×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This appeal in ITA No.798/Mum/2016 for A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-24, Mumbai in appeal No.CIT(A)-24/ITO-15(3)(3)/IT-223/2016-17 dated 26/12/2017 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 20/12/2016 by the ld. Income Tax Officer – 15(3)(3), Mumbai (hereinafter referred to as ld. AO).
2. The Ground Nos.1 and 6 raised by the assessee are general in nature and does not require any specific adjudication.
3. The Ground No. 2 raised by the assessee is with regard to disallowance of interest paid to M/s Nayan Gems in the sum of Rs 2,85,041/-. The Ground No. 3 raised by the assessee is with regard to disallowance of interest paid to M/s Casper Entertainment Pvt Ltd , Pragati Gems Pvt Ltd and Duke Business Pvt Ltd in the sums of Rs 1,64,384/- ; Rs 1,57,151/- and Rs 82,191/- respectively totaling to Rs 4,03,726/-.
3.1. We have heard the rival submissions. The ld AO observed that the loans borrowed from aforesaid parties in Asst Year 2013-14 were treated to be ingenuine and hence the interest paid to those parties are not allowable. Accordingly, the ld AO disallowed the interest paid on loans to aforesaid parties in the sums of Rs 2,85,041/- and Rs 4,03,726/-. This action of the ld AO was upheld by the ld CITA. We find that this tribunal in assessee’s own case for the Asst Year 2013-14 in ITA No. 6557/Mum/2017 dated 3.5.2019 had held the loans received from aforesaid parties to be genuine and deleted the additions made u/s 68 of the Act. We hold that once the loans were held to be genuine, the interest paid on such loans are also allowable expenditure. It is not the case of the revenue that the borrowed funds from aforesaid parties were diverted by the assessee for non-business purposes. The assessee is a builder and developer and deriving business income from such projects. The borrowings were utilized only for the purpose of business which fact remain undisputed by the revenue and hence the interest paid on such loans, which were treated as genuine in Asst Year 2013-14 by the order of this tribunal dated 3.5.2019 supra, becomes an allowable deduction. Hence we direct the ld AO to grant deduction of interest paid on such loans in the sums of Rs 2,85,041/- and Rs 4,03,726/- . Accordingly, the Ground Nos. 2 and 3 raised by the assessee are allowed.
4. The Ground No.4 raised by the assessee is with regard to the disallowance of depreciation claimed on motor car in the sum of Rs 10,80,912/-.
4.1. We have heard the rival submissions. It is not in dispute that the motor car bearing registration number MH04- FZ-6299 was purchased in the name of the Director of the assessee company and not in the name of the assessee company , for which the assessee had explained that the same was done in order to reduce the incidence of indirect taxes leviable thereon. It is not in dispute that the assessee company had borrowed vehicle loan of Rs 34,00,000/- from M/s Daimler Financial Services (I) Pvt Ltd for purchase of motor car. This loan borrowed was duly disclosed under the head ‘Secured Loan’ in the balance sheet of the assessee company. It is not in dispute that the motor car was registered on 25.3.2013. Once the vehicle is registered, the fact of the vehicle being put to use cannot be doubted. Infact even before the registration of the vehicle, the vehicle could be used by an assessee subject to the maximum limits of kilometers permitted under the Motor Vehicles Act. Hence the fact of motor car being put to use before 31.3.2013 cannot be doubted in the instant case. It is not in dispute that the motor car was duly reflected as a fixed asset in the balance sheet of the assessee company as at 31.3.2013 and depreciation claimed accordingly. It is not in dispute that the assessee company had claimed only 50% of eligible rate of depreciation on motor car since the car was used for less than 180 days in Asst Year 2013-14 as per the provisions of section 32 of the Act as it is being used for its business. The only reason for disallowance of depreciation on motor car is that the assessee company is not the owner of the said motor car as it was in the name of director of assessee company. We find that the assessee company had given reasonable explanation for registering the vehicle in the name of the individual