2011 (1) TMI 1567 - AT - Income Tax

Summary

Issues involved: Revenue challenging deletion of addition in sale price of shares and disallowance of depreciation and other expenses on car registered in the name of the director.

Deletion of addition in sale price of shares: Revenue challenged the deletion of addition of Rs. 15,10,000 in respect of sale price of shares. The assessee claimed that shares were sold at purchase price without making any profit, as they were of closely held private limited companies. The AO made the addition without any justification, applying 25% as additional sale price. The learned CIT(A) accepted the contention of the assessee, noting that shares were purchased as stock-in-trade and complete details were filed. The addition was deleted as no material was brought to show higher profit earned on sales.

Disallowance of depreciation on car: Revenue challenged the deletion of disallowance of Rs. 1,11,369 in respect of depreciation and other expenses on a car registered in the name of the director. The AO disallowed depreciation on the motor car purchased in the director's name, despite being used for business purposes. The learned CIT(A) accepted that the car was purchased from the funds of the assessee-company and used for its business, thus deleting the disallowance.

Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the deletion of addition in sale price of shares and disallowance of depreciation on the car registered in the director's name. The Tribunal found no merit in the Revenue's grounds and affirmed the decisions of the learned CIT(A) in both issues.