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2016 (11) TMI 358 - ITAT MUMBAI

2016 (11) TMI 358 - ITAT MUMBAI - TMI - Allowability of expenses on motor car maintenance, car insurance and interest paid on car loan - cars were registered in the name of the directors - Held that:- It is a case of a company which is a separate legal juristic person. There cannot be any disallowance on account of alleged personal user. It was shown that complete details and evidences were submitted in this regard. Nothing has been brought on record by either of the authorities to show any disc .....

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preciation on motor cars - diallowance of claim as the said cars were registered in the name of the director and not in the name of the assessee company - Held that:- As noted that in this case car was purchased by the assessee company in preceding year i.e. A.Y. 2009-10, wherein depreciation was claimed by the assessee and allowed by the AO. Thus, the said car had entered into block of assets in A.Y. 2009-10. Once an asset is entered into the block of asset and is brought forward as part of ope .....

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- Thus, taking into account the aforesaid legal position and peculiar facts and circumstances of this case, we find that depreciation is allowable on the car and, therefore, the same is directed to be allowed - Decided in favour of assessee - I.T.A. No.570 /Mum/2015 - Dated:- 21-9-2016 - SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) For The Appellant : Shri Neelkanth Kandelwal For The Respondent : Arju Garodia ORDER Per ASHWANI TANEJA, AM This appeal has been .....

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the ground that the said cars are registered in the name of the directors and not in the name of the appellant- company and hence, the appellants are not the owners of the motor cars. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have confirmed the impugned disallowance notwithstanding the fact that the motor cars are registered in the name of the directors inasmuch as the appellants, having paid for the cost of the said vehicle .....

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Commissioner of Income-tax - 4(2) (hereinafter referred to as the Assessing Officer) in disallowing car insurance ₹ 53,240 being, 50% of 1,06,479, interest paid on car loan ₹ 81,278 being 50% of 1,62,556 and motor car expenses ₹ 3,73,33 1 on motor cars on the ground that the said cars are registered in the name of the directors and not in the name of the appellant-company and hence, the appellants are not the owners of the motor cars. The appellants contend that on the facts a .....

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as submitted that this ground was omitted to be raised in the appeal memo inadvertently and no fresh facts are required to adjudicate this ground. It was noted by us the additional ground can be decided on the basis of material held on records and therefore after hearing both the parties, it was admitted. 3. It is also noted that there is delay in filing of appeal by 43 days. It was submitted by the Ld. Counsel that there has been inadvertent delay in filing this appeal. Our attention was drawn .....

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2. I look after the accounts, income-tax and other matters related to finance of the said Company. 3. I received the order of the Commissioner of Income-tax (Appeals) - 8, dated 01.09.2014 in the case of Mehta Equities Limited for the assessment year 2010-11 on 16th October, 2014 and kept them separately in my drawer. I also kept other papers and documents together with the aforesaid order. As a practice, all income-tax related papers/ documents are sent to Messrs P. D. Saraf & Co, Chartere .....

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sel submitted that there was no intention to file the appeal belatedly. The delay occurred on the part of the accountant inadvertently. It was beyond the knowledge of the assessee. The reasons given are duly explained in the affidavit. 5. Ld. DR could not rebut the facts narrated before us that led to the delay in filing this appeal. No serious objection was made by her in condoning the delay. Therefore, taking into account all the facts and circumstances of the case, the delay in filing this ap .....

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d that no disallowance should have been made. But, the Ld. CIT(A) sustained the disallowance on motor car expenses @50% as has been made by the AO, but brought down the disallowance on account of car insurance and interest paid on car loan to 50% to make the disallowance at par with the motor car expenses. While doing so, the Ld. CIT(A) did not give any proper reasoning as to why this 50% disallowance should be made. Being aggrieved, the assessee came in appeal before the Tribunal and contented .....

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complete details have been furnished before the lower authorities. There are no basis to disallow 50% of the expense incurred on the motor car which was used exclusively for the purpose of the business of the assessee. Nothing has been detected to show he user of the motor car for non business purposes. No reasoning whatsoever has been given by the AO as to why these expenses have not been allowed fully. Ld. CIT(A) also has not given proper reasoning to sustain 50% disallowance of motor car exp .....

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pany. Under these circumstances, we find the action of the lower authorities as unjustified in making the disallowances on surmises and conjectures. Therefore, the AO is directed to fully allow the motor car expenses, car insurance and interest paid on car loan as claimed by the assessee. Thus, additional ground is hereby allowed. 10. Now we shall take up original ground. In this ground, the assessee has contested the action of lower authorities in disallowing depreciation of ₹ 5,01,924 on .....

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rse of hearing, Ld. Counsel of the assessee brought our attention upon the written submissions filed before the Ld.CIT(A) wherein it was explained in detail along with requisite evidences that actually the assessee company is the owner of the car but due to certain reasons it was purchased in the name of the director. The assessee had paid requisite amount for purchase of the car and it was shown in its balance-sheet as such. The assessee was its owner and, therefore, entitled for depreciation. .....

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not registered in the name of the assessee, but if the assessee is de-facto owner of the asset, then the claim of depreciation shall be allowed to the assessee:- 1. Mysore Minerals (1999) 106 Taxman 166 (SC) 2. Navdurga Transport Co 149 CTR 219 3. Dilip SinghSardarsingh Bagga 201 ITR 995 4. Electro Ferro Alloys Ltd 25 Taxmann.com 458 (Ahd) 5. Aravali Finlease Ltd 341 ITR 383 (Guj) 6. Basti Sugar Mills Co Ltd 257 ITR 88 (Del) 13. In view of the above said legal position and facts of the case, Ld .....

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ranted benefit of depreciation. Reliance was placed on the decision of Mumbai Bench of the Tribunal in the case of Edwise Consultants Pvt Ltd (A.Y. 2007-08 in ITA No.391/Mum/2011 order dated 19-04-2013). 16. In reply, Ld. Counsel submitted that in the case of Edwise Consultants Pvt Ltd, the Tribunal (vide its order dt 14-10-2015 for A.Ys 2008-09, 2009-10 and 2010-11 in ITA Nos 4376/Mum/2011, 4121/Mum/2014 and 594/Mum/2013) considered the issue again in the light of aforesaid judgments of High Co .....

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ies before us. It is not in dispute that car has actually been purchased by the assessee company from the funds of the company and the same has been shown by the company in its balance-sheet. It was also stated that a resolution was passed by the company wherein it was clarified that though the car, for some reasons, has been purchased in the name of the director, but it belongs to the company and is owned by the company. The director has never claimed the ownership of the car. The company has u .....

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icle though registered in the name of the director of the company, but if entire funds for purchase of vehicles had gone from the coffers of the company and the same was used for the purpose of the business of the company, under these circumstances, the company was entitled to depreciation on the said vehicle. Similarly, the Hon ble Delhi High Court in the case of Basti Sugar Mills Co Ltd (supra) held that the company was entitled to depreciation on car which was owned by it but not registered i .....

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