2016 (12) TMI 868 - AT - Income Tax

Tribunal Ruling on Assessment Years 2011-12 & 2012-13: Mixed Decisions on Expenses & Deductions

In the case, the Tribunal partly allowed the assessee's appeals for Assessment Years 2011-12 and 2012-13. The disallowance of expenses for personal use ... Disallowance of Vehicle running and maintenance, Depreciation on car and Telephone expenses on account of personal use - Held that:- It is noticed that the assessee is an individual. There is no log book maintained by the assessee to show that vehicle was run and telephone was used only for business purposes. In these circumstances, element of personal user from these expenses cannot be ruled out. Thus sustenance of disallowance at 10% of these expenses is reasonable, which does not require any interference.- Decided against assessee in part Low household withdrawals - Held that:- As assessee did not furnish any justification for the household withdrawals before the AO addition confirmed. - Decided against assessee Addition u/s 43B - delay in payment of PPF - Held that:- The Hon’ble Supreme Court in the case of CIT v. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT ] has held that the amendment to first proviso and omission of the second proviso to section 43B by the Finance Act, 2003 is retrospective. The Hon’ble Delhi High Court in the case of CIT v. Aimil Limited [2009 (12) TMI 38 - DELHI HIGH COURT ] has allowed deduction in respect of employees’ share when the amount was paid before the due date. When I consider these two judgments, it becomes patent that both the employer’s and employees’ contribution are allowable as deduction if the amount of provident fund etc., though belatedly, but is paid before the due date of filing of return u/s 139(1) of the Act. Adverting to the facts of the instant case, it is seen as an admitted position that the assessee deposited its and employees’ share in EPF etc. before the due date u/s 139(1) of the Act. Thus deletion of the addition confirmed. - Decided against revenue Issues:1. Disallowance of expenses for personal use.2. Addition on account of low drawings.3. Claim for fresh deduction not made in the return.Analysis:*Assessment Year 2011-12:*1. The first issue pertains to the disallowance of Rs. 2,01,121 for vehicle running, maintenance, depreciation on car, and telephone expenses due to personal use. The AO disallowed 10% of these expenses considering personal use, which was upheld in the first appeal. The Tribunal found that without a log book or evidence of business use, personal use could not be ruled out. Thus, the disallowance was deemed reasonable, and the ground was not allowed.2. The second issue concerns the addition of Rs. 54,483 due to low drawings. The AO estimated household expenses at Rs. 30,000 per month, leading to the addition. The CIT(A) reduced the addition to Rs. 54,483, noting a computation error by the AO. As the assessee failed to justify the withdrawals, the Tribunal upheld the addition, deeming it justified based on the facts and circumstances. Hence, this ground was not allowed.3. The final issue involves a fresh deduction claim of Rs. 8,01,463 not initially claimed but later presented before the AO. The claim was based on timely deposit of ESI and PF, which the AO rejected, citing the need for a revised return. However, the Tribunal referred to precedents allowing deductions for timely payments made before the return filing due date. Relying on relevant judgments, the Tribunal ordered the deletion of the addition, allowing the claim. Consequently, this ground was allowed.*Assessment Year 2012-13:*1. The first issue relates to the disallowance of Rs. 50,000 for vehicle running, maintenance, and telephone expenses due to personal use. Since the assessee did not maintain a log book or provide evidence of business use, the Tribunal considered the disallowance reasonable, upholding the decision. Thus, this ground was not allowed.2. The only other issue concerns a fresh deduction claim of Rs. 1,09,763 for late payment of EPF, not initially claimed but later raised. The claim was rejected by both the AO and the CIT(A). However, the Tribunal, following the decision on a similar issue in the previous assessment year, allowed the deduction. Therefore, this ground was allowed.In conclusion, both appeals by the assessee were partly allowed, with the Tribunal granting relief on specific grounds based on legal precedents and factual considerations.