Company-owned premises for Director's residence deemed business expense, not taxable perquisite. Revenue's appeal dismissed.

The court allowed the claim of depreciation on premises used for the residence of the Director, as the property was owned by the company and provided to the director for managing business affairs. The court dismissed the Revenue's appeal, holding that the benefit from the accommodation was not a perquisite in the director's return and that no resolution was required for the director's occupancy. The decision was supported by relevant case laws, a CBDT circular, and a Delhi High Court judgment.

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Issues:
1. Claim of depreciation on premises used for the residence of the Director.
2. Verification of benefit shown as perquisite in the return of the director.
3. Verification of any resolution passed by the Board of Directors authorizing the Director's occupancy.

Analysis:

1. The appeal involved the question of whether the assessee was entitled to claim depreciation on premises owned by it and used for the residence of the Director. The Assessing Officer disallowed the depreciation, resulting in an added amount to the total income of the assessee. The ld. Commissioner of Income Tax (Appeals) allowed the depreciation based on the argument that the flat was purchased by the appellant company and given to its director, who managed the business affairs of the company. The Commissioner relied on relevant case laws and held in favor of the assessee, allowing the depreciation.

2. The issue of verifying whether the benefit out of the accommodation had been shown as a perquisite in the return of the director was raised. The ld. Commissioner of Income Tax (Appeals) did not find this to be a case made by the assessing officer. The flat was owned by the company and used by the directors for residence, as well as for official works of the company. The decision was supported by a CBDT circular and a Delhi High Court judgment, leading to the dismissal of the Revenue's appeal.

3. Another issue raised was the verification of whether any resolution was passed by the Board of Directors authorizing the Director to occupy the flat for residential purposes. The argument put forth was that the flat was part of the company's assets, used by the directors for both residence and business purposes. The ITAT upheld the order of the ld. Commissioner of Income Tax (Appeals) based on the discussions and precedents from the Hon'ble High Court, deciding the issue in favor of the assessee and dismissing the Revenue's appeal.

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