2009 (4) TMI 975 - AT - Income Tax

Summary

Issues involved: Assessment of motor car expenses, lease line charges, application of Section 2(22)(e) of the Income Tax Act, 1961, and levy of interest u/s. 234B.

Assessment of Motor Car Expenses:
The appeal was against the disallowance of motor car expenses, car insurance, and depreciation, as well as the enhancement of income by applying Section 2(22)(e) of the Act. The Assessing Officer disallowed a portion of the expenses due to personal use of the car. The CIT(A) upheld the disallowance and invoked Section 2(22)(e) for deemed income. However, the Tribunal found that the car was purchased in the name of the director but owned by the company. Citing relevant case law, the Tribunal ruled in favor of the assessee, allowing depreciation and expenses as the car was used for business purposes.

Application of Section 2(22)(e):
The CIT(A) directed the Assessing Officer to examine the applicability of Section 2(22)(e) for other assessment years and initiate penalty proceedings. The Tribunal, after considering the evidence presented, concluded that the transaction of purchasing the car in the director's name was in the ordinary course of business, and there was no intention to provide a benefit to the director. Therefore, the amount deemed as income under Section 2(22)(e) was deleted.

Lease Line Charges:
The Assessing Officer disallowed lease line charges due to the absence of TDS payments, but the CIT(A) did not adjudicate on this issue. The Tribunal referred to a relevant decision and remanded the matter back to the CIT(A) for fresh consideration, providing the assessee with a reasonable opportunity to present their case.

Levy of Interest u/s. 234B:
The appeal also contested the levy of interest u/s. 234B. The Tribunal, after hearing both parties, directed the Assessing Officer to allow consequential relief regarding the interest levy. Consequently, the ground taken by the assessee was allowed.

In conclusion, the Tribunal partly allowed the assessee's appeal for statistical purposes, addressing the issues related to motor car expenses, application of Section 2(22)(e), lease line charges, and interest u/s. 234B. The Tribunal provided detailed reasoning based on the facts presented and relevant legal principles to arrive at its decisions.