2019 (9) TMI 1128

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....i Company (P) Ltd., the assessee, is engaged in manufacturing and sale of Beedi. While making the assessment for the assessment year 2013-14, the assessee claimed depreciation on BMW car purchased during the assessment year. On examination, the AO found that the Director of the assessee company purchased the car by availing car loan from HDFC Bank in his name and the car was registered in his name. On examination, the assessee replied that the initial down payment and the monthly installments of the vehicle loan was paid from the funds of the company, the asset value has been accounted for in its books of account, the car has been put into use only for the purpose of company's business, therefore, the interest paid on the car loan, the car ....

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....e company. Therefore, the Ld.CIT(A) upheld the orders of the AO. On the issue of proportionate disallowance of interest on the loans to related parties, the Ld.CIT(A) dismissed the assessee's plea. Aggrieved against those orders, the assessee filed these appeals. 5. The Ld.AR pleaded that the Ld.CIT(A) failed to note that the car was accounted in the books of account and was used for the purpose of business. Even though it was registered in the name of the Director, the car was not given to the Director as perquisite. Therefore the Ld CIT(A) ought to have deleted the disallowances of depreciation, interest and maintenance expenses of the car. In this regard, the Ld.AR relied on the decision of the Ahmedabad ITAT in the case of Swagat ....

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....tted that the assessee is having sufficient interest free funds. Therefore, the interest disallowance made by the AO is unwarranted and hence pleaded that the disallowance made by the AO may be deleted. 7. Per contra, the Ld.DR supported the orders of the lower authorities. 8. We heard the rival submissions and gone through relevant material. On the ownership of the high valued BMW car, the ld CIT(A) recorded findings that it lies in the name of the Director, who purchased the car for his own use and there may not be any doubt that such high valued car could have always been used by the said Director only. On the usage of the car by the assessee, the ld CIT(A) held that during the course of assessment proceedings, the assessee could n....