https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=436009 https://www.taxtmi.com/caselaws?id=436009 Correct head of income - Chargeability of rental income under the head IFHP or PGBP - Income From House Property (IFHP) v/s Profits and Gains from Business or Profession (PGBP) - HELD THAT:- Leasing out the property is not one of the objects of the business of assessee as could be culled out from the Memorandum of Association. Consequence is that the decision of Chennai Properties and Investments Ltd [ 2015 (5) TMI 46 - SUPREME COURT] has no application to the facts of the case. We accordingly hold that the learned CIT(A) is right in rejecting the contention of the assessee and maintaining the chargeability of rental income under the head IFHP. Grounds relating to this issue are dismissed. Commencement of business - Assessee incurred expenditure relating to printing and stationery, audit fee, filing fee, miscellaneous expenses etc., which according to the learned AO are not specifically related to the business. Learned Assessing Officer further held that the Income from House Property cannot be equated to business income. We, however, are of the considered opinion that in commencement of business the assessee purchased the property and the rent is a by-product. We, therefore, accept the contention of the assessee that they have commenced their business. Processing fee and interest addition - We held that the assessee commenced its business - in order to claim any deduction towards interest or the processing fee in the nature of interest, the assessee must have acquired a business asset. No dispute that there is neither work in progress nor any stock in trade shown by the assessee in their books. Only some advance was given for acquiring the property in Hyderabad. Giving advance for acquiring a property cannot be equated to the acquisition of the property. Acquisition of property for business purpose means such property must be available to the assessee to be dealt for its business purposes, namely, to carry on the business of real estate s dealers, estate owners etc. Unless and until the assessee purchased the property in Hyderabad, it cannot be said that they are in a possession to use such property for the purposes of carrying out their business. Mere giving advance towards the property in Hyderabad will not entitle the assessee to deal with such property for the purposes of their business and, therefore, it cannot be said that the assessee acquired such property. Till the property is acquired by the assessee and ready for use for carrying out the business purposes, the interest or the processing fee in the nature of interest has to be capitalised and it cannot be claimed as deduction as revenue expenditure . No illegality or irregularity in the findings of the learned CIT(A) and restricting the processing fee and the interest to the extent the borrowed amount was used for repayment of the debt is incurred to acquire the Bangalore property and to disallow the rest of it, holding that at best it can be capitalised. Case-Laws Income Tax Wed, 29 Mar 2023 00:00:00 +0530