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TMI Blog2015 (7) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the order of CIT(Appeals) that both the properties acquired by the assessee during the year were being used for the purpose of business and, therefore, the assessee was entitled for the depreciation, and no question of adding annual value as income from house property under section 22 arises. - Decided in favour of assessee. Addition on set off of the past business losses - CIT(A) deleted addition - Held that:- Provisions of section 79 are applicable where there is a change on the last day of the previous year the shares of the company carrying not less than 51% of the voting power were beneficially held by the persons who beneficially held shares of the company not less than 51% of the voting power on the last date of the year or years in which the loss was incurred. The preamble of this section requires that there must be a change in the shareholding. In the case of the assessee, we noted that there is no change in the shareholding pattern, the old 10 shareholders, who were having the entire share capital as on 31.03.2004 continues to hold the shares as on 31.03.2007. In the case of the assessee the change in the shareholding pattern is due to the induction of the fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome liability to tax. This was provided in the then clause (b) of section 79 which has since been omitted w.e.f. 01.04.89 and hence the above mentioned Supreme Court decision is no longer relevant. 2. Grounds No. 1 2 relate to the deletion of the disallowance in respect of the depreciation. The assessee claimed depreciation totalling to ₹ 35,39,663/-, out of which depreciation on building amounting to ₹ 35,21,646/- was disallowed by the Assessing Officer. When questioned, during the course of assessment the assessee made a written submission stating that the assessee s premises consist of two properties on which depreciation was claimed. The fi rst property is situated at 10, Mistry Manor, 62A, Napean Sea Road, Mumbai, which was acquired and put to use on 16.05.2006 for a total investment of ₹ 6,45,89,190/-. The said property was allotted to Mrs. Anita Krishna in her capacity as Director and perquisite value is duly considered in her income-tax return. The second property is situated at No. C-6, Corianthian, 17 off Arthur Bunder Road, Colaba, Mumbai, which was acquired and put to use on 15.01.2007 as an office of the assessee-company for total investment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. In true perspective, these buildings are part of the business equipment of the owner , or, in other words, it is the business asset of the owner . Similar view has been taken in following cases:- Jamshedpur Engineering and Machine Manufacturing Co. Ltd. Vs. CIT (1957) 32 ITR 41 (Pat); Rohtas Industries Ltd. (1961) 41 ITR 524 (Pat); CIT vs. National Newsprint and Paper Mills Ltd. (1978) 114 ITR 388(MP); D.L.F. Housing Construction P. Ltd. Vs. CIT (1983) 141 ITR 806 (Delhi). ii) In view of above discussed legal and factual position I am of the considered view that the property situated at 10, Mistry Manor, 62A, Napean Sea Road, Mumbai is used for the business of appellant company and is eligible for depreciation. Accordingly A.O. is directed to allow depreciation on the said property as per the rate prescribed under Income Tax Rules, 1962. Office at C-6, Corianthian, 17 Off Arthur Bunder Road, Colaba, Mumbai i) It is not in dispute that main active director of the company Shri Ravi Krishna resides in Mumbai and some financial transaction relating to insurance and Bank are executed from his residential house situated in Mumbai . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial available on record we noted that this ground, in our opinion, is consequential in nature. Since we have already confirmed the order of CIT(Appeals) that both the properties acquired by the assessee during the year were being used for the purpose of business and, therefore, the assessee was entitled for the depreciation, and no question of adding annual value as income from house property under section 22 arises. We accordingly dismiss this ground. 6. Ground No. 4 relates to the deletion of the addition made to the tune of ₹ 30,67,863/-. The facts relating to this ground are that the assessee claimed set off of the past business losses for the assessment year 2004-05 of ₹ 30,67,863/- and for the assessment year 2006-07 of ₹ 19,36,402/-. The Assessing Officer asked for the shareholding of the assessee-company during the assessment year, but was not satisfied with the assessee relating to the shareholding given by the assessee for the assessment year 2004-05. The Assessing Officer noted from the shareholding pattern that during the financial year 2003-04 there was 10 old shareholders carrying 100% voting power. The said shareholders al so continued in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years 2004-05 and 2005-06 cannot be compared. The CIT(Appeal s) ultimately relying on the decision of the Hon ble Supreme Court in the case of CIT vs.- Italindia Cotton Co. Pvt. Limited reported in 174 ITR 160 and that of CIT vs.- Shri Subhulaxmi Mills Limited reported in 249 ITR 795 deleted the disallowance. According to him, there was no change in the shareholding pattern due to induction of fresh capital in the company and not due to transfer of shares from one shareholder to another. 8. We have heard the rival submissions and carefully considered the same along with the order of tax authorities below. We have also gone through the provisions of section 79. We noted that during the assessment year 2004-05, in which the loss incurred which the assessee claimed to set off during the impugned assessment year. The assessee s paid up share capital was ₹ 20,05,200/- and the assessee was having 10 shareholders. Subsequently during the assessment year 2005-06 the assessee has issued fresh shares to 7 new shareholders. When the assessee issued, subscribed capital increased to ₹ 45,65,200/-. Similarly in the assessment year 2006-07 the assessee has also issued fre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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