ORDER
S.R. Chauhan, J.M.
1. As the above appeals are inter-related and involve common points so we are disposing them of by this common order for the sake of convenience.
2. ITA Nos. 1012/Jp/97, 112/Jp/94, 231/Jp/95, 1013/Jp/97 and l014/Jp/97 are appeals by Revenue for asst. yrs. 1989-90, 1990-91, 1991-92, 1993-94 and 1994-95, respectively, and are directed against the order of Dy. CIT(A), Jodhpur, dt. 13th Jan., 1997, 2nd Nov., 1993, 28th Nov., 1994, 13th Jan., 1997, and 13th Jan., 1997, respectively.
3. We have heard the arguments of both the sides and perused the records including the written statement of the learned authorised representative of assessee furnished on record before us.
4. First we take up appeal No. 1012/Jp/94 being for asst. yr. 1989-90.
5. Ground No. 1 disputes the allowing of standard deduction of Rs. 12,000 out of director’s remuneration. The learned Departmental Representative of Revenue has contended that this issue has been dealt with elaborately/specifically by AO and learned CIT(A), whom he supports. He has also submitted that the main order of this issue has been passed by AO in asst. yr. 1990-91 (pp. 19 to 25 paper book in ITA No. 1112/Jp/94). As against this the learned authorised representative of assesses has relied on his written statement contending that most of the issues are covered in assessee’s favour by the order of Tribunal and the same has been mentioned in his written statement. In the written statement of assessee it has been contended that the assessee was director of the company “Shyam Oil Cake Limited” and was paid salary as he was rendering his full services for the purposes of the business of the company. It has been contended that the assessee was looking after the purchases, production, sales and day-to-day administration of the Jaipur unit of the company. He has contended that the assessee was paid salary for his full-time services for the purpose of business to the company and not otherwise. He has contended that the fact of rendering of services by assessee has not been disputed by the AO in the assessment order and also in the assessment order for asst. yr. 1990-91. He has contended that the factum of assessee’s rendering of services to the company is verifiable from the records of the company. He has contended that, as such, there is a definite employer-employee relationship between the assessee and the company and so the assessee is eligible for deduction under Section 16(i) out of his salary income. He has also contended that the payment of salary was duly authorized by specific resolution of the company and is in accordance with the provisions of memorandum and articles of association, copies thereof being on pp. 17 to 21 of the paper book. It has been contended that the tax has also been deducted at source and TDS certificate has been issued regarding assessee’s salary and deduction therefrom. Reliance has been placed on :
(i) ITO v. Shashi Kumar Mohatta (1991) 42 TTJ (Jp) 663
(ii) ITO v. P. Narayan Rao (1987) 27 TTJ (Hyd) 452
(iii) Ram Prasad v. CIT (1972) 86 ITR 122 (SC)
6. It has also been contended that the assessee’s similar claim for asst. yr. 1990-91 was also rejected by AO but the same was allowed in assessee’s appeal by learned Dy. CIT(A), and no further appeal has been filed there against by the Department.
7. He has also contended that the matter is fully covered by the decision of this Bench in the case of assessee’s brother in Asstt. CIT v. Shyam Sunder Chhugani rendered in ITA No. 2255/Jp/95 for asst. yr. 1989-90 on 29th Nov., 2001 [reported at (2002) 74 TTJ (Jd) 26–Ed.].
8. We have considered the rival contentions, the relevant material on record, as also the cited decisions. From the perusal of record, we find that the AO has followed his orders passed in asst. yrs. 1990-91 and 1991-92 in the case of assessee. In AO’s order dt. 29th Jan., 1993, passed for asst. yr. 1990-91 (pp. 19 to 25 paper book in ITA No. 1112/Jp/94) it has been mentioned as having been stated by the learned authorised representative of assessee that the assessee and his own family were holding just 1,220 shares out of total 17,010 shares; and that the assessee and his own family were holding just 15.19 per cent of total capital as on 31st March, 1990. The AO has noted therein the authorised representative’s submissions that the assessee was holding directorship of Shyam Oil Cake Limited not because of his shareholding but because of being a whole-time working director. The AO has also observed therein that a director is not a servant or employee of the company and so the fees received by director is taxable under Section 56 (income from other sources) and not as salary. A perusal of assessment order shows that the AO has not disputed the rendering of services by assessee to the company. The record also reveals that the assessee is receiving remuneration not because of his shareholding but it is because of the services being rendered by assessee to the company. This is authorized under the memorandum and articles of association as also by the resolution. As such considering all the facts and circumstances of the case we find the assessee to be an employee of the company and that he was being paid remuneration for the services the assessee was rendering to the company. In that view of the matter, in the facts and circumstances of the case and also in view of decision of this Bench in the case of assessee’s own brother Shri Shyam Sunder Chhugani (supra), we find that the remuneration received by assessee falls within the category of salary for the reason of the assessee being an employee/servant of the company. That being the situation, the assessee is found to be entitled to deduction under Section 16(i) of the Act out of his remuneration as director of the company. As such the impugned order of learned Dy. CIT(A) in allowing standard deduction under Section 16(i) to the assessee out of the remuneration/salary is quite justified and suffers from no infirmity. We, therefore, decline to interfere with the learned CIT(A)’s impugned order on this count.
9. Ground No. 2 disputes the deletion of addition of Rs. 8,000, being interest on deposit of family members of assessee, that is, estimated interest income of HUF and wife at Rs. 4,000 each, aggregating to Rs. 8,000. The learned Departmental Representative of the Revenue has referred to pp. 2 and 3 of the assessment order and has relied thereon contending that the estimated interest income of the assessee’s HUF and wife is required to be considered in the case of assessee for the reason that the income earned by HUF and wife was offered by assessee in his case for asst. yr. 1988-89. He has contended that the AO has rightly estimated the interest income and made addition. As against this the learned Authorised Representative of the assessee has relied on his written statement. In the written statement of assessee it has been contended that assessee’s wife Smt. Lata and HUF have been the existing income-tax assessees and filing their returns of income. Accordingly, there is no justification of addition of estimated interest income in the hands of the assessee. He has also contended that the addition has been made merely on the basis of estimate without there being a specific finding as to actual accrual/receipt of income. He has also contended that the AO has himself accepted that the assessee has offered satisfactory explanation in respect of deposits/credits in respect of HUF and his wife, there is no justification of addition for estimated interest.
10. We have considered the rival contentions as also material on record. From the perusal of record we find that assessee’s HUF and wife were existing income-tax assessee. Besides, the AO has made the addition merely on the basis of estimate without giving a specific finding to actual accrual/earning of income. Considering all the facts, we find that the learned Dy. CIT(A) was quite justified in deleting the addition made on this count. We, therefore, decline to interfere with the same.
11. In the result the Revenue’s Appeal No. 1012/Jp/97 is dismissed.
12. Now we take up ITA No. 1112/Jp/94 being for asst. yr. 1990-91.
13. Ground No. 1 disputes the reduction of addition of Rs. 44,300 to Rs. 20,300 made by AO on account of low household withdrawals. The learned Departmental Representative of the Revenue has referred to para 6 of the assessment order and has relied thereon contending that the assessee’s standard of living was quite high, and so the AO rightly estimated the household expenses of the assessee @ Rs. 4,000 p.m. and rightly made the consequent addition. He has contended that the reduction of aforesaid addition by the learned Dy. CIT(A) is not proper. As against this the learned Authorised Representative of assessee has relied on his written statement. In the written statement of assessee it has been contended that the assessee’s family consisted of assessee himself, his wife and two children. It has been contended that the assessee was living in the house belonging to the company, and was not paying any rent. It has also been contended that the AO has not given any basis for his estimation for household expenses @ Rs. 4,000 p.m. It has been contended that the learned Dy. CIT(A) has rightly estimated the assessee’s household expenses @ Rs. 2,000 p.m. and the same is quite reasonable.
14. We have considered the rival contentions, as also the relevant material on record. From the perusal of record, we find that the assessee was having a small family and had not to pay the rent for the residence. As such, considering the fact-situation, we find the learned Dy. CIT(A)’s estimation of assessee’s household expenses, and in turn, the consequent reduction in addition made by AO on that count to be quite reasonable and suffering from no infirmity. We, therefore, decline to interfere with the same.
15. Ground No. 2 disputes the learned Dy. CIT(A)’s impugned order for holding the interest income of assessee’s wife and two minor children being Rs. 6,480, 6,395 and Rs. 5,367 to be not includible in the hands of the assessee. The learned Departmental Representative for Revenue has supported the AO’s order contending that this addition had rightly been made by AO in respect of interest on deposits of the assessee’s wife Smt. Lata and two sons. As against this, the learned authorised representative of assessee has relied on his written statement. In the written statement of assessee it has been contended that the addition of above income in the hands of assessee made by AO on protective basis is not justified. It has been contended that the assessee furnished details of interest and that the source has also been examined by AO in asst. yr. 1989-90 (paras 2.3 and 2.6 on p. 3 of W/s). It has been contended that the AO has himself accepted on p. 2 of assessment order for asst. yr. 1989-90 (p. 11 paper book in ITA No. 1012/Jp/97) the deposits/credits of assessee’s wife Smt. Lata and assessee’s two minor sons Jayant and Ajay to have been satisfactorily explained. It has been contended that the addition of interest income of Rs. 6,480 pertaining to assessee’s wife Smt. Lata, who is an existing income-tax assessee since long, has been made on protective basis. It has been contended that in the proceedings under Section 148 in the case of Smt. Lata for the year under appeal, this interest income was taxed on protective basis but the same has been directed by learned Dy. CIT(A) in appeal to be treated as substantive and not protective, and there has been no further appeal by Revenue. It has been contended that now the matter has become final and the Department has virtually accepted the interest income shown as that of Smt. Lata to be her own income and not that of assessee.
16. It has also been contended that the interest income has accrued to the two sons of assessee on deposits owned by them and belonging to them, and that the copies of account of deposits with Mahendra Oil Industries, gift deeds and RD account pass book were also furnished in support of assessee’s plea. It has also been contended that even otherwise, no specific opportunity was provided by AO to assessee before making the said addition. The learned Authorised Representative of assessee has relied on the following decisions :
1. CIT v. Zafrul Hasan Iraqi (1998) 62 TTJ (Jp) 795.
2. Madholal v. ITO (1991) 40 TTJ (Jp)(TM) 333.
3. CIT v. Smt. Durgavati Singh 230 ITR 249 (All)(sic)
It has also been contended that this matter is fully covered by the decision of this Bench in the case of assessee’s brother Govind Ram Chhugani v. Asstt. CIT in ITA No. 1267/Jp/94 rendered on 13th Sept., 2002 [reported at (2002) 77 TTJ (Jd) 339–Ed.].
17. We have considered the rival contentions, the relevant material on record as also the cited decisions. Considering all the facts and circumstances of the case together with the elaborate contentions made in the written statement of assessee, we find the addition in respect of the aforesaid interest income, being in the name of assessee’s wife and his two sons, made by AO in the hands of assessee to be uncalled for. In the circumstances, we find the deletion of addition by learned Dy. CIT(A) to be quite proper and justified. We therefore, decline to interfere with the same.
18. In the result this appeal of Revenue being ITA No. 1112/Jp/94 is dismissed.
19. Now we take up ITA No. 231/Jp/95 being for asst. yr. 1991-92.
20. Ground No. 2 disputes the learned CIT(A)’s order in directing the AO to allow standard deduction of Rs. 12,000 under Section 16(i). This ground is similar to ground No. 1 in asst. yr. 1989-90 (ITA No. 1012/Jp/97). The facts being identical, we follow our decision rendered above on similar ground No. 1 in asst. yr. 1989-90 (ITA No. 1012/Jp/97) wherein we have upheld the learned Dy. CIT(A)’s order allowing standard deduction under Section 16(i) to the assessee out of remuneration salary received by assessee. Accordingly, we find no fault with the learned CIT(A)’s impugned direction in allowing standard deduction under Section 16(i) out of assessee’s salary/remuneration from the company. We therefore, decline to interfere with the same.
21. Ground No. 2 disputes the learned CIT(A)’s impugned order in allowing depreciation of Rs. 60,000 on car-taxi. The learned Departmental Representative of Revenue has relied on the AO’s order contending that the assessee did not obtain permit for running the car as taxi from RTO. He has contended that the depreciation was rightly disallowed by AO. As against this the learned authorised representative of assessee has supported the learned CIT(A)’s order and has relied on his written submissions. In the written statement of assessee it has been contended that the AO’s action in disallowing of assessee claim for depreciation at Rs. 60,000 being @ 50 per cent is not justified in as much as the assessee purchased the car and got it registered in assessee’s name. It has been contended that the assessee plied it on hire and earned income of Rs. 500 from hire. It has been contended that the disallowing of depreciation by AO for the reasons of the car having been plied on hire only for two days in the year under appeal and the assessee having not obtained taxi permit from RTO is not proper. It has been contended that the quantum of hire income earned during the year is irrelevant for the purpose of allowing of depreciation and so is irrelevant the number of days of user of car as taxi in the year. It has been contended that obtaining of permit for plying the car as taxi from RTO is not necessary for running the private car as legally there are two types of cars which are run on hire, firstly, under taxi quota and secondly, private car. It has been contended that even otherwise the matter of non-obtaining of such permit is for the RTO to consider and not for the AO. It has been contended that the AO has not disputed the receipt of income, but has treated the same as income from other sources instead of business income. Reliance has been placed on CIT v. Dilip Singh Sardar Singh Bagga (1993) 201 ITR 995 (Bom) and CIT v. Nidish Transport Corporation (1990) 185 ITR 669 (Ker). It has also been contended that the issue is covered by the decision of this Tribunal in the case of assessee’s brother Shyam Sunder Chhugani (supra) (pp. 34 to 50 paper book).
22. We have considered the rival contentions, as also the relevant material on record. From the perusal of record, we find that the assessee has shown an income of Rs. 500 from the use of this car as taxi and AO has included the said income of Rs. 500 from the said taxi-car in assessee’s total income for the year under consideration. In that view of the matter, considering all the facts and circumstances of the case, we find the learned CIT(A)’s impugned action in allowing depreciation on taxi-car for the year under consideration to be quite justified. As such, we find no fault with the learned CIT(A)’s impugned order on this count in allowing depreciation and so we make no interference therein.
23. Ground No. 3 disputes the learned CIT(A)’s impugned direction to AO to allow the assessee credit in respect of jewellery already declared after examining the factum of declaration. The learned Departmental Representative of Revenue has relied on AO’s order contending that CIT(A) was not justified in giving the said direction as the assessee had not put this claim before the AO. As against this the learned authorised representative of assessee has relied on his written statement. In the written statement of assessee it has been contended that the assessee had filed letter dt. 26th Jan., 1994, along with copies of capital account and balance-sheet, return acknowledgement and assessment order for asst. yr. 1982-83, explaining the source of gold ornaments and so the AO was not justified in observing that such ground was not raised before him.
24. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the assessee has explained the source of gold ornaments in the above-mentioned letter dt. 26th Jan., 1994, as, placed on pp. 19 to 21 of paper book along with other accompanying record on pp. 22 to 24 of paper book. It appears from the said record (pp. 19 to 24 of paper book) that the assessee claimed credit in respect of gold ornaments as declared in the return of income for asst. yr. 1982-83 as filed under the amnesty scheme. As such, considering all the facts and circumstances of the case including the above record, we do not find any fault with the impugned order of learned CIT(A) in directing the AO to allow credit to the assessee in respect of gold ornaments and jewellery already declared by him in his return of income as filed under amnesty scheme, after examining the same. We, therefore, decline to interfere with the same.
25. In the result this appeal of Revenue being ITA No. 231/Jp/95 is dismissed.
26. Now we take up ITA No. 1013/Jp/97 being for asst. yr. 1993-94.
27. Ground No. 1 disputes the learned CIT(A)’s impugned order in directing to AO to allow standard deduction of Rs. 12,000 under Section 16(i) out of director’s remuneration. This ground is similar to the ground No. 1 in asst. yrs. 1989-90 and 1991-92. The facts being identical the ground is covered by our decision rendered above on similar ground in asst. yrs. 1989-90 and 1991-92 wherein we have upheld the allowing of such standard deduction. We, therefore, follow our above decision on similar ground and accordingly find no fault with the learned CIT(A)’s impugned direction in allowing standard deduction under Section 16(i) out of assessee’s salary/remuneration from the company as director thereof. We, therefore, decline to interfere with the same.
28. Ground No. 2 disputes the reduction of Rs. 8,800 out of addition on account of perquisites i.e., free use of house and car of the company The learned Departmental Representative of Revenue has relied on the AO’s order contending that the valuation of perquisites at Rs. 24,000 and Rs. 4,800, aggregating to Rs. 28,800 as made by the AO was quite reasonable and, therefore, the learned Dy. CIT(A) was not justified in allowing reduction out of addition of above value of perquisites. As against this, the learned authorised representative of assessee has relied on the impugned order of learned Dy. CIT(A). The learned authorised representative of assessee has contended that the assessee has received salary of Rs. 48,000 only and considering the same the learned Dy. CIT(A) has rightly allowed reduction.
29. We have considered the rival contentions, as also the relevant material on record. Considering all the facts and circumstances of the case together with the discussions made by the authorities below including the fact that the value of perquisites was taken by AO only on estimate basis, we are of the view that the learned Dy. CIT(A)’s action in allowing reduction of Rs. 8,800 out of addition of Rs. 28,800 on that count does not suffer from any infirmity and is rather quite justified. We, therefore, decline to interfere with the same.
30. In the result this appeal of Revenue for asst. yr. 1993-94, being ITA No. 1013/Jp/97, is dismissed.
31. Now we take up ITA No. 1014/Jp/97 being for asst. yr. 1994-95.
32. Ground No. 1 disputes the learned CIT(A)’s order in directing the AO to allow standard deduction of Rs. 15,000 under Section 16(i). This ground is similar to ground No. 1 in asst. yrs. 1989-90, 1991-92 and 1993-94. The facts being identical, the ground is covered by our decision rendered above on similar ground in asst. yrs. 1989-90, 1991-92 and 1993-94. We, therefore, follow our decision rendered above on similar ground and accordingly find no fault with the learned Dy. CIT(A)’s direction in allowing standard deduction under Section 16(i) out of assessee’s salary/remuneration from the company as director thereof. We, therefore, decline to interfere with the same.
33. Ground No. 2 disputes the reduction of Rs. 8,800 out of addition of Rs. 28,800 on account of perquisites i.e., free use of house and car of company. This ground is common with ground No. 2 in asst. yr. 1993-94. The facts being identical, the ground is covered by our decision rendered above on similar ground in asst. yr. 1993-94. We, therefore, follow our decision rendered above on similar ground and accordingly find no fault with the learned Dy. CIT(A)’s impugned direction in allowing reduction of Rs. 8,800 out of addition of Rs. 28,800 on account of perquisites. We, therefore, decline to interfere with the same.
34. In the result this appeal of the Revenue for asst. yr. 1994-95, being ITA No. 1014/Jp/97, is dismissed.