9911796707
TMI Blog2017 (5) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... and in that event, the assessee establishes the right to claim depreciation. We further note that the assessee has himself admitted that some element of personal use of the cars cannot be ruled out in the absence of logbook and other relevant details. Therefore, some reasonable disallowance on account of personal use of the cars was required to be made. However, disallowance made by the A.O. to the extent of 30% was held to be excessive. Therefore, the disallowance of 20% of the car maintenance and running expenses and depreciation would be reasonable and was rightly confirmed to that extent and accordingly, the disallowance on these accounts was restricted to ₹ 1,03,012/-, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue - Decided against revenue Disallowance of Tour and Travelling expenses - Held that:- We note that the disallowance has been made by the A.O. by observing that examination of the vouchers revealed ineligible nature of the expenses to this extent. However, no specific instance of disallowable nature has been pointed out by the A.O. nor has he brought on record any evidence in support of these obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 35(4), New Delhi. The case was transferred from ACIT, Circle 35(1), New Delhi to ITO, Ward 35(4), New Delhi. Accordingly, a detailed questionnaire No. 1 dated 6.9.2011 alongwith notices u/s. 143(2) of the Act and 142(1) of the Act, 1961 were also issued and served. A 2nd questionnaire dated 3.10.2011 was issued and served. In response to statutory notices, the A.R. of the assessee attended the proceedings and filed the written submissions. After examining the replies, a 3rd questionnaire dated 28.11.2011 was issued. The AR furnished a replies on 5.12.2011. The books of accounts which were relied on by the Tax Auditor alongwith bank statements maintained with Citi Bank, Noida were produced for examination. The assessee is doing the business of Tiber and Plywood under the name and style of Lakshmi Furniture and Decorators. The total turnover amounted to ₹ 5,62,31,467/- with gross profit of ₹ 60,48,676/- (10.76%). The net profit declared is ₹ 5,74,905/- (1.02%). The net profit included Misc. income of ₹ 20,554/-. AO observed that since the assessee GP ratio is only 10.76% the liabilities did not exist at all on 31.3.2009. Accordingly, ₹ 84,10,126/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3.2009 as it was on 31.3.2008. Therefore, according to the A.O. these liabilities had ceased to exists as the appellant had not made payment in respect of these liabilities. In case of one of the creditors i.e. in the case of M/s Utsav Plywood even when a payment of ₹ 3,00,000/- was made by the appellant during the year under consideration still the balance outstanding in the account of this party was also held to have ceased to exist and was added to the appellant's income. The appellant during the course of the assessment proceedings had filed complete details giving the names and addresses of the creditors to show that not only the liabilities were outstanding but alsothat the same were duly acknowledged by the sundry creditors as well. Moreover, a copy of the bank-account of the appellant has also been placed on record out of which all these sundry creditors have been paid through account payee cheques in the following Financial Year. 10. In view of the facts of the case as discussed above and also in view of the various decisions relied upon by the appellant mentioned above, it is held that the liabilities in respect of various sundry creditors mentioned above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to satisfy his personal needs such cloths foods etc. However, it has been admitted by the appellant in his submissions that possibility of some personal use of the cars cannot be ruled out and some reasonable disallowance in the absence of log book and other relevant details can be made. As far as depreciation on cars is concerned it was submitted that the cars fell under the head machinery and plant block and individual asset loses it identity and the question whether an individual asset is put to use in a particular year or not is irrelevant. The appellant also relied on the decision in the case of CIT Vs. Union Carbide (I) Ltd. (2002) 174 CTR (Cal), 334, wherein it was held that once it is shown that the assessee has put the machinery to use, for the purpose of the assessee's business, then further inquiry about the degree or type of use is not permitted to be scrutinized by the language of the section. Once the assessee can establish bonafide use of the machinery for the purposes of the assessee's business, then and in that event, the assessee establishes the right to claim depreciation. 16. I have carefully considered the submissions of the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was remission nor was there any cessation of the liabilities which were being shown by the appellant as payable, therefore, the appellant had not obtained any benefit in respect of the various liabilities as noted above. The only reason mentioned by the A.O. for making this addition is that the balance in the accounts of these sundry creditors was the same as on 31.3.2009 as it was on 31.3.2008. Therefore, according to the A.O. these liabilities had ceased to exists as the appellant had not made payment in respect of these liabilities. In case of one of the creditors i.e. in the case of M/s Utsav Plywood even when a payment of ₹ 3,00,000/- was made by the assessee during the year under consideration still the balance outstanding in the account of this party was also held to have ceased to exist and was added to the appellant's income. The assessee during the course of the assessment proceedings had filed complete details giving the names and addresses of the creditors to show that not only the liabilities were outstanding but also-that the same were duly acknowledged by the sundry creditors as well. Moreover, a copy of the bank-account of the assessee has also been pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese expenses on the ground that the appellant's claim on account of car running and maintenance expenses and depreciation on the same was excessive as the appellant was having three cars. In response to this disallowance the appellant has submitted that disallowance made by the A.O. was adhoc and unreasonable. The assessee relied on the decision of the Hon'ble Supreme Court in the case of State of Madras vs. G J Coelhi 53 ITR 186 (SC), wherein it was held that personal expenses are those that relate to the person of the assessee to satisfy his personal needs such cloths foods etc. However, it has been admitted by the assessee in his submissions that possibility of some personal use of the cars cannot be ruled out and some reasonable disallowance in the absence of log book and other relevant details can be made. As far as depreciation on cars is concerned it was submitted that the cars fell under the head machinery and plant block and individual asset loses it identity and the question whether an individual asset is put to use in a particular year or not is irrelevant. The appellant also relied on the decision in the case of CIT Vs. Union Carbide (I) Ltd. (2002) 174 CTR (Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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