KALPAJ REALTY P.LTD,MUMBAI vs. ITO WD 9(2)(2), MUMBAI

In this appeal, the only grievance of the assessee is against an adhoc addition of Rs.2,29,440/- being 25% of depreciation on motor car, repairs & maintenance and insurance disallowed by the income-tax authorities by treating it as an expenditure of personal element.

Before me, the Ld. Representative for the assessee pointed out that assessee is a corporate entity and the entire expenditure is authorized by the Board of directors and is in relation to the business of the assessee. It is pointed out that there cannot be a personal element in case of the expenses incurred by a corporate entity as laid down by the Hon'ble Gujarat High Court in the case of Sayaji Iron And Engg. Co. vs CIT, 253 ITR 749(Guj).

On the other hand, Ld. Departmental Representative has pointed out that the disallowance was made by the Assessing Officer as no explanation was offered by the assessee.

In my considered opinion, since the assessee is a corporate entity, the impugned adhoc disallowance made on the basis of alleged personal use is not sustainable having regard to the judgment of the Hon’ble Gujarat High Court in the case of Sayaji Iron & Engg. Co.(supra). In any case, the assessee has maintained Books of account and the Assessing Officer has not pointed out any specific instance of expenditure which is of non-business nature and in such a circumstance, adhoc disallowance @ 25% is untenable. The same is hereby directed to be deleted. Thus, assessee succeeds in this appeal.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on 29/12/2016