Case Law Details
Desh Raj Arora Vs ITO (ITAT Delhi)
The issue under consideration is whether the depreciation on car purchased by assessee can be disallowed only because the payment towards purchase of the same is made through his personal account?
In present case, the assessee purchased the car in his personal name. The payment of the purchase of the car was also made from the personal account. Therefore the learned assessing officer took a view that assessee has used this car for his personal purposes and therefore the depreciation on purchase of the new car was disallowed. He further noted that assessee has not debited the expenses related to the car in the profit and loss account and therefore it is used for the personal purposes and not for the purposes of the business. The assessee preferred appeal before the learned CIT(A) against the above disallowance who confirmed the addition.
ITAT states that, the assessee is a proprietor of M/s Diamond Tool (India) carrying on the trading of hardware and tools. As assessee is an individual so naturally the assessee will purchase the car in his own name only. Therefore, ITAT do not find any reason that assessee should not be allowed depreciation on the car, which is used for the purposes of his business. Merely because assessee has made payment for purchase of car from his personal account does not mean that it is not the business asset of the assessee. Further as the learned assessing officer has not found any expenditure debited to the profit and loss account, but it cannot be said that depreciation on the asset is not allowable to the assessee. The assessee is owning an asset, which is used for the purposes of the business of the assessee. The learned assessing officer has presumed that assessee is not using motor car for his business purposes, which cannot be the basis of disallowance of depreciation. Accordingly ITAT direct the learned assessing officer to delete the disallowance of depreciation. Accordingly, the appeal filed by the assessee is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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