Case Law Details
NVR Cinema Vs ITO (ITAT Chennai)
Section 4 of the Partnership Act defines partnership as the relation between person who had agreed to share the profit of the business carried on by all or any of them acting for all. Partners are collectively called as “firm”. Thus Partnership is merely an association of individuals and the firm’s name is only a collective name of those individuals who constitute the firm. Therefore as per common law the partnership firm is not a legal entity. Only the Income Tax law for the purpose of income tax recognize partnership firm as a distinct personality. Therefore the partnership firm can own assets only in the name of the partners. In the case of the assessee firm, the car is owned in the name of the partner of the firm. If the car is purchased from the resource of the firm or the purchase consideration is credited to the partner’s current account or capital account then it shall be construed that the firm is the owner of the car. Further in the case CIT vs. Nidish Transport Corporation in 185 ITR 669 the Hon’ble Kerala High Court had held that “for the transfer of ownership of the motor vehicle, mutation of the name in the certificate of registration was not necessary and the vehicle could be sold and purchased without following the procedure prescribed under Section 31 of the Motor Vehicles Act. The assessees were the owners of the vehicles and they used them in their business and, therefore, they were entitled to depreciation on them.” Similar view was also expressed by the Hon’ble Allahabad High Court in the case CIT Vs. Navdurga Transport Company reported in 235 ITR 158. Therefore we hereby direct the Ld.AO to verify whether the car is acquired from the resource of the firm or the purchase consideration is credited to the partner’s current or capital account and if so grant depreciation as claimed by the assessee. Similarly, we also hereby direct the Ld.AO to grant 50% deduction with respect to the claim of interest expense & insurance expense incurred by the assessee on the car loan since these expenses are revenue in nature and the assessee has used the car for business as well as for personal purpose and the assessee itself had disallowed 50% depreciation in his computation of income. However the life tax has to be added to the cost of the car because it adds to the value of the car. It is also pertinent to mention that the loan processing charges is an expense incurred by the assessee before the acquisition of the asset and therefore the same has also to be added to the cost of the car. Needless to mention that depreciation has to be granted after taking into consideration the life tax and the loan processing charges as the cost of the car. It is ordered accordingly.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-14, Chennai, dated 28.02.2018 in ITA No.318/CIT(A)-14/2016-17 for the assessment year 2014-15 passed U/s.250(6) r.w.s. 143(3) of the Act.
2. The appeal was filed by the assessee with a delay of 24 days. The Ld.AR submitted before us that the assessee had filed miscellaneous petition before the Ld.CIT(A) to rectify certain mistake in his order and was of the firm belief that the issue would be resolved in favour of the assessee at the first appellate authority stage itself. But the said miscellaneous petition has not been disposed off. Subsequently the assessee’s counsel advised to file the appeal before the Tribunal. Hence the delay had occurred. Therefore the Ld. AR pleaded that the delay in filing the appeal may be condoned. The Ld. DR strongly objected to the submission of the Ld. AR. After hearing both sides though we do not appreciate the lapse on the part of the assessee to obtain legal opinion promptly and file the appeal, considering the issues involved in the appeal, in the interest of justice we hereby condone the delay in filing the appeal and proceed to hear the issues on merits.
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