ITAT Partially Allows Appeal in TDS Matter, Restricts Motor Car Expenses and Depreciation Disallowance to 10%
The Income Tax Appellate Tribunal (ITAT), Mumbai, partly allowed an appeal related to various disallowances made by the tax authorities for the Assessment Year 2006-07.
The Assessee debited an amount of Rs 10,00,000 in the P&L Account during FY 2005-06, which was made as an advance payment towards the “consultancy & professional charges” in FY 2001-02. However, the assessee did not deduct TDS under section 194J at the time of payment, leading to an addition against such a transaction. The assessee submitted that the TDS provisions were not applicable during that FY, so the TDS was not deducted for that payment.
The CIT(A) also upheld this addition, claiming that no TDS was deducted either in FY 2001-02 or FY 2005-06. The Tribunal noted that the assessee had not submitted any proof to show that the TDS was paid either in A.Y. 2001-02 or A.Y. 2005-06, when the expenditure was claimed in the books. But still, the Tribunal believed that the assessee must be given one more opportunity to substantiate his claim. Therefore, this matter was restored to the Assessing Officer for fresh verification of the fact of payment and applicability of TDS.
The second disallowance was the Telephone Expenses. In this regard, the assessee submitted that these were actual expenses for the business purpose. The CIT disallowed 20% of the expenses claimed by the assessee. In this issue, the Tribunal noted that the assessing officer did not have any material to justify the addition, so these additions were deleted.
For the Disallowance of Motor Car Expenses and Depreciation, the assessee claimed that the Motor car expenses and depreciation were for business purposes. Meanwhile, the revenue claimed that the assessee did not maintain a logbook to show exclusive business use. The Tribunal also noted that the assessee could not submit any evidence that shows that the motor car was not used for personal purposes. While the CIT(A) had upheld a 20% disallowance, the ITAT reduced it to 10%.
Case Citation: Amrita Prabhakar Deodhar Vs ACIT (ITAT Mumbai); I.T.A No.5892/Mum/2025; 28/11/2025; 2006-07
