SANDEEP BHALCHANDRA KERKAR,MUMBAI vs. ACIT WD 18(3), MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सदस्य, राजेन्द्र के अिुसार/ PER Rajendra A.M.- Challenging the order,dated 25/02/2013of the CIT (A)-16,Mumbai the assessee has filed the present appeal.Assessee,an individual,filed his return of income on 16/10/2008,declaring total income at Rs. 14.37 lakhs.The Assessing Officer (AO) completed the assessment, u/s.143 (3) of the Act, on 31/12/2010, determining his income at Rs. 27.08 lakhs. During the course of hearing before us,the Authorised Representative(AR)stated that the assessee was not interested in pursuing last ground. Hence, third ground of appeal stands dismissed as not pressed. 2.First ground of appeal is about upholding the disallowance of Rs.10.29 lakhs on account of depreciation.During the assessment proceedings, the AO found that assessee had claimed depreciation of Rs. 14.36 lakhs on various assets. In order to verify the genuineness of the claim of depreciation,a specific questionnaire was served on him regarding acquisition of the assets. In response to it,the assessee furnished a copy of purchase agreement of a flat at Wadala(East), Mumbai-37, valued at Rs. 1.02 crores. He found that assessee had claimed depreciation at the rate of 10% about the said flat, that he also filed a copy of Bill for addition of car to plant and machinery block.With respect to other additions amounting to Rs. 1.08 lakhs the assessee stated that copies of bills were not readily available.A request was made to the AO to excuse the assessee for not providing the bills for purchase of miscellaneous assets worth Rs.1.08 lakhs. The AO made enquiries about the flat and found that same was located on the third floor of a pure residential complex. He deputed is Inspector to verify the genuineness of the claim made by the assessee.On 27/12/2010,a show cause letter was issued to the assessee giving him final opportunity of being heard with a direction to furnish the documentary evidence in form of permission letter of the society to conduct business activities from there and the electricity bill of the premises for the period April,2007 to March,2008.The assessee,vide his letter dated 29/ 12/ 2010,stated that claim for depreciation for a period of six months could be disallowed, that he would submit the VAT and sales tax related papers to prove the basis that it was used for business purposes.As the primary onus of proving the use of assets was not discharged,the AO disallowed the claim of depreciation made by the assessee. 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA). Before him it was argued that residential premises was purchased and used for professional use only, that asset had entered block of assets and appeared in the block of fixed assets, that he was residing at Mahim along with his family members.He relied upon several cases and referred to the explanation 5 to section 32(1) and contended that he was entitled to claim depreciation.After considering the submission of the assessee and the assessment order, the FAA held that entitlement for depreciation hence out on a basic fact of asset having been put to use for business purposes or for the purpose of profession during the relevant previous year, that mere purchase and taking more possession of a flat did not itself indicates that asset was put to use for purpose of business/profession, that the assessee had not been able to establish by means of any evidence that he actually put the asset to use,that he had not brought any material on record to show that he actually use the flat for his business,that allowing depreciation in the subsequent years would not prove that assessee was entitled to claim depreciation for the year under consideration also.Finally, the FAA upheld the order of the AO. 4.Before us,the AR contended that the flat was part of block,that report of the inspector about not using the flat for business purposes could not be relied upon. The DR supported the order of the FAA. 5.We have heard the rival submissions and perused the material before us.We find that the assessee had claimed depreciation on a residential unit for the year under consideration,that he was directed by the AO to produce the evidence of using the flat for business/profession purposes, that he did not produce any evidence before the AO or the FAA,that he stated before the AO that the depreciation for a period of six months could be disallowed.Depreciation of an asset is allowed for its wear and tear,that the precondition of claiming depreciation is to prove the ownership of the asset and used by the assessee for a particular years. Assets ready to use for the business/profession are also entitled to claim 2 depreciation. In the case before us,the assessee had not filed any evidence before any of the revenue authorities to prove that flat purchased by it was used for his business/profession for the year under appeal. His residing along with his family members in a different locality could not mean that the flat purchased by him was used for business. Whenever an assessee makes a claim resulting in reducing the tax ability, he has to produce the evidence in support of the claim.It is not the job of the assessing officer to prove the negative. Both the revenue authorities had given him ample opportunities to prove the claim. As the assessee had failed to lead any primary or secondary documentary evidence in support of his claim,so,in our opinion there is no need to interfere with the order of the FAA.Upholding his order, we decide the first ground of appeal against the assessee. 6.Second ground of appeal pertains to disallowance of 20% from motorcar depreciation 20% of motorcar insurance interest and repairs 20% from mobile and telephone charges. During the assessment proceedings, the AO observed, from the details filed by the assessee, that he had claimed certain expenses against is income from business. Considering the possibility of inclusion of personal element in those expenses he disallowed 20% of the expenditure. As per the AO, the assessee did not submit any written reply in that regard, though a show cause notice was issued. As a result, the AO disallowed Rs. 2.09 lakhs (20% of Rs. 10.49 lakhs) and added back to the total income of the assessee for want of proper Bills/vouchers for verification and possible inclusion of personal element. 7.During the appellate proceedings, the assessee argued that disallowance of flat 20% of the expenses was not justifiable under any circumstances, that disallowance of 20% was much on higher side and should be restricted to 10% only, that expenditure on repairs of car and motorcar insurance was against the provisions of the Act. After considering the submission of the assessee and the assessment order, the FAA held that the AO had made the disallowance not only for the reason of there being personal element involved in the expenses but also for want of proper bills/vouchers for verification, that the assessee had failed to furnish any justification or evidence before the AO when asked to do so on the proposed disallowance, that even during the appellate proceedings no supporting evidence had been filed, that in absence of supporting documents to prove veracity of the claims for expenses is also for personal element involved in the expenses disallowance of 20% was reasonable. 8.Before us,the AR stated that disallowance was on higher side.The DR supported the order of the FAA. We have heard the rival submissions and perused the material before us. We find that the FAA had upheld the disallowance of 20% of the various expenses, that the assessee had 3