TaxTMI 
TaxTMI 
2018 (9) TMI 1009
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....case. 2. The learned Commissioner of Income Tax erred in confirming the order of the Assessing Officer wherein, the lease rental income of Rs. 28,15,047 admitted as business income, was considered as income from property, inspite of a favorable recommendation from the Assessing Officer. 3. The learned Commissioner further erred in confirming the disallowance of interest of Rs. 16,08,014/- which is claimed as business expenditure as the loan taken from SBI, Balanagar branch was utilized for the purpose of business, inspite of a favorable recommendation from the Assessing Officer. 4. The learned Commissioner of Income Tax erred in confirming the order of the Assessing Officer wherein, the claim of depreciation amounting to Rs. 18,50,219....
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....nd need no adjudication. 4. As regards Ground of appeal No.2, brief facts are that the assessee company, which is in the business of manufacturing of Aluminium Cans, Accessories, Castings, etc, filed its return of income for the A.Y 2007-08 on 31.10.2007 declaring 'Nil' income. Initially, the return was processed u/s 143(1) of the Act resulting in a demand of Rs. 11,95,930. Subsequently, the case was subjected to scrutiny and various details were called for, which were furnished by the assessee, from time to time. On perusal of the information so filed, the AO observed that the assessee company leased its own building to M/s. BHEL GE Gas Turbine Services Pvt. Ltd for a period of 5 years and that for the relevant A.Y, the assessee company h....
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....ving that the advances are in the nature of personal advances to one of the Directors of the Company, Shri G.Venkat Reddy, he treated it as advance made to Directors in the books of the company and disallowed the interest @ 12% on such advances also. The AO also verified the TDS certificate filed along with the return of income and observed that the assessee company received an amount of Rs. 94,07,386 as job work receipts, whereas in the P&L A/c, no such income has been admitted. Therefore, he treated the sum of Rs. 94,07,307 as other sales and advances and brought it to tax as undisclosed income of the assessee. 6. The AO also observed that the assessee company has unsecured loans amounting to Rs. 64,70,785 during the year. The assessee w....
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....sessee had taken an alternative stand that the lease rental income should be treated as business income, but the CIT (A) has not agreed to the assessee's contention and has confirmed that the income should be treated as income from house property. We have heard both the parties and have also perused the lease deed filed by the assessee. From the recitals in the lease deed, we find that the assessee had given the land and also the building and structures constructed thereon or to be constructed thereon, as per the requirements of the lessee, for a period of 5 years. It is seen that the assessee is required to make the modification/repairs or construction as per the requirements of the lessee and thereafter, the lessee is required to take car....
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....y, of the assessee. Therefore, the AO is directed to allow the same as business expenditure. We find that the security for the loan, is the lease rental income, but it does not mean that it can be set off against the rental income. Ground No.3 is therefore, treated as allowed for statistical purposes. 10. As regards Ground No.4, since we have already held that the income from lease rental is to be treated as income from house property, the building cannot be treated as a business asset and therefore the depreciation thereon of an amount of Rs. 18,50,219/- cannot be allowed. Ground No.4 is therefore, rejected. 11. As regards Ground No.5, we find that the assessee has claimed that these advances are trade advances and not loans/advances as....