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Issues:
- Disallowance of Rs. 12,000 claimed by the appellant for petrol expenditure and car depreciation. Detailed Analysis: The appellant, a partner in a firm, claimed a deduction of Rs. 12,000 for petrol expenditure and car depreciation related to the business of the firm. The Income Tax Officer (ITO) rejected this claim, which was upheld by the Appellate Assistant Commissioner (AAC), leading to the appeal. The appellant argued that based on the Supreme Court judgment in Ramniklal Kothari v. CIT, an assessee partner is entitled to deduct expenses related to earning income from the firm. The appellant also cited the Gujarat High Court judgment in Matubai Chunilal Patel v. CIT to support the deduction claim. The appellant contended that the expenditure was incurred for business purposes and should be allowed as a deduction from the share income. The revenue opposed the appellant's submissions, stating that there was no evidence to prove the car was used for the firm's business, no commercial expediency for purchasing the car, and no partnership deed clause requiring the appellant to use his own transport for the firm's business. However, after considering the arguments and judgments cited, the tribunal held that the claim of the appellant was admissible. The tribunal noted that business income earned by a firm is considered business income for all partners, and expenses necessary for earning that income are deductible. The tribunal found that the appellant's expenditure on petrol and depreciation on the car was justified for carrying on the business and earning business income. The tribunal directed the ITO to allow Rs. 2,000 as petrol expenditure and 50% of the depreciation while computing the appellant's total income. In conclusion, the tribunal allowed the appeal in part, granting the appellant the deduction for petrol expenditure and a portion of the car depreciation, based on the principles established by the Supreme Court and High Court judgments cited in the case.
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