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TMI Blog2022 (10) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... the head 'profit and gains of business or profession'. Thus, as per the mandate of section 57 (iii) of the Act, it is necessary that the primary motive of incurring such expenditure should be directly relatable to the earning of income falling under the head 'income from other sources'. In the present case it is beyond doubt that depreciation, interest on loan, repairs and maintenance expenses as well as insurance expenses were directly relatable to the earning of lease rental which was shown by the assessee under 'income from other sources'. A plain reading of section 57 (iii) of the Act would lead one to the conclusion that it does not say that the expenditure shall be deductible only if any net positive income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny under the CASS guidelines and during the course of assessment proceedings, the Assessing Officer (AO) noted that the assessee had given his car on lease to the employer company and had received a lease rent of Rs. 4,08,000/- as 'income from other sources'. The AO further noted that the assessee had shown a net loss on account of lease to the tune of Rs. 4,33,020/after claiming depreciation of Rs. 4,39,662/-, interest on loan amounting to Rs. 3,19,572/- repairs and maintenance amounting to Rs. 41,970/- and insurance amounting to Rs. 39,816/-. The assessee was required by the AO to justify the allowability of expenditure relating to depreciation, interest, repairs and maintenance and insurance. The assessee submitted a detailed rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and on facts. 2. The Ld. CIT(A) has erred in restricting the expenses, to lease income of assessee from vehicles of Rs. 4,08,000/- and disallowing balance expenses of Rs. 4,33,020/- claimed u/s. 57 of Income Tax Act, 1961. 3. When the appeal was called out for hearing, none was present on behalf of the assessee. However, an application from Shri Sunil Kumar Bhasin, Chartered Accountant, the Ld. AR for the assessee was placed before us requesting adjournment on the ground that due to heavy rush of Tax Audit assignments, the case could not be prepared. 3.1. On perusal of the file, it is seen that this case was earlier fixed for hearing on 19.07.2022 and on that date, the Ld. AR had sought an adjournment on the ground that due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as official, whereas, the assessee was using the vehicle both for official as well as personal purposes and, therefore, the Ld. CIT(A) had rightly upheld a disallowance of Rs. 4,33,020/-. It was prayed that the appeal of the assessee be dismissed and the order of the Ld. CIT(A) be upheld. 5. We have heard the Ld. Sr. DR and have also perused the material on record. It is seen that the facts are not in dispute. The assessee had leased out his vehicle to his employer company and had shown lease rent of Rs. 4,08,000/- under the head 'income from other sources' and had claimed an expenditure of Rs. 8,41,020/- against the said lease rental. No doubt, the assessee is not in the business of leasing out cars on rent and that is the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le was not registered as taxi was concerned, the same was irrelevant in as much as the vehicle was given on lease to the employer company for official use and not for the use by public at large. 5.1. A perusal of the impugned order shows that the Ld. CIT(A) did not consider any of these submissions made before him but simply proceeded to restrict the disallowance tune of to the income received from lease i.e. Rs. 4,08,000/- by holding that the assessee was using the vehicle both for official as well as personal use. This reasoning for upholding part of the disallowance cannot be upheld for the simple reason that depreciation (Rs. 4,39,662/- in this case) has been held to be an allowable deduction even against income shown under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... personal expenses of the assessee, expended wholly and exclusively for the purposes of the business or profession while computing the income chargeable under the head 'profit and gains of business or profession'. Thus, as per the mandate of section 57 (iii) of the Act, it is necessary that the primary motive of incurring such expenditure should be directly relatable to the earning of income falling under the head 'income from other sources'. In the present case it is beyond doubt that depreciation, interest on loan, repairs and maintenance expenses as well as insurance expenses were directly relatable to the earning of lease rental which was shown by the assessee under 'income from other sources'. Further, a plain r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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