G. Santhanam, Accountant Member - (1.) THE appellant is a company in which public are substantially interested. It has income from growing and manufacturing of tea besides trading activities. THE Assessing Officer invoked the provisions of Section 40A(5) of the Income-tax Act, 1961, to disallow part of the expenditure on building maintenance, depreciation on buildings, repairs to furniture and fittings etc. THE disallowance was confirmed in appeal.
(2.) Shri Ananthanarayanan, learned Chartered Accountant, very fairly brought to our notice that the disallowance was to be confirmed in the light of the decision of the Kerala High Court reported in 138 ITR 1 as affirmed by the Supreme Court in 208 ITR 649. Accordingly, the ground against the disallowance under Section 40A(5) in respect of the expenditure on building, deprecation thereon and repairs to furniture are decided against the assessee. The assessing authorities disallowed the expenditure on motor cars together with the depreciation thereon at 1/3rd of such expenditure under the provisions of Section 40A(5) of the Act.
(3.) SHRI Ananthanarayanan, learned Chartered Accountant, while conceding that the disallowance is called for in terms of the decision of the Supreme Court, cited above, submitted that the disallowance made was rather excessive and the Tribunal in the assessee's own case, in the earlier years, had considered it reasonable to restrict the disallowance to 15% of the total expenditure on motor car maintenance and depreciation. He relies on the order of the Tribunal dated 7-1-1991 in ITA No. 447/Coch/83 for the assessment year 1979-80, in the assessee's own case. The learned departmental representative does not seem to have any serious objection in restricting the disallowance to 15% of the expenditure on motor car maintenance and depreciation thereon as against 331/3%. Accordingly, we direct the Assessing Officer to restrict the disallowance to 15%.;