Ketan Balwantrai Mehta, Thane vs Assessee
- CitationI.T.A. No.6377/Mum/2013
Ratio decidendi
The rule this decision rests on
The Tribunal reasoned on two points, each resting on the court's own reasoning. First, the assessee's contention that the same expense was allowed in full in the preceding year does not by itself displace a disallowance where the authority below has given a reasoned basis for it, and an assessee who does not controvert that reasoning cannot succeed on the point. Where telephone expenses are reasonably capable of being used for personal as well as business purposes, a proportionate disallowance of ten per cent of such expenses is justified. Second, where expenditure is incurred on motor cars, the possibility that the cars were used for personal or non-business purposes cannot be ruled out, so a proportionate disallowance of ten per cent of the vehicle expenses attributable to those cars, and the consequential disallowance of depreciation under section 38(2) of the Act, are sustainable notwithstanding a fall in vehicle expenses from the preceding year or a contention that the disallowance was computed on the written-down value rather than on the expenses.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
आयकर अपील य अ धकरण, मुंबई यायपीठ "डी " मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL" D" BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) सव ी बी.आर.बा करन, लेखा सद य एवं अ मत शु ला, या यक सद य के सम
आयकर अपील सं./I.T.A. No.6377/Mum/2013 ( नधारण वष / Assessment Year :2008-09)
Ketan Balwantrai Mehta बनाम/ Asst.Commissioner of Income Tax, Prop: M /S Super Industrial Circle-1, Ashar I T Park, Road, Vs. Gas D/2 Nandanvan Industrial No.16 Z Wagle Ind. Estate, Thane-
400604 estate L, B S Marg Navpada, Thane-4000604, Maharashtra.
(अपीलाथ /Appellant) .. ( यथ / Respondent)
थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAVPM4662P
अपीलाथ ओर से / Assessee by Shri Jitendra S Sanghavi यथ क ओर से/Revenue by Shri Love Kumar
सुनवाई क तार ख / Date of Hearing : 19.3.2015 घोषणा क तार ख /Date of Pronouncement : 25.3.2015
आदे श / O R D E R
PER B.R. BASKARAN (AM)
The assessee has filed this appeal challenging the order dated 22.8.2013 passed by Ld CIT(A)-2, Thane for assessment year 2008-09.
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) has erred in confirming the disallowance of motor car expenses to the tune of Rs.2,74,800/- in as much as same 2 I . T . A . N o . 6 3 7 7 / Mu m / 2 0 1 3
is worked out on WDV of gross block of motor car which is illogical and unjustifiable.
3) Alternatively the ld.CIT(A) has 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 expenses 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 of 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 erred in confirming disallowance of depreciation on car to the tune of Rs.,20,610/-"
3. We have heard the parties 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 assessment proceedings, the AO noticed that the expenses claimed by the assessee 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 assessee 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 preceding year. However, we notice that the Ld CIT(A) has confirmed addition of 10% of telephone expenses on the reasoning that the assessee could have used telephones for personal purpose also. Before us, the assessee could not controvert the view 3 I . T . A . N o . 6 3 7 7 / Mu m / 2 0 1 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 reasoning 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 submitted that the car expenses have actually gone down during the year in spite of inflationary 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, the assessee has incurred a sum of Rs.56.41 lakhs only towards vehicle expenses. Accordingly he submitted that the disallowance of Rs.2.74 lakhs out of the vehicle expenses is not justified. He further submitted that the AO was not justified in disallowing a portion of depreciation claimed on car, 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 4 I . T . A . N o . 6 3 7 7 / Mu m / 2 0 1 3
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 contentions of the assessee. Further, in 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 expenses. 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 above order was pronounced in the open court on 25th March, 2015.
घोषणा खल ु े यायालय म दनांकः 25th March, 2015 को क गई ।
Sd sd
(अ मत शु ला / AMIT SHUKLA) (बी.आर.बा करन / B.R. BASKARAN) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER मुंबई Mumbai: 25th March,2015.
व. न.स./ SRL , Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु त(अपील) / The CIT(A)- concerned
4. आयकर आयु त / CIT concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब ु ई/ DR, ITAT, Mumbai concerned
6. गाड फाईल / Guard file.
आदे शानस ु ार/ BY ORDER,
True copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मंब ु ई /ITAT, Mumbai
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