AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 82
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....ssesee's appeal 2. The first grievance of the assessee relates to the treatment of property lease income as income under the head "Profits and Gains of Business or Profession". 3. While scrutinizing the income for the year under consideration, the Assessing Officer noticed that the assessee has constructed a Mall named Metro Junction Mall at Kalyan which has been let out to various parties without a single shop sold. The AO further found that the assessee has disclosed property lease income of Rs. 6,10,92,422/- received from letting out of the shops. In addition to this, the assessee is also providing various services to its tenants and has received Rs. 5,70,88,487/- under the head 'Recovery of common area maintenance and utility expense....
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....rned. 4.1. In so far as the claim of interest expenditure is concerned, the Ld. CIT(A) directed to allow the claim proportionately i.e. that portion which is used for earning the business income. In so far as the issue relating to the disallowance made u/s. 14A is concerned, the Ld. CIT(A) directed the AO to exclude that portion of the interest which has been disallowed u/s. 36 of the Act. 5. Aggrieved by this finding of the Ld. CIT(A), the assessee and the Revenue are in appeal before us. 6. The Ld. Counsel for the assessee reiterated what has been stated before the lower authorities. The Ld. Counsel drew our attention to the assessment order for A.Y. 2008-09 and pointed out that the property lease income has been accepted under the hea....
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....iness of the assessee, the income from which has to be treated as income from business. The Hon'ble Supreme Court has further observed that the Memorandum of association of the assessee company clearly mentions that main objects is to acquire and hold the properties and holding the aforesaid properties and earning income by letting out those properties is the main objective of the company. Therefore, any income earned has to be taxed under the head 'Income from 'business'. 8.1. In the present case also we find that in A.Y. 2008-09, the AO himself has accepted the nature of business of the assessee as "Operation of Mall' therefore any income earned by the assessee by the operation of mall has to be taxed under the head Profits & Gains of B....
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.... with mandatory Accounting Standards. 9.2. The claim of the assessee was denied by the Revenue authorities. 9.3. Before us, the Ld. Counsel for the assessee straightaway relied upon the decision of the Hon'ble High Court of Bombay in the case of Reliance Industrial Infrastructure Ltd 379 ITR 340. It is the say of the Ld. Counsel that on identical set of facts, the Hon'ble High Court has held that lease equalization credited to the profit and loss account is not the real income and the entries have been made to comply with the Guidance Note issued by the ICAI. 9.4. The Ld. DR could not bring any distinguishing decision in favour of the Revenue. 9.5. We have given a thoughtful consideration to the contentions of the Ld. Counsel. We find t....
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....which is completely notional and brought into the books only for complying with the Accounting Standards and has no relevance to determine the amount of net income chargeable to tax. In that view of the matter, the respondent-assessee was completely justified in reducing the amount of Rs. 2.06 crores credited to the profit and loss account as lease equalization fund for the purposes of determining the income chargeable to tax. In these circumstances, we find that question (B) does not give rise to any substantial question of law for our consideration. Hence, not admitted. " Respectfully following the findings of the Hon'ble Jurisdictional High Court, we direct the AO to exclude the notional lease rental income of Rs. 1,49,70,691/- from th....