Acuity Holdings Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Undisputedly, the subject premise in respect of which the assessee has claimed the rental expenses has been taken on lease by the assessee. Though, in the leave and license agreement, it is mentioned that it has been taken on lease for the use of residence of directors/employees, however, it cannot be said that in course of such user, the directors are not doing any official work, such as, meeting the investors, etc. Therefore, merely because as per the terms of the leave and license agreement the premise is to be used foRer residence purpose of the directors, assessee’s claim cannot be rejected. The Tribunal in Stuish Capital Services Pvt. Ltd. (supra) while considering the allowability of depreciation on a premise taken on lease for use of director’s residence allowed assessee’s claim by holding that since the company is engaged in share trading, the premise is used by directors for official work also, hence, as per CBDT Circular and the decision of the Hon’ble Delhi High Court in CIT v/s Modi Industries Ltd., [1994] 210 ITR 001 (Del.), assessee’s claim is allowable. The ratio laid down in the aforesaid decision squarely applies to assessee’s case.
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