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TMI Blog2011 (12) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue, the assessee cannot alternatively make a claim under the head of 'business loss'. - the question is answered in favour of the revenue. - 136 of 2008 - - - Dated:- 8-12-2011 - Mr.Justice ELIPE DHARMA RAO, Mr.Justice R.SUBBIAH, JJ. For Petitioner : Mr.T.Ravikumar For Respondents : Mr.P.S.Raman, Senior Counsel for Mr.Padmanabhan JUDGMENT R.SUBBIAH, J., This appeal is directed, at the instance of the Revenue, against the order of the Income Tax Appellate Tribunal, Chennai Bench 'C', dated 02.02.2007 made in I.T.A.No. 1849/Mds/2003. 2. The appeal was admitted on the following substantial questions of law; (i) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the expenses incurred in the foreign travel of the Chairman's wife is to be allowed as a business expenditure ? (ii) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to depreciation on the amount paid on the sale and lease back transaction ? 3. The assessee is a company and its business is that of manufacture and sale of circuit breakers, isolators, etc. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein it has been contended that the payment has been effected by cheques to the account of M/s.Ashish Engineering Works at New Delhi. The source pricing and obtaining delivery of the supply of the asset was identified by the lessee and the assessee was not concerned in the matter. Further, a sum of Rs.23,38,377/- has been offered as lease rentals and Rs.1,67,275/- as lease management fee. It was also stated that the transaction was brokered by Aartik Financial Consultants Limited. Further, the lessee subsequently had threatened to terminate the lease citing defect in the asset and sent notice through their advocates. Further, the assessee had also produced a copy of part of policy from New India Assurance Company Limited regarding insurance of the asset. Thus, the assessee had produced documents to establish the transaction of the lease with Prakash Industries as genuine. But, the Assessing Officer has disallowed the claim made by the assessee for depreciation of Rs.1,84,52,500/- on a finding that the facts gathered from the supplier made it clear that the transaction is only a paper transaction and asset does not exist. The said finding of the Assessing Officer was also confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed as business expenditure and hence, no infirmity could be found in the order passed by the Income Tax Appellate Tribunal. 8. But we are unable to appreciate the submission made by the learned Senior Counsel for the respondent because the facts on the case on hand would show that the wife of the Chairman has nothing to do with the business of the company. At least if she is one of the Directors of the Company, then the arguments put forth by the respondent could have some force. In this regard, it would be useful to refer the judgments relied on by the learned counsel for the appellant/revenue. In COMMISSIONER OF INCOME TAX .vs. T.S.HAJEE MOOSA AND CO., ((1986) 51 CTR (MAD) 200, it has been held as follows: "The attention given by the wife of the partner of the assessee while on tour would enure to his benefit and advantage, not only when he was engaged in his business activities, but even, otherwise as a human being, so that at least in part the expenditure incurred had been laid out for the advantage and benefit of the partner. The expenditure incurred thus served not only purposes of business but also a personal or a private purpose and if the expenditure does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of a nurse or attendant are any the less personal, however much the expenses are either necessary or even otherwise productive of good health or other enjoyable results from the point of view of the personal need and requirement of such a businessman". 9. This Court also examined the question whether the expenditure would be allowable under section 37 of the Income-tax Act and held that the expenditure was not laid out wholly and exclusively for business purposes. It was held that the expenditure was laid out for a dual purpose, viz., (i) to satisfy the personal needs of the assessee and (ii) for the purpose of business, and therefore the expenditure was not incurred wholly and exclusively for the purpose of business and it would not qualify for allowance. In other words, the Court held that the expenditure was for a dual purpose and it would not qualify for allowance. This Court after noticing some of earlier cases on this aspect held as under:- " ... the object of the partner of the assessee at the time when he took his wife along with him on his foreign tour was only to serve or assist him and not for any business purposes, albeit there was also another object, namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the claim of the assessee for a sum of Rs.4,36,83,000/- on the ground of depreciation by leasing the machinery to M/s.Prakash Industries, New Delhi, is not genuine. But the Appellate Tribunal, by relying upon the lease agreement entered into between the assessee and Prakash Industries has allowed the claim. In this regard, the appellant has further submitted when there is ample evidence to show that the alleged manufacturer has not supplied the asset to M/s.Prakash Industries, by placing reliance on the lease agreement entered into between the assessee and the lessee, the Appellate Tribunal ought not to have allowed the claim on the ground of depreciation. At this stage, it would be appropriate to refer the judgments relied on by the learned counsel for the appellant. In LACHMINARAYAN MADAN LAL .vs. COMMISSIONER OF INCOME TAX ((1972) 086 ITR 0439, the Hon'ble Supreme Court has held as follows: "... The mere existence of an agreement between the assessee and its selling agents or payment of certain amounts as commission, assuming there was such payment, does not bind the Income-tax Officer to hold that the payment was made exclusively and wholly for the purpose of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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