THR OUGH ACCOUNT PAYEE CHEQUES IN THE FOLLOWING FINANCIAL YE AR. 10. IN VIEW OF THE FACTS OF THE CASE AS DISCUSSED ABOVE AND ALSO IN VIEW OF THE VARIOUS DECISIONS RELIED UPON B Y THE APPELLANT MENTIONED ABOVE, IT IS HELD THAT THE LIAB ILITIES IN RESPECT OF VARIOUS SUNDRY CREDITORS MENTIONED AB OVE WERE STILL OUTSTANDING AT THE END OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE PROVISIONS OF SECTION 41(1) WERE NOT APPLIC ABLE IN THE APPELLANT'S CASE. ADDITION OF RS. 84,10,126/ - MADE BY THE A.O. ON THIS ACCOUNT IS, THEREFORE, DEL ETED. GROUND NO.2 - DISALLOWANCE OF RS. 17,200/- ON ACCOU NT OF SALES PROMOTION EXPENSES- 11. THE APPELLANT HAD CLAIMED SALES PROMOTION EXPE NDITURE AMOUNTING TO RS. 65,500/- IN HIS PROFIT AND LOSS ACCOUNT. THE A.O. DISALLOWED AN AMOUNT OF RS. 17,20 0/- OUT OF THESE EXPENSES FOR THE REASON THAT THIS AMOU NT DID NOT RELATE TO THE APPELLANT'S BUSINESS AS SEEN BY THE A.O. ON EXAMINATION OF THE VOUCHERS. 12. IN RESPONSE TO THIS ADDITION, IT HAS BEEN SUBM ITTED BY THE APPELLANT THAT BOTH INTERNAL AS WELL EXTERNAL VOUCHERS WERE DULY MAINTAINED AND DISALLOWANCE MADE BY THE A.O. IS ON ADHOC BASIS. NO SPECIFIC INSTANCE OF 7 DISALLOWABLE EXPENSES WAS BROUGHT ON RECORD BY THE A.O. 13. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS MADE BY THE A.O. IN THE ASSESSMENT ORDER AND FACTS OF THE CASE. THOUGH THE A.O. HAS MENTIONED IN THE ASSESSMENT ORDER THAT HE HAD FOUND AN AMOUNT OF RS. 17,200/- AS NOT RELATING TO THE APPELLANT'S BUSINESS ON EXAMINATION OF VARIOUS VOUCHERS BUT HE HAS NOT POINTED OUT ANY SPECIFIC INSTANCE OF ANY EXPENSE WHICH WAS NOT RELATED TO TH E APPELLANT'S BUSINESS. IN THE ABSENCE OF THE SAME DISALLOWANCE MADE BY THE A.O. CANNOT BE SUSTAINED A ND THE SAME IS DELETED. GROUND NO.3 - DISALLOWANCE O FRS 1,54,519/- ON ACCO UNT OF CAR RUNNING AND DEPRECIATION 14. THE APPELLANT HAD CLAIMED AN AMOUNT OF RS. 1,7 4,558/- ON ACCOUNT OF CAR RUNNING AND MAINTENANCE EXPENSES AND RS. 3,40,504/- WAS CLAIMED ON ACCOUNT OF DEPRECIATION ON THREE CARS. THE A.O. DISALLOWED 30% OF THESE EXPENSES ON THE GROUND THAT THE APPELLANT'S C LAIM ON ACCOUNT OF CAR RUNNING AND MAINTENANCE EXPENSES AND DEPRECIATION ON THE SAME WAS EXCESSIVE AS THE APPELLANT WAS HAVING THREE CARS. 8 15. IN RESPONSE TO THIS DISALLOWANCE THE APPELLANT HAS SUBMITTED THAT DISALLOWANCE MADE BY THE A.O. WAS ADHOC AND UNREASONABLE. THE APPELLANT RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F STATE OF MADRAS VS. G J COELHI 53 ITR 186 (SC), WHE REIN IT WAS HELD THAT PERSONAL EXPENSES ARE THOSE THAT R ELATE TO THE PERSON OF THE ASSESSEE TO SATISFY HIS PERSON AL NEEDS SUCH CLOTHS FOODS ETC. HOWEVER, IT HAS BEEN ADMITTED BY THE APPELLANT IN HIS SUBMISSIONS THAT POSSIBILITY OF SOME PERSONAL USE OF THE CARS CANNOT BE RULED OUT AND SOME REASONABLE DISALLOWANCE IN THE ABSENCE OF LOG BOOK AND OTHER RELEVANT DETAILS CAN BE MADE. AS FAR AS DEPRECIATION ON CARS IS CONCERNED I T WAS SUBMITTED THAT THE CARS FELL UNDER THE HEAD MACHINE RY AND PLANT BLOCK AND INDIVIDUAL ASSET LOSES IT IDENT ITY AND THE QUESTION WHETHER AN INDIVIDUAL ASSET IS PUT TO USE IN A PARTICULAR YEAR OR NOT IS IRRELEVANT. THE APPELLA NT ALSO RELIED ON THE DECISION IN THE CASE OF CIT VS. UNION CARBIDE (I) LTD. (2002) 174 CTR (CAL), 334, WHEREIN IT WAS HELD THAT ONCE IT IS SHOWN THAT THE ASSESSEE HA S PUT THE MACHINERY TO USE, FOR THE PURPOSE OF THE ASSESS EE'S BUSINESS, THEN FURTHER INQUIRY ABOUT THE DEGREE OR TYPE OF USE IS NOT PERMITTED TO BE SCRUTINIZED BY THE LA NGUAGE OF THE SECTION. ONCE THE ASSESSEE CAN ESTABLISH BON AFIDE 9 USE OF THE MACHINERY FOR THE PURPOSES OF THE ASSESS EE'S BUSINESS, THEN AND IN THAT EVENT, THE ASSESSEE ESTABLISHES THE RIGHT TO CLAIM DEPRECIATION. 16. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS MADE BY THE A.O. IN THE ASSESSMENT ORDER AND THE FACTS OF THE CASE. THE APPELLANT HAS HIMSELF ADMITTED THAT SOME ELEMENT OF PERSONAL USE OF THE CARS CANNOT BE RULED OUT IN THE ABSENCE OF LOGBOOK AND OTHER RELEVANT DETAILS. THEREFORE, SOME REASONABLE DISALLOWANCE ON ACCOUNT OF PERSONAL USE OF THE CARS WAS REQUIRED TO BE MADE. HOWEVER, DISALLOWANCE MADE BY THE A.O. TO THE EXTEN T OF 30% IS HELD TO BE EXCESSIVE. THE DISALLOWANCE OF 20% OF THE CAR MAINTENANCE AND RUNNING EXPENSES AND DEPRECIATION WOULD BE REASONABLE AND IS CONFIRMED T O THAT EXTENT. THEREFORE, THE DISALLOWANCE ON THESE ACCOUNTS IS RESTRICTED TO RS. 1,03,012/-. GROUND NO.4 - DISALLOWANCE OF RS. 11,265/- OUT OF T OUR AND TRAVELLING EXPENSES 17. THE A.O. MADE A DISALLOWANCE OF RS. 11,265/- O UT OF TOUR AND TRAVEL EXPENSES OF RS. 88,575/- ON THE GROUND THAT EXAMINATION OF THE VOUCHERS REVEALED TH AT THIS MUCH EXPENDITURE WAS NOT ELIGIBLE FOR DEDUCTIO N. IN 10 RESPONSE TO THIS ADDITION, IT HAS BEEN SUBMITTED BY THE APPELLANT THAT DISALLOWANCE HAS BEEN MADE BY THE A. O. ON ADHOC BASIS WITHOUT POINTING OUT ANY SPECIFIC INSTANCE OF DISALLOWABLE NATURE OR BRINGING ON RECO RD ANY CONTRARY MATERIAL. 18. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS MADE BY THE A.O. IN THE ASSESSMENT ORDER AND THE FACTS OF THE CASE. THE DISALLOWANCE OF RS. 11,265/- HAS BEEN MADE BY THE A .O. BY OBSERVING THAT EXAMINATION OF THE VOUCHERS REVEA LED INELIGIBLE NATURE OF THE EXPENSES TO THIS EXTENT. HOWEVER, NO SPECIFIC INSTANCE OF DISALLOWABLE NATUR E HAS BEEN POINTED OUT BY THE A.O. NOR HAS HE BROUGHT ON RECORD ANY EVIDENCE IN SUPPORT OF THESE OBSERVATION S. THEREFORE, DISALLOWANCE OF RS. 11,265/- MADE ON THI S ACCOUNT IS DELETED. 7. ON GOING THROUGH THE AFORESAID FINDINGS OF THE LD. CIT(A), WITH REGARD TO GROUND NO. 2 RELATING TO DELETION OF ADDITION MA DE BY AO U/S. 41(1) OF RS. 84,10,126/- IN RESPECT OF CESSATION OF LIABILIT Y IN RESPECT OF SUNDRY CREDITORS IS CONCERNED, WE FIND THAT IN TERMS OF S ECTION 41(1) OF THE ACT IF A BENEFIT IS OBTAINED BY AN ASSESSEE BY WAY OF REM ISSION OR CESSATION IN REST OF TRADING LIABILITY IN RESPECT OF WHICH ALLOW ANCE / DEDUCTION HAS BEEN MADE IN AN EARLIER YEAR THAN IN THE YEAR OF SUCH BE NEFIT THE VALUE OF THE 11 BENEFIT IS DEEMED AS PROFITS AND GAINS OF THE ASSES SEES BUSINESS. IN THE ASSESSEES CASE, NEITHER THERE WAS REMISSION NOR WA S THERE ANY CESSATION OF THE LIABILITIES WHICH WERE BEING SHOWN BY THE AP PELLANT AS PAYABLE, THEREFORE, THE APPELLANT HAD NOT OBTAINED ANY BENEF IT IN RESPECT OF THE VARIOUS LIABILITIES AS NOTED ABOVE. THE ONLY REASON MENTIONED BY THE A.O. FOR MAKING THIS ADDITION IS THAT THE BALANCE IN THE ACCOUNTS OF THESE SUNDRY CREDITORS WAS THE SAME AS ON 31.3.2009 AS IT WAS ON 31.3.2008. THEREFORE, ACCORDING TO THE A.O. THESE LIABILITIES HAD CEASED TO EXISTS AS THE APPELLANT HAD NOT MADE PAYMENT IN RESPECT OF TH ESE LIABILITIES. IN CASE OF ONE OF THE CREDITORS I.E. IN THE CASE OF M/S UTS AV PLYWOOD EVEN WHEN A PAYMENT OF RS. 3,00,000/- WAS MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION STILL THE BALANCE OUTSTANDING I N THE ACCOUNT OF THIS PARTY WAS ALSO HELD TO HAVE CEASED TO EXIST AND WAS ADDED TO THE APPELLANT'S INCOME. THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS HAD FILED COMPLETE DETAILS GIVING THE N AMES AND ADDRESSES OF THE CREDITORS TO SHOW THAT NOT ONLY THE LIABILITIES WERE OUTSTANDING BUT ALSO-THAT THE SAME WERE DULY ACKNOWLEDGED BY THE SU NDRY CREDITORS AS WELL. MOREOVER, A COPY OF THE BANK-ACCOUNT OF THE A SSESSEE HAS ALSO BEEN PLACED ON RECORD OUT OF WHICH ALL THESE SUNDRY CRED ITORS HAVE BEEN PAID THROUGH ACCOUNT PAYEE CHEQUES IN THE FOLLOWING FINA NCIAL YEAR. THEREFORE, THE LD. CIT(A) RIGHTLY HELD THAT THE LIA BILITIES IN RESPECT OF VARIOUS SUNDRY CREDITORS MENTIONED ABOVE WERE STILL OUTSTANDING AT THE END OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMEN T YEAR UNDER CONSIDERATION AND THE PROVISIONS OF SECTION 41(1) O F THE ACT WERE NOT 12 APPLICABLE IN THE ASSESSEES CASE, HENCE, THE ADDI TION OF RS. 84,10,126/- MADE BY THE A.O. ON THIS ACCOUNT WAS RIGHTLY DELETE D, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROU ND NO. 2 RAISED BY THE REVENUE. 8. WITH REGARD TO GROUND NO.3 RELATING TO DISALLOWA NCE OF RS. 17,200/- ON ACCOUNT OF SALES PROMOTION EXPENSES IS CONCERNED , WE FIND THAT THE ASSESSEE HAD CLAIMED SALES PROMOTION EXPENDITURE AM OUNTING TO RS. 65,500/- IN HIS PROFIT AND LOSS ACCOUNT. THE A. O. DISALLOWED AN AMOUNT OF RS. 17,200/- OUT OF THESE EXPENSES FOR TH E REASON THAT THIS AMOUNT DID NOT RELATE TO THE ASSESSEES BUSINESS AS SEEN BY THE A.O. ON EXAMINATION OF THE VOUCHERS. IN RESPONSE TO THIS AD DITION, IT HAS BEEN SUBMITTED BY THE ASSESSEENT THAT BOTH INTERNAL AS W ELL EXTERNAL VOUCHERS WERE DULY MAINTAINED AND DISALLOWANCE MADE BY THE A .O. IS ON ADHOC BASIS. NO SPECIFIC INSTANCE OF DISALLOWABLE EXPENSE S WAS BROUGHT ON RECORD BY THE A.O. WE NOTE THAT THOUGH THE A.O. HAS MENTIONED IN THE ASSESSMENT ORDER THAT HE HAD FOUND AN AMOUNT OF RS. 17,200/- AS NOT RELATING TO THE ASSESSEES BUSINESS ON EXAMINATION OF VARIOUS VOUCHERS BUT HE HAS NOT POINTED OUT ANY SPECIFIC INSTANCE OF ANY EXPENSE WHICH WAS NOT RELATED TO THE ASSESSEES BUSINESS. IN THE ABSENCE OF THE SAME DISALLOWANCE MADE BY THE A.O. CANNOT BE SUSTAINED A ND THE SAME WAS RIGHTLY DELETED, WHICH DOES NOT NEED ANY INTERFERE NCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUND NO. 3 RAISED BY THE REVENUE. 13 9. WITH REGARD TO GROUND NO. 4 RELATING TO DISALLOWANC E OF RS 1,54,519/- ON ACCOUNT OF CAR RUNNING AND DEPRECIATION IS CONCE RNED, WE FIND THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS. 1,74,558/- ON ACCOUNT OF CAR RUNNING AND MAINTENANCE EXPENSES AND RS. 3,40,504/- WHICH WAS CLAIMED ON ACCOUNT OF DEPRECIATION ON THREE CARS. THE A.O. DISALLOWED 30% OF THESE EXPENSES ON THE GROUND THAT THE APPELLANT'S C LAIM ON ACCOUNT OF CAR RUNNING AND MAINTENANCE EXPENSES AND DEPRECIATION O N THE SAME WAS EXCESSIVE AS THE APPELLANT WAS HAVING THREE CARS. I N RESPONSE TO THIS DISALLOWANCE THE APPELLANT HAS SUBMITTED THAT DISAL LOWANCE MADE BY THE A.O. WAS ADHOC AND UNREASONABLE. THE ASSESSEE RELIE D ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF STATE OF M ADRAS VS. G J COELHI 53 ITR 186 (SC), WHEREIN IT WAS HELD THAT PERSONAL EXPENSES ARE THOSE THAT RELATE TO THE PERSON OF THE ASSESSEE TO SATISF Y HIS PERSONAL NEEDS SUCH CLOTHS FOODS ETC. HOWEVER, IT HAS BEEN ADMITTE D BY THE ASSESSEE IN HIS SUBMISSIONS THAT POSSIBILITY OF SOME PERSONAL U SE OF THE CARS CANNOT BE RULED OUT AND SOME REASONABLE DISALLOWANCE IN TH E ABSENCE OF LOG BOOK AND OTHER RELEVANT DETAILS CAN BE MADE. AS FAR AS D EPRECIATION ON CARS IS CONCERNED IT WAS SUBMITTED THAT THE CARS FELL UNDER THE HEAD MACHINERY AND PLANT BLOCK AND INDIVIDUAL ASSET LOSES IT IDENT ITY AND THE QUESTION WHETHER AN INDIVIDUAL ASSET IS PUT TO USE IN A PART ICULAR YEAR OR NOT IS IRRELEVANT. THE APPELLANT ALSO RELIED ON THE DECISI ON IN THE CASE OF CIT VS. UNION CARBIDE (I) LTD. (2002) 174 CTR (CAL), 334, W HEREIN IT WAS HELD THAT ONCE IT IS SHOWN THAT THE ASSESSEE HAS PUT THE MACHINERY TO USE, FOR THE PURPOSE OF THE ASSESSEE'S BUSINESS, THEN FURTHE R INQUIRY ABOUT THE 14 DEGREE OR TYPE OF USE IS NOT PERMITTED TO BE SCRUTI NIZED BY THE LANGUAGE OF THE SECTION. ONCE THE ASSESSEE CAN ESTABLISH BON AFIDE USE OF THE MACHINERY FOR THE PURPOSES OF THE ASSESSEE'S BUSINE SS, THEN AND IN THAT EVENT, THE ASSESSEE ESTABLISHES THE RIGHT TO CLAIM DEPRECIATION. WE FURTHER NOTE THAT THE ASSESSEE HAS HIMSELF ADMITTED THAT SO ME ELEMENT OF PERSONAL USE OF THE CARS CANNOT BE RULED OUT IN THE ABSENCE OF LOGBOOK AND OTHER RELEVANT DETAILS. THEREFORE, SOME REASONA BLE DISALLOWANCE ON ACCOUNT OF PERSONAL USE OF THE CARS WAS REQUIRED TO BE MADE. HOWEVER, DISALLOWANCE MADE BY THE A.O. TO THE EXTENT OF 30% WAS HELD TO BE EXCESSIVE. THEREFORE, THE DISALLOWANCE OF 20% OF T HE CAR MAINTENANCE AND RUNNING EXPENSES AND DEPRECIATION WOULD BE REAS ONABLE AND WAS RIGHTLY CONFIRMED TO THAT EXTENT AND ACCORDINGLY, T HE DISALLOWANCE ON THESE ACCOUNTS WAS RESTRICTED TO RS. 1,03,012/-, WH ICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTI ON OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUND NO. 4 R AISED BY THE REVENUE. 10. WITH REGARD TO GROUND NO. 5 RELATING TO DISALLO WANCE OF RS. 11,265/- OUT OF TOUR AND TRAVELLING EXPENSES IS CONCERNED, WE FIND THAT THE A.O. MADE A DISALLOWANCE OF RS. 11,265/- OUT OF TOUR AND TRAVEL EXPENSES OF RS. 88,575/- ON THE GROUND THAT EXAMINATION OF THE VOUCHERS REVEALED THAT THIS MUCH EXPENDITURE WAS NOT ELIGIBLE FOR DED UCTION. IN RESPONSE TO THIS ADDITION, IT WAS SUBMITTED BY THE ASSESSEE THA T DISALLOWANCE HAS BEEN MADE BY THE A.O. ON ADHOC BASIS WITHOUT POINTING OU T ANY SPECIFIC INSTANCE OF DISALLOWABLE NATURE OR BRINGING ON RECO RD ANY CONTRARY MATERIAL. WE NOTE THAT THE DISALLOWANCE OF RS. 11,2 65/- HAS BEEN MADE 15 BY THE A.O. BY OBSERVING THAT EXAMINATION OF THE VO UCHERS REVEALED INELIGIBLE NATURE OF THE EXPENSES TO THIS EXTENT. H OWEVER, NO SPECIFIC INSTANCE OF DISALLOWABLE NATURE HAS BEEN POINTED OU T BY THE A.O. NOR HAS HE BROUGHT ON RECORD ANY EVIDENCE IN SUPPORT OF THE SE OBSERVATIONS. THEREFORE, DISALLOWANCE OF RS. 11,265/- MADE ON THI S ACCOUNT WAS RIGHTLY DELETED, WHICH DOES NOT NEED ANY INTERFERENCE ON OU R PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND NO. 5 RAISED BY THE REVENUE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/05/2017. SD/- SD/- (O.P. KANT) (H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:26/05/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES