TaxTMI 
TaxTMI 
2017 (11) TMI 903
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....disposed of by way of this common order for the sake of convenience. Revenue's appeal in ITA No.2097/Kol/2013 for assessment year 2004-05 is treated as lead case, the grounds raised by the Revenue reads as under: "1) Whether on the facts and circumstances of the case, the Ld. CIT(A) was right in law as well as on facts in ignoring the fact that assessee had no real estate business and as such business expenses claimed against house property income was not allowable u/s 24 of the Act. 2) Whether on the facts and circumstances of the case, the Ld. CIT(A) was right in law as well as on facts in ignoring the fact that as per lease agreement with tenants, rental income was separate from car parking fees, furniture lease etc. and thence standard deduction u/s.24 of the Act on this receipt was on allowable. 3) That the appellant craves leave to add, alter, modify, include or delete any of the above grounds of appeal." 4. First issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the disallowance made by Assessing Officer for the business expenses including the depreciation in view of the fact that assessee carried no business activity. 5. Briefly stated f....
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....rom house property income. In compliance thereto, assessee submitted that it is engaged in the business of real estate development and for the running of its business it has incurred expenses such as salary, conveyance, painting, stationery, electricity, office maintenance, telephone etc. Besides the above, it has also claimed the depreciation of Rs.22,53,751/- which is a statutory allowance u/s. 32(1) of the Act. Simply, the assessee has not shown any income under the head "business or profession" cannot be the basis of ruling out the existence of any business. However, the AO disallowed the claim of assessee by observing that it has already claimed expenditure against the rental income u/s. 24 of the Act and in fact, all expenses claimed by assessee under the head "business or profession" are actually incurred against the rental income. Thus, AO disallowed the claim of Rs.31,41,251/- and added to the total income of assessee. 6. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that it has constituted the Deed of Partnership with effect from 10.01.2003 to carry on the real estate business. The assessee for real estate business ha....
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....d is the actual distribution or sale of the building. There is no requirement in law that deduction for expenditure in course of business can be granted only against income. Nonetheless, it is not the case that the appellant has not earned any income, it has earned interest income from parking of surplus funds. It is an established fact that the business activities have been done and business has commenced. In para-14 of the said decision, judgment of Gujarat High Court in the case of CIT v. Sourastra Cement & Chemical Industries Ltd. referred wherein also it was held that all the activities which go to make up a business need not be started simultaneously in order that business may commence. The business would commence when the activity which is first in point of time and which must necessarily precede all other activities is started. In 102 ITR 25 (Guj) took the same view and held that business commences with the fiat acivity for acquiring by purchase or otherwise, immovable property. There may be an interval between the setting up of the business and the commencement of the business. In CIT v. Sarabhai Management Corporation Ltd., 192 ITR 151 (SC), the decision of the Gujarat....
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..... Besides the above the ld. AR further submitted that the fact whether the advance shown by the assessee represents as investment made by the assessee or as stock-in-trade in the books has not been verified by Ld. CIT(A) during his appellate stage. Ld. DR further submitted that assessee has not carried out any business activities since inception till 31.03.2009 and no record is also available for the subsequent years. Thus, in view of the fact that Ld. DR submitted that assessee has not carried out any business activity and therefore the expense claimed by it under the head "business or profession" needs to be disallowed. He heavily relied on the order of AO. 8. We have heard Ld. DR and perused the material available on record including the order of Authorities Below. In the instant case, assessee derived its income under the head "house property, business & profession and income from other sources." According to the AO the assessee has not carried out any activity under the head "business or profession during the year under consideration as well as subsequent year. Therefore, the business expenses claimed by it cannot be allowed as deduction. However, Ld. CIT(A) rejected the find....