Depreciation being a statutory allowance and hence cannot be restricted on the basis of personal use

I.T.O. Vs Bhagchand Jain (ITAT Jaipur)

Disallowance of depreciation on vehicles is also not warranted with the facts and merits of the case as depreciation being a statutory allowance and hence cannot be restricted on the basis of personal use as has been held by Coordinate Bench of this Tribunal in ITA no. 373/JP/2002 in case of Triveni Pharma (2006) 35 T.W. 64 (Jp) and also in Kailash Chand Gupta v/s DCIT 35 Tax World 36 (Jp). Considering the totality of the facts and circumstances as well as case laws relied upon by the ld. AR, we found merit in the contentions raised by the assessee, therefore, we direct to delete the additions confirmed by the ld. CIT(A) with regard to various expenses.

Expense cannot be disallowed on ad hoc basis, simply on mere suspicion, surmises and conjectures

We found that, as per the the assessee has maintained complete Books of account and other subsidiary record and all the expenses are fully supported by vouchers. A bare reading of the order of lower authority shall reveal that in almost all the cases the disallowances have been made on ad hoc basis, simply on mere suspicion, surmises and conjectures. No specific instance of any nature whatsoever has been given by the AO in the impugned order to support his contention with the documentary evidence that the expenditures were incurred for non-business purposes, element of personal user was there. An allegation remains a mere allegation unless proved. Suspicion can-not take the place of reality, are the settled principles as has been held by the Hon’ble Supreme Court in the case of Dhakeshwari cotton Mills 26 ITR 775 (SC). All the expenses were fully supported by vouchers which were even produced before the AO during the remand proceeding and the same were admitted by him [refer Pg-10 of ld. CIT(A)]. The Freight, Telephone expenses, Petrol & Diesel Expenses and Vehicle Expenses were dully supported by Bills and vouchers etc. In these expenses there was no possibility of personal user. It is a settled law that a businessman is the best judge to take care of its own interest & to take decisions and the AO is not supposed to intervene therein nor he can replace the assessee. Here, whatever decisions were taken by the assessee, has to be understood as taken out of commercial expediency. In this regard, we rely on the decisions in the case of T.T. (P) Ltd. v/s CIT (1980) 121 ITR 551 (Kar), CIT v/s Udhoji Shrikrishnadas (1983) 139 ITR 827 (MP) and JK Woolen Manufacturers 72 ITR 612 (SC).

It was submitted by the ld. AR that looking to a huge turnover of more than Rs.9.40crores (approx.), claim of expenditure is otherwise very meager. Thus such a meager claim to achieve such a huge turnover is not at all unjustified. All these expenses were incurred exclusively for businesses purpose and are under the provisions of the Act. We found merit in the contentions raised by the assessee, therefore, we direct to delete the additions confirmed by the ld. CIT(A) with regard to various expenses.

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