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Issues:
- Disallowance of claim for depreciation under section 32 in respect of motor car and/or motor cycle used for business purposes by partners of a firm. Analysis: The appeals were filed against the order of the Commissioner of Income-tax (Appeals) arising from the Assessing Officer's order under section 143(3) for the assessment years 2000-01 and 2001-02. The main issue in all three appeals was the disallowance of the claim for depreciation on motor vehicles used for business purposes by the partners of the firm. The Assessing Officer rejected the claim, stating that depreciation is only allowable for assets used by the assessee for business or profession. The Commissioner of Income-tax (Appeals) upheld this decision, noting the lack of evidence that the motor vehicles were used for business purposes. The authorised representative argued that the vehicles were indeed used for business, citing judgments and the assessment order of the firm. The Tribunal considered whether depreciation could be allowed for assets owned by a partner but used for the firm's business, as per the provisions applicable to taxation of registered firms and partners from April 1, 1993. Section 32 allows depreciation on assets used for business, with partial disallowance for personal use under section 38(2). The Tribunal noted that the firm's Assessing Officer had accepted substantial business use of the vehicles but partially disallowed maintenance expenditure due to possible personal use. The issue was whether a partner could claim depreciation on assets used for the firm's business against share income, remuneration, and interest. The Tribunal analyzed the Assessing Officer's reasons for disallowance and the appellant's reliance on judgments, including the Madras High Court's decisions. The Tribunal referred to the Madras High Court's judgment in CIT v. K. G. Sadagopan, allowing depreciation on assets used for the firm's business by a partner. It also considered the case of Additional CIT v. N. Vaidyanathan, where depreciation was allowed for assets used partially for professional purposes. Additionally, the Tribunal cited a decision regarding deduction of interest paid for capital investment in a firm against business income. The Tribunal held that the appellant's claim for depreciation was allowable, considering the firm's assessment and the proportion of personal use determined by the Assessing Officer. Accordingly, the Tribunal allowed four-fifths of the depreciation claim for the partners, as one-fifth was considered personal use. The appeals were partly allowed based on these findings.
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