TMI Blog2023 (4) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;personal use'. The limited company is an inanimate person and there cannot be anything personal about such an entity. The view was supported by the provision of section 40(c) and section 40A (5) of the Act. Once the expenditure in question was in terms as provided in sections 309 and 198 of the Companies Act, there could not be any 'non-business' purpose insofar as the assessee-company was concerned. Decided in favour of assessee. - ITA No. 558/Mum/2021 ,ITA No. 1060/Mum/2021 - - - Dated:- 20-10-2022 - SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER For the Appellant : Sh. Madhur Agrawal, Adv. For the Respondent : Sh. Chetan M. Kacha, Sr. DR ORDER PER GAGAN GOYAL, A.M: These appeals by the assessee are directed against the order of Commissioner of Income Tax (Appeals)-50, Mumbai [hereinafter referred to as ( CIT(A)] vide common order dated 17.02.2021 for the Assessment Years (AY) 2013-14 2014-15 respectively. The assessee has raised similar grounds of 2 ITA No. 558 1060/Mum/2021-Silver Spark Apparel Ltd. appeal in both the AYs. Firstly, we are taking ITA No. 558/Mum/2021 for A.Y. 2013-14 as lead case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of subsection (1) of section 32 shall be restricted to a fair proportionate part thereof which the assessing officer may determine, having regard to the user such building, machinery, plant or furniture for the purposes of the business or profession . From the above provisions, it is clear that the fair proportionate deprecation pertaining to the non-business purpose as worked out by the assessing officer is liable to disallowed. During the course of assessment proceedings, the assessee, vide order sheet noting, was asked to justify as to why the depreciation claimed on sports car should not be disallowed. The assessee, vide its letter dated 15/03/2016, has submitted its justification note. The assessee's justification has been considered and verified. Taking into consideration the facts of the case in totality and having regard to the fact that the identical issue involved in the past year wherein assessee's claim of depreciation was denied, the undersigned does not find any reason to deviate from the conclusion drawn in earlier years. Therefore, the depreciation claim of Rs. 5,90,596/- and expenses occurred on it of Rs. 3,45,918/- totalling amount of Rs. 9,36,514 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant has also placed reliance on the decision of the Hon'ble Gujarat High Court in the case of Sayaji Iron Engg. Co. v/s CIT reported in 253 ITR 749 and that in the case of Dinesh Mills Ltd vs. CIT reported in 122 Taxman 384. 10. Without prejudice to the above, the appellant has also placed reliance of the decision dated 10.10.2017 in their own case for case for AY 2012-13 of my Ld. Predecessor, wherein 50% of expenses and deprecation were allowed. It has also been submitted that as on date, the decision of Ld. CIT (A) in the appellant's own case for AY 2012-13 holds good as the Department has not preferred an appeal before the Hon'ble Tribunal. 5. Ld. CIT (A) himself categorically given a finding vides para-5.3.3 I find that the appellant s luxury sports care has never been used for racing purposes and there cannot be any objection owning such sport car by the appellant company. This vehicle has been used for commuting of key managerial personnel of the appellant company. Ld. CIT (A) further observed vide para-5.3.4 I also find that there is no ban for owning a luxury sports car for business in a textile industry. I also notice that the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure for personal use of the directors. The same was as per the terms and conditions of service and insofar as the assessee-company was concerned, it was a business expenditure and not disallowable as such. There was one more aspect of the matter which required to be considered. The assessee, which was a private limited company, was a distinct assessable entity as per the definition of 'person' under section 2(31) of the Act. Therefore, it could not be stated that when the vehicles were used by the directors 'even if they were personally used by the directors', the vehicles were personally used by the company, because a limited company by its very nature cannot have any 'personal use'. The limited company is an inanimate person and there cannot be anything personal about such an entity. The view was supported by the provision of section 40(c) and section 40A (5) of the Act. Once the expenditure in question was in terms as provided in sections 309 and 198 of the Companies Act, there could not be any 'non-business' purpose insofar as the assessee company was concerned. In the circumstances, the Tribunal was wrong in disallowing one-sixth of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter which required to be considered. The assessee, which was a private limited company, was a distinct assessable entity as per the definition of 'person' under section 2(31) of the Act. Therefore, it could not be stated that when the vehicles were used by the directors 'even if they were personally used by the directors', the vehicles were personally used by the company, because a limited company by its very nature cannot have any 'personal use'. The limited company is an inanimate person and there cannot be anything personal about such an entity. The view was supported by the provision of section 40(c) and section 40A (5) of the Act. Once the expenditure in question was in terms as provided in sections 309 and 198 of the Companies Act, there could not be any 'non-business' purpose insofar as the assessee-company was concerned. 9. In view of the above, appeal of the assessee is allowed with a direction to the AO for deletion of depreciation amounting to Rs. 5,90,596/- and expenses incurred amounting to Rs. 3,45,918/-. 10. In the result, appeal filed by the assessee is allowed. ITA No. 1060/Mum/2021 (A.Y. 2014-15) 11. As the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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