TMI Blog2017 (7) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the existence and creditworthiness of the creditor from home it has taken a loan of ₹ 56 Lacs. The addition made by the AO for this loan under section 68 is therefore, upheld. Disallowance of depreciation of car - Held that:- Car was purchased out of the funds of the assessee company and also used for the business purposes of the assessee company only. To prove this point assessee produced complete audit accounts and balance sheet for the year ended 31-03-2007. The assessee has disclosed this car in the business asset and claimed depreciation. We find in the exactly similar circumstanced coordinate Bench of this Tribunal in the case of Mehta Equities Ltd. v. The ACIT [2016 (11) TMI 358 - ITAT MUMBAI] for the assessment year 2010-11 vide order dated 21-09-2016 has allowed the claim of depreciation wherein the car was purchased in the name of one of the director of the assessee company - ITA No.1553/Mum/2014, And CO No.03/Mum/2016 - - - Dated:- 27-2-2017 - SRI MAHAVIR SINGH, JM AND SRI ASHWANI TANEJA, AM For The Revenue : Shri Suman Kumar, DR For The Assessee : Shri Aseem L.Thakkar, AR ORDER PER MAHAVIR SINGH, JM: This appeal by R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest expenditure should be disallowed. The appellant on the other hand has submitted that no interest cost has been incurred on the loans advanced on which the interest has not been charged. It has submitted that the interest expenditure that has been incurred during the year does not relate to the interest on loans taken by the appellant company. The major item of expenditure of interest was on the margin funding for share trading business of the appellant company. It has further been submitted by the appellant that the loans were advance in earlier years and have been reflected in the balance sheet from year to year. Since the loan itself had become doubtful, the appellant has submitted, it was not prudent to charge the interest. After considering the explanation and the details given by the appellant it is noted that the advances on which the interest has been disallowed were partly new and old. Out of the advances of ₹ 2.59 crores, which have been considered by AO for disallowance, old advances were of ₹ 1.88 crores and the monies advanced during this year were 70.78 Lacs The appellant has not charge interest on any of these advances. The claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee preferred the appeal before Tribunal. 4. We have heard the rival contentions and gone through the facts and circumstances of the case. Before us, the learned Sr. DR relied on the assessment order and stated that the AO has rightly held that the assessee company has diverted interest bearing funds by advancing interest fee loans and hence he has rightly disallowed the proportionate interest. On the other hand, the learned Counsel for the assessee argued that advances on which the interest has been disallowed were partly new and old. According to him out of the advances of ₹ 2.59 crores which has been considered by the AO for disallowing old advances were to the tune of ₹ 1.88 crores and money is advanced during the year were at ₹ 70.78 lakhs on which assessee has not charged any interest. The assessee before CIT(A) has claimed that it had share capital of 7.95 crores and unsecured loan to the extent of ₹ 10.71 crores which were interest free during the year. It was explained by the learned Counsel for the assessee that the interest on margin funds were to the tune of ₹ 85,73,303/-, which is a normal trading of the business and not interest fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the appellant that does not contain the PAN of the creditor. Accordingly, with a view to ascertain whether the creditor is a regular taxpayer or not an enquiry was made from the database of the Income Tax Department. However, it was found that the name of the creditor was not reflected in the records of the Department data base. Accordingly, a letter under section 133(6) was issued by this office asking the company to conform whether it has given the loan to the appellant company. No reply to the enquiry letter was received in spite of a lapse of considerable time. It is to be noted that the letter was duly served at the given address. In view of these facts the appellant has not been able to give satisfactory evidence regarding the existence and creditworthiness of the creditor from home it has taken a loan of ₹ 56 Lacs. The addition made by the AO for this loan under section 68 is therefore, upheld. Another loan that has been taken is from Parsoli Corporations Ltd Ahmedabad. In respect of this loan it is noted that the appellant has duly given confirmation certificate which contains detailed address and the permanent account number of the creditor. The loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of depreciation wherein the car was purchased in the name of one of the director of the assessee company, by observing as under: - We have gone through he orders passed by the lower authorities and copies of judgments placed before us and submissions made by both the parties 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 undisputed ownership of the car. Both the parties involved in the transaction are clear about this factual and legal position. There is no confusion on that. Under these circumstances, it can be safely said that the company is the de-facto owner of the car. It is also not disputed that the car has been actually used by the company for its business purposes. Similar position came up before the Hon ble Gujarat High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
