Brand Aid Pvt.Ltd.,, Ahmedabad v. The Income tax Officer,Ward-1(2),, Ahmedabad

ITA 650/AHD/2009 | 2005-2006
Pronouncement Date: 11-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 65020514 RSA 2009
Assessee PAN AACCB1595N
Bench Ahmedabad
Appeal Number ITA 650/AHD/2009
Duration Of Justice 2 year(s) 13 day(s)
Appellant Brand Aid Pvt.Ltd.,, Ahmedabad
Respondent The Income tax Officer,Ward-1(2),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 11-03-2011
Date Of Final Hearing 03-03-2011
Next Hearing Date 03-03-2011
Assessment Year 2005-2006
Appeal Filed On 27-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI D.K. TYAGI JUDICIAL MEMBER AND SHRI A.N.PHAUJA ACCOUNTANT MEMBER ITA NO.650/AHD/2009 ASSESSMENT YEAR:2005-06 DATE OF HEARING:3.3.11 DRAFTED:7.3.11 BRAND AID PVT. LTD. A-202 SAPATH-IV OP. KARNAVATI CLUB S.G. HIGHWAY AHMEDABAD PAN NO.AACCB1595N V/S. INCOME TAX OFFICER WARD-1(2) AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S.N.DEVETIA AR RESPONDENT BY:- SHRI P.R. GHOSH SR-DR O R D E R PER D.K. TYAGI JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME-TAX(APPEALS)-VI AHMEDABAD IN APPEAL NO. CIT(A)-VI/WARD 1(2)/191/07-08 DATED 10-11-2008. FOR THE ASSESSMENT YEAR 2005-06. 2. THOUGH THE ASSESSEE HAS TAKEN THREE GROUNDS OF A PPEAL BUT AT THE TIME OF HEARING ONLY GROUND NO.2.1 WAS PRESSED WHICH READS AS UNDER:- 2.1 THE LD. CIT(A) HA GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THE FOLLOWING DISALLOWANCES MADE BY AO. (A) FOREIGN TRAVEL EXPS. : RS.1 09 604 ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 2 (B) OUT INTEREST EXPS. :RS.1 91 760 MOTOR CAR DEPN. AND EXPS. RS.1 45 913 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE-CO MPANY IS ENGAGED IN THE BUSINESS OF ADVERTISING DESIGN MARKETING F ILM MAKING PRINTING AND PROGRAMMING. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS DEBITED IN THE PROF IT AND LOSS ACCOUNT A SUM OF RS.1 09 604/- ON ACCOUNT OF FOREIGN TRAVEL E XPENSES. THE ASSESSEE WAS ASKED TO SUBMIT COMPLETE TRAVELING EXP ENSES WHICH WERE SUBMITTED. AGAIN ASSESSEE WAS ASKED TO JUSTIFY FORE IGN TOUR FOR BUSINESS PURPOSES AND ALSO TO SUBMIT COMPLETE TRAVELING EXPE NSES WHICH WERE ALSO SUBMITTED ASSESSEE ALSO SUBMITTED THAT AIR TRI P WAS MADE TO GERMANY FRANCE FRANKFURT AND PARIS TO ATTEND TRAD E SHOW FOR BUSINESS PURPOSES. THE ASSESSING OFFICER FOUND FROM BILL DAT ED 06-11-2004 FOR PURCHASE OF FOREIGN CURRENCY THAT PURCHASE WAS MADE BY SHRI MANSUKHBHAI GANDHI FOR GOING TO UK. WHILE ANOTHER B ILL DATED 28-10- 2004 SHOWED PURCHASE OF TICKET INSURANCE ETC. IN T HE NAME OF SHRI HITEN SHAH. THE ASSESSEE WAS ASKED TO SUBMIT DOCUMENTS TO SHOW THAT FOREIGN TRIP WAS FOR BUSINESS PURPOSES. THE ASSESSE E REPLIED AS UNDER:- THE DIRECTOR HAS INCURRED FOREIGN TOUR EXPENSE TO DEVELOP THE BUSINESS. THE COMPANY HAS EARNED IN FOREIGN EXCHANG E RS.4 21 818/- DURING THE YEAR 2003-04 AND RS.9 945/ - DURING THE YEAR 2004-05. THE BILLS AND VOUCHERS ARE ALREADY SU BMITTED ALONG WITH OUR LETTER DATED 20.11.2007. AS IT WAS A BUSIN ESS TOUR THE DIRECTORS HAD GONE ALONE WITHOUT TAKING HIS FAMILY. TAKING INTO CONSIDERATION THE SUBMISSION OF ASSESSE E THE ASSESSING OFFICER MADE THE ADDITION OF RS.1 09 604/- BY OBSER VING AS UNDER:- SUBMISSION MADE BY THE ASSESSEE IS OF GENERAL NATU RE. IT DOES NOT EVEN SPECIFY THAT WHICH DIRECTOR HAS GONE TO FO REIGN TRIP. AS IS SEEN FROM THE SUBMISSION DATED 20.11.2007 FOREIGN C URRENCY WAS PURCHASED IN THE NAME OF SHRII MANSUKHBHAI GANDHI F OR PROCEEDING TO U.K. AND OTHER BILL IS FOR SHRI HITEN SHAH. THEREFORE ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 3 FROM THE DETAILS GIVEN BY THE ASSESSEE IT IS NOT EV EN CLEAR THAT WHETHER IT WAS A SINGLE TRIP OR TWO TRIPS AND WHO H AS TAKEN THE FOREIGN TRIP. REASON FOR FOREIGN TRIP GIVEN BY THE ASSESSEE THAT IT WAS FOR BUSINESS PURPOSE TO ATTEND TRADE FAIR IS AL SO NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. IN THIS CASE ASSESSEE SHOULD HAVE SUBMITTED DATES OF TRADE FAIR IN WHICH COUNTRY IT W AS HELD; WHAT WAS THE THEME OF THE TRADE FAIR; HOW IT WAS RELATED TO THE BUSINESS OF THE COMPANY; TO WHICH PARTIES PERSON MAKING THE TR IP HAS MET. HOWEVER NO SUCH DETAILS HAVE BEEN SUBMITTED NOR COP IES OF AIR TICKETS FOR THE JOURNEY HAS BEEN GIVE. SUBMISSION O F THE ASSESSEE EVEN DOES NOT SPECIFY THE NAME OF THE DIRECTOR WHO WENT TO FOREIGN TRIP AND THE REASON FOR PURCHASE OF FOREIGN CURRENC Y FOR PROCEEDING TO U.K. IN THE NAME OF SHRI MANSUKH GANDHI. ASSESSE ES CONTENTION OF EARNING FOREIGN CURRENCY BY THE COMPA NY IN THE YEAR PRIOR TO THE YEAR IN WHICH FOREIGN TRIP WAS MADE AL SO DOS NOT SUPPORTS ITS CAUSE. IN THIS REGARD ASSESSEE SHOULD HAVE GIVEN DETAILS OF EFFECT ON ITS BUSINESS DUE TO FOREIGN TR IP I.E. WHETHER NEW CLIENTS WERE CONTRACTED WHETHER ANY ORDERS WERE PR OCURED FROM FOREIGN CLIENTS WHETHER SALES TURNOVER OF THE COMP ANY HAS INCREASED DUE TO FOREIGN TRIP. HOWEVER NO SUCH DETA ILS HAVE BEEN SUBMITTED. THEREFOR4E IN VIEW OF NON-SUBMISSION OF SPECIFIC DETAILS OF PERSON GOING TO FOREIGN TRIP INSPSITE OF GIVING OPPORTUNITY MORE THAN ONCE FOR WHICH AND MOST OF ALL FOR NON-SUBMIS SION OF ANY DEAL WITH DOCUMENTARY EVIDENCE REGARDING PURPOSE OF THE VISIT ASSESSEES CLAIM OF SUCH EXPENSES OF RS1 09 604/- F OR BUSINESS PURPOSE IS NOT ACCEPTABLE. THE SAME ARE THEREFORE D ISALLOWED. PENALTY PROCEEDINGS U/S.271(1) ARE INITIATED FOR F URNISHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THIS ORDER ASSESSEE WENT IN APPEAL BEF ORE CIT(A). 4. BEFORE CIT(A) ASSESSEE FILED WRITTEN SUBMISSION. THE CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER BY OBSERV ING AS UNDER:- KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTAN CES; THE FACT EMERGES THAT THE APPELLANT HAS FAILED TO ESTABLISH WITH CORROBORATIVE DOCUMENTARY EVIDENCE THAT THE FOREIGN TOUR IN QUESTION HAS BEEN UNDERTAKEN WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. SO MUCH SO THE APPELLANT HAS FAILED TO F URNISH THE NAME OF THE DIRECTOR WHO VISITED U.K. AND ALSO THE REASO NS FOR THE PURPOSE OF FOREIGN CURRENCY IN THE NAME OF SHRI MUK ESH PANDIT. ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 4 FURTHER THERE IS CONTRADICTION IN APPELLANTS CONT ENTION THAT THE FOREIGN CURRENCY WAS EARNED BY IT IN THE YEAR UNDER CONSIDERATION AS THE APPELLANT HAS SPECIFICALLY SUBMITTED BEFORE THE AOP IN ITS LETTER DATED 26.11.2007 THAT IT HAS EARNED THE FORE IGN EXCHANGE OF RS.421818/- DURING THE YEAR 2003-04 AND RS.9945/- D URING THE YEAR 2004-05. WITH THE RESULT THE APPELLANT HAS NO T EARNED ANY FOREIGN EXCHANGE DURING THE YEAR UNDER APPEAL. BUT HOWEVER IN ITS SUBMISSION FILED ON 245.10.2008 IT IS SUBMITTE D THAT IT HAS EARNED RS.9945/- AS FOREIGN EXCHANGE IN THE YEAR UN DER APPEAL. BUT CONTRADICTION IN QUESTION WAS NO CLARIFIED EVEN DURING THE APPELLANT PROCEEDINGS AND ALSO NO DOCUMENTARY EVIDE NCE WAS PRODUCED TO SUBSTANTIATE ITS CONTENTION. IN THE GIV EN FACTS AND CIRCUMSTANCES IT CANNOT BE SAID THAT FOREIGN TRIP IN QUESTION HAS BEEN UNDERTAKEN WHOLLY AND EXCLUSIVELY FOR THE BUSI NESS PURPOSES. WITH THE RESULT THE ACTION OF THE ASSESSING OFFICE R IS CONFIRMED ON THIS GROUND. HENCE THE APPEAL IS DISMISSED ON THIS GROUND. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING BEFORE US LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT WHATEVER EVIDENCES/DETAILS WERE ASKE D FOR BY THE ASSESSING OFFICER WERE FILED BEFORE HIM. WHILE MAKI NG THIS ADDITION THE ASSESSING OFFICER HAS GONE BEYOND ENQUIRIES MADE DU RING THE ASSESSMENT PROCEEDINGS. SIMILARLY LD CIT(APPEALS) HAS ALSO NOT TAKEN INTO CONSIDERATION THE SUBMISSION MADE BY ASSESSEE BEFORE HIM. PLACING RELIANCE AT PAGES 37 TO 45 OF ASSESSEES PAPER BOOK AND WRITTEN SUBMISSION BEFORE LD. CIT(APPEALS). LD. COUNSEL SUB MITTED THAT ADDITION MADE BY ASSESSING OFFICER AND SUSTAINED BY LD. CIT( APPEALS) MAY KINDLY BE DELETED AS THE LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE FACTS OF THE CASE.. LD. SR-DEPARTMENTAL REPRESE NTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDERS OF AUTHORITIES BE LOW AND SUBMITTED THAT SINCE ASSESSEE HAS FAILED TO PROVE THAT FOREIGN TRI P EXPENSES WERE INCURRED BY ASSESSEE FOR BUSINESS PURPOSES THE ORDE R PASSED BY THE LD. CIT(A) MAY KINDLY BE UPHELD. ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 5 6. HEARD BOTH THE PARTIES AND PERUSED THE RECORD. T HE ASSESSING OFFICER HAS MADE THIS ADDITION AS ACCORDING TO HIM THE ASSESSEE FAILED TO ESTABLISH THAT FOREIGN TOUR WAS INCURRED WHOLLY AND EXCLUSIVE FOR THE BUSINESS PURPOSES. BUT WE FIND THAT REASONS GIVEN B Y HIM FOR HOLDING SO ARE SUCH ON WHICH NO QUERY WAS RAISED BY HIM DURING THE ASSESSMENT PROCEEDINGS. THEREFORE ASSESSEE HAD NO OCCASION TO SUBSTANTIATE HIS CLAIM THE WAY ASSESSING OFFICER WANTED HIM TO DO. THE LD. CIT(A) ALSO CONFIRMED THIS ADDITION AS HE FOUND SOME CONTRADICT ION IN THE SUBMISSION OF THE ASSESSEE IN RESPECT OF FOREIGN EXCHANGE EARN ED BY THE ASSESSEE IN THE YEAR UNDER APPEAL BEFORE HIM AND THE ASSESSI NG OFFICER. ACCORDING TO HIM ASSESSEE HAD SUBMITTED BEFORE THE AO THAT DURING THE YEAR NO FOREIGN EXCHANGE WAS EARNED BUT DURING THE APPELLATE PROCEEDINGS THE ASSESSEE CLAIMED TO HAVE EARNED FOR EIGN EXCHANGE OF RS.9 945/-. INSTEAD OF ASKING FOR CLARIFICATION AND DECIDING THE ISSUE HE CHOOSE TO CONFIRM THE ADDITION. WE THEREFORE ARE O F THE CONSIDERED OPINION THAT ASSESSEE BE GIVEN ONE MORE OPPORTUNITY TO SUBSTANTIATE HIS CLAIM THAT FOREIGN TOUR EXPENSES WERE INCURRED FOR BUSINESS PURPOSES AND FOR THIS PURPOSE THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO ASSESSEE. THIS GROUND OF ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. 7. THE NEXT GROUND RELATES TO DISALLOWANCE OUT OF I NTEREST EXPENSES OF RS.1 91 760/-. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS DEBITED INTEREST EX PENSES OF RS.2 45 133/- IN PROFIT AND LOSS ACCOUNT. HE FURTHE R FOUND FROM THE DETAILS SUBMITTED THAT ASSESSEE HAS GIVEN LOAN TO FOLLOWING CONCERNS ON WHICH NO INTEREST HAS BEEN CHARGED.:- 1. BHAVYA DEVELOPERS ORGANIZERS RS. 5 60 000/- ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 6 2. BHAYA PAPERS RS. 4 40 000/- 3. KARAN & CO. RS.18 78 000/- RS.28 78 000/- FROM THESE PARTIES NO INTEREST HAS BEEN CHARGED. ON THE OTHER HAND ASSESSEE HAS INCURRED INTEREST EXPENDITURE OF RS.2 45 133/-. THUS ASSESSING OFFICER FOUND THAT THERE WAS DIVERSION OF BUSINESS PROFIT. THE ASSESSEE WAS ASKED AS TO WHY INTEREST EXPENDITURE P ROPORTIONATE TO INTEREST FREE LOAN SHOULD NOT BE DISALLOWED. THE AS SESSEE REPLIED THAT HE HAD GIVEN DEPOSITS TO BHAVYA DEVELOPER BHAVYA PAPE RS AND KARAN & CO. DURING THE YEAR 2003-04. THE DEPOSIT WAS GIVEN FOR THE PURPOSE OF BUSINESS HENCE NO INTEREST WAS CHARGED. IT WAS FUR THER SUBMITTED THAT ASSESSEE RECEIVED RS.25 LAKH FROM M/S. PRAN ENTERPR ISES DURING THE YEAR 2003-04 ON WHICH NO INTEREST WAS PAID AND OUT OF THIS INTEREST FREE DEPOSIT THE ABOVE DEPOSITS HAVE BEEN GIVEN. HENCE NO INTEREST EXPENDITURE CAN BE DISALLOWED. AFTER TAKING THIS SU BMISSION OF THE ASSESSEE ASSESSING OFFICER WAS OF THE VIEW THAT AS SESSEE WAS HAVING INTEREST FREE LOAN FROM M/S. PRAN ENTERPRISES ITS B ALANCE AT THE END OF THE YEAR WAS RS.12.20 LAKH AS THERE WAS REPAYMENT OF RS .12.80 LAKH DURING THE YEAR. AGAIN THIS AMOUNT OF RS.12.20 LAKH INTERE ST FREE ADVANCES WERE GIVEN ARE OF RS.28.78 LAKH. THUS INTEREST FREE ADVA NCE GIVEN FAR EXCEED INTEREST FREE FUNDS AVAILABLE WITH THE COMPANY. THU S CONSIDERING THE INTEREST FREE FUNDS AVAILABLE FROM M/S. PRAN ENTERP RISE INTEREST FREE LOAN WERE GIVEN OF RS.15.98 LAKH ON WHICH PROPORTIONATE INTEREST EXPENDITURE ARE TO BE DISALLOWED BEING NON-BUSINESS EXPENDITURE . INTEREST ON RS.15.98 LAKH AT THE PREVALENT INTEREST RATE OF RS. 12% WAS WORKED OUT AT RS.1 28 760/- AND THE SAME WAS DISALLOWED. ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 7 8. AGAINST THIS ADDITION ASSESSEE WENT IN APPEAL B EFORE CIT(APPEALS) WHO HAS CONFIRMED THIS ADDITION. FUR THER AGGRIEVED THE ASSESSEE IS NOW IN APPEAL BEFORE US. 9. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT LD. CIT(A) HAS CONFIRMED THE ADDITION MADE BY ASSES SING OFFICER WITHOUT TAKING INTO CONSIDERATION THE SUBMISSION MADE ON B EHALF OF THE ASSESSEE BEFORE HIM .FOR MAKING THIS SUBMISSION HE PLACED RELIANCE ON THE WRITTEN SUBMISSIONS BEFORE LD. CIT(A) WHICH ARE AVAILABLE IN ASSESSEE;S PAPER BOOK. HE THEREFORE PRAYED THAT TH E ORDERS OF LOWER AUTHORITIES BE SET ASIDE AND THE ADDITION MADE BY A SSESSING OFFICER AND SUSTAINED BY LD. CIT(A) MAY KINDLY BE DELETED. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDERS OF THE AUTHORITI ES BELOW AND PRAYED FOR UPHOLDING THE SAME. 10. HEARD BOTH THE PARTIES AND PERUSED THE RECORDS INCLUDING THE WRITTEN SUBMISSIONS OF THE ASSESSEE BEFORE THE LD. CIT(A) WHICH ARE AVAILABLE AT PAGES 55-58 OF ASSESSEES PAPER BOOK. WE FIND THAT LD. CIT(A) HAS CONFIRMED THE ADDITION WITHOUT PROPERLY CONSIDERING THE SUBMISSION OF ASSESSEE. WE FURTHER FIND THAT PART O F THE ASSESSEES SUBMISSION REQUIRE VERIFICATION AT THE END OF ASSES SING OFFICER. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT TH E MATTER SHOULD GO BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJ UDICATION AFTER PROVIDING PROPER OPPORTUNITY OF BEING HEARD. WE HOLD ACCORDIN GLY. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. 11. GROUND NO.3.1 RELATES TO DISALLOWANCE OF MOTOR CAR DEPRECIATION AND EXPENDITURE OF RS.1 45 013/-. THE ASSESSING OFF ICER FOUND FROM THE BILLS OF ADDITION TO FIXED ASSETS THAT A NEW MOTOR CAR WAS PURCHASED ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 8 DURING THE YEAR IN THE NAME OF SHRI HITEN J SHAH. A DDITION ON ACCOUNT OF CAR IS RS.3 75 843/- AND DEPRECIATION ON IT CLAIMED AT RS.75 169/- @ 20%. THE ASSESSING OFFICER WAS OF THE OPINION THAT FOR CLAIMING DEPRECIATION ON THE ASSET BY THE ASSESSEE-COMPANY T WO BASIC CONDITIONS WERE REQUIRED TO BE FULFILLED I.E. ASSET SHOULD BE OWNED BY THE ASSESSEE-COMPANY AND IT SHOULD BE PUT TO USE FOR TH E BUSINESS PURPOSE. IN THE INSTANT CASE ASSET WAS NOT IN THE NAME OF A SSESSEE-COMPANY BUT IN THE NAME OF DIRECTOR SHRI HITEN J SHAH. SINCE I T WAS A MOVABLE ASSET IT WAS BOUND TO BE USED FOR PERSONAL USE OF THE DIR ECTOR IN WHOSE NAME IT WAS PURCHASED. THE ASSESSEE WAS ASKED TO JUSTIFY CLAIM OF DEPRECIATION ON MOTOR CAR AND RELATED EXPENSE AS T HE SAME WAS PURCHASED IN THE NAME OF DIRECTOR SHRI SHAH THE AS SESSEE REPLIED THAT SAID CAR WAS PURCHASED IN THE NAME OF SAID DIRECTOR AS PER BOARDS RESOLUTION. THE FUNDS OF THE COMPANY WERE UTILIZED FOR PURCHASE OF CAR AND LOAN WAS TAKEN BY THE ASSESSEE-COMPANY AND INST ALLMENT OF THE SAID LOAN WAS ALSO PAID BY ASSESSEE. THE CAR WAS AL SO IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-COMPANY AND INCLUDED IN FIX ED ASSETS AND THE SAME WAS USED FOR THE PURPOSE OF BUSINESS OF THE AS SESSEE-COMPANY. HENCE DEPRECIATION WAS CLAIMED BY THE ASSESSEE-COM PANY. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY ASS ESSING OFFICER AND HE DISALLOWED THE DEPRECIATION CLAIMED BY ASSESSEE. INTEREST EXPENSES OF RS.15 523/- INCURRED BY ASSESSEE ON LOAN FOR PUR CHASE OF CAR WERE ALSO DISALLOWED AND RS.54 321/- I.E. 1/3 OUT OF VEH ICLE EXPENSES OF RS.1 62 964/- WERE ALSO DISALLOWED AS THE SAME COUL D NOT HAVE BEEN INCURRED FOR BUSINESS PURPOSES. THIS ACTION OF ASSE SSING OFFICER WAS CONFIRMED BY LD. CIT(APPEALS) WHEN ASSESSEE FILED A N APPEAL BEFORE HIM. FURTHER AGGRIEVED NOW ASSESSEE IS IN APPEAL B EFORE US. ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 9 12 AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ISSUE REGARDING DEPRECIATION OF CAR IS COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE IN VIEW OF THE HONBLE ITAT AHMEDABAD BENCH IN THE CASE OF AMBUJA SYNTHETICAS MILLS PVT. LTD. V. DCIT RANGE-1 AHMEDABAD. REGARDING OTHER EXPENSES OF MOTOR CAR THE ASSESSEE PLACED RELIANCE ON HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF SAYAJI IRON AND ENGG. CO. V. CIT (2002) 253 ITR 749 (GUJ). ON THE OTHER HAND LD. SR-DR RELIED ON THE ORDERS OF AUTHORITIES BELOW . 13. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORDS WE FIND THAT THERE IS NO DISPUTE THAT CAR WAS PURCHASED BY THE ASSESSEE- COMPANY IN THE NAME OF DIRECTOR SHRI HITEN J SHAH A S PER THE BOARDS RESOLUTION AND FUNDS OF THE ASSESSEE-COMPANY WERE U TILIZED FOR PURCHASE OF CAR AND LOAN WAS ALSO TAKEN BY THE ASSE SSEE-COMPANY AND INSTALLATION OF LOAN AND INTEREST ON LOAN WAS ALSO PAID BY ASSESSEE- COMPANY. THE CAR WAS IN THE BOOKS OF THE ASSESSEE-C OMPANY AND WAS INCLUDED IN THE FIXED ASSET. THERE IS NOTHING ON RE CORD TO SHOW THAT THE CAR WAS NOT USED FOR THE PURPOSE OF BUSINESS. IN TH E LIGHT OF THESE UNDISPUTED FACTS THE RATIO AS LAID DOWN BY THIS TR IBUNAL IN THE CASE OF AMBUJA SYNTHETICAS MILLS PVT. LTD. V. DCIT RANGE-1 AHMEDABAD VIDE ORDER DATED 29-01-2004 IS SQUARELY APPLICABLE TO P RESENT CASE WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- IT IS NOT DISPUTED THAT FUNDS FOR THE PURCHASE OF THE CAR WERE PROVIDED BY THE ASSESSEE COMPANY WHICH IS ALSO REFL ECTED IN THE ACCOUNTS OF THE ASSESSEE COMPANY. IN OUR OPINION W HEN THE CAR IS ACTUALLY USED FOR THE PURPOSE OF THE BUSINESS OF TH E COMPANY DEPRECIATION THERE ON CANNOT BE DENIED. IN VIEW OF THE ABOVE THE ASSESSING OFFICER IS DIREC TED TO ALLOW THE DEPRECIATION CLAIMED BY THE ASSESSEE. ITA NO.650/AHD/2009 A.Y. 2005-0 6 BRAND AID PVT. LTD. V. ITO WD-1(2) ABD PAGE 10 14. AS FAR AS THE INTEREST EXPENSES OF RS.15 5243/- ON LOAN FOR PURCHASE OF CAR AND VEHICLE EXPENSES OF RS.54 321/- ARE CONCERNED SINCE WE HAVE HELD THAT CAR WAS USED FOR THE PURPOS E OF BUSINESS OF THE ASSESSEE-COMPANY AND DEPRECIATION CLAIMED HAS BEEN ALLOWED THESE EXPENSES CANNOT BE DISALLOWED AND THE ADDITION SO M ADE IS HEREBY DELETED. THIS GROUND OF ASSESSEES APPEAL IS ALLOWE D. 15. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 11/03/2011 SD/- SD/- (A.N.PHAUJA) (D.K. TYA GI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED : 11/03/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-VI AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD