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2015 (1) TMI 1234 - AT - Income TaxDisallowance of motor car expenses and depreciation on motor car - A.O has disallowed the claim of depreciation mainly for the reason that the motor car was in the name of the Director and not in the name of the Assessee and also disallowed the claim of the Assessee for expenses for the reason that Assessee could not prove that the expenses have been incurred wholly and exclusively for the purpose of business and were not in personal in nature - Held that:- On perusing the Balance sheet placed by the Assessee in the paper book, it is seen that the motor car is reflected in the schedule of fixed assets. Before us, Revenue has not brought any material on record to controvert the submissions of Assessee that the funds of Assessee has been used for the purchase of motor car. We further find that on identical facts, in the case of Swati Autolink Pvt. Ltd. vs. ITO (2013 (2) TMI 727 - ITAT AHMEDABAD) as held mere non-registration of a vehicle in the name of the company under the Motor Vehicles Act, cannot disentitle it in regard to its claim of depreciation, when the facts on record are undisputed that the asses see company has, in fact, made the investment in pur chase of the vehicle and such vehicle is being used for its business. The requirement of section 32 is that the vehicle must be owned by the assessee and not that the assessee must be a 'registered owner' of the same under the Motor Vehicles Act. - Decided in favour of the Assessee Disallowance made u/s. 40A(2)(b) - Assessee had borrowed funds from related parties in earlier years - Held that:- Assessee had borrowed funds from related parties in earlier years also and no disallowance on account of interest was made by the Revenue while framing the assessment u/s. 143(3). The aforesaid submission of the Assessee has not been controverted by Revenue by bringing any contrary material on record. A.O while disallowing the expenses has noted that the loans from bank are available @ 12% or less. However we find that A.O has not placed on record any evidence of such interest being charged by the banks. It is also Assessee’s submission that the loans obtained from the related party are in the nature of unsecured loan whereas the loan from bank are in the nature of secured loan where the Assessee is required to provide security and also required to comply with other formalities. These submissions of Assessee have also not been controverted by Revenue by placing any contrary material on record. Further no material has been brought on record by Revenue to demonstrate that the funds borrowed by the Assessee have been used for non business purposes. Considering the totality of the aforesaid facts, we are of the view that no disallowance on account of interest is required in the present case and therefore direct the deletion of disallowance. - Decided in favour of the Assessee
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