TaxTMI 
TaxTMI 
2012 (11) TMI 269
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.... style of "Mobi Care". During the year in question, assessee claimed business expenditure from this supply of hospital equipment. AO, though assessed the income from business, however, disallowed an expenditure of Rs. 4,29,098/- as not incurred for the purpose of business on a suspicion that the volume of business was low and the assessee was claiming bogus expenditure in the guise of business expenditure. 3.1. Aggrieved assessee preferred first appeal, where it was pleaded that the expenditure claimed pertained to electricity & water charges, salary & wages, telephone expenses, van charges, conveyance expenses and petty expenses. Besides, comparative figures for the sale, purchase and g.p. rates were filed, claiming that in preceding year, the turn over was to the extent of Rs. 18,96,809/-, though the turn over had reduced in this year, it does not detract the fact that the business was in continuation. AO in the subsequent years i.e. A.Y. 2008-09 & 2-009-10 had allowed similar business expenditure by assessments u/s 143(3). CIT(A) allowed the expenditure by following observations: "4. I have considered the basis of disallowance made by the Assessing Officer as well as submi....
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....der the following heads [as per MOU dated 16th September, 2004 with the existing tenant, M/s. Uberoi Limited] for acquiring vacant possession:- (i) Advance against property (a) Uberoi Ltd. Rs. 3,81,48,000 (b) Aggarwal Properties Rs. 2,00,000 Rs. 3,83,48,000 (ii) Investment Rs. 1,51,96,000 (iii) Loans & Advances Rs. 28,45,741 Rs.5,63,89,741 Since the amount of Rs.32,05,602 depicted under 'Finance Charges' primarily represented the interest paid to Corporation Bank for the loans raised for acquiring vacant possession of the immovable. property at Shop No.14-E (G. F.), Connauqht Place, New Delhi the appellant HUF was advised that deduction for the amount of Rs.32,05,602 is correctly claimable under the head 'Income from House Property'. Consequently with the very same letter dated 6th August, 2009 the appellant HUF submitted a note styled 'NOTE ON CORRECTION OF THE GROSS TOTAL INCOME'. In the calculations submitted with the said note the loss under the head 'Business Income' was reduced by Rs.32,05,602 while the income under the head 'Income from House Property was correspondingly reduced by....
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....the immovable property acquired at 14E (Ground Floor), Connaught Place, New Delhi:- (a) Advance against property - Uberoi Ltd. Rs. 3,81,48,000 (b) Advance against property- Aggarwal properties Rs. 2,00,000 (c) Neeru Jaggi Rs. 18,01,207 (d) Rajesh Jaggi Rs. 10,44,534 Total Rs.4,11,93,741 After deducting the above amount of RsA.12 crores from the aggregate figure of Rs.6.29 crores the balance amount of Loans & Advances worked cut to Rs.2.17 crores, As stated in the assessment order an amount of RS.1.08 crores (Ansa] Buildwell Rs.12,10,OOO, Bala Chhabra Rs.S2,33i800, Anisha Chaturvedi Rs.35,OO,OOO and Amit Chhabra Rs,30,OO,OOO) related to the business of the appellant HUF thereby leaving a balance of Rs.0.88 crores -- of which the break-up is as under:- Security Deposit Rs. 1,80,900 TDS Rs. 16,15,680 Prepaid expenses Rs. 6,372 Rs. 18,02,952 i.e. 0.18 crores. Interest bearing Advance MM Chhabra Rs. 16,95,000 i.e. 0.17 crores Interest Free Advances To different parties 0.53 crores Total: 0.88 crores It was thus evident that the appellan....
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....or which rent is being received to the tune of Rs. 8 lacs per month. The claim of the assessee that interest expenses have to be considered under the head Income from House property is the correct course of action to be taken in this regard. It is further relevant to note that on the same facts, for Assessment Year 2008- 09, the Assessing Officer has allowed the claim of 'Finance Charges' under the head 'Income from House property' to the tune of Rs. 47,89,062/-. Therefore, it becomes abundantly clear that the computation given by the assessee in the original return of income, wherein the interest has been claimed as a business expense, was incorrect as the interest had been paid for acquiring the house property, from which rent was being received and therefore, the revised computation filed during the course of assessment proceedings claiming this interest expense under. the head 'Income from House property' had to be allowed accordingly .. As such, addition made by the Assessing Officer to the tune of Rs. 32,05,602/- is deleted. 3.5. Learned counsel thus contends that in subsequent two years i.e. A.Y. 2008-09 and 2009-10, the AO himself in orders u/s 143(3) has allowed the cla....