1990 (5) TMI 67 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of car expenses and depreciation claimed by the assessee.
2. Rejection of collection charges claimed by the assessee for a house property.

Issue 1: Disallowance of Car Expenses and Depreciation:
The assessee, a partner in two firms, claimed deduction for car depreciation and maintenance expenses. The ITO disallowed the claim due to the absence of a provision in the partnership deed. On appeal, the AAC upheld the disallowance stating the onus was on the assessee to prove the expenses were for business purposes. The counsel for the assessee argued that although not explicitly mentioned in the partnership deed, it was understood that conveyance expenses were to be borne by the assessee as the firms were not capital intensive and relied on partners' services. The tribunal noted that partners were working partners, the firms had no vehicle, and the nature of business required travel within the city. Considering the circumstances, the tribunal allowed the claim, directing the ITO to do the same.

Issue 2: Rejection of Collection Charges for House Property:
The assessee claimed collection charges for a house property, which the ITO rejected citing lack of evidence. On appeal, the AAC found the claim reasonable as it was less than 6% of the annual letting value and services were rendered for rent collection. The Department contended that the claim amount being less than 6% was not determinative and emphasized the need to prove actual expenditure for collection purposes. The counsel for the assessee provided details of employees hired for rent collection and various property-related tasks. The tribunal acknowledged the employment of individuals for collection and maintenance tasks but clarified that only expenses directly related to collection could be claimed as collection charges. Ultimately, the tribunal allowed the entire claim, considering the services rendered and the necessity of the expenses.

In conclusion, the appellate tribunal allowed the assessee's appeal regarding both the disallowance of car expenses and depreciation as well as the rejection of collection charges for the house property, dismissing the departmental appeal.