TaxTMI 
TaxTMI 
2010 (10) TMI 1200
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....plicable for residential premises. 4. Both the Learned Commissioner [Appeals] and the learned Assessing Officer erred in passing their orders without granting Your Appellant an adequate opportunity of being heard. 3. After hearing both the parties we find that the assessee had claimed depreciation in respect of Flat No.104, 10th Floor, Somerset House, 61, Bhulabhai Desai Road, Mumbai which was claimed to be used for business purposes. A survey u/s.133A was conducted at Flat No.104, 10th Floor, Somerset House, 61, Bhulabhai Desai Road, Mumbai on 20-9-2006. Mrs. Anju Bang Director of the company and also wife of Shri Dilip Bang who is also Director was present. A statement from Mrs. Anju Bang was recorded u/s. 133A(iii). The relevant portion of the statement extracted in the assessment order reads as under: "Q.No.3 Please state the office address of the Shresth Securities Pvt. Ltd.? Ans. Only the address o the premises is given as office address and no books of accounts and no papers of any kind pertaining to Shresth Securities Private Ltd. is kept here. In fact this premises is used only as residence and we are staying here. Q.No.4: There is co....
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.... the furniture and electrical fittings were acquired in the subsequent year, which clearly showed that premises were not put to use for business purposes. Accordingly, the claim for depreciation was rejected. 6. Before the CIT[A] similar submissions were reiterated. Alternatively, it was submitted that even if the premises were occupied by the directors for their residence the said use of the premises should be construed only for business purposes. Reliance was placed on certain cases. The ld. CIT[A] after examining the submissions, confirmed the action of the AO and decided the issue against the assessee vide paras 3.1 and 3.2 which are as under: "3.1 I have considered the submissions of the appellant and found the contentions of the appellant not acceptable. It is an admitted fact that the said premise was not used by the appellant for conducting any business. Though the appellant claimed that business was carried out from the said premises, but it filed no evidence to support its claim. in fact, statement of Mrs. Anju Bang contradicts the claim of the appellant. Mrs. Anju Bang has clearly stated that no business was carried out from the said premises. The appellant h....
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....r clearly shows that the premises were never used for business purposes. This statement is further fortified by the statement of Shri Kishore M. Bang and Shri Ajay Karia, Accountant, in which it has been clearly stated that the books of accounts were being maintained in the office at 38-B Khatau Building, opposite Union Bank of India, Fort, Mumbai. This clearly shows that these premises were never used for business purposes. As far as the claim that even if the same is used for the residence of the director of the firm, no resolution has been filed before the lower authorities or even before us and, therefore, it cannot be said that the company had allowed the use of premises for the purpose of residence of the director. 9. We have considered the rival submissions carefully. Admittedly, the premises were not used for the business purposes because no books of accounts or any other business activity was being carried out at flat No.104, 10th Floor, Somerset House, 61, Bhulabhai Desai Road, Mumbai. Even the alternate submission clearly shows that the premises were used for the purpose of residence of the director. 10. In regard to the alternative submission, strong reliance was ....
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.... in this regard or whether same has been shown as perquisite in the returns of the individual director who is using the premises. He admitted that neither any resolution was passed nor any perquisite value is being taxed in the hands of the director. 11. As far as the decision of the Mumbai Bench of the Tribunal in the case of Intersil India Ltd. Vs. ACIT [supra] is concerned, the issue regarding disallowance of vehicle expenses was raised in ground No.2 and the Tribunal has deleted the disallowance by following the decision of the Hon'ble Gujarat High Court decision in the case of Sayaji Iron And Engg. Co. vs. CIT [supra] which we have already distinguished. Therefore, in our view, the disallowance of depreciation has been rightly made by the lower authorities because the premises were never used for business purposes. In these circumstances, we find nothing wrong in the order of the ld. CIT(A) and confirm the same. 12. I.T.A.No.918/Mum/09 - : In this appeal various grounds have been raised but the only issue raised is regarding confirmation of levy of penalty u/s.271[1][c]. 13. After hearing both the parties, we find that assessee has made a claim for depreciation amount....
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....Company was under the impression that it is statutory required and as per the Companies Act mandatory to claim depreciation on fixed assets. In liew of this it was claimed, but to buy peace we have withdrawn in income tax. 10. We request your honour to take a lenient view and drop the proceedings initiated u/s.271[1][c] of I.T.Act 191 and obliged." The AO did not accept the submissions and observed that it is a false claim and ultimately minimum penalty of Rs. 8,03,285/- was levied u/s.271[1][c]. 14. On appeal, the explanation given before the AO was mainly repeated. The ld. CIT(A) observed that assessee has furnished inaccurate particulars of income by claiming wrong depreciation and, therefore, confirmed the penalty levied by the AO. 15. Before us, Ld.counsel of the assessee submitted that there is no failure to disclose any particulars and it was merely a legal claim and therefore penalty should not have been imposed. 16. On the other hand, Ld.DR submitted that since no resolution was passed to give the premises to the director for residential use, therefore, it was a case of false claim. The assessee had withdrawn this claim only when he was fully cornered ....