ITAT Ahmedabad: Higher Depreciation Rate & Reduced Disallowance of Travel Expenses The Appellate Tribunal ITAT Ahmedabad ruled in favor of the assessee regarding the depreciation rate on the motor car, allowing depreciation at 50% ...
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The Appellate Tribunal ITAT Ahmedabad ruled in favor of the assessee regarding the depreciation rate on the motor car, allowing depreciation at 50% instead of 15%. In the case of disallowance of travelling expenses, the Tribunal partially allowed the appeal, reducing the disallowance to 15% of the Directors' travelling expenses. The decision was pronounced on 30th March 2017.
Issues involved: 1. Depreciation rate on motor car 2. Disallowance of travelling expenses
Depreciation rate on motor car: The appeal was against the CIT(A)'s order confirming the Assessing Officer's decision to allow depreciation on a motor car at 15% instead of the 50% claimed by the assessee. The motor car was purchased in the previous assessment year for business purposes. The assessee argued that as per CBDT Circular No.10/2009, depreciation should be allowed at 50% for commercial vehicles acquired in a specific period. The Tribunal referred to the Income-tax Rules and a Co-ordinate Bench decision supporting the assessee's claim. The Tribunal held in favor of the assessee, allowing depreciation at 50% for the motor car purchased for business purposes.
Disallowance of travelling expenses: The second issue was the disallowance of travelling expenses by the Assessing Officer, which was confirmed by the CIT(A). The disallowance was based on the inability of the assessee to substantiate the business nexus of the travelling expenses incurred by the Directors. The Tribunal noted that while the expenses were incurred, the business nexus was not adequately proven. Considering the audited books of accounts and lack of major adverse findings, the Tribunal partially allowed the appeal, restricting the disallowance to 15% of the Directors' travelling expenses. As a result, the disallowance was reduced to Rs. 56,110. The Tribunal partly allowed the appeal on this ground.
In conclusion, the Tribunal allowed the appeal partly, ruling in favor of the assessee regarding the depreciation rate on the motor car and partially in the case of disallowance of travelling expenses. The decision was pronounced on 30th March 2017 at Ahmedabad by the Appellate Tribunal ITAT Ahmedabad.
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