""
IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI
. . , ,
BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA, AM
./I.T.A. No. 1653/Mum/2011
( / Assessment Year: 2006-07)
Sandra A. Merchant Income Tax Officer-11(1)(4),
Corporate Communication Services Room No.467, Aayakar Bhavan,
C/o. Merchants of India, / M. K. Marg, Mumbai-400 020
43, Prospect Chambers Annexe,
Vs.
4th Floor, D. N. Road, Fort,
Mumbai-400 001
. / . /PAN/GIR No. AADPM 2283 L
( /Appellant) : ( / Respondent)
/ Appellant by : Shri A. S. Jain
/Respondent by : Shri Pitambar Das
/ : 02.07.2014
Date of Hearing
Date of Order : 02.07.2014
/ O R D E R
Per Sanjay Arora, A. M.:
This is an Appeal by the Assessee directed against the Order by the Commissioner
of Income Tax (Appeals)-3, Mumbai (`CIT(A)' for short) dated 13.12.2010, partly
allowing the assessee's appeal contesting its assessment u/s.143(3) of the Income Tax
Act, 1961 (`the Act' hereinafter) for the assessment year (A.Y.) 2006-07 vide order dated
31.12.2008.
2. The brief facts of the case are that the assessee is a proprietor of a firm, M/s.
Corporate Communication Services, engaged in the business of editing, writing and
2
ITA No. 1653/Mum/2011 (A.Y. 2006-07)
Sandra A. Merchant vs. ITO
compiling industrial magazines. It was, during the course of assessment proceedings for
the relevant year, observed to have incurred expenses totaling to Rs.6.34 lacs under the
following heads of account:
(Amount in Rs.)
Heads of income Amount
Books and periodicals 28,378
Telephone charges 51,811
Electricity charges 72,373
Motor car expenses 1,15,190
Depreciation on motor car 2,77,490
Interest on motor car loan 59,604
Traveling and conveyance 29,376
6,34,222
Being liable to be used for personal purposes, i.e., apart from business purposes, with the
assessee being unable to adduce evidence as to non-user of any of those for personal
purposes, the same was estimated at 1/5th, effecting disallowance, as a result, at
Rs.1,26,844/-.
The same stood confirmed in appeal. As observed by the ld. CIT(A), the
assessee's entire pleadings before her were with regard to the genuineness and the
verifiability of the expenditure. The Assessing Officer (A.O.) had not doubted the same,
but only considered a part of it as being not allowable for the reason of having been not
incurred wholly and exclusively for business purposes, i.e. to that extent, but for personal
purposes of the assessee and toward which no case stood made out by the assessee,
before her. The disallowance being confirmed, the assessee is in second appeal before us.
3. We have heard the parties, and perused the material on record. It is apparent that
the A.O. has not examined the details of the expenses in arriving at his estimation, but
inferred the personal user on the basis of the nature of the expense, as where there was
propensity for being used for other than business purposes in-as-much as no separate
assets for personal purposes had correspondingly been specified by the assessee. In this
regard, therefore, we find some merit in the case of either party. There is nothing to show
3
ITA No. 1653/Mum/2011 (A.Y. 2006-07)
Sandra A. Merchant vs. ITO
of any personal user in respect of books and periodical and travelling and conveyance
expenses, for the Revenue to have inferred any personal element therein. With regard to
the electricity charges, as also claimed before us, the same are only in respect of the
electricity connection at the office premises. It is unfortunate that even such basic facts
stand not determined even up to the first appellate stage, so that the counter contentions
come to be made before us. The A.O. shall, while giving effect to this order, verify the
the assessee's claim with regard to the electricity connection/s, and if in respect of office
premises only, no part thereof would stand to be disallowed. Further, if any part of it
relates to the assessee's residence, no contention in its respect having been raised at any
stage, the entire of it, i.e., the said part, would stand to be disallowed. With regard to
telephone charges and motor car expenses, we consider the non-business (personal)
element, estimated at 1/5th by the Revenue, in the absence of call records or user details
being maintained by the assessee, as apposite. The depreciation on motor car would
follow suit. As regards the interest on motor car loans, as clarified by the ld. AR before
us, the same is also applicable to al1 the three cars for which maintenance expenses have
been claimed. So, however, in our clear view, the motor cars, despite a part user for other
than business purposes, are principally business assets and, therefore, notwithstanding a
part user for other than business purposes, disqualifying the direct, maintenance
expenditure to that extent, no part of the interest of loans assumed to acquire the same is
liable to be considered as incurred for non-business purposes. Disallowance in its respect
is deleted. We decide accordingly.
4. In the result, the assessee's appeal is partly allowed.
Order pronounced in the open court on July 2, 2014 at the conclusion of the hearing
itself.
Sd/- Sd/-
(I. P. Bansal) (Sanjay Arora)
/ Judicial Member / Accountant Member
Mumbai; Dated : 08.07.2014
4
ITA No. 1653/Mum/2011 (A.Y. 2006-07)
Sandra A. Merchant vs. ITO
. ../Roshani, Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent
3. () / The CIT(A)
4. / CIT - concerned
5. , , / DR, ITAT, Mumbai
6. / Guard File
/ BY ORDER,
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
|
