2013 (8) TMI 973 - AT - Income Tax

Disallowance of turnover discount given to it s associate company - Held that - There is a finding of fact by ld.CIT(A) that sister-concern is also subjected to same rate of tax and there is no attempt of evading tax. Thus no addition required Disallowance of depreciation - Held that - From the assessment order it is transpired that there was no disallowance of depreciation in this year and before ld.CIT(A) also there was no ground against the disallowance of depreciation. It appears that this ground was wrongly raised therefore the same is rejected. Disallowance on account of depreciation of Car purchased on 31.03.2009 - Held that - CIT(A) allowed the claim of the assessee on the basis that the AO has held on the surmises that there was no sufficient diesel in the new vehicle purchased on 31/03/2009 which could have been used for the business purpose whereas the assessee has stated that dealer has provided reasonable quantity of free-diesel at the time of delivery and the car was used accordingly. After considering the facts and the submissions we are of the view that there is no infirmity in the order of the ld.CIT(A). Since the finding of the Assessing Officer is based merely on conjectures and surmises that there was no sufficient diesel/petrol as provided by the dealer we do not understand that how can AO determine that how much petrol was supplied to the assessee by the dealer without making any enquiry from the dealer. Therefore this ground of the Revenue is hereby rejected.

Summary

Issues Involved:
- Disallowance of turnover discount
- Disallowance of depreciation on car purchase

Analysis:

Issue 1: Disallowance of Turnover Discount
The Revenue appealed against the deletion of turnover discounts given to an associate company. The Assessing Officer disallowed the discounts, suspecting undue benefits to the related party. The ld.CIT(A) allowed the appeal, stating no loss to Revenue as the sister-concern was taxed at the same rate. The appellant cited legal precedents, emphasizing a trader's right to arrange transactions for tax efficiency. The tribunal upheld the ld.CIT(A)'s decision, noting no attempt to evade tax, as per court rulings. The ground for disallowance was dismissed based on factual findings and legal principles.

Issue 2: Disallowance of Depreciation
The Assessing Officer disallowed depreciation on a car purchase, questioning its business use. The ld.CIT(A) overturned this decision, accepting the assessee's explanation of dealer-provided diesel for initial use. The tribunal found the AO's reasoning speculative and lacking evidence, supporting the ld.CIT(A)'s ruling. The ground for disallowance was rejected due to insufficient basis and lack of dealer inquiry. The appeal against depreciation disallowance was dismissed.

General Grounds:
- Grounds 3 & 4, being general, required no separate adjudication.
- The tribunal dismissed the Revenue's appeals for both assessment years, upholding the ld.CIT(A)'s decisions in favor of the assessee.
- The judgments were pronounced openly in court, concluding the legal proceedings.