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TMI Blog2015 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... d.CIT(A)-V, Baroda was erred in confirming 10% of various expenses as personal expenses even though expenses were incurred for the purpose of business and erred in applying sec.38(2) of the I.T.Act. 02. On the facts and circumstance of the case as well as in law the lrd.ITO, Ward-5(3), Baroda was erred in confirming disallowance of depreciation on computers on the ground that the same were not put to use even though same were used for the purpose of business. 03. The appellant prays to your Honor to leave, amend, alter or cancel any ground of appeal at the time of hearing. Relief claimed in appeal (1) Appellant prays your Honour to allow 10% of various expenses from postage and telephone, vehicle, petrol and motor car depreciation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 110/- as depreciation on computers. However, the AO did not allow the same on the ground that the computers were not put to use, although the assessee has placed on record trial run of the computers. He drew our attention towards page No.11 of the assessee's paper-book, wherein a letter dated 06/11/2006 is enclosed. As per this letter, a proposal is made for hiring computers on lease for a period of three years. The ld.counsel for the assessee further drew our attention towards page No.12 of the paper-book in support of his contention that 88 computers were received. Since the trial run was carried out by the assessee, assessee is entitled for depreciation. He placed reliance on the judgement(s) of Hon'ble High Court of Gujarat rendered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he site of Rishabh Software in small lots of 10 to 15 machines which were to be tested before being put to actual use. Moreover, the actual hiring of machines was supposed to start once entire infrastructure of Rishabh Software was in place and projects, for which it was being created, started. Vide letter dated 23rd March 2007, Rishabh Software informed the appellant that they confirm receipt of 88 computers which will be retained by them for use on lease for a period of three years. This was subject to positive report on testing which was expected to be received by the end of the week. It was further stated in the letter that the appellant could start raising invoices to start for lease rent w.e.f. April, 2007. Thus, letter clearly shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and these computers were subject to positive report on testing. It is not coming out from the records that when the testing was carried out and whether the testing was carried out for the purpose of business requirements. In the absence of such material evidence, no inference can be drawn with regard to usage of the computers. Under these facts, we deem it proper to restore this issue back to the file of AO for verification and the AO is hereby directed to carry out further verification of the genuineness of certificate and claimed trial run of computers.
6. In the result, Assessee's appeal is partly allowed for statistical purposes.
Order pronounced in the Court on Friday, the 21st day of August, 2015 at Ahmedabad. X X X X Extracts X X X X X X X X Extracts X X X X
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