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2020 (10) TMI 609 - AT - Income TaxRevision u/s 263 - depreciation on the residential properties - HELD THAT:- In the instant case, where the matter was selected for complete scrutiny and there are addition to the fixed assets during the year, it is ordinarily expected that the AO examines these transactions thoroughly from the perspective of satisfying the twin test of ownership and usage for purposes of business rather than merely relying on the information submitted by the assessee company. It is not a question of kind and extent of enquiry and hence, a difference of approach and methodology of examination of a particular transaction as done by the AO and as suggested by the ld Pr CIT. No doubt every AO has his unique style of functioning and no hard and fast rule can be laid down as to how he should conduct the enquiry in discharge of his statutory functions. Where the factual scenario of a case prima facie shows the description of property as residential and cry for looking deep into it in terms of actual usage for the purposes of business, then a mere collection of registry document and keeping that on record cannot be held as conducting an enquiry. It is a clear case of lack of enquiry on part of the AO and the order thus passed is clearly erroneous and prejudicial to the interest of the Revenue. Finding of the ld Pr CIT that the order so passed by the AO is erroneous in so far as prejudicial to the interest of Revenue is upheld. Claim of depreciation on scooter - AO has to satisfy himself about the ownership and usage of the property. In the instant case, the scooter is registered in the name of one of the partners of the firm and therefore, it was incumbent on part of the AO to examine the reason as to how the same was reflected in the balance sheet of the firm and whether any payments were made by the firm or not and whether the assessee firm can still claim depreciation on such scooter even though the scooter was not registered in the name of the firm. However, no such enquiry was conducted and matter was thus not examined at all. Similarly, no enquiry was conducted regarding usage of scooter for business purposes - lack of enquiry on part of the Assessing officer and the finding of the ld Pr CIT that the order so passed by the AO is erroneous in so far as prejudicial to the interest of Revenue is upheld. Interest on FDRs - There is no enquiry and investigation carried out by the AO regarding the purpose for which the FDRs were created and placed as guarantee as so claimed by the assessee for business purposes. Consequently, there is no examination and finding as to how the interest on such FDRs can be included for the purposes of computing the partner’s remuneration u/s 40(b) - It is again a case of lack of enquiry on part of the AO and the finding of the ld Pr CIT to this extent that the order so passed by the AO is erroneous in so far as prejudicial to the interest of Revenue is upheld. Inadmissible expenses - All the ld Pr CIT has stated is that these expenses so claimed by the assessee include inadmissible expenses and the AO failed to make the enquiry and identify such expenses and therefore, the order so passed by the AO is erroneous in absence of making enquiry/investigation and we therefore, don’t see any infirmity in the said findings of the ld Pr CIT. We are of the considered view that there is no infirmity or illegality in action of the ld Pr CIT in exercising his revisionary jurisdiction u/s 263 - Decided against assessee.
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