TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 1754
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.... case are that the assessee M/s. Central Depository Services (India) Ltd., is a public limited company jointed promoted by BSE Ltd. and other leading financial institutions such as SBI and other nationalized banks. The assessee filed its return of income for A.Y. 2012-13 on 28.09.2012, declaring total income of Rs. 56,81,37,750/-. The case was selected for scrutiny and notices u/s. 143(2) and 142(1) were issued and served on the assessee. During the course of assessment proceedings, the Assessing Officer noticed that as per the Wealth Tax return filed for A.Y. 2012-13, the assessee has shown residential flat at Prabhadevi valuing Rs. 1,73,76,753/- as a taxable asset u/s. 2(ea) of Wealth Tax Act, 1957. However, it had not offered any income from it under the head 'Income from House Property'. Therefore, the assessee was asked to explain as to why the Annual Letting Value (ALV) of this property should not be assessed as per the provisions of section 22 of the Income tax Act, 1961. In response to notice, the assessee vide letter dated 01.12.2014, submitted that the said property is used for the purpose of business in the form of guest house, wherein the outstation Directors can come a....
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....yees of the assessee. Therefore, the question of disallowance of expenses incurred to maintain said guest house does not arise. The learned CIT(A) after considering the relevant submissions of the assessee held that the assessee has admittedly shown residential flat at Prabhadevi in the Wealth Tax return, which is taxable u/s. 2(ea) of the Wealth Tax Act, 1957. Moreover, the assessee has used the said premises for the purpose accommodating their Directors/employees stationed outside and visiting Mumbai for Board meetings. Even if the assessee used the residential property for commercial purpose, which has been shown as taxable asset u/s 2(ea) of the Wealth Tax Act, attract ALV to be assessed as 'Income from House Property'. The Assessing Officer, considering the location and the area, has taken a conservative estimate of ALV @8% of the cost of the property and, therefore, there is no reason to interfere with the determination of the ALV by the Assessing Officer. The CIT(A) further held that since the Assessing Officer has determined the ALV of the property and computed income after allowing standard deduction as provided u/s. 24 of the Income tax Act, no further expenses/expenditur....
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....es Cotton & Co. Ltd. vs. CIT (2005) [279 ITR 42]. 6. On the other hand, learned DR strongly supported the order of the CIT(A) and submitted that the assessee itself had admitted that residential property owned by it is taxable u/s. 2(ea) of the Wealth Tax Act 1957 and, hence, the claim of the assessee that the said property was used as guest house for its staff is not based on any evidence. The Assessing Officer brought out clear facts to the effect that the assessee has not filed any evidence to prove the maintenance of guest house for its business purpose in the said residential property, therefore, he has rightly computed ALV of the property to be taxed under the head 'Income from House Property'. The order of the CIT(A) should therefore, be upheld. 7. We have heard both the parties and perused the material available on record. The fact with regard to ownership of residential property at Prabhadevi, Mumbai, is not disputed by the assessee. It is also an admitted fact that the assessee has included the said flat within the meaning of asset as defined u/s. 2(ea) of the Wealth Tax Act, 1957, which is taxable under the Wealth Tax Act. The Assessing Officer computed ALV of the prop....
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....guest house for the impugned assessment year. Therefore, we are of the considered view that the Assessing Officer was right in computing ALV of the property as per the provisions of section 22 of the Income tax Act. 9. Having said so, let us examine the method of determination of ALV by the Assessing Officer. The Assessing Officer has determined ALV of the property @8% of the cost of the asset. According to him the ALV determined by the assessee of Rs. 4,776/- is not acceptable, therefore, he proceeded on to determine the property on adhoc basis by estimating 8% of the total cost of the asset. It is the contention of the assessee that in case of deemed let out properties, the annual value shall be determined on the basis of some for which the property might reasonably be expected to let from year to year or where the property or any part of the property is let and the actual rent received or receivable by the assessee in respect thereof is in excess of the sum referred to in clause (a), it is the amount so received or receivable. Since the property has not been let out, the ALV of the property should be determined based on the fair rent of the property, whereas the Assessing Offic....
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....s allowable. We find that the Assessing Officer has allowed Standard Deduction u/s. 24 of the Income tax Act, 1961, against ALV determined from the property to compute 'Income from House Property'. Once standard deduction is allowed, then no further deductions can be allowed towards any expenditure incurred on said property, whether or not such expenses are incurred in the course of carrying out business of the assessee. The expenses, we are of the considered view that the Assessing Officer was right in disallowing expenses towards property. The learned CIT(A) after considering relevant submissions has upheld the additions made by the Assessing Officer. We do not find any error in the order of the CIT(A), hence we are inclined to affirm the findings of the CIT(A) and reject the ground taken by the assessee. Thus, the appeal filed by the assessee is partly allowed for statistical purposes. 11. We shall now take up the Revenue's appeal in ITA No. 1129/Mum/2017, wherein, following grounds have been raised: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the exclusion of investments in 'Mutual Funds Growth Option' while cal....
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....cal issue (supra) has been decided by the co-ordinate bench of the Tribunal, wherein vide para four of the order, it has been held by the Tribunal as under : "4. After considering the rival submissions and on perusal of the impugned orders, we find that the only dispute qua the disallowance under section 14A which has been raised by the Ld. Counsel before us is that, there are certain investments which are generating taxable income and therefore, these investments should be removed from the working of the average investment under formula prescribed under Rule 8D(2)(iii). The details of the investment considered for disallowance and also the investment which are generating taxable income were given in the following manner:- Particulars As on 31.03.2010 As on 31.03.2009 Total Investments Rs. 2,22, 51,04, 146 Rs. 1,21,57,53,656 Less: Investments generating taxable Income Schedule(l) Rs. 40,60,85,329 Rs. 25,65,26,626 Investment considered for Sec 14A Disallowance Rs. 1,81,90,18,817 Rs. 95,92,27,030 Sch. 1: Investment generating taxable income Particulars 31.03.2010 31.03.2009 In Rs. In Rs. Investment in Taxable Bonds ....