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TMI Blog2016 (5) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... her hand, stating that the firms (of which he is a partner), as being not interested in investing in a car. In fact, in case of the same (common) car being used, the expenditure would necessarily have to be appropriated between the two firms, for which the car is thus used, and the assessee (refer s. 38(2)). In other words, the expenditure would required to be split three ways, i.e., the two firms for which the car is being also used, and the assessee. That, as well as the proportionate incidental expenditure – on car repairs, depreciation, and interest (on car loan), is, as afore-stated, the only expenditure that the assessee can rightly claim against the business income from the firms, with that relatable to the business purpose of the firms being deductible in their hands. Further, the assessee has nowhere specified the expenditure on the personal user of the car/s, an aspect which cannot be overlooked. We, accordingly, restore the matter back to the file of the A.O. to verify the assessee’s claims and determine the expenditure on car/s deductible in his hands in accordance with law, issuing definite findings of fact. The onus, we may clarify, to establish his claims, with mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of expenses (Rs.1.07 lacs), primarily on car, against business income, being interest and remuneration from two firms, namely M/s. Globus Enterprises & M/s. Silken Car Detaining, in which he is a partner. The Assessing Officer (A.O.) disallowed the same for the reason that the assessee could not establish any direct nexus of the impugned expenditure with the said business. The user of the car for personal purposes could not, in any case, be ruled out. In appeal, the ld. CIT (A) was of the view that the income by way of interest and remuneration to a partner from a partnership firm is rightly assessable as income from other sources u/s. 56. That apart, the expenditure claimed, being on account of professional fees, car repair, car depreciation and interest on car loan (at ₹ 1,07,355/-), had no nexus with the receipt by way of interest and remuneration from the partnership firms. 3. We have heard the parties, and perused the material on record. Without doubt, even as the ld. Authorized Representative (AR), the assessee's counsel, was at pains to emphasize before us, income by way of interest (on capital) and remuneration (against services rendered) to a partner (from a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, assuming the car/s being used for the business purposes of the firms, why should a partner bear the expenditure of the firm, which, besides being not deductible in his hands, would only be to his own detriment. Or, is it that the user of the car by the assessee-partner is only for commuting between his residence and business premises, while using another car (vehicle) for the business purposes of the firms; the assessee stating of his residence being in Santa Cruz (West), Mumbai, while his office is in Santa Cruz (East) (refer para 1(f) of the written submissions dated 01.6.2011 before the ld. CIT(A)/PB pgs. 1-9). In which case, the expenditure on car maintenance would, as other incidental expenditure on car, stand to be incurred by the assessee himself. The question of actual incurring of the maintenance (running) expenditure, and source thereof, though continues. We are conscious that the expenditure on commuting, where claimed by the firm(s) as a part of their business expenditure u/s.37(1), could imply that the firm has extended the said facility to the partner, which though could only be where the car/s is owned by the partnership firms, as distinct from the partner/s. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pvt. Ltd. (5000 x 2) Rs.60,000 Rent from Silken (2500 x 12) Rs.30,000 Rent from Globus Enterprises (4000 x 12) Rs.48,000 The net income, i.e., after allowing standard deduction (on account of repairs), ₹ 88,315/-, was adjusted against interest paid on loan for the self occupied property, returning a net loss of ₹ 61,685/-. In the A.O's view, the assessee had, on account of close nexus between him and the tenant-firms, or otherwise to save on tax, had shown very nominal rental income. On the basis of market inquiries through his Inspector, he estimated ₹ 10,000/- per month and ₹ 7,000/- per month as the minimum rent for the flat and the garages respectively, which he assessed as their annual value u/s. 22. The claim of maintenance charges (Rs.10,096/-) to the housing society/s was also disallowed. In appeal, the assessee, relying on the decision in CIT vs. Shiv Mohan Lal [1993] 202 ITR 60 (All.), claimed that as the house properties under question were being used for the purposes of his business by the assessee-owner, their annual value was not liable to tax u/s. 22. The ld. CIT (A) found the said case law distinguishable in-as-much as in that case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties, i.e., the flat and two garages respectively, situate in the locality in which they are. The area of each of the three house properties and, thus, of the rent rate assessed, claimed to be on market inquiries, is only known to the assessee. Why, then, could he not state the rent rate charged in terms of square feet, i.e., as being at 'X' (say) not 'Y' (say) for the property situate in that area/locality at the relevant time? Rent rates, though based on demand and supply, are also influenced by and dependent on the cost of construction/acquisition of the house property, calculated to yield a reasonable rate. What is the going rate of the relevant properties in the relevant area at the relevant point of time? This, we understand to be the basic question, i.e., the point of difference between the assessee and the Revenue, and which, therefore, needs to be addressed. The assessee's case is completely silent, even up to the stage of the Tribunal, on all these relevant aspects and parameters. Surely, the plea of natural justice cannot be allowed to be used as a ruse. When all the information is available (with the assessee), all that it entails is a comparison between the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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