TaxTMI 
TaxTMI 
2022 (11) TMI 1251
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....ssessee has assailed the impugned order on the following grounds of appeal: "1. In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition of Rs.23,15,025/- made on account of value of Mercedes car gifted to appellant and also erred in not allowing depreciation on the vehicle which was used for business. 2. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of Rs.3,23,898/- made out of interest expenses u/s.40A(2)(b) of the Income-tax Act, 1961. 3. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (App....
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....ted in the capital account may not be treated as her income u/s. 28(iv) of the Act, the assesee failed to come forth with any reply. In order to verify the factual position the A.O made necessary verification with M/s. J.K Tyres & Industries Ltd., which in reply stated that the said vehicle was gifted to the assessee for having achieved the prescribed sales target and was purely in the nature of a business transaction. As the assessee vide letter dated 29.02.2016 offered the value of the aforesaid car of Rs.23,15,025/- for tax as her income from business/profession, therefore, the A.O made an addition of the said amount to her returned income. It was however requested by the assessee that depreciation on the aforesaid car which was being us....
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....income in her income tax return. It was observed by the A.O that the assessee was availing Cash Credit Account with SBI with a limit of Rs.80 lacs on which interest was being charged by the bank @12.35%. It was also observed by the A.O that the assessee had not utilized its Cash Credit Account to its maximum limit of Rs.80 lacs through out the year. In reply, it was the claim of the assessee that the cash credit limit of Rs.47 lacs was increased to Rs.80 Lacs only in February, 2013. Considering the fact that loans were easily available in the market from financial institutions and private parties @ 12% to 15%, the A.O was of the view that the interest paid by the assessee to the aforementioned persons and to Smt. Chandra Khatuja @18% was ex....
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.... Also, it was observed by the A.O that the assessee had not come forth with the bills against which the said amount was claimed to have been reduced for the reason that goods received were not found to be desired quality. The A.O thus made an addition of Rs.84,958/- to the returned income of the assessee. Accordingly, on the basis of the aforesaid observations the A.O vide his order passed u/s.143(3), dated 23.03.2016 assessed the income of the assessee at Rs.34,85,510/-. 6. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without any success. 7. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me. As the assessee appellant despite having been intima....
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....so, there is no denying of the fact that the assessee had in the course of the assessment proceedings vide her letter dated 29.02.2016 offered the value of the aforesaid car of Rs.23,15,025/- for tax u/s.28(iv) of the Act. Considering the aforesaid facts which had not been rebutted by the assessee, I am of the considered view that no infirmity does emerge from the observation of the A.O who had rightly brought the value of the car to tax u/s. 28(iv) of the Act. Apropos, the assessee's claim for depreciation on the aforesaid Mercedez Benz car, I find that as observed by the A.O as the assessee had not only claimed any depreciation on the said car during the year under consideration, but had in fact claimed the depreciation on the entire valu....
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....on that as in comparison to the loans raised from a bank which involves substantial formalities, hidden charges and offering of collateral securities etc., the raising of unsecured loan from a family member involves neither of such issues. Considering the aforesaid facts, I am unable to concur with the very basis leading to drawing of adverse inference by the lower authorities, and thus, is of the considered view that the matter in all fairness requires to be restored to the file of the A.O, with a direction to re-adjudicate the issue after considering the rates at which unsecured loans at the relevant point of time would be available. Needless to say, the A.O in the course of setaside proceeding shall grant a reasonable opportunity of bein....