The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) had allowed the deduction to the Bollywood actor, Akshaye Khanna in respect of the expenditure incurred by him for a speed-boat.
The Assessing Officer, during the assessment proceedings, disallowed the expenditure on speed-boat owned by him by finding that the assessee claimed aggregate expenditure on account of speed-boat amounting to Rs.9,22,382/- which comprised-off of depreciation of Rs.7,53,790/- & insurance expenses of Rs.1,68,592/-.
Assessee contended that he had farmhouse at Alibaug and creative part of the professional work including reading, evaluating stories and scripts, acting practice, speech improvements, story sessions etc. was being done from the premises at Alibaug and it was very convenient to use speed-boat than any other mode of transport as he was able to travel from Walkeshwar, Mumbai to Alibaug at minimum time. It was further submitted that the assessee earned a sum of Rs.96,900/- as boat hire charges during impugned AY and further the assessee, suo-moto disallowed 25% of the expenditure, being personal in nature.
While allowing relief to the actor, the Tribunal noted that he was saddled with similar additions in AYs 2009-10 & 2010-11, which was subsequently allowed by the first appellate authority in both the years.
The Tribunal observed that the appellate order for AY 2009-10 records a clear-cut finding that the assessee had been using speed-boat for traveling from Mumbai to Alibaug for his professional activities like acting, practice, health, maintenance, storytelling etc. and hence, business asset has been utilized by assessee for commutation for professional work and therefore, the expenditure against the same was allowable to the assessee like any other traveling mode like motor-car etc.
“Another important fact to note is that the speed-boat forms part of the 15% block of Fixed Assets which is evident from depreciation chart as placed on record and therefore, constitute a business / professional asset for the assessee. It is further noted that the assessee has claimed impugned depreciation on opening is written down the value of the speed-boat which is being carried forward from earlier AY and already merged under 15% block of fixed assets. Further, the assessee has suo-moto disallowed 25% of the expenditure on an estimated basis to account for personal element/usage. Therefore, considering the totality of facts, impugned additions could not be sustained,” the Tribunal said.
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