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TMI Blog2014 (1) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ad-hoc disallowance of Vehicle Expenses & Depreciation on Vehicle - Held that:- No specific averment or incident has been brought on record to indicate that the vehicle has been used other then the business purposes - Even otherwise in the case of company if it is found that the vehicle has been used for personal purpose then it can be considered as perquisites in the hands of the user employee - Decided in favour of assessee. Disallowance of bad debts - Held that:- The assessee has failed to establish that the amount paid to the employee was for the purpose of the business of the assessee - Advancing loan which is not the business activity of the assessee and further having no nexus with the business of the assessee cannot be allowed as bad debts or business loss, if the assessee is not able to recover the same - Decided against assessee. - I.T.A. No.1706/Mum/2009, I.T.A. No.161/Mum/2011, I.T.A. No.4760/Mum/2010 - - - Dated:- 11-12-2013 - Shri Vijay Pal Rao, JM And Shri Rajendra, AM,JJ. For the Petitioner : Shri Satish R. Mody For the Respondent : Shri B. P. K. Panda ORDER Per : Vijay Pal Rao, JM These three appeals by the assessee are directed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld benefit the companies business. He has relied upon the decision of Hon ble Jurisdiction High Court in case of Sakal Paper Pvt. Ltd. Vs CIT 114 ITR 256 and submitted that the Hon ble Jurisdiction High Court has held that the husband and wife as shareholders and directors of the company running Marathi Paper incurred expenditure for obtaining practical training of their daughter who was working in the editorial department of the company was held to be revenue expenses. He has also relied upon the following decision: CIT Vs Dr. M. S. Shroff 80 ITR 687 (Del) M/s J. B. Advani Company Pvt. Ltd. 92 TTJ 175 Apurva Patel 7 SOT 755 5. The Ld. A.R has further pointed out that for the assessment year 2006-07 and 2007-08 the assessee has paid Fringe Benefit Tax (FBT) on these expenses which have been accepted by the A.O after verification. Therefore, in view of CBDT Circular No. 8/2005 dated 29.8.2005 the expenditure on education of the employee is an allowable business expenses. In support of his contention he has relied the decision of this Tribunal dated 16.9.2011 in case of Hansraj Mathuradas Vs ITO in ITA No. 2397/M/2010. 6. On the other hand, the Ld. D.R has relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 17. Further, as explained in para No. 3.2 of the Circular, the scope of the term fringe benefits provided is defined in section 11 5WB (1) to mean any consideration for employment provided by way of any privilege, service facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise, to his employees. Moreover, as clarified in the said circular while answering frequently asked question No. 15, fringe benefit is deemed to have been provided if the employer has incurred expenses for any of the purposes referred to in the relevant provisions and there is no requirement to segragate such expenses between those incurred for official purposes and personal purposes. It was further clarified while answering question No. 81 that when expenditure on running and maintenance of motor cars is liable to fringe benefit tax, the employees will not be liable to income tax on the perquisite value of motor car provided by the employer. As rightly contended by the learned counsel for the assessee, circular No. 8/2005 dated 29-08-2005 issued by the Board explaining the provisions relating to fringe benefit tax thus makes it clear that fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly reason which has weighed with the Tribunal, we must answer the question referred to us in favour of the assessee since the view we have taken is that the reason given by the Tribunal is not a good reason. 9. The above decision of the Hon ble Jurisdiction High Court is applicable in the facts of the case in hand. Accordingly, in the facts and circumstances of the case and in view of the above discussion we delete the addition made by the A.O on this account and decide this issue in favour of the assessee. The decision relied upon by the A.O are clearly distinguishable on the facts and therefore would not help the case of the revenue. For the assessment year 2005-06 10. The assessee has raised another ground as under: The Commissioner of Income Tax(Appeals) erred in upholding the Assessing Officer order of ad-hoc disallowance of Vehicle Expenses Depreciation on Vehicle totalling to Rs. 48,138/- on the facts. 11. We have heard the Ld. A.R as well as Ld. D.R and considered the relevant material on record. The A.O has disallowed 20% of the Vehicle Expenses on the ground of personal element in para 4 as under: 4. Assessee has debited vehicle expenses of Rs. 2,21,330 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employee had already left the service of the assessee it was not possible to recover the assessee amount therefore the same may be allowed as business loss if not as bad debts. On the other hand, the Ld. D.R has relied upon the orders of the authorities below and submitted that the loan given by the assessee does not qualified as allowable claim of expenditure therefore, same cannot be allowed even as business loss. 17. Having considered the rival submissions as well as relevant material on record we are of the view that the assessee has failed to establish that the amount paid to the employee was for the purpose of the business of the assessee. Advancing loan which is not the business activity of the assessee and further having no nexus with the business of the assessee cannot be allowed as bad debts or business loss, if the assessee is not able to recover the same. Accordingly, we do not find any error or illegality in the orders of the authorities below qua this issue. 18. In the result, the appeals of the assessee for the assessment years 2005-06 and 2007-08 are allowed and assessment year 2006-07 is partly allowed. Order pronounced in the open Court on this 11th day of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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