Case Law Details
ACIT Vs Metallizing Equipment Co. (P) Ltd. (ITAT Jodhpur)
In Hero Cycles Ltd. v. Asstt. CIT (1999) 63 TTJ (Chd) 665. Tribunal, Chandigarh, has held that the expenditure on telephone installed at the residences of directors is not covered by section 38(2) and expenses in case of a company cannot be for non-business purposes and the same cannot be disallowed. In Bhorot Motor Parcel Service v. ITO (1992) 44 TTJ (Hud) 404, Tribunal, Hyderabad, has held that partly disallowing of expenditure on telephone installed at the residence of managing partner on the presumption of personal use is not justified. It was also observed that as the branches of the assessee-firm were spread over different cities and towns, the managing partner was required to contact them for the purpose of business. In (1989) 25 TTJ (Del) 602, Tribunal, Delhi, has held that telephone provision at the residence of managing director of the assessee-company was for business purpose of the company, and that if the managing director used some of the calls for personal purposes, that would not make the expenditure incurred by the company as not for the purposes of business. It has also been held that so far as the assessee-company is concerned, the entire amount will be allowable as business expenditure. The learned Commissioner (Appeals) has, however, sustained the disallowance observing that the element of personal use involved in the claims of telephone expenses and vehicle maintenances is not completely ruled out considering the above-referred judicial decisions, we are of the view that in the case of a company, there cannot be a disallowance on account of personal user of telephone. In the instant case, there is no material on record to support that there was non-business user of the telephone installed at the residence of the directors.
Similar is the position in respect of vehicles. As such, considering all the facts and circumstances of the case, we find the disallowances on telephone expenses and vehicle maintenance expenses sustained by the learned Commissioner (Appeals) to be not justified which we delete accordingly. Consequential to the above, the disallowance of 1/5th depreciation is also not tenable which we accordingly delete.’
Windmill eligible for Additional depreciation and has nothing to do with the power industry
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