TMI Blog2019 (6) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income Tax (Appeals)-12, Mumbai [in short CIT(A)], in Appeal Nos CIT(A)-12/IT-213/ITO-6(1)(1)/13-14, CIT(A)-12/ITO-6(1)(1)/294/15-16, CIT(A)-12/ITO-6(1)(1)/686/15-16, CIT(A)-12/ITO-6(1)(1)/B2-561/16-17, CIT(A)-12/ITO-6(1)(1)/C-141/17-18 vide order dated 08.05.2018, 15.05.2018. The Assessments were framed by the Income Tax Officer, Ward 6(1)(1) Mumbai (in short ITO/ AO ) for the A.Ys. 2011-12, 2012-13, 2013-14, 2014-15 vide order dated 31.01.2014, 20.03.2015, 17.02.2016,19.08.2016,27.11.2017 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter the Act ). 2. The only common issue in these appeals of assessee is against the order of CIT(A) confirming the action of the AO in disallowing interest on bank loan for purchase of flat and also disallowance of depreciation on flat that was provided as residential accommodation to the Managing Director holding the same as non-business transaction. Facts and circumstances are exactly identical and also the issues are same in all the appeals. Hence, I will take the grounds from AY 2011-12 and decide the issue. For this assessee has raised the following three grounds in AY 2011-12: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010-11 has been decided against the appellant by the CIT(A)-12, Mumbai vide order dated 13.08.2015 in al No. CIT(A)-12/ITO- 6(1)(1)/65/13-14. In the said decision, the CIT(A) upheld the g of the A.O. that the residential flat purchased by the appellant cannot be termed as the business asset of the appellant and that the same was not used for the purpose of the appellant's business. The relevant part of the decision of the 01(A) for A.Y.2010-11 is reproduced as under: - 1. I have carefully perused both the written submission of the appellant and the assessment order of the A.O. It is seen that the flat was purchased purely for the personal use of the M.D., Dr. S. Natarajan. it/s the purchase of an asset, i.e. a residential house purely for his personal use. it is not meant for the common good of the other employees of the appellant company. it is definitely a transaction which cannot be termed as carried out for the commercial expediency of the appellant. Purchase of the flat by the appellant company has no business nexus with that of Dr. S. Nataranjan. Thus, it has been correctly held by the .4.0. that the flat purchased by the appellant has neither been exploited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the premises held by the Managing Director is also devoted to business usage. Hence, from both the angles, the property is used for the purpose of business. Hence, depreciation is clearly admissible. The Assessing Officer is directed accordingly . Thus, it is seen that the premises are used for the business purpose in the Shukra Diamond case and so the other issue like depreciation is to be allowed. But, here in the appellant s case such is not the case. The AO has very clearly established that the purchase of the residential accommodation is not for business. 17. Consequently, the CIT(A) upheld the disallowance of the depreciation claimed in respect of the said residential flat by stating as under: - 9.1 The Hon'ble Delhi High Court in the case of CIT vs. Modi Industries Ltd. (210 PR 1) and followed by Hon'ble Bombay High Court in re. Shukra Diamonds Ltd. case, held that the subject property constitutes business asset of the Appellant, and it is entitled to depreciation. The Appellant also relied on Board Circular Ref. F.No. 10/14/66-IT(AI) dated 12.12.1966, wherein it has been clarified as under: On reconsideration therefore the Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest as well as depreciation and finally held in Para 20 as under: - 20. As the facts of the case for the present A.Y.2011-12 are the same as that of the A.Y.2010-11, by following the order of the CIT(A) for A.Y.2010-11, it is held that the residential flat at Dadar purchased by the appellant during the previous year relevant to A.Y.2010-1 I does not constitute a business asset which has been put to use for the purpose of the appellant's business. Consequently, it is held that the depreciation claimed on the said residential property, the interest expenditure incurred on the loan taken for purchase of the said property and the electricity expenses incurred in respect of the said property cannot be considered to have been laid out wholly and exclusively for the purpose of the appellant's business. 5. I find that this issue of interest disallowance and deprecation disallowance is squarely covered by the decision of co-ordinate Bench of this Tribunal in assessee s own case in ITA No. 5325/Mum/2015 for AY 2010-11 vide order dated 24.10.2018, wherein Tribunal vide Para 4 allowed as under: - 4. Issue nos. 1 to 6 are inter-connected, therefore, are be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. However, on the other hand, the Ld. Representative of the Department has strongly relied upon the order passed by the CIT(A) in question. The factual position is not in dispute. The assessee purchased the flat bearing flat no.602, in the building namely Ornate Galaxy, located at L.T. Road, Dadar (E), Mumbai. No doubt, the assessee Dr. Natarajan is the CMD of hospital and is having 99% share of the assessee company. The flat is near to the hospital which facilitate the treatment of eye patient at any time. Even in the case of emergency the CMD can approach to the hospital promptly. In the instant case, the assessee did not transfer the fund to its director. The assessee took the bank loan to the tune of ₹ 300 lacs and by adding some more funds, purchased the flat bearing no.602, in the building namely Ornate Galaxy, located at L.T. Road, Dadar (E), Mumbai. It is purely the wish of the AO in which he desired that the Dr. S. Natarajan was having the flat at Wadala, therefore, the assessee company should not purchase the flat for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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