NARESH KUMAR v. INCOME TAX OFFICER
[Citation -1986-LL-0929-5]

Citation 1986-LL-0929-5
Appellant Name NARESH KUMAR
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 29/09/1986
Assessment Year 1984-85
Judgment View Judgment
Keyword Tags capital account
Bot Summary: The withdrawals were mode from his capital account in the books of M/s Gupta Construction Co. The assessee claimed depreciation on the car as according to him it was used for business purposes of the assessee in the firms where he was a partner. The ITO observed that the assessee's capital account in M/s Gupta Construction Co. id not show any expenditure to have been incurred for running car. On these facts, the ITO came to the conclusion that the assessee did use the car for business purposes. The assessee preferred an appeal before the AAC. It was stated before him that the assessee had withdrawn a sum of Rs. 10,000 on 19th Oct., 1983 from the books of M/s Gupta Construction Co. which was for maintenance and running expenses of the car. Counsel for the assessee has submitted that the ITO did not allow any opportunity to the assessee to prove his case of user. On the contrary, he observed by referring to the accounts of the assessee in the two firms that there were no withdrawals for the running of the car. Counsel for the assessees that the ITO did not give any opportunity to the assessee to prove the use of the car for business purposes.


This appeal by assessee is directed against order of AAC relating to asst. yr. 1984-85. only ground is that AAC has wrongly held view in not allowing depreciation on car claimed by assessee in his original income-tax return. depreciation on car may be allowed in full as car has been used for purpose of running of business. assessee is individual. He is partner in M/s Gupta Construction C o . and M/s Gupta Builders. accounting period of assessee for assessment year under appeal ended on 31st March, 1984. He purchased car on 6th Jan., 1984 for Rs. 75,000. withdrawals were mode from his capital account in books of M/s Gupta Construction Co. assessee claimed depreciation on car as according to him it was used for business purposes of assessee in firms where he was partner. ITO observed that assessee's capital account in M/s Gupta Construction Co. id not show any expenditure to have been incurred for running car. He also referred to his account in books of M/s Gupta Builders which account also showed only credits but no debits. On these facts, ITO came to conclusion that assessee did use car for business purposes. Therefore, no depreciation was admissible. claim was accordingly rejected. assessee preferred appeal before AAC. It was stated before him that assessee had withdrawn sum of Rs. 10,000 on 19th Oct., 1983 from books of M/s Gupta Construction Co. which was for maintenance and running expenses of car. AAC has observed that "I am in agreement with views of ITO that withdrawal of Rs. 10,000 made on 19th Oct., 1983 could not be for car which was purchased on 6th Jan., 1984". He further observed that there were no withdrawals for purposes of car and it was not possible to believe that appellant would have withdrawn sum of money three months before actual purchase of car for purposes of running expenses. He also noted that this amount was withdrawn for household expenses. He, therefore, observed that assessee was not able to prove that this car was actually used for business purposes during accounting period relevant to assessment year under appeal. He, therefore, confirmed order of ITO. ld. Counsel for assessee has submitted that ITO did not allow any opportunity to assessee to prove his case of user. On contrary, he observed by referring to accounts of assessee in two firms that there were no withdrawals for running of car. He further urged that AAC has not properly appreciated facts of case. He further submitted that depreciation was allowable under s. 67 of Act and in support of this contention relied on order of Chandigarh Bench of Tribunal dt. 30th April, 1982 in ITA No. 63 of 1982 in case of Ram Murti Sood. ld. D.R. on other hand, has supported orders of authorities below. I have carefully considered rival submissions. I am in agreement with ld. Counsel for assessees that ITO did not give any opportunity to assessee to prove use of car for business purposes. On contrary he was swayed away by fact that there were no specific withdrawals for this purpose in his personal account in two firms. I also notice that AAC has also not properly appreciated facts of case. He has observed that he was in agreement with views of ITO that withdrawal of Rs. 10,000 made on 19th Oct., 1983 could not be for car which has purchased on 6th Jan., 1984. I notice that there is no such discussion in order of ITO. As per Appellate order of AAC ITO was also not present at time of hearing of appeal. claim of assessee has, therefore, not been properly appreciated by lower authorities. claim of assessee is that he withdrew Rs. 10,000 on 19th Oct., 1983 part of which was utilised for running of car also. This submission has been rejected by lower authorities summarily without looking into magnitude of his household expenses. I have also looked into copy of account of assessee in M/s Gupta Construction Co. and find that prior to 19th Oct., 1983 from 1st April, 1983 there are no withdrawals for house hold expenses. Even after 19th Oct., 1983 there are no such withdrawals. In such circumstances, I set aside order of AAC for fresh determination after taking into consideration magnitude of household expenses of assessee and availability of funds from these withdrawals for user of car. While predetermining issue, he will also take into consideration decision of Tribunal dt. 30th April, 1982 referred to above. In result, appeal is allowed for statistics. *** NARESH KUMAR v. INCOME TAX OFFICER
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