GOLDEN COMPUTERS PVT. LTD., MUMBAI V. DCIT - 8(1), MUMBAI

ITA 2783/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0367 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 16-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: RAHUL K HAKANI; DR K SHIVARAM
• Keywords: Business income; Depreciation; Opportunity of cross examination; Corroborative evidences
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 2783 / MUM/20 1 6 ( ASSESSMENT YEAR : 2011 - 12 ) GOLDEN COMPUTERS PVT. LTD., UNIT NO.602, 6 TH FLOOR, FLORAL DECK PLAZA, MIDC, ANDHERI EAST , MUMBAI 400 003 VS. DCIT 8(1), MUMBAI 400 020 PAN/GIR NO. AAACG1233E APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI DR. K . SHIVARAM AND SHRI RAHUL K HAKANI REVENUE BY SHRI M.C.OMI NINGSHEN DATE OF HEARING 16 / 05 /201 7 DATE OF PRONOUNCEME NT 20 / 06 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) 16, MUMBAI DATED 08/02/2016 FOR THE A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF SECURITIES AND DERIVATIVE TRANSACTIONS, COMMISSION AND BROKERAGE AND FINANCING BUSINESS AND INVESTMENT IN AGRICULTURE LAND. 4 . DURING THE COURSE OF SCRUTINY ASSESSMENT, AO DISALLOWED COMMISSION INCOME OF RS.7,33,360/ - TREATED BY IT AS BUSINESS INCOME, INTEREST PAID TO T OVYA AUTOMATION PVT. LTD., AO ALSO DISALLOWED CARRY FORWARD OF UNABSORBED LOSS OF RS.46,51,297/ - WHICH WAS PERT AINING TO ASSESSEES CLAIM OF DEPRECIATION ON CAR. ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 2 5. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ADDITION SO MADE , AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. PRECISE OBSERVATION OF CIT(A) WAS AS UNDER: - 6.2.1 VIDE THESE GROUNDS THE APPELLANT H AS AGITATED AGAINST ASSESSING COMMISSION INCOME OF RS.7,33,360/ - UNDER THE HEAD 'INCOME FROM OTHER SOURCES' INSTEAD OF 'BUSINESS INCOME.' IN PARA 4 OF THE ASSESSMENT ORDER, THE LD. A.O. MENTIONED THAT THE APPELLANT COMPANY HAD SHOWN TO HAVE EARNED OTHER IN COME OF RS.7,55,799/ - WHICH COMPRISES OF COMMISSION INCOME OF RS.7,33,360/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. A.O. INQUIRED ABOUT THE NATURE OF COMMISSION INCOME EARNED, TRANSACTIONS ON WHICH COMMISSION INCOME WAS EARNED AND SERVICES RE NDERED BY THE APPELLANT FOR EARNING THE ABOVE MENTIONED COMMISSION INCOME. THE LD. A.O. CONDUCTED NECESSARY INQUIRIES BY RECORDING STATEMENT U/S.131 OF THE PERSON FOR WHOM THE SERVICES WERE RENDERED AND VARIOUS SALE TRANSACTIONS ON WHICH COMMISSION WAS EAR NED BY THE APPELLANT. AFTER CONDUCTING VARIOUS INQUIRIES U/S.131 THE LD. A.O. ALSO RECORDED STATEMENT ON OATH OF VARIOUS PERSONS FOR WHOM THE SERVICES WERE RENDERED BY THE APPELLANT FOR EARNING THE COMMISSION INCOME. AS MENTIONED IN PARA 4.14. AND 4.15 OF THE ASSESSMENT ORDER, THE LD. A.O. APPRAISED THE APPELLANT ABOUT THE STATEMENT RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO OFFERED AN OPPORTUNITY OF CROSS EXAMINATION. COPIES OF ALL THE STATEMENTS MENTIONED IN THE ASSESSMENT ORDER WERE AL SO PROVIDED TO THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT DURING ASSESSMENT PROCEEDINGS. IN PARA 4.15 OF THE ASSESSMENT ORDER, IT IS CATEGORICALLY MENTIONED THAT AN OPPORTUNITY OF CROSS EXAMINATION WAS OFFERED IN RESPONSE TO WHICH THE APPELLANT EXPLAIN ED THAT IT DID NOT WANT TO CROSS EXAMINE ANY OF THE PARTIES WHICH HAS BEEN EXAMINED BY THE A.O. EVEN DURING ASSESSMENT PROCEEDINGS, THE APPELLANT DID NOT CHALLENGE THE CONTENT OF VARIOUS STATEMENT RECORDED BY THE A O AND DISCUSSED IN THE ASSESSMENT ORDER. FROM THE ABOVE MENTIONED FACTS, IT CAN BE PRESUMED WITHOUT ANY DOUBT THAT THE CONTENT OF VARIOUS STATEMENTS DISCUSSED IN PARA 4 OF THE ASSESSMENT ORDER ARE CORRECT. AFTER CONSIDERING THE FACTS RECORDED IN THE STATEMENT AND SUBMISSIONS OF THE APPELLANT COMP ANY, THE LD. A.O. CONCLUDED THAT THE APPELLANT COMPANY THROUGH ITS DIRECTORS HAS HELPED OTHER PERSONS IN REDUCING THE SAID FIRM'S TAXABLE INCOME UNDER THE GRUB OF BOGUS AND SHAM TRANSACTION OF COMMISSION OF SALES. IT WAS ADMITTED TO BE OF NON GENUINE CHARA CTER BY THE VARIOUS PERSONS WHO HAD MADE PAYMENT OF COMMISSION TO THE APPELLANT. IN VIEW OF THESE FACTS, THE LD. A.O. CONCLUDED THAT A SUM OF RS.7,33,360/ - WAS NOT COMMISSION INCOME EARNED BY THE APPELLANT RATHER IT WAS INCOME FROM OTHER SOURCES. 6.2.2 DUR ING APPELLATE STAGE, THE AUTHROISED REPRESENTATIVE COULD ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 3 NOT SUBSTANTIATE ITS CLAIM FOR EARNING THE COMMISSION INCOME AND NO DEFECTS WERE POINTED OUT BY THE LD. A.R. DURING APPELLATE PROCEEDINGS IN THE FINDINGS OF THE A.O. EVEN THE CONTENT OF THE STATEMENT S RECORDED BY THE A.O. U/S.131 WERE NOT CHALLENGED BEFORE ME. THEREFORE, I CANNOT FIND ANY DEFECT IN THE FINDINGS OF THE A.O. AND I HAVE NO REASON TO INTERFERE IN THE CONCLUSION DRAWN BY THE A.O. IN VIEW OF THESE FACTS GROUND NOS.2 & 3 RAISED BY THE APPELL ANT ARE DISMISSED. 6.3 GROUND NO.4 6.3.1 VIDE THIS GROUND THE APPELLANT HAS AGITATED AGAINST DISALLOWING CAR DEPRECIATION OF RS.44,09,123/ - , INTEREST ON CAR LOAN RS.9,26,098/ - AND CAR EXPENSES AMOUNTING TO RS.26,812/ - . IN PARA 5 OF THE ASSESSMENT ORDER, TH E LD. A.O. MENTIONED THAT THE APPELLANT COMPANY HAD SHOWN TO HAVE PURCHASED A MOTOR CAR OF RS.2,93,94,155/ - ON WHICH THE APPELLANT COMPANY HAD CLAIMED DEPRECIATION OF RS.38,05,073/ - UNDER THE PROVISIONS OF COMPANY'S ACT. THE APPELLANT COMPANY HAD FURTHER C LAIMED INTEREST OF RS.9,26,098/ - INCURRED ON CAR LOAN OBTAINED FROM KOTAK MAHINDRA. DURING ASSESSMENT PROCEEDINGS, THE A.O. INQUIRED ABOUT THE USE OF CAR FOR THE BUSINESS ALONGWITH NECESSARY EVIDENCES LIKE MAINTENANCE OF LOG BOOK AND NECESSARY EVIDENCES RE GARDING ITS USE OF THE BUSINESS. THE LD. A.O. CONDUCTED FURTHER NECESSARY INQUIRIES U/S.131 OF THE ACT FOR ASCERTAINING THE USE OF THE CAR FOR THE BUSINESS OF THE APPELLANT COMPANY. COPY OF VARIOUS STATEMENT RECORDED IN THIS CONNECTION WERE ALSO HANDED OVE R TO THE APPELLANT COMPANY DURING ASSESSMENT PROCEEDINGS BY THE A.O. AFTER CONDUCTING VARIOUS INQUIRIES, THE LD. A.O. CONCLUDED THAT THE APPELLANT HAD NEVER USED THE ROLLS ROYCE CAR WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT COMPAN Y. THEREFORE, THE EXPENSES ON ACCOUNT OF DEPRECIATION, INTEREST AND OTHER EXPENDITURES. 6.3.2. EVEN DURING APPELLATE PROCEEDINGS NO EVIDENCES WERE FURNISHED BY THE APPELLANT IN SUPPORT OF ITS CLAIM. EVEN THE LD. A.R. DID NOT CHALLENGE THE CONTENT OF VARIO US INVESTIGATIONS CONDUCTED BY THE A.O. IN ABSENCE OF ANY SUPPORTING EVIDENCES PROVING USE OF CAR FOR THE BUSINESS OF THE APPELLANT, THE CONTENTION OF ID. A.R. CANNOT BE ACCEPTED. IN VIEW OF IT, THIS GROUND OF APPEAL RAISED BY THE APPELLANT IS DISMISSED. 6. AS PER ORDER OF LOWER AUTHORITIES THE AO HAS DISALLOWED ASSESSEES CLAIM OF DEPRECIATION ON CAR ON THE PLEA THAT IT WAS FOR THE PERSONAL USE , AND THAT THE CAR WAS NOT USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 4 BUSINESS. LEARNED AR RELIED ON THE DECI SION OF GUJARAT HIGH COURT REPORTED AT 280 ITR 86 IN SUPPORT OF THE PROPOSITION THAT NO DISALLOWANCE IN RESPECT OF PERSONAL USE BY DIRECTORS OR EMPLOYEES OF THE COMPANY CAN BE MADE IN THE HANDS OF THE ASSESSEE BEING A CORPORATE ENTITY. IT WAS ALSO CONTENTI ON OF LEARNED AR THAT DIRECTOR WAS HAVING HIS PERSONAL CAR, THEREFORE, AO HAS WRONGLY PRESUMED THAT CAR OF THE COMPANY WAS USED BY THE DIRECTOR FOR HIS PERSONAL PURPOSE. AS AN ALTERNATIVE ARGUMENT, CONTENTION OF LEARNED AR WAS THAT EVEN IF CAR WAS USED FOR A SINGLE DAY, WHOLE DEPRECIATION IS TO BE ALLOWED IN VIEW OF THE DECISION OF GAUHATI HIGH COURT REPORTED AT 221 ITR 857. LEARNED AR FURTHER SUBMITTED THAT IN THE SUBSEQUENT YEAR ASSESSEE WAS HAVING SUBSTANTIAL INCOME FROM SHARE TRANSACTION WHICH SHOULD AL SO BE TAKEN INTO ACCOUNT WHILE CONSIDERING USE OF CAR FOR THE PURPOSE OF BUSINESS. 7. ON THE OTHER HAND, LEARNED DR CONTENDED THAT ASSESSEE WAS NOT HAVING ANY BUSINESS INCOME AND AFTER MAKING DETAILED ENQUIRY AND RECORDING THE STATEMENT OF THE PERSONS PAYI NG THE INCOME, THE AO REACHED TO THE CONCLUSION THAT TRANSACTION OF COMMISSION INCOME WAS BOGUS, ACCORDINGLY AO WAS HELD TO BE JUSTIFIED IN TREATING COMMISSION INCOME AS INCOME FROM OTHER SOURCES AND DECLINE OF CLAIM OF DEPRECIATION WAS HELD TO BE JUSTIFIE D. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT DURING THE YEAR ASSESSEE HAS FILED RETURN OF INCOME AT NIL AFTER CLAIMING CARRY FORWARD OF CURRENT YEARS LOSS OF RS.46,51 ,297/ - WHICH WAS ASSESSED BY THE AO AT ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 5 RS.8,47,190/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT, AO FOUND THAT COMMISSION INCOME SHOWN TO BE RECEIVED FROM SHREE CHEM INDUSTRIES WAS FAKE. HE ISSUED SUMMON U/S.133(6) TO VARIOUS PARTIES TO WHOM GOODS WERE SOLD BY SHREE CHEM INDUSTRIES, CALLING FOR INFORMATION IN RESPECT OF THE ALLEGED PURCHASE MADE BY THEM FROM M/S. SHREE CHEM INDUSTRIES THROUGH THE ASSESSEE - COMPANY. CONTENTION OF ASSESSEE WAS THAT COMMISSION WAS PAID BY M/S. SHREE CHEM INDUSTRIES IN RESPECT O F SALES AFFECTED THROUGH ASSESSEE - COMPANY TO VARIOUS PARTIES. HOWEVER TO FIND OUT GENUINESS OF COMMISS ION INCOME SHOWN BY ASSESSEE, AO ISSUED SUMMONS TO PAYEE OF COMMISSION AND TO THE PARTIES TO WHOM PAYEE HAS SOLD GOODS. AS PER THE STATEMENT RECORDED BY T HE AO, ALL THESE PARTIES ADMITTED THAT THEY DO NOT KNOW THAT THE ASSESSEE - COMPANY OR ANY OF ITS DIRECTORS OR EMPLOYEES AND THAT ALL THE TRANSACTIONS WHICH M/S. SHREE CHEM INDUSTRIES ARE ROUTED THROUGH ONE SHRI AMIT GANDHI. THE AO ALSO CALLED SHRI AMIT GAND HI BY ISSUING NOTICE U/S.131. I N RESPONSE TO SUMMONS ISSUED U/S.131 OF THE ACT, SHRI AMIT GANDHI, RESIDENT OF MUMBAI, PARTNER OF M/S. SHREE CHEM INDUSTRIES, BHIWANDI, ATTENDED HIS OFFICE ON 21.01.2014 WHERE AT HIS STATEMENT ON OATH WAS RECORDED WHEREIN HE HAS ADMITTED THAT COMMISSION WAS PAID TO THE ASSESSEE COMPANY FOR A.YS. 2011 - 12, 2012 - 13 AND 2013 - 14 FOR NO SERVICES RENDERED BY THEM AND THAT THEY WERE NOT INVOLVED IN THE INTRODUCTION OF THE PARTIES AND FURTHER THEY HAVE NOT PARTICIPATED IN TAKING THE P URCHASE ORDERS, TAKING OF MATERIAL SUPPLIED AND FOLLOW - UP FOR PAYMENTS, HENCE COMMISSION PAID TO THE - , ASSESSEE COMPANY FOR A .YS.2011 - 12, 2012 - 13 & ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 6 2013 - 14 WA S NOT GENUINE . 9. VIDE ORDER SHEET NOTING DATED 30.01.2014, THE AR OF THE ASSESSEE COMPANY WAS APP RISED OF THE FACTUM OF NON - GENUINE CHARACTER OF COMMISSION INCOME IN VIEW OF THE ADMITTANCE ON THE PART OF SHRI AMIT GANDHI, PARTNER / PRINCIPAL OFFICER OF M/S. SHREE CHEM INDUSTRIES, BHIWANDI AND ALSO IN VIEW OF THE STATEMENTS ON OATH RECORDED OF THE PART IES TO WHOM SALES ARE PURPORTED TO HAVE BEEN MADE THROUGH THE ASSESSEE COMPANY WHEREIN THEY HAVE CATEGORICALLY ADMITTED THAT THEY DO NOT KNOW THE ASSESSEE COMPANY OR ANY OF ITS DIRECTORS / EMPLOYEES AND THAT ALL THE TRANSACTIONS WITH M/S.SHREE CHEM INDUSTR IES, BHIWANDI ARE CARRIED OUT BY THEM THROUGH ONLY MR.AMIT GANDHI. THE AR OF THE ASSESSEE WAS ALSO PROVIDED WITH COPIES OF ALL THE ABOVE REFERRED STATEMENTS. VIDE ORDER SHEET NOTING DATED 10.02.2014, THE AR OF THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE COMMISSION INCOME OF RS.7,33,360/ - CREDITED TO PROFIT & LOSS ACCOUNT UNDER THE HEAD OTHER INCOME SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES AND BE TAXED ACCORDINGLY. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS OFFERED AN OPPORTUNIT Y OF CROSS - EXAMINATION OF ALL THE AFORESAID PARTIES, HOWEVER, THE ASSESSEE EXPRESSED THAT IT DOES NOT WANT TO CROSS - EXAMINE ANY OF THE AFORESAID PARTIES. FURTHER, EVEN THE DIRECTORS OF THE ASSESSEE COMPANY, WHO ARE STATED TO BE VERY AGED, HAVE NEVER ATTEND ED THE PROCEEDINGS EVEN AFTER ISSUANCE OF SUMMONS U/S. 131 OF THE ACT. 10. IN VIEW OF THE ABOVE, AFTER CONSIDERING THE REPLY OF ASSESSEE, THE AO HELD AS UNDER: - ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 7 A \ OF (AE 4.17. T HE SUBMISSION OF THE ASSESSEE IS CONSIDERED, HOWEVER, IN VIEW OF THE CLEAR FACT ON RECO RD THAT SHRI AMIT GANDHI, PARTNER / PRINCIPAL OFFICER OF M/S.SHREE CHEM INDUSTRIES, FROM WHOM THE ASSESSEE CLAIMS TO HAVE RECEIVED COMMISSION @ 5% ON SALES EFFECTED, HAS CATEGORICALLY ADMITTED THAT THE COMMISSION PAID TO THE ASSESSEE COMPANY IS A NON - GENUI NE TRANSACTION AND THAT THE DIRECTORS / EMPLOYEES OF THE ASSESSEE COMPANY HAVE PLAYED NO ROLE IN EFFECTING THEIR SALES AND THAT ALL THE PARTIES WERE CONTACTED BY HIM ONLY AND EVEN NO FOLLOW - UP FOR RECOVERY OF BILLS PAYMENT WAS EVER MADE BY ANY OF THE DIRE CTORS / EMPLOYEES OF THE ASSESSEE COMPANY. MOREOVER, THE ASSESSEE HAS EVEN EXPRESSED ITS UNWILLINGNESS TO CROSS - EXAMINE ANY OF THE PARTIES, INCLUDING SHRI AMIT GANDHI. THEREFORE, AN ADVERSE INFERENCE IS HEREBY DRAWN THAT THE COMMISSION INCOME OF RS.7,33,36 0/ - , WHICH IS ALLEGED TO HAVE BEEN EARNED @5% ON SALES OF M/S.SHREE CHEM INDUSTRIES, IS OF NON - GENUINE CHARACTER AND ACCORDINGLY THE SAID SUM OF RS.7,33,360/ - IS HEREBY TREATED AND TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. 11. THE DETAILED FINDIN G RECORDED BY AO AND CIT(A) HAS NOT BEEN CONTROVERTED BY ASSESSEE, BY BRINGING ANY POSITIVE MATERIAL ON RECORD, ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LOWER AUTHORITIES TREATING THE COMMISSION INCOME AS INCOME FROM OTHER SO URCES. 12. WITH REGARD TO ASSESSEES CLAIM OF DEPRECIATION ON THE ROLLS ROYCE CAR AMOUNTING TO RS.2.93 CRORES AND LOAN PROCESSING EXPENDITURE OF RS. 75,144 AND INTEREST EXPENDITURE OF RS.9.26 LAKHS ON THE LOAN OBTAINED FOR THE PURPOSE OF PURCHA SING THE SAID CAR FROM KOTAK MAHENDRA BANK LTD., WE FOUND THAT V IDE ORDER SHEET NOTING DATED 14.11.2013, THE AR OF THE ASSESSEE WAS ASKED TO STATE AS TO HOW THE SAID CAR HAS BEEN USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND ALSO TO FURNISH THE LOG BOOK O F THE NEWLY PURCHASED CAR. ON 27.11.2013, THE AR OF THE ASSESSEE FILED A LETTER DATED 25.11.2013, CONTAINING THE EXPLANATION ABOUT PURCHASE AND USE OF CAR FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 8 COMPANY. IN VIEW OF AOS CONCLUSION THAT COMMISSION INCOM E OF RS.7,33,360/ - OFFERED BY THE ASSESSEE AS BUSINESS INCOME WAS NOT CORRECT, HE TREATED THE SAME AS INCOME FROM OTHER SOURCES, AO DECLINED THE CLAIM OF DEPRECIATION BY OBSERVING THAT CAR WAS NOT USED FOR THE PURPOSE OF BUSINESS AS THAT OF COMMISSION AGEN T IS FOUND TO BE TOTALLY FALSE. IT WAS CONTENTION OF ASSESSEE BEFORE THE AO THAT THE CAR IS USED FOR THE PURPOSE OF TRADING IN SHARES AND DERIVATIVES, THE ASSESSEE WAS ASKED TO FURNISH THE RELEVANT DETAILS IN RELATION TO THE TRADING IN. SHARES AND DERIVATI VES AND THE NAME & ADDRESS OF THE BROKERS. ACCORDINGLY, THE ASSESSEE FURNISHED THE DETAILS OF PURCHASES AND SALES AND CLOSING STOCK OF SHARES / DERIVATIVES ALONG WITH COPIES OF BROKERS NOTES AND DEMAT STATEMENT. FROM THE DETAILS SO FILED, IT IS SEEN THAT THE BROKERS OF THE ASSESSEE COMPANY IN RELATION TO SHARES I DERIVATIVES ARE RRS SHARES & STOCK BROKERS PRIVATE LIMITED & JRS SHARES & STOCK BROKERS PRIVATE LIMITED. DURING THE ASSESSMENT PROCEEDINGS, STATEMENT ON OATH OF SHRI JAYANT R.SHAH, DIRECTOR OF RRS SHARES FIT STOCK BROKERS PRIVATE LIMITED WAS RECORDED ON 03.02.2014 U/S.131 OF THE ACT WHEREIN HE STATED THAT SHRI M.L.TANDON, DIRECTOR OF THE ASSESSEE COMPANY WAS INTRODUCED BY SUB BROKER SHRI NAYAN G.ASHAR AS A CLIENT AND THEIR RELATION WITH THE ASSESSE E COMPANY AND THE SAID DIRECTOR IS THAT OF A CLIENT AND A BROKER. HE FURTHER STATED THAT THE ORDERS FOR PURCHASE OR SALE TAKE PLACE OVER TELEPHONE / CELL PHONE ON INSTRUCTION THROUGH ONE SHRI VIKRAM CHOPRA FROM THE ASSESSEE COMPANY AND THAT THERE IS NO NEE D TO MEET PERSONALLY FOR THIS BUSINESS. HE FURTHER STATED THAT THE MEETING WITH SHRI M.L.TANDON, ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 9 DIRECTOR OF THE ASSESSEE COMPANY, TOOK PLACE AT HIS OFFICE LOCATED IN SEEPZ ONLY AND NOWHERE ELSE SO FAR AND THAT HE MEETS WITH MR.VIKRAM CHOPRA TWICE OR THRIC E IN A YEAR IN HIS OFFICE OR AT THEIR OFFICE. HE FURTHER STATED THAT HE HAS NEVER MET MR.TANDON OUTSIDE HIS OFFICE AT SEEPZ, ANDHERI AND THAT TOO BY PRIOR APPOINTMENT. 13. IN V IEW OF THE STATEMENT OF SHRI JAYANT R. SHAH STATING THAT THE ASSESSEE COMPANY A ND ITS DIRECTOR SHRI M.L. TANDON WERE INTRODUCED BY ONE SHRI NAYAN G. ASHAR, SUB - BROKER OF RRS SHARE & STOCK BROKERS PRIVATE LIMITED, STATEMENT OF SHRI NAYAN G.ASHAR WAS ALSO RECORDED ON OATH ON 04.02.2014 U/S.131 OF THE ACT WHEREIN HE STATED THAT MEETING WITH SHRI M.L.TANDON TOOK PLACE ONLY AT HIS OFFICE LOCATED IN SEEPZ AND NOWHERE ELSE THUS FAR AND THAT ONE MR.DATTA, PEON OF THE ASSESSEE COMPANY, USED TO COME TO BROKERS OFFICE TO DELIVER THE CHEQUES OR DOCUMENTS AND THAT APART FROM THE SAID PERSON NAMEL Y MR.DATTA, NOBODY COMES TO MEET HIM IN THE BROKERS OFFICE TO EXECUTE THE TRADE FOR AND ON BEHALF OF THE ASSESSEE COMPANY AND THAT THE ORDERS TAKE PLACE ONLY ON PHONE / MOBILE. HE FURTHER STATED IN HIS STATEMENT ON OATH THAT HE HAS NEVER MET SHRI M.L.TAND ON, DIRECTOR OF THE ASSESSEE COMPANY, OUTSIDE HIS OFFICE AT SEEPZ, ANDHERI AND THAT TOO BY PRIOR APPOINTMENT. 14. DURING THE ASSESSMENT PROCEEDINGS, VIDE ORDER SHEET NOTING DATED 10.02.2014, THE AR OF THE ASSESSEE COMPANY WAS SHOWN THE STATEMENTS OF SHRI J AYANT R.SHAH, DIRECTOR OF RRS SHARES & STOCK BROKERS PRIVATE LIMITED AND SHRI NAYAN G.ASHAR, SUB - BROKER OF THE SAID COMPANY; AND HE WAS POINTED OUT THAT FROM THE SAID STATEMENTS, IT COMES OUT VERY CLEAR THAT ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 10 THE DIRECTOR OF THE ASSESSEE COMPANY HAS NEVER V ISITED THE BROKER / SUB - BROKER BY USING THE ROLLS ROYCE CAR. IN VIEW OF T HESE FACT IT IS CLEAR THAT THE SAID CAR WAS NEVER BEEN USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE COMPANY, HE WAS ASKED TO SHOW CAUSE AS TO WHY THE ASSESSEES CLAIM OF DEPRECIAT ION OF RS.44,09,123/ - ON THE SAID CAR AND ALSO THE INTEREST EXPENDITURE OF RS.9,26,098/ - INCURRED ON LOAN OBTAINED FOR THE PURPOSE OF PURCHASING THE SAID CAR FROM KOTAK MAHINDRA BANK LIMITED, SHOULD NOT BE DISALLOWED IN VIEW OF THE CLEAR FACT THAT THE SAID CAR WAS NOT USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE COMPANY. 15. THE AO ALSO ISSUED SUMMON U/S.131 TO SHRI SUNIL SHAH, DIRECTOR OF THE ASSESSEE - COMPANY WHO STATED THAT ROLLS ROYCE CAR IS DRIVEN BY A DRIVER VIZ. SHRI SURESH SUVARNA RIGHT FROM THE DATE OF ITS PURCHASE. 16. IN VIEW OF THE ABOVE, AO POINTED OUT CONTRADICTION IN THE AVERMENT MADE BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS VIS - - VIS STATEMENT OF THE DIRECTOR SHRI SUNIL SHAH. FURTHER, AS ADMITTED BY THE BROKER AND THE SUB - BROKER T HAT SHRI M.L.TANDON, DIRECTOR OF THE ASSESSEE COMPANY HAS NEVER VISITED THEIR OFFICE I N RESPECT OF THE TRADING IN SHARES / DERIVATIVES AND THAT THE ENTIRE SUCH BUSINESS TAKES PLACE MOSTLY THROUGH TELEPHONIC CONVERSATION AND THAT SHRI CHOPRA, EMPLOYEE OF TH E GROUP COMPANIES, USED TO VISIT THE BROKER / SUB - BROKER ONLY TWICE OR THRICE A YEAR. IT IS HARDLY BELIEVABLE THAT AN ORDINARY EMPLOYEE OF A COMPANY COULD BE PROVIDED WITH SUCH A COSTLY VEHICLE FOR THE PURPOSE OF VISITING THE BROKER / SUB - BROKER FOR CARRYI NG OUT THE TRADING ACTIVITIES. IN VIEW OF ALL THESE FACTS AS A WHOLE, AO HELD THAT THE CAR IS AND HAS NEVER BEEN USED ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 11 FOR THE DIRECTORS OF THE ASSESSEE COMPANY WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE COMPANY AND AS SUCH THE DEPRE CIATION CLAIMED ON ROLLS ROYCE AND INTEREST INCURRED ON LOAN OBTAINED FROM KOTAK MAHINDRA BANK LIMITED WERE DISALLOWED. ON SIMILAR REASONING, CLAIM OF PROCESSING CHARGES PAID TO THE BANK AND EXPENSES INCURRED ON CAR WAS ALSO DECLINED. NOTHING WAS BROUGHT O N RECORD TO CONTROVERT THE FINDINGS RECORDED BY THE LOWER AUTHORITIES TO THE EFFECT THAT CAR WAS NEVER USED FOR THE PURPOSE OF BUSINESS , ACCORDINGLY WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF AO WHICH WAS CONFIRMED BY THE CIT(A). 17. IT IS P ERTINENT TO MENTION HERE THAT EACH YEAR IS SEPARATE AND INDEPENDENT, THEREFORE, CONTENTION OF ASSESSEE THAT ASSESSEE - COMPANY WAS HAVING SUBSTANTIAL SHARE TRANSACTION / INCOME IN THE SUBSEQUENT YEAR, THE SAME CANNOT BE CONSIDERED FOR ALLOWING DEPRECIATION D URING THE YEAR UNDER CONSIDERATION WHEN IT IS ESTABLISHED THAT CAR WAS NOT USED FOR THE PURPOSE OF BUSINESS DURING THE YEAR UNDER CONSIDERATION . 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 20 / 06 /2017 SD/ - ( RAVISH SOOD ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 20 / 06 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPO NDENT. 3. THE CIT(A), MUMBAI. 4. CIT ITA NO. 2783/MUM/2016 GOLDEN COMPUTERS PVT. LTD., 12 BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//