9911796707
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Issues Involved:
1. Disallowance of the petitioner's claim for deduction of salary paid to the driver. 2. Disallowance of the petitioner's claim for depreciation in respect of the car. Detailed Analysis: 1. Disallowance of the Petitioner's Claim for Deduction of Salary Paid to the Driver: The petitioner challenged the disallowance of the salary paid to the driver, which was claimed as a deduction under "Income from other sources." The Assessing Officer disallowed the claim, and the Commissioner of Income-tax upheld this decision, citing the Supreme Court's ruling in Vijaya Laxmi Sugar Mills Ltd. v. CIT [1991] 191 ITR 641. The Commissioner argued that the salary paid to the driver is inadmissible under the head of income declared by the petitioner. The petitioner contended that the deduction should be allowed under section 57(iii) of the Income-tax Act, which provides for deductions in the computation of income from other sources. The petitioner argued that the nature of the claim required an objective consideration and could not be disallowed as prima facie inadmissible under section 143(1)(a) without proper adjudication. The court noted that section 143(1)(a) allows the Assessing Officer to disallow claims that are patently inadmissible in law. The court further explained that the officer must consider the statutory provision under which the claim is made. If the statute expressly prohibits the allowance, the claim is patently inadmissible. However, if the claim is maintainable under any provision of the Act, it calls for adjudication and cannot be disallowed as prima facie inadmissible. In this case, the court found that the petitioner did not provide sufficient details to substantiate the claim for the driver's salary. The court emphasized that while the Supreme Court's decision in Vijaya Laxmi Sugar Mills Ltd. does not establish a general rule that salary paid to an employee is inadmissible under section 57(iii), the petitioner failed to demonstrate that the claim was tenable. Therefore, the court upheld the Commissioner's decision to disallow the claim as prima facie inadmissible. 2. Disallowance of the Petitioner's Claim for Depreciation in Respect of the Car: The petitioner also challenged the disallowance of depreciation on the car claimed under "Income from other sources." The Assessing Officer disallowed the claim, and the Commissioner upheld this decision, stating that depreciation is allowable under section 57(ii) only against income from hire charges. Since the petitioner did not return any income from hire charges, the claim was deemed prima facie inadmissible. The petitioner argued that the claim should be allowed under section 57(iii), which provides for deductions of any other expenditure laid out for earning income. However, the court clarified that depreciation is not an expenditure but an allowance provided under section 32, generally allowed in the computation of income from business or profession. Section 57(ii) is an exception that allows depreciation only against income from hire charges. The court found that the petitioner's income under "Income from other sources" included only interest and dividends, with no hire charges. Therefore, the claim for depreciation did not fall under section 57(ii) and could not be considered under section 57(iii) as it is not an expenditure. Consequently, the court upheld the disallowance of the depreciation claim as prima facie inadmissible. Conclusion: The court dismissed the petition, upholding the disallowance of both the salary paid to the driver and the depreciation on the car as prima facie inadmissible claims under section 143(1)(a) of the Income-tax Act. The court emphasized that the petitioner failed to provide sufficient details to substantiate the claims and that the statutory provisions did not support the deductions claimed.
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