M/S MASTERLINE TELEBIZ PRIVATE LIMITED,MOHALI vs. DCIT, MOHALI
What did the Tribunal hold?
The Tribunal allowed the appeal on the donation and road tax issues, holding that the donation was proven through banking channels and the road tax was a revenue expenditure linked to business activity. However, the disallowance for vehicle accessories and office expenses were upheld.
What were the facts?
The assessee appealed against the CIT(A)'s order disallowing donations, road tax, and expenses. The CIT(A) had disallowed a donation of Rs. 10,500 for want of a receipt, road tax of Rs. 28,195 as capital expenditure, and Rs. 86,056 for vehicle accessories as capital expenditure. An ad-hoc disallowance of Rs. 2,07,000 for office expenses was also made.
What were the issues?
Whether donations made through banking channels are eligible for deduction under Section 80G without a receipt, and whether road tax paid for commercial vehicles is a revenue or capital expenditure.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against
the order dated 21.3.2017 of the Commissioner of Income Tax
[hereinafter referred to as CIT(A)]-2, Chandigarh.
The assessee has taken the following grounds of appeal:-
That the order of the Ld. CIT(A)-2 is not a speaking order, is erroneous arbitrary, opposed to law and facts of the case.
That the Ld. CIT(A) has erred in disallowing donations made through banking channels amounting to Rs. 10,500/- u/s 80G for want of receipt.
That the Ld. CIT(A)-2 has erred in disallowing a sum of Rs. 28,195/- paid as road tax for new vehicle without correctly appreciating that the road tax was paid for commercial vehicles.
That the Ld. CIT(A)-2 has erred in disallowing a sum of Rs. 86,056/- paid for purchase of alloy and tyres without correctly appreciating the facts of the case.
That the Ld. CIT(A)-2 has erred in disallowing office expense, printing and stationery and repair and maintenance expenses aggregating to Rs. 2,07,000/- without correctly appreciating the facts of the case.
That the appellant craves leave to add, to alter, to amend or vary from aforesaid grounds of appeal at or before the time of hearing of the said appeal.
Ground No.1 is general in nature and does not require any adjudication.
Ground No.2 is relating to the disallowance of donation
made through banking channel amounting to Rs. 10,500/- u/s 80G
of the Income-tax Act, 1961 (in short 'the Act'). The Ld. counsel
has invited our attention to the paper book page 7 to submit that the amount of Rs. 21000/- was remitted to the Shri Mata Vaishno
Devi Shrine Board. The claim has been rejected only to the fact
that the assessee had not received the receipt of the payment.
After hearing the Ld. representatives of the parteis, we are of the view that the assessee has been able to prove that the amount has actually been remitted through banking channel to Shri Mata Vaishno Devi Shine Board, which is an approved
undertaking u/s 80G of the Act. In view of this, we do not find
any justification on the part of the lower authorities in denying
the claim of the assessee on this issue. This ground is accordingly
allowed.
Vide ground No. 3, the assessee has agitated the disallowance of Rs. 28,195/- paid as road tax for new vehicle.
The lower authorities have denied the claim holding that the same
was a capital expenditure. The Ld. Counsel for the assessee
before us has submitted that the vehicles are in the name of the assessee and are registered as commercial vehicles. The road tax
is paid from year to year basis. That without payment of the road
tax, the vehicles cannot run on the road. He, therefore, has submitted that the aforesaid expenditure is not of capital
expenditure but Revenue expenditure and required to be paid from year to year basis as the use of vehicle is intrinsically linked to the business activity of the assessee.
The Ld. DR, on the other hand, relied on the findings of the lower authorities.
After considering the rival submissions, we are of the view
that the payment of the aforesaid road tax is linked to day to day
business activity of the assessee which is required to be paid on annual basis. The aforesaid payment of road tax does not add to the value of the vehicle otherwise but is linked to the running of the vehicle on the road which is required for business activity of the assessee. In view of this, we do not find any justification on the part of the lower authorities in denying this claim. Ground No.
3 is accordingly allowed.
Vide ground No.4, the assessee has agitated the disallowance of Rs. 86,056/- on the purchase of alloys and other
vehicle accessories. The lower authorities disallowed the claim
of the assessee holding the expenditure on the aforesaid items as capital expenditure in nature. The Ld. Counsel has invited our
attention to pages 33 & 34 of the paper book to state that the alloys which are made of metal are build at Rs. 18876/- after
giving the discount to the assessee of Rs. 1876-/. The total
payment received on this item is Rs. 17000/-. Paper book page 34
is the copy of the bill wherein various items have been mentioned.
After going through the bills of these items, we are of the view
that the billed items add to the value of the vehicles and are of long term use. In view of this, we do not find any infirmity in the order of the lower authorities in disallowing the aforesaid claim
of the assessee. Ground No.4 is accordingly dismissed.
In ground No.5, the assessee has agitated the adhoc
disallowance of Rs. 2,07,000/- out of office expenses including
printing and stationery.
The Ld. DR has invited our attention to the assessment order
and has stated that assessee has himself agreed to the aforesaid
disallowance. Since the assessee has agreed to the aforesaid
disallowance, hence, we find no reason to interfere with the order of the Assessing officer on this issue and ground No. 5 of the appeal is therefore, dismissed.
Ground No.6 is general in nature and does not require any adjudication. In view of this, the appeal of the assessee is partly allowed. Order pronounced in the Open Court. (B.R.R.KUMAR) JUDICIAL MEMBER Dated : 09.04.2018 Rkk Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR
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