VLCC HEALTH CARE LTD.,NEW DELHI vs. ADDL.CIT, SPECIAL RANGE- 9, NEW DELHI
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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA
1 ITA no. 550/Del/2019 VLCC Healthcare Ltd. Vs. Addl. CIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
ITA no. 550/Del/2019 [Assessment Year: 2014-15
VLCC Health Care Ltd., Vs Addl. CIT, Special Range-9, M-14, Commercial Complex, New Delhi. Greater Kailash,Part-II, New Delhi-110048
PAN: AAACC4808P APPELLANT RESPONDENT Appellant by Sh. Vinod Bindal, CA & Ms. Rinky Sharma, ITP Respondent by Sh. Toufel Tahir, Sr. DR Date of hearing 21.07.2022 Date of pronouncement 29.07.2022
O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of learned
CIT(Appeals)-16, New Delhi dated 31.12.2018 pertaining to the assessment year
2014-15. The assessee has raised following grounds of appeal:
“1. The CIT(A) erred in law and on facts in confirming the disallowance of Rs. 15,79,287/- out of expenses incurred by the assessee by alleging the same as personal expenses of the directors on the basis of statement of one employee recorded during the course of survey without giving an
2 ITA no. 550/Del/2019 VLCC Healthcare Ltd. Vs. Addl. CIT opportunity to cross-examine her though specifically asked for. Thus the addition so made ignoring the principles of natural justice should be deleted.
The CIT(A) erred in law and on facts in confirming the disallowance of Rs. 15,79,287/- by alleging it as incurred towards personal expenses of the directors ignoring the submissions and evidences placed on record. Thus the addition so made should be deleted.
The assessing officer erred in law and on facts in disallowing an amount of Rs. 89,439/- on estimate basis being 15% of the depreciation claimed on a BMW car arbitrarily ignoring the submissions and evidences placed on record to show that the car was owned by the assessee and used for the purpose of business. Thus the disallowance so made should be deleted.
The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal either before or at the time of hearing.”
Facts, in brief, are that in this case the assessee filed return of income
declaring total income of Rs. 14,00,72,370/-. The case was taken up for scrutiny
assessment and the assessment u/s 143(3) of the income-tax Act, 1961 (in short
“the Act”) was framed vide order dated 31.12.2016. While completing the
assessment the Assessing Officer made disallowance of expenditure of 36,06,570/-
being the personal expenses. The Assessing Officer made disallowance by
invoking the provisions of Section 14A of the Act of Rs. 9,56,250/- and disallowed
the claim of depreciation on account of running and maintenance of BMW car
amounting to Rs. 1,49,065/-. Aggrieved against this the assessee preferred appeal
before the learned CIT(Appeals), who after considering the submissions partly
3 ITA no. 550/Del/2019 VLCC Healthcare Ltd. Vs. Addl. CIT allowed the appeal. He deleted the disallowance made u/s 14A and further reduced
the disallowance on car to Rs. 89,439/-. Aggrieved against this the assessee is in
appeal before this Tribunal.
Ground nos. 1 & 2 of the assessee’s appeal are against confirming the
disallowance of Rs. 15,79,287/- by the learned CIT(Appeals) on account of
personal expenses of the director. Learned counsel for the assessee submitted that
the assessing officer was not justified in making the disallowance looking to the
fact that the assessee had declared income of Rs. 14,00,72,370/-. It is submitted
that it was categorically stated before the assessing officer that the expenditure was
for business exigency. The assessing officer on the basis of the statement of the
employee recorded during the course of survey proceedings made addition of
Rs.36,06,570/-. The learned CIT(Appeals) restricted the disallowance to the extent
of Rs. 15,79,287/-. He contended that similar disallowance was made in earlier
year and the Tribunal had deleted the disallowance.
On the contrary, learned DR opposed the submissions and supported the
orders of the authorities below. He contended that it was incumbent upon the
assessee to prove that the expenditure was incurred for business purposes. Any
personal element involved in the expenditure would be liable for disallowance.
We have heard rival submissions and perused the material available on
record. We find that the learned CIT(Appeals) restricted the disallowance to the
4 ITA no. 550/Del/2019 VLCC Healthcare Ltd. Vs. Addl. CIT extent of Rs. 15,79,287/- out of disallowance of Rs. 36,06,570/- made by the
Assessing officer. It is seen from the record that before the lower authorities,
amount of Rs. 3,92,500/-, Rs. 3,57,000/- and Rs. 4,00,000/- was claimed on
account of uniform for staff. In our considered view the expenditure relating to the
staff and gift to the associates cannot be stated to be personal expenditure of the
director. Therefore, the same cannot be disallowed as personal expenditure of the
director, as has been done by the authorities below. Therefore, the same is hereby
deleted. Ground nos. 1 & 2 are allowed.
Ground no. 3 is against disallowing the claim of depreciation of Rs. 89,439/-
on account of running and maintenance of car. Learned counsel for the assessee
submitted that the disallowance is made solely on the basis of ad hoc and treating
the expenditure being personal in nature.
On the contrary, learned Sr. DR opposed the submissions and supported the
orders of the authorities below.
We have heard rival submissions and perused the material available on
record. We find that the assessing officer has made ad hoc disallowance of the
claim made by the assessee on account of depreciation and car expenses. In our
considered view the ad hoc disallowance made by the assessing officer cannot be
sustained on account of the fact that the assessing officer has not specifically
pointed out the personal use of the car. Hence, the disallowance is deleted. Ground
5 ITA no. 550/Del/2019 VLCC Healthcare Ltd. Vs. Addl. CIT no. 3 of assessee’s appeal is allowed.
In the result, assessee’s appeal is allowed.
Order pronounced in open court on 29th July, 2022.
Sd/- Sd/- (PRADIP KUMAR KEDIA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER
*MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
