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TMI Blog2018 (5) TMI 2087X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case. We, therefore, find no justification to deviate from the findings of the Revenue authorities reached in the preceding years and not to follow the rule of consistency during the year under consideration. Disallowance being 50% of the rent paid by the assessee for its branch office at Greater Kailash, New Delhi - AO restricted the claim of rent simply on the ground that the said premises was being used by two persons, i.e., assessee and M/s. Bhakru Associates, the proprietor of which Ms. Pallavi Joshi Bhakhru is the partner in assessee firm - HELD THAT:- Simply because Mrs. Pallavi Joshi was the partner in the assessee firm, no adverse inference can be drawn that both the assessee and Bhakhru Assocites were using common space for their business or profession. This fact of internal relationship, in our opinion, would not go to belie the contention of the assessee that the assessee has paid rent for the space used by him to operate its branch office to Smt. Pallavi Joshi Bhakhru, Prop. M/s. Bhakhru Associates, as Pallavi Joshi was the owner of the said premises. There is not even an iota of evidence to justify that the assessee has claimed any rent for the space used by Bhakhr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the CIT(A) both have specifically invoked the provisions of section 38(2) of the Act. - Decided against assessee. Disallowance of 1/6th interest on vehicle loans - HELD THAT: We find that the assessee has himself disallowed 1/6th of vehicle running, repairing and maintenance expenses, which admittedly suggest that partial use of the vehicles was made for personal purpose and not wholly for the purpose of business. Therefore, in view of our finding on disallowance of 1/6th of the depreciation on vehicles, noted above, we find that the ld. Authorities below have rightly disallowed 1/6th of the assessee s claim of interest on vehicle loans. Accordingly, this ground also deserves to be dismissed. Disallowance of 1/10 of the business development expenses - HELD THAT:- AO has disallowed this expense only on adhoc basis without pointing out any expenditure of disallowable nature or personal in nature. From the submissions of the assessee before the lower authorities, it is clear that photocopies of some of the vouchers were produced before the lower authorities. No personal expenses have been pointed out by the Assessee. Disallowance of interest u/s. 40(b) paid to Mr. Vinod Chandiok - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and on facts in confirming the disallowance of ₹ 2,09,538/- being l/5th of the electricity expenses of its office at L-41, Connaught Circus New Delhi by averring the same to be used by M/s Walker Chandiok & Associates ignoring the fact and evidences placed on record. Thus the disallowance so made should be deleted. 5. The CIT(A) erred in law and on facts in confirming the addition of ₹ 65,681/- being the amount of stale cheques which were issued during the year but were not presented for payment and the same were reversed since their validity got expired and therefore shown as current liability. Thus the disallowance so made should be deleted. 6. Without prejudice to above, if the addition for the amount of stale cheques is confirmed in the year under consideration, then directions should be issued to exclude the same from the income of AY 2010-11 when the balance outstanding in the said account has been written back and declared as miscellaneous income as the same amount cannot be taxed twice. 7. The CIT(A) erred in law and on facts in confirming the disallowance of depreciation of ₹ 5,48,350/- made on estimated basis being l/6th of the depreciation on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard, the assessee submitted detailed reply. The Assessing Officer further observed that the branch office of the assessee firm situated at ground floor, W-129, Greater Kailash-II, New Delhi and claiming rent of ₹ 9 lacs. He further observed that M/s. Bhakru & Associates office is also at ground floor W-129, Greater Kailash, New Delhi. Therefore, he disallowed 50% of the rent payment of branch office keeping in view the relationship of the assessee and Bhakru & Associates, having common place of operation at both the addresses. He also disallowed 1/5th of the electricity and water charges amounting to ₹ 2,09,538/- each attributable to M/s. Bhakru & Associates, M/s. Grant Thornton India Pvt. & M/s. Walker Chandiok & Associates. 4. The Assessing Officer further noticed from the details submitted by the assessee that the unpaid cheques for expenses amounting to ₹ 65,681/- were transferred to Stale cheques a/c on 31.03.2010, whereas the assessee was following cash system of accounting as per audit report and therefore, the expenses were to be allowed as deduction only when the same were actually paid. Thus, after considering the submissions of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of interest paid in the hands of the partnership firm. 7. Feeling aggrieved from the order of the Assessing Officer, the assessee appealed before the ld. CIT(A) and made a detailed written submissions wherein various case laws have also been relied upon. The ld. CIT(A) after considering the submissions, partly allowed the appeal of the assessee. Aggrieved, the assessee is in appeal before the Tribunal. 8. The ld. AR of the assessee reiterated the submissions made before the ld. CIT(A). In respect of ground Nos. 1, 3 & 4, the ld. AR submitted that the Assessing Officer had no any cogent material to prove that other firms are running from the same building, in which the assessee's office is situated. Drawing our attention to auditor's report in regard to payment to specified persons as per section 40A(2)(b), she further submitted that in assessment years 2008-09 and 2009-10, the ld. CIT(A) has deleted the addition in the similar facts and circumstances. 9. In respect of ground No. 2, it is submitted that undisputedly, the assessee is operating its branch office from W-129 Greater Kailash, New Delhi, which is the property of Mrs. Pallavi Joshi Bhakhru, who is the proprietor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the interest payment was supported by partnership deed clause (5). In the preceding years 2008-09 and 2009-10, similar issue was raised by the Assessing Officer which has been accepted by the ld. CIT(A). Therefore, the consistent view should be followed by the Assessing Officer. The concerned partner has also offered it as his income and has paid taxes thereon @ 30. Therefore, there is no loss to the Revenue. 14. On the other hand, the ld. DR relied on the orders of the lower authorities, stating that the impugned order of ld. CIT(A) is based on plausible reasons, which needs no interference. It is submitted that every assessment year is separate assessment year and the principle of res judicata is not applicable in the Income-tax Proceedings. 15. We have heard the submissions of both the parties and have perused the material available on record. It is an undisputed fact that the assessee is a Chartered Accountant firm. On perusal of records, we find that the assessee has successfully explained the facts pertaining to the impugned premises of assessee L-41, Stating the Connaught place premises consists of four units, L- 41 & GIC(first floor), L-25A & L-60 (second floor) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to establish that there is any change in the fact situation of the instant case. We, therefore, find no justification to deviate from the findings of the Revenue authorities reached in the preceding years and not to follow the rule of consistency during the year under consideration. In such view of the matter, the grounds Nos. 1, 3 & 4 raised by the assessee deserve to be allowed. 16. In respect of ground No. 2, we find that the assessee has explained that M/s. Bhakru Associates (Prop. Ms. Pallavi Joshi) has its registered office at Ground Floor, W-129, Greater Kailash, New Delhi and has attached copy of a letter head of the firm (PB-28) in support. The assessee also states that it has also a branch office at W-129, Greater Kailash, New Delhi. A perusal of assessment order shows that the Assessing Officer has restricted the claim of rent simply on the ground that the said premises was being used by two persons, i.e., assessee and M/s. Bhakru & Associates, the proprietor of which Ms. Pallavi Joshi Bhakhru is the partner in assessee firm. In our considered opinion, as already noted, simply because Mrs. Pallavi Joshi was the partner in the assessee firm, no adverse inference can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the disallowance as the Assessing Officer has applied the provisions of section 38(2) which provides as under : (2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions under sub-clause (ii) of clause (a) and clause (c) of section 30, clauses (i) and (ii) of section 31 and clause (ii) of sub-section (1) of section 32 shall be restricted to a fair proportionate part thereof which the Assessing Officer may determine, having regard to the user of such building, machinery, plant or furniture for the purposes of the business or profession. According to that section, if the asset is not used wholly for the purpose of business, but partly, then the Assessing Officer is empowered to restrict the fair portion of the claim of the assessee. The Assessing Officer has given the reasons for adopting 1/6th of the total depreciation that the assessee himself has disallowed 1/6th of the expenditure of motor cars. The assessee has relied upon the decision of Co-ordinate Bench reported in 92 ITD 349. We have carefully perused that decision. The Co-ordinate Bench deleted the disallowance holding that in that par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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