TaxTMI 
TaxTMI 
2017 (11) TMI 1290
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....ny income. During the assessment proceedings for A.Y. 2012-2013, Assessing Officer noticed that assessee has credited the work-in-progress account as on 31.03.2012 with various amounts totalling to Rs. 24,99,733/-. When asked, assessee admitted for inclusion of interest received on the refund at Rs. 7,710/- whereas, it objected to bringing to tax the rental income received in various years. The year-wise receipt of rentals in the impugned assessment years are as under:- Name of Tenant A.Y. 2008-09 A.Y. 2009-10 A.Y. 2010-11 A.Y. 2011-12 A.Y. 2012-13 Total rent Aircel Ltd - - 10,000/- 30,000/- - 40,000/- The Mithra Agencies 2,38,048/- 6,98,975/- - - - 9,37,023/- Ramdharam Kanta 60,000 1,20,000/- 1,20,000/- 1,20,000/- 1,20,000/- 5,40,000/- Vijaya Mining - - 7,50,000/- 2,25,000/- - 9,75,000/- 3.1. Assessee submitted before the A.O. that the company purchased the property in Uppal from two companies and an individual. These properties were tenanted at the ti....
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.... assets; therefore, the income should be assessed under the head 'house property'. He also held that construction of the Industrial Park had neither been completed during the relevant assessment year nor any business had commenced. Under these circumstances, the rental income received by the assessee, by no stretch of imagination, can be adjusted with work-in-progress. Assessee's reliance that the amounts are capital in nature has not been adjudicated by the Ld. CIT(A) and held that the amount is assessable under the head 'house property'. In his order he changed the head of income and did not allow the set off to work-in-progress. He also upheld the proceedings under section 147 as the information has come to knowledge of AO in AY 2012-13 and no assessment u/s 143(3) was completed earlier in the impugned years. 6. In the grounds raised by the assessee, it was also contended that notice issued u/s 148 of the Act is without jurisdiction and raised other grounds that the amounts cannot be brought to tax under the head 'house property' and should have been set off against the expenditure, ie. work-in-progress. 7. Ld. Counsel reiterated the submissions made before the Ld. CIT(A) and ....
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..... 9.1. It is undisputed that assessee has purchased the said property along with tenancies. It is also undisputed that the properties are being demolished for construction of a big commercial complex, for establishing an Industrial Park. Pending eviction of the tenants and settlement with the tenants who occupied the various shops/godowns in the properties purchased by the assessee, assessee received rentals as the properties were acquired along with the tenancies. It is not in dispute that assessee has taken legal steps and has spent considerable amounts for evicting the tenants. However, it took some time therefore, in the impugned assessment years assessee was receiving the rental income from the tenants, as stated in the table above. It is not in dispute that assessee has not completed its project during the impugned assessment years. The issue is whether the amounts can be brought to tax as 'income from house property' or can be set off against the project expenditure as the properties were acquired for the purpose of setting up of an Industrial Park. 10. In the case of Thermal Powertech Corporation India Ltd vs. DCIT (164 ITD 449) the issue is whether the interest earned on....
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....le Supreme Court held that the income received by the company ie. from the contractor under various sources mentioned above is inextricably linked with the setting up of the factory building / capital structure of the company and, therefore, such income has to be treated as capital receipt going to reduce the cost of construction of the assessee company. 11. This principle laid down by the Hon'ble Supreme Court in the case of CIT vs. Bokaro Steel Limited (236 ITR 315) (SC) was followed in later case i.e., in the case of CIT vs. Karnataka Power Corporation (247 ITR 268) (SC). In that case, the question raised was whether, on the facts and in circumstances of the case, the Tribunal is right in law in upholding the order of the Commissioner (Appeals) who deleted the addition of Rs. 1,30,44,518/- being interest receipts and hire charges from contractors, by holding that the same are in the nature of capital receipts which would go to reduce capital cost? The Hon'ble Supreme Court held that it is not in dispute that the question must be answered in the affirmative and in favour of the assessee having regard to the judgment of this Court in CIT vs. Bokaro Steel Ltd [1999] (236 ITR 315) ....