TMI Blog2019 (10) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of motor vehicle expenses made by the A.O. Disallowance of education expenses - HELD THAT:- As observed by the authorities below, that as Shri Uday Singh was a director of three different companies (including the assessee company), therefore, it could safely be concluded that the expenditure incurred on his education was not wholly and exclusively for the purpose of the business of the assessee company. Apart there from, it was observed by them, that the assessee had also not been able to support its claim by showing any real connection between the expenditure so incurred and the business of the assessee company. As such, the A.O had disallowed the aforesaid claim of expense raised by the assessee u/s 37(1) of the Act. We have given a thoughtful consideration to the aforesaid issue before us, and are unable to subscribe to the view taken by the lower authorities. Admittedly, a perusal of the facts borne from the records reveals that Shri Uday Singh, director of the assessee company had gone for a management programme/course at Harward Business School. The expense therein involved were borne by the assessee company. In our considered view, the expenses incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for not allowing Interest paid for loan taken for the purpose of properties held as depreciable asset against income assessed under the head House Property. 3. On sale of Proper t ies which are depreciable assets, instead of reducing sale consideration from block of assets u/s 32, the same was taxed under section 45 as Long Term Capital Gain. The addition under the head Long Term Capital Gain is to be deleted. 4. Due to losses in the company the financial institution has granted loan in the name of the director and the car was also purchased in the name of the directors. The car was reflected as an asset in the balance sheet of the Company also the repayment of loan was made by the company. Mere non-registration of a vehicle in the name of the company under the Motor Vehicles Act, cannot disentitle it in regard to its claim of depreciation, when the facts on record are undisputed that the assessee company had, in fact, made the investment in purchase of the vehicle and such vehicle is being used for its business. Therefore disallowance of Depreciation and expenses incurred for motor car is to be deleted. 5. Disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short A.R ) for the assessee, at the very outset submitted that the appeal filed in the present case involved a delay of 4 days. It was submitted by the ld. A.R, that the appeal was to be filed before the Tribunal latest by 29.10.2016. However, as the office of the assessee was closed because of Diwali holidays from 28.10.2016 till 01.11.2016 and the director of the assessee company viz. Mr. Uday Pratap Singh was not available in town at the relevant point of time, therefore, for the aforesaid inadvertent and bonafide reasons there was a delay involved in filing of the present appeal. The aforesaid factual position had been supported by the assessee on the basis of an affidavit , dated 22.11.2018 that has been placed on our record. The ld. Departmental Representative did not object to the application filed by the assessee for condonation of delay of 4 days in filing of the appeal. 6. We have considered the reasons leading to the aforesaid delay of 4 days in filing of the present appeal by the assessee, which we find is duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the reason that it was registered in the name its director. In support of his aforesaid contentions the ld. A.R had placed reliance on certain judicial pronouncements to which our attention was drawn during the course of hearing of the appeal. Also, it was submitted by the ld. A.R, that for the reason that Mr. Uday Singh, director of the assessee company was also a director in two other companies, the claim of the assessee towards depreciation on the car could not have been declined. As regards the disallowance of the vehicle expenses by the A.O, it was submitted by the ld. A.R, that there can be no question of any personal expenses in the case of a company. In order to drive home his aforesaid contention, support was drawn by him from certain judicial pronouncements. Lastly, it was submitted by the ld. A.R, that the lower authorities had wrongly disallowed the assesses claim in respect of the education expenses which were incurred in respect of one of its director viz. Mr. Uday Singh for pursuing of an Advance Management Programme from Harvard business school. It was the claim of the ld. A.R, that as the aforesaid expenses were incurred wholly and exclusively for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also do not find any illegality or infirmity in the order of the CIT(A) deleting the disallowance of claim of expenses amounting to ₹ 44,33,565/- which has been incurred by the assessee for maintaining the business assets as the assessee is engaged in the business of renting various business activities such as house-keeping, security, telephone, electricity, maintenance etc. No cogent material or evidence was brought to our notice by the learned DR so that the finding given by the learned CIT(A) could be reversed. We, therefore, confirm the order of the CIT(A) on this account. Accordingly, finding ourselves to be in agreement with the aforesaid view, we respectfully follow the order passed by the Tribunal in the assesses own case for A.Y. 2010-11. As such, the A.O is directed to assess the rental receipts in the hands of the assessee as its business income . The Ground of appeal No. 1 is allowed. 10. As we have concluded that the rental receipts had rightly been shown by the assessee as its business income, therefore, its alternative claim that the A.O had erred in not allowing the interest paid on loan taken for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of the aforesaid properties as LTCG by the A.O. Accordingly, the order of the CIT(A) upholding the aforesaid view of the A.O is set aside . The Ground of appeal No. 3 is allowed. 12. We shall now advert to the claim of the assessee that the lower authorities had erred in declining to allow the assesses claim for depreciation on a motor car, despite the fact that the same was reflected as an asset in its balance sheet. As is discernible from the orders of the lower authorities, the A.O observed that though the purchase price of the motor car was paid by the assessee company, however, it was purchased and thereafter registered in the name of Mr. Uday Singh, director of the assessee company. Also, it was observed by the A.O that the vehicle was not registered in the name of the assessee company under the Motor Vehicles Act. In the backdrop of the aforesaid facts, the A.O decline to allow the assesse s claim for depreciation on the motor car. We have given a thoughtful consideration to the issue under consideration and are unable to persuade ourselves to subscribe to the view taken by the lower authorities. Admittedly, the motor car that was reflected as an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Trib)236 (Mum) 4. Pan Oleo Enterprises Pvt. Ltd. Vs. ACIT 60 ITR (Trib.) 230 (Mum) We are also unable to persuade ourselves to accept the view taken by the lower authorities, that as Shri Uday Singh, director of the assessee company in whose name the aforesaid motor car was registered also happened to be a director in two other companies, therefore, the aforesaid claim of depreciation, interest expenditure, and vehicle expenses pertaining to the said car were liable to be disallowed on the said count too. In our considered view, the fact that somebody other than the assessee is also benefited by the expenditure incurred by the assessee cannot come in the way of allowability of the said expenditure, if it otherwise satisfies the test of commercial expediency. Our aforesaid view is fortified by the following judicial pronouncements: Sr. No. Particulars 1. CIT Vs. Chandulal Keshavlal Co. 38 ITR 601 (SC) 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee under Sec. 37(1) of the Act. We have given a thoughtful consideration to the aforesaid issue before us, and are unable to subscribe to the view taken by the lower authorities. Admittedly, a perusal of the facts borne from the records reveals that Shri Uday Singh, director of the assessee company had gone for a management programme/course at Harward Business School. The expense therein involved were borne by the assessee company. In our considered view, the expenses incurred by the assessee company on the education of its director viz. Mr. Uday Singh, who was pursuing a management course, can safely be held to have been incurred wholly and exclusively for the purpose of its business. Our aforesaid view is fortified by the following judicial pronouncements: Sr. No. Particulars 1. Sakal Paper pvt. ltd. Vs. CIT 114 ITR 265 (Bom) 2. Mallige Medical Centre P. Ltd. Vs. JCIT 375 ITR 522 (Karn) 3. CIT Vs. Kohinoor Paper P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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