TaxTMI 
TaxTMI 
2008 (1) TMI 647
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....id (SAPT) building. 3. The first common grievance in both the years is that the ld. Assessing Officer has erred in reopening of assessment already made under section 143(3) by issuance of notice under section 148 of the Act. The brief facts are that the assessee company at the relevant time was engaged in the trading activity of cotton waste. It has filed its return of income on 27-11-1996 and 1-12-1997 declaring total income of Rs. 16,74,081 and Rs. 21,04,918 in the assessment years 1996-97 and 1997-98 respectively. The ld. Assessing Officer framed assessment under section 143(3) on 8-1-1999 and 17-12-1999 in assessment years 1996-97 and 1997-98 respectively. On 24-8-2000 a survey under section 133A was carried at the business premises of the assessee. During the survey statements of Shri D.R. Barucha one of the Director and Estate Manager Shri S.R. Krishnan were recorded. According to the Assessing Officer they have disclosed that SAPT building was in bad condition and therefore in 1994 building was vacated for major structural reconstruction which included strengthening of columns and ceiling. This structural renovation work continued from March 1994 to March 1997 and thereaf....
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....fully and truly all material facts, is not available to assessee. In the present case the notice under section 148 was served within 4 years. The basis for forming an opinion that income has escaped assessment is the outcome of survey carried out at the business premises of the assessee on 24-8-2000 where according to the Assessing Officer it revealed that SAPT building was not used for the purpose of business. On the basis of such report the ld. Assessing Officer arrived at a conclusion that income has escaped assessment therefore the information which has come to his possession is the basis for forming a prima facie belief about escapement of income. The assessments have not been reopened merely on the basis of change of opinion i.e., merely on the basis of re-appreciation of the material already possessed by the Assessing Officer. In view of the above discussion we do not find any merit in the first grievance of the assessee. The reopening of the assessment is upheld in both the years. 8. The next two issues are interlinked with each other in both the assessment years. They relate to disallowance of depreciation on SAPT building as well as maintenance and lift expenditure inc....
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....cate the user of the building took us through the break-up of electricity expenses, break-up of telephone expenses pertaining to this building as well as other places in Mumbai and other places in the country. On the strength of telephone expenses he pointed out that at SAPT building apart from other phones, one telephone connection bearing No. 2626344 was available and for this telephone assessee had incurred Rs. 18,197 during this year. Similarly, demonstrating the electricity expenses he pointed out that a sum of Rs. 5,37,444 was incurred for Bombay. This sum include repair of Rs. 3,28,603 and payment of Rs. 15,907 and Rs. 1,85,748.66 to BEST. The specific details are available on page 14 of the paper book. Further taking us through the statement reflecting sales and purchases at Bombay during 1995-96 and 1996-97 he submitted that substantial business activities have been carried out by the assessee. In this connection he drew our attention towards page Nos. 12-13 where sales and purchase statement are available. He further contended that address of the registered office of the assessee is in SAPT building. All correspondence were made on that address. Even in the assessment ord....
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....He took us through the question and the replies of the statement of Shri Krishnan, Estate Manager, reproduced by the revenue authorities below. He submitted that this statement do indicate that asset was not used for the business of the assessee and hence it is not entitled for depreciation. With regard to the grant of depreciation even on passive user he submitted that Hon'ble Jurisdictional High Court in the case of Dinesh Kumar Gulabchand Agarwal v. CIT [2004] 267 ITR 768 (Bom.) has held that expression "used" as employed in section 32 of the Income-tax Act denotes actual user of the asset. If the assets are actually used depreciation would be admissible to the assessee otherwise not. 14. We have duly considered the rival contention and gone through the record carefully. Interpretation of expression "used" employed in section 32 had come up on a number of occasions before the Hon'ble Supreme Court, Hon'ble High Court and the Tribunal. Recently the Hon'ble Presi-dent of the Tribunal while sitting as a 3rd Member in the case of Sanghvi Movers (P.) Ltd. v. Dy. CIT [2008] 110 ITD 1 (Pune) has made a lucid enunciation of law on this point. We cannot do better than to extract....
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....ace passive as well as active user. They pointed out that when machinery is kept ready for use at any moment in a particular factory under an express agreement from which taxable profits are earned, the machinery can be said to be used for the purpose of the business which earned the profits, although it was not actually worked, and the depreciation allowance granted by section 10(2)(vi) could be given in respect of such machinery. No doubt, that was said in connection with clause (vi) of section 10(2), but the Supreme Court has pointed out that all these clauses are in pari materia and the expression used in either of them would apply to the other : see the Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265; [1954] SCR 767 (SC). In Vishwanath Bhaskar Sathe's case, the facts were similar to the present case. The assessee owned a ginning factory and was a member of a pool with the owners of other ginning factories. During the assessment year in question in that case the assessee's factory had not been actually employed in the work of ginning in accordance with the pooling agreement, though he had received a share of the profits. That was because the assessee was under the agreeme....
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....has purchased five new buses is not disputed. The only argument is that the vehicles were not registered in the name of the assessee under the Motor Vehicles Act. But that is one of the factors that has to be taken into consideration for deciding the questions of ownership of the buses. It cannot be said as a matter of law that unless the buses are registered in the name of the assessee, the assessee cannot be regarded as the owner of the buses. On the contrary, the essential pre-requisite for registration under section 22(1) of the Motor Vehicles Act is ownership of the motor vehicle. Unless a person is the owner of a motor vehicle he is not entitled to get it registered in his name under section 22(1) of the Motor Vehicle Act. The Tribunal in this case has come to the conclusion on a review of the facts and also of the agreement that the assessee was the owner of the five new buses and as such was entitled to claim depreciation allowance on these buses. The Tribunal has not committed any error of law in coming to this conclusion. The requirement of section 32 of the Income-tax Act is that the vehicles must be "owned by the assessee". This section does not require that the assesse....
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.... of the Department that these oil tankers were not necessary for the business purposes of the assessee-appellant. These oil tankers were actually plied on the road on the last date of the accounting year were challanged and also fined by the CMM, Kanpur. Therefore, the oil tankers were actually put to use in the relevant accounting year by the assessee for its business purposes. Alternatively the assessee was entitled for depreciation on these two oil tankers as they were purchased during the relevant accounting year for business purposes and were ready to use, road tax was deposited and the oil tankers were got registered with the registering authority on the last date of the accounting year. Failure of the assessee to produce the hire contract with the parties is in respect of the two oil tankers is of little significance in view of exposition of law that the word "used" under section 32 of the Act has to be given wider meaning and it will include assets ready for use.' 15.6 The Punjab and Haryana High Court in CIT v. Pepsu Road Transport Corpn. [2002] 253 ITR 303 has held that the assessee who was the transporter had to keep spare engines in the store, was entitled to depreci....
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....tal asset. 15.8 Reference to section 32(1) as existing in all material time reveals that building, machinery and other assets mentioned in sub-section (1) when owned by the assessee and 'used for purposes of the business or profession' are entitled to depreciation. It has been noted that section 32 confers the benefit on the assessee and it is required to be construed liberally and in a manner which is favourable to the assessee. I find force in assessee's submission that decision of Hon'ble Bombay High Court in the case of Dineshkumar Gulabchand Agrawal (supra) has to be read in the light of other decisions of Bombay High Court and of the Supreme Court and when so read, it does not lay any different law. Expression 'used' is to be construed in the context of facts and circumstances of the case and would include not only active use of asset but also passive use of asset for purposes of business. This is what has been consistently held by the Supreme Court and the Bombay High Court in the decisions cited supra. Permanent registration under the Motor Vehicles Act is not sine qua non for claim of depreciation. Temporary registration for a limited period pending permanent registrati....
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....er only under section 132(4) of the Income-tax Act in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law. Therefore, there is much force in the argument of learned counsel for the appellant that the statement elicited during the survey operation has no evidentiary value and the Income-tax Officer was well aware of this." 16. Contrary to these facts possessed by the Assessing Officer assessee ....