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2020 (10) TMI 1085 - AT - Income TaxDepreciation claim on motor vehicles - Personal use v/s business use - Disallowance of claim as vehicles were purchased in the name of the directors of the assessee company - HELD THAT - As decided in assessee's own case 2019 (1) TMI 1816 - ITAT PUNE there cannot be any disallowance of personal expenses for cars on account of personal use by the director. It has been further held that no disallowance can be made even by treating such expenditure as not having been incurred for the business purpose - there can be no disallowance on account of personal use by the director-employees of the assessee. Such an amount can be treated as a perquisite in the hands of the employees - Decided in favour of assessee. Disallowance u/s.80IA(4) - As per AO Assessee had claimed deduction u/s.80IA(4)(iii) of the Act without complying with the provisions of the Act and Income Tax Rules - HELD THAT - This issue is also covered in favour of the assessee by the order of Pune Bench of the Tribunal 2018 (8) TMI 1993 - ITAT PUNE wherein placing reliance on the decision of the Hon‟ble Jurisdictional High Court in the case of CIT Vs. Paul Brothers 1992 (10) TMI 5 - BOMBAY HIGH COURT wherein held unless the relief claimed in the first year of undertaking is withdrawn, the AO cannot withhold the relief for the subsequent years. As claim is allowed for first year of undertaking, the AO cannot withdraw the deduction - Decided in favour of assessee.
Issues Involved:
1. Disallowance of depreciation claim on motor vehicles. 2. Disallowance claimed under section 80IA(4) of the Income Tax Act. Issue 1: Disallowance of Depreciation Claim on Motor Vehicles: The appeal concerned the disallowance of depreciation claimed on motor vehicles by the assessee. The Assessing Officer disallowed the claim as the vehicles were purchased in the name of the directors of the company, not in the name of the company itself. The Assessing Officer emphasized that ownership of the asset is a mandatory requirement for claiming depreciation under section 32 of the Act. However, the Tribunal referred to a previous decision where it was held that disallowance of expenses for personal use by directors of a company is not justified. Citing judicial precedents, the Tribunal ruled that there can be no disallowance on account of personal use by director-employees, as it can be treated as a perquisite. Consequently, the Tribunal set aside the order of the Ld. CIT(Appeals) and allowed the ground of appeal related to this issue. Issue 2: Disallowance Claimed under Section 80IA(4) of the Income Tax Act: The second issue pertained to the disallowance claimed under section 80IA(4) of the Act. The assessee, engaged in the business of builders and developers, had claimed a deduction under this section. However, the Assessing Officer disallowed the claim as the assessee allegedly did not comply with the provisions of the Act and Income Tax Rules. The Tribunal, in this case, relied on a previous decision where it was held that unless the relief claimed in the first year of undertaking is withdrawn, the Assessing Officer cannot withhold the relief for subsequent years. Referring to relevant legal judgments, the Tribunal concluded that the assessee was entitled to the relief for both years on this legal issue alone. Consequently, the Tribunal set aside the order of the Ld. CIT(Appeals) and allowed the ground raised by the assessee related to this issue. In conclusion, the Appellate Tribunal ITAT Pune ruled in favor of the assessee, allowing both grounds of appeal related to the disallowance of depreciation claim on motor vehicles and the disallowance claimed under section 80IA(4) of the Income Tax Act for the assessment year in question.
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