Parmeshwar Engineers, Surat v. The ACIT.,Circle-2,, Surat

ITA 2668/AHD/2008 | 2005-2006
Pronouncement Date: 02-07-2010 | Result: Partly Allowed

Appeal Details

RSA Number 266820514 RSA 2008
Assessee PAN AADFP1709J
Bench Ahmedabad
Appeal Number ITA 2668/AHD/2008
Duration Of Justice 1 year(s) 11 month(s) 7 day(s)
Appellant Parmeshwar Engineers, Surat
Respondent The ACIT.,Circle-2,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 02-07-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 02-07-2010
Date Of Final Hearing 01-07-2010
Next Hearing Date 01-07-2010
Assessment Year 2005-2006
Appeal Filed On 25-07-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K.SHARMA JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER DATE OF HEARING:1-7-10 DRAFTED ON:1-7-10 ITA NO.2668/AHD/2008 ASSESSMENT YEAR 2005-06 M/S.PARMESHWAR ENGINEERS C-113 UDHNA UDHYO NAGAR SGHOPPING COMPLEX UDHANA SURAT. VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2 AAYAKAR BHAVAN MAJURA GATE SURAT. PAN/GIR NO. :AADFP 1709J (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI HARDIK VORA RESPONDENT BY: SHRI B\GAURAV BATHAM D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II SUR AT DATED 27-06-2008. 2. GROUND NO.1 READS AS UNDER:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LEARNED C.I.T.(A) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING RS.28 00 000/- FOR PREMIUM PAID UNDER KEYMAN INSURA NCE POLICY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE A. O. OBSERVED THAT IN VIEW OF THE LEGISLATURE KEYMAN IS EITHER AN EMPLO YEE OF THE ORGANIZATION OR ANY OTHER SALARIED PERSON WHO IS A KEY PERSON IN THE ORGANIZATION. CONSEQUENTLY THE KEYMAN INSURANCE IS AN INSURANCE - 2 - POLICY WHERE THE PROPOSER AS WELL AS THE PREMIUM PA YER IS THE EMPLOYER THE LIFE TO BE INSURED IS THAT OF THE EMP LOYEE AND THE BENEFIT IN CASE OF A CLAIM GOES TO THE EMPLOYER. THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP IS A SINE-QUA-NON FO R THE DEDUCTIBILITY OF KEYMAN INSURANCE PREMIA. 4. HOWEVER SUCH KIND OF A RELATIONSHIP IS CONSPIC UOUSLY ABSENT BETWEEN THE PARTNERSHIP FIRM AND THE PARTNERS. THE PARTNERS CONSTITUTE THE FIRM. THE FIRM HAS ONLY AN ARTIFICIA L IDENTITY UNDER THE INCOME TAX ACT 1961. IN EFFECT ANY EXPENDITURE ON LIFE INSURANCE OF PARTNERS BY WHATEVER NAME CALLED (INCLUDING KEY MAN POLICY) BY THE FIRM GOES TO INSURE THE PARTNERS ONLY. SINCE TH E PARTNERS AND THE FIRM ARE INEXTRICABLY LINKED BY THE CHANNEL OF KEYMAN INSURANCE THE PARTNERS INSURE THEMSELVES ONLY. UNL IKE A COMPANY WHERE THE EMPLOYEE/DIRECTOR AND THE EMPLOYER ARE TW O DIFFERENT PERSONS IN THE FIRM THE PARTNERS AND THE FIRM ARE INSEPARABLE. HENCE EXPENDITURE ON PREMIA OF KEYMAN INSURANCE FO R A FIRM ON LIFE OF PARTNERS BESTOWS PERSONAL BENEFITS TO THE P ARTNERS. THE FIRM MAKES OUTLAYS ON ITSELF; HENCE THE PREMIA BECOMES A PERSONAL EXPENDITURE. ANY PERSONAL EXPENDITURE IS NOT DEDUCT IBLE UNDER SECTION 37(1) OF THE INCOME TAX ACT 1961. 5. WITHOUT PREJUDICE TO THE ARGUMENTS OF ABOVE PARA ; FURTHER THE AMOUNT ON CLAIM OR MATURITY UNDER A KEYMAN INSU RANCE POLICY IS NOT EXEMPT UNDER SECTION 10(10D) OF THE INCOME T AX ACT WHEN THE COMPANY PAYS THE PREMIA BECAUSE IN SUCH SITUAT ION THE BENEFITS RECEIVED ACQUIRE THE NATURE OF CAPITAL REC EIPTS. HENCE LOGICALLY THE EXPENDITURE ON PREMIA PARTAKE THE NAT URE OF CAPITAL EXPENDITURE AND ANY CAPITAL EXPENDITURE IS NOT DEDU CTIBLE UNDER SECTION 37(1) OF THE INCOME TAX ACT 1961. - 3 - 6. IN RESPECT OF SUCH TYPES OF INSURANCE IN PARTNER SHIP FIRMS THE JURISDICTIONAL GUJARAT HIGH COURT IN THE CASE OF CI T V. KHODIDAS MOTIRAM PANCHAL(1986) 161 ITR-99 (GUJ.) HAS DENIED THE ALLOWABILITY OF PREMIA BY ADOPTING THE FOLLOWING RA TIO: .THE CONTENTION THAT THE EXPENDITURE IS IN THE NA TURE OF CAPITAL EXPENDITURE IS WELL-FOUNDED. BY TAKING OUT THESE INSURANCE POLICIES THE ASSESSEE-FIRM DESIRES TO EN SURE THE AVAILABILITY OF LIQUID CASH FOR PAYMENT TO THE LEGA L REPRESENTATIVES OF THE DECEASED PARTNER IN THE EVEN T THE SURVIVING PARTNERS DESIRE TO CONTINUE THE FIRM. WHE N THE SHARE OF THE DECEASED PARTNER IS PAID OFF THE SHAR ES OF THE SURVIVING PARTNERS IN THE ASSETS OF THE FIRM CAN BE AUGMENTED. WHAT IS THEREFORE SOUGHT TO BE ACQUIR ED IS CAPITAL THAT IS LIQUID CASH NEEDED FOR BUYING THE SHARE OF THE DECEASED PARTNER BY PAYING OFF HIS LEGAL REPRESENTA TIVES. IF THE AMOUNT RECEIVED FROM THE INSURANCE COMPANY ON T HE DEMISE OF THE PARTNER IS A CAPITAL ASSET LIKE ANY O THER AMOUNT BORROWED BY THE PARTNERSHIP FIRM FROM THIRD PARTIES WHAT THE PARTNERSHIP FIRM EXPENDS FOR ACQUIRING THAT CAPITAL ASSET CAN ONLY BE SAID TO BE CAPITAL EXPENDITURE WITHIN THE M EANING OF SEC. 37(1) OF THE ACT. 7. HENCE THE SOLE PURPOSE OF TAKING OUT THESE INSU RANCE POLICIES IS TO SECURE LIQUID CASH AT THE TIME IT WILL BE NEE DED TO PAY OFF THE LEGAL REPRESENTATIVES OF THE DECEASED PARTNER. IF T HE AMOUNT PAID BY WAY OF INSURANCE PREMIA IS FOR SECURING THIS LIQ UID CASH A CAPITAL ASSET THEN THE EXPENDITURE INCURRED THEREFORE COUL D ONLY BE SAID TO BE IN THE NATURE OF CAPITAL EXPENDITURE. THEREFORE THE KEYMAN INSURANCE PREMIA CAN NOT DEDUCTIBLE UNDER SEC. 37(1 ).HENCE THE POSITION OF LAW AS REGARDS TO NON-DEDUCTIBILITY OF PREMIUM IS CLEAR AS PER THE JURISDICTIONAL HIGH COURT. 8. IN ADDITION THE LIFE INSURANCE CORPORATION OF I NDIA (LIC) HAS DESIGNED KEYMAN INSURANCE TO ENABLE COMPANIES AND PARTNERSHIP FIRMS TO INDEMNIFY THEMSELVES AGAINST THE LOSS OR R EDUCTION OF FUTURE EARNINGS THAT MAY RESULT FROM DEATH OR REGIS TRATION OF THE KEYMAN. ACCORDING TO THAT THE KEYMAN CANNOT BE GIVE N IF - 4 - HE HAS A SHARE EQUAL TO OR MORE THAN 51% IN THE FI RM IS FAMILY (SPOUSE AND MINOR CHILDREN) HAS A SHARE EQUAL TO OR MORE THAN 70%OF THE CAP ITAL IN THE FIRM. THE COMPANY IS INCURRING LOSSES CONSISTENTLY AND THE KEYMAN IS ILLITERATE. THESE ARE THE RULES LAID DOWN BY THE LIC FOR ITS OW N ADMINISTRATION AND PROCEDURE. THE FIRM IN THE INSTANT CASE FAILS T O FULFILL THESE CONDITIONS AS ONE PARTNER HAS 90% OF THE SHARE AND ANOTHER IS HIS WIFE WITH10% OF SHARE. 9. HOWEVER NOTWITHSTANDING ANYTHING EVEN IF THE A BOVE CONDITIONS ARE FULFILLED AND A PARTNER IS TREATED A S KEYMAN THE INCOME TAX ACT 1961 WOULD NOT PERMIT THE DEDUCTION IN RESPECT OF KEYMAN INSURANCE PREMIUM BECAUSE OF THE REASONS DIS CUSSED ABOVE. 10. LAST BUT NOT THE LEAST THE LAW RELATING TO DED UCTIBILITY OF THE PREMIUM ON KEYMAN POLICY HAS BEEN SETTLED AS SUCH P REMIUM IS NOT DEDUCTIBLE FOR PARTNERSHIP FIRMS WHERE NO EM PLOYEE-EMPLOYER RELATIONSHIP EXISTS BETWEEN THE FIRM AND THE PARTNE RS. THIS POSITION HAS BEEN CLARIFIED IN BOARDS CIRCULAR NO.762 AS QU OTED BY THE LD. A.R. AND MENTIONED ABOVE. A KEYMAN INSURANCE POLICY OF THE LIFE INSURANCE CO RPORATION OF INDIA ETC. PROVIDES FOR AN INSURANCE POLICY TAK EN BY A BUSINESS ORGANIZATION OR A PROFESSIONAL ORGANIZATIO N ON THE LIFE OF AN EMPLOYEE IN ORDER TO PROTECT THE BUSINE SS AGAINST - 5 - THE FINANCIAL LOSS WHICH MAY OCCUR FROM THE EMPLOY EES PREMATURE DEATH. THE KEYMAN IS AN EMPLOYEE OR A D IRECTOR WHOSE SERVICES ARE PERCEIVED TO HAVE A SIGNIFICANT EFFECT ON THE PROFITABILITY OF THE BUSINESS. THE PREMIUM IS P AID BY THE EMPLOYER. 11. AS PER THE SPIRIT AND LETTER OF THE BOARD CIRCU LAR THE PARTNERSHIP FIRMS ARE NOT ELIGIBLE FOR DEDUCTION IN RESPECT OF ANY PREMIUM PAID AS KEYMAN INSURANCE PREMIUM ON LIFE OF PARTNER ON ACCOUNT OF THE WANT OF ANY EMPLOYEE-EMPLOYER RELATI ONSHIP AND ABSENCE OF DISTINCT SEPARATION BETWEEN THE FIRM AND THE PARTNERS. 12. HENCE THE FOLLOWING EMERGE FROM THE ABOVE DISCU SSION REGARDING THE DEDUCTIBILITY OF PREMIUM PAID ON PART NERS LIFE: THE PARTNER IS NOT A KEYMAN OF THE FIRM BUT CONSTI TUTES THE FIRM THERE IS NO EMPLOYEE-EMPLOYER RELATIONSHIP BETWEEN THE FIRM AND THE PARTNER. THE EXPENDITURE BY THE FIRM ON THE PREMIUM FOR INSU RANCE OF KEYMAN IS A CAPITAL EXPENDITURE. THE EXPENDITURE BY THE FIRM ON THE PREMIUM FOR INSU RANCE OF KEYMAN IS A PERSONAL EXPENDITURE BY THE PARTNERS. 13. ON ACCOUNT OF THE REASONS DISCUSSED ABOVE THE DEDUCTION OF RS.28 00 000 CLAIMED WITH REGARD TO THE PREMIUM OF KEYMAN INSURANCE POLICY ON LIFE OF PARTNERS IS DISALLOWED AND ADDED BACK TO THE TAXABLE INCOME. - 6 - 14. ON APPEAL THE LD. C.I.T.(A) HELD AS UNDER :- I HAVE GONE THROUGH THE CONTENTS OF THE ASSESSMEN T AS ALSO THE WRITTEN SUBMISSIONS OF THE A.R. I FIND THAT THE FACTS OF THE CASE HAVE REMAINED THE SAME AS FAR AS THE ISSUE OF KIP IS CONCERNED AS IN THE IMMEDIATELY PRECEDING YEAR. TH E VIEW TAKEN BY THE A.O. AS ALSO THE GROUNDS TAKEN BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE FOR ARGUI NG THE CASE OF THE ASSESSEE HAVE REMAINED THE SAME AS IN THE IMMEDIATELY PRECEDING YEAR. THIS ISSUE HAD COME UP IN APPEAL AND I HAD THE OCCASION TO EXAMINE THE SAME I SSUE IN CONSIDERABLE DETAIL WHILE DECIDING THE ASSESSEES APPEAL FOR THE A.Y. 2004-05 IN CAS/II?394/06-07 DATED 28.9.07. FOLLOWING THE VIEW TAKEN BY ME IN THE SAID ASSESSME NT YEAR I HOLD THAT THE A.O. WAS FULLY JUSTIFIED IN DISALL OWING THE CLAIM OF DEDUCTION OF THE SUM OFRS.28 00 000 BEING THE PR EMIUM PAID FOR KIP. THE ADDITION OF THE SAID SUM IS THERE FORE CONFIRMED. 15. THE AR SUBMITTED THAT THE ISSUE REGARDING PRE MIUM PAID FOR KEYMAN INSURANCE POLICY FOR THE PARTNER OF THE FIRM IS COVERED BY THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF C. I.T. VS. M/S. B.N. EXPORTS (2010)323 ITR-178 (BOM) AND BY THE ORD ER OF THE AHMEDABAD BENCH OF THE TRIBUNAL DATED 6-3-2009 IN T HE CASE OF ACIT VS.M/S.GEM ART ITAA NO.1722/AHD/.2008 FOR THE A.Y. 2005- 06 & ACIT VS.M/S.GEM ART ITA NO.2725/AHD/.2007 FOR THE A.Y. 2004-05 ORDER DT. 26-3-2010 THEREFORE FOLLOWING TH E SAME THE APPEAL OF THE ASSESSEE IS ALLOWED. 16. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE A.O. HAS DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF PREMIUM OF - 7 - RS.28 00 000/-UNDER KEYMAN INSURANCE POLICY FOR TH E REASON THAT THE EXPENSES WERE INCURRED ON THE LIFE OF THE PARTN ER AND THERE WAS NO EMPLOYER-EMPLOYEE RELATIONSHIP AND ABSENCE OF DISTINCT SEPARATION BETWEEN THE FIRM AND THE PARTNERS. IN AP PEAL THE CIT (A) CONFIRMED THE DISALLOWANCE. WE FIND THAT THE HO N'BLE BOMBAY HIGH COURT IN THE CASE OF B.N. EXPORTS (SUPRA) IN S IMILAR FACTS AND CIRCUMSTANCES OF THE CASE HELD THAT WHERE KEYMAN IN SURANCE POLICY WAS TAKEN NOT FOR THE PERSONAL BENEFIT OF THE PARTN ER BUT FOR THE BENEFIT OF THE FIRM IN ORDER TO PROTECT ITSELF AGAI NST THE SET-BACK THAT MAY BE CAUSED ON ACCOUNT OF THE DEATH OF THE P ARTNER THE INSURANCE PREMIUM WAS DEDUCTIBLE. THE RELEVANT PORT ION OF THE BOMBAY HIGH COURT DECISION IS EXTRACTED HEREUNDER : IN THIS APPEAL THE COURT HAS TO DETERMINE THE QUE STION OF EXPENDITURE INCURRED TOWARDS THE PAYMENT OF INSURA NCE PREMIUM ON A KEYMAN INSURANCE POLICY. THE CIRCULAR WHICH HAS BEEN ISSUED BY THE CENTRAL BOARD OF DIRECT TAXE S CLARIFIES THE POSITION BY STIPULATING THAT THE PREMIUM PAID F OR A KEYMAN INSURANCE POLICY IS ALLOWABLE AS BUSINESS EXPENDITURE. IN THE PRESENT CASE ON THE QUESTION W HETHER THE PREMIUM WHICH WAS PAID BY THE FIRM COULD HAVE B EEN ALLOWED AS BUSINESS EXPENDITURE. THERE IS A FINDING OF FACT BY THE TRIBUNAL THAT THE FIRM HAD NOT TAKEN INSURANCE FOR THE PERSONAL BENEFIT OF THE PARTNER BUT FOR THE BENEFI T OF THE FIRM IN ORDER TO PROTECT ITSELF AGAINST THE SET BACK THA T MAY BE CAUSED ON ACCOUNT OF THE DEATH OF A PARTNER. THE OB JECT AND PURPOSE OF A KEYMAN INSURANCE POLICY IS TO PROTECT THE BUSINESS AGAINST A FINANCIAL SET BACK WHICH MAY OCC UR AS A RESULT OF A PREMATURE DEATH TO THE BUSINESS OR PRO FESSIONAL ORGANIZATION. THERE IS NO RATIONAL BASIS TO CONFINE THE ALLOWABILITY OF THE EXPENDITURE INCURRED ON THE PRE MIUM PAID TOWARDS SUCH A POLICY ONLY TO A SITUATION WHERE THE POLICY IS IN RESPECT OF THE LIFE OF AN EMPLOYEE. A KEYMAN INSURA NCE POLICY IS OBTAINED ON THE LIFE OF A PARTNER TO SAFEGUARD T HE FIRM AGAINST A DISRUPTION OF THE BUSINESS THAT MAY RESUL T DUE TO THE PREMATURE DEATH OF A PARTNER. THEREFORE THE EX PENDITURE WHICH IS LAID OUT FOR THE PAYMENT OF PREMIUM ON SUC H A POLICY IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. - 8 - WE FIND THAT BOTH THE PARTIES BEFORE US HAS NOT BR OUGHT ANY MATERIAL WHICH COULD SHOW THAT THE KEYMAN INSURANCE POLICY WAS TAKEN FOR THE BENEFIT OF THE BUSINESS OF THE PARTNE RSHIP FIRM TO PROTECT IT FROM DISRUPTION OF BUSINESS ON THE DEATH OF THE PERSON ON WHOSE LIFE KEYMANS INSURANCE WAS TAKEN OR THE SAME WAS TAKEN FOR THE BENEFIT OF THE INDIVIDUAL PARTNER ON WHOSE LIFE SUCH INSURANCE WAS TAKEN. IN THE CIRCUMSTANCES IN OUR C ONSIDERED OPINION IT SHALL BE IN THE INTEREST OF JUSTICE TO R ESTORE THIS ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR P ROPER VERIFICATION. THE LEARNED ASSESSING OFFICER IS DIRECTED TO RECONS IDER THE ISSUE IN LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH CO URT IN THE CASE OF B.N. EXPORTS (SUPRA) AS PER LAW AFTER ALLOWING R EASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 18. BEFORE PARTING WITH THE ISSUE WE WOULD ALSO LIK E TO OBSERVE THAT THE LEARNED ASSESSING OFFICER HAS RELIED UPON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF KHODI DAS MOTIRAM PANCHAL (SUPRA) FOR DISALLOWING THE CLAIM OF THE AS SESSEE FIRM. WE FIND THAT IN THE AFORESAID DECISION THE HON'BLE HIG H COURT HAS DISALLOWED THE CLAIM OF THE ASSESSEE BY TREATING TH E AMOUNT OF PREMIUM PAID IN RESPECT OF KEYMANS INSURANCE POLIC Y AS CAPITAL EXPENDITURE. HOWEVER IN VIEW OF THE SUBSEQUENT POS ITION ADMITTED BY THE HON'BLE C.B.D.T. WHICH IS THE HIGHEST BODY F OR TAX ADMINISTRATION IN THE COUNTRY THAT KEYMANS INSURAN CE PREMIUM CAN BE TREATED AS AN ALLOWABLE EXPENDITURE THE BENE FIT GIVEN BY THE CIRCULAR TO THE ASSESSEE CANNOT BE TAKEN AWAY ON TH E BASIS OF EARLIER LEGAL PRONOUNCEMENT. IT IS AN ESTABLISHED P OSITION OF LAW THAT BENEVOLENT CIRCULAR ARE BINDING AND THE DEPARTMENT IS EXPECTED TO FOLLOW THE SAME IN THE SPIRIT IN WHICH THE SAME IS ISSUED BY THE C.B.D.T. THEREFORE THIS GROUND OF THE APPEAL IS AL LOWED FOR STATISTICAL PURPOSES. - 9 - GROUND NO.2 READS AS UNDER: - ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT THE LD. C.I.T.(A)HAS ERRED IN DISALLOW ING RS.1 01 791/- & RS.38 728/- BEING 20% OF EXPENSES R ELATING TO VEHICLE AND MOTOR CAR DEPRECIATION. 19. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNE D ASSESSING OFFICER FOUND THAT ASSESSEE HAS CLAIMED VEHICLE EXP ENSES OF RS.5 08 954/-. THE ASSESSEE SUBMITTED THAT IT WAS N OT MAINTAINING ANY LOG BOOK IN RESPECT OF USE OF VEHICLE. THEREFO RE THE A.O. HELD THAT IT CANNOT BE ASCERTAINED AS TO WHETHER THE VEH ICLE HAS BEEN USED SOLELY FOR BUSINESS PURPOSE AND ESTIMATED THE USE OF VEHICLES FOR NON BUSINESS PURPOSES AT 20% OF THE EXPENSES AN D DISALLOWED RS.1 01 791/-OUT OF THE EXPENSES CLAIMED BY THE ASS ESSEE. SIMILARLY HE ALSO DISALLOWED 20% OUT OF DEPRECIATIO N CLAIMED ON MOTOR CAR AND ADDED RS.38 728/- TO THE INCOME OF TH E ASSESSEE. 20. IN APPEAL THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) CONFIRMED THE ORDER OF THE A.O. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE LEARNED ASSESSING OFFICER DISALLOWED 20% OUT OF VEHICLE EXPENSES AND DEPRECIATION ON ACCOUNT OF PERSONAL USE AS THE ASSESSEE DID NOT MAI NTAIN LOG BOOK FOR USE OF VEHICLE AND THEREFORE IT COULD NOT BE V ERIFIED THAT THE VEHICLE WAS USED SOLELY FOR BUSINESS PURPOSES OF TH E ASSESSEE. THE CIT(A)CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFICER THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT TH E DISALLOWANCE MADE ON ACCOUNT OF PERSONAL USE OF VEHICLE WAS HIGH ER AND - 10 - THEREFORE THE SAME MAY BE REDUCED. THE LEARNED DE PARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUPPORTED THE ORDE R OF THE CIT(A). WE FIND THAT NO MATERIAL WAS BROUGHT ON REC ORD BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE T O SHOW THAT THE ESTIMATE OF 20% EXPENSES FOR PERSONAL USE OF VEHICL E WAS HIGHER. THEREFORE WE DO NOT FIND ANY GOOD REASON TO INTERF ERE WITH THE ORDER OF THE C.I.T.(A). IT IS CONFIRMED AND THE GRO UND OF APPEAL OF THE ASSESSEE IS DISMISSED. GROUND NO.3 READS AS UNDER :- 22. ON FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT LD C.I.T. (A) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING RS.29 824/- FOR ALLEGED UNPAID BONUS EXPENSES UNDER SECTION 43B. 23. AT THE TIME OF HEARING THE LEARNED AUTHORISED R EPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING T HE ABOVE GROUND OF APPEAL. HENCE THE SAME IS DISMISSED AS NOT PRESS ED. 24. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 02ND DAY OF JULY 2010. SD/- SD/- ( T.K. SHARMA ) ( N .S. SAINI ) JUDICIAL MEMBER ACCOUNTAN T MEMBER AHMEDABAD; ON THIS 02 ND DAY OF JULY 2010 PATKI - 11 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 1-7-2010 2. DRAFT PLACED BEFORE AUTHORITY 2-7-2010 3. DRAFT PROPOSED & PLACED JM/AM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER