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2021 (3) TMI 673 - AT - Income TaxDisallowance of depreciation on Car - Invoice of Car purchase was not produced for verification - HELD THAT:- It is undisputed that the Department has allowed interest on vehicle loan as well as has also allowed the expenditure towards car running. Thus, in fact, it is accepted by the Department that the assessee has a vehicle which is used for the business purposes. Although, the assessee could have made efforts to obtain a copy of the purchase invoice from the hypothecating bank and produced it before the Lower Authorities, all the same, it is our considered opinion that the assessee should not be penalized for his failure to produce the purchase invoice, specially, when the Department has in principle accepted the assessee’s claim of interest on car loan as well as claim of Car running expenditure. Therefore, in view of the facts of the case, we delete this disallowance. Addition on account of notional interest added to the income of the assessee in respect of an amount advanced to M/s Chander Rani Enterprises Pvt. Ltd. - HELD THAT- We have gone through the audited financial statements of the assessee and it is seen that the share holders’ funds (Share Capital and Reserves & Surplus) as on 31st March, 2012 stood at ₹ 4,88,60,427/- whereas the long term borrowing stood only at ₹ 11,84,274/- and the short term borrowing stood at ₹ 4,05,944/-. Thus, it can be safely concluded that the advance of ₹ 10,00,000/- given by the assessee was given from interest free funds/reserves of the assessee. In such a situation, we are unable to uphold the addition on account of notional interest to the income of the assessee and we direct the deletion of the same. Liability of unpaid creditors from the opening written down value of block of license - addition u/s 50 - HELD THAT:- Assessee has finally paid an amount which is much less than the agreed/ invoiced amount towards the purchase of fixed assets. The amount less paid is ₹ 4,37,38,637/-. Thus, in fact, the actual cost of the fixed assets to the assessee has been reduced by ₹ 4,37,38,637/- and to this extent the stand of the Department is correct that the assessee should have reduced the cost of assets by the amount of ₹ 4,37,38,637/-. Further, we are in agreement with the contention of the Ld. Authorized Representative that provisions of Section 50 (1) & (2) of the Act are not attracted in this case. As there has been no transfer of assets in the present case, short term capital gains cannot be computed in this case. Accordingly, this issue will have to be re-examined by the Assessing Officer after duly taking into account our directions that provisions of Section 41(1) and Section 50(1) & 50(2) are not attracted in this case. However, the amount of sundry creditors written back will have to be reduced from the cost of fixed assets and Written Down Value would have to be adjusted accordingly. Thus, Ground have to be reconsidered and re-examined by the Assessing officer. We direct that the same be done after giving adequate opportunity to the assessee to present its case.
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