IN INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI, BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER . I.T. A. No.967 Mds 2015 ( Assessm ent Year: 2005-06) Mr. K.Natarajan, Vs Deputy Commissioner of Prop. Sri Ganesh Transport, Income Tax, 68, Karuppannan Street, S.P.Pudur, Central Circle, Salem. Namakkal-637 001. PAN: ABLPN082 9N ( Appellant) ( Respondent) Appellant by : Mr.T.S.Lakshmi Venkatraman, CA Respondent by : Mr. Supriyo Pal, JCIT Da t e of h e ar in g : 12th July, 2016 D at e of Pr on oun c em ent : 15th September, 2016 O R D E R Per A. Mohan Alankamony, AM:- This appeal is filed by assessee aggrieved by order of learned Commissioner of Income Tax (Appeals)- 18, Chennai dated 27.02.2015 in ITA No.287 14-15 passed under section 143(3) r.w.s. 250(6) of Act. 2. assessee has raised several grounds in its appeal, however, cruxes of issues are as follows:- (i) learned Commissioner of Income Tax (Appeals) has erred in sustaining disallowance of `3,59,000 - made by learned Assessing Officer on account of bad debts. (ii) learned Commissioner of Income Tax (Appeals) has erred in sustaining addition of `8,80,931 - 2 ITA No.967 Mds 2015 made by learned Assessing Officer under section 41(1)of Act. (iii) learned Commissioner of Income Tax (Appeals) has erred in sustaining disallowance of `10,000 - made by learned Assessing Officer being donation given for Tsunami. (iv) learned Commissioner of Income Tax (Appeals) has erred in sustaining disallowance of 20% of car maintenance expenses amounting to `39,620 - by estimating same to be for personal use. (v) learned Commissioner of Income Tax (Appeals) has erred in sustaining disallowance of `23,790 - made by learned Assessing Officer being 20% of telephone expenses - by estimating same to be for personal use. (vi) learned Commissioner of Income Tax (Appeals) has erred in sustaining interest amount of `86,503 - levied by learned Assessing Officer under section 234B of Act. 3. Brief facts of case are that assessee is individual engaged in business of transport contract and also earning income from other sources filed his return of income for assessment year 2005-06 disclosing his income of Rs.6,63,230 - and agricultural income of Rs.1,12,700 -. After assessment being initially processed under section 143(1) of Act, case was taken up for 3 ITA No.967 Mds 2015 scrutiny wherein learned Assessing Officer made various disallowances. Ground No.1: bad debts:- 4.1 assessee had claimed bad debts amounting to Rs.3,59,000 - being bank guarantee furnished by assessee in favour of ONGC which was invoked due to non- performance of contract. learned Assessing Officer disallowed same because assessee had claimed it as bad debts and aforesaid loss of assessee cannot be construed as bad debts. learned Assessing Officer also rejected claim of assessee for granting deduction as business expenditure. On appeal, learned Commissioner of Income Tax (Appeals) confirmed order of learned Assessing Officer by agreeing with view of learned Assessing Officer. 4.2 After hearing both sides, we are of considered view that assessee had genuinely incurred loss of Rs.3,59,000 - during course of business. Therefore, we are of considered view that assessee would be 4 ITA No.967 Mds 2015 entitled for deduction of Rs.3,59,000 - as business loss. Hence, we hereby direct learned Assessing Officer to delete addition made for Rs.3,59,000 -. Ground no.2: Addition of Rs.8,80,931 - under section 41(1) of Act 5.1 assessee had credited sum of Rs.8,80,931 - to his capital account during relevant assessment year. It was observed by learned Assessing Officer that assessee had build up credit of Rs.8,80,931 - over period 1.4.1999 to 08.12.2001 by claiming same as hire charges payable by him to his father Shri V. Kaliappan in respect of four lorries owned by Shri Kaliappan. It was further observed that Mr.Kaliappan expired on 11.2.1997 and assessee was operating all four lorries owned by his father. When queried, assessee explained that since lorries belong to his late father revenue from same has to be credited in his father s HUF account and by mistake it was credited to his father s account. learned Assessing Officer rejected claim of assessee by treating it to be 5 ITA No.967 Mds 2015 bogus and further invoking provisions of section 41(1) of Act and brought amount of Rs.8,80,931 - to tax. 5.2 On appeal, learned Commissioner of Income Tax (Appeals) by agreeing to view of learned Assessing Officer confirmed his order on this issue. 5.3 After hearing both sides, we find merit in contention of learned Authorized Representative. accumulated revenue receipts of his late father and income generated from lorries owned by his late father will devolve to his father s HUF and if same is given to assessee, it cannot be construed as his income, needless to mention that income generated by lorries of assessee s late father will be taxable only in hands of assessee s father s HUF. Therefore, we hereby direct learned Assessing Officer to delete addition of Rs.8,80,931 - made in hands of assessee. Ground No.3: Donation given for Tsunami: 6 ITA No.967 Mds 2015 6. assessee had paid sum of Rs.10,000 - as donation to Chief Minister s Tsunami fund. learned Assessing Officer denied granting benefit under section 80G of Act because it was not supported by valid receipt or certificate. On appeal, learned Commissioner of Income Tax (Appeals) confirmed order of learned Assessing Officer accepting with his view. After perusing orders of Revenue we find that assessee had furnished Xerox copy of demand draft drawn in favour of Chief Minister s Tsunami fund in support of his claim. Revenue could have verified claim of assessee from bank from which assessee has obtained demand draft. We are of considered view that this generous donation of assessee should not be discouraged when genuinely he has made donation to Chief Minister s fund towards Tsunami. Therefore, we hereby direct learned Assessing Officer to grant benefit of section 80G of Act towards donation of Rs 10,000 - made to Chief Minister s fund. 7 ITA No.967 Mds 2015 Ground No.4: disallowance of 20% of car maintenance expenses: 7. assessee had incurred expenses of Rs, 1,98,107 - towards maintenance of his car, fuel expenses, driver s salary and depreciation. Since assessee has given in writing for disallowing of 20% of such expenditure being Rs.39,620 - towards personal use, learned Assessing Officer has disallowed same. On appeal, learned Commissioner of Income Tax (Appeals) confirmed order of learned Assessing Officer. On perusing matter, we do not find any merit in claim of assessee on this issue at this stage. Since assessee has not maintained details of usage of his vehicle, there is every possibility that he would have used his car for personal purposes which is claimed as deduction. Accepting same, assessee himself has agreed for disallowance of 20% of such expenditure which was accepted by learned Assessing Officer. In this situation, we do not understand reason for assessee to carry matter on appeal before learned Commissioner of Income Tax (Appeals) or before us. Therefore, we do not find any merit in claim of 8 ITA No.967 Mds 2015 assessee and accordingly confirm orders of Revenue on this issue. Ground No.5 : Disallowance of telephone expenses:- 8. assessee had debited sum of Rs.1,18,970 - towards telephone expenses for which he has not maintained any details. Therefore, learned Assessing Officer made disallowance of 20% of such expenditure amounting to Rs.23,790 - as there is possibility of assessee using telephone for personal use. On appeal, learned Commissioner of Income Tax (Appeals) confirmed order of learned Assessing Officer. Since apprehensions of Revenue for personal use cannot be denied, we do not find it necessary to interfere with their orders on this issue. Ground No.6: Interest under section 234B of Act.: 9. assessee has agitated against levy of interest under section 234B of Act by citing decision of Mumbai Bench of Tribunal in case of Data Matrix Ltd. Vs. ACIT reported in 110 ITD 24 . Since decision of this 9 ITA No.967 Mds 2015 case was not brought to notice of learned Assessing Officer, we remit back this issue to file of learned Assessing Officer to consider above mentioned decision and decide issue thereafter afresh. 10. In result, appeal of assessee is partly allowed for statistical purposes as indicated herein above. Order pronounced in open court on 15th September, 2016 Sd - Sd - ( Duvvuru RL Reddy ) ( A. Mohan Alankamony ) Judicial Member Accountant Member Chennai, Dated 15th September, 2016 somu Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. GF K. Natarajan v. Deputy Commissioner of Income-tax, Central Circle, Salem