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TMI Blog2013 (7) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 3. Because the learned Commissioner of Income-tax (Appeals), Agra wrongly confirmed the disallowance of interest on debit balance of Shri Kunal Jain, S/o. the managing partner while the amount given to Kunal Jain is finally treated as drawings of the partner who is responsible to bear the education expenses of Shri Kunal Jain. 4. Because the learned Commissioner of Income-tax (Appeals), Agra wrongly confirmed the disallowance of depreciation amount on one car amounting to Rs. 1,50,000 (car worth Rs. 10,00,000). 5. Because the learned Commissioner of Income-tax (Appeals), Agra wrongly confirmed the addition of Rs. 92,276 out of food and beverage expenses and Rs. 1,35,180 out of fuel of car and scooter. Because the order passed by the learned Commissioner of Income- tax (Appeals), Agra is wrong, illegal and against the facts of the case and liable to be set aside." 3. Ground Nos. 1 and 2 are pertaining to disallowance of loom expenses. The brief facts of the case are the assessee-firm carries on the business of export of handmade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC), wherein it has been held that whether the assessee is entitled to a particular deduction or not will depend on the provisions of law relating thereto and not on the view which the assessee might take of his right nor can the existence or absence of entries in the books of account be decisive or conclusive in the mater. The Assessing Officer made addition of Rs. 22,62,695. 4. The Commissioner of Income-tax (Appeals) confirmed the addition. The Commissioner of Income-tax (Appeals) called the remand report from the Assessing Officer on the submission of the assessee. At the time of remand proceedings two persons were produced wherein they claimed that 85 looms have been erected/constructed. The Commissioner of Income-tax (Appeals) held that only on the basis of sample survey, verification of 100 per cent. expenses on looms erected cannot be accepted. However, the Commissioner of Income-tax (Appeals) found that the assessee is in the business of manufacturing of carpet and the looms are essential machinery. Therefore, construction/erection of looms by the assessee at the site of weavers cannot be denied. It is also observation of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit shown was Rs. 1,45,00,622 and for the year ended March 31, 2007 gross profit shown is Rs. 2,12,79,434. Thus, proportionate loom expenditure should be Rs. 18,50,000 (rounded off) (1260374/14500612 x 2,12,79,434). It is stated that in last year the loom expenses have been accepted by the Department. Under the circumstances loom expenses to the extent of Rs. 18,50,000 is allowable as expenditure. We accordingly allow the same and the balance amount of Rs. 4,12,695 is confirmed. The assessee gets relief of Rs. 18,50,000 out of addition of Rs. 22,62,695. 6. The third ground is in respect of disallowance of interest expenses. During the assessment proceedings the Assessing Officer noticed that the assessee has claimed interest expense of Rs. 2,45,337 on account of interest. The Assessing Officer further noticed that an amount of Rs. 9,03,331 has been shown as outstanding under the head advance in the name of Shri Kunal Jain. Shri Kunal Jain is the son of one of the partners Shri Lalit Jain. The Assessing Officer noticed that no interest recovery on account of advance given to Shri Kunal Jain has been shown. The nature of advance is a personal advance given by the firm to Shri Kunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... car and it is being used for the purpose of business. 10. The learned authorised representative submitted that copy of registration was furnished before the Commissioner of Income-tax (Appeals). As per the registration document, the car was transferred in the name of one of the partners Shri Lalit Jain. 11. After hearing the learned Departmental representative, we find that the assessee has failed to furnish supporting evidence that the car was purchased in the name of partner Shri Lalit Jain and it was used for the purpose of business. The assessee has failed to furnish any evidence in this regard. Once it is found that the car was not used for the purpose of business, depreciation is not allowable. The assessee has failed to furnish any evidence to show that the car was used for the purpose of business. In the light of the fact, we do not find any infirmity in the order of the Commissioner of Income-tax (Appeals). The order of the Commissioner of Income-tax (Appeals) is confirmed on the issue. 12. The fifth ground of appeal is in respect of disallowance of expenses of Rs. 92,276 out of food and beverages. During the assessment proceedings, the Assessing Officer noticed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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