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2017 (1) TMI 953 - ITAT DELHI

2017 (1) TMI 953 - ITAT DELHI - TMI - Allowable business expenditure - Claim of expenditure for the purpose of business - Held that:- At the level of the Tribunal, we are unanimous for confirming disallowance roughly in between 5% to 10% of the total disallowances unless the assessee proved that expenditures were incurred exclusively for the purposes of business. Assessee has pointed out that out of office repair and business promotion, the ld. Assessing Officer has made double disallowance i.e. .....

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. The ld. Assessing Officer may quantify the amounts after providing an opportunity of hearing to the assessee. - ITA No. 3245/Del/2015 - Dated:- 6-1-2017 - Shri Rajpal Yadav, Judicial Member Assessee By : Shri Sachin Kumar, CA Department By : Shri S.K. Jain, Sr.DR ORDER Per Rajpal Yadav, JM The assessee is in appeal before the Tribunal against the order of the CIT(A) dated 23rd March, 2015 passed for Assessment Year 2009- 10. 2. The grounds of appeal taken by the assessee are not in consonance .....

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grounds. 3. As far as the first fold of grievances is concerned, the brief facts are that the assessee has filed his return of income on 30th September, 2009 declaring an income of ₹ 36,93,160/-. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) of the Income-tax Act, 1961 (for short the Act ) was issued on 23rd August, 2010. It emerges out from the record that at the relevant time the assessee was running two proprietorship firms, namely, M/s Delhi Inve .....

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this car was purchased by Mr. Parmanand Vijay Kumar. Shri Jasvinder Singh has assigned his rights to Mr. Parmanand Vijay Kumar. The car was sold in August, 2010. The assessee has claimed depreciation on this car. This claim of depreciation was denied to the assessee by the Assessing Officer on the ground that a sum of ₹ 29 lac was received by the assessee in F.Y. 2007-08 itself. Only ₹ 60,000/- was received at the time of alleged actual transfer of the car. The ld. Assessing Officer .....

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given and it got scratch mark, therefore, ultimately, a sum of ₹ 29,60,000/- was received by the assessee. The car was transferred on 2nd November, 2010. For buttressing this contention, he took me through page No.15 of the paper book wherein information collected from the Office of the Motor Licensing Officer has been placed on record. He also took me through page 14, where copy of Form No.29 issued under Rule 55(1) of Motor Vehicle Act, 1988 has been placed. On the strength of these doc .....

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he record carefully. Depreciation is being provided u/s 32 of the Income Tax Act. It is pertinent to take note of the relevant part of this section:- Depreciation. 32. (1) In respect of depreciation of- (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly .....

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hellip;…………. 8. A bare reading of this section would indicate that in order to claim depreciation, the assessee should demonstrate ownership over the asset and its user for the purpose of the business. The ld.CIT(A) while rejecting the claim of the assesseer has observed that the assessee failed to bring demonstrative evidence of the user of the car for the purpose of business. The ld. First appellate authority further observed that once the assessee has received subs .....

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sued by the licensing authority which is the authorised agency for keeping the record of vehicles under the Motor Vehicle Act. This certificate read as under:- OFFICE OF THE MOTOR LICENSING OFFICER, TRANSPORT DEPARTMENT, GOVT. 'OF NCT OF DELHI, WEST ZONE -I, JANAK PURl, NEW DELHI-110058. No F/MLO/WZ-I/2014/8125 Dated: 2/7/2014 To, Sh. O. P. Arora, A-82, Chander Nagar, Janak Puri, New Delhi - 110058. Sub: Information asked under Right to Information Act 2005, (ID No. 10949). Sir, With referen .....

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Licensing Officer, West Zone-I, Janak Puri 1. PlO (RTI), Transport Department, 5/9, Under Hill Road, Delhi- 110054. Sd/- PlO/Motor Licensing Officer, West Zone-I, Janak Puri 9. The ownership of a vehicle is not only necessary for the purpose of claiming depreciation, but, also relevant for other laws, i.e., Motor Vehicle Act. In case the vehicle met with an accident and injured somebody, then, who will be responsible for making the payment of compensation, to whom the insurance company would re .....

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t. There may be dispute between the vendee and vendor, payments might have been made, but, unless transfer is effected under the Motor Vehicle Act, the ownership on the basis of circumstances cannot be recognized. To my mind, the ld. first appellate authority has erred in appreciating the controversy on the said strength of circumstantial evidence and holding that the assessee was not owner of the vehicle. As far as demonstrative evidence exhibiting user of this vehicle for business purposes is .....

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ee has filed written submissions and in the submissions the ld. Counsel for the assessee has tabulated the details of expenditure claimed by the assessee, disallowed by the Assessing Officer and also quantified the percentage of the disallowance to the total expenditure. For appreciating the controversy in a more scientific way, I would like to take note of these details from the submissions of the ld. Counsel for the assessee. It read as under:- Expenses Total Disallowed % age of receipt Disall .....

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penses of personal nature cannot be ruled out. 35,577 6,51,655 30,000 1.64% 4.36% Vehicle repair & maintenance expenses being 1/8 on the ground of use of the assessee 1,34,301 16,790 0.32% 12.5% Depreciation on vehicle being 1/8 on the ground of use of the assessee 42,060 5,260 12.5% Telephone expenses on the ground of use of the assessee 39,80,658 12,000 9.49% 0.30% 11. With the assistance of the ld. Representatives, I have gone through the record carefully. In order to claim expenditure fo .....

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