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TMI Blog2006 (7) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... because even the partial use of assets is sufficient for full depreciation. The ld. D.R. relied on the impugned order. 5. Having regard to the facts of the case, and the submissions made before us, it is found that the Assessing Officer has disallowed 1/6th of these expenses resulting into an addition of Rs. 14,434. The contention of the ld. A.R. for not considering depreciation for making disallowance is sans merits because of the specific language of section 38(2) which provides as under: "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 of the business or profession." A bare perusal of this sub-section leaves nothing to doubt that if an asset is not exclusively used for the business purpose, the deductions, including depreciation under section 32, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed business income only and the claim for deduction under section 80-IA on such surrendered amount was legally correct. He relied on certain decisions including: 1. Kashmir Steel Rolling Mills v. Dy. CIT [1991] 39 TTJ (Asr.) 126 2. Dy. CIT v. Chaman Lal Sons [2005] 93 TTJ (Asr.) 132 3. Raj Sons Jewellers v. ITO [2004] 86 TTJ (Delhi) 1106 4. Parkar Cycle Industries v. ITO [2004] 91 TTJ (Chd.) 436 to contend that the amount surrendered by the assessee was eligible for deduction under section 80-IA. He further relied on the decision of the Mumbai Bench of the Tribunal in Minestones v. Asstt. CIT [2004] 37 BCAJ, copy placed at page 20 of the PB in support of his claim. It was still further argued that the judgment of the Hon'ble Calcutta High Court in the case of Debi Burman v. CIT 1994 Tax LR 452, 457 was relevant and the claim of the assessee for deduction could not be denied. In the light of these decisions, it was strongly urged that the first appellate authority was not justified in refusing the claim of deduction under section 80-IA on the amount surrendered by the assessee. Per contra, the ld. D.R. relied on the impugned order. His further submissions were the reite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been placed at pages 3 to 9 of the PB. In response to Question No. 10, it was stated by the assessee that the cash belonging to his business was available in the drawer of the table. It was further stated that as per cash book the opening cash balance as on 23-3-2001 being, the date of survey, was at Rs. 44,948. Thereafter, it was noted by the survey team that the cash in hand found in the drawer was at Rs. 46,605 and a further sum of Rs. 15 lakhs was found behind the table of the assessee in a wooden showcase. On being called upon to give explanation about the cash of Rs. 15 lakhs found separately placed, the assessee stated in response to Question No. 22 that he had no explanation with regard to such cash. Then, in reply to Question No. 23, the assessee admitted the excess cash of Rs. 15.01lakhs as his undisclosed income and surrendered the same. Here, it is pertinent to note Question No. 17, which was aimed at ascertaining if the assessee was engaged in any other business as well. In reply, it was stated that he was engaged in the sale and purchase of shares in addition to his regular business. He further submitted that his wife and daughter were also doing the business of purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness premises, would that assume the character of business income? The answer has to be in the negative. We are dealing with a case in which cash of Rs. 15 lakhs was found behind the table of the assessee in a wooden showcase and the business cash of Rs. 46,600 was kept separately in a drawer of the table. Further, this excess cash of Rs. 15 lakhs was not found entered in the books of account of the assessee. Even during the course of survey when the assessee was called upon to explain about this cash, he did not offer any explanation, much less the relation of this cash with the business of Ayurvedic medicine. The other important aspect, being the negligible difference of Rs. 14,446 in the stock, at the time of survey, clearly proves that the surrendered cash could not be attributed to the stock sold outside the books of account. Thus, it becomes crystal clear that the excess cash was not relatable to the assessee's business of Ayurvedic medicines. The argument of the ld. A.R. that the only source of assessee's income was from the business of manufacturing of Ayurvedic medicine is not acceptable in view of the assessee's categorical admission during the course of survey that he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase and sale of rice being part and parcel of the business of industrial undertaking of the assessee, the profit in respect of such trading operations qualified for deduction under section 80-IA. 14. However, we find another order passed by the Amritsar Bench of the Tribunal in the case of Sadhu Singh Gurdip Singh v. Asstt. CIT [2005] 97 TTJ (Asr.) 1 in which that assessee introduced a sum of Rs. 18.04 lakhs in his books of account with a view to explain the investment in plot of land after relevant documents were found by the Income-tax authorities during the course of search. The deduction claimed under section 80-IA on the said amount was held to be not available because the assessee had failed to establish the direct nexus between the income disclosed by it as unexplained investment in property and the industrial undertakings, which were eligible for relief under section 80-IA. 15. Insofar as the reliance on the case of Raj Sons Jewellers is concerned, the same is again misconceived in view of the fact that in that case it was held that deduction under section 80HHC was allowable on the basis of the profits or gains of business as finally assessed after taking into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the assessee was business of export of diamonds and the income was relatable to excess business stock. Adverting to the facts of our case, we find that both these things are found to be non-existent, which make it distinguishable. Similar is the position about the judgment of the Hon'ble Calcutta High Court in the case of Debi Burman where the extra sale consideration from the buyer was held as business income against sale of fiats. In the instant case, we are not concerned with any extra sale consideration, which was found to have been realized. 17. In the case of Dy. CIT v. Gold Tex Furnishing Industries [2001] 73 TTJ (Delhi) 223 certain valuables, such as jewellery, investments and cash were seized from residential premises of the partners of the firm, the business of which was manufacturing of furnishing items. These items were not entered in the books of account of the assessee and hence were surrendered. It was only at the end of the accounting period that the same was entered in the books of account. The claim of the assessee for deduction under section 80-IA on such surrendered amount was not allowed by the Assessing Officer who held it to be income from othe ..... 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