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TMI Blog2001 (8) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... Onkar Nath Mahendra, Master Rahul Mahendra and Master Pankaj Mahendra, admitted to the benefits of partnership. The reference relates to the assessment year 1975-76. During the previous year relevant to this assessment year, the respondent-assessee constructed a residential property at Auckland Road, Allahabad, which was used solely by the manager of the assessee-firm, Shri O. N. Mahendra, for his residence. On the basis that the salary of Shri O. N. Mahendra was only Rs.600 per month, i.e., less than Rs.7,500 per year, it was claimed that on the cost of construction of this property the respondent-assessee was entitled to initial depreciation as laid down by clause (iv) of sub-section (1) section 32 of the Act, and also depreciation. The Income-tax Officer gave a finding that this property was given to the manager, Shri O. N. Mahendra, who was being paid a monthly salary of Rs.600 per month and was in the assessee's employment for the past several years, but this property was also occupied by the minor sons of Shri O. N. Mahendra who were admitted to the benefits of partnership. The Income-tax Officer further found that this property was also in the occupation of Shri P. N. Mahen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building as against the initial depreciation allowed by the Income-tax Officer only on the actual cost of the out-houses. The Appellate Tribunal upheld the order of the Commissioner of Income-tax (Appeals) on this issue in the following words: "We have carefully considered the rival submissions. It is not under dispute that Shri O. N. Mahendra was employed by the assessee-firm as its manager for the past several years and during the previous year relevant to the assessment year 1975-76 he was being paid salary of Rs.600 per month. It is further not under dispute that the value of the perquisite of the rent-free house was worked out in the assessment of Shri O. N. Mahendra for the assessment year 1975-76, that is, the assessment year under consideration here, at Rs.900 only and the income of Shri O. N. Mahendra chargeable under the head "Salaries" including the value of this perquisite was determined by the Income-tax Officer at Rs.6,680 only. Here it might also perhaps not be out of place to mention that it is not the Department's case that the value of the rent-free house was treated as the perquisite and added to the total income of any of the minor sons of Shri O. N. Mahendra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of tax by dubious methods. It further held that it is the obligation of every citizen to pay the taxes honestly without resorting to subterfuge. However, in the present case avoidance of tax by dubious method does not arise. Shri Vikram Gulati, learned counsel for the respondent-assessee, has, however, submitted that Shri Onkar Nath Mahendra was an employee of the respondent-assessee and in that capacity, he was provided with the residential accommodation and merely because, the two minors, namely, Master Rahul Mahendra and Master Pankaj Mahendra, who have been admitted to the benefit of the partnership firm happened to be his sons and were living with him, would not mean that the residential premises was not solely used for the purpose of residence of Shri Onkar Nath Mahendra and, thus, the Tribunal was justified -in giving the benefit Of clause (iv) of section 32(1) of the Act. Shri Vikram Gulati, learned counsel, further submitted that this court in reference has to go with the findings of fact as found by the Tribunal and cannot reappraise the evidence. It has to answer the question of law on the basis of the facts and circumstances of the case as found by the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , so as to qualify for the depreciation of 20 per cent. as provided in clause (iv) of section 32(1) of the Act. For ready reference, clause (iv) of section 32(1) of the Act as it stood during the relevant year, i.e., 1975-76, is reproduced below: "in the case of any building which has been newly erected after the March 31, 1961, where the building is used solely for the purpose of residence of persons employed in the business and the income of each such person chargeable under the head 'Salaries' is seven thousand and five hundred rupees or less, or where the building is used solely or mainly for the welfare of such persons as a hospital, creche, school, canteen, library, recreational centre, shelter, rest-room or lunch room, a sum equal to twenty per cent. of the actual cost of the building to the assessee in respect of the previous year of erection of the building ; but any such sum shall not be deductible in determining the written down value for the purposes of clause (ii) of sub-section (1)." Normally, depreciation on building as specified in Appendix I, is only 2.5 per cent. on the building in respect of the first class substantial building of selected material, 5 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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