2013 (5) TMI 932

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....perty' by the Ld.CIT(A) as claimed by the assessee. 2.1 Brief facts are that the assessee, an individual engaged in the business of trading in iron and steel etc while declaring a total income of Rs. 1,10,95,946/- had shown an income of Rs. 1,08,00,000/- as income from house property on account of leasing/renting out a property at Panval to M/s Sanyo Resorts Pvt. Ltd. The assessee had claimed standard deduction of Rs. 32,40,000/- under section 24(a) of the Act and offered Rs. 75,60,000/- as net house property income. However, in the assessment framed under section 143(3), the AO treated the impugned income as 'income from other sources' for the reason that the building which is existing on the plot are not even worth to live or to be let....

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....th Schedule and 11th Schedule are having RCC structure. The assessee along with others thus has become co-owners of a bigger piece of land which is in fact by joining all these plots which all are next to each other. The assessee has purchased along with others the non agricultural plots from various different parties. Out of these few are only plots whereas two plots are with RCC structure on the same. The details of these schedules i.e. 10th and 11th forming part of the lease rent agreement are given as under: THE TENTH SCHEDULE HEREINABOVE REFERRED TO PVL3-05344-2006 "ALL that piece or parcel of Non-agricultural land or grounds situated lying and being village-Kolkhe, Tal. Panvel, Dist. Raigad within the limits of Grampanchayat Kol....

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....ea in form of RCC structure The land being appurtenant to building, though disproportionately big, still during the year the nature of income having been derived from a big plot of land with some godowns on it which is undisputedly asset with share of appellant in it has to be assessed as Income from House Property." It is relevant to state that the Chennai ITAT in the case of ACIT V T&R Welding Products (India) Ltd. has held in a similar set of facts when major portion of the leased out property is a land and the lease agreement permits the lessee to build permanent structure therein, the lease income has to be assessed under the head 'income from house property'. Also, the Delhi ITAT in the case of Sanjit Singh Rathee V. ACIT has he....

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....e assessment framed u/s 143(3), disallowed a proportionate interest payment which he worked out at Rs. 15,20,277/-. The working of the proportionate interest by AO is as under: "Total interest paid x Interest free loans and advances Total available funds 18,53,889 X 5,68,88,306 =Rs.15,20,277" 6,93,71,951 According to the AO, there had been no requirement of working capital to the assessee as he had only one transaction with his sister concern for the purchases. The funds invested in immovable properties are either in residential house or open plots. The borrowed funds had not been utilized for the business purposes and hence disallowed proportionate interest as worked above. 3.2 On appeal, the Ld.CIT(A) has deleted the impugned ....