Tribunal denies deduction claim for car purchase under section 32AB The Tribunal ruled against the assessee, disallowing the deduction claim for the purchase of a car under section 32AB. The Tribunal held that a car falls ...
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Tribunal denies deduction claim for car purchase under section 32AB
The Tribunal ruled against the assessee, disallowing the deduction claim for the purchase of a car under section 32AB. The Tribunal held that a car falls under the definition of a road transport vehicle, making it ineligible for deduction. Additionally, the Tribunal found that the Rs. 20,000 component paid for the car purchase did not qualify for deduction under section 32AB, as sub-section (4) covers both clauses of sub-section (1), and any amount used for a road transport vehicle purchase is not deductible. The application for rectification was dismissed.
Issues: 1. Deduction claim on the purchase of a car under section 32AB. 2. Interpretation of sub-section (4) of section 32AB. 3. Rectification of Tribunal order regarding the component of Rs. 20,000 paid for the car purchase.
Detailed Analysis:
1. The assessee claimed a deduction of Rs. 41,195 for the purchase of a car, which was considered a plant or machinery. The Assessing Officer rejected the claim citing that a car is a road transport vehicle under section 32AB(4). The CIT(A) allowed the claim, but the Tribunal ruled that a car falls under the definition of a road transport vehicle, disallowing the deduction under section 32AB(1).
2. The assessee contended that Rs. 20,000 of the car price was paid as a repayment of a term loan under a scheme framed by the Central Government under section 32AB(1). The Tribunal was urged to consider this component separately for deduction. However, the Tribunal found that sub-section (4) of section 32AB covers both clauses (a) and (b) of sub-section (1), and any amount utilized for the purchase of a road transport vehicle is not deductible.
3. The Tribunal rejected the assessee's argument, stating that sub-section (4) applies to both clauses of sub-section (1), and the legislative intent was not to restrict it to clause (b) only. The Tribunal emphasized that subordinate legislation, such as the Investment Deposit Account Scheme of 1986, cannot override the provisions of the principal legislation. Therefore, the Tribunal held that no rectification of the order was needed as the Rs. 20,000 component did not qualify for a deduction under section 32AB. The application for rectification was dismissed.
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