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TMI Blog2022 (11) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... es, namely, salary for the AY 2014 2015, 2015 2016 and 2016 2017 and salaries paid to Shri Sathish and Shri Giri for the Assessment Years 2016 2017 and 2015 2016 respectively. In terms of the above, in all these years, i.e. 20-12 2013, 2013 2014, 2014 2015, 2015 2016 and 2016 2017, the directions will apply accordingly. Thus, in principle we have decided the issue in favour of the Assessee, but subject to the verification of the facts by the AO. Hence, this matter is restored back to the file of the AO for limited purpose of verification of facts, as to whether the recipients have disclosed the remunerations received on the salaries received from the Assessee in their individual tax returns and discharged the taxes payable there under in terms of the second proviso to Section 40(a)(ia) - AO will accordingly allow the claim after verifying the same. Thus, this common issue in all these years is allowed partly as indicated above. Claim of depreciation and expenses on motor vehicles, i.e insurance, interest on vehicle loan, vehicle maintenance and other repairs, etc. for the reason that the aforesaid motor vehicles are registered in the name of individual Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest payment u/s.40A(3) - payment exceeding Rs.20,000/- as mandated under the said Section - HELD THAT:- We are inclined to remit the matter back to the file of the Assessing Officer who will verify individually the payments which are disbursed to the workers at the construction site besides other legitimate expenses classified as the imprest amount given in lumpsum to be disbursed in smaller fractions to the workers. Accordingly, this issue in the Assessee s appeal is remitted back to the file of the Assessing Officer and is allowed partly. - I.T.A Nos.:1654 to 1658/CHNY/2019 - - - Dated:- 7-9-2022 - Shri Mahavir Singh, Vice President And Shri Manoj Kumar Aggarwal, Accountant Member For the Appellant : Mr. J. Prabhakar, F.C.A. For the Respondent : Mr. ARV Sreenivasan, Addl. CIT ORDER PER MAHAVIR SINGH, VP: Out of these five appeals of the Assessee, two appeals are arising out of two different orders of the Commissioner of Income Tax (Appeals) 15, Chennai for the Assessment Years 2012 2013 and 2013 2014 in ITA No.218 219/2018-19/CIT(A)-15; dated 29.03.2019. For these two assessment years, assessments were framed by the Income Tax Officer, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [4] Interest paid to Shri Ganesh (Director) 14,97,135.00 Assessment Years 2014 2015 : Sl. No. Particulars Amount [1] Salary Ms. Selvi 3,04,600.00 [2] Director remuneration Mr. Ganesh 6,00,000.00 [3] Director remuneration Mr. Rathinavel 6,00,000.00 Assessment Years 2015 2016 : Sl. No. Particulars Amount [1] Director remuneration Mr. Ganesh 3,00,000.00 [2] Director remuneration Mr. Rathinavel 3,00,000.00 [3] Salary Mr. Giri 3,71,960.00 [4] Salary Ms. Selvi 3,59,000.00 Assessment Years 2016 2017 : Sl. No. Particulars Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se two recipients and paid the taxes due thereon. The learned Counsel for the Assessee further stated that these two Directors, Mr. Ganesh and Mr. Rathinavel had disclosed the remuneration received from the Assessee in their individual income tax returns and discharged the taxes payable there under, except for the Assessment Year 2014 2015 in the case of Mr. S. Ganesh who has not filed the return of income for that particular year. 5. When these facts were confronted to the learned Senior Departmental Representative, he in principle had agreed that in case the recipient Directors have included these remuneration in their respective returns of income and paid taxes thereon, then in terms of the second proviso to Section 40(a)(ia) of the Act, the disallowance can be deleted by the Assessing Officer. For this, the learned Senior Departmental Representative stated that this issue can be remitted back to the file of the Assessing Officer for verification of the facts only. 6. In counter, the learned Counsel for the Assessee stated that the Assessee now in his paper-book has filed copies of the returns filed by the said Directors that are enclosed herewith with his proof of disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are registered in the name of individual Directors of the Assessee Company. 8. The brief facts are that the Assessing Officer had disallowed the following motor vehicle expenses in the following Assessment Year s-: Particulars A.Y 2012-13 A.Y 2013-14 A.Y 2014-15 A.Y 2015-16 A.Y 2016-17 Depreciation 5,22,069 5,56,100 4,72,685 4,01,782 1,61,515 Insurance 14,980 36,570 1,44,533 56,688 53,943 Interest on Vehicle Loan 3,02,234 3,00,929 2,11,327 1,14,715 89,791 Vehicle Maintenance 2,56,623 3,33,391 4,93,178 5,07,096 4,54,705 Other Repair 64,946 97,482 70,296 34,670 0 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he depreciation is allowable in the hands of the company, even if it is registered in the name of its Director provided that the vehicle is used for the purpose of business of the company and income derived there from was shown as income of the company. In the instant case there is no dispute with regard to the fact that the vehicles are used for the purpose of business of the Assessee Company. In the case of the Commissioner of Income Tax Vs. Basti Sugar Mills Company Limited [2002] 257 ITR 88 (Delhi), the Hon ble Delhi High Court approved the decision of the Tribunal in holding that since the vehicle is a movable asset, the registration as required in the case of transfer of immovable property is not a condition precedent for legal ownership. In the instant case, the funds for purchase of vehicles have been provided by the Assessee Company and they have been shown as assets of the Assessee Company. Hence, in our view, the Assessee Company should be considered as owner for all practical purposes and hence it is entitled for depreciation. In view of the direct decision of the Hon ble Gujarat High Court is available on this issue, we prefer to follow the same to that rendered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided in favour of the Assessee in both the Assessment Years. Thus, this issue in the Assessee s appeal is allowed. 13. The next issue for the Assessment Year 2016 2017 is as regards to the disallowance u/s.37(1) of the Act, confirmed by the Commissioner of Income Tax (Appeals) that is made by the Assessing Officer amounting to Rs.60.00 lakhs in respect of the payment titled Pannallur Minister Expenses . 14. The brief facts are that the Assessing Officer on verification of the impounded books of accounts noticed that on 03.11.2015, the Assessee has made a payment of Rs.60.00 lakhs which is entered as cash paid towards the Pannallur Minister Expenses . The Assessing Officer had brought out this in his assessment order as under: Date Particulars Vch. Type Vch. No. Debit 03.11.2015 Cr. Ganesh Imprest : Cash paid towards Panallur Minister Expenses details overleaf through Ganesh unoffi total 1,74,00,000/- already 4,00,000/- add Rs.60,00,000/- balance Rs.1,10,00,000/- (50.00 Lakhs singing of Minister and Rs.60.00 Lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After hearing rival contentions and going through the facts and circumstances of the case, we noted that the addition that was made of Rs.64.00 lakhs should be restricted to Rs.60.00 lakhs only for the reason that the payment of Rs.60.00 lakhs made to the Minister on 03.11.2015, i.e. Pannallur Minister Expenses is clearly hit by the Explanation 1 of Section 37(1) of the Act. We affirm the findings of the lower authorities and this issue in the Assessee s appeal is dismissed. As regards to the addition of Rs.4.00 lakhs, the Assessing Officer will verify as to whether this Rs.4.00 lakhs is already considered in the payments disallowed of Rs.18,04,800/- and accordingly he will decide the claim of the Assessee after verification. Thus, this issue in the Assessee s appeal is partly allowed. 18. The next issue in these appeals for the Assessment Years 2015 2016 and 2016 2017 is as regards to the disallowance in respect of the interest payment u/s.40A(3) of the Act. 19. The brief facts are that the Assessing Officer during the course of the assessment proceedings has made the following disallowance by invoking the provisions of Section 40A(3) of the Act being payment exce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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