TMI Blog2018 (11) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue of assessee’s appeal is allowed. Depreciation on motor car, interest and vehicle expenses disallowed - motor car was not purchases in the name of the assessee company once the same was purchased in the name of the directors - Held that:- As decided in DCIT vs. Kaytee corporation [2017 (4) TMI 814 - ITAT MUMBAI] depreciation is allowable in the hands of the company, even if it is registered in the name of its director provided that the vehicle is used for the purpose of business of company and income derived there from was shown as income of the company. As the funds for purchase of vehicles have been provided by the assessee company and they have been shown as assets of the assessee company. Hence, the assessee company should be considered as owner for all practical purposes and hence it is entitled for depreciation - Decided in favour of assessee. Addition of share application/ share premium treating the same as unexplained cash credit under section 68 - Held that:- As decided in CIT vs. Orchid Industries Pvt. Ltd. [2017 (7) TMI 613 - BOMBAY HIGH COURT] Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO estimated the disallowance at 2 lacs. Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the action of the AO considering hundred percent increase in the expenses of security charges over the last year and also that in immediate preceding year, the amount paid for security charges to Krishna Plastic site to the extent of ₹ 1,48,540/- disallowed, he confirmed the disallowance of ₹ 2 lacs made by the AO. Aggrieved, now assessee is in appeal before Tribunal. 4. In view of the above reasoning that the security charges for earlier year was disallowed at ₹ 1,48,540/- paid to Krishna Plastic site out of the total claim of the assessee at ₹ 4,46,480/-. There is increase in overall security charges to ₹ 8,14,896/- i.e. which almost double of the earlier year. From the order of lower authorities it is clear the neither genuineness nor expenses as business expenditure was doubted. We find that in earlier year disallowance was at ₹ 1,48,540/- and hence, we restricted the disallowance in this year at ₹ 1 lac. This issue of the assessee s appeal is partly allowed. 5. The next issue in this appeal of assessee is against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation in the absence of any adverse material. 8. After hearing both the sides and gone through the facts and circumstances of the case. We noted that these cranes and crawlers purchased in 2009 (details are cited above). Accordingly, the assessee s claim for depreciation was allowed in earlier years and taking the same facts in this year, depreciation cannot be disallowed. Accordingly, we allow the claim of depreciation and this issue of assessee s appeal is allowed. 9. The next issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing depreciation on motor car depreciation, interest and vehicle expenses by observing that motor car was not purchases in the name of the assessee company once the same was purchased in the name of the directors. For this assessee has raised the following ground No. 3: - 3. On the fact and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in disallowing ₹ 15,88,936/- on account of Motor Car depreciation, interest and vehicle expenses, on the alleged plea that the motor car was not purchased in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. In the case of Basti SugarMills Co. Ltd. (supra), the Hon ble Delhi High Court approved the decision of the Tribunal in holding that, since vehicle is a movable asset, the registration as required in the case of transfer of immovable property is not a condition precedent for legal ownership. In the instant case, the funds for purchase of vehicles have been provided by the assessee company and they have been shown as assets of the assessee company. Hence, in our view, the assessee company should be considered as owner for all practical purposes and hence it is entitled for depreciation. In view of the direction decision of Hon ble Gujarat High Court is available on this issue, we prefer to follow the same to that rendered by the Tribunal in the assessee s own case for A.Y.2007-08. Accordingly, we set aside the order of Ld. CIT(A) on this issue and direct the AO to allow depreciation on vehicles. 6. Since above decision of the Tribunal has been passed after taking into account Hon ble Gujarat High Court and Hon ble Delhi High Court decisions, following the above said decisions we uphold the order of the learned CIT(A). Hence this issue is decided in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to attract genuine investors by pegging the premium at a reasonable level but to bring in large amounts of unaccounted funds in the guise of share premium from related concerns. Since the amount come from the director and sister concern, the genuineness of the whole transaction becomes doubtful and the assessee has not satisfactorily explained this genuineness. In view of above, the shore premium is found to be excessive and unreasonable and the explanation offered by the assessee is not found satisfactory. Thus, relying on the decision of the Bombay High Court in case of Major Metals P Ltd. Vs UQI Others (W P397 of 2011) dated 22/02/2012, the share premium amount of ₹ 15,13,52,000/- received during the year is added back U/s 68 of the Act. Aggrieved, assessee came in appeal before CIT(A), who also confirmed the order of AO. Aggrieved, assessee came in second appeal before Tribunal. 15. We have heard rival contentions and gone through facts and circumstances of the case. From above finding of the AO, it is very clear that he has accepted shares capital of ₹ 72,88,000/-which proves that he has not doubted entire transaction in toto, his only contention i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment of the both the above shareholders were completed accepting returned income. The assessee has filed copies of assessment orders of both the shareholders. In this regard, we are find from the order of AO that he has not done any independent enquiry to prove that the transaction is not genuine. He has accepted share capital part which further proves that he has not doubted transaction per se being genuine. Further out of total capital a sum of ₹ 4,00,00,000/-was received in earlier years. Shares to Director Mr A K Jaka were allotted at Book value of the share, as indicated above. Further shares were allotted to Gracious Portfolio is also supported with valuation report as per DCF method, which is in compliance with Rule 11UA of the IT Rules. Further, even the valuation report of the shares clearly reveals the following pricing:- Book value of the shares as on 1.4.2010 was as under: - Total Capital + Reserve = 7,10,000 + 3,60,85,388 = 3,67,95,388 No. of Equity Shares = 7,10,000 Value per share = 36795388 /710000 = 51.82 Copy of Balance sheet of the appellant company as on 31.3.2011 is enclosed herewith. Accordingly shares to Employee Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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