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TMI Blog2016 (12) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company - Held that:- The assessee is entitled for claim of depreciation on the vehicles used by it even though they have been purchased in the name of the directors. We draw support from the decision of the Co-ordinate Bench in the case of V-Tex Overseas Pvt. Ltd. [2015 (12) TMI 1618 - ITAT MUMBAI] - Decided against revenue Disallowances made u/s. 14A r.w.r. 8D - Held that:- The undisputed fact is that the assessee did not earn any exempt income during the year under consideration; therefore, disallowance u/s. 14A is unwarranted. We find that while making the disallowances, the A.O. drew support from the decision of the Special Bench of the Tribunal in case of Cheminvest Ltd.[2009 (8) TMI 126 - ITAT DELHI-B ]. However, the said decision of the Special Bench has been reversed by the Hon’ble High Court of Delhi in [2015 (9) TMI 238 - DELHI HIGH COURT ] which was subsequently followed by the Hon’ble Jurisdictional High Court of Gujarat in Commissioner of Income Tax –I Versus Corrtech Energy Pvt. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT ].Respectfully following the said ratio, we set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition - Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case in confirming the action of Id. AO in disallowing ₹ 3,27,045/- on account of depreciation, interest and other expenditure claimed on vehicle. 3. The ld. CIT(A) has erred in law and on the facts of the case in confirming the action of ld. AO in invoking provisions of S. 14A of the Act read with Rule 8D of the IT Rules. 4. The ld. CIT(A) has erred in law and on the facts of the case in confirming the action of ld. AO in making addition of ₹ 38,333/- u/s 14A of the Act. 5. The ld. CIT(A) has erred in law and on the facts of the case in confirming the action of ld. AO in not allowing loss of ₹ 2,64,958/- after treating the same as speculative loss. 6. The ld. CIT(A) has erred in law and on the facts of the case in confirming the action of ld. AO in disallowing foreign travelling expenditure of ₹ 2,08,564/-. 3. Ground no. 1 relates to the disallowance of deferred revenue expenses of ₹ 4,03,633/- 4. During the course of the scrutiny assessment proceedings, the A.O. noticed that the assessee has reduced deferred revenue expenses of ₹ 13,54,621/- from the net profit as per Profit Loss account. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of depreciation. 9. During the course of the assessment proceedings, the A.O. noticed that the assessee has claimed depreciation on two cars which were in the name of the directors of the assessee company. The A.O. further found that the assessee has also charged interest on car loan and vehicle expenses. Since the cars were not in the name of the company but were in the name of the directors of the company, the A.O. proceeded by making an addition of ₹ 3,27,045/- on account of depreciation, interest and other expenses. 10. Assessee carried the matter before the ld. CIT(A) but without any success. 11. Before us, the ld. counsel for the assessee stated that the vehicles were no doubt in the name of the directors but were duly reflected in the balance sheet of the assessee company and used for the purposes of business and, therefore, depreciation and all related expenditures have to be allowed. Per contra, the ld. D.R. strongly supported the findings of the revenue authorities. 12. After considering the facts in totality, in our considered opinion, the assessee is entitled for claim of depreciation on the vehicles used by it even though they have been purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through Multi Commodity Exchange and the transactions were settled other-wise than by actual delivery. In view of the above, the A.O. treated the loss of ₹ 2,29,920/- as speculation loss. The A.O. also disallowed MCX trading charges. 21. Assessee carried the matter before the ld. CIT(A) but without any success. 22. Before us, the ld. counsel for the assessee stated that the assessee is engaged in the business of manufacturing and trading of copper rods, flats, PVC coated copper tubes, etc. The ld. counsel further stated that the main raw material used is copper scrap whose price is highly sensitive in the global market and, therefore to protect against such price fluctuations, the assessee usually sells average quantity of stock of raw material in forward market and as soon as finished goods are sold, then respective quantity is purchased in forward market. It is the say of the ld. counsel that, by doing so, the assessee hedges its probable losses. Therefore, the same cannot be treated as a speculation loss. Per contra, the ld. D.R. supported the findings of the lower authorities. 23. We have given a thoughtful consideration to the orders of the authorities below. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed fact is that these expenditures pertained to the foreign travel of the directors. We find that such expenditure include air ticket + visa charges. Since the travelling was done in the month of April, 2008 i.e. next financial year, the air tickets have to be booked prior to the date of travelling and the visa have to be taken accordingly. It is not the case of the revenue that such expenditures were not incurred for the purposes of business. Considering the nature of expenditure, we do not find any merit in the impugned disallowance. We, accordingly, set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition. Ground no. 6 is accordingly allowed. 28. The other grounds relates to the charging of interest u/s. 234A, 234B 234C of the Act and initiation of penalty proceedings u/s. 271(1)(c) of the Act. Levy of interest is mandatory, though consequential. We accordingly direct the A.O. to charge interest as per the provisions of the law and so far as challenge to the initiation of penal proceedings is concerned, it is premature and is accordingly dismissed. 29. In the result, the appeal filed by the Assessee is partly allowed. Order pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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