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TMI Blog2017 (8) TMI 1443X X X X Extracts X X X X X X X X Extracts X X X X ..... I 857 - ITAT PUNE] in assessment year 2007-08. - Decided in favor of assessee. - ITA No. 671/PUN/2015, ITA No. 833/PUN/2015 - - - Dated:- 23-8-2017 - SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM For the Assessee by- Shri Sunil U. Pathak For the Revenue- Shri Achal Sharma ORDER PER VIKAS AWASTHY, JM These cross appeals by the assessee and the Revenue are directed against the order of Commissioner of Income Tax (Appeals)-2, Nashik dated 20-03-2015 for the assessment year 2009-10. 2. The assessee in appeal by raising elaborate grounds has primarily assailed the findings of Commissioner of Income Tax (Appeals) on two counts : 1. Disallowance of ₹ 16,90,477/- on account of write off of obsolete stock. 2. Disallowance of expenditure in respect of flat at Khar, Mumbai viz: (i). Interest expenditure ₹ 43,85,538/-. (ii). Depreciation ₹ 48,46,127/-. (iii). Telephone/Electricity expenses ₹ 48,000/- 3. The Department in appeal has assailed the findings of Commissioner of Income Tax (Appeals) in respect of : 1. Deleting the addition of ₹ 1,66,95,244/- on account of low Gross Profit after rejecting the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riting off of obsolete stock which was earlier carried forward in the books by the assessee. Accordingly, ground No. 2 raised in the appeal by the assessee is allowed. 7. In ground No. 3 the assessee has assailed the action of Commissioner of Income Tax (Appeals) in disallowing interest, depreciation and telephone/electricity expenses in respect of flat at Khar, Mumbai. The ld. AR submitted that interest expenditure was incurred in respect of loan taken for purchasing the flat. Though, the said flat was purchased in the name of one of the Directors of the assessee company, but was in fact used for business purposes. The assessee had claimed depreciation, interest expenditure and telephone/electricity expenses in respect of said flat in assessment year 2007-08 and the same was disallowed. The assessee carried the matter in appeal before the Tribunal in ITA No. 891/PN/2013. The Tribunal vide order dated 29-02-2016 allowed the claim of assessee. The assessee had made similar claim of interest, depreciation and telephone/electricity expenses in assessment year 2008-09. The Assessing Officer in scrutiny assessment proceedings for the said assessment year accepted the claim of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved for the purchase of the flats in the name of the 2 directors. Depreciation in the computation statement is as per Form No.3CD enclosed along with return of income. In the schedule of depreciation enclosed along with Form 3CD we find depreciation has been claimed at ₹ 2,18,73,103/- which includes the depreciation of ₹ 62,39,688/- on building/flats amounting to ₹ 5,98,28,719/- (page 35 of the paper book). The submission of the assessee before the CIT(A) that the assessee s claim for depreciation has been accepted for the A.Y. 2007-08 is also not disputed by the CIT(A). We find before CIT(A) the assessee has inter alia made following submissions : It was only for the sake of convenience that the said flats were registered in the name of the Directors. The facts of the case clearly show that the company is the real owner of both the flats notwithstanding their registration in the names of directors. It is the defacto and beneficial ownership which is material and relevant. In the context of depreciation the courts have accepted the assessee s claim for the same even when property/vehicles are not registered in the name of company/firm but in the names of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of the flats has been shown as liability in the liability side of the balance sheet and the depreciation claimed by the assessee on such flat has not been rejected in the assessment completed u/s.143(3), therefore, disallowance of interest and the telephone/electricity expenses on account of flat at Khar, Mumbai in our opinion is not justified. In view of the above discussion, we are of the considered opinion that the CIT(A) was not justified in disallowing the interest expenditure and telephone and electricity expenditure relating to the flats at Mumbai. We accordingly set aside the order of the CIT(A) and the grounds raised by the assessee are allowed. There has been no change in the facts and circumstances in the assessment year under appeal. Thus, in view of the findings of Co-ordinate Bench of the Tribunal in assessee‟s own case, we find merit in the ground No. 3 raised by the assessee. Accordingly, the same is allowed in same terms. 10. The other grounds i.e. ground Nos. 1, 4 and 5 raised in appeal by the assessee are general in nature, hence, require no adjudication. 11. In the result, the appeal of the assessee is allowed. 12. The first ground o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer on the submissions made by assessee assailing addition on account of low Gross Profit. The Commissioner of Income Tax (Appeals) has examined the same extensively and has thereafter retained the Gross Profit of 4.28% as declared by the assessee. We concur with the well reasoned findings of Commissioner of Income Tax (Appeals) on this issue. For the sake of brevity and in line with the decision of Hon‟ble Supreme Court of India in the case of Commissioner of Income Tax Vs. K.Y. Pilliah and Sons reported as 63 ITR 411. Subsequently, followed by the Hon‟ble Delhi High Court in the case of Commissioner of Income Tax Vs. Global Vantedge Pvt. Ltd. reported as 354 ITR 21 we are not reproducing the reasons given by the Commissioner of Income Tax (Appeals) in accepting the reasons of the assessee. The ld. DR has not been able to show any material infirmity in the impugned order on this issue. Accordingly, ground No. 1 raised by the Revenue in appeal is dismissed being devoid of any merit. 15. In ground No. 2 raised in the appeal, the Revenue has assailed deleting of disallowance of ₹ 5,15,368/- made u/s. 14A r.w. Rule 8D of the Act. The ld. AR submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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