Decided on August 23,1993



S.K. Jain, Judicial Member - (1.) AGGRIEVED by the order dated 25-2-1992 of the CIT(A)-I, Indore for the Assessment year 1988-89, the Revenue is in appeal on the following grounds: (i) The CIT(A) erred in allowing tanker bharai at Rs. 3,137 and Mehta Sukhadi at Rs. 25,515 disallowed by the AO. (ii) The CIT(A) erred in reducing the tanker plying income estimated by the AO at Rs. 1,25,000 to Rs. 2,000 only. (iii) The CIT(A) erred in reducing disallowance out of vehicle expenses from 1/3 to 1/4 and also erred in reducing telephone expenses from Rs. 39,750 to Rs. 3,500. (iv) TheCIT(A) erred in deleting the addition of Rs. 90,000 made by the A.O. on the basis of system of accounting regularly followed by the assessee. (v) The CIT(A) erred in deleting the disallowance of Rs. 14,500 for not charging interest from sister concern. (vi) The CIT(A) erred in deleting interest charged under Section 215 of the Income-tax Act.
(2.) Ld. representatives of the parties are heard. Ground No. (i) The facts as to claim of Rs. 25,515 on account of Mehta Sukhadi and of Rs. 3,137 on account of tanker bharai have been lucidly stated by the CIT(A) in paras 1 to 7 of his order. He has explained as to what is the Mehta Sukhadi and what for such expenditure is required to be incurred by a businessman. This issue came for consideration before the Tribunal in assessee's own case for the Assessment year 1984-85 in inter alia ITA No. 792/Ind/88. The Tribunal by order dated 15-3-1993 upheld the claim of the assessee as to Mehta Sukhadi and dismissed the appeal of the Department. Thus, claim of Mehta Sukhadi is covered by the said order of the Tribunal in favour of the assessee. The AO simply observed that the total expenditure of Rs. 3,137 on account of tanker bharai is hit by Section 40A(3) of the Income-tax Act. He did not at all examine if the said expenditure was incurred at one time. The facts have been examined by the CIT(A) in para 4 of the order. We find no flaw in his order. Ground No. (ii)-
(3.) WHILE estimating the income from tanker, the A.O., Shri Pradip Sharma, Asstt. Commissioner of Income-tax, Circle-I(1), Indore, had adopted a peculiar logic unknown to law and human understanding. He was estimating the income from tanker for the Assessment Year 1988-89. He observed that the assessee had purchased a new tanker in the Assessment Year 1990-91 for Rs. 7,29,373 and, therefore, the cost of the tanker which the assessee had in the instant Assessment Year 1988-89 should be taken at Rs. 6,00,000 and thereon it should be assumed that the assessee had income equivalent to interest @ 20 per cent per annum. He, thus, computed the interest income at Rs. 1,20,000 and further estimated the income from tanker at Rs. 1,25,000. He did not at all take notice of the fact that the tanker in possession of the assessee in the Assessment year 1988-89 was purchased in the Assessment year 1981-82 and was depreciated much in value in the instant Assessment year 1988-89. He did not remain satisfied by making such unreasonable and exorbitant estimate but made addition of the entire amount of Rs. 1,25,000 to the income of the assessee without allowing deduction of Rs. 38,951 which was shown by the assessee as income from the tanker and was included in the return of income at Rs. 4,15,504 which was taken as the basis for computation of the income by the AO.;

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