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2018 (3) TMI 1922 - AT - Income TaxAddition on account of expenses of personal use - AO disallowed which is 10% of expenses on vehicle maintenance, sales promotion, staff welfare, travelling and conveyance and telephone - HELD THAT:- CIT(A) held that the element of personal use cannot be completely rules out, therefore, he sustain the disallowance to the tune of ₹ 81,166/-. It can be seen that the Assessing Officer made disallowance only on the estimated basis. Therefore, there is no need to interfere with the order of the CIT(A). Ground No. 1 of the Revenue’s appeal is dismissed. Unverified expenses - Addition on account of Diwali expenses - onus was on assessee to establish that it was incurred wholly and exclusively for the purpose of business - HELD THAT:- CIT(A) has correctly held that the books of accounts of the assessee are audited and the assessee is maintaining the computerized accounts books in the shape of Cash Book, Ledger, Stock Register, Salary Register, Sale Purchase Voucher, bank statement etc. regularly. Therefore, any disallowance on estimated basis is not tenable. There is no need to interfere with the finding of the CIT(A). Addition on account of incorrect claim of depreciation on commercial vehicle - whether these vehicles were acquired between 01.10.1998 and 31.03.1999 and put to use before 01.04.1999 as per the provision of third provision to section 31(1) - HELD THAT:- The perusal of the records show that the assessee furnished all the relevant documents before the Assessing Officer. There is no additional evidence given by the assessee before the CIT(A). CIT(A) rightly held that the Assessing Officer wrongly disallowed a sum of ₹ 1,71,929/- depreciation on commercial vehicle. As per 3rd proviso to clause (ii) of Sub-section (1) of Section 32 of the Act, the assessee has rightly claimed the depreciation @40%. Thus, there is no need to interfere with the findings of the CIT(A). Addition on account of incorrect claim of cost of acquisition of shares while computing Long Term Capital Gain on sale of shares - HELD THAT:- The persual of the records show that the assessee furnished all the relevant documents before the Assessing Officer. Therefore, there is no additional evidence given by the assessee before the CIT(A). CIT(A) rightly held that cost of acquisition which was disclosed in the Financial Year 2003-04 as purchase and the same was allowed by the CIT(A). There is no need to interfere with the findings of the CIT(A). Ground No. 6 & 7 are dismissed. Long Term Capital Gain addition - HELD THAT:- From the records it can be seen that shareholding pattern was not verified by the Assessing Officer as well as the CIT(A). In fact, the assessee has converted his business from proprietorship to Pvt. Ltd. company w.e.f. 01.01.2009 with allotment of 99.66% share in his name. Neither the Assessing Officer not the CIT(A) has not taken into account the effect of the revaluation after the proprietary concern is converted into Private Limited Company as regards to the shares allotted to the assessee as a Director of the said Private Limited Company. Therefore, this needs to be looked into by the Assessing Officer. The matter is remanded back to the file of the Assessing Officer. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.
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