Case Law Details
Sh. Tejinder Singh Vs DCIT (ITAT Chandigarh)
ITAT Chandigarh held that for claiming deduction u/s 57(iii) of the Income Tax Act primary motive of incurring such expenditure should be directly relatable to the earning of income falling under the head ‘income from other sources’. Such expenditure are deductible even if there is net loss.
Facts-
During the course of assessment proceedings, AO noted that the assessee had given his car on lease to the employer company and had received a lease rent of Rs. 4,08,000/- as ‘income from other sources’. The assessee had shown a net loss on account of lease to the tune of Rs. 4,33,020/ after claiming depreciation of Rs. 4,39,662/-, interest on loan amounting to Rs. 3,19,572/- repairs and maintenance amounting to Rs. 41,970/- and insurance amounting to Rs. 39,816/-.
AO noted that depreciation was allowable only if the asset had been used for the purpose of business whereas, the assessee was not in the business of car leasing and furthermore the said car was not registered as a Taxi. Based on this observation, the AO proceeded to disallow such entire expenses claimed u/s 57 of the Income Tax Act, 1961 by the assessee which were to the tune of Rs. 8,41,020/-.
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