TMI Blog2013 (10) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... the registered owner to be the owner proper. How would, and on what basis, one may ask, the assessee claim the vehicle from the concerned employee when required, as when the employee leaves the service? Who, of the two, has its possession? It is only where the beneficial ownership is not disputed that it has been held by the hon'ble courts that the absence of registration or legal title would not operate to preclude the claim for depreciation on the relevant asset. - matter remanded back for reconsideration. - I.T.A. No.3474/Mum/2011, I.T.A. No.7582/Mum/2011 - - - Dated:- 29-5-2013 - Shri I. P. Bansal, JM And Shri Sanjay Arora, AM,JJ. For the Appellant : Shri Shalin D. Divatia For the Respondent : Mrs. R. M. Madhavi ORDER Per Sanjay Arora, A. M. These are a set of two Appeals by the Assessee, i.e., for two consecutive years, being assessment years (A.Ys.) 2007-08 2008-09, agitating the separate Orders by the Commissioner of Income Tax (Appeals)-16, Mumbai ('CIT(A)' for short) dated 08.03.2011 and 09.08.2011 respectively, dismissing its appeals contesting its assessments u/s.143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for the relevant years. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fair market value (FMV) thereof at the relevant time. Under these circumstances, therefore, the assessed interest rate of 15% is justifiable, praying for its confirmation. 4. We have heard the parties, and perused the material on record. 4.1 We may firstly clarify that the Revenue assumes, in view of the specific provision of section 40A(2)(a), the jurisdiction to enquire into the reasonableness of an expenditure incurred by the assessee where the same entails payment/s to a specified person/s, i.e., u/s.40A(2)(b) of the Act. The test of reasonableness again stands provided for by the relevant provision, and is with reference to a defined criterion, i.e., the FMV of the goods or services for which the relevant cost has been incurred by the assessee. The same is, thus, not subject to any arbitrary criteria, which in the opinion of the Assessing Officer (A.O.) may be considered as reasonable or justifiable. Further, though the range of the enquiry u/s.40A(2)(a) also extends to examining the legitimate needs of the business or the benefit derived or accruing to the assessee on incurring the said expenditure, in the instant case the Revenue's case rests solely on the excessiven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as observed by the Bench during hearing, it has not brought on record any material to exhibit the market interest rate, as in terms of the rate of interest being allowed by other similar parties, or on debts obtained by the assessee-company or its group concerns from other parties in the market. In fact, the unsecured loan market is also fairly organized, so that it would not be difficult to obtain a quote thereon, which would be again on a competitive basis. 5.3 The ld. AR during hearing further claimed that the assessee's business to be the new one, so that it carried significant risk, or at least a higher risk perception. However, again, there is nothing on record to show of the assessee's business being new, or it finding it difficult to raise resources. Rather, as admitted by him, the assessee was able to raise loans/capital from the bank subsequently, repaying the unsecured loans under reference. The rate/s of interest at which such loans had been obtained has again not been disclosed. As it would appear to us, therefore, the assessee, being a private company, raised resources from related parties to cover the time gap, i.e., till it could arrange funds from the regular s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on storage equipment used in the warehouse at the rate applicable to 'furniture and fittings', as against the claimed rate, i.e., as applicable to 'plant and machinery', and which resulted in an 'under-allowance' of depreciation to the extent of Rs.1,00,812/- and Rs.91,086/- for the two consecutive years respectively. 7. After hearing the parties, and going through the orders by the authorities below, it was expressed by the Bench during hearing that there is some substance in the case of the either party. This is as some items, viz. storage equipment, which would qualify as 'plant and machinery', while others, as 'cabin partition', which would only be 'furniture and fittings'. The issue would, thus, warrant a remission back to the file of the assessing authority to rework the depreciation accordingly. In view of the nominality of the amount involved, as well as the concomitant tedium, the ld. AR would, upon this, state that he was prepared not to press the matter any further, so that it may not be restored back for the said purpose. Accordingly, we are not inclined to interfere with the impugned order, and the assessee's relevant grounds stand dismissed. 8. This leaves us wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, and there was no doubt as to the assessee being the beneficial owner (which we find to be the case in the case of Dilip Singh Sardarsingh Bagga (supra) as well), while in the instant case, the asset had been purchased, and which would only be deliberately so, by or in the hands of its employee. This aspect of the matter was, however, not brought to our notice during hearing by either party. Further, it may well be that the assessee has some explanation for the asset being purchased in the name of an employee, and that it retains the beneficial ownership thereof. The same is purely a matter of fact, and which has to be necessarily decided on the basis of the evidences or materials led by the assessee. This aspect of the matter having not been brought to our notice during hearing by the parties, we only consider it fit and proper under the circumstances to remit the matter back to the file of the first appellate authority to decide the same after hearing both the parties qua the aspect of beneficial ownership of the car, on which fact, the law being clear, the assessee's claim hinges. We are not impressed, we may though clarify, with the argument of the ld. CIT(A) with refer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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