1979 (9) TMI 119 - AT - Income Tax

Summary

Issues:
1. Disallowance of expenditure treated as capital expenditure.
2. Disallowance of a portion of the driver's salary.
3. Disallowance of expenses on tea and pan.
4. Disagreement over the treatment of interest payments.
5. Disagreement over the treatment of entertainment expenses.

Analysis:

1. The assessee challenged the disallowance of Rs. 9,951 as capital expenditure, citing a Supreme Court judgment regarding the nature of expenditure. The Tribunal agreed with the assessee, stating that the expenditure was for overhauling cars and did not create a new asset, thus deleting the disallowance.

2. The disallowance of 1/3rd of the driver's salary was upheld as the assessee failed to provide evidence that the car was solely used for business purposes. The Tribunal found that without a log-book or other material, it was reasonable to assume some personal use of the car, affirming the lower authorities' decision.

3. The disallowance of Rs. 796 out of Rs. 2,596 incurred on tea and pan was deemed unwarranted by the Tribunal, citing previous decisions. The Tribunal held that the disallowance should not have been made, leading to a partial allowance of the assessee's appeal.

4. Regarding interest payments, the Tribunal rejected the Department's appeal, referencing a previous decision in favor of the assessee for a different assessment year. The Tribunal upheld the deduction of Rs. 10,358 as interest.

5. The disagreement over entertainment expenses resulted in the Tribunal dismissing the Department's appeal. Citing consistent judicial precedents, the Tribunal found no merit in the Department's argument and upheld the relief granted by the lower authorities.

In conclusion, the Tribunal partly allowed the assessee's appeal and dismissed the Department's appeal, resolving the various issues raised in the case.