DR. SANJAY AGARWALA, MUMBAI v. THE ASST.C.I.T. 11(3), MUMBAI

ITA 6781/MUM/2008 | 2003-2004
Pronouncement Date: 18-03-2011 | Result: Allowed

Appeal Details

RSA Number 678119914 RSA 2008
Assessee PAN AADPA6415C
Bench Mumbai
Appeal Number ITA 6781/MUM/2008
Duration Of Justice 2 year(s) 3 month(s) 23 day(s)
Appellant DR. SANJAY AGARWALA, MUMBAI
Respondent THE ASST.C.I.T. 11(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 18-03-2011
Date Of Final Hearing 18-01-2011
Next Hearing Date 18-01-2011
Assessment Year 2003-2004
Appeal Filed On 25-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M. JAGTAP AM AND SHRI N.V. VASUDEV AN JM I.T.A.NO. 6781/MUM/2008 ASSESSMENT YEAR : 2003-04 DR. SANJAY AGARWALA 26 AGARWAL HOUSE 2 ND FLOOR D ROAD CHURCHGATE MUMBAI 400 020. PAN: AADPA 6415 C VS. THE ASST. COMMISSIONER OF INCOME- TAX-11(3) AAYAKAR BHAVAN MUMBAI 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJIT C. SHAH RESPONDENT BY : SHRI D. SONGATE O R D E R PER P.M. JAGTAP AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) CENTRAL-VII MUMBAI DATED 21.08.2008. 2 THE ISSUE RAISED IN GROUND NO. 1 RELATES TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT( A) BY RESTRICTING THE DEPRECIATION CLAIMED BY THE ASSESSEE ON MOTOR-CAR A T 50% TO 20%. 3. THE ASSESSEE IN THE PRESENT CASE IS A PRACTICING ORTHOPAEDIC SURGEON. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON WAS FILED BY HIM ON 15.10.2003 DECLARING TOTAL INCOME OF RS.73 38 649/. ON THE MOTOR-CAR PURCHASED DURING THE SAID YEAR DEPRECIATION AT A HIGHER RATE OF 50% WAS CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE SAID CAR PURCHASED FOR THE PURPOSE OF HIS PROFESSION WAS A COMMERCIAL VEHICLE. THIS CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE RESTRICTED THE CLAI M OF THE ASSESSEE FOR DEPRECIATION ON MOTOR-CAR PURCHASED DURING THE YEAR UNDER CONSIDERATION TO THE NORMAL RATE OF 20%. ITA NO.6781/M/2008 DR. SANJAY AGARWALA 2 4. BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED ON B EHALF OF THE ASSESSEE THAT NEW COMMERCIAL VEHICLE WHICH WAS ACQUIRED ON O R AFTER 1 ST DAY OF APRIL 2001 BUT BEFORE THE 1 ST DAY OF APRIL 2002 AND IS PUT TO USE BEFORE THE 1 ST DAY OF APRIL 2002 FOR THE PURPOSE OF BUSINESS OR PROFESSION WAS ENTITLED FOR DEPRECIATION AT A HIGHER RATE OF 50%. IN THIS REGARD RELIANCE WAS P LACED BY THE ASSESSEE ON THE DEFINITION OF COMMERCIAL VEHICLE GIVEN IN SECTION 2 OF THE MOTOR VEHICLES ACT 1988 ACCORDING TO WHICH LIGHT MOTOR VEHICLE AND ME DIUM PASSENGER MOTOR VEHICLE WERE INCLUDED IN THE DEFINITION OF COMMERCIAL VEH ICLE. THIS STAND OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LEARNED CI T(A) AND HE PROCEEDED TO UPHOLD THE ACTION OF THE ASSESSING OFFICER IN REST RICTING THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON MOTOR-CAR AT 20%. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THIS ISSUE IS SQUARE LY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL RENDERED I N THE CASE OF DCIT VS. M/S. E- MERCK INDIA LTD. VIDE ITS ORDER DATED 22 ND OCTOBER 2008 IN ITA NO. 3997/MUM/2004 WHEREIN AFTER TAKING INTO CONSIDERAT ION THE RELEVANT ENTRY IN THE DEPRECIATION SCHEDULE AS WELL AS THE DEFINITION OF COMMERCIAL VEHICLE GIVEN IN SECTION 2 OF THE MOTOR VEHICLES ACT 1988 IT WAS H ELD BY THE TRIBUNAL THAT THE ASSESSEE WAS ENTITLED FOR DEPRECIATION AT A HIGHER RATE ON MOTOR-CAR WHICH WAS USED FOR THE PURPOSE OF HIS BUSINESS OR PROFESSION. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL IN THE CASE OF DCIT V. M/S . E-MERCK INDIA LTD.(SUPRA) WE REVERSE THE IMPUGNED ORDER OF THE LEARNED CIT(A) O N THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION AT HIGHER R ATE ON THE MOTOR-CAR AS CLAIMED BY THE ASSESSEE. GROUND NO. 1 OF THE ASSESSEES AP PEAL IS ACCORDINGLY ALLOWED. 6. THE ISSUE RAISED IN GROUND NO.2 RELATES TO THE D ISALLOWANCE OF RS.16 388/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) OUT OF INTEREST PAID BY THE ASSESSEE ON MOTOR-CAR LOAN. ITA NO.6781/M/2008 DR. SANJAY AGARWALA 3 7. IN HIS PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD DEBITED TOTAL EXPENSES OF RS. 2 51 502 /- INCURRED IN RELATION TO MOTOR-CAR INCLUDING INTEREST OF RS.81 942/- PAID ON LOAN TAKEN FOR PURCHASE OF MOTOR-CAR. SINCE NO LOG BOOK WAS MAINTAINED BY THE ASSESSEE TO SHOW THAT THE MOTOR-CAR WAS WHOLLY AND EXCLUSIVELY USED FOR THE P URPOSE OF HIS PROFESSION THE ASSESSING OFFICER DISALLOWED 20% OF THE EXPENSES CL AIMED IN RELATION TO MOTOR CAR FOR PERSONAL USE. THE ASSESSEE ACCEPTED THE SAID D ISALLOWANCE IN RESPECT OF OTHER EXPENSES EXCEPT THE DISALLOWANCE MADE OUT OF INTERE ST PAID ON LOAN TAKEN FOR THE PURCHASE OF MOTOR-CAR WHICH HE DISPUTED IN THE APP EAL FILED BEFORE THE LEARNED CIT(A). THE CONTENTION RAISED ON BEHALF OF THE ASSE SSEE ON THIS ISSUE BEFORE THE LEARNED CIT(A) WAS THAT THE RELEVANT LOAN HAVING BE EN ENTIRELY USED FOR THE PURCHASE OF PURCHASE OF MOTOR-CAR AS BUSINESS ASS ET INTEREST PAID THEREON WAS FULLY ALLOWABLE AS DEDUCTION UNDER SECTION 36(1)(II I) OF THE ACT. THIS CONTENTION OF THE ASSESSEE HOWEVER WAS NOT FOUND ACCEPTABLE BY THE LEARNED CIT(A) AND CONSIDERING THAT 20% OF THE USE OF MOTOR-CAR FOR PE RSONAL PURPOSE WAS ACCEPTED BY THE ASSESSEE HE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF INTEREST PAID ON MOTOR-CAR LOAN. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS PER THE PROVISIONS OF SECTION 36(1)(III) THE ASSESSEE IS ENTITLED TO DEDUCTION ON ACCOUNT OF INTEREST PAI D IN RESPECT OF CAPITAL BORROWED FOR THE PURPOSES OF HIS BUSINESS OR PROFESSION. IN THE PRESENT CASE THE ENTIRE AMOUNT OF LOAN BORROWED WAS UTILIZED BY THE ASSESSE E FOR PURCHASE OF MOTOR-CAR AND THE SAID ASSET BEING BUSINESS ASSET OF THE ASSE SSEE WE ARE OF THE VIEW THAT INTEREST PAID ON THE SAID LOAN WAS FULLY ALLOWABLE AS DEDUCTION AS PER THE PROVISIONS OF SECTION 36(1)(III) IRRESPECTIVE OF TH E FACT THAT THE MOTOR-CAR PURCHASED BY THE ASSESSEE FOR THE PURPOSE OF HIS PROFESSION W AS PARTLY USED FOR PERSONAL PURPOSES. WE THEREFORE DELETE THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER ITA NO.6781/M/2008 DR. SANJAY AGARWALA 4 AND CONFIRMED BY THE LEARNED CIT(A) OUT OF INTEREST PAID BY THE ASSESSEE ON MOTOR-CAR LOAN AND ALLOW GROUND NO.2 OF THE ASSESSE ES APPEAL. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF MARCH 2011. SD. SD. (N.V.VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 18 TH MARCH 2011. KN COPY TO: 1. THE ASSESSEE 2. THE ACIT-11(3) MUMBAI 3. THE CIT-XI MUMBAI 4. THE CIT(A) CENTRAL-VII MUMBAI 5. THE DR E BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI