Decided on April 30,1982



S.K.Chander, - (1.) IN this appeal by the assessee the grievance against the order of the AAC dated 22-10-1981 is that he erred in law as well as on facts in sustaining the disallowance of Rs. 12,000, claimed by the appellant on account of petrol expenditure and depreciation on the car owned by him.
(2.) In order to determine the above issue, the following facts are relevant and will have to be taken into consideration. The assessee is a partner in many firms including the firm of Sood Bhandari & Co., Sirhind. This firm has its head office at Sirhind and branch office at Sadhugarh. This partner resides at Sirhind. In all, there are three partners. When the firm was constituted, he did not own a car. It is common ground that in the instrument evidencing the partnership under the name and style of 'Sood Bhandri & Co.', there was no stipulation as to the expenditure to be paid to this partner with regard to the business of the firm that he may help to carry on. The business of the firm is that of commission agents because its income is from kachi arhat and also from dealings in grains, etc. For the assessment year under appeal, the share of the assessee from the firm was Rs. 24,769. The assessee had purchased a car during the previous year relevant to the assessment year under appeal and while filing the return, he made a claim of Rs. 12,000 as a deduction from his share against the income of share of profit from this firm on the ground that Rs. 12,000 consisted of petrol expenditure and depreciation on the car used for carrying on the business of the firm as a partner. This claim was rejected by the ITO and the rejection was upheld by the AAC. Hence, the present proceedings. Relying on the Supreme Court judgment in the case of Ramniklal Kothariv. CIT[1969] 74 ITR 57, the learned counsel for the assessee submitted that it has been held by the Supreme Court that an assessee who was a partner in four firms but did not carry on any independent business, was entitled to deduct from his share of the profits from the firms amounts paid as salary and bonus to staff, expenses for maintenance and depreciation of motor car and travelling expenses met by him in earning the income from the firms. The learned counsel for the assessee submitted that in this case also, the assessee has share income from three firms and has no independent business of his own. It was contended that factually he was travelling between Sirhind and Sadhugarh for purposes of the business of the firm and was also going to various villages for disbursement of amounts to zamindars, who were given advances to make sure that they would sell their produce through the assessee. As such the amount was admissible and should have been allowed.
(3.) THE learned counsel for the assessee relied on the judgment of the Gujarat High Court in the case of Matubai Chunilal Patel v. CIT [1967] 66 ITR 408 to emphasize the contention that the claim of the assessee, a partner in a firm, to deduct half of the motor expenses, including depreciation, from his share income from the partnership, on the ground that it related to his carrying on the business, was allowed by the Hon'ble High Court, on a reference, by holding that, on the facts and in circumstances of the case, the assessee had incurred this expenditure wholly and exclusively for purposes of the business of the firm and, therefore, the amount was deductible from his share income.;

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