Kay Jay Auto Ltd., New Delhi V. ACIT, New Delhi

ITA 264/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1114 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 23-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `D : NEW DELHI) BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.264/DEL./2009 (ASSESSMENT YEAR : 2005-06) KAY JAY AUTO LTD., VS. ACIT, RANGE 5, WAHI & CO., CAS. NEW DELHI K-1, KAILASH COLONY, NEW DELHI-110048. (PAN/GIR NO.AAACK0163H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI LALIT KUMAR SHARMA, ADV. REVENUE BY : SHRI B.K. GUPTA, SR.DR ORDER PER K.D. RANJAN: AM THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 05-06 ARISES OUT OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, NEW DELHI. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER: THE HONBL;E ITAT HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,83,206/- ON ACCOUNT OF DISALLOWANC E OF DEPRECIATION ON FROM HOUSE OF THE COMPANY WHICH IS EXCLUSIVELY USED FOR HOLDING CONFERENCES AND OTHER BUSINESS MEETINGS OF THE COMP ANY. THE ADDITION MADE BY THE A.O. IS ARBITRARY AND NOT FOUNDED ON FA CTS. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO CONF IRMING THE ADDITION OF RS.1,83,206/-. WHEN THE CASE CAME UP FOR HEARING, LD.COUNSEL FOR THE ASSESSEE MOVED ADJOURNMENT APPLICATION ON THE GROUND THAT SHRI ANI L KUMAR MALHOTRA WAS OUT OF STATION. KEEPING IN VIEW THE SMALLNESS OF ISSUE INVOLVED, TH E ADJOURNMENT APPLICATION WAS REJECTED AND APPEAL HAS BEEN DECIDED AFTER HEARING SHRI LALIT KUMAR SHARMA, ADV. APPEARED ON BEHALF OF THE ASSESSEE AND LD.SR.DR. I.T.A. NO.264/DEL./2009 (A.Y. : 2005-06) 2 3. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON FARM HOUSE OF RS.1,83,206/-. THE A.O. FURTHER NOTE D THAT THE FARM HOUSE HAD NOT BEEN PUT FOR USE IN THE BUSINESS OF THE ASSESSEE AND, THEREF ORE, IT COULD NOT BE TREATED AS BUSINESS ASSET. ACCORDINGLY, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE CLAIM OF DEPRECIATION ON FARM HOUSE SHOULD NOT BE DISALLOWED . IN RESPONSE TO QUERY RAISED BY THE ASSESSING OFFICER IT WAS STATED THAT THE ASSESSEE WAS USING THIS PROPERTY TO CONDUCT BUSINESS MEETINGS WITH THE BUYERS, STAFF CONFERENCE S ETC. THEREFORE, THE FARM HOUSE WAS USED FOR THE PURPOSES OF BUSINESS. IT WAS ALSO SUB MITTED THAT FARM HOUSE EXPENSES WERE OFFERED FOR TAX TO BUY PEACE, BUT THE PROPERTY WAS USED FOR THE PURPOSES OF BUSINESS. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE AS SESSEE AND DISALLOWED DEPRECATION ON FARM HOUSE AMOUNTING TO RS.1,83,206/-. 4. ON APPEAL, COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ADDITION BY OBSERVING THAT THE USE OF FARM HOUSE FOR BUSINESS P URPOSES ON FEW OCCASIONS WILL NOT CONVERT THE CHARACTER OF THE PREMISES FROM BEING FA RM HOUSE INTO AN OFFICE. IT WAS AN OPEN SECRET THAT FARM HOUSE IN AND AROUND DELHI WER E USED FOR PERSONAL PURPOSES OF KEY PERSONS OF A COMPANY RATHER THAN FOR THE REAL BUSIN ESS PURPOSES. THE SAID FARM HOUSE WAS CLOSE TO DELHI AND IT WAS NOT ACCEPTABLE THAT M EETINGS WERE HELD THERE REGULARLY WHEN THE REGISTERED OFFICE OF THE COMPANY WAS SITUATED V ERY CLOSE TO IT AT SAINIK FARM. HE ACCORDINGLY UPHELD THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS A FACT THAT ASSESSEE HIMSELF WHILE COMPUTING THE TOTAL INCOME HAD DISALLOWED EXPENSES RELATING TO FARM HOUSE. ONCE THE EXPENSES RELATING TO FARM HOUSE HAD BEEN TREATED AS NON-BUSINESS PURPOSES, THE PROPERTY CANN OT BE HELD AS BUSINESS ASSET ON WHICH DEPRECATION WILL BE ALLOWABLE U/S 32 OF THE ACT. A CCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSIONER O F INCOME-TAX (APPEALS) CONFIRMING THE DISALLOWANCE OF DEPRECATION IN RESPECT OF FARM HOUSE. I.T.A. NO.264/DEL./2009 (A.Y. : 2005-06) 3 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 7. ORDER PRONOUNCED IN OPEN COURT ON 30/10/2009. (C.L. SETHI) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: OCT. 30, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A)-VIII, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT