M/S ASSOMAC MACHINES LTD.,GHAZIABAD vs. ADDL. CIT, GHAZIABAD

The assessing officer noted that the books of accounts, bills and vouchers etc., maintained by the assessee company have been produced and the same have been test checked. The assessee company is engaged in the manufacturing of wire drawing equipments and their accessories. The assessing officer noted that assessee has 14 vehicles, on which, assessee company has claimed running and maintenance expenses, depreciation etc. The assessee was asked to justify the claim of vehicle running and maintenance expenses and depreciation, which seems to be of huge amount looking to the fact that Directors are claiming expenses on tour and travel (foreign & inland) separately to the tune of Rs.15,69,384/-. The assessee company explained before assessing officer that cars are provided to various Executives of the Company, including Directors according to their status in the job hierarchy of the company, their job profiles and requirements. Some cars are kept by the Company for general use for movement of the Technical Team of the assessee company and other staff. It is not the case that all the cars were used by only

After considering the rival submissions, we are of the view that addition is wholly unjustified. The assessee is a company and as such it could not have any personal use of the cars in question. The assessee explained that the cars maintained by the assessee company have been used for the purpose of business by the Directors and other Executives and the Staff. The assessing officer has not given any finding as to what extent the Directors have used the cars for personal purpose. Therefore, in the absence of any such 4 ITA.No.5748/Del./2015 M/s. Assomac Machines Ltd., Ghaziabad. finding, it is difficult to believe that the Directors have used the cars for personal purpose. Further, in case the Directors were using the cars for personal purpose, fringe benefit tax could have been levied for the same. The disallowance of expenses is adhoc in nature, cannot be sustained. We, accordingly, set aside the orders of the authorities below and delete the addition of Rs.4,78,555/- Ground Nos. 1 to 3 of the appeal of assessee are allowed.

On Ground No.4 and 5, the assessee challenged the charging of interest under section 244A of the Income Tax Act, 1961. No arguments have been made by the Learned Counsel for the Assessee on the same. Therefore, Ground Nos.4 and 5 of the appeal of assessee are dismissed.

The assessee also moved an application for admission of the additional ground, challenging the orders of the authorities below, in confirming disallowance at Rs.1,22,500/- under section 40A(3) of the Income-Tax Act, 1961.

The Assessing officer noted that assessee company had paid sum of Rs.1,98,500/- to 05 persons on different dates through bearer cheques against payment towards job and work. Since the payments were for more than Rs.20,000/- to these persons in a day through bearer cheques, therefore, it is in violation of Section 40A(3) of the Income Tax Act, 1961. The assessing officer, accordingly, made the addition of Rs.1,98,500/-. The assessee challenged the addition the before Learned CIT(A). The Learned CIT(A), considering the explanation in detail, restricted the addition to Rs. 1,22,500/-.

After considering the rival submissions, we do not find any justification to admit the additional ground for the purpose of disposal of the appeal. The assessee in the paper book at Sl.No.7 on this issue, has filed copies of bills and vouchers of various parties, against which, payment exceeding Rs.20,000/- by bearer cheques have been made and against last column, it is mentioned that these are “additional evidences”. The assessee did not move any application for admission of these additional evidences.

In the result, appeal of Assessee partly allowed.