Tribunal rules no personal use expenses to be attributed to company assessee.

The Tribunal allowed the appeal of the assessee, holding that no personal use of car or telephone expenses could be attributed to a company assessee. Citing a decision of the Hon'ble Gujarat High Court, the Tribunal concluded that adhoc disallowance for personal use by company assesses was not justified. As the Departmental Representative failed to provide a contrary decision, the Tribunal deleted the disallowance of 1/6th of telephone and car expenses incurred by the assessee.

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Issues:
Adhoc disallowance of Telephone and car expenses for personal use by the assessee.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) related to the assessment year 2010-11. The primary issue raised in the appeal was the adhoc disallowance of Telephone and car expenses on the grounds that they were incurred for personal use by the assessee. The Assessing Officer disallowed 1/6th of the Telephone expenses and car expenses as no log book had been maintained, raising the possibility of personal use. The Commissioner of Income Tax (Appeals) upheld the disallowance made by the Assessing Officer.

During the proceedings, the counsel for the assessee argued that as the assessee was a company, no personal use of any asset could be attributed to it. The counsel relied on various decisions to support this contention. The Departmental Representative supported the order of the Commissioner of Income Tax (Appeals).

After hearing both parties, the Tribunal found merit in the contention of the counsel for the assessee. The Tribunal referred to the decision of the Hon'ble Gujarat High Court, which held that no personal use of car or telephone expenses could be attributed to a company assessee. The Tribunal noted that no disallowance on an adhoc basis could be made for personal use of car and telephone expenses for company assesses. As no contrary decision was presented by the Departmental Representative, the Tribunal deleted the disallowance made on the Telephone and car expenses incurred by the assessee.

Consequently, the Tribunal allowed the appeal of the assessee, and the disallowance of 1/6th of telephone and car expenses was removed.

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