Income Tax Appellate Tribunal - Mumbai
Nibr Bullion P. Ltd, Mumbai vs Dcit Cc 3, Mumbai on 17 July, 2018
आयकर अपील य अ धकरण, मुंबई यायपीठ, 'बी',मुंबई।
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, 'B' MUMBAI ी जो ग दर संह, या यक सद य एवं ी राजेश कुमार, लेखा सद य, के सम Before Shri Joginder Singh, Judicial Member, and Shri Rajesh Kumar, Accountant Member ITA Nos.5522 to 5524/Mum/2011 Assessment Years: 2006-07, 2007-08 & 2008-09 M/s. NIBR Bullion Pvt. DCIT, Ltd., बनाम/ C.C.-3, R.No.903, 9th 78-A Shaikh Memon Floor, Old CGO Bldg.
Vs.
Street, Annexe, M.K. Road,
Mumbai - 400 002 Mumbai -400 020
( नधा!"रती /Assessee) (राज व /Revenue)
PAN. No. AABCN7138C
नधा!"रती क ओर से / Assessee by Shri Vijay Mehta
राज व क ओर से / Revenue by Shri Debashis Chande CIT-
DR ु वाई क& तार'ख / Date of Hearing :
सन 17/07/2018
आदे श क& तार'ख /Date of Order: 17/07/2018
2 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1
NIBR Bullion Pvt. Ltd.
आदे श / O R D E R
Per Joginder Singh (Judicial Member)
This bunch of three appeals is by the assessee for Assessment Years 2006-07, 2007-08 and 2008-09, challenging the respective orders of the Ld. First Appellate Authority, Mumbai, wherein, common grounds have been raised.
2. First, we shall take up the appeal for Assessment Year 2006-07(ITA No.5522/Mum/2011), wherein, the first ground raised by the assessee pertains to upholding the order passed by the Ld. Assessing Officer under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (hereinafter the Act). During hearing of this appeal, the ld. counsel for the assessee, Shri Vijay Mehta, did not press this ground to which the ld. CIT-DR, Shri Devashis Chande, had no objection, therefore, this ground is dismissed as not pressed.
3. The next ground i.e. ground no.2 pertains to sustaining the addition of Rs.4,91,607/- on account of gross profit on alleged purchases made through entry. The Ld. counsel explained that the assessee is trader in bullion, 3 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
wherein, the normal gross profit is @ 0.4 to 0.5 and the addition was made merely on the basis of statement recorded from the supplier, where he confessed that these are accommodation entries. However, the statement was retracted by him on 21/11/2008 and even no opportunity was given to the assessee to cross examine him and finally the addition was made at the rate of 1%. It was pleaded that the credit of gross profit declared by the assessee may be given. The Ld. CIT-DR defended the addition by placing reliance upon the assessment order as well as the order the of the Ld. Commissioner of Income Tax (Appeal). 3.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of trading in silvers bars and gold bullion, declared turnover of Rs.298, 75,97,709/- by showing a gross profit of Rs.1,56,31,880/-, which amounts to 0.523% of the turnover. The comparative chart of gross profit for different Assessment Years has been shown/mentioned in para-6 of the assessment order, which ranges from 0.523% to 0.529%. A search action under section 132 of the Act was 4 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
carried out in NIBR Bullion Group, its directors, associates and relative persons on 25/09/2008. The flagship company of the group is M/s NIBR Bullion Pvt. Ltd. (the present assessee) and the business of this group is controlled and managed by sons of Late Charandas J. Arora. Shri Ajay C. Arora, Shri Harmesh Arora and Shri Anil C. Arora are the directors of the assessee company. Notice under section 143(2) of the Act and thereafter notice under section 142(1) along with questionnaire were issued/served upon the assessee. The assessee attended the proceedings from time to time and furnished the relevant documents, bank account and other details before the Ld. Assessing Officer. The Ld. Assessing Officer made addition of Rs.4,91,607/- by estimating the gross profit @ 1% of the purchases amounting to Rs.10,30,624/- for purchase of silver.
3.2. On appeal before the Ld. Commissioner of Income Tax (Appeal), the addition made by the Ld. Assessing Officer was upheld, which is under challenge before this Tribunal.
5 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1
NIBR Bullion Pvt. Ltd.
3.3. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we have already mentioned the facts in earlier paras and detailed facts along with the submissions of the assessee have been narrate in the impugned order. The gist of the submissions have been narrated in para-26 of the impugned order, wherein, it has been mentioned that the payments were made through banking channel, the copies of the purchase and sale bill clearly mentions the description of goods, rate and the total amount paid by the parties and on the date of purchase of silver from a particular party, identically similar purchases were made from other parties and the assessee furnished the comparative rate chart. It is observed that the rate from the concerned parties is lower than the purchases made from other vendors which fortifies the case of the assessee and it is a factual position that the transaction of purchase and sales are duly recorded in the books and returns have been filed on which applicable VAT of 1% has 6 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
been paid to the VAT authorities. The transactions are duly recorded in the stock register and every purchase can be identified with the corresponding sales. It seems that the addition has been made on the basis of statement tendered by Shri S. K. Bajaj and that statement was retracted on 21/11/2008. The cross examination was never provided to the assessee and the whole addition is based upon estimation only, thus, considering the factual matrix and interest of Revenue, we deem it appropriate to adopt the gross profit @ 0.7 minus already GP declared by the assessee and against 1% estimated by the Ld. Assessing Officer. Thus, this ground of the assessee is partly allowed. Our aforesaid conclusion/order will also cover identical grounds for the Assessment Year 2007-08 (ITA No.5523/Mum/2011) and Assessment Year 2008-09 (ITA No.5524/Mum/2011) also. Thus, this ground is partly allowed.
4. The next ground raised by the assessee pertains to sustaining the addition of Rs.5,15,312/- made under section 69C of the Act on account of alleged commission paid on purchase of silver bills. The crux of the argument is 7 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
that the commission was estimated by the Ld. Assessing Officer @0.5%, which may be reduced to 0.2%. Our attention was invited to page -8 of the paper book (para 7.4) and also para-16 (page-8) of the impugned order. However, the Ld. CIT-DR defended the estimation of payment of commission by the Ld. Assessing Officer. 4.1. We have considered the rival submissions and perused the material available on record. It is noted that during search proceedings, statement of Shri S. K. Bajaj was recorded on 25/09/2008, where he allegedly confess that he merely issued sale bills to the assessee without actual delivery of goods and he received cheque against the bills and he received Rs.50 to 60 as commission per Kg. of silver. He further tendered that he was filing sales tax return also. However, the statement was later on retracted and initially even he did not accept that he was giving accommodation entries. It is noted that silver was purchased from M/a Art Jewellery @ Rs.23,011/- per kg on 07/05/2008 and on the same day also purchased from M/s Krishna Trading Company @ Rs.23,000/- per kg. Similarly, Silver was purchased from the bank of Nova 8 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
Scotia @ Rs.22,584/- per kg on 25/04/2008 and on 26/04/2008 @ Rs.22,222/- per kg and similarly on 26/04/2008 from M/s Krishna Trading Company @ Rs.22,638/- per kg. These purchases clearly indicate that the prices of bullion may vary on day to day basis and even within hours/minutes. The purchases are made through banking channel and the purchase and the sales are also recorded in the books, thus, the purchases are made at prevailing market rates. The commission has been estimated by the Ld. Assessing Officer @ 0.5%, which as per the assessee is highly excessive, considering the totality of facts, we deem it appropriate that the estimation depends upon the state of mind and individual perception and there is always a scope of variation from individual to individual. Thus, considering the totality of facts it will meet the end of justice, if the commission is estimated at the rate of 0.3%, in place of 0.5% made by the Ld. Assessing Officer and 0.2% requested by the Ld. counsel for the assessee. The Ld. Assessing Officer is directed accordingly. This ground of the assessee is partly allowed. Our aforesaid conclusion/order will also cover identical 9 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
grounds for the Assessment Year 2007-08 (ITA No.5523/Mum/2011) and Assessment Year 2008-09 (ITA No.5524/Mum/2011) also. Thus, this ground is partly allowed in the respective appeals.
5. Grounds numbers 4 & 5 pertains to confirming the disallowance of Rs.1,92,114/-, being 1/6th of car and telephone expenses and further disallowance at the rate of 15% of entertainment expenses for personal use. 5.1. During hearing the ld. counsel for the assessee contended that it is a case of company wherein no disallowance can be made on the basis of personal use for which reliance was placed upon the decision of Hon'ble Gujarat High Court in Sayaji Iron & Engg. Co. vs .Commissioner of Income-tax (253 ITR 749) and Dinesh Mills Ltd. v. Commissioner of Income-tax [2002] 122 Taxman 384 (Gujarat). However, the Ld. CIT-DR defended the disallowance made by the Ld. Assessing Officer by contending that personal use cannot be ruled out. 5.2. We have considered the rival submissions and perused the material available on record. In view of the 10 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
above, we are reproducing hereunder the relevant portion from the decision in the case of Sayaji Iron & Engg. Company vs CIT ((supra)) for ready reference and analysis:-
"At the instance of the assessee, the following question has been referred to this Court for its opinion under the provisions of section 256(1) of the Income-tax Act, 1961 ('the Act'), by the Tribunal, Ahmedabad Bench 'C' :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing 1/6th of the total car expenses and depreciation claimed by the assessee because of the personal use of the car entrusted to the director by it ?"
2. The learned advocate Shri Manish Shah for Mr. J.P. Shah has appeared for the applicant-assessee whereas learned advocate Shri Bharat Naik has appeared for the respondent.
3. The assessee is a private limited company. For the purpose of its business, it owned several vehicles. For the assessment year 1979-80, the assessee had incurred expenditure to the tune of Rs. 96,653 on the vehicles maintained by it. The assessee had claimed the said amount as business expenditure, but the Assessing Officer came to the conclusion that all the vehicles of the assessee-company were not exclusively used for the business and as the directors were also using the vehicles of the company for their personal use, the Assessing Officer disallowed 1/6th of the expenditure incurred by the assessee on the vehicles.
4. Being aggrieved by the said order, the assessee filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) dismissed the appeal. The assessee thereupon filed second appeal before the Tribunal but the Tribunal also confirmed the disallowance and dismissed the appeal.
5. The learned advocate Shri Manish Shah, appearing for the assessee, has submitted that the disallowance to the extent of 1/6th of the expenditure is not justified for the reason that the assessee-company, by way of perquisite, had permitted its directors to use the vehicles. He has submitted that as part of salary and perquisites to the directors of the company, the directors were entitled to use the vehicles of the company and, therefore, it cannot be said that the directors were using the vehicles for their personal use and, therefore, disallowance of part of the expenditure incurred by the company for the maintenance of the vehicles was not justified. He has also submitted that without having recourse to the provisions of sections 40(c) and 40A of the Act, the Assessing Officer should not have disallowed the expenditure in question.
6. It has also been submitted by the learned advocate appearing for the assessee that except for the assessment year 1979-80, for all other 11 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
assessment years the expenditure incurred by the assessee-company towards the vehicles was allowed in toto. It has also been submitted that whenever any expenditure incurred by the assessee towards maintenance of vehicles was disallowed by the Assessing Officer, the disallowance was finally set aside. It has been submitted by the learned advocate that as the expenditure was incurred for the purpose of business by way of salary and perquisites given to the directors, the said expenditure ought not to have been disallowed.
7. On the other hand, the learned advocate Shri Bharat Naik, appearing for the revenue, has submitted that the directors of the assessee-company were using the vehicles for their personal use and as the directors were not using the vehicles exclusively for the purpose of the business of the company, the Tribunal was justified in disallowing 1/6th expenditure of the cars and depreciation claimed by the assessee. He has, therefore, submitted that the view expressed by the Tribunal regarding disallowance of 1/6th of the expenditure is justified.
8. We have heard the learned advocates and have also perused the impugned orders.
9. In our opinion, as the directors of the assessee were entitled to use the vehicles of the assessee-company for their personal use as per the terms and conditions on which they were appointed, it was not proper on the part of the Assessing Officer to disallow 1/6th of the expenditure incurred by the assessee on maintenance of its vehicles. Section 309 of the Companies Act, 1956 provides the modality for determining the remuneration payable to directors, including any managing or full-time director. Such remuneration is payable either as stated in the articles of association of the company or in accordance with the resolution or if provided by articles, by a special resolution which might be passed by the company in the general meeting. This payment of remuneration is subject to overall limits of managerial remuneration laid down in section 198 of the Act. What is more material for the purpose of the present controversy is Explanation to section 198 of the Companies Act which permits and provides that 'remuneration' shall include (a) any expenditure incurred in providing any rent-free accommodation, etc., (b) any expenditure incurred in providing any other benefit or amenity free of charge or at a concessional rate, (c) any expenditure which would have been incurred by the director but for such expenditure having been incurred by the company, (d) any expenditure incurred by the company for the purpose of any insurance on the life, etc. Therefore, it is clear that the expenditure incurred by the assessee-company on maintenance of vehicles which were available to the directors for their personal use would fall within the meaning of 'remuneration' as defined in the Explanation to section 198 of the Companies Act, and once such remuneration is fixed as provided in section 309 of the Companies Act, it was not possible to state that the assessee-company incurred an expenditure for the personal use of the directors, i.e.,even if there was any personal use by the directors, the same was as per the terms and conditions of service and insofar as the assessee- company was concerned, it was a business expenditure and not disallowable as such.
12 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1
NIBR Bullion Pvt. Ltd.
9.1 There is one more aspect of the matter which requires to be considered. The assessee which is a private limited company is a distinct assessable entity as per definition of 'person' under section 2(31) of the Act. Therefore, it cannot be stated that when the vehicles are used by the directors, 'even if they are personally used by the directors' the vehicles are personally used by the company, because a limited company by its very nature cannot have any 'personal use'. The limited company is an inanimate person and there cannot be anything personal about such an entity. The view that we are adopting is supported by the provisions of section 40(c) and section 40A(5) of the Act.
9.2 It is pertinent to note that except for the assessment year in question, for no other assessment year the expenditure in question has been disallowed. We see no reason for the Tribunal to take a different view for this assessment year, especially when it is an undisputed fact that in the past all such disallowances were deleted by the Tribunal and the said decision was not challenged.
9.3 The Tribunal has, in our view unfortunately, upheld the order of the Commissioner (Appeals) wherein the Tribunal's earlier orders in the assessee's own case have been distinguished by giving reasons which are, to say the least, unwarranted. The earlier orders of the Tribunal are distinguished by stating that even if there is no personal user of cars by the company, it would yet be user for 'non-business purpose'. As already stated hereinbefore once the expenditure in question is in terms as provided in sections 309 and 198 of the Companies Act, 1956, there cannot be any 'non business' purpose insofar as the assessee-company is concerned.
9.4 In relation to the aforesaid approach of the Commissioner (Appeals) and the Tribunal, we cannot do better than reiterate what the Madras High Court has stated in the case of CIT v. L.G. Ramamurthi [1977] 110 ITR 453 :
"No Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another Bench of the same Tribunal on the same facts. It may be that the members who constituted the Tribunal and decided on the earlier occasion were different from the members who decided the case on the present occasion. But what is relevant is not the personality of the officers presiding over the Tribunal or participating in the hearing but the Tribunal as an institution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the Tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence. The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over the Courts or the Tribunals and not reached objectively on the basis of the facts placed before the authorities.13 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1
NIBR Bullion Pvt. Ltd.
If a Bench of a Tribunal on the identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself. That is the reason why in a High Court, if a Single Judge takes a view different from the one taken by another judge on a question of law, he does not finally pronounce his view and the matter is referred to a Division Bench. Similarly, if a Division Bench differs from the view taken by another Division Bench, it does not express disagreement and pronounces its different views, but has the matter posted before a Fuller Bench for considering the question. If that is the position even with regard to a question of law, the position will be a fortiori with regard to a question of fact. If the Tribunal wants to take an opinion different from the one taken by an earlier Bench, it should place the matter before the President of the Tribunal so that he could have the case referred to a Full Bench of the Tribunal consisting of three or more members for which there is provision in the Income-tax Act itself." (p. 453) We are in respectful agreement with the aforesaid view.
10. In the circumstances, in our opinion, the Tribunal was wrong while disallowing 1/6th of the total car expenditure and depreciation claimed by the assessee on account of the personal use of the cars which were used by the directors. We, therefore, answer the question in the negative, i.e., in favour of the assessee and against the revenue.
11. The reference is disposed of, accordingly, with no order as to costs.
5.3. Likewise, Hon'ble Gujarat High Court in the case of Dinesh Mills Ltd. vs CIT ((supra)), vide order dated 05/12/2001 held as under:-
"The Tribunal, Ahmedabad Bench 'A' has referred the following questions at the instance of the assessee as well as Commissioner under section 256(1) of the Income-tax Act, 1961 ('the Act') : At the instance of assessee :
Assessment year : 1977-78 only in (R.A. No. 223) (Ahd.) of 1987. "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing the embezzlement loss of Rs. 7,80,000 ?"
(For assessment years : 1979-80 and 1980-81) (In R.A. Nos. 224 and 225) (Ahd.) of 1987.
"2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing the commission paid to the 14 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
Directors as perquisite in the assessment years 1979-80 and 1980-81, for the purposes of section 40(c) of the Act ?"
At the instance of revenue :
(Assessment years 1977-78, 1979-80 and 1980-81) (R.A. Nos. 241, 242 and 243) (Ahd.) of 1987 :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law to hold that sum of Rs. 20,000 out of motor car expenses in each of the assessment years 1977-78, 1979-80 and 1980-81 was not disallowable as personal and non-business use of motor car in the hands of the assessee ?"
For assessment year 1979-80 :
(R.A. No. 242) (Ahd.) of 1987 :
"2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to the depreciation as claimed and 1/7th portion of the depreciation of motor car was not disallowable ?"
2. The assessment years are 1977-78, 1979-80 and 1980-81, and the relevant accounting periods are calendar years 1976 to 1979, respectively. The assessee is a limited company carrying on business in textiles and maintains the accounts by mercantile system of accounting.
3. Insofar as the first question at the instance of the assessee is concerned, the same is relatable to assessment year 1977-78 only. The assessee- company employed one Shri M.J. Patel as clerk in the accounts department with effect from 2-7-1973. This clerk misappropriated various accounts during the tenure of his service as per following details :
From 29-1-1974 to 30-8-1974 (11 occasions) Rs. 4,40,000 From 5-2-1975 to 12-10-1975 (8 occasions) Rs. 5,20,000 From 9-1-1976 to 26-4-1976 (4 occasions) Rs. 3,80,000 Rs. 13,40,000
4. The said loss was discovered during the year under consideration. However, the ITO was of the view that the extent of the loss remained indeterminate and unknown during the year under consideration, and the amount of actual loss could be known only when the assessee entered into compromise decree with the defaulter employee in calendar year 1980 relevant to assessment year 1981-82. Accordingly, the assessee's claim for loss was disallowed.
5. The Commissioner (Appeals) in the appeal filed by the assessee held that the claim of the assessee that the entire loss of Rs. 13,40,000 should be allowed in the year under consideration and the stand of the ITO that not a single rupee claimed should be allowed as embezzlement loss were extreme positions and reasonable and just view would fall somewhere between respective positions taken by the assessee and the department. According to 15 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
the Commissioner (Appeals), the whole amount of embezzlement had to be considered as comprising of two parts, viz., the part which could reasonably be estimated to be recoverable and the other part, if any, which could not be reasonably expected or estimated to be recoverable. This position had to be ascertained at the end of the previous year, viz., as on 31-12-1976. Based on this line of reasoning, the Commissioner (Appeals) held that a sum of Rs. 7,20,000, the assessee could have reasonably hoped to recover while the balance of Rs. 6,20,000 was lost by the assessee for all time to come. Accordingly, he granted deduction to the tune of Rs. 6,20,000 in the assessment year 1977-78.
6. The assessee carried the matter in appeal before the Tribunal and relying upon the Circular issued by the Central Board of Direct Taxes being Circular No. 35-D(XLVII-20) of 1965, dated 24-11-1965 submitted that the approach of the learned Commissioner (Appeals) was not correct. It was pointed out that in a later year the assessee had, in fact, recovered an amount of Rs. 5,60,704 and, thus, the balance of Rs. 7,79,000 was a total loss which ought to be allowed as a deduction. The revenue, on the other hand, supported the order of the Commissioner (Appeals). The Tribunal reproduced the last paragraph of the circular and held that the said circular provides for two aspects : firstly, that such embezzlement loss incurred by the assessee because of the employee had to be treated to be incidental to business and the second part was that the deduction had to be allowed in the year in which the loss was discovered. The Tribunal accepted the position that there was no dispute as to loss being incidental to business. Insofar as the year in which the loss was allowable, the Tribunal took it upon itself that even if it was established that the loss was discovered during the year under consideration, it was yet open to the Tribunal to ascertain whether there was any loss, in fact, incurred or not. Referring to the Supreme Court decision in the case of Associated Banking Corpn. of India Ltd. v. CIT [1965] 56 ITR 1, the Tribunal held that till the point of time reasonable prospects of recovery of the amount embezzled existed, it could not be stated that a trading loss in a commercial sense had been incurred. Further, referring to the suit which was filed by the assessee against the employee and the compromise which had been arrived at during the calendar year 1980, the Tribunal held that till that point of time the assessee entertained the hopes regarding recovery of loss and, hence, the full amount of Rs. 13,40,000 was not allowable during the assessment year under consideration. In light of this finding, the Tribunal upheld the order of the Commissioner (Appeals) and rejected the appeal of the assessee.
7. We have heard Mr. J.P. Shah, the learned advocate appearing on behalf of the assessee and Mr. Akil Qureshi, the learned counsel appearing on behalf of the revenue. Both the sides reiterated the contention raised by them before the Tribunal. Mr. Shah made a statement to the effect that in assessment year 1981-82, when the compromise decree was arrived at, though the assessee had claimed the balance amount of loss which was not allowed as a deduction during the year under consideration, the same was not allowed in light of the fact that the assessee was claiming entire loss during the year under consideration. He further stated that out of abundant caution even if in the appeal or further proceedings pertaining to the 16 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
assessment year 1981-82, any deduction from the balance of loss was allowed, the petitioner-assessee would not raise any objection and surrender the same for the purpose of taxability.
8. In view of the fact that Mr. Shah has made a statement to the effect that no deduction has been allowed in any subsequent year, we hold that the assessee would be entitled to deduction of loss during the year under consideration as this is the year in which the loss on account of embezzlement was, in fact, discovered. There is no dispute as to the fact that the loss is incidental to business carried on by the assessee. The Tribunal while giving effect to this judgment shall ascertain the allowability or otherwise of the loss in light of the aforesaid statement made by Mr. Shah and then allow deduction of the balance amount of loss in the year under consideration.
9. Insofar as the question No. 2 at the instance of the assessee, pertaining to assessment years 1979-80 and 1980-81 is concerned, Mr. Shah has not pressed the said question and, hence, it is not necessary to answer the same.
10. Both the questions referred to us at the instance of the revenue stand answered by decision of this Court in the case of Sayaji Iron & Engg. Co. v. CIT [2002] 253 ITR 7491 and, hence, it is not necessary to set out the facts and submissions in detail.
11. Question No. 1, referred at the instance of the assessee, is therefore answered in the negative, i.e., in favour of the assessee and against the revenue.
12. Question No. 2, referred at the instance of the assessee, is left unanswered as the same has not been pressed on behalf of the assessee.
13. Both the questions referred at the instance of the revenue are answered in the affirmative, i.e., in favour of the assessee and against the revenue.
14. The reference stands disposed of accordingly with no order as to costs." In the light of the above decisions from Hon'ble High Court, it can be concluded that the vehicles of the assessee company are used as per terms and conditions of the service and since the assessee is a private limited company, it is assessable as a distinct assessable entity, as per the definition of 'person' under section 2(31) of the Act. The Hon'ble High Court clearly held that it could not be stated that when the vehicles were used by the directors 'even if 17 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1 NIBR Bullion Pvt. Ltd.
they were personally used by the directors', the vehicles were personally used by the company, because a limited company by its very nature cannot have any 'personal use'. The limited company is an inanimate person and there cannot be anything personal about such an entity. The view was supported by the provision of section 40(c) and section 40A(5) of the Act. Once the expenditure in question was in terms as provided in sections 309 and 198 of the Companies Act, there could not be any 'non-business' purpose insofar as the assessee-company was concerned. While coming to the aforesaid conclusion, Hon'ble High Court followed the decision from Hon'ble Madras High Court in CIT vs L.G. Ramamurthi (1977) 110 ITR 543 (Mad.). No contrary decisions or facts were brought to our notice by the Revenue. Thus, respectfully following the aforesaid decision from Hon'ble High Court, these grounds of the assessee are allowed. Our aforesaid conclusion/order will also cover identical grounds for the Assessment Year 2007-08 (ITA No.5523/Mum/2011) and Assessment Year 2008-09 (ITA No.5524/Mum/2011) also. Thus, these grounds are allowed in the respective appeals. 18 ITA Nos.5 5 2 2 to 5 5 2 4 / M u m / 2 0 1 1
NIBR Bullion Pvt. Ltd.
6. The last ground pertains to levy of interest under section 234B of the Act was not argued by the Ld. counsel for the assessee, however it will be consequential in nature.
Finally, the appeals of the assessee are partly allowed. This order was pronounced in the open court in the presence of the ld. representative from both sides at the conclusion of the hearing on 17/07/2018.
Sd/- Sd/-
(Rajesh Kumar) (Joginder Singh)
लेखा सद#य / ACCOUNTANT MEMBER या$यक सद#य /JUDICIAL MEMBER
मब
ुं ई Mumbai; (दनांक Dated : 17/07/2018
f{x~{tÜ? P.S //. न.स.
आदे श क %$त'ल(प अ)े(षत/Copy of the Order forwarded to :
1. अपीलाथ- / The Appellant (Respective assessee)
2. ./यथ- / The Respondent.
3. आयकर आय1 ु त(अपील) / The CIT, Mumbai.
4. आयकर आय1 ु त / CIT(A)- , Mumbai,
5. 3वभागीय . त न ध, आयकर अपील'य अ धकरण, मब ुं ई / DR, ITAT, Mumbai
6. गाड! फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मब ुं ई / ITAT, Mumbai