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TMI Blog1999 (12) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... ade. The Ld. CIT(A) deleted the said disallowance by observing as under:--- "At the most, the perquisite value can be assessed in the hands of the concerned directors as the company can provide cars for personal use by the directors". 11. In ITO v. Ashoka Betelnut Co. (P.) Ltd.[1984] 10 ITD 788 (Mad.) (TM), it was held that where the assessee company by its conduct allowed its director to use its cars for personal purposes, the expenditure on said cars could not be disallowed. A decision, almost to the same effect was rendered by the Special Bench in the case of Daks Copy Services (P.) Ltd. v. ITO [1989] 30 ITD 223 (Bom.) wherein it was held that the cars had been maintained for business purposes and the fact that part of expenses would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the plant and machinery exclusively for the purpose of the business. Rule 5 would apply to cases falling under section 32 and not to cases failing under section 38(2)." 13. We are reminded of the classic decision rendered in the case of Saloman v. Saloman & Co. [1897] AC 22, wherein it was held that the entity of corporation is entirely separate from that of its shareholders, in so far as its assets are separate and distinct from those of its members, creditors and the members have no right to the assets of the corporation. 14. The legal entity of a company, apart from its directors is well established by catena of decisions in this regard. It is only when the corporate character is employed to commit any illegality that the courts wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Chitram & Co. (P.) Ltd., proceeded to make disallowance for depreciation on account of personal use of car by the directors. It may be relevant to reproduce the provisions of section 38(2), so as to understand the controversy in hand, as under :--- "(2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions under sub-clause (ii) of clause (a) and clause (c) of section 30, clauses (i) and (ii) of section 31 and clause (ii) of sub-section (1) of section 32 shall be restricted to a fair proportionate part thereof which the Assessing Officer may determine, having regard to the user of such building, machinery, plant or furniture, for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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