GROWELL CONSULTANTS P.LTD, MUMBAI V. ITO 3(1)(4), MUMBAI

ITA 5641/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5747 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 23-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Keywords: Business income; Depreciation; Business expenditure; Wrong claim
• Section: 234B; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , ! ! ! ! '##%&' , ( , ) ) ) ) BEFORE SHRI B.R.MITTAL, JM AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO. 5641/MUM/2012 ( ' * ' * ' * ' * !+* !+* !+* !+* / ASSESSMENT YEAR :2009-10) M/S GROWELL CONSULTAN T S PVT. LTD. 11D, HARBOUR HEIGHTS, N.A. SAWANT MARG, COLABA, MUMBAI-400005 ' ' ' ' / VS. THE INCOME TAX OFFICER - 3(1)(4), MUMBAI , ( ./ PAN : AACCG0915F ( ,- / APPELLANT ) .. ( ./,- / RESPONDENT ) ,- 0 1 / APPELLANT BY : SHRI VIMAL PUNMIYA ./,- 0 1 / RESPONDENT BY : SHRI R.K.SAHU '! 0 2( / DATE OF HEARING : 23-01-2014 34+ 0 2( / DATE OF PRONOUNCEMENT : 31-01-2014 5 / O R D E R PER B.R.MITTAL, J.M. THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2009-10 AGAINST ORDER OF THE LD. CIT(A) DATED 29.05.2012 ON FOLLOWING GROUNDS. I. THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN CONF IRMING THE DISALLOWANCE OF THE DEPRECIATION OF RS.8,25,483/- C LAIMED ON THE PREMISE AND FURNITURE AND FIXTURES AND ALSO ERRED I N WRONGLY ALLEGING THAT THE BUSINESS ASSETS OF THE ASSESSEE COMPANY AR E NOT BUSINESS ASSETS. II. THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN CONF IRMING THE DISALLOWANCE OF THE INTEREST ON HOUSING LOAN OF RS. 4,49,652/- PAID TO ICICI BANK LTD. AND ADDED THE SAME TO THE TOTAL INC OME OF THE ASSESSEE COMPANY AND THEREBY CONFIRMED IN TREATED THE SAME F OR NON-BUSINESS PURPOSE. III. THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN CONF IRMING AND DISALLOWANCE OF REPAIRS AND MAINTENANCE OF RS.75,06 1/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE COMPANY AN D THEREBY TREATED THE SAME FOR NON-BUSINESS PURPOSE. IV. THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN CONF IRMING THE DISALLOWANCE OF THE ELECTRICITY EXPENSES OF RS.70,2 42/- AND ADDED THE 2 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. SAME TO THE TOTAL INCOME OF THE ASSESSEE COMPANY AN D TREATED THE SAME FOR NON-BUSINESS PURPOSE. V. THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN CONF IRMING THE CHARGING OF INTEREST U/S 234A, 234B 234C AND 234D OF THE INC OME TAX ACT,1961. VI. THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN CONF IRMING INITIATION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT ASSESSEE FILED RETURN OF INCOME ON 29/09/2009 DECLARING TOTAL LOSS OF RS.6,30,217/-. THE ASSESSEE IS IN THE BUSINESS OF DEALING IN FINAN CIAL ACTIVITIES AND SECURITIES (TRADING OF SLR BONDS & NON SLR BONDS IS SUED BY VARIOUS GOVERNMENT ORGANIZATION). 3. THE ASSESSEE CLAIMED THAT THE PREMISES BEING FLA T NO. 11D, HARBOUR HEIGHTS-A C.H.S. LTD., 11TH FLOOR, N.A. SAW ANT MARG, COLABA, MUMBAI 400005 WHICH IS OWNED BY THE ASSESSEE AS ITS BUSINESS PREMISES. THAT THE ASSESSEE COMPANY IS CARRYING OF ITS BUSINESS ACTIVITIES FROM THE SAID PREMISES AND ACCORDINGLY C LAIMED BUSINESS EXPENDITURE BY WAY OF DEPRECIATION, PAYMENT OF INTE REST AS HOUSING LOAN, PAID TO ICICI BANK LTD., REPAIRS AND MAINTENA NCE EXPENSES, ELECTRICITY EXPENSES ETC. HOWEVER, THE ASSESSING O FFICER STATED THAT THE PREMISE IS A RESIDENTIAL PROPERTY USED BY ASSESSEE S DIRECTORS. THE ASSESSING OFFICER HAS STATED THAT AS PER DETAILS SU BMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON MAKING SEPA RATE ENQUIRIES, IT IS ASCERTAINED THAT FLAT NOS. 12C AND 12D ARE OCCUP IED BY ASSESSEES TWO DIRECTORS FAMILY. THE ASSESSING OFFICER HAS S TATED THAT ALL THESE THREE ARE RESIDENTIAL FLATS AND ARE INTERCONNECTED. THE ASSESSING OFFICER HAS FURTHER STATED THAT A NOTICE U/S 133(6) DATED 3 1.10.2011 WAS SERVED ON THE SOCIETY CALLING FOR INFORMATION RELAT ING TO OWNERSHIP OF FLAT NO.11D; STATUS OF THE PREMISES (WHETHER RESIDE NTIAL OR COMMERCIAL) AND ITS USAGES. IN RESPONSE THERETO, THE SOCIETY CONFIRMED THAT FLAT NO.11D IS IN RESIDENTIAL USE. THE SOCIETY IS RESID ENTIAL BUILDING WITH NO SHOPS OR OFFICES. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE COMPANY, DURING THE COURSE OF ASSESSMENT PROCEEDING S, WAS ASKED TO 3 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. FURNISH ITS SUBMISSION ON THE ISSUE AND THE ASSESSE E COMPANY VIDE LETTER 18.11.2011 STATED THAT SINCE THE DATE OF INC ORPORATION THE REGISTERED PLACE OF BUSINESS OF THE ASSESSEE IS THE OWNED PREMISES ACCEPT FOR A SHORT PERIOD OF FIVE MONTHS (MARCH 200 4 TO JULY 2004) WHEN THE PREMISES WERE LEASED TO DEUTSCHE BANK. TH E ASSESSEE COMPANY IS CARRYING ON ITS BUSINESS ACTIVITY OF TRA DING OF BONDS AND SECURITIES FROM THE SAID PREMISES. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE SUBMITTED ONE MORE LETTER DATED 2 5.11.2011AND THE GIST OF THIS LETTER IS AS FOLLOWS. SINCE THE DATE OF INCORPORATION THE REGISTERED PLAC E OF BUSINESS OF THE ASSESSEE IS THE OWNED PREMISES, I.E., 11D. THE BUSINESS OF TRADING IN SLR AND NON-SLR BONDS TR ADING IS DONE BY SHRI ATUL SUD (DIRECTOR) FROM THESE PREMISES. COMMERCIAL ACTIVITY CAN BE UNDERTAKEN IN RESIDENTIA L PREMISES. THE ASSESSEE HAS QUOTED CERTAIN JUDICIAL PRONOUNCEM ENTS IN SUPPORT OF THEIR CONTENTIONS. 4. THE ASSESSING OFFICER HAS STATED THAT THE SUBMI SSION OF THE ASSESSEE IS NOT ACCEPTABLE AND THE SAID FLAT NO.11D IS USED BY TWO DIRECTORS FOR THEIR RESIDENTIAL PURPOSES. THE ASS ESSING OFFICER HAS FURTHER STATED THAT THE ASSESSEE COMPANY HAS STATED THAT THEIR REGISTERED OFFICE IS AT STRATEGIC HOUSE, 44, MINT ROAD, FORT, MUMBAI 400001 AND FLAT NO. 11D HARBOUR HEIGHTS IS TERMED AS OFFICE PREMISES. SINCE, THE ASSESSEE ITSELF HAS GIVEN NOM ENCLATURE TO THE PREMISES FOR CLAIM OF INTEREST AND DEPRECIATION ON THE PROPERTY WHILE COMPUTING THE TOTAL INCOME, WHICH IS NOT ACCEPTABLE . THE ASSESSING OFFICER HAS FURTHER STATED THAT IN ALL THE CORRESPO NDENCE DONE BY THE ASSESSEE COMPANY IN COURSE OF ASSESSMENT PROCEEDING S BEAR THE ADDRESS OF STRATEGIC HOUSE AND NOT 11D, HARBOUR H EIGHTS. IT IS FURTHER STATED THAT THE BANK PASSBOOK, LEAVE AND LI CENSE AGREEMENTS, TDS CERTIFICATES IN FORM 16A ALSO BEAR THE ADDRESS OF STRATEGIC HOUSE. HENCE THE OPERATIONAL AND FUNCTIONING OF THE ASSESS EE COMPANY IS DONE FROM THE STRATEGIC HOUSE ADDRESS AND NOT FROM 11 D HARBOUR 4 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. HEIGHTS, WHICH IN ANY WAY IS A RESIDENTIAL PREMISE . THE ASSESSING OFFICER HAS FURTHER STATED THAT AS PER FORM NO.18, WHICH IS A NOTICE OF SITUATION OR CHANGE OF SITUATION OF REGISTERED OFFI CE OF THE ASSESSEE IN PURSUANCE TO SECTION 146 OF THE COMPANIES ACT, 1956 , FLAT NO. 11D HARBOUR HEIGHTS IS NOT A REGISTERED OFFICE OF THE A SSESSEE COMPANY. THE ASSESSING OFFICER HAS FURTHER STATED THAT THE ELECT RIC BILLS ARE CHARGED AT THE RATE OF RESIDENTIAL USE AND NOT THE COMMERCIAL USE BY THE ELECTRICITY PROVIDER AND PERUSAL OF THE COPIES OF BILLS OF THE HOUSING SOCIETY IS CHARGING IN THEIR BILLS NON-OCCUPANCY CHARGES OF RS.15,000/- PER ANNUM TO THE ASSESSEE COMPANY. HENCE, THE ASSESSEE COMPANY IS NOT USING THE PREMISES FOR ITS BUSINESS PURPOSES. THE ASSESSING OFFICER HAS FURTHER STATED THAT THE ASSESSEE HAS NOT DEBITE D EXPENSES WHICH ARE NORMALLY RELATED TO A FUNCTIONAL OFFICE, I.E. S ALARY, TELEPHONE, POSTAGE, INTERNET OR OTHER COMMUNICATION EXPENSES. IN VIEW OF ABOVE, THE ASSESSING OFFICER HAS NOT ONLY DENIED THE CLAIM OF DEPRECIATION BUT ALSO REJECTED THE CLAIM OF INTEREST PAID TO ICICI B ANK LTD. ON A HOUSING LOAN FOR PURCHASE OF THE SAID PREMISES 11D HARBOUR HEIGHTS AND ALSO DENIED THE CLAIM OF EXPENSES DEBITED ON ACCOUNT OF ELECTRICITY OF RS.70,242/- AND REPAIRS AND MAINTENANCE OF RS.75,06 1/-. BEING AGGRIEVED, ASSESSEE FIELD APPEAL BEFORE THE FIRST A PPELLATE AUTHORITY. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REASONING GIVEN BY THE AO HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER VIDE PARA 4.3 OF THE IMPUGNED ORD ER, WHICH IS AS UNDER:- I HAVE CONSIDERED THE A.O.S ORDER AS WELL AS THE APPELLANTS SUBMISSION. HAVING CONSIDERED BOTH, I FIND THAT TH E A.O. HAS MADE A DETAILED DISCUSSION IN THE ASSESSMENT ORDER BEFORE MAKING ADDITION, WHICH HAS BEEN AGITATED BY THE APPELLANT THROUGH AF ORESAID GROUNDS OF APPEAL. I FIND THAT THE A.O. HAS CLEARLY MENTIONED IN PARA-9 OF THE ASSESSMENT ORDER THAT THE APPELLANT IS CARRYING OUT ITS REGISTERED OFFICE AT STRATEGIC HOUSE,44 MINT ROAD, FORT, MUMBAI AND NOT AT FLAT NO.11D, HARBOUR HEIGHTS AS CLAIMED BY THE APPELLANT. THE A .O. HAS CLEARLY MENTIONED THIS FACT THAT ALL THE CORRESPONDENCE THR OUGH THE APPELLANT WERE MADE BY THE DEPARTMENT TO THIS ADDRESS ONLY AN D THE SAME WERE ALSO COMPLIED WITH. FURTHER AS PER DETAILED DISCUS SION IN PARA-10 OF THE ASSESSMENT ORDER, WHEREIN THE A.O. MADE THE FACT TH AT THE APPELLANT IS USING THE FLAT NO.11D AS ITS RESIDENTIAL PURPOSE. IT IS ALSO EVIDENT THAT THE APPELLANT COULD NOT ADDUCE ANY EVIDENCE OR DOCU MENTS THAT THE SAID 5 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. PREMISES WERE USED OTHER THAN RESIDENTIAL PURPOSES. EVEN THE A.O. MADE THE ENQUIRY FROM HOUSING SOCIETY, WHICH CONFIR MS THE USE OF RESIDENTIAL PURPOSE. EVEN I FIND THAT THE A.O. HAS ALSO MADE INDEPENDENT ENQUIRY AS MENTIONED IN PARA-12 OF THE ASSESSMENT ORDER, WHICH ALSO CONFIRMS THAT THE SAID PREMISE WAS USED OF RESIDENTIAL PURPOSES. IN VIEW OF THE SAME, I AM IN AGREEMENT W ITH THE A.O. THAT THE SAID PREMISES WAS A RESIDENTIAL PREMISES AND HENCE THE APPELLANT WAS MAKING WRONG CLAIM OF DEDUCTION OR REPAIRS & MAINTE NANCE, ELECTRICITY CHARGES, ETC. HENCE THE ADDITION SO MADE BY THE A. O. IS CONFIRMED. FURTHER TO THAT ON THE AFORESAID FACTS, I ALSO AFFI RM THE A.O.S ACTION FOR NOT ALLOWING DEPRECIATION AS DISCUSSED BY THE A.O. IN PARA-17 OF THE ORDER. ACCORDINGLY THE A.O.S ACTION IS CONFIRMED. THUS THESE GROUNDS OF APPEALS ARE DISMISSED. HENCE, ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRI BUNAL. 6. THE LD. AR SUBMITTED THAT THE SAID PREMISES BEIN G 11D HARBOUR HEIGHT IS THE BUSINESS PREMISES OF THE ASSESSEE AND THE ASSESSEE IS CARRYING ON ITS BUSINESS FROM THE SAID PREMISES. H E SUBMITTED THAT THE SAID SOCIETY HAS CHARGED HIGHER MAINTENANCE AS COMP ARE TO THE OTHER INDIVIDUALS ON ACCOUNT OF FACT THAT THE PREMISES IS USED BY THE ASSESSEE COMPANY. THE ASSESSEE PAID RS. 21,004/-AS EXTRA MA INTENANCE CHARGES PER ANNUM TO THE SOCIETY FOR THE SAID FLAT. HE FURTHER SUBMITTED THAT THE ASSESSEE IS USING THE SAID PREMI SES FOR ITS OFFICE PURPOSE SINCE ASSESSMENT YEAR 2004-05 AND THE DEPAR TMENT HAS ACCEPTED THE CLAIM OF DEPRECIATION, INTEREST AND EX PENSES FROM ASSESSMENT YEARS 2004-05 TO 2008-09 AND ALSO IN THE SUBSEQUENT ASSESSMENT YEAR I.E. A.Y. 2010-11 ONWARDS. HE SUBM ITTED THAT THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSES SEE IN RESPECT OF THE SAID FLAT MERELY ON THE GROUND THAT THE SAID SOCIET Y IS A RESIDENTIAL SOCIETY. HE SUBMITTED THAT EVEN IN A RESIDENTIAL B UILDING, THE PREMISES COULD BE USED FOR BUSINESS PURPOSES AND REQUISITE E XPENSES ON ACCOUNT OF CARRYING ON THE BUSINESS ACTIVITY ON THE SAID PR EMISES IS ALLOWABLE. HE SUBMITTED THAT THE ASSESSEE COMPANY IS DEALING I N GOVERNMENT SECURITIES, WHICH IS A SPECIALIZED ACTIVITY AND THE DIRECTORS OF THE ASSESSEE COMPANY MANAGE THE BUSINESS FROM THE SAID PREMISES. HE SUBMITTED THAT MR. SUD ONE OF THE DIRECTOR IS A WH OLE TIME DIRECTOR OF STRATCAP SECURITIES AND FOR THE FIRST HALF OF THE D AY HE OPERATES FROM THE 6 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. HARBOUR HEIGHTS AND FOR THE SECOND HALF OF THE DAY FROM STRATCAP OFFICE. THE LD. AR HAS SUBMITTED THAT THERE IS NO OTHER STA FF AND MR. SUD IS THE SOLE PERSON TO MANAGE THE CLIENTS FROM THE PREMISES AT HARBOUR HEIGHT. HE SUBMITTED THAT THE ASSESSEE HAS SHOWN THE SAID F LAT AS FIXED ASSETS IN THE BALANCE SHEET AS THE PREMISES IS IN THE NAM E OF THE ASSESSEE COMPANY. THE SAID PREMISES IS NOT IN THE NAME OF DI RECTORS INDIVIDUALLY OR JOINTLY. THE LD. AR REFERRED PAGE 7 OF THE PAPE R BOOK WHICH A COPY OF THE E-FILING ACKNOWLEDGMENT OF THE RETURN FOR THE A SSESSMENT YEAR 2009-10 AND SUBMITTED THAT THE ADDRESS OF THE ASSES SEE IS MENTIONED AT 11D HARBOUR HEIGHT, N.A. SAWANT MARG, COLABA, M UMBAI-400005. HE FURTHER SUBMITTED THAT EVEN IN THE COMPUTATION O F INCOME, COPY PLACED AT PAGE 8 OF THE PAPER BOOK ADDRESS OF THE A SSESSEE HAS BEEN GIVEN 11D HARBOUR HEIGHT. THE LD AR SUBMITTED THAT THE COPY OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.03.2009 ALONGWITH TAX AUDIT REPORT IS PLACED AT PAGES 9 TO 12 AND 23 TO 39 OF T HE PAPER BOOK. HE SUBMITTED THAT IN FORM 3CA (AT PAGE 24 OF THE PAPER BOOK) THE ADDRESS IS MENTIONED OF THE ASSESSEE 11D HARBOUR HEIGHT. HE FURTHER REFERRED FORM 3CD (PAGE 26 OF THE PAPER BOOK) AND SUBMITTED THAT THE ADDRESS OF THE ASSESSEE IS GIVEN 11D HARBOUR HEIGHT. THE L D. AR FURTHER SUBMITTED THAT EVEN IN RESPECT OF GIVING THE DETAIL S OF THE BOOKS OF ACCOUNT MAINTAINED; THE STATUTORY AUDITOR IN THE AN NEXURE HAS MENTIONED THE ADDRESS OF THE ASSESSEE 11D HARBOUR H EIGHT. THE LD. AR FURTHER FILED THE DETAILS OF THE LEDGER ACCOUNT AND COPIES OF DEBIT NOTES WHICH ARE PLACED AT PAGES 42 TO 74 OF THE PAPER BOO K AND SUBMITTED THAT THE ADDRESS OF THE ASSESSEE IS MENTIONED 11D H ARBOUR HEIGHT. SINCE THE SAID PREMISES IS USED FOR BUSINESS PURPOS ES BY THE ASSESSEE, THE CLAIM OF DEPRECIATION AND OTHER EXPENSES CLAIME D IS TO BE ALLOWED WHILE COMPUTING THE INCOME OF THE ASSESSEE UNDER TH E HEAD BUSINESS INCOME. ON THE OTHER HAND, THE LD. DR SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE REGISTERE D OFFICE OF THE COMPANY IS AT FORT AND NOT IN THE PREMISES AT FLAT NO. 11D HARBOUR HEIGHT. HE FURTHER SUBMITTED THAT THE OTHER FLATS ARE FLAT NO.12C AND 7 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. 12D ARE INTERCONNECTED WITH FLAT NO.11D AND THE SAI D FLATS ARE PURCHASED IN THE NAME OF DIRECTOR OF ASSESSEE AND A RE ALSO USED BY THE DIRECTORS FOR THEIR RESIDENTIAL PURPOSES. THEREFO RE, THE ASSESSING OFFICER IS JUSTIFIED THAT THE PREMISES 11D IS USED BY THE DIRECTORS OF THE ASSESSEE COMPANY FOR THEIR RESIDENTIAL PURPOSES AND NOT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. HE SUBMITTED THAT THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF THE ASSESSIN G OFFICER IS JUSTIFIED. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF TH E AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE RELEVANT PAGES OF THE PAPE RBOOK. 8. WE OBSERVE THAT THAT ASSESSEE IS IN THE BUSINESS OF TRADING IN GOVERNMENT SECURITIES. THE ASSESSEE HAS CLAIMED TH AT IT IS CARRYING ON ITS BUSINESS FROM FLAT NO.11D HARBOUR HEIGHT, N.A. SAWANT MARG, COLABA, MUMBAI 400005 AND HAS CLAIMED DEPRECIATION, INTEREST PAID ON HOUSING LOAN FOR PURCHASE OF SAID PREMISES AND OTHE R EXPENSES ON ACCOUNT OF ELECTRICITY AND REPAIRS AND MAINTENANCE ETC. THE ASSESSING OFFICER HAS STATED THAT THE SAID PREMISES IS USED B Y THE ASSESSEE FOR RESIDENTIAL PURPOSES OF ITS DIRECTOR AND NOT FOR BU SINESS PURPOSES. THE ASSESSING OFFICER HAS SUBSTANTIATED HER CONCLUSION BY CONSIDERING THAT THERE ARE TWO OTHER ADJOINING FLATS BEING FLAT NO.1 2C AND 12D WHICH ARE UNDISPUTEDLY USED BY THE TWO DIRECTORS OF THE ASSES SEE COMPANY FOR THEIR RESIDENTIAL PURPOSES, THAT SAID BUILDING IS A RESIDENTIAL BUILDING AND THE ASSESSEE HAS ALSO NOT DEBITED ANY EXPENSE W HICH ARE NORMALLY CLAIMED RELATING TO A FUNCTIONAL OFFICE. ON THE OT HER HAND, THE ASSESSEE HAS STATED THAT THOUGH IT IS A RESIDENTIAL BUILDING BUT THE ASSESSEE IS CARRYING ON ITS OFFICE PREMISES FROM THE SAID PREMI SES BEING FLAT NO.11D HARBOUR SOCIETY AND TO SUBSTANTIATE ITS CLAIM HAS F ILED THE COPY OF DEBIT NOTES AS WELL AS THE COPY OF TAX AUDIT REPORT WHERE IN THE ADDRESS IS MENTIONED AS 11D HARBOUR HEIGHT. THE ASSESSEE HAS ALSO SUBSTANTIATED ITS CONTENTION BY STATING THAT IN THE RETURN FILED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION VIZ ASSESSMENT YEAR 2009-10 THE 8 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. ADDRESS OF THE ASSESSEE IS GIVEN AS 11D HARBOUR HEI GHT . NOT ONLY THIS THE ASSESSEE HAS ALSO SUBSTANTIATED ITS CONTENTION STATING THAT FROM ASSESSMENT YEAR 2004-05 TO ASSESSMENT YEAR 2008-09 AND ALSO IN THE SUBSEQUENT ASSESSMENT YEARS TO THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2010-11 ONWARDS THE DEPARTMENT HAS ALSO ALLOWED TO THE ASSESSEE, THE CLAIM OF DEPR ECIATION AND ALL EXPENSES INCLUDING THE INTEREST, ELECTRICITY CHARGE S ETC. THE SAID FACT HAS NOT BEEN DISPUTED BY THE LD. DR AT THE TIME OF HEARING OF THIS APPEAL. 9. CONSIDERING THE ISSUE IN THE LIGHT OF ABOVE CONT ENTION OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE MATERIAL PLA CED ON RECORD, WE FIND MERIT IN THE CONTENTION OF THE LD. AR THAT THE ASSESSEE IS CARRYING ON ITS BUSINESS ACTIVITIES FROM FLAT NO.11D HARBOUR HEIGHT N.A. SAWANT MARG, COLABA, MUMBAI, MAHARASHTRA. THE SAID FACT I S SUBSTANTIATED BY THE FACT THAT THE ASSESSEE IS PAYING EXTRA MAINTENA NCE CHARGES OF RS.21,004/- PER ANNUM TO THE SOCIETY. FURTHER EVEN IN THE ASSESSMENT ORDER AS WELL AS IN THE ORDER OF THE LD. CIT(A), TH E ADDRESS OF THE ASSESSEE IS GIVEN AS 11D HARBOUR HEIGHT N.A. SAWANT MARG, COLABA, MUMBAI 400005 AND THEREFORE THE OBSERVATION OF THE ASSESSING OFFICER GIVEN IN PARAS 12 AND 13 THAT THE ASSESSEE COMPANY DOES NOT RUN OFFICE FROM THE SAID PREMISES IS CONTRARY TO THE FACTS ON RECORD. ON THE OTHER HAND, IT ESTABLISHES THAT THE ASSESSEE IS USING THE SAID FLAT BEING FLAT NO.11D HARBOUR HEIGHT TO CARRY ON ITS BUSINESS ACTI VITY. THERE MAY BE A FACT THAT THE ADJOINING FLATS VIZ FLAT NOS.12C A ND 12D ARE USED BY THE DIRECTORS OF THE ASSESSEE COMPANY FOR THEIR RESIDEN TIAL PURPOSES AND THE FLAT UNDER CONSIDERATION I.E. FLAT NO.11D IS IN TERCONNECTED WITH THE SAID FLATS BUT MERELY THIS FACT CANNOT DENY THE FAC T ON RECORD THAT SAID FLAT IS USED BY THE ASSESSEE COMPANY FOR ITS BUSINE SS PURPOSES FOR CARRYING ON ITS BUSINESS ACTIVITY. WE AGREE WITH TH E LD. AR EVEN IN A RESIDENTIAL BUILDING, THE PREMISES/FLAT CAN BE USED FOR OFFICE PURPOSES TO CARRY ON BUSINESS ACTIVITY PARTICULARLY WHEN THE SAID FLAT HAS BEEN 9 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. PURCHASED BY THE ASSESSEE COMPANY IN ITS OWN NAME A FTER OBTAINING LOAN FROM ICICI BANK. WE ALSO FIND THAT IN THE COR RESPONDENCE WITH REGISTRAR OF COMPANIES AS WELL AS MINISTRY OF COMPA NY AFFAIRS, THE BUSINESS ADDRESS IS MENTIONED OF FLAT NO. 11D HARBO UR HEIGHTS. 10. IN VIEW OF ABOVE FACTS WE HOLD THAT THE ASSESSE E IS CARRYING ON ITS BUSINESS ACTIVITY FROM THE SAID FACT BEING FLAT NO. 11D HARBOUR HEIGHT N.A. SAWANT MARG, COLABA, MUMBAI 400005 AND THEREFO RE THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION AND THE OTHER EXP ENSES VIZ PAYMENT OF INTEREST ON THE BORROWED MONEY TAKEN FOR THE PURCHA SE OF THE SAID FLAT AND ALSO THE ELECTRICITY CHARGES AND THE EXPENSES F OR REPAIR AND MAINTENANCE AS CLAIMED. HENCE, GROUND NOS.1 TO 4 O F THE APPEAL TAKEN BY THE ASSESSEE ARE ALLOWED BY REVERSING THE ORDERS OF THE AUTHORITIES BELOW. 11. THE GROUND NO. 5 IN RESPECT OF CHARGING OF INTE REST U/S 234A, 234B, 234C AND 234D OF THE INCOME-TAX ACT IS CONSEQ UENTIAL. THEREFORE IT DOES NOT REQUIRE SPECIFIC ADJUDICATION. 12. THE GROUND NO. 6 OF THE APPEAL FOR INITIATION O F PENALTY U/S 271(1)(C) OF THE ACT IS PREMATURE AND ACCORDINGLY T HE SAME IS REJECTED. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED IN PART AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY 2014. 5 0 34+ ( 6'7 31 ST JANUARY 2014 4 0 8 SD/- SD/- ( N.K.BILLAIYA ) ( B.R.MITTAL ) ( / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; 10 ITA NO.5641/MUM/2012 M/S. GROWELL CONSULTANTS PVT. LTD.. 6' DATED. 31/01/2014 F{X~{T? P.S./ ' . . 5 5 5 5 0 00 0 .29 .29 .29 .29 :9+2 :9+2 :9+2 :9+2 / COPY OF THE ORDER FORWARDED TO : 1. ,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. ; / CIT CONCERNED, MUMBAI 5. 9!<8 .2' , , / DR, ITAT, MUMBAI BENCH 6. 8=* > / GUARD FILE. 5' 5' 5' 5' / BY ORDER, /92 .2 //TRUE COPY// ? ?? ? / @ @ @ @ ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI,