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2022 (7) TMI 264 - AT - Income TaxDisallowance of depreciation on buildings and expenditure on account of telephone and vehicle - HELD THAT - The issue of ad hoc disallowance was also dealt with by the ITAT 2019 (3) TMI 1983 - ITAT DELHI and finding that no cogent material was produced by the AO for the disallowance, the same was deleted. We find that the aforesaid decision of ITAT fully applies to the present case. It is not the case that the decision of ITAT was reversed by Hon'ble jurisdictional High Court 2010 (12) TMI 947 - DELHI HIGH COURT , hence the grounds for disallowance of depreciation and ad hoc disallowance of expenditure on account of telephone and vehicle are directed to be deleted. Disallowance u/s. 40A(3) - assessee states that date on which payments were made were public holidays and hence the same falls under the exception clause and the same should be allowed - HELD THAT - Since this is factual aspect we deem it appropriate to remit this issue to the file of AO. AO shall consider the issue afresh and decide the issue only for those payments, which were made on those days that the asses see claimed as bank holidays, is found to be correct and found to be falling under the exception clause. Other payment on the ground of only business exigency, we do not find any infirmity in the orders of the authorities below on this issue. Less credit of TDS, since the matter is going back to the AO, AO shall examine the same and decide as per law. Appeal of the assessee is partly allowed.
Issues Involved:
1. Disallowance of depreciation on building 2. Disallowance of telephone expenses 3. Disallowance of vehicle maintenance and depreciation on vehicle 4. Disallowance u/s. 40A(3) of the IT Act 5. Lessor credit of TDS amount Disallowance of Depreciation on Building: The appeal contested the disallowance of Rs. 5,00,000 on building depreciation, emphasizing that the land and building were purchased as a single unit for business purposes. The ITAT allowed the appeal, citing the rule of consistency as the Revenue Department previously allowed depreciation on the building in other assessment years. Similarly, the disallowance of Rs. 3,87,595 related to the rental portion of the building was also overturned by the ITAT, following a decision by the Delhi High Court that depreciation cannot be segregated for different portions of the building. Disallowance of Telephone Expenses: The disallowance of Rs. 1,44,436 on telephone expenses was contested, arguing that the reduction from 20% to 10% was arbitrary and lacked evidentiary support. However, the ITAT did not find any merit in this argument and upheld the disallowance. Disallowance of Vehicle Maintenance and Depreciation on Vehicle: Regarding the disallowance of Rs. 3,41,075 on vehicle maintenance and depreciation, the ITAT found that no cogent material was presented by the Assessing Officer for the disallowance, leading to its deletion. The decision of the ITAT in a previous case was applied to this issue, resulting in the deletion of the disallowance. Disallowance u/s. 40A(3) of the IT Act: The disallowance of Rs. 2,61,200 under section 40A(3) was challenged on the basis that the payments were made on public holidays falling under an exception clause. The ITAT remitted this issue back to the Assessing Officer for reconsideration based on the specific circumstances of the payments. Lessor Credit of TDS Amount: The contention regarding the lesser credit of TDS amounting to Rs. 7,17,985 was left for the Assessing Officer to re-examine and decide according to the law. The ITAT partially allowed the appeal, directing a review of specific issues while upholding certain disallowances based on the evidence presented. This detailed analysis of the legal judgment highlights the key issues raised in the appeal, the arguments presented by the parties, and the decisions rendered by the ITAT on each issue, providing a comprehensive overview of the case.
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