TaxTMI 
TaxTMI 
2018 (5) TMI 1894
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....depreciation. (iii) Deleting the disallowance of Rs. 44,14,909/- on account of interest paid. (iv) Deleting the disallowance made on account of salary and staff welfare. (v) Directing the AO to treat the loan of Rs. 2.60 crores as liability of firm, instead of that of the partners and allow interest paid thereon amounting to Rs. 33,59,700/- u/s 24 of the Act. (vi) Deleting the addition of Rs. 1,92,670/- made on account of difference in cost construction. (vii) Directing the AO to allow depreciation of Rs. 14,97,977/- instead of Rs. 9,51,526/- which is actually allowable. The appellant craves the right to add, alter or amend any other ground(s) of appeal. ITA no. 5545/Del/2012 (A.Y.:2009-10) On the facts and circumstances of the case and in law CIT(A) has erred in- (i) Directing the AO to treat the hiring receipts of Rs. 88,94,880/- under the head 'income from business or profession' as against 'income from house property'. (ii) Deleting the disallowances amounting to Rs. 22,20,000/- made on account of bank charges, hiring charges for generator, maintenance charge, security charges and depreciation. ....
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....tal income of Rs. 6,630/-. Ld.AO observed that during the year under consideration assessee earned rental income, interest income and also income from business of trading in road safety equipment. Ld.AO observed that during the year, assessee received rent of Rs. 82,04,148/- but had offered only Rs. 27,26,065/-as income for the year under consideration. 3.3. A survey was carried out on 12/11/10 as an aid to ongoing scrutiny assessment proceedings for the year under consideration. It was observed by survey team that the property, minus furniture and fixtures have been sold during April 2010, and that no business activity of the firm were carried out at the said address. 3.4. During the assessment proceedings assessee submitted that loan of Rs. 2.60 crores was obtained from ICICI bank to finance the project. It was submitted that this loan was provided by the bank subject to the security by including themselves, their respective husbands and the residential property owned by them along with their husband and also a family-owned company namely M/s CBM Industries as co-borrowers. 3.5. Assessee further submitted that on receipt of loan from bank, construction was completed in A....
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....for which rents were separately received by assessee. The terms and conditions for both agreements were different and were related to subject of agreement. He submitted that Assessing Officer has merely relied on particular Clause, that too in the Preamble of building rental agreement, which talks of renewal and existence of both agreements. Ld.AR submitted that this Clause was specifically inserted to safeguard interest of assessee. Ld.AR placing reliance on Hon'ble Supreme Court in case of Chennai Properties & Investments Ltd. vs. CIT reported in 373 ITR 673 (2015) (SC), submitted that under the Income Tax Act, income from letting out of property is to be taxed under section 22 and income from hire charges of furniture, equipments etc. is to be taxed either under section 28 or under section 56, depending upon the facts but certainly it cannot be section 22. However in a case where there are composite agreement entered into for the purposes of letting of building and furniture equipments then effort would have to be made to segregate the amount allocable to rental of building and for hire charges of furniture, fixtures and fittings etc. In the present case Ld.AO has clubbed togeth....
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....gh Court mentioned above, it is hereby held that the hire charges received by the appellant by hiring of equipments, furniture, fixtures, air conditioning and interior items is to be subjected to tax under the head "business income" and correspondingly, all the expenses claimed by the appellant as a consequence, shall be allowed as legitimate expenses, since, all such expenses are fully vouched and the AO has not pointed out any defect in the books of account of the appellant. Accordingly, the appellant gets a relief of Rs. 17,32,852/- (to be taxed as business income) and Rs. 22,85,644.12 (as related expenses mentioned in para 2.2 of the assessment order). 5.6. Admittedly in preceding Assessment Year as is observed from assessment order passed for Assessment Year 2007-08 placed at page 77-79 in the paper book-II, Ld.A.O. in reassessment proceedings has not disputed the nature of income earned by assessee. Further at page 80 of paper book -II computation for year ending 31/03/11 has been placed, wherein rent received from hire of equipments have been shown as income from business. Assessee has sold the building during Financial Year 2010-11, but was continuing to receive hire cha....
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....misc. expenses in so far as the property building is concerned under the head 'income from house property'. We cannot appreciate the fact that these charges could be allocated to the rental income earned by assessee against hire of furniture fittings as all the maintenance charges are borne by the lessee. In so far as bank charges are concerned, ld.A.O. shall verify if it could be attributed to earning of rental income from hiring of furniture fittings. In the event the bank charges could be attributed to earning of rental income from furniture fittings, the same may be allowed as 'business expenditure'. Assessee is directed to provide all details in respect of the same to the satisfaction of Ld.AO for proper verification as per law. 6.5. We, therefore, modify the findings of Ld.CIT(A) regarding claim of expenditure as discussed above. Accordingly this ground raised by revenue stands partly allowed for statistical purposes. 7. Ground number (iii) This ground has been raised by revenue against deleting the disallowance of Rs. 44,14,909/- on account of interest paid. 7.1. Ld. DR placed reliance upon the observations of Ld. AO. 7.2. On the contrary Ld. AR submitted t....
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....considered opinion that the rental income earned by assessee from hire of furniture, fittings has been allowed to be treated as 'business expenditure', which do not require to engage any employee since all the maintenance of such furniture, fixtures and fittings are being taken care by lessee as per agreements placed in the paper book. Further it is observed that assessee during the year has earned income from house property and rental income from hire of furniture, fixtures being income from business. Assessee is already claiming standard deduction u/s 24 at 30% which subsumes all such misc. expenses in so far as the property building is concerned under the head 'income from house property'. We cannot appreciate the fact that these charges could be allocated to the rental income earned by assessee against hire of furniture fittings as all the maintenance charges are borne by the lessee. 8.5. Accordingly this ground raised by revenue stands allowed. 9. Ground number (v) This ground has been raised by revenue against treating the loan of Rs. 2.60 crores as a liability of the firm. 9.1. Ld. DR placed reliance upon order of Ld. AO. 9.2. On the contrary Ld.AR placed r....
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.... both the sides in the light of the records placed before us. We agree with the submissions advanced by Ld.AR that Ld. AO has not found any fault in the bills and vouchers produced by assessee in support of the construction cost but has merely relied upon the DVO's report. There has been neither any instance placed on record regarding any infirmity in the books of accounts nor there is any observations regarding the same by her. 10.3. Under such circumstances, we do not find any reason to differ with the observations of Ld. CIT (A) and accordingly the same is upheld. 10.4. Accordingly this ground raised by revenue stands dismissed. 11. Ground number (vii) This ground has been raised by revenue against depreciation being allowed at Rs. 14,97,977/-instead of Rs. 9,51,526/-. Ld.DR placed reliance upon the order of Ld. AO. 11.1. On the contrary Ld.AR placed reliance upon the orders of Ld. CIT (A). 11.2. We have perused the submissions advanced by both the sides in the light of the records placed before us. It is observed that Ld. CIT (A) granted relief to assessee by observing as under: "4.10 The next ground of appeal relates to claim of depreciation. The app....
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....On perusal of the above, we do not find any reason to interfere with the same and accordingly the same is upheld. 11.4. Accordingly this ground raised by revenue stands dismissed. 12. In the result appeal filed by revenue for assessment year 2008-09 stands partly allowed. 13. Assessment year 2009-10 Both the parties submit that issues are identical and stands squarely covered by the decision taken for assessment year 2008- 09. It has been submitted that issues raised herein are similar to ground nos. (i) (ii) (iii) (iv) and (vii) as raised in Assessment Year 2008-09. Both the parties reiterated identical arguments in respect of the grounds herein. We have perused the submissions advanced by both the sides in the light of records placed before us. We observe that since the issues are similar to those raised by Revenue in Assessment Year 2008-09 and that they have been dealt with herein above while deciding grounds for Assessment Year 2008-09, for the sake of brevity the same are not reproduced herein. We refer to submissions advanced by both the sides in respect of the grounds raised herein and rely upon our observations in respect of the relevant grounds for Asses....