TaxTMI 
TaxTMI 
2017 (2) TMI 1092
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....disposed of by this common order for the sake of convenience. 3. The contentious issues relate to the taxability of the lease rental income under the head "Profits and gains of business or profession" or under the head "Income from other sources". The issues relating to the allowability of depreciation, additional depreciation, set off of unabsorbed deprecation and allowability of interest emanate from the main issue of taxability of rental income. 4. The assessee in its appeal in ITA No. 2438/Ahd/2010 has also challenged the service of notice u/s. 143(2) of the Act as barred by limitation. The ld. Senior Counsel fairly conceded that this issue is not pressed; therefore, the same is dismissed as not pressed. The assessee has also challenged the taxability of the rental income under the head "Income from other sources". It is the claim of the assessee that the income from lease rental should have been taxed under the head "Profit and gains of business or profession". Subsequent conduct of the assessee prompts us to dismiss this grievance of the assessee because in subsequent years, the assessee itself has shown the lease rental income under head "Income from other sources". Th....
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.... gains of business or profession". 10. Section 57 allows certain deductions from such income. Under clause (ii) of Section 57 it is provided that only in cases falling under clauses (ii) and (iii) of sub-section 2 of Section 56, deductions u/s. 30, 31 and 32 of the Act would be allowed. 11. The main contention of the revenue in disallowing the claim of depreciation is that Section 30, 31 & 32 fall under part B of the Act which deal with the computation of income under the head "Profits and gains of business or profession". 12. We find that Under Clauses (ii) and (iii) of Section 57 in cases of income arising out of hiring of machinery, plant and furniture, the Legislature intended to confer the same benefit on the same terms as was available in respect of income under the head "Profits and gains of business or profession" on account of certain specified items of expenditure or deduction. The scheme appeared to be not to allow all deductions available for computing the income under the head "Profits and gains of business or profession" in respect of income arising out of letting out of plant, machinery and furniture but to allow deductions under certain specified heads whic....
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....sible to effect reconciliation between them. Thus a construction that reduces one of the provisions to a "useless lumber" or "dead letter" is not a harmonized construction. To harmonise is not to destroy." 16. Coming back to the allowability of depreciation from the income taxed under the head "Income from other sources" in the light of the afore-stated discussions, in our considered opinion, the A.O. ought to have allowed depreciation as per the provisions of the law. 17. Section 32 (1) (iia) contains the provisions for the allowability of additional depreciation. As mentioned elsewhere, u/s. 57(ii) deductions are allowed as provided in Sections 30, 31 & 32 of the Act and since the legislature has not specified any provision in respect of any sub-clause in these sections, all the deductions provided in these sections have to be allowed accordingly. The ratios laid down by the Hon'ble Supreme Court mentioned elsewhere squarely apply to this issue also. We accordingly held that the assessee is entitled for additional depreciation and the A.O. is directed accordingly. 18. The next claim of the assessee is that the unabsorbed depreciation. Referable to the income from lease r....
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....wed the claim of interest in toto but only from the head "Income from other sources" by disallowing the same from the head "Profits and gains of business or profession". 25. We find that in A.Y. 2006-06, the assessee has done the business for some part of the year which income has been taxed under the head "Profits and gains of business or profession". In our considered opinion, the interest should have been allowed on pro rata basis. We accordingly direct the A.O. to deduct interest proportionately from the income taxed under the head "Profits and gains of business or profession" and "Income from other sources". We hold accordingly. 26. For the similar reasons the depreciation need to be bifurcated proportionately in A.Y. 2006-07 between the heads "Profits and gains of business or profession" and "Income from other sources". 27. We summarize our findings as under:- (i) The lease rental income has to be taxed under the head "Income from other sources". (ii) The assessee is entitled for depreciation as per the provisions of the law. (iii) The assessee is also entitled for additional depreciation as per the provisions of the law. (iv) In A.Y. 2006-07, the A.O. mu....