TMI Blog2017 (10) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of the telephone expenses, car repairs & maintenance as well as care car petrol expenses - Held that:- In the present case, the assessee admitted before the ld. CIT(A) that no separate telephone or vehicles were there for the personal use and that no log-book was maintained for running of the cars, in such circumstances, the personal use by the partners and the employees cannot be ruled out in such type of cases. However, the disallowance made by the AO and sustained by the ld. CIT(A) appears to be on higher side. I, therefore, considering the totality of the facts and to meet the ends of justice, deem it appropriate to reduce the disallowance to the extent of 10% of expenses incurred on telephone, car repairs & maintenance and car petrol instead of 1/8th made by the AO and sustained by the ld. CIT(A). - ITA No. 5634/Del/2016 And S. A. No. 514/Del/2016 - - - Dated:- 12-6-2017 - Sh. N. K. Saini, Accountant Member For The Assessee : Sh. Repudaman Thakur, FCA For The Revenue : Sh. Bedobani Chaudhari, Sr. DR ORDER This is an appeal by the assessee and is directed against the order dated 16.08.2016 of ld. CIT(A)-16, New Delhi. The assessee also moved a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking of Section 40(b)(iv) of the Income Tax Act, 1961 (hereinafter referred to as the Act). 5. Facts of the case in brief are that the assessee filed its return of income on 28.09.2012 declaring an income of ₹ 2,62,447/- which was processed u/s 143(1) of the Act. Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed that the assessee had paid interest of ₹ 14,53,887/- on the unsecured loans and the capital account of the partners revealed that the following partners had shown debit balance as on 31.03.2012: S. No. Name of the partner Balance as on 31.03.2012 1. Shri Alok Kumar Shorewala 26,67,076 2. Shri Anil Kumar Shorewala 21,93,282 3. Shri Atul Kumar Shorewala 27,14,678 4. Kalawati Devi 1,82,586 5. Sangeeta Shorewala 64,182 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ati Dyestff Industries Vs ITO in ITA No. 2263/Adh./2010 ACIT Vs M/s Lakhani Shoes Co. Pvt. Ltd. (2012) (ID2)- GJX-1054-TJAI DCIT Vs M/s Ashok Kumar, Amit Kumar Shipra Estates (P) Ltd. (2013)-(ID2)-GJX-3393-TDEL 10. It was further submitted that as per the provisions of Section 5 of the Act, the taxability is attracted even when income has accrued but it is the real income and not any hypothetical income and if the income does not result at all, there cannot be a tax, even though in book keeping and entries are made about a hypothetical income. The reliance was placed on the following case laws: E. D. Sassoon Co. Ltd. Vs CIT (1954) 26 ITR 27 DIT Vs Ericsson Communications Ltd. (2015) 378 ITR 395 (Del.) CIT Vs Shoorji Vallabhdas and Co. (1962) 46 ITR 144 (SC) CIT Vs Chamanlal Mangaldas and Co. (1960) 39 ITR 8 (Sc) 11. In his rival submissions the ld. DR strongly supported the orders of the authorities below and reiterated the observations made in their respective orders. 12. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Expenses ₹ 5,53,070/- He further observed that the above said expenditure may include some element attributable towards the personal use by the partners and it was not proved that the whole of the expenditure was incurred wholly and exclusively for the purpose of business. He disallowed 1/8th of the total expenditure and made the addition of ₹ 3,30,155/-. 16. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that the AO had not pointed out any instance of personal use. 17. The ld. CIT(A) after considering the submissions of the assessee observed that the depreciation on car is a statutory allowance which is not affected by the extent or type of usages. Therefore, there shall not be any disallowance out of car depreciation. Similarly, the expenses on travelling had been claimed to be only for business purposes and the AO had not pointed out any instance of personal use. Accordingly, disallowance made by the AO on account of car depreciation and travelling expenses was deleted. As regards to the disallowance out of telephone, car repair maintenance and car petrol, the ld. CIT(A) observed that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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