TMI Blog2018 (10) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed. Accordingly, we allow the claim of the assessee company for such interest expenditure on bank loan taken for the purpose of the assessee business. So far as the claim of depreciation is concerned, we are of the view that the assessee is entitled to claim the depreciation @ 5% of the total value of the purchase of ₹ 34,72,037/-. The claim of the electricity charges has not been pressed by Ld. AR, therefore, the same is hereby dismissed being not pressed. Accordingly, the issues nos. 1, 2, 4 & 5 are hereby decided in favour of the assessee and against the revenue. Foreign travel expenses disallowance - Held that:- The assessee purchased the air ticket of jet airways from Mumbai–Newark-Mumbai on 20.10.2009. The assessee purchased the ticket in cash. A mail was found in which it was stated that the Jet airways detailed about the cash payment on 09 October. The contents speaks about the cash payment, therefore, the claim of the assessee was declined u/s 40A(3). The facts are not distinguishable at this stage. Moreover, no business expediency is on record in connection with the said transaction/travelling. CIT(A) has rightly confirmed the addition and in this rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,77,746/- u/s 40A(3) of the Act., 3. The brief facts of the case are that the assessee filed its return of income on 28.09.2010 declaring total income to the tune of ₹ 17,85,050/- for the A.Y. 2010-11. The return was processed u/s 143(1) of the Act by CPC Bangalore on 02.06.2011 determining a refund of ₹ 18,85,450/-. Thereafter, the case was selected for scrutiny under CASS. Notices u/s 143(2) 142(1) of the Act were issued and served upon the assessee. The assessee was a Private Limited Company in which the public were not substantially interested, engaged in the business of specialty eye care hospital and there was no change in assessee s business of the assessee during the year under consideration. The assessee purchased the residential flat at Dadar for which the total value was capitalized in the books to the tune of ₹ 3,47,20,373/-. The assessee claim the depreciation claim @ 10% to the tune of ₹ 34,72,037/- as against the allowable claim to the extent of 5% as per the Income Tax Act. The notice was given and after the reply of the assessee, the depreciation was reduced @ 5% of the cost of flat to the tune of ₹ 17,36,019/-. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee regarding purchase of the flat in sum of ₹ 3,47,20,373/- along with ancillary claim. The assessee is a private company and purchased the flat at Dadar bearing no.602 in the building namely Ornate Galaxy, located at L.T. Road, Dadar (E), Mumbai. The assessee took the loan in sum of ₹ 300 lacs and paying the installment along with interest. The assessee purchased the said residential premises for the residence of CMD of the assessee company. The AO declined the claim of the assessee in view of provision u/s 2(22)(e) of the I.T. Act, 1961. The AO declined the claim of the assessee on the ground of that there was no business nexus between the residential premises and the assessee company. Dr. S. Natarajan was having 99% share in the company who also having owned the flat at Wadala. The AO also stated that the assessee company was running a eye care center in which there was no emergency, therefore, there was no need to purchase the flat for CMD. There was not employer and employee relationship with the CMD and the assessee company. The claim of the assessee was accordingly declined. In appeal, the CIT(A) has confirmed the order of the AO. The Ld. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of the provision of any income tax act. The provision of Section 2(22)(e) of the Act is not applicable to the facts of the case. Moreover, there may be tax planning on the part of the assessee company but there is no violation of any provision of the Income Tax Act. The claim of the assessee is not liable to be declined. In this regard, we also find support of law settled in case titled as Union of India Vs. Azadi Bachao Andolan 263 ITR 706 (SC), Madras High Court in M.V. Vallipan Vs. CIT 170 ITR 238 Bhoruka Engg. Ltd. Vs. DCIT 356 ITR 25. The assessee company neither transferred the funds outside the company nor to the director, therefore, the provision of Section 2(22)(e) of the Act is not applicable to the facts of the case. Accordingly, we set aside the finding of the CIT(A) in this regard. Since the finding given by lower authorities attracting the provision of Section 2(22) (e) of the Act is not justifiable, therefore, ancillary claim is also not liable to be declined. So far as disallowance of repayment of loan installment is concerned the CIT(A) has deleted the disallowance subject to verification by the AO, we do not find any infirmity in the direction of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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