What did the Tribunal hold?

The Tribunal held that since the car was partly used for personal purposes and no log book was maintained, some disallowance was warranted. However, the disallowance was reduced from 30% to 15%.

The assessee claimed depreciation, interest on car loan, and conveyance expenses. The Assessing Officer disallowed 30% of these expenses due to personal use of the car, which was confirmed by the CIT(A).

What were the issues?

Whether disallowance of 30% of depreciation, conveyance expenses, and interest on car loan is justified when the vehicle is used for both business and personal purposes.

Jaykumar Mangilal Nagori vs ITO | ITAT Pune 2022

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Appellant: Shri Pramod Shingte

For Respondent: Shri Piyush Kumar Singh Yadav

This appeal by the assessee is directed against the order passed by the National Faceless Appeal Centre (NFAC), Delhi on 09-06-2021 in relation to the assessment year 2017-18.

The only issue raised through various grounds is against the confirmation of disallowance at 30% of depreciation on motor car; conveyance expenses; and interest on car loan.

Briefly stated, the facts of the case are that the assessee is engaged in the business. He claimed depreciation on motor car amounting to Rs.8,65,503/-; interest on motor car loan at Rs.3,33,915/- and conveyance expenses at Rs.37,050/-. The assessee was called upon to produce the car log book for demonstrating that the car was used only for business purposes.

The assessee admitted that no such log book was maintained.

Considering the fact that the tax audit report also depicted that personal element was involved in the vehicle expenses, the AO disallowed 30% of car depreciation, interest on such car loan and conveyance expenses. The ld. CIT(A) countenanced the disallowance.

I have considered the rival submissions and perused the relevant material on record. It is indisputable that the assessee could not lead any evidence to demonstrate that the user of the car was restricted only to business purposes and did not percolate for personal use. Even the auditor has also mentioned that the personal element in vehicle expenses could not be ignored. This shows that the car was partly used for business and partly for personal purpose. In such circumstances, disallowance of some percentage of the expenses in connection with the running of car is warranted. Keeping into consideration the peculiarity of the facts and circumstances of case under consideration, I am of the considered opinion that the ends of justice would meet adequately if the disallowance is restricted to 15% of such expenses and allowance instead of 30% as sustained in the first appeal. I order accordingly.

In the result, the appeal is partly allowed. Order pronounced in the Open Court on 28th June, 2022.

JAYKUMAR MANGILAL NAGORI,PUNE vs. INCOME-TAX OFFICER, WARD 2(3), PUNE

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

Recent GST High Court judgments