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2019 (1) TMI 1816 - ITAT PUNEDepreciation on cars for personal use by the directors of the assessee company - AO noticed that the cars were not purchased in the name of the assessee but its directors thus made disallowance invoking the provisions of section 38(2) - HELD THAT:- AO has basically made disallowance u/s. 38(2) of the Act. The very fact that he allowed depreciation @ 50% of the amount claimed on cars goes to prove that he accepted the ownership of cars in the name of the assessee company. Hon’ble Gujarat High Court in Sayaji Iron and Engineering Company [2001 (7) TMI 70 - GUJARAT HIGH COURT] has held that there cannot be any disallowance of personal expenses for cars on account of personal use by the director. It has been further held that no disallowance can be made even by treating such expenditure as not having been incurred for the business purpose. Similar view has been taken by the Delhi Bench of the Tribunal in several cases including Dy. CIT vs. Haryana Oxygen Ltd. [1999 (12) TMI 107 - ITAT DELHI-D]. Thus it is evident that there can be no disallowance on account of personal use by the director-employees of the assessee. Such an amount can be treated as a perquisite in the hands of the employees - Decided in favour of assessee.
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