1982 (4) TMI 126 - AT - Income Tax

Summary

Issues:
Disallowance of claimed petrol expenditure and depreciation on a car by the appellant.

Analysis:
The appellant, a partner in multiple firms, claimed Rs. 12,000 as a deduction for petrol expenditure and car depreciation against his share of profit from a firm. The claim was rejected by the Income Tax Officer (ITO) and upheld by the Appellate Authority. The appellant argued that similar deductions were allowed in previous cases, citing the Supreme Court judgment in CIT vs. Ramniklal Kothari. The appellant relied on the Gujarat High Court judgment in Matubai Chunilal Patel vs. CIT to support his claim. The appellant contended that the expenditure was incurred for business purposes and should be allowed as a deduction.

The revenue opposed the appellant's submissions, stating lack of evidence for the car's business use and no clause in the partnership deed regarding the appellant's business activities with a personal vehicle. However, after considering the arguments, the Tribunal held in favor of the appellant. The Tribunal referred to the general proposition established by the Supreme Court, Gujarat High Court, and Patna High Court that partners can claim deductions for expenses incurred in earning profits from a firm. The Tribunal found that the appellant's expenditure of Rs. 2,000 on petrol was wholly and exclusively for business purposes, justifying the deduction. 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, permitting the deduction of Rs. 2,000 as petrol expenditure and half of the depreciation on the car.