TaxTMI 
TaxTMI 
2018 (9) TMI 1009
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....st the law, weight of evidence and probabilities of 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 Assess....
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....rejected as not pressed. 3. As regards grounds of appeal No.1 & 9 are concerned, they are general in nature and 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. B....
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....m of Rs. 20,84,566 to tax. He also observed that there were advances outstanding to the tune of Rs. 36,90,231. Observing 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 ....
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....d the income as income from other sources, while the AO treated it as income from house property. Before the CIT (A), the assessee 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 m....
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....'income from house property' as claimed by the assessee but the AO/CIT (A) can set off the same from the business income if any, 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. ....