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TMI Blog2006 (7) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2992/Mum/2003 may be considered in the other two appeals also, the issue being the same. The solitary effective ground urged in the three appeals is the same ; to the effect that the Commissioner of Incometax (Appeals) is not justified in confirming the action of the Assessing Officer in disallowing the claim for depreciation under the provisions of section 32 in respect of motor car and/or motor cycle used for the purpose of business, by the appellants who are partners of the same firm. The authorised representative sought our consideration to the facts of the case, as per the orders of the Assessing Officer and the Commissioner of Income-tax (Appeals) in I. T. A. No. 2992/Mum/2003, which are as follows : The appellant is a partner in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the hon ble Madras High Court in Additional CIT v. N. Vaidyanathan [1989] 180 ITR 198 and in CIT v. K. G. Sadagopan [1976] 104 ITR 412 is not applicable, as the same relate to the claim when the share income of a partner was taxable under the provisions of section 67(2), which is not the case of the appellant, as the provisions under which the partner s income from a firm is subject to tax, are entirely different with effect from April 1, 1993. The Commissioner of Income-tax (Appeals) upheld the Assessing Officer s action holding that the appellant even before him did not produce any evidence in the shape of log book or any other details to the effect that the motor vehicles have been used for the purpose of business. The authorised r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the assets owned by him which have been used for the purpose of the business of the firm in which he is a partner, as per the provisions applicable to taxation of registered firms and its partners with effect from April 1, 1993. As per the provisions of section 32, depreciation is allowable on an asset used for the purpose of business and in case of personal use, as per the provisions of section 38(2), partial depreciation can be disallowed. In the case before us, it is a fact that the Assessing Officer of the firm in which the appellant is a partner, had held that personal use of the appellant cannot be ruled out and disallowed part of the expenditure claimed on the vehicles maintenance, the claim of depreciation in respect of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcluded as exempt under section 10(2A). Alternatively, the assessee s reliance on the decision in the cases of CIT v. K. G. Sadagopan [1976] 104 ITR 412 (Mad) and Additional CIT v. N. Vaidyanathan [1989] 180 ITR 198 (Mad) is also of no help to the assessee. These decisions were delivered by the hon ble Madras High Court with reference to the provisions of section 67(2) of the Income-tax Act, 1961, which were on the statute at that time. But, now since the said section 67 has been completely omitted by the Finance Act, 1992, with effect from April 1, 1993, from the statute and a new scheme of the assessment of firms and its partners from the assessment year 1993-94 onwards has been introduced, with due respect to the said decisions, these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a partner. We have considered the reliance placed by the authorised representative on the other judgment of the hon ble Madras High Court in the case of Additional CIT v. N. Vaidyanathan [1989] 180 ITR 198 in which it has been held that when the assessee had used the half portion of his house for the purpose of profession, that he is entitled to depreciation thereon. The third decision relied upon by the authorised representative is the case of Santosh Kumar Agrawal v. Assistant CIT [2001] 78 ITD 394 (Mum) in which it has been held that an assessee is entitled to deduction of interest paid in respect of the amounts borrowed for the capital invested in the firm in which he is a partner, against the income by way of remuneration received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee in respect of which depreciation has been claimed and which have been used by the firm in which the appellant is a partner. For this position, there is a specific provision under section 38(2), as per which when an asset is not exclusively used for the purpose of business, the Assessing Officer shall restrict the claim for depreciation to a fair proportion of the purpose for which the asset is used for the purpose of business or profession. The Assessing Officer in the assessment of the firm having held that one-fifth as the estimated proportion in respect of which the motor cars are not used exclusively for the purpose of business of the firm, following the same, we direct that the four-fifths of the claim for depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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