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2021 (6) TMI 570 - AT - Income TaxIncome from house property - Notional rental value against residential house property situated in Mumbai - addition under section 23 (a) by taking view that assessee has two residential house, one at Surat and another at Mumbai - HELD THAT:- Assessee has not filed any documentary evidence about the use of house property for the purpose of business, except making self-serving statement that property is being used for business purpose as and when the assessee visits the Mumbai. Assessee relied upon the decision in CIT Vs Rasiklal Balabhai [1978 (10) TMI 22 - GUJARAT HIGH COURT]. The facts of the said case are absolutely different. In the said case, the question before the Hon'ble Court was that if the Tribunal was justified by holding that annual letting value of go down owned by assessee used for the purpose of business carried on by him in partnership. Clearly in the said case the house property was in the shape of Go-down. Go-down can only be used for business purpose. On the contrary the house property in the present case is a residential property situated in residential area. Thus, the case law relied by ld AR for the assessee is not helpful to the assessee. Hence, we affirms the order passed by ld. CIT(A). In the result, Ground No.1 of the appeal is dismissed. Adhoc disallowance of cash expenditure - assessee submits that during the assessment, the AO made disallowance @20% of the total expenses made in cash - CIT(A) restricted the disallowance to 10% - HELD THAT:- On appeal before the CIT(A), the assessee made similar submission as made before us. CIT(A) after considering the submission of the assessee and considering the earning of better Net Profit (NP) during the year compared to immediately preceding year, although the Gross Profit (GP Ratio) was slightly lower in this year. The ld. CIT(A) held that in the past, the Gross Profit Ration has been accepted by the Department. On his overall observation, the ld.CIT(A) took his view that it is to be fair and reasonable for both the parties, if the additions are sustained @10% of the expenses. Thus, the ld.CIT(A) allowed 50% relief to the assessee. Before us, assessee vehemently argued that the disallowance sustained by the ld. CIT(A) is on higher side and it may be reduced further. In our view, the ld. CIT(A) after considering the past practice and Net Profit ratio for the year under consideration generously accepted the contention of assessee in sustaining the 10% of the disallowance. In our view, the ld.CIT(A) has taken reasonable view, which we affirm. In the result, Ground No.2 of assessee is dismissed. Disallowance of depreciation on car - HELD THAT:- There is no dispute that assessee claimed depreciation of three cars. The assessee explained the one vehicle is exclusively available for the purpose of office staff. We find merit in the submission of ld.Sr.DR for the Revenue that the assessee has not debited any salary of staff in the profit and loss account. No name, post and proof of employment of staff is furnished before us. For remaining two cars, the assessee explained that one car is used within city of Surat for travelling from home to office and factory and other for frequent visit to Mumbai. The second contention of the assessee with regard to use of two vehicles i.e. one within the city and second is inter-state seems to be reasonable and plausible, therefore, we direct the AO to allow depreciation on two vehicles.
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