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Income Tax Appellate Tribunal, DIVISION BENCH ‘B’, CHANDIGARH
Before: SHRI SANJAY GARG & MS.ANNAPURNA GUPTA
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘B’, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.1250/Chd/2017 (Assessment Year : 2010-11) M/s Vallabh Yarns Pvt. Ltd., Vs. The J.C.I.T., B-XXIV/353/1, Sunder Nagar, Range-2, Ludhiana. PAN: AAACV5322K (Appellant) (Respondent)
Appellant by : Shri Amarjit Kamboj, CA Respondent by : Smt.Chanderkanta, Sr.DR Date of hearing : 22.03.2018 Date of Pronouncement : 28.03.2018
ORDER PER ANNAPURNA GUPTA, A.M.:
This appeal has been preferred by the assessee against
the order of Ld. Commissioner of Income Tax(Appeals)-2,
Ludhiana [hereinafter referred to as ‘CIT(Appeals)’] dated
17.5.2017 relating to assessment year 2010-11.
The effective grounds raised by the assessee read as
under:
The Ld. Commissioner of Income Tax (Appeals)-2, Ludhiana has erred in law and on facts of the case:- a) By arbitrarily and wrongly confirmed the disallowance of Rs.46514/-, made by the Ld. A.O @ l/6in out of telephone expenses of Rs.2,79,084/-, on adhoc basis towards non business purpose, without considering the fact that the assessee is a corporate assessee. b) By arbitrarily and wrongly confirmed the disallowance of Rs.1,91,275/-, made by the Ld. A.O @ l/6th for personal use out of Car repair & maintenance expenses Rs.4,75,233/-, car insurance Rs.35,815/- and depreciation
on car Rs.6,36,604/- totaling Rs.11,47,652/-, on adhoc basis towards non business purpose, without considering the fact that the assessee is a corporate assessee.” 3. The only issue raised in the present appeal is relating
to the adhoc disallowance of Telephone and car expenses for
the reason that they were incurred for personal use of the
assessee.
Briefly stated, the Assessing Officer had disallowed
1/6 t h of the Telephone expenses claimed by the assessee
amounting to Rs.46,514/- & 1/6 t h of the car expenses
incurred by the assessee amounting to the Rs.1,91,275/-
for the reason that no log book had been maintained by the
assessee for the same and, therefore, the possibility of
incurring the said expenses for personal purposes could not
be ruled out.
The Ld. CIT(Appeals) upheld the disallowance so made.
Before us, the Ld. counsel for assessee pointed out
that the assessee was a company and no personal use of
any asset could be attributed to it. Ld. counsel for
assessee relied upon the following decisions in support of
its contention:
1) CIT v/s Dinesh Mills Ltd. (2005) 148 Taxman 76.
2) M/s Mitsui and company India Pvt. Ltd. Vs. Addl.CIT, Range 6, New Delhi ITA No. 1362/Del/2011 dated 03- 06-2011.
3) Principle CIT v/s Rimjhim Ispat Ltd. (2016) 282 ITR 152 (ALL).
Ld. DR, on the other hand, vehemently supported the
order of the CIT(Appeals).
We have heard the contentions of both the parties and
we find merit in the contention of Ld. Counsel for the
assessee that no disallowance on account of personal use of
car and telephone expenses can be made in the case of
company assesses that too on an adhoc basis. The reliance
placed by the assessee in this regard on the decision of the
Hon’ble Gujarat High Court in the case of CIT Vs. Dinesh
Mills Ltd. (2005) 148 Taxman 76 (Guj) wherein it has been
categorically held that no personal use of car or telephone
expenses can be attributed to company assessee and,
therefore, cannot form the basis for disallowing the
expenses. This proposition has been reiterated in a number
of other decisions also as pointed out by the Ld. Counsel for
the assessee. The Ld. DR has not brought to our notice any
contrary decision in this regard. In view of the above, we
delete the disallowance made of 1/6 t h of telephone and car
expenses incurred by the assessee amounting to
Rs.46,514/- & Rs.1,91,275/- respectively.
Ground No. 1(a) & (b) raised by the assessee are,
therefore, allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court.
Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 28th March, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR
Assistant Registrar, ITAT, Chandigarh