SHRI OM PRAKASH VIRMANI,DELHI vs. ITO, NEW DELHI

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ITA 426/DEL/2016Status: DisposedITAT Delhi13 May 2016AY 2012-133 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the truck expenses were allowable as the trucks were exclusively used in the assessee's own business. It also held that the cash expenses for property improvement were supported by evidence and thus allowable.

What were the facts?

The assessee claimed truck running and maintenance expenses for two trucks sold in July 2011, which were used in their brick trading business. The assessee also claimed cash expenses for property improvement when selling a property. The Assessing Officer disallowed both claims.

What were the issues?

Whether expenses incurred on trucks sold but used in own business are allowable, and whether cash expenses for property improvement are deductible.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI

Before: SMT DIVA SINGH & SHRI PRASHANT MAHARISHI

Hearing: 17/03/2016Pronounced: 13/05/2016

Assessee by : Sh. Harish Malik, CA Respondent by: Sh. K. K. Jaiswal, DR Date of Hearing 17/03/2016 Date of pronouncement 13/05/2016 O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is appeal filed by the assessee against the order of the ld CIT(A)-19, New Delhi dated 06.11.2015 for the Assessment Year 2012-13. The assessee has raised the following grounds of appeal:- 2. “1. That the appellate order as passed by the Ld. CIT (Appeals) is bad in law and contrary to the fact of the case.

2. (a) That the Ld. CIT (A) has erred in law and facts of the case by confirming the addition of Rs. 2,55,7507- on account of Truck Running & Maintenance Exp. (b) That the Ld. CIT (A) has further erred in law and facts of the case by confirming the addition of Rs. 1,25,0007- on account of cash expenses for acquiring of property.

3. That no Show cause notice was given before making the above disallowance at the time of assessment. Also the disallowances have been confirmed by the Ld. CIT (A) without verifying and appreciating the facts placed before the Appellate Authority.

4. That the order as passed is bad in law and addition as confirmed ordered to be deleted.

5. That it is prayed that the addition made on account of cash expenses for acquiring of property and on account of truck running & Maint. Exp. disallowed be ordered to be deleted.”

3. The assessee is an individual who filed his return of income on 16.09.2012 of Rs. 393170/-. The assessee is engaged in business of trading of brick and is running two proprietary concerns namely M/s. Virmani Brick Suppliers Page 2 of 3 and M/s. OP Virmani & Co. During the assessment proceedings assessee has claimed truck running and maintenance expenses of Rs. 126260/- and Rs. 129490/- with respect to two trucks. These two trucks were sold in the month of July 2011. The assessee showed no receipts against these trucks, hence the ld Assessing Officer disallowed the expenses. Against this assessee preferred an appeal before the ld CIT(A), who upheld the disallowance and therefore the assessee is in appeal before us on ground No. 2(a).

4.

We have heard the rival contentions. Before us the ld AR submitted that the appellant owns four trucks out of which two have been sold in the month of July 2011 and they are used in transporting of the bricks sold by the assessee and therefore were exclusively used in the business of the assessee . As they were not used for the business of transportation hence there is no freight income from those two trucks. The other two trucks were used for transportation of the goods and has earned truck freight income of Rs. 1802093/-. For this he submitted complete details of income and expenses of the truck division profit and loss account. Ld DR did not controvert. In view of this we are of the view that disallowance of expenditure cannot be made as the trucks which were sold by the assessee were exclusively used in own business for sale of bricks. Therefore we reverse the finding of the ld CIT (A) and direct the Assessing Officer to delete the disallowance of truck expenses of Rs. 255750/-. In the result ground No. 2(a) of the appeal is allowed.

5.

Ground No. 2(b) of the appeal is against disallowance of Rs. 125000/- on account of cash expenses. The facts of this ground is that the assessee has shown short-term capital gain on sale of property and there is an expenses of which was incurred form improvement of Rs. 125000/- in cash. The Assessing Officer was of the view that these expenses have been booked by the assessee to reduce income of the assessee on capital gains on sale of the property therefore he disallowed. The assessee carried matter before ld CIT(A), who confirmed the addition made by the Assessing Officer.

6.

We have carefully considered the rival contentions. The assessee has paid Rs.10000/- on 20.05.2011 for registration of the sale deed and Rs.115000/- was paid for improvement of the property. It is undisputed fact that the assessee has purchased a property at Rs. 25 lacs in May 2011 and sold it

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