2012 (10) TMI 896 - HC - Income Tax

Expenditure on account of foreign visits - held that - . We also fail to understand on what basis the Commissioner of Income Tax (Appeals) has allowed 50% we think it was completely guess work and it appears as if just because the Commissioner of Income Tax (Appeals) thinks that the aforesaid expenditure of disallowance should be granted and it was granted. Disallowance of depreciation - lease hold property Held that - There was no document to show whether it was a leasehold interest or otherwise - assessee is not the owner and the lessee - assessee is entitled to depreciation only on that portion of capital expenditure on construction of any structure brought about by the assessee and uses for the parties on business as it is clearly written under Explanation I to Section 32(1) - Since no agreement has been produced to substantiate that the assessee holds lease for more than 12 years therefore, the claim made by the assessee is not sustainable

Issues:
1. Allowability of sum under "Return to Certificateholders"
2. Remittance of the matter to the Assessing Officer
3. Deviation from previous decision on interest-free loans
4. Restrictions contained in Residuary Non-banking Company Direction, 1987
5. Disallowance of expenditure of foreign tour
6. Declining depreciation in respect of long-term leasehold properties

Analysis:

1. Allowability of sum under "Return to Certificateholders":
The appellant contended that the sum under "Return to Certificateholders" should be considered as a revenue outgoing, not a capital liability. The Tribunal's decision was challenged based on the nature of subscriptions from certificate-holders. However, during the hearing, the appellant chose to proceed only on specific grounds related to foreign tour expenditure and depreciation of leasehold properties.

2. Remittance of the matter to the Assessing Officer:
The appellant argued that the Tribunal erred in remitting the matter to the Assessing Officer, contrary to its earlier decision on similar issues. The Tribunal's decision was questioned regarding the addition of interest on loans and the nature of liabilities. However, the appellant focused the appeal on specific grounds related to foreign tour expenditure and depreciation of leasehold properties.

3. Deviation from previous decision on interest-free loans:
The appellant raised concerns about the Tribunal deviating from its earlier decision on interest-free loans, questioning the consistency in decisions across assessment years. However, the appellant chose to proceed with the appeal on grounds related to foreign tour expenditure and depreciation of leasehold properties.

4. Restrictions contained in Residuary Non-banking Company Direction, 1987:
The appellant argued that the restrictions in the Residuary Non-banking Company Direction, 1987 precluded the presumption of diversion of depositors' money, challenging the addition as arbitrary. However, the focus of the appeal shifted to specific grounds related to foreign tour expenditure and depreciation of leasehold properties.

5. Disallowance of expenditure of foreign tour:
The appellant contended that the foreign tour expenditure was essential for the nonbanking financing business, emphasizing the lack of formal evidence due to the nature of business activities. The appellant relied on previous judgments and argued against the Tribunal's decision to disallow the entirety of the expenditure, focusing the appeal on this specific ground.

6. Declining depreciation in respect of long-term leasehold properties:
The appellant argued for the allowance of depreciation on long-term leasehold properties based on ownership definitions under relevant tax laws. The appellant cited precedents and legislative provisions to support their claim, challenging the Tribunal's decision to decline depreciation. However, the appeal primarily focused on specific grounds related to foreign tour expenditure and depreciation of leasehold properties.

In the final judgment, the Court dismissed the appeal, upholding the decisions of the authorities regarding the disallowance of foreign tour expenditure and depreciation of leasehold properties. The Court emphasized the lack of adequate evidence to support the claims and found no basis for interference. The appellant failed to discharge the initial burden of proof required for the deductions, leading to the dismissal of the appeal without any order as to costs.

← Previous Next →