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2016 (7) TMI 738 - ITAT AHMEDABAD

2016 (7) TMI 738 - ITAT AHMEDABAD - TMI - Depreciation on motor car - car purchased in the names of the Directors of the assessee-company - Held that:- It is an undisputed fact that though the car has been purchased in the name of the two Directors of the Company, but it is reflected in the balance-sheet of the assessee. We find that on identical facts, on similar issue the Coordinate Bench in the case of Afflon Alpast [2015 (1) TMI 1234 - ITAT AHMEDABAD] wherein held that mere non-registration .....

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P. Hemani, AR For The Respondent : Shri K. Madhusudan, Sr.DR ORDER PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : This appeal by the Assessee is directed against the order of the Commissioner of Income Tax(Appeals)-VIII, Ahmedabad dated 18/02/2013 for the assessment year 2008-09. 2. The relevant facts as culled out from the materials on record are as under:- 2.1. Assessee is a company stated to be engaged in the business of manufacturing and trading of electronic weighing scales and its parts. As .....

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peal No.CIT(A)-VIII/ITO/Wd.4(1)/507/10-11) granted partial relief to the assessee. Aggrieved by the order of the ld.CIT(A), assessee is now in appeal before us and has raised following grounds:- 1. The learned CIT(A) has erred both in law and on the facts of the case in confirming the disallowance of ₹ 2,72,972/- made in respect of depreciation on cars purchased during the year under consideration. 2. Both the lower authorities have passed the orders without properly appreciating the fact .....

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learned CIT(A) has erred in law and on facts of the case in confirming action of the ld.AO in initiating penalty u/s.271(1)(c) of the Act. 2.2. Before us, ld.AR submitted that though various grounds have been raised, but the solitary issue which is to be decided is with reference to depreciation on motor car. During the course of assessment proceedings, AO on perusing the depreciation statement, noticed that a Honda Civic Car was purchased in the name of Directors, namely, S/Shri Paragbhai Rame .....

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o the AO. He after placing reliance on the decision of Hon ble Delhi High Court in the case of M.M.Fisheries (P) Ltd. vs. CIT reported at 277 ITR 204 (Del) concluded that since assessee has failed to furnish any proof to demonstrate that the vehicle was used for the purpose of business of the company, disallowed the claim of depreciation amounting to ₹ 2,72,972/-. Aggrieved by the order of AO, assessee carried the matter before the ld.CIT(A), who upheld the order of AO by holding as under: .....

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n the name of director. Therefore, appellant company is not the legal owner of the motor car. For claim of depreciation, the two conditions are to be fulfilled namely-appellant must be owner of the asset and it must be used for the purpose of appellant's business. In this case appellant is not the owner since the ownership vests with the director who is separate entity than the appellant company. As regards use of these cars for the purpose of business, the same were not furnished. Therefore .....

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eld that the motor car was not used for the purpose of appellant's business. Coming to the appellant's argument of beneficial ownership, appellant submitted that payment for the car was made by the company and hence the appellant is the beneficial owner. Payment will not determine the ownership since payment can be made by way of loan also. In fact major payment is made by finance company but it is not the beneficial owner. Since both appellant and its director are separate entities and .....

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in High Courts including Supreme Court decision in the case of Mysore minerals Ltd. It would be very relevant to refer three-member decision of honorable Supreme Court in the case of Tamil Nadu civil supplies Corporation Ltd versus CIT reported in 249 ITR 214. In this larger bench decision of apex court, earlier decision of- Mysore minerals Ltd was also considered. The said decision was distinguished on facts and it was held that since assessee has not acquired Dominion over asset in question, c .....

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on over the asset as well as use for the purpose of business. If appellant is not able to prove either in the light of larger bench decision of Supreme Court, claim of depreciation on assets standing in others name cannot be allowed. The decisions of other high Courts have been considered. In all those decisions the user of asset namely transport buses etc were by the companies and the companies were disclosing the income from hiring those vehicles. The user of asset for the purpose of business .....

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ivate Ltd, the decision of jurisdictional ITAT is not followed which has not considered these decisions. It is therefore held that the depreciation claimed by the appellant is correctly disallowed by the assessing officer. The ground of the appellant is dismissed. 3. Aggrieved by the order of the ld.CIT(A), assessee is now in appeal before us. 3.1. Before us, ld.AR reiterated the submissions made before the AO and ld.CIT(A) and further submitted that on identical issue, the Coordinate Bench of T .....

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e rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the decision relied upon by the ld.AR. The issue in the present case is with respect to depreciation on the car which has been purchased in the names of the Directors of the assessee-company. It is an undisputed fact that though the car has been purchased in the name of the two Directors of the Company, but it is reflected in the balance-sheet of the assessee. We find tha .....

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s for the reason that Assessee could not prove that the expenses have been incurred wholly and exclusively for the purpose of business and were not in personal in nature. On perusing the Balance sheet placed by the Assessee in the paper book, it is seen that the motor car is reflected in the schedule of fixed assets. Before us, Revenue has not brought any material on record to controvert the submissions of Assessee that the funds of Assessee has been used for the purchase of motor car. We furthe .....

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funds of the assessee has been used could not be controverted by the Revenue by bringing any material on record. We find that the Co-ordinate Bench in the case of Studio-3 Architect Pvt Ltd (supra) held as under:- "5. We have heard both the parties and gone through the facts of the case. The relevant provisions of section 32 of the Act stipulate depreciation in respect of building, machinery, plant or furniture "owned by the assessee" and "used" for the purposes of the b .....

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ess the car is registered in the name of the assessee under the Motor Vehicles Act, the assessee would not be entitled to deduction of depreciation allowance in respect thereof. We are of the opinion that the assesses, who had purchased the car for valuable consideration and used the same for its business, cannot be denied the benefit of depreciation on the ground that the transfer was not recorded under the Motor Vehicles Act or that the vehicle stood in the name of a director of the assessee c .....

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d 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. Bus Shokat Ali (No.2), 256 ITR 357 (Raj), CIT Vs Fazilka Dabwali TPT Co. Ltd (2004) 270 ITR398 (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.), CITv. Dilip Singh Bagga [1993] 201 ITR 995/11994] 77 Taxaman 66 (Bom), CIT v Navdurga Transport Co. [1999] 235 ITR 158 .....

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