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2023 (6) TMI 263 - AT - Income TaxDisallowance of car expenses - Expenses incurred by a Private Limited company towards personal use by the two Directors - HELD THAT:- As decided in DCIT vs. Haryana Oxygen Ltd. [1999 (12) TMI 107 - ITAT DELHI-D] the use of cars by directors-employees of a company cannot be characterized as user for non-business purpose and, hence, no part of such car expenses can be disallowed. As in Sayaji Iron and Engineering Company [2001 (7) TMI 70 - GUJARAT HIGH COURT] has held that once the directors of the assessee company are entitled to use the vehicles of the company for personal use as per the terms and conditions of their appointment, it cannot be said that there was a personal use of cars. Also further held that such user of vehicles by the employees of the company cannot even be considered as ‘non-business user”. There are innumerable judgments on this point holding that there can be no disallowance of depreciation or other expenses on maintenance of the vehicles used by the directors/employees by treating it as personal user or non-business user of the company. We fail to see any rationale in disallowing the expenses incurred on cars as for personal use, when admittedly these have been provided to director-employees. A company is a separate legal entity distinct from its directors or employees. As such, there can be no question of treating the use of vehicles by the directors/employees as a personal use by the company - Therefore, order for the deletion of disallowance of expenses incurred on vehicles. Assessee appeal allowed.
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