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TMI Blog2000 (9) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of returned income but the expression "the amount computed as hereunder" implies that the calculation has to be made as per the AO's computation, that is, as computed by AO on the basis of ultimate assessment, and not on the basis of the returned income. 5. As against this, the learned Departmental Representative of Revenue has contended that on assessee's filing of return, the computation has to be made on the basis of returned income only and the deductions are to be allowed accordingly. He has contended that there cannot be fluctuating/varying deductions. He has contended that if there is some concealed income and an addition has been made therein, then assessee's deduction claimed cannot be increased proportionately at any stage of computation. He has contended that when a deduction is permitted under the IT Act, as per computation that means, as computed by assessee in his return of income as per the books of account. 6. We have considered the rival contentions as also the relevant material on record. 7. In our opinion, the contentions of the learned authorised representative of assessee cannot be said to be without weight. Although under s. 37(2A), it has nowhere be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that the directors have their personal cars or personal telephones at their residences. He has also contended that there is no material on record to show any recovery made by the company from the director's records on the use of car and telephone for non-business purpose. He has referred to para 7 on p 6 of the assessment order and contended that the AO has observed that as indicated in the TAR the assessee is not maintaining proper records to ensure exclusive use of vehicles for the purpose of business. He has contended that the AO made a disallowance of 1/5th of assessee's claim on account of use of vehicles being not related to assessee's business. He has contended that similar is the position in respect of disallowance out of telephone expenditure. 10. We have considered the rival contentions, the relevant material on record as also the cited decisions, the copies of which have been furnished on record. In (1999) 63 TTJ (Chd) 665. Tribunal Chandigarh has held that the expenditure on telephone installed at the residences of directors is not covered by s. 38(2) and expenses in case of a company cannot be for non-business purposes and the same cannot be disallowed. In (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arate category for office equipment/appliances. He has contended that the definition of 'plant' in s. 43(1) is inclusive only. He has cited CIT vs. Mohan Meakin Breweries Ltd. (1979) 11 CTR (HP) 52 : (1980) 122 ITR 203 (HP) and contended that 100 per cent development rebate has been allowed on telephone in that case. He has contended that when telephone is treated as 'plant' for development rebate there is no reason why the same should not be treated similarly for depreciation purpose. He has also furnished the copies of the following decisions in his support: (i) CIT vs. Jagdeesh Chandran Co. (1970) 75 ITR 697 (Mad); (ii) Scientific Engineering House (P) Ltd. vs. CIT (1985) 49 CTR (SC) 386 : (1986) 157 ITR 86 (SC); (iii) CIT vs. Parke Davis (India) Ltd. (1995) 128 CTR (Bom) 195 : (1995) 214 ITR 587 (Bom) (iv) CIT vs. Tarun Commercial Mills Ltd. (1984) 38 CTR (Guj) 148 : (1985) 151 ITR 75 (Guj); (v) Sundaram Motors (P) Ltd. vs. CIT (1969) 71 ITR 587 (Mad); and (vi) Hindustan Aeronautics Ltd. vs. CIT (1994) 119 CTR (Kar) 391 : (1994) 206 ITR 338 (Kar). 12. As against this the learned Departmental Representative of Revenue has contended that the depreciation at the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for depreciation under s. 32. In (1984) 38 CTR (Guj) 148 : (1985) 151 ITR 75 (Guj) the Hon'ble Gujarat High Court laid down three tests for examining as to whether an item would be an 'office appliance' or would fall within the purport of 'plant'. The Court observed as under: "....... the initial test for determining the nature of the article is what is known as the test of common or popular parlance as understood by a person dealing with those articles. The second test would be the principal and primary use for which the goods are required and for which the same are capable of being used. The third test is what is known as the commercial test in seeing how the articles or goods are known in the world of trade and commerce." The Court also observed as under: "The word 'appliance' is qualified by the word 'office' and, therefore, some meaning must be given to the word 'office' and unless an appliance is capable of being primarily used in the office, it cannot be termed as 'office appliance." It must be, therefore, an appliance which is generally used in office as an aid or facility for the proper functioning of the office." Observing as above, the Hon'ble Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (1981) 21 CTR (P H) 123 : (1982) 134 ITR 458 (P H). As against this the learned Departmental Representative of Revenue has contended that the AO has gone through various items of expenditure and he examined a few and made disallowance on estimate basis. He has also contended that it is not mentioned that the marriage gift was to employee and the same may have been to a relative. He has also contended that expenditure on charity regarding 'Jawar' for pegions is not allowable as it is not wholly and exclusively for the purpose of business. He has also contended that in the alternative that the matter may be sent back to the AO for examining each item. 16. We have considered the rival contentions, the relevant material on record as also the cited decisions. The assessee has furnished the details of general expenditure on pp. 2 to 6 of the paper book. In our view, the disallowance is quite excessive. As considering all the facts and circumstances of the case as also the legal position, we restrict the disallowance to Rs. 2,250 and the assessee gets a relief of Rs. 8,000. 17. In the result, the appeal of the assessee is allowed in part as indicated above. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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