Case Law Details
Akshaye Khanna Vs ACIT (ITAT Mumbai)
Assessee had been using speed-boat for travelling from Mumbai to Alibaug for his professional activities like acting, practice, health, maintenance, story telling etc. and hence, business asset has been utilized by assessee for commutation for professional work and therefore, the expenditure against the same was allowable to the assessee like any other travelling mode like motor-car etc. Another important fact to note is that the speed-boat forms part of the 15% block of Fixed Assets which is evident from depreciation chart as placed on record and therefore, constitute business / professional asset for the assessee. It is further noted that the assessee has claimed impugned depreciation on opening written down value of the speed-boat which is being carried forward from earlier AY and already merged under 15% block of fixed assets. Further, the assessee has suo-moto disallowed 25% of the expenditure on estimated basis to account for personal element / usage. Therefore, considering the totality of facts, impugned additions could not be sustained. Reversing the stand of lower authorities, we allow the appeal.
FULL TEXT OF THE ITAT JUDGMENT
1. Aforesaid appeal by assessee for Assessment Year [AY] 2012-13 agitate the order of Ld. Commissioner of Income Tax (Appeals)-4, Mumbai [CIT(A)], Appeal No. CIT(A)-4/IT-11/ACIT-16(1)/2014-15 dated 12/06/2017 qua confirmation of certain additions of Rs.9,22,380/- on account of expenditure on speed-boat owned by the assessee.
2.1 Briefly stated the assessee being resident individual is a film actor by profession. The assessment for impugned AY was framed by Ld. Assistant Commissioner of Income Tax-16(1), Mumbai [AO] in scrutiny assessment u/s 143(3) on 03/12/2014 wherein the income of the assessee was assessed at Rs.124.39 Lacs after certain additions as against returned income of Rs.105.30 Lacs e-filed by the assessee on 26/09/2012. The assessee has been saddled with disallowance of Rs.9,22,380/- on account of expenditure on speed-boat owned by him which is the sole subject matter of this appeal.
2.2 During assessment proceedings, it transpired that the assessee claimed aggregate expenditure on account of speed-boat amounting to Rs.9,22,382/- which comprised-off of depreciation of Rs.7,53,790/- & insurance expenses of Rs.1,68,592/-. Similar expenditure was disallowed during earlier AYs 2009-10 & 2010-11 also. The assessee defended the same by submitting that the assessee had farm house at Alibaug and creative part of the professional work including reading, evaluating stories and scripts, acting practice, speech improvements, story sessions etc. was being done from the premises at Alibaug and it was very convenient to use speed-boat than any other mode of transport as he was able to travel from Walkeshwar, Mumbai to Alibaug at minimum time. It was further submitted that the assessee earned a sum of Rs.96,900/- as boat hire charges during impugned AY and further the assessee, suo-moto disallowed 25% of the expenditure, being personal in nature. However, in the absence of any cogent material on record to support the submissions and following the reasoning of AY 2010-11, Ld. AO disallowed the aforesaid expenditure of Rs.9.22 Lacs and added the same to the income of the assessee.
3. Aggrieved, the assessee agitated the same without any success before Ld. CIT(A) vide impugned order dated 12/06/2017 wherein Ld. CIT(A) confirmed the stand of Ld. AO on the premise that the assessee was unable to demonstrate with verifiable evidence that such speed-boat was actually utilized for professional activities and not for personal purposes. Aggrieved, the assessee is in further appeal before us.
4. The Ld. Authorized Representative for Assessee [AR], Shri Dilkhush Malesha reiterating the submissions contended that the speed-boat was used for professional purposes by the assessee and similar claim in AYs 2009-10 & 2010-11 has been allowed by first appellate authority. The same has been controverted by Ld. JCIT-DR, Shri Ashish Kumar who submitted that the onus to prove that the speed-boat was used for professional purposes squarely lied on the assessee.
5. We have carefully perused the rival contentions and perused relevant material on record. Upon perusal, we find that It is undisputed fact that the assessee was saddled with similar additions in AYs 2009-10 & 2010-11, however, the claim of the assessee was allowed by Ld. first appellate authority in both the years. The appellate order for AY 2009-10 records a clear-cut finding that the assessee had been using speed-boat for travelling from Mumbai to Alibaug for his professional activities like acting, practice, health, maintenance, story telling etc. and hence, business asset has been utilized by assessee for commutation for professional work and therefore, the expenditure against the same was allowable to the assessee like any other travelling mode like motor-car etc. Another important fact to note is that the speed-boat forms part of the 15% block of Fixed Assets which is evident from depreciation chart as placed on record and therefore, constitute business / professional asset for the assessee. It is further noted that the assessee has claimed impugned depreciation on opening written down value of the speed-boat which is being carried forward from earlier AY and already merged under 15% block of fixed assets. Further, the assessee has suo-moto disallowed 25% of the expenditure on estimated basis to account for personal element / usage. Therefore, considering the totality of facts, impugned additions could not be sustained. Reversing the stand of lower authorities, we allow the appeal.
6. In nutshell, the appeal stands allowed.
Order pronounced in the open court on 05th December, 2018
