Dr. Avinash Ramchandra Phadnis, Pune V. Income-tax Officer,

ITA 2194/PUN/2013

• Counselvise Citation: 219424514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 20-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Capital asset; Business income; Depreciation; Income from undisclosed sources; Document seized; Period of limitation; Source of fund; Proportionate interest; Cost of acquisition; Validity of assessment; Benefit of exemption; Time period of passing order; Documents seized; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 133A; 153A; 37; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.2013 TO 2016/PN/2013 (ASSESSMENT YEARS : 2001-02 & 2004-05 TO 2006-07) INCOME TAX OFFICER, (CENTRAL)-II, PUNE. . APPELLANT VS. M/S PHADNIS CLINIC PVT. LTD., 1205/1-10, SHREE CLINIC, SHIVAJINAGAR, PUNE 411 004. PAN : AABCP0292K . RESPONDENT ITA NOS.2059 TO 2064/PN/2013 (ASSESSMENT YEARS : 2001-02 & 2003-04 TO 2007-08) PHADNIS CLINIC PVT. LTD., 1205/1-10, SHREE CLINIC, SHIVAJINAGAR, PUNE 411 005. PAN : AABCP0292K . APPELLANT VS. INCOME TAX OFFICER, (CENTRAL)-II, PUNE. . RESPONDENT ITA NO.2192 TO 2197/PN/2013 (ASSESSMENT YEARS : 2003-04 TO 2008-09) DR. AVINASH RAMCHANDRA PHADNIS, SHUBHALAXMI, OPPOSITE SHREE CLINIC, SHIVAJINAGAR, PUNE 411 005. PAN : ABQPP4715L . APPELLANT VS. INCOME TAX OFFICER, (CENTRAL)-II, PUNE. . RESPONDENT ASSESSEE BY : MR. SUNIL PATHAK DEPARTMENT BY : MR. B. C. MALAKAR DATE OF HEARING : 23-02-2015 DATE OF PRONOUNCEMENT : 10-04-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEALS RELATE TO TWO CONNECTED ASSES SEES INVOLVING CERTAIN COMMON ISSUES, THEREFORE THEY HAVE BEEN CLU BBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SA KE OF CONVENIENCE AND BREVITY. 2. ITA NO.2060/PN/2013 IN THE CASE OF PHADNIS CLINI C PVT. LTD. RELATING TO ASSESSMENT YEAR 2003-04 IS TAKEN AS THE LEAD CASE. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL, PUNE DATED 23.08.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 31.12.2008 PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 1 53C OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 3. IN THIS APPEAL, THE ABRIDGED GROUNDS OF APPEAL R AISED BY THE ASSESSEE ARE AS UNDER :- 1] THE ASST. U/S 153C R.W.S. 143(3) IS BAD IN LAW AND HENCE, THE SAME MAY BE DECLARED AS NULL AND VOID. 2] THE LEARNED CIT(A) ERRED IN DISALLOWING THE EXPE NSES OF RS.50,10,056/- CLAIMED ON ACCOUNT OF DEPRECIATION, REPAIRS AND MAINTENANCE, INTEREST ON LOAN AND ELECTRICITY CHARGES IN RESPECT OF THE PROPERTY SHUBHALAXMI. 3] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 4. BEFORE WE PROCEED TO ADJUDICATE THE SPECIFIC GRO UNDS OF APPEAL RAISED, IT WOULD BE APPROPRIATE TO REFER TO THE BACKGROUND OF THE DISPUTE. THE CAPTIONED ASSESSEES COMPRISE OF A COMPANY INCORPORA TED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND ONE OF IT S DIRECTORS, DR. AVINASH R. PHADNIS. ON 24.01.2007, A SEARCH ACTION U/S 132(1) OF THE ACT WAS CARRIED OUT IN THE CASE OF THE DIRECTORS OF PHADNIS CLINIC PVT. LTD., IN THE COURSE OF WHICH CERTAIN DOCUMENTS WERE SEIZED, WHICH ALSO INCLUDED DOCUMENTS BELONGING TO THE CAPTIONED ASSESSEE COMPANY. SIMULTANEOUSLY ON 24.01.2007, A SURVEY ACTION U/S 133A OF THE ACT WAS ALSO CARRIED OUT AT THE BUSINESS PREMISES OF THE CAPTIONED ASSESSEE COMPANY I.E. PHADNIS CLINIC PVT. LTD.. AS A CONSEQUENCE OF THE AFORESAID, ASSESSMENTS IN THE HANDS OF THE I NDIVIDUAL DIRECTOR HAS BEEN MADE U/S 153A R.S.W. 143(3) OF THE ACT WHEREAS IN T HE CASE OF ASSESSEE COMPANY, PHADNIS CLINIC PVT. LTD. ASSESSMENTS HAVE BEEN MADE U/S 153C R.W.S. 143(3) OF THE ACT FOR THE CAPTIONED ASSESSME NT YEARS. 5. IN THIS BACKGROUND, THE FIRST ISSUE RAISED BEFOR E US IS BY WAY OF GROUND OF APPEAL NO.1 WHEREIN IT IS CONTENDED THAT THE ASS ESSMENT MADE IN THE CASE OF THE COMPANY, PHADNIS CLINIC PVT. LTD. BY INVOKIN G SECTION 153C R.W.S. 143(3) OF THE ACT IS BAD IN LAW. IN THIS CONTEXT, THE LD. REPRESENTATIVE FOR THE ASSESSEE COMPANY SUBMITTED THAT THE INVOKING OF SEC TION 153C OF THE ACT WAS BAD IN LAW BECAUSE THE NECESSARY INGREDIENTS OF THE SECTION WERE NOT FULFILLED. THE MAIN PLANK OF HIS ARGUMENT IS THAT NO INCRIMINA TING DOCUMENTS OR MATERIAL WAS SEIZED FROM THE INDIVIDUAL DIRECTOR IN THE COUR SE OF SEARCH AND THEREFORE SECTION 153C OF THE ACT HAS BEEN WRONGLY INVOKED. THE LD. REPRESENTATIVE POINTED OUT THAT ON THE BASIS OF SEARCH ON THE INDI VIDUAL DIRECTORS, THE INFORMATION OR DOCUMENTS FOUND CAN AT BEST BE SAID TO BE PERTAINING TO ASSESSEE COMPANYS CLAIM FOR DEPRECIATION AND EXPEN SES RELATING TO A RESIDENTIAL BUILDING NAMED SHUBHALAXMI. IT WAS S UBMITTED THAT SUCH INFORMATION CANNOT BE SAID TO BE INCRIMINATING OR U NEARTHED DUE TO SEARCH BECAUSE THE SAID CLAIM WAS ALREADY MADE IN THE RETU RNS OF INCOME FILED BY THE ASSESSEE COMPANY IN THE NORMAL COURSE. 6. ON THIS ASPECT, THE LD. DEPARTMENTAL REPRESENTAT IVE APPEARING FOR THE REVENUE ARGUED THAT IN THE IMPUGNED ASSESSMENTS THE DISALLOWANCE OF EXPENSES/DEPRECIATION RELATING TO THE RESIDENTIAL P ROPERTY AS CLAIMED BY THE ASSESSEE COMPANY HAS BEEN MADE BASED ON THE DOCUMEN TS SEIZED DURING THE COURSE OF SEARCH ACTION. THEREFORE, THE PLEA R AISED BY THE ASSESSEE THAT THERE WAS NO INCRIMINATING DOCUMENTS FOUND SO AS TO INVALIDATE THE INVOKING OF SECTION 153C OF THE ACT IS NOT JUSTIFIED. 7. WE HAVE CAREFULLY CONSIDERED THE AFORESAID ASPEC T OF THE CONTROVERSY. THE STAND OF THE ASSESSEE IS THAT THE ADDITIONS/DIS ALLOWANCES WITH RESPECT TO THE DEPRECATION/EXPENSES RELATING TO THE RESIDENTIA L PROPERTY, SHUBHALAXMI HAS BEEN MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENTS ON THE BASIS OF AN INFORMATION AND MATERIAL ALREADY ON REC ORD AND NOT ON THE BASIS OF ANY INCRIMINATING EVIDENCE FOUND DURING THE COURSE OF SEARCH. IT HAS ALSO BEEN POINTED OUT THAT AS REGARDS THE SPECIFIC ISSUE OF DEPRECIATION/EXPENSES OF RESIDENTIAL PROPERTY, THE SAME HAS BEEN CLAIMED BY THE ASSESSEE IN THE STATEMENT OF ACCOUNTS ALREADY WITH THE DEPARTMENT A LONGWITH THE RETURNS OF INCOME FILED IN THE NORMAL COURSE. 8. IN THIS CONTEXT, WE FIND THAT THE CIT(A) HAS DIS AGREED WITH THE ASSESSEE BY FOLLOWING THE RATIO OF THE JUDGEMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF SSP AVIATION LTD. VS. DCIT, (2012) 20 TAXMA NN.COM 214 (DELHI). THE HONBLE HIGH COURT IN THE CASE OF SSP AVIATION LTD. (SUPRA) HAS MADE THE FOLLOWING OBSERVATIONS IN THE CONTEXT OF SECTION 15 3C OF THE ACT :- THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT TH E ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLE S OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST BE SHO WN TO CONCLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. 9. IF THE FACTS OF THE PRESENT CASE ARE EXAMINED IN THE LIGHT OF THE AFORESAID OBSERVATIONS OF THE HONBLE DELHI HIGH COURT, IT WO ULD BE NOTICED THAT THE SEARCH IN THE CASE OF THE INDIVIDUAL DIRECTORS RESU LTED IN SEIZURE OF DOCUMENTS WHICH BELONGED TO THE ASSESSEE COMPANY. THE ASSESS EE COMPANY HAS ALSO NOT DISPUTED THE AFORESAID POSITION BUT THE CLAIM S ETUP IS THAT THE INFORMATION IN SUCH DOCUMENTS WAS ALREADY AVAILABLE WITH THE REVEN UE AND WAS NOT OF INCRIMINATING NATURE. THE AFORESAID OBJECTION OF T HE ASSESSEE GETS ANSWERED BY THE DISCUSSION MADE BY THE HONBLE DELHI HIGH CO URT WHEREIN IT IS OBSERVED THAT THERE IS NO REQUIREMENT IN SECTION 153C(1) OF THE ACT THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH DOCUMENT S FOUND ON THE PERSON SEARCHED MUST ALSO BE SHOWN TO REFLECT CONCLUSIVELY ANY UNDISCLOSED INCOME OF THE OTHER PERSON. IN THIS VIEW OF THE MATTER, I N OUR VIEW, THE CIT(A) MADE NO ERROR IN DISMISSING ASSESSEES PLEA CHALLENGING THE VALIDITY OF ASSESSMENT U/S 153C R.W.S. 143(3) OF THE ACT. THE SAID DECISION O F THE CIT(A) IS HEREBY AFFIRMED AND ACCORDINGLY, ASSESSEE FAILS ON GROUND OF APPEAL NO.1. 10. IN SO FAR AS THE GROUND OF APPEAL NO.2 IS CONCE RNED, THE DISPUTE ARISES FROM THE DEPRECIATION CLAIMED BY THE ASSESSEE WITH RESPECT TO A RESIDENTIAL BUILDING NAMED SHUBHALAXMI LOCATED AT SURVEY NO.5 69, CTS NO.1205/1/3/4, BHAMBURDA, OFF APTE SHIROLE ROAD, SHIVAJI NAGAR, PU NE. THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE DENIED ASSESSEE S CLAIM FOR DEPRECIATION ON THE AFORESAID PROPERTY PRIMARILY ON THE GROUND THAT THE OWNERSHIP OF THE PROPERTY DID NOT VEST WITH THE ASSESSEE COMPANY AS THE SAID PROPERTY WAS PURCHASED BY ITS DIRECTORS IN THEIR INDIVIDUAL NAME S. 11. IN BRIEF, THE RELEVANT FACTS AND CIRCUMSTANCES LEADING TO THE AFORESAID DISPUTE CAN BE SUMMARIZED AS FOLLOWS. THE APPELLAN T IS A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE PROVISIONS OF THE CO MPANIES ACT, 1956 AND IS, INTER-ALIA, ENGAGED IN THE BUSINESS OF RUNNING A GYNAECOLOGY AND INFERTILITY CLINIC/HOSPITAL. TWO OF ITS DIRECTORS, NAMELY, DR. AVINASH R. PHADNIS AND DR. (MRS.) AMITA AVINASH PHADNIS ARE ASSOCIATED WITH TH E COMPANY IN THEIR PROFESSIONAL CAPACITY. THE ASSESSING OFFICER NOTED THAT ON 27.09.2002 THE DIRECTORS OF THE COMPANY VIZ. DR. AVINASH R. PHADNI S AND DR. (MRS.) AMITA AVINASH PHADNIS PURCHASED 9 AND 5 APARTMENTS RESPEC TIVELY IN A RESIDENTIAL PROPERTY NAMED, SHUBHALAXMI WHICH CONSISTED OF 14 A PARTMENTS. THE TOTAL COST OF THE PROPERTY WAS 2,60,09,920/- AND THE SOUR CE OF INVESTMENT WAS AS DETAILED BELOW :- (I) DR. AVINASH R. PHADNIS RS.21,30,362/- (OWN FUNDS) (II) DR. (MRS.) AMITA A. PHADNIS RS.30,79,558/- (OWN FUNDS) (III) ICICI BANK HOME LOAN RS.2,08,00,000/- TOTAL RS.2,60,09,920/- 12. THE LOAN FROM ICICI BANK WAS RAISED BY THE DIRE CTOR, DR. AVINASH R. PHADNIS IN HIS INDIVIDUAL CAPACITY. ONCE THE PROPE RTY WAS ACQUIRED BY THE TWO DIRECTORS IN THEIR INDIVIDUAL NAMES, IT WAS TRANSFE RRED/INCORPORATED INTO THE ACCOUNT BOOKS OF THE ASSESSEE COMPANY AND TAKEN AS A PART OF ITS ASSETS THROUGH A JOURNAL BOOK ENTRY. SIMULTANEOUSLY, THE PERSONAL FUNDS PUT INTO THE PURCHASE OF PROPERTY BY THE TWO DIRECTORS WERE TRAN SFERRED BY WAY OF BOOK ENTRIES AS LIABILITIES OF THE ASSESSEE COMPANY. TH E ICICI BANK HOME-LOAN LIABILITY WAS ALSO TRANSFERRED BY WAY OF A BOOK ENT RY AS A LIABILITY OF THE ASSESSEE COMPANY BETWEEN THE DIRECTOR AND THE ASSES SEE COMPANY. THE ASSESSEE COMPANY STARTED REIMBURSING THE REPAYMENT OF INSTALLMENTS OF PRINCIPAL AND INTEREST WHICH DR. AVINASH R. PHADNIS WAS PAYING TO THE BANK. SIMULTANEOUSLY, EXPENSES ON PROPERTY TAX, ELECTRICI TY BILLS, REPAIRS AND RENOVATION, ETC. WERE ALSO INCURRED BY THE ASSESSEE COMPANY AND CLAIMED AS AN EXPENDITURE IN ITS PROFIT & LOSS ACCOUNT. THE I NTEREST PAID ON LOAN FROM ICICI BANK HOME-LOAN WAS ALSO CLAIMED AS AN EXPENDI TURE IN THE PROFIT & LOSS ACCOUNT. IN THE RETURN OF INCOME, ASSESSEE ALSO CL AIMED DEPRECIATION ON THE COST OF THE BUILDING ON THE GROUND THAT THE BUILDIN G WAS OWNED AND PUT TO USE FOR ITS BUSINESS. 13. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO JUSTIFY ITS CLAIM OF DEPRECIATION AND OTHER RELATED EXPENDITURE ON THE G ROUND THAT THE PROPERTY WAS BELONGING TO THE TWO DIRECTORS IN THEIR INDIVID UAL CAPACITY. THE STAND OF THE ASSESSEE HAS BEEN LUCIDLY DETAILED BY THE ASSES SING OFFICER IN THE ASSESSMENT ORDER AND BEFORE US ALSO THE SAME HAS BE EN REITERATED. FIRSTLY, THE PLEA OF THE ASSESSEE WAS THAT THE TITLE OF THE PROPERTY WAS NOT IN THE NAME OF THE ASSESSEE BUT IN SUM AND SUBSTANCE ASSESSEE W AS THE RIGHTFUL OWNER OF THE PROPERTY. IT WAS POINTED OUT THAT THE EXTRACTS OF THE MINUTES OF THE BOARD MEETINGS OF THE ASSESSEE COMPANY PRIOR TO THE PURCH ASE OF PROPERTY AS WELL AS THE SUBSEQUENT EFFORTS OF THE DIRECTORS VIS--VI S THE ASSESSEE COMPANY SHOWED THAT THE INTENTION WAS ALWAYS TO ENSURE THAT ASSESSEE ALONE WAS THE BENEFICIARY OF THE PROPERTY. IT HAS BEEN EXPLAINED BEFORE US THAT THE REASON FOR INITIATING THE PURCHASE OF THE NEW PREMISES WAS TO ACCOMMODATE THE GROWING BUSINESS OF THE HOSPITAL AND ALSO TO ENSURE THAT DR . AVINASH R. PHADNIS AND HIS FAMILY STAYED IN THE VICINITY OF THE HOSPITAL S O THAT HE WAS AVAILABLE ROUND THE CLOCK. IT WAS POINTED OUT THAT DR. AVINASH R. PHADNIS WAS WORKING AS A CONSULTANT WITH THE ASSESSEE COMPANY AND WAS ALSO B EING PAID PROFESSIONAL FEES FOR THE SERVICES RENDERED. IN THE COURSE OF T HE HEARING, THE LD. REPRESENTATIVE EMPHASIZED THAT THE DR. AVINASH R. P HADNIS WAS THE DRIVING FORCE BEHIND THE BUSINESS OF THE ASSESSEE COMPANY A ND THAT THE BUSINESS IS PRIMARILY DEPENDENT UPON HIS EXPERTISE AND ROUND TH E CLOCK AVAILABILITY. THE ASSESSEE COMPANY WAS OFFERING SPECIALIZED INFERTILI TY TREATMENT AND RUNNING A MATERNITY HOSPITAL WHEREIN EMERGENCIES ARE FREQUENT AND THEREFORE IT WAS A CRUCIAL BUSINESS NECESSITY THAT THE DR. AVINASH R. PHADNIS BE ACCOMMODATED IN SUCH A MANNER THAT HE IS AVAILABLE FOR EMERGENCI ES ROUND THE CLOCK. THE LD. REPRESENTATIVE POINTED OUT THAT THE NEW BUILDIN G PURCHASED WAS EXACTLY OPPOSITE THE HOSPITAL PREMISES AND THE PURCHASE WAS NECESSITATED FOR THE AFORESAID REASONS. 14. IT WAS ALSO EXPLAINED THAT THE TITLE OF THE PRO PERTY WAS IN THE NAME OF THE DIRECTORS BECAUSE COMMERCIALLY IT WAS FOUND MORE BE NEFICIAL TO AVAIL THE HOME-LOAN FROM ICICI BANK IN THE PERSONAL NAME OF T HE DIRECTOR INSTEAD IN THE NAME OF THE ASSESSEE COMPANY. IT WAS EXPLAINED THA T DR. AVINASH R. PHADNIS AGREED TO TAKE THE LOAN IN HIS NAME ON THE CONDITIO N THAT THE ASSESSEE COMPANY TOOK OVER THE RESPONSIBILITY FOR THE REPAYM ENT OF LOAN AND INTEREST THEREON. ALL THESE ASPECTS HAVE BEEN SOUGHT TO BE SUPPORTED BY THE RESOLUTIONS PASSED IN THE MEETING OF THE BOARD OF D IRECTORS OF THE ASSESSEE COMPANY, COPIES OF WHICH HAVE ALSO BEEN PLACED IN T HE PAPER BOOK FILED BEFORE US. 15. IT WAS EXPLAINED THAT AS SOON AS THE LOAN OF RS .208 LAKHS WAS RAISED BY DR. AVINASH R. PHADNIS FROM THE BANK, THE LIABILITY OF THE SAME WAS TRANSFERRED TO THE BOOKS OF THE ASSESSEE COMPANY BY WAY OF A JO URNAL ENTRY. THE REPAYMENT OF THE PRINCIPAL AMOUNT OF THE LOAN AS WE LL AS INTEREST IS BEING MADE BY THE ASSESSEE COMPANY BY WAY OF REIMBURSEMENT TO DR. AVINASH R. PHADNIS. IT WAS THEREFORE EMPHASIZED THAT IN REALI TY AND ACTUALLY, PROPERTY BELONGS TO THE ASSESSEE COMPANY AND IS IN ITS POSSE SSION, THOUGH THE DOCUMENTS OF PURCHASE ARE EXECUTED IN THE NAME OF I NDIVIDUAL DIRECTORS. IT WAS POINTED OUT THAT THE PREMISES HAVE BEEN ALLOTTE D TO DR. AVINASH R. PHADNIS AND HIS FAMILY FOR HIS RESIDENCE. THE LD. REPRESENTATIVE, AT THE TIME OF HEARING, POINTED OUT THAT PRIOR TO SHIFTING INTO NEW PROPERTY DR. AVINASH R. PHADNIS ALONG WITH HIS FAMILY WAS STAYING IN THE HO SPITAL PREMISES ITSELF. IT WAS ALSO POINTED OUT THAT APART FROM THE BEING USED AS A RESIDENCE FOR DR. AVINASH R. PHADNIS AND HIS FAMILY, PROPERTY IS BEIN G USED FOR HOSPITAL BUSINESS ALSO, FOR INSTANCE WAITING ROOMS FOR THE P ATIENTS, EXAMINATION ROOM FOR PATIENTS, REST ROOM FOR STAFF/DOCTORS IN THE NI GHT, PLACE FOR THE MEETING OF DOCTORS, ETC.. IT WAS POINTED OUT THAT ALMOST 50% OF THE AREA IN THE NEW PROPERTY WAS BEING DIRECTLY USED FOR THE HOSPITAL B USINESS ON ACCOUNT OF THE AFORESAID ACTIVITIES. ALL THESE SUBMISSIONS, WHICH WERE ADVANCED BEFORE THE LOWER AUTHORITIES HAVE ALSO BEEN REITERATED BEFORE US. 16. BEFORE US, THE LD. REPRESENTATIVE VEHEMENTLY PO INTED OUT THAT THE FACTS AND CIRCUMSTANCES OF THE CASE DEMONSTRATE THAT THE FUNDS FOR ACQUISITION OF THE PROPERTY ARE BEING PROVIDED BY THE ASSESSEE COM PANY AND THAT THE EXECUTION OF PURCHASE DEED IN THE NAMES OF THE DIRE CTORS WAS MERELY TO SUIT THE COMMERCIAL INTEREST OF ASSESSEE COMPANY BY AVAI LING CONCESSIONAL LOAN FROM ICICI BANK IN THE INDIVIDUAL NAME OF THE DIREC TOR. IN THE COURSE OF THE HEARING, THE LD. REPRESENTATIVE HAS ALSO RELIED UPO N THE FOLLOWING DECISIONS IN ORDER TO SUPPORT THE PLEA THAT THAT DEPRECIATION IS ALLOWABLE IN THE HANDS OF THE ASSESSEE :- (I) ROHAN BUILDERS (INDIA) PVT. LTD. VS . ACIT (ITA NO.813/PN/2004 DATED 10.03.2007; (II) ACIT VS. CHOICE TRADING CORP ORATION LTD., 90 ITD 1 (COCH.); (III) GOWERSONS PUBLISHERS (P) LTD. VS. CI T, 240 ITR 191 (DEL.); AND, (IV) CIT VS. FAZILKA DABWALI TPT CO. PVT. LTD., 270 ITR 398 (P&H). 17. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE APPEARING FOR THE REVENUE HAS ASSAILED THE ARGUMENTS PUT-FORTH BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COULD NOT BE SAID TO BE OW NER OF THE PROPERTY SO AS TO BE ALLOWED DEPRECIATION U/S 32(1) OF THE ACT. I N THIS CONTEXT, REFERENCE HAS BEEN MADE TO THE DISCUSSION BY THE ASSESSING OFFICE R IN PARA 5.6 TO 5.11 OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. THE LD. DEPARTMENTAL REPRESENTATIVE EMPHASIZED THAT IN THE PRESENT CASE THE PROPERTY HAS INDEED BEING PURCHASED BY THE INDIVIDU AL DIRECTORS IN THEIR OWN NAME AND BY ARRANGING FUNDS IN THEIR INDIVIDUAL CAP ACITY AND THAT THE PROPERTY HAS ALSO BEEN TRANSFERRED IN THEIR INDIVIDUAL NAMES . THE TITLE OF THE PROPERTY IS BEING HELD BY THE TWO INDIVIDUAL DIRECTORS AND IT C OULD NOT BE SAID THAT ASSESSEE HAD PURCHASED THE PROPERTY AT ANY STAGE. ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE, AN IMMOVABLE PROPERTY CANNOT BE TRANSFERRED OTHERWISE THAN BY WAY OF REGISTERED DEED OF CONVEYA NCE ON PAYMENT OF APPROPRIATE STAMP DUTY AND THAT TRANSFER BY WAY OF A JOURNAL/BOOK ENTRY WOULD NOT ACT AS A SUBSTITUTE FOR THE STATUTORILY REQUIRE D CONVEYANCE DEED. THEREFORE, THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS CANNOT BE USED TO PROVE OWNERSHIP OF THE IMMOVABL E PROPERTY FOR THE PURPOSES OF CLAIMING DEPRECIATION U/S 32(1) OF THE ACT. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 32(1) OF THE ACT PERMITS DEPRECIATION ON THE COST OF THE PRE SCRIBED ASSETS WHICH ARE OWNED BY THE ASSESSEE AND USED FOR THE PURPOSES OF BUSINESS OR PROFESSION. IT IS WELL UNDERSTOOD THAT IN ORDER TO CLAIM THE AL LOWANCE FOR DEPRECIATION WITH RESPECT TO AN ASSET, ASSESSEE IS NOT ONLY REQUIRED TO PUT IT TO USE FOR THE PURPOSES OF ITS BUSINESS BUT ALSO SHOULD BE ITS OWN ER. IN THE PRESENT CASE, THE BUILDING IN QUESTION NAMED, SHUBHALAXMI CONSISTS OF 14 APARTMENTS WHICH HAVE BEEN ACQUIRED BY THE TWO DIRECTORS OF THE ASSE SSEE COMPANY IN THEIR INDIVIDUAL NAMES I.E. THE TITLE DEEDS IN RESPECT OF 14 APARTMENTS IN THE BUILDING STAND IN THE NAME OF THE TWO DIRECTORS, DR. AVINASH R. PHADNIS AND DR. (MRS.) AMITA AVINASH PHADNIS. THE COST OF ACQUISITION IS STATED TO BE 2,60,09,920/-. IT IS ALSO NOT IN DISPUTE THAT THE SAID PROPERTY HA S BEEN SHOWN AS AN ASSET IN THE BALANCE SHEET OF THE ASSESSEE COMPANY AND CORRE SPONDINGLY ON THE LIABILITY SIDE IN THE BALANCE SHEET THE RELEVANT AM OUNT HAS BEEN SHOWN PAYABLE TO THE TWO DIRECTORS ON ACCOUNT OF THEIR OW N FUNDS DEPLOYED FOR BUYING THE PROPERTY AS ALSO THE AMOUNT OF ICICI BANK HOME- LOAN RAISED BY ONE OF THE DIRECTORS TO ACQUIRE THE PROPERTY. THE MOOT QUESTI ON IS AS TO WHETHER SUCH AN ARRANGEMENT ENTITLES THE ASSESSEE TO BE UNDERSTOOD AS AN OWNER OF THE PROPERTY QUA THE PROVISIONS OF SECTION 32(1) OF THE ACT. 19. IN THIS CONTEXT, IT IS GAINFUL TO REFER TO THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. V S. CIT, (1999) 239 ITR 775 (SC). AS PER THE HONBLE SUPREME COURT, THE TE RMS OWN, OWNERSHIP AND OWNED ARE GENERIC AND RELATIVE TERMS AND THEY WOULD HAVE WIDE AS WELL AS NARROW CONNOTATION, DEPENDING ON THE CONTEXT IN WHICH THE TERMS HAVE BEEN USED. PERTINENTLY, THE ISSUE BEFORE THE HONB LE SUPREME COURT RELATED TO THE CLAIM OF DEPRECATION U/S 32(1) OF THE ACT WHERE IN THE BUILDING IN QUESTION WAS NOT REGISTERED IN THE NAME OF THE ASSESSEE. TH E HONBLE SUPREME COURT REFERRED TO ITS EARLIER DECISION IN THE CASE OF THE CIT VS. PODAR CEMENT (P) LTD., (1997) 226 ITR 625 (SC) AND OBSERVED THAT ASSISTANC E CAN BE TAKEN FROM THE LAW LAID DOWN IN THE AFORESAID CASE FOR FINDING OUT THE MEANING OF THE TERM OWNED AS OCCURRING IN SECTION 32(1) OF THE ACT. IT WAS HELD BY THE HONBLE SUPREME COURT :- IN OUR OPINION, THE TERM 'OWNED' AS OCCURRING IN S ECTION 32(1) OF THE INCOME TAX ACT, 1961, MUST BE ASSIGNED A WIDER MEANING. AN YONE IN POSSESSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINION OVER THE PROPERTY AS WOULD ENABLE OTHERS BEING EXCLUDED THEREFROM AND HAVING T HE RIGHT TO USE AND OCCUPY THE PROPERTY AND/OR TO ENJOY ITS USUFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDINGS THOUGH A FORMAL DEED OF TIT LE MAY NOT HAVE BEEN EXECUTED AND REGISTERED AS CONTEMPLATED BY THE TRAN SFER OF PROPERTY ACT, THE REGISTRATION ACT, ETC. 'BUILDING OWNED BY THE ASSES SEE' THE EXPRESSION AS OCCURRING IN SECTION 32(1) OF THE INCOME TAX ACT ME ANS THE PERSON WHO HAVING ACQUIRED POSSESSION OVER THE BUILDING IN HIS OWN RI GHT USES THE SAME FOR THE PURPOSES OF THE BUSINESS OR PROFESSION THOUGH A LEG AL TITLE HAS NOT BEEN CONVEYED TO HIM CONSISTENTLY WITH THE REQUIREMENTS OF LAWS SUCH AS THE TRANSFER OF PROPERTY ACT AND THE REGISTRATION ACT, ETC., BUT NEVERTHELESS IS ENTITLED TO HOLD THE PROPERTY TO THE EXCLUSION OF A LL OTHERS. 20. THE AFORESAID DISCUSSION BY THE HONBLE SUPREME COURT SHOWS THAT A FORMAL DEED OF TITLE MAY NOT HAVE BEEN EXECUTED AND REGISTERED AS CONTEMPLATED BY THE TRANSFER OF PROPERTY ACT, REGIS TRATION ACT, ETC. AND YET AN ASSESSEE CAN BE SAID TO BE OWNER OF THE PROPERTY WITHIN THE MEANING OF SECTION 32(1) OF THE ACT. SO HOWEVER, IT IS FURTHE R EXPLAINED BY THE HONBLE SUPREME COURT THAT IN THE CONTEXT OF SECTION 32(1) OF THE ACT, AN OWNER MEANS THE PERSON WHO ACQUIRES POSSESSION OVER THE B UILDING IN HIS OWN RIGHT, USES THE SAME FOR THE PURPOSES OF BUSINESS THOUGH A LEGAL TITLE MAY NOT HAVE BEEN CONVEYED TO HIM BUT HE IS OTHERWISE ENTITLED T O HOLD THE PROPERTY TO THE EXCLUSION OF ALL OTHERS . IN THE BACKGROUND OF THE SAID LEGAL POSITION, NO W WE MAY EXAMINE THE FACTS IN THE PRESENT CASE SO AS TO DETERMINE WHETHER ASSESSEE CAN BE UNDERSTOOD AS AN OWNER FOR THE PURP OSES OF SECTION 32(1) OF THE ACT. 21. NO DOUBT, IN THE PRESENT CASE, THE FORMAL DEED OF TITLE OF THE PROPERTY IS NOT EXECUTED AND REGISTERED IN THE NAME OF ASSESSEE COMPANY. THE MOOT QUESTION IS AS TO WHETHER ASSESSEE CAN BE SAID TO H AVE ACQUIRED POSSESSION OVER THE PROPERTY IN ITS OWN RIGHT AND IS USING IT FOR THE PURPOSES OF BUSINESS AND IS ENTITLED TO HOLD THE PROPERTY TO THE EXCLUSI ON OF ALL OTHERS. IN OUR CONSIDERED OPINION, THE ANSWER TO THE AFORESAID QUE STION IS NO. WE SAY SO FOR THE REASON THAT IN THE PRESENT CASE, THE ASSESSEE C ANNOT BE SAID TO HAVE ACQUIRED POSSESSION OF THE PROPERTY IN HIS OWN RIGH T OR EXERCISING SUCH DOMINION OVER IT AS WOULD ENABLE OTHERS BEING EXCLU DED THEREFROM. ADMITTEDLY, THE ONLY MECHANISM IN TERMS OF WHICH AS SESSEE IS USING THE PROPERTY IS THE ARRANGEMENT WITH THE INDIVIDUAL DIR ECTORS, WHICH IS SUPPORTED BY THE RESOLUTIONS OF THE BOARD OF DIRECTORS. THE INDIVIDUAL DIRECTORS HAVE ACQUIRED THE PROPERTY IN THEIR NAMES AND THE TRANSF ER OF THE PROPERTY INTO THE ACCOUNT BOOKS OF THE ASSESSEE COMPANY IS MERELY BY WAY OF A BOOK ENTRY SUPPORTED BY THE RESOLUTION OF THE BOARD OF DIRECTO RS. SUCH ARRANGEMENT OSTENSIBLY DOES NOT INVEST THE ASSESSEE WITH THE DO MINION OVER THE PROPERTY TO THE EXCLUSION OF ALL OTHERS. THEREFORE, IN THE LIG HT OF THE LEGAL POSITION LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MY SORE MINERALS LTD. (SUPRA) AND THE FACT-POSITION IN THE PRESENT CASE, IN OUR VIEW, THE LOWER AUTHORITIES RIGHTLY HELD THE ASSESSEE NOT ENTITLED FOR DEPRECIATION U/S 32(1) OF THE ACT WITH RESPECT OF THE PROPERTY IN QUESTION. 22. BEFORE PARTING, WE MAY REFER TO THE DECISIONS W HICH HAS BEEN RELIED UPON BY THE ASSESSEE BEFORE US. IN THE CASE OF ROH AN BUILDERS (INDIA) PVT. LTD. (SUPRA), THE ISSUE RELATED TO ALLOWANCE OF DEP RECIATION ON VEHICLES WHICH WERE PURCHASED IN THE NAME OF THE INDIVIDUAL DIRECT ORS BUT WERE SHOWN AS ASSETS OF THE ASSESSEE COMPANY. THE TRIBUNAL ALLOW ED THE CLAIM FOR DEPRECIATION ON SUCH VEHICLES ALTHOUGH THE REGISTRA TION OF THE VEHICLE STOOD IN THE NAME OF THE INDIVIDUAL DIRECTORS. THE TRIBUNAL FOUND THAT THE ASSESSEE COMPANY HAD INVESTED THE INITIAL AMOUNT ON PURCHASE OF CAR AND THE LOAN WAS ALSO REPAID BY THE ASSESSEE COMPANY. THE TRIBUNAL ALSO FOUND THAT THE ASSESSEE HAD STATED BEFORE THE RTO THAT THE CAR ACT UALLY BELONGED TO THE COMPANY AND IT PAID DIFFERENTIAL ROAD TAX IN RESPEC T OF THE CAR ALSO. CONSIDERING THE ENTIRETY OF CIRCUMSTANCES, THE TRIB UNAL CAME TO CONCLUDE THAT ASSESSEE COMPANY WAS IN POSSESSION OF THE CAR IN IT S OWN RIGHTS AND EXERCISED A DOMINION TO THE EXCLUSION OF OTHER AND THEREFORE ALLOWED DEPRECIATION ON THE SAME. IN THE CASE BEFORE THE T RIBUNAL, THE ISSUE RELATED TO A MOVABLE PROPERTY AND CONSIDERING THE ENTIRETY OF FACTS, IT WAS CONCLUDED THAT THE ASSESSEE COMPANY ENJOYED DOMINION OVER THE CAR TO THE EXCLUSION OF OTHERS. WHEREAS IN THE PRESENT CASE THE FACTUAL FI NDINGS ARE TO THE CONTRARY AND MOREOVER THE CASE BEFORE US RELATES TO AN IMMOV ABLE PROPERTY AND NOT A MOVABLE PROPERTY BEING CONSIDERED BY THE TRIBUNAL I N THE CASE OF ROHAN BUILDERS (INDIA) PVT. LTD. (SUPRA). THEREFORE, THE RATIO OF THE SAID DECISION IS NOT APPLICABLE IN THE PRESENT CASE. 23. ON THE SAME ANALOGY THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF CHOICE TRADING CORPORATION LTD. (SUP RA) RELIED UPON BY THE ASSESSEE IS ALSO NOT APPLICABLE IN THE PRESENT CASE AS IT RELATED TO A MOVABLE ASSET. 24. SIMILAR IS THE SITUATION WITH RESPECT TO THE DE CISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF FAZILKA DABWALI TPT CO. PVT. LTD. (SUPRA). 25. THE ONLY OTHER DECISION RELIED UPON BY THE ASSE SSEE BEFORE US IS THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF GOWERSONS PUBLISHERS (P) LTD. (SUPRA). IN THE CASE BEFORE TH E HONBLE DELHI HIGH COURT, DEPRECIATION CLAIMED BY THE ASSESSEE ON A BUILDING WAS DENIED ON THE GROUND THAT THE FORMAL SALE DEED WAS NOT EXECUTED I N FAVOUR OF THE ASSESSEE. THE HONBLE HIGH COURT FOUND IT FIT TO ALLOW THE CL AIM OF DEPRECIATION BY NOTICING THAT ASSESSEE COMPANY HAD TAKEN OVER THE B UILDING FROM A FIRM ALONG WITH OTHER ASSETS AND IT WAS REFLECTED IN THE BALAN CE SHEET. THE ASSESSEE HAD PAID FULL PRICE AND WAS USING THE ASSET FOR ITS OWN BUSINESS. THE HONBLE HIGH COURT FOUND THAT FOR REASON OF SOME RESTRICTIO NS WHICH WERE APPLICABLE FOR A SPECIFIED PERIOD, A FORMAL SALE DEED WITH RESPECT TO THE PROPERTY COULD NOT BE EXECUTED IN FAVOUR OF THE ASSESSEE. THEREFORE, IT WAS HELD THAT MERE ABSENCE OF A DULY REGISTERED DOCUMENT OF TITLE IN FAVOUR OF THE ASSESSEE WOULD NOT DISENTITLE THE ASSESSEE FROM THE CLAIM OF DEPRECIAT ION; AND, ASSESSEE CAN BE SAID TO BE THE OWNER OF THE PROPERTY FOR THE PURPOS ES OF SECTION 32(1) OF THE ACT. THE FACT-SITUATION IN THE CASE BEFORE THE HON BLE DELHI HIGH COURT STOOD ON A COMPLETELY DIFFERENT FOOTING THAN THE CASE BEF ORE US. IN THE CASE BEFORE THE HONBLE DELHI HIGH COURT, ONLY A DELAY IN THE E XECUTION OF A FORMAL SALE DEED IN THE PROPERTY IN FAVOUR OF THE ASSESSEE WAS THE STUMBLING BLOCK FOR THE CLAIM OF DEPRECIATION. WHEREAS IN THE PRESENT CASE , THERE IS NO SUCH SITUATION AND RATHER IT IS A CASE WHERE THERE IS NO SCOPE FOR ARGUMENT THAT A REGISTERED DOCUMENT OF TITLE IS LIABLE TO BE EXECUTED IN FAVOU R OF THE ASSESSEE. THUS, THE DECISION IN THE CASE OF GOWERSONS PUBLISHERS (P) LT D. (SUPRA) STANDS ON A QUALITATIVELY DIFFERENT FOOTING THAN THE PRESENT CA SE AND THEREFORE THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT DOES NOT HELD THE CASE OF THE ASSESSEE. 26. FOR ALL THE AFORESAID REASONS, WE HEREBY AFFIRM THE ACTION OF THE LOWER AUTHORITIES IN DENYING THE ASSESSEES CLAIM OF DEPR ECIATION U/S 32(1) OF THE ACT IN RESPECT OF THE PROPERTY SHUBHALAXMI. THUS, ON T HIS ASPECT, ASSESSEE FAILS. 27. IN GROUND OF APPEAL NO.2, ANOTHER ASPECT OF DIS PUTE IS IN RELATION TO THE DISALLOWANCE OF VARIOUS EXPENSES, VIZ. REPAIRS & MA INTENANCE, INTEREST ON LOAN AND ELECTRICITY CHARGES INCURRED IN RELATION TO THE PROPERTY SHUBHALAXMI. THE DETAILS OF SUCH EXPENSES ARE AS UNDER :- INTEREST ON LOAN - RS.10,27,165/- REPAIRS & MAINTENANCE - RS.13,60,329/- ELECTRICITY CHARGES - RS.20,970/- 28. IN THIS CONTEXT, THE ASSESSING OFFICER NOTED TH AT THE PROPERTY IN QUESTION WAS NOT BEING USED FOR DIRECT BUSINESS OPERATIONS O F THE ASSESSEE AND THEREFORE SUCH EXPENDITURE CANNOT BE ALLOWED AS DED UCTION WHILE COMPUTING ASSESSEES BUSINESS INCOME. THE CIT(A) HAS ALSO AF FIRMED SUCH STAND OF THE ASSESSING OFFICER AGAINST WHICH ASSESSEE IS IN APPE AL BEFORE US. 29. ON THIS ASPECT, THE LD. REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE EXPENSES INCURRED ON THE PREMI SES ARE ALLOWABLE EVEN IF IT IS HELD THAT THE PROPERTY IS NOT OWNED BY THE ASSES SEE AS ON THE BASIS OF THE USE FOR BUSINESS SUCH EXPENSES ARE ALLOWABLE. IT W AS REITERATED THAT THE PROPERTY IN QUESTION WAS BEING USED FOR THE COMPANY S BUSINESS PURPOSES AS RESIDENCE OF DR. AVINASH PHADNISM MEDICAL CONSULTAN T ON WHOM THE BUSINESS OF THE ASSESSEE DEPENDS AS WELL AS FOR OTHER BUSINE SS PURPOSES. IT WAS POINTED OUT THAT ON VARIOUS OCCASIONS DR. AVINASH R . PHADNIS EXAMINED THE PATIENTS AT HIS RESIDENCE ALSO THE ADMINISTRATIVE M ATTERS RELATING TO THE HOSPITAL WERE ALSO DEALT WITH AT THE RESIDENCE ON MANY OCCAS IONS. IN ANY CASE, THE LD. REPRESENTATIVE POINTED OUT THAT IT CANNOT BE DENIED THAT A PORTION OF THE PROPERTY WAS INDEED BEING USED FOR THE PURPOSES OF ASSESSEES BUSINESS AS IT WAS BEING PUT TO USE AS WAITING ROOM FOR PATIENTS, EXAMINATION ROOM, REST ROOM FOR STAFF/DOCTORS ON NIGHT DUTY, AREA FOR MEET INGS OF THE DOCTORS, ETC.. 30. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE APPEARING FOR THE REVENUE REITERATED THE STAND OF THE ASSESSING O FFICER TO THE EFFECT THAT AS NO DIRECT BUSINESS OPERATION OF THE HOSPITAL WERE C ARRIED OUT FROM THE IMPUGNED PREMISES, THEREFORE THE AFORESAID EXPENSES ARE NOT AN ALLOWABLE DEDUCTION. 31. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN SO FAR AS THE ALLOWABILITY OF EXPENSES IN RELATION TO THE IMPUGNE D PROPERTY IS CONCERNED, THE INSISTENCE ON ITS OWNERSHIP BEING IN THE NAME OF TH E ASSESSEE IS NOT JUSTIFIED. WHAT IS REQUIRED TO BE EXAMINED IS AS TO WHETHER TH E EXPENSES IN QUESTION HAVE BEEN INCURRED ON THE PREMISES SO AS TO FACILIT ATE CARRYING ON OF ASSESSEES BUSINESS. THE APPELLANT COMPANY HAS BEE N CONSISTENTLY ASSERTING BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) THAT THE PREMISES ARE BEING USED FOR THE BUSINESS OF THE ASSESSEE AND EVEN BEFORE US VARIOUS FUNCTIONS HAVE BEEN ENUMERATED TO JUSTIFY THE USAGE OF THE PROPERTY FOR THE BUSINESS OF THE ASSESSEE. THOUGH, THERE IS NO CLIN CHING EVIDENCE IN FAVOUR OF THE ASSERTIONS OF THE ASSESSEE BUT AT THE SAME TIME THE ASSESSING OFFICER HAS ALSO NOT LEAD ANY MATERIAL TO PROVE ANY FALSITY IN THE ASSERTIONS OF THE ASSESSEE; THEREFORE, IN OUR VIEW, IT WOULD MEET THE ENDS OF JUSTICE IF IT IS TO BE UNDERSTOOD THAT 50% OF THE EXPENSES RELATING TO REP AIR, MAINTENANCE, ELECTRICITY BILLS, MUNICIPAL TAXES AND WATER EXPENS ES INCURRED ON PROPERTY ARE RELATABLE TO THE CARRYING ON OF THE HOSPITAL BUSINE SS OF THE ASSESSEE. THUS, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AS SESSING OFFICER TO ALLOW ONLY 50% OF THE EXPENSES ON ELECTRICITY BILLS, REPAIR & MAINTENANCE, MUNICIPAL TAXES AND WATER EXPENSES, AND DISALLOW THE BALANCE. THUS, IN SO FAR AS THE GROUND OF APPEAL NO.3 IS CONCERNED, ASSESSEE PARTLY SUCCEED. 32. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 33. IN SO FAR AS THE OTHER CAPTIONED APPEALS OF THE ASSESSEE PERTAINING TO ASSESSMENT YEARS 2001-02 AND 2004-05 TO 2007-08 ARE CONCERNED, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE ISSUES RA ISED THEREIN ARE PARI- MATERIA TO THOSE CONSIDERED BY US IN THE APPEAL FOR ASSESSMENT YEAR 2003-04 IN THE EARLIER PARAS, THEREFORE OUR DECISION IN APP EAL FOR ASSESSMENT YEAR 2003-04 WOULD APPLY MUTATIS-MUTANDIS IN THE OTHER AFORESTATED APPEALS ALSO. 34. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEARS 2001- 02 AND 2003-04 TO 2007-08 IN THE CASE OF PHADNIS CL INIC PVT. LTD. ARE PARTLY ALLOWED. 35. NOW, WE TAKE-UP THE APPEALS OF THE REVENUE WHIC H RELATE TO ASSESSMENT YEAR 2001-02, 2004-05 TO 2006-07 VIDE IT A NO.2013 TO 2016/PN/2013 RESPECTIVELY IN THE CASE OF M/S PHADNI S CLINIC PVT. LTD.. IN ALL THESE APPEALS, A COMMON ISSUE HAS BEEN RAISED BY TH E REVENUE ARISING OUT OF THE ACTION OF THE CIT(A) IN SETTING ASIDE THE ACTIO N OF THE ASSESSING OFFICER OF DISALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U /S 35(1)(IV) OF THE ACT. 36. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE HAD CLAIMED DEDUCTION U/S 35(1)(IV) OF THE ACT ON ACCOUNT OF EXPENDITURE OF C APITAL NATURE INCURRED ON SCIENTIFIC RESEARCH RELATED TO THE BUSINESS CARRIED OUT BY THE ASSESSEE. THE AMOUNT OF SUCH CLAIM FOR THE FOUR ASSESSMENT YEARS WAS AS UNDER :- ASST. YEAR EXPENSES CLAIMED U/S 35(1)(IV) 2001-02 58,26,895 2004-05 31,50,000 2005-06 5,33,894 2006-07 21,50,000 37. THE ASSESSING OFFICER NOTED FROM THE DETAILS OF EXPENDITURE THAT IT MOSTLY RELATED TO COST OF MACHINERIES AND OTHER ACC ESSORIES. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE MACHINERY IN QUES TION APPEARED TO BE DIAGNOSTIC EQUIPMENT USED BY THE ASSESSEE FOR THE P URPOSES OF ITS BUSINESS. THE ASSESSING OFFICER SHOW-CAUSED THE ASSESSEE TO J USTIFY ALLOWANCE OF THE CLAIM U/S 35(1)(IV) OF THE ACT. THE ASSESSING OFFI CER CONSIDERED THE SUBMISSIONS PUT-FORTH BY THE ASSESSEE AND CONCLUDED THAT NO SYSTEMIC SCIENTIFIC RESEARCH WAS CARRIED OUT BY THE ASSESSEE AND INSTEAD THE MACHINERIES IN QUESTION WERE BEING USED ONLY TO CAR RY OUT TESTS FOR THE PURPOSES OF TREATMENT OF PATIENTS, AN ACTIVITY WHIC H WAS PART AND PARCEL OF ASSESSEES BUSINESS IN THE NORMAL COURSE. HAVING R EACHED THE ABOVE CONCLUSION, THE ASSESSING OFFICER MADE A REFERENCE TO THE BOARD IN TERMS OF SECTION 35(3)(B) OF THE ACT AS TO WHETHER SUCH ACTI VITY CONSTITUTED SCIENTIFIC RESEARCH OR NOT? AS AT THE TIME OF COMPLETION OF T HE ASSESSMENT A RESPONSE FROM THE BOARD WAS AWAITED, THE ASSESSING OFFICER P ASSED AN ASSESSMENT ORDER DENYING THE BENEFIT OF EXEMPTION U/S 35(1)(IV ) IN THE ASSESSMENT YEARS OF 2001-02, 2004-05, 2005-06 AND 2006-07 AMOUNTING TO RS.58,26,895/-, RS.31,50,000/-, RS.5,33,894/- AND RS.21,50,000/- RE SPECTIVELY. 38. ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E CIT(A), WHO HAS AFFIRMED THE VIEW OF THE ASSESSING OFFICER THAT THE ACTIVITY REPRESENTED BY THE IMPUGNED EXPENDITURE COULD NOT BE HELD TO BE CONSTI TUTING SCIENTIFIC RESEARCH. HOWEVER, THE CIT(A) NOTED THAT HAVING REGARD TO THE MANDATORY PROVISIONS OF SECTION 35(3) OF THE ACT, THE ASSESSING OFFICER WAS NOT COMPETENT TO DECIDE WHETHER A GIVEN ACTIVITY CONSTITUTES SCIENTIFIC RES EARCH OR WHETHER AN ASSET WAS BEING PUT TO USE FOR SCIENTIFIC RESEARCH. AS P ER THE CIT(A), IN THE ABSENCE OF A DECISION FROM THE PRESCRIBED AUTHORITY, THE BO ARD BEING THE PRESCRIBED AUTHORITY IN TERMS OF SECTION 35(3) OF THE ACT, THE ASSESSING OFFICER COULD NOT HAVE DISALLOWED THE EXPENDITURE. IN COMING TO SUCH CONCLUSION, THE CIT(A) FOLLOWED THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. MASTEK LTD., (2012) 25 TAXMANN.COM 133 (GUJ.). IN THIS CONTEXT, THE FOLLOWING DISCUSSION MADE BY THE CIT(A) IN THE CONT EXT OF ASSESSMENT YEAR 2001-02 IS RELEVANT :- 6.7 IN THE PRESENT CASE, THE AO NO DOUBT REFERRED THE M ATTER TO THE BOARD. HOWEVER NOT HAVING RECEIVED ANY REPLY FROM THE BOAR D AS OF THE DATE OF PASSING THE ASSESSMENT ORDER, (WHICH IN FACT WAS TH E LAST DAY OF THE LIMITATION PERIOD), HE COMPLETED THE ASSESSMENT BY DENYING THE APPELLANT THE BENEFIT OF THE SAID EXEMPTION. THE REMAND REPORT RECEIVED FROM THE LEARNED AO WHICH IS DATED 05.07.2013 IS ALSO SILENT ON THIS ISSUE, FROM WHICH, IT CAN BE INFERRED THAT EVEN AS OF THAT DAY NO REPLY HAD BEEN RECEIVED FROM THE BOARD TO THE AFORESAID REFERENCE MADE BY THE LEARNED AO. AS SUCH , SINCE NO ADVERSE DECISION HAS EVIDENTLY BEEN GIVEN BY THE PRESCRIBED AUTHORITY HOLDING THE ACTIVITY CARRIED ON BY THE APPELLANT NOT TO BE OF T HE NATURE OF SCIENTIFIC RESEARCH', AND SUCH A DECISION BEING A MANDATORY REQUIREMENT AS HELD BY THE HON. GUJARAT HIGH COURT IN THE AFORE-CITED DECI SION, THE ADDITION OF RS.58,26,895/- MADE BY THE LEARNED AO DISALLOWING T HE CLAIM OF DEDUCTION UNDER SECTION 35(1)(IV) ON ACCOUNT OF CAPITAL EXPEN DITURE ON SCIENTIFIC RESEARCH RELATED TO THE BUSINESS OF THE ASSESSEE IS HEREBY D ELETED. ACCORDINGLY, THIS GROUND OF APPEAL IS HEREBY ALLOWED. 39. AGAINST THE AFORESAID DECISION OF THE CIT(A), R EVENUE IS IN APPEAL BEFORE US. 40. OSTENSIBLY, THE CLAIM OF THE ASSESSEE WAS IN TE RMS OF SECTION 35(1)(IV) OF THE ACT WHEREBY ASSESSEE CONTENDED THAT THE IMPU GNED SUMS OF CAPITAL NATURE WERE EXPENDED ON SCIENTIFIC RESEARCH RELATED TO THE BUSINESS CARRIED ON BY IT. AS PER THE PROVISIONS OF SECTION 35(3) OF T HE ACT, IT IS PRESCRIBED THAT IF ANY QUESTION ARISES U/S 35 OF THE ACT AS TO WHETHER , AND IF SO, TO WHAT EXTENT, ANY ACTIVITY CONSTITUTES OR CONSTITUTED, OR ANY ASS ET IS OR WAS BEING USED FOR, SCIENTIFIC RESEARCH, THE BOARD SHALL REFER THE QUES TION TO (A) THE CENTRAL GOVERNMENT, WHEN SUCH QUESTION RELATES TO ANY ACTIV ITY UNDER CLAUSES (II) AND (III) OF SUB-SECTION (1), OR (B) THE PRESCRIBED AUT HORITY, WHEN SUCH QUESTION RELATES TO ANY ACTIVITY OTHER THAN THE ACTIVITY SPE CIFIED IN CLAUSE (A) ABOVE. SECTION 35(3) FURTHER PRESCRIBES THAT THE DECISION OF THE CENTRAL GOVERNMENT OR THE PRESCRIBED AUTHORITY, AS THE CASE MAY BE, SHALL BE FINAL IN THIS REGARD. IN VIEW OF THE AFORESAID SPECIFIC INTENDMENT OF SECTIO N 35(3) OF THE ACT, IT WAS NOT OPEN FOR THE ASSESSING OFFICER TO SUO-MOTU DECIDE THE QUESTION AS TO WHETHER THE IMPUGNED ACTIVITY CONSTITUTED SCIENTIFIC RESEAR CH OR WHETHER IMPUGNED ASSETS WERE BEING USED FOR SCIENTIFIC RESEARCH. HA VING REGARD TO THE PROVISIONS OF CLAUSE (B) OF SECTION 35(3) OF THE AC T, THE QUESTION WAS REQUIRED TO BE REFERRED TO THE PRESCRIBED AUTHORITY BY THE B OARD. IT IS EMERGING FROM THE ORDERS OF THE AUTHORITIES BELOW THAT THE ASSESSING OFFICER BEFORE COMPLETION OF ASSESSMENT REFERRED THE MATTER TO THE BOARD AND NO REPLY HAD BEEN RECEIVED FROM THE BOARD BEFORE COMPLETION OF ASSESSMENT OR E VEN WHEN THE CIT(A) PASSED THE IMPUGNED ORDER. EVEN IN THE COURSE OF H EARING BEFORE US, WHEN IT WAS EXPRESSLY PUT TO THE LD. DEPARTMENTAL REPRESENT ATIVE, NO ASSERTION HAS BEEN MADE TO SAY THAT ANY REPLY FROM THE BOARD HAS BEEN RECEIVED IN THIS BEHALF. AS A CONSEQUENCE, EVEN IN THE COURSE OF PR OCEEDINGS BEFORE THE TRIBUNAL, EVIDENTLY, NO ADVERSE DECISION HAS BEEN G IVEN BY THE PRESCRIBED AUTHORITY HOLDING THAT THE IMPUGNED ACTIVITY CARRIE D OUT BY THE ASSESSEE DOES NOT CONSTITUTE SCIENTIFIC RESEARCH. IN THIS FACTUA L BACKGROUND, THE CIT(A) CANNOT BE FAULTED FOR HAVING APPLIED THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MASTEK LTD. (SUPRA) AND S ETTING-ASIDE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE HO NBLE GUJARAT HIGH COURT NOTED THAT IN THE ABSENCE OF THE ASSESSING OFFICER HAVING OBTAINED ANY ADVERSE DECISION FROM THE PRESCRIBED AUTHORITY, THE RE WAS NO JUSTIFICATION IN REJECTING ASSESSEES CLAIM FOR DEDUCTION OF EXPENDI TURE INCURRED FOR SCIENTIFIC RESEARCH. AS A CONSEQUENCE OF THE AFORESAID DISCUS SION, IN OUR VIEW, THE CIT(A) WAS JUSTIFIED IN SETTING-ASIDE THE ACTION OF THE ASSESSING OFFICER DISALLOWING THE CLAIM OF DEDUCTION U/S 35(1)(IV) OF THE ACT RELATING TO THE CAPITAL EXPENDITURE INCOME ON SCIENTIFIC RESEARCH. THUS, O N THIS ASPECT, WE HEREBY AFFIRM THE ORDER OF THE CIT(A) AND ACCORDINGLY REVE NUE FAILS. 41. RESULTANTLY, THE CAPTIONED FOUR APPEALS OF THE REVENUE RELATING TO ASSESSMENT YEAR 2001-02, 2004-05 TO 2006-07 ARE DIS MISSED. 42. NOW, WE MAY TAKE-UP THE APPEALS IN ITA NOS.2192 TO 2197/PN/2013 WHICH RELATE TO DR. AVINASH RAMCHANDRA PHADNIS FOR ASSESSMENT YEAR 2003- 04 TO 2008-09. ALL THESE APPEALS ARISE FROM A COMM ON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL, PUNE DATED 27.09.2013 WHICH, IN TURN, HAS ARISEN FROM THE RESPECTIVE ORDE RS DATED 31.12.2008 PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 153A OF THE ACT. 43. FIRSTLY, WE MAY TAKE-UP THE APPEAL FOR ASSESSME NT YEAR 2003-04 VIDE ITA NO.2192/PN/2013 WHEREIN THE GROUNDS OF APPEAL R AISED BY THE ASSESSEE, READ AS UNDER :- 1. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSMENT U/S 143(3) R.W.S. 153A WAS A VALID ASSESSMENT. 1.1) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT:- A. DURING THE COURSE OF THE SEARCH, ON DR. AVINASH PHADNIS' PREMISES, THERE WAS NO INCRIMINATING EVIDENCE FOUND RELATING TO THE ASSESSEE AND HENCE, THE PROVISIONS OF SECTION 153A COULD NOT BE INVOKED AGAINST THE DR. AVINASH PHADNIS. B. THE ADDITIONS MADE IN COMPLETED ASSESSMENTS WERE NOT BASED ON SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THESE ADDITIONS COULD HAVE BEEN MADE DURING THE COURSE OF NORMAL AS SESSMENTS WITHOUT THE REQUIREMENT OF THE SEARCH OPERATIONS. B UT STILL SEARCH OPERATION WAS CARRIED OUT AND ASSESSMENT WAS MADE U .S. 153A EVEN THOUGH NO HIDDEN INCOME/ WEALTH OR UNDISCLOSED SOUR CES OF INCOME WAS FOUND 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE IMM OVABLE PROPERTY SHUBHALAXMI' BELONGS TO DR. AVINASH PHADNIS AND DR MRS. AMITA PHADNIS AND NOT TO PHADNIS CLINIC PVT. LTD. WHEN TH E FUNDS FOR ITS ACQUISITION, RENOVATION, MAINTENANCE ARE BEING BORN E BY THE COMPANY I.E. PHADNIS CLINIC PVT. LTD.. SIMILARLY, THE COMPA NY IS ALSO PAYING THE INTEREST ON BORROWING MADE AND IS ALSO REPAYING THE AMOUNT BORROWED. 2.1 WITHOUT PREJUDICE TO THE ASSESSEE'S CLAIM THAT THE PROPERTY SHUBHALAXMI' IS OWNED BY THE COMPANY, PHADNIS CLIN IC PVT. LTD., THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT:- THE PART OF THE PROPERTY IS USED BY THE ASSESSEE, D R. AVINASH PHADNIS AND OR MRS AMITA PHADNIS FOR THEIR PROFESSION AND P ART FOR THEIR RESIDENCE AND HENCE A. AS DEDUCTION OF RS.1,50,000/- IS ALLOWED BY THE (EARNED CIT(A) TO DR. AVINASH PHADNIS FOR HIS SELF-OCCUPIED AREA , THEREFORE DEDUCTION OF BALANCE INTEREST CALCULATED ON THE BAS IS OF PROPORTIONATE AREA USED BY HIM FOR HIS PROFESSION B E ALLOWED AT 100%. B DEPRECIATION AT APPROPRIATES RATES BE ALLOWED FOR AREA USED FOR PROFESSION BY DR. AVINASH PHADNIS AND EXPENDITURE F OR MAINTAINING THE PROPERTY BE ALSO ALLOWED SEPARATELY , I.E. 'REPAIRS AND MAINTENANCE, TAXES, ELECTRICITY, ETC. 3. THE APPELLANT REQUESTS FOR ADMISSION OF ADDITION AL EVIDENCES, IT ANY, REQUIRED IN THE COURSE OF APPEAL HEARING. 4. THE ASSESSEE PRAYS TO ADD, ALTER, AMEND AND FOR WITHDRAWAL OF ANY OF THE GROUNDS OF APPEAL AS AND WHEN THE OCCASION DEMA NDS. 44. IN SO FAR AS THE FIRST GROUND OF APPEAL IS CONC ERNED, THE SAME RELATES TO THE STAND OF THE ASSESSING OFFICER TO THE EFFECT TH AT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER BY INVOKING SECTION 153A R.W.S. 143(3) OF THE ACT WAS INVALID BECAUSE THE SEARCH CARRIED OUT U/S 132(1) OF THE ACT DID NOT UNEARTH ANY HIDDEN WEALTH OR UNDISCLOSED SOURCES OF INCOME. THE SAID PLEA OF THE ASSESSEE IS SOMEWHAT SIMILAR TO WHAT HAS BEEN R AISED IN THE CASE OF M/S PHADNIS CLINIC PVT. LTD. IN ITA NO.2060/PN/2013 DEA LT WITH BY US IN EARLIER PARAS. THOUGH, IN THE CASE OF M/S PHADNIS CLINIC P VT. LTD. (SUPRA) THE ISSUE WAS RAISED IN THE CONTEXT OF THE ASSESSING OFFICER HAVING INVOKED SECTION 153C R.W.S. 143(3) OF THE ACT WHEREAS IN THE PRESEN T CASE, THE ASSESSING OFFICER HAS INVOKED SECTION 153A R.W.S. 143(3) OF T HE ACT. OSTENSIBLY, A SEARCH ACTION U/S 132(1) OF THE ACT WAS CONDUCTED I N THE CASE OF THE ASSESSEE ON 24.01.2007. 45. THE STAND OF THE REVENUE IS THAT THE DOCUMENTS SEIZED IN THE COURSE OF SEARCH REVEALED THAT THE PURCHASE OF PROPERTY SHUB HALAXMI WAS UNDERTAKEN IN THE NAME OF THE TWO INDIVIDUAL DIRECTORS WHEREAS FINANCIAL STATEMENTS OF THE COMPANY I.E. PHADNIS CLINIC PVT. LTD. SHOWED IT AS AN ASSET OF THE COMPANY. THE REVENUE HAS ALSO JUSTIFIED INVOKING OF SECTION 153A OF THE ACT ON THE GROUND THE ADDITIONS/DISALLOWANCES IN QUESTION HAVE BEEN MADE ON THE BASIS OF THE DOCUMENTS FOUND IN THE COURSE OF SEARCH. 46. IN THE CONTEXT OF THE ABOVE, WE FIND THAT THE C IT(A) NOTED THAT THE FACTUM OF SEIZURE OF DOCUMENTS DURING THE COURSE OF SEARCH IS UNDENIABLE. AS PER THE CIT(A), ONCE A SEARCH/REQUISITION IS MADE U /S 132(1) OF THE ACT, THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE U/S 153A TO THE ASSESSEE CALLING FOR THE RETURN OF INCOME FOR EACH OF ASSESSMENT YEAR FA LLING WITHIN SIX IMMEDIATELY ASSESSMENT YEARS RELEVANT TO THE PREVIOUS YEAR IN W HICH SUCH SEARCH WAS CONDUCTED. BY FOLLOWING THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SCOPE (P) LTD. VS. DCIT, (2013) 33 TAXM ANN.COM 167 (MUMBAI- TRIB.) THE CIT(A) OBSERVED THAT THE INITIATION OF P ROCEEDINGS U/S 153A IS MANDATORY FOR ALL THE AFORESAID YEARS FALLING WITHI N THE SIX IMMEDIATELY PRECEDING AFORESAID ASSESSMENT YEAR. THE FOLLOWING DISCUSSION IN THE ORDER OF THE CIT(A) IS RELEVANT :- 5.7 IN THIS CONTEXT, I HAVE PERUSED THE LEGAL POSI TION WITH REGARD TO SCHEME OF ASSESSMENT IN SEARCH CASES TO BE COMPLETED UNDER SECTION 153A READ WITH SECTION 143(3). THE APPELLANT HAS RELIED UPON A SER IES OF CASE LAWS. IT IS SEEN, HOWEVER, THAT THE DECISIONS CITED BY THE APPELLANT ARE OVER A YEAR OLD. IN A MORE RECENT DECISION (DATED 20TH MARCH, 2013) DELIV ERED BY THE ITAT (MUMBAI) IN THE CASE OF SCOPE (P) LTD. V DCIT IT HA S BEEN HELD THAT [I] ONCE A SEARCH/REQUISITION IS MADE U/S 132 OF THE IT ACT, T HE AO IS BOUND TO ISSUE NOTICE U/S 153A TO THE ASSESSES TO FURNISH THE RETU RN FOR EACH AY FALLING WITHIN SIX AYS IMMEDIATELY PRECEDING THE AY RELEVANT LO TH E PY IN WHICH SEARCH CONDUCTED, [II] INITIATION OF PROCEEDINGS U/S 153A IS MANDATORY FOR ALL THE ASSESSMENT YEARS FALLING WITHIN THE SIX YEARS IMMED IATELY PRECEDING THE SAID AY; [III] IN THE SAID PROCEEDINGS, THE AO IS EMPOWE RED TO ASSESS OR REASSESS T HE TOTAL INCOME OF ALL THE SIX AYS; [IV] WHERE AN A SSESSMENT HAD BEEN COMPLETED VIDE ASSESSMENT ORDER PASSED PRIOR TO THE DATE OF INITIATION OF SEARCH, THE CASE WOULD FALL UNDER THE CATEGORY OF ' REASSESSMENT' U/S 153A; [V] ONCE THE AO HAS ISSUED NOTICE U/S 153A INVITING THE RETURN OF INCOME, HE IS DUTY-BOUND TO PROCEED WITH THE REASSESSMENT PROCEED INGS; [VI] WHERE THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE O F SEARCH RELATING TO THE ASSESSES FOR THE AY UNDER CONSIDERATION, THE QUESTI ON WHETHER THE AO CAN MAKE AN ADDITION IN THE REASSESSMENT PROCEEDINGS U/ S 153A DEPENDS ON THE NATURE OF ADDITION AND THE FACTS AND CIRCUMSTANCES OF EACH CASE; [VII] WHERE INCOME, WHICH WAS OTHERWISE ASSESSABLE TO TAX HAD E SCAPED ASSESSMENT, THE SAME CAN BE ASSESSED DURING THE PROCEEDINGS U/S 153 A. 47. IN OUR CONSIDERED OPINION, THE AFORESAID DISCU SSION MADE BY THE CIT(A) DOES NOT JUSTIFY THE PLEA OF THE ASSESSEE CHALLENGI NG THE VALIDITY OF ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT ON THE GROUND THAT ADDITIONS TO THE INCOME MADE BY THE ASSESSING OFFICER WERE NOT O N THE BASIS OF ANY INCRIMINATING DOCUMENT. WE HEREBY AFFIRM THE ORDER OF THE CIT(A) ON THIS ASPECT AND ACCORDINGLY ASSESSEE FAILS IN GROUND OF APPEAL NO.1. 48. IN SO FAR AS THE GROUND OF APPEAL NO.2 IS CONCE RNED, IT ARISES FROM THE ACTION OF THE INCOME-TAX AUTHORITIES IN HOLDING THA T THE PROPERTY AT SHUBHALAXMI BELONGS TO THE ASSESSEE INDIVIDUAL AND NOT TO COMPA NY, M/S PHADNIS CLINIC PVT. LTD.. SIMILAR ASPECT OF THE MATTER HAS ALREADY BEEN CONSIDERED BY US IN THE APPEAL RELATING TO M/S PHADNIS CLINIC PVT. LTD. VIDE ITA NO.2060/PN/2013 IN THE EARLIER PART OF THIS ORDER. FOLLOWING THE S AID DECISION , IT HAS TO BE HELD THAT THE INCOME-TAX AUTHORITIES WERE JUSTIFIED IN H OLDING THAT THE PROPERTY SHUBHALAXMI BELONGS TO ASSESSEE DR. AVINASH RAMCH ANDRA PHADNIS AND PARTLY TO DR. (MRS.) AMITA AVINASH PHADNIS AND NOT TO M/S PHADNIS CLINIC PVT. LTD., AS CONTENDED BY THE ASSESSEE. THEREFORE, IN SO FAR AS THE GROUND OF APPEAL NO.2 IS CONCERNED, ASSESSEE FAILS. 49. IN SO FAR AS THE GROUND OF APPEAL NO.2.1 IS CON CERNED, THEREIN IT IS CONTENDED BY THE ASSESSEE THAT IF THE PROPERTY M/S SHUBHALAXMI IS HELD TO BE BELONGING TO THE ASSESSEE THEN APPROPRIATE RELIEF A S STATED IN THE ITEM (A) AND (B) OF GROUND OF APPEAL NO.2.1 BE ALLOWED IN THE HA NDS OF THE ASSESSEE. THE AFORESAID ASPECT OF THE MATTER, IN OUR VIEW, DESERV ES TO BE APPROPRIATELY CONSIDERED IN THE HANDS OF THE ASSESSEE INDIVIDUAL. 50. IN THIS CONTEXT, THE RELEVANT FACTS ARE THAT CO NSEQUENT TO HOLDING THAT THE PROPERTY SHUBHALAXMI WAS OWNED BY THE INDIVIDUAL DI RECTORS, DR. AVINASH RAMCHANDRA PHADNIS AND DR. (MRS.) AMITA AVINASH PHA DNIS, THE ASSESSING OFFICER TREATED THE ENTIRE PROPERTY TO BE A SELF-OC CUPIED PROPERTY OF THE TWO INDIVIDUALS AND ALLOWED INTEREST ON BORROWED CAPITA L SUBJECT TO RS.1,50,000/- SPECIFIED IN THE SECOND PROVISO TO SECTION 24 OF TH E ACT. THE PLEA OF THE ASSESSEE ON THIS ASPECT BEFORE THE CIT(A) WAS THAT IN CASE THE PROPERTY IS HELD TO BE OWNED BY HIM, THE DEDUCTION FOR INTEREST PAYMENT BE NOT LIMITED TO RS.1,50,000/- AS ALLOWED BY THE ASSESSING OFFICER B UT PROPORTIONATE INTEREST RELATABLE TO THE PORTION OF THE PROPERTY WHICH IS S TATED TO BE USED FOR BUSINESS PURPOSES BE ALLOWED AS DEDUCTION. IT WAS ALSO CONT ENDED BEFORE THE CIT(A) THAT THE DEPRECIATION ON THE COST OF THE AREA OF TH E PROPERTY USED FOR THE PURPOSES OF BUSINESS SHOULD ALSO BE ALLOWED. THIS ASPECT OF THE MATTER HAVE BEEN REJECTED BY THE CIT(A) ON THE GROUND THAT ASSE SSEE COULD NOT ESTABLISH THAT THE BUILDING IN QUESTION WAS BEING PARTLY USED FOR THE PURPOSES OF BUSINESS OR PROFESSION. AGAINST SUCH A DECISION OF THE CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US BY WAY OF GROUND OF APPEAL NO.2.1. 51. ON THIS ASPECT, IN OUR VIEW, THE MATTER DESERVE S TO BE CONSIDERED AFRESH BY THE LOWER AUTHORITIES IN VIEW OF OUR DECI SION IN THE CASE OF THE COMPANY, I.E. M/S PHADNIS CLINIC PVT. LTD. FOR ASSE SSMENT YEAR 2003-04 THAT 50% OF THE BUILDING CAN BE SAID TO HAVE BEEN USED F OR THE PURPOSES OF THE BUSINESS OF THE COMPANY ITSELF. AS A CONSEQUENCE O F THE AFORESAID DECISION, THE ASSESSING OFFICER IS DIRECTED TO RE-VISIT THE A FORESAID PLEAS OF THE ASSESSEE AFRESH AND ALLOW APPROPRIATE RELIEF AS PER LAW. NE EDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPOR TUNITY OF BEING HEARD BEFORE PASSING AN ORDER ON THIS ASPECT IN ACCORDANC E WITH LAW. 52. THUS, IN SO FAR AS THE GROUND OF APPEAL NO.2.1 IS CONCERNED, ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 53. IN THE RESULT, APPEAL OF THE ASSESSEE FOR ASSES SMENT YEAR 2003-04 IS PARTLY ALLOWED. 54. THE DECISION IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003- 04 (SUPRA) COVERS ALL THE GROUNDS OF APPEAL RAISED IN THE OTHER CAPTIONED APPEALS RELATING TO ASSESSMENT YEARS 2004-05 TO 200 8-09 EXCEPT THE FOLLOWING GROUND OF APPEAL NO.3.1 IN THE APPEAL OF THE ASSESS EE FOR ASSESSMENT YEAR 2005-06 WHICH READS AS UNDER :- 3.1 THE ASSESSEE HAD INCURRED THE EXPENDITURE IN A CCORDANCE WITH AN AGREEMENT WITH JAHANGIR HOSPITAL FOR SECURING THE R IGHT TO PRACTICE AT JAHANGIR HOSPITAL. THE ASSESSEE, BY VIRTUE OF THE AGREEMENT , HAD DIVESTED HIMSELF OF THE OWNERSHIP RIGHTS OF THE MACHINERIES AND OTHER E XPENDITURE ON RESTRUCTURING OF THE IVF LAB AT THE HOSPITAL, AND HAD GIVEN THE S AME TO THE HOSPITAL. THE EXPENDITURE, THE APPELLANT SUBMITS, WAS INCURRED WH OLLY AND EXCLUSIVELY FOR THE FURTHERANCE/CONTINUATION OF THE BUSINESS AND DID NO T CREATE ANY CAPITAL ASSET AND SHOULD BE CONSEQUENTLY ALLOWABLE AS BUSINESS EX PENDITURE U/S 37. 55. IN THIS CONTEXT, BRIEF FACTS ARE THAT IN ASSESS MENT YEAR 2005-06, ASSESSEE CLAIMED REVENUE EXPENDITURE OF RS.32,74,56 4/- UNDER THE HEAD CONSULTANCY ASSIGNMENT COST FOR JAHANGIR HOSPITAL, PUNE. THE DETAILS OF THE EXPENDITURE REVEALED THAT IT WAS INCURRED FOR PURCH ASE OF IVF MACHINERY AND RENOVATION/RESTRUCTURING OF THE IVF SETUP AT JAHANG IR HOSPITAL. AS PER THE ASSESSING OFFICER, IT WAS CAPITAL IN NATURE AND THE REFORE HE SHOW-CAUSED THE ASSESSEE TO JUSTIFY THE CLAIM OF SUCH EXPENDITURE A S A REVENUE EXPENDITURE U/S 37 (1) OF THE ACT. 56. IN RESPONSE, IT WAS EXPLAINED THAT ASSESSEE WAS A WELL-KNOWN GYNECOLOGIST IN INDIA PRACTICING SINCE MANY YEARS A ND WAS A DIRECTOR OF PHADNIS CLINIC PVT. LTD.. HE WAS LOOKING AFTER ALL THE MAJOR ACTIVITIES OF THE HOSPITAL OF PHANDIS CLINIC PVT. LTD.. APART THEREF ROM, ASSESSEE WAS A VISITING FACULTY AT JAHANGIR HOSPITAL, WHICH WAS A MAJOR HOS PITAL IN PUNE. FOR THE PURPOSES OF MAINTAINING CLOSE RELATIONSHIP WITH A L ARGE HOSPITAL AND FROM A PROFESSIONAL VIEW POINT, ASSESSEE MADE AN AGREEMENT WITH JAHANGIR HOSPITAL WHICH STIPULATED THAT IN ORDER TO TREAT ALL THE CAS ES AS A VISITING FACULTY, ASSESSEE WAS TO INCUR SOME EXPENDITURE FOR THE JAHA NGIR HOSPITAL. IN PURSUANCE TO SUCH AGREEMENT, ASSESSEE SPENT THE IMP UGNED SUM OF RS.32,74,564/-. IT WAS CONTENDED THAT SUCH EXPENDI TURE WAS INCURRED WITH THE HOPE THAT THE PRACTICE WOULD GROW SUBSTANTIALLY AND ASSESSEE WOULD GET MORE BUSINESS FROM A HOSPITAL OTHER THAN PHANDNIS CLINIC PVT. LTD.. THE CASE OF THE ASSESSEE WAS THAT THE EXPENDITURE WAS INCURRED IN O RDER TO EXPAND HIS BUSINESS AND THEREFORE, IT WAS TO BE ALLOWED AS A R EVENUE EXPENDITURE. THE ASSESSING OFFICER HAS REJECTED THE PLEA OF THE ASSE SSEE BY MAKING THE FOLLOWING DISCUSSION IN THE ASSESSMENT ORDER :- 5.2 THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN CONS IDERED. IN THIS CASE, IT IS CLEAR THAT THE ASSESSEE INCURRED THE EXPENDIT URE TO DERIVE A LONG TERM BENEFIT. IT IS AN ADMITTED FACT THAT THE ASSESSEE EXPECTED HIS OWN BUSINESS TO IMPROVE IN THE LONG RUN BECAUSE OF HIS ASSOCIATION WITH JAHANGIR HOSPITAL AND THEREFORE, HE HAS INCURRED THE EXPENDITURE. THIS I S, THEREFORE, CLEARLY A CAPITAL EXPENDITURE. HENCE, THE ASSESSEES CLAIM OF REVENU E EXPENDITURE OF RS.32,74,564/- IS DISALLOWED. NO DEPRECIATION ALLO WANCE IS WORKED OUT BECAUSE THE ASSESSEE HANDED OVER THE RELATED ASSET TO JAHANGIR HOSPITAL AND IS NEITHER THE OWNER OF THE ASSET NOR DID HE USE AS SET FOR HIS BUSINESS. 57. THE CIT(A) HAS ALSO AFFIRMED THE STAND OF THE A SSESSING OFFICER AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 58. THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS VEH EMENTLY CANVASSED THAT THE ASSESSEE INCURRED SUCH EXPENDITURE ON BUSI NESS CONSIDERATIONS. ACCORDING TO THE LD. REPRESENTATIVE, THE MACHINERY IN QUESTION WAS DONATED TO JAHANGIR HOSPITAL IN TERMS OF THE AGREEMENT AND THAT SUCH EXPENDITURE PROVIDED ASSESSEE WITH PROSPECTS OF EXPANDING HIS B USINESS ON ACCOUNT OF HIS ASSOCIATION WITH JAHANGIR HOSPITAL. THEREFORE, SUC H AN EXPENDITURE IS TO BE VIEWED AS HAVING BEEN INCURRED FOR THE PURPOSES OF BUSINESS AND WAS ALLOWABLE AS A REVENUE EXPENDITURE. 59. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE APPEARING FOR THE REVENUE HAS RELIED UPON THE ORDERS OF THE AUTHORITI ES BELOW AND POINTED OUT THAT THE EXPENDITURE WAS CAPITAL IN NATURE WHICH PR OVIDED THE ASSESSEE WITH LONG TERM BENEFITS AND THEREFORE THE ASSESSING OFFI CER WAS JUSTIFIED IN TREATING IT AS A CAPITAL EXPENDITURE. 60. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. FACTUALLY SPEAKING, THE OWNERSHIP OF THE ASSET REPRESENTED BY THE IMPUGNED EXPENDITURE IN THE SHAPE OF IVF MACHINERY AND THE R ENOVATION/RESTRUCTURING OF THE IVF SETUP OF THE JAHANGIR HOSPITAL VESTS WITH T HE JAHANGIR HOSPITAL. ON THIS ASPECT, THERE IS NO DISPUTE. THE ASSESSING OF FICER HAS ALSO ACCEPTED THE POSITION THAT ASSESSEE INCURRED SUCH EXPENDITURE WI TH THE EXPECTATION THAT HIS OWN BUSINESS WOULD IMPROVE IN THE LONG RUN BECAUSE OF THE ASSOCIATION WITH JAHANGIR HOSPITAL. 61. ONCE THE OBJECTIVE OF THE EXPENDITURE BEING IMP ROVEMENT IN BUSINESS PROSPECTS IS ACCEPTED, THEN IT HAS TO FOLLOW THAT S UCH AN ENDURING BENEFIT IS IN THE REVENUE FIELD. IF THE BENEFIT, THOUGH LONG TER M IS IN THE REVENUE FIELD, THEN THE CORRESPONDING EXPENDITURE WHICH HAS RESULTED IN SUCH BENEFIT IS LIABLE TO BE CONSIDERED REVENUE IN NATURE FOLLOWING THE PARIT Y OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF EMPIRE JUT E COMPANY LTD. VS. CIT, 124 ITR 1 (SC). THEREFORE, ON THIS ASPECT OF THE M ATTER, WE ACCEPT THE PLEA OF THE ASSESSEE THAT THE EXPENDITURE OF RS.32,74,564/- IN QUESTION IS LIABLE TO BE TREATED AS A REVENUE EXPENDITURE. THUS, GROUND OF APPEAL NO.3.1 IS ALLOWED. 62. IN THE RESULT, THE APPEALS OF THE ASSESSEE VIDE ITA NOS.2192 TO 2197/PN/2013 FOR ASSESSMENT YEARS 2003-04 TO 2007-0 8 ARE PARTLY ALLOWED. 63. RESULTANTLY, ALL THE CAPTIONED APPEALS OF THE T WO ASSESSEES ARE PARTLY ALLOWED AND THAT OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 10 TH APRIL, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 10 TH APRIL, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-CENTRAL, PUNE; 4) THE CIT-CENTRAL, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE