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TMI Blog2017 (11) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... on the loan obtained for the purpose of purchasing the said car from Kotak Mahendra Bank Ltd. - Held that:- AO pointed out contradiction in the averment made by the assessee during the assessment proceedings vis-à-vis statement of the Director Shri Sunil Shah. Further, as admitted by the broker and the sub-broker that Shri M.L.Tandon, Director of the assessee company has never visited their office in 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 the 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 carrying out the trading activities. In view of all these facts as a whole, AO held that the car is and has never been used for the Directors of the assessee company wholly and exclusively for the purpose of business of the assessee company and as such the depreciation claimed on Rolls Royce and interest incurred on loan obtained from Kotak Mahindra Bank Limited were disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 rendered 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 earned 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 also 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 explained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 over 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 company. 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 various 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 assessee‟s 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 Gandhi by issuing notice u/s.131. In 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 purchase orders, taking of material supplied and follow-up for payments, hence commission paid to the-, assessee company for A.Ys.2011-12, 2012-13 2013-14 was not genuine. 9. Vide order sheet noting dated 30.01.2014, the AR of the assessee company was apprised 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded 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 sources. 12. With regard to assessee‟s claim of depreciation on the Rolls Royce Car amounting to ₹ 2.93 crores and Loan processing expenditure of ₹ 75,144 and interest expenditure of ₹ 9.26 lakhs on the loan obtained for the purpose of purchasing the said car from Kotak Mahendra Bank Ltd., we found that vide 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 of 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 company. In view of AO‟s conclusion that commission income of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part from the said person namely Mr.Datta, nobody comes to meet him in the broker‟s 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.Tandon, 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 Jayant 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 the Director of the assessee company has never visited the broker / sub-broker by using the Rolls Royce car. In view of these 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 assessee‟s claim of depreciation of ₹ 44,09,123/- on the said car and also the interest expenditure of ₹ 9,26,098/- incurred on loan obtained for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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