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TMI Blog2018 (5) TMI 1317X X X X Extracts X X X X X X X X Extracts X X X X ..... just and addition of Rs. 16,81,057/- deserves to be deleted. 2. Without prejudice to Ground No. 1, Depreciation on account treated as capital expenditure (Building) (10% of Rs. 16,81,057) be allowed to the assessee. 3. That the Learned CIT(Appeals) erred in confirming disallowance of Telephone, Travelling, conveyance Expenses and depreciation on Car to the extent of Rs. 4,28,126/-. 4. That the Learned CIT(Appeals) erred in Confirming disallowance of entertainment and Staff Refreshment expenses to the extent of Rs. 69,766/-." 2. Regarding ground Nos. 1 and 2, briefly the facts of the case are that during the course of assessment proceedings, the Assessing Officer observed that the assessee has taken certain loan for building const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed as eligible revenue expenditure. As per the ld. CIT(A), since the assessee itself has capitalized the loan in the previous year and the period of construction of the building and the period of loan are for the same months, it cannot be ascertained whether the loan was utilized for business construction or not. In view of the same and by the assessee's own treatment of capitalizing the same in the earlier year, the stand of the Assessing Officer was confirmed. 4. During the course of hearing, the ld. AR reiterated the submissions made before the lower authorities. It was submitted by the ld AR that the loan of Rs. 2.8 Crores from HDFC Bank was taken in August, 2010 against mortgage of property and the construction of building at Ramba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further submitted that since the building was ready for use and started being used by June, 2012 itself, though full-fledged business operations started in September, 2012 interest can only be disallowed/ capitalized upto June, 2012 only and not upto September, 2012 when the showroom started functioning. Further, without prejudice, it was submitted that if the interest is disallowed as being capital expenditure pertaining to the building, depreciation @ 10% on Rs. 16,81,057/- deserved to be allowed on the amount of interest disallowed being of capital in nature and cost of the building and the written down value of building has to be accordingly adjudicated. 5. The ld. DR is heard who has relied on the finding of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture in the previous assessment year 2012-13, where the assessee now claims that the expenditure is not capital but revenue, there is greater onus on the assessee which it has again failed to discharge in the present case. In this factual background, we do not see any infirmity in action of the Assessing Officer in disallowing the interest expenses till the new building was put to use in September, 2012. At the same time given that the Assessing Officer has capitalized the said interest paid for the period April 2012 to August, 2012 in the building account, the assesse become eligible to claim depreciation @ 10% on the said interest being capitalized. We therefore, allow the alternative claim of the assessee regarding depreciation on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aipur and almost all wholesale sale is out of Jaipur. The partners and employees have to travel extensively. More than 80% of the expenditure is on Air and travel tickets and hotel stay which are fully vouched. Copy of Ledger account is at page 23-33 of paper book. Expenses on Taxies and food and miscellaneous expenditure which is reimbursed on statement of expenditure submitted is less than 20% of the travelling expenditure. Assuming personal expenses in travelling expenditure is erroneous. The quantum of such expenditure is most reasonable looking to the nature of business and turnover of the assessee. The same deserves acceptance. Alternatively, disallowance of 10% (i.e. Rs. 1,90,777/-) is highly excessive and deserves to be substantiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here can be no personal element or unvouched expenditure in depreciation of vehicles and depreciation is a statutory deduction based on wear and tear of assets owned. Once it is not disputed by the Revenue that the vehicles are owned by the firm, the depreciation being a statutory allowance deserves to be allowed. At the same time, where it is established that the vehicle has been used for personal purposes, in such a scenario, the Revenue is well within its right to tax the vehicle running expenditure as perquisite in hands of the employees/directors. In the result, the ground of appeal is partly allowed. 10. Regarding ground no. 4, brief facts of the case are that the Assessing officer has disallowed 10% of entertainment and staff refres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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