TMI Blog2011 (1) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer. 6. It is therefore, prayed that the order of the Id. Commissioner of Income-tax(A)-XIV, Ahmedabad may be set-aside and that of the Assessing Officer be restored. 2 Adverting first to ground no.1 in the appeal , facts, in brief, as per relevant orders are that return declaring loss of ₹ 3,42,071/ filed on 27-12-2006 by the assessee, engaged in the business of interior and architectural work, after being processed u/s 143(1) of the Income-tax Act, 1961 [hereinafter referred to as the Act ] was selected for scrutiny with the issue of a notice u/s 143(2) of the Act on 19.10.2007. During the course of assessment proceedings, the Assessing officer noticed that though the assessee had an innova car registered in the name of a director and not in the name of assessee company, it claimed depreciation of ₹ 1,94,948/- on the said car. While referring to provisions of sec. 32 of the Act and decisions in the case of M.M. Fisheries ,227 ITR 204( Delhi) and Addl. CIT Vs. United Motor Transport Service Association (1991) 190 ITR 13(All.), the AO concluded that depreciation is allowable only on assets owned by the assessee. Since car was not registered in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee owned and used the three vehicles within the meaning of s. 32 of the Act. Similar view was taken in the case of CIT Vs, Mohd. Bux Shokat Ali(No.2), 256 ITR357(Raj), CIT Vs Fazilka Dabwali TPT Co. Ltd. (2004) 270 ITR 398 (P H), CIT v. Salkia Transport Associates [1983] 143 ITR 39/13 Taxman 191 (Cal.), CIT v. Nidish Transport Corpn. [1910] 185 ITR 669/[1989] 44 Taxman 351(Ker.), CIT v. Dilip Singh Bagga [1993] 201ITR 995/[1994] 77 Taxman 66(Bom.), CIT v. Navdurga Transport Co. [1999] 235 ITR 158 (All.) and CIT v. Basti Sugar Mills Co. Ltd. [2002] 257 ITR 88/123 Taxman 693 (Delhi)as also by the ITAT in their decision in the case of The Curious House (P) Ltd. v ITO (1980) 9 TTJ 348(Indore) and ITO Vs. Modi Agency, ITA no. 198/Gau/1977-78(Gauhati). 5.2 In the light of view taken in the aforesaid decisions, mere non registration of a vehicle in the name of the company under the Motor Vehicles Act, cannot disentitle it in regard to its claim of depreciation, when the facts on record are undisputed that the assessee company has, in fact, made the investment in purchase of the vehicle and such vehicle is being used for its business. The requirement of section 32 is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds for loans to associate concerns did not arise nor the AO established the nexus between the interest bearing funds and the interest free advances given to associate concern. Inter alia, the ld. CIT(A) relied on various decisions including the decision in the case of Torrent Financiers vs. ACIT, 73 TTJ 624 (Ahd ). 8. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A).The learned DR supported the order of the AO while the learned AR on behalf of the assessee supported the findings of the learned CIT(A). 9.. We have heard both the parties and gone through the facts of the case. Indisputably and as pointed out by the ld. CIT(A), the aforesaid advance of ₹ 1,04,70,526/- to M/s Asopalav Estate and Leasing Pvt. Ltd. and Rs,23,76,805/- to M/s. Mistry Associates was given for the purpose of business of the assessee . There is nothing on record to suggest that the said amount was for non-business purposes. Before the ld. CIT(A), the assessee contended that majority of loans had been advanced in the preceding years out of available surplus with the company and that the assessee had not utilized borrowed funds for the purpose. Hon ble Karnata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced and still no income from interior designing was offered to tax while the project wise details of material and other expenses were not maintained and the assessee did not furnish bifurcation of the expenses on each of the project nor the assessee furnished any evidence as to whether or not work had been carried out with labour or with material. Inter alia, since the assessee did not maintain any stock register nor furnished project wise details of commencement and their completion while the expenses on labour and raw material increased in February and March,2006 without any basis and the assessee failed to establish the genuineness of the said expenses and the no basis was shown for valuing WIP, the AO rejected book results having recourse to provisions of sec. 145(3) of the Act and consequently, estimated gross profit @ 8% of total receipts, resulting in addition of an amount of ₹ 9,49,176/-. 11. On appeal , the learned CIT(A) deleted the addition in the following terms:- 4.3 I have considered the facts of the case and the submissions as advanced by the A.O. From the details furnished by the A.R., it is seen that its accounts are duly audited by the Chartered Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and making any trading addition. Hon ble Gauhati High Court in Aluminium Industries (P) Ltd. v. CIT (I.T.R. No. 12 of 1990) observed that a lower rate of gross profit declared by the assessee as compared to the previous year, would not in itself be sufficient to justify any addition. The mere fact that the percentage of loss or gross profit is high or low in a particular year does not necessarily lead to inference that there has been suppression. Low profit is neither a circumstance nor material to justify addition of profits. The ratio of the judgments in Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC); Raghubir Mandal Harihar Mandal v. State of Bihar [1957] 8 STC 770 (SC); State of Kerala v. C. Velukutty [1966] 60 ITR 239 (SC); State of Orissa v. Maharaja Shri B.P. Singh Deo [1970] 76 ITR 690 (SC); Brij Bhusan Lal Parduman Kumar v. CIT [1978] 115 ITR 524 (SC); Chouthmal Agarwalla v. CIT [1962] 46 ITR 262 (Assam); R.V.S. and Sons Dairy Farm v. CIT [2002] 257 ITR 764 (Mad); International Forest Co. v. CIT [1975] 101 ITR 721 (J K) ; M. Durai Raj v. CIT [1972] 83 ITR 484 (Ker); Ramchandra Ramnivas v. State of Orissa [1970] 25 STC 501 (Orissa); Action Electricals v. Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO , the assessee explained that only the sundry balances were written off, income in relation to which was duly accounted for . However, the AO did not accept the submissions of the assessee on the ground in the audited accounts, the above amount had been shown as bad debts and no action had been taken to recover the amount. Since no action for recovery had been taken, the AO disallowed the claim for deduction of the said amount of ₹ 1,01,081/- . 15. On appeal, the learned deleted the disallowance in the following terms: 5.3 I have considered the facts and the circumstances and the submissions of the appellant. I find that the AR has filed account copies of parties and has claimed the same as sundry balances written off and that the amounts were not receivable due to claims made by the parties and the claims made by the parties were accepted by the appellant. Considering these facts and submissions, I hold that the claim of the appellant that the amounts written off are kasar vatav is genuine, hence I delete the disallowance. 16. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A).The learned DR supported the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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