TaxTMI 
TaxTMI 
2014 (1) TMI 1530
X X X X Extracts X X X X
X X X X Extracts X X X X
....Tax (A)-7, [CIT(A)]-; 1. Rental Income whether Business Income or Income from House Property erred in sustaining the action of AO in assessing rent income of Rs. 4.12 crores from temporary letting of assessee's commercial establishment at Solitaire Corporate Park, Andheri as House Property income as against Business Income returned by the assessee and consequently denying depreciation allowance of Rs. 2.39 crores in the business income computation; 2. Income on account of advisory fees of Rs. 28.321acs wrongly booked twice erred in not allowing reversal of income on account of advisory fees of Rs. 28.32 lacs, which is wrongly booked twice in the accounts of the assessee; should have appreciated that tax can only be charged on legitimate income and the same income cannot be charged to tax twice; 3. Municipal taxes of Rs. 57.52 lacs erred in not allowing deduction of Rs. 57.52 lacs paid towards additional Municipal tax during the year to the landlord; should have appreciated that the additional municipal taxes were crystallized during the year, as there was ongoing litigation between landlord and municipal authority on the basis of which demand was raised by landlord dur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee between the parties vide the order dated 3rd day of December, 2002, the assessee admitted to vacate the Nariman Point office by March 2010 only. The date of lease from 21.07.02 also indicate that property was leased prior to the date of decree ( 03-12- 02), so the reasons stated by assessee for non-occupation for own use is not employees resistance as submitted. Not only that, agreement do indicate that the assessee was not involved in day to day management or maintenance of the premises and except giving the property on leave and license basis, there are no complex commercial activities involved in this agreement. The agreement was also registered by virtue of Maharashtra Rent Control Act and there are no other plant and machinery so as to consider that the assessee is exploiting it on commercial basis. Therefore, we are of the opinion that the CIT (A) has come to correct conclusion that the rental income has to be treated as income from house property." So respectfully following the decision of the co-ordinate bench of the Tribunal passed in the own case of the assessee for assessment years 2005-06 and 2006-07, this issue, for the assessment year under consideration also, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the average value of investment of the assessee. While confirming the said disallowance, the CIT(A) has observed that in the earlier years i.e. for assessment year 2006-07, the disallowance under this head was upheld at the rate of 0.5% of the average value of investment by his predecessor. So, following the decision of the CIT(A) on the issue in preceding year, CIT(A) confirmed the disallowance at the rate of 0.5% of the average value of investment at Rs. 26,84,000/-. 7. The ld. representative of the assessee has brought our attention to the judgment of the Tribunal in the own case of the assessee for assessment years 1997-98 to 2002-03 (ITA No.7901/M/2003 & ors.), wherein, while dealing with the identical issue and taking into the consideration the relevant fact and circumstances, the Tribunal considered that in the case of the assessee, the disallowance of 1% of total administrative expenses as reasonable allocation towards administrative expenses for the purpose of earning exempt income. Following the Rule of consistency and also in view of the observations made by the Tribunal in the own case of the assessee for the preceding years, for this year also the disallowance ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 10. The ld. CIT(A), following the observations of his predecessors for the preceding years, held that no interest expenditure was to be disallowed. However, as observed above he had confirmed the disallowance at the rate of 0.5% of the average value of investment towards administrative expenditure. 11. As per our findings made above, the said disallowance on account of administrative expenditure has been restricted by us at the rate of 1% of the administrative expenses following the findings of the Tribunal in the own case of the assessee for earlier assessment years i.e. A.Y.s 1997-98 to 2002-03 (ITA No.7901/M/2003 & ors.). 12. It may be observed that the issue relating to disallowance on account of interest expenditure had also come into consideration in the said judgment of the Tribunal and the Tribunal while deciding the Revenue's appeal No.5152/M/05 relevant to assessment year 2000-01, upheld the finding of the ld. CIT(A) in deleting the interest expenditure. As the facts for this year are also identical, hence, respectfully following the observations and findings of the Tribunal made in the case of assessee for earlier years, this ground of the Revenue's appeal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 15. The ld. representative of the assessee has brought our attention to the fact that the identical issue was raised in the own case of the assessee for assessment year 1981-1982 and assessment year 1983-84, wherein it had been held by the Tribunal vide order dated 07.08.91 that the assessee had been engaged in buying and selling the shares and securities and the income of the assessee on such transactions would be in the nature of business. The Tribunal, vide said order had upheld the order of the CIT(A) for bringing to tax the profit or gain on the sale of shares and securities dealt in directly as business income. The ld. representative of the assessee has also relied upon an another authority of the Tribunal in the case of I-Ven Interactive Ltd. (ITA No.3256/M/09) dated 27.10.10 wherein the co-ordinate bench of the Tribunal has held that if the nature of the activities of the assessee of investment in shares is a business activity, the claim of expenditure is an allowable deduction. 16. The contention of the ld. representative of the assessee has been that the impugned loss was incurred by the assessee in the ordinary course of business of financial industrial enterpri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actions itself was not genuine. In case of the other two parties, namely Fujitsu ICIM Ltd. (supra) and Datar Switchgear Ltd., he has allowed the same mainly on the ground that sale transactions and leaseback after the purchase is a genuine transactions. In case of Maharashtra Esters & Keytones Pvt. Ltd. (supra), it is seen that this transaction of sale and leaseback took place in the earlier previous year and the depreciation has been allowed in respect of such leased assets. Thus, the disallowance of depreciation in case of Maharashtra Esters & Keytones Pvt. Ltd. (supra) cannot be upheld mainly on the ground that the depreciation has already been allowed in the earlier years and forms part of the block of assets. Coming to the transactions with Konkan Railway Corp. Ltd. (supra) and other two parties, it is seen that the learned Commissioner (Appeals) has gone on a wrong footing of judging the genuineness of the sale transactions without any adverse material on record brought by the Assessing Officer. Under the sale and lease agreement, the asset is purchased and the same is leased back to the SICOM Limited party and the assets so purchased belongs to the assessee as it retains the....