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2019 (7) TMI 929
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.... order of assessment made was vitiated order in law. 1.2 That the learned CIT(A) having admitted the additional evidence furnished by the assessee, failed to comprehend such evidences more particularly when no adverse comments had been made by the AO in his report in respect of such evidences and as such the findings recorded by the learned CIT(A) in his order while confirming the order of assessment and holding that 'said transaction' is not genuine is apparently arbitrary and is thus misconceived both on facts and in law. In fact the findings recorded by the learned CIT(A) in his order are highly vague. 1.3 That the learned CIT(A) has further erred when he held that the documentary evidences have been created only to create smoke screen, is based on no material. No such adverse finding could have been recorded by him without bringing any evidence whatsoever. The findings are based on mere assumptions and presumptions and upon ignoring documentary evidences furnished by the assessee. 2. That the learned CIT(A) has erred both on facts and in law in sustaining the disallowance of loss of Rs. 103.50 crores out of the loss suffered of Rs. 104.50 crores on re....
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....hase is factually incorrect and was recorded by completely overlooking the written submissions and documentary evidences placed on record. 2.8 That the learned CIT(A) has erred in placing to reliance on the judgments referred to by him in para 4.1.6 which have no semblance of resemblance with the facts of the instant case. 2.9 That the findings recorded by the learned CIT(A) confirming a disallowance of Rs. 103.50 crores is contradictory since the loss suffered by the assessee aggregated to Rs. 104.50 crores. In fact, in the absence of any adverse finding in respect of the transaction where assessee had earned a gain of Rs. 1 crores on sale of debentures subscribed by it, the findings recorded by the learned CIT(A) is without application of mind. 3. That the learned CIT(A) has further erred in sustaining an addition of Rs. 13.92 crores and that too on an assumption that there was an obligation of the assessee to deduct tax at source in respect of expenditure incurred by M/s DLF Universal Ltd.; whereas neither there was any such obligation to deduct tax at source by the assessee nor there was any failure to do so. 4. That the learned CIT(A) has th....
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....bmission supported by charts and judgments. 5. We have considered the oral arguments and written submission and material placed on record by both the sides. Both the assessee and revenue have contended on merits of the disallowances/addition made by authorities below. No submissions were made in respect of Grounds No. 1 to 1.3 of Grounds of Appeal separately and otherwise too are general and therefore dismissed as such. 6. Ground Nos. 2 to 2.9 relates to disallowance of expenditure incurred of Rs. 103.50 crores under the head 'finance cost' by the assessee company. Relevant facts qua this issue are that the assessee company during the year, had issued secured unrated fully transferable unlisted 9,500 debentures of face value of Rs. 10 lacs each aggregating to Rs. 950 crores at a discount of Rs. 3,62,421/- per debenture aggregating to total discount of Rs. 350 crores, i.e., at net issue price of Rs. 6,31,579/- per debenture, aggregating to Rs. 600 crores for a tenure of three years at a coupon rate of 2% per annum to M/s. India Bulls Housing Finance Ltd. These debentures were issued on 17.12.2015 and redeemed from the open market from 30.3.2015 at a price of Rs. 104.50 crores.....
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....ived by the assessee on 17.12.2014 as a borrowing against the issue of debentures from India Bulls Group of companies (M/s. India Bulls Housing Finance Ltd. Rs. 600 crores) has gone back to India Bulls Group companies, M/s. India Bulls Housing Finance Ltd. (Rs. 550 crores) and M/s. India Bulls Infrastructure Ltd. (Rs. 50 crores). Likewise, he has held that from the flow chart B, even on redemption of debentures, i.e., on 30.3.2015, the money originating from M/s. India Bulls Group companies, India Bulls Housing Finance Ltd. - Rs. 550 crores and M/s. India Bulls Commercial Rs. 50 crores has been routed through the same companies to which the assessee had given loans and finally it is finding its way back to M/s. India Bulls Housing Finance Ltd (Rs. 703.61 crores). He also held that from flow chart C, it is evident that the assessee company took advances aggregating to Rs. 588 crores from five independent entities namely, Mendell Developers (P) Ltd., Caspar Developers (P) Ltd., Espo Developers (P) Ltd., Sanaskar Buidtech (P) Ltd., Nakshtra Buildcon (P) Ltd. and paid Rs. 588 crores to Dewu Developers Pvt. Ltd. It has been stated that even in the aforesaid layers of transactions, it wi....
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.... under: "The AO after doing a detailed fact finding as well as a speaking, well reasoned order had disallowed the such loss and had held that such los is a contrived loss. The AO had found that (which is a matter of record): • Many companies have similar addresses. In fact the undersigned would like to mention that more apt word is same address for most companies; • Common email id meaning thereby that they are being controlled b the same person and are group entities. The undersigned agrees this factual observation of the AO; and • The capital base of these companies is very low meagre, meaning that such companies have been working as a pure conduits to create fictitious expenses. The undersigned agreed to till observation of the AO. The AO has done an extremely essential exercise and has mapped the money trail in the assessment order, by way of detailed flowchart showing the movement of money from the Indiabulls groups of companies and he receipt of money back to the Indiabulls groups of companies. The whole chain of events shows that the assessee had some preconceive notion to siphon off money and book losses to evade tax.....
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....e nature and may or may include any compliance under Chapter XVII-B, and failure of any compliance under Chapter XVII-B would lead to other severe consequences like penalty u/s 271C or prosecution proceedings etc. Hence, this argument of the appellant totally fails." 8. Before us, the learned Senior Advocate for the appellant assessee contended that the authorities below have failed to appreciate the factual matrix of the claim of the appellant company and also the statutory provisions of law. He submitted that the appellant had issued debentures on 17.12.2014 to M/s. India Bulls Housing Finance Ltd. and same were redeemed on 30.3.2015. It was contended that the amount borrowed had been utilized for the purpose of business and it was supported by documents placed on record in the Paper Book. It was also submitted that the utilization of funds was done for the purpose of business by advancing the same to three companies for the purpose of acquiring the land. The details of the advances made in the agreements as tabulated in the synopsis is as under: Sr. No. Particulars Amount (Rs. in crores) Date of agreement Copy of agreement i) M/s Winston Developers Pvt. L....
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....d. reported in 397 ITR 106, the revenue was incorrect to deny the claim of deduction made by the appellant company. As regards flow charts prepared and relied in the order of assessment, in the written submissions it has been submitted as under: "I Flow Chart 'A' prepared by the AO allegedly reflects the money trail on 17.12.2014 (copy enclosed as Annexure "A" of synopsis). Findings of AO: The learned Assessing Officer has held the said chart establishes the amounts advanced to the assessee of Rs. 600 crores on 17.12.2014 by M/s Indiabulls Housing Finance Ltd. had reached back to M/s Indiabulls Housing Finance Ltd. Contention of the appellant: The case of the assessee is that in so far as the said chart is concerned, it shows the utilisation of the funds by the assessee which itself establishes that it had advanced the said sum to the three companies for the purpose of its business who had further advanced the amounts from the sums received by it from the assessee. On the contrary it establishes that monies received and were utilised by it for the purpose of business. The mere fact the amounts were received by M/s Indiabulls Group of companies in....
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.... Bulls Housing Finance Ltd. and likewise even on the redemption of debentures, the money flew was actually reversed in as much as money originated from M/s. India Bulls Housing Finance Ltd. was returned to M/s. India Bulls companies. In the written submissions filed by the learned CIT DR, it was contended as under: "1. The assessee has claimed deduction of Rs. 1,03,50,00,000 2. The assessee had taken loan of Rs. 6,00,00,000 against issue of debentures from India Bulls Housing Finance Ltd. on 17.12.2014. As per flow chart "A" in assessment order, the entire amount went back to India Bulls Group Companies (India Bulls Housing Finance Ltd. and India Bulls Infrastructure) on the same date i.e. 17.12.2014 through a maze of companies. Mainly conduit companies. 3. The assessee redeemed debentures on 30.3.2015. As per flow chart "B" in assessment order, the money flow was actually reversed. This time money originated from to India Bulls Group Companies (India Bulls Housing Finance Ltd. and India Bulls Commercial). 4. As per flow chart "C" in assessment order, it is evident as to how assessee company took advances from Mendell, Caspar, Espo, Sanaskar, Nak....
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....arm's length. 15. As mentioned in para 3.35, the transaction was SHAM because. i) The money originated from India Bulls and went back to India Bulls Group of companies on the same day. ii) When money was to be returned on 30.3.2015, money originated from India Bulls and went back to India Bulls Group of companies iii) Money was channeled through various conduit companies without any approval of board or agreement or agreement or any other documentation. 16. As mentioned in para 3.36, the assessee has treated income as capital receipts, expenses have been treated as business loss/interest expense. 17. As mentioned in para 3.39, in no money lending business, interest rates are as high as 70% which assessee has paid to India Bulls." 9.1 The learned CIT DR further placed reliance on the following judgments: 1. CIT Vs. Durga Prasad More (82 ITR 540) (SC) 2. ITO Vs. Shiva Gases (1 SOT 21) (Delhi) 3. CIT Vs. Wipro Ltd. (50 Taxman.com 421) (KHC) 4. DCIT Vs. Pawan Kumar Malhotra [2 ITR (T) 250] (Delhi) 10. We have considered the rival submissions and perused the relevant material placed on record....
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....be satisfied in order to enable the asseesee to claim a deduction in respect of the interest under section 10(2)(iii) are, firstly, that money must have been borrowed by the assessee ; secondly, it must have been borrowed for the purpose of business and, thirdly, the assessee must have paid interest on the said amount and claimed it as a deduction. It is not the requirement of the provision that the assessee must further show that the borrowing of the capital was necessary for the business so that if at the time of borrowing the assessee had sufficient amount of its own, the deduction could not be allowed. Similarly, the Madras High Court in Amna Bai Hajee Issa v. Commissioner of Income-tax [1964] 51 ITR 835 has held that in deciding whether a claim for interest on borrowing can be allowed the fact that the assessee had ample resources at its disposal and need not have borrowed, is not a relevant matter for consideration. The matter to be decided is whether the amount of interest was paid in fact in respect of the capital borrowed for business. 11.2 Likewise Hon'ble Delhi High Court in the case of CIT vs. Regal Theatres reported in 225 ITR 205 in the above context has held as un....
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....been disputed by the authorities below. According to the appellant, the aforesaid sums raised through the debentures have been utilized for advanced to the three companies namely, M/s. Winston Developers Pvt. Ltd., M/s. Avenio Developers Pvt. Ltd. and M/s. Famous Dwellers Pvt. Ltd. It is also not in dispute that there are three different agreements entered into by the appellant company with each of the aforesaid three entities. One of the agreements is dated 18.8.2013 and the addendum to the agreement is dated 1.9.2014 with M/s. Winston Developers Pvt. Ltd. Likewise, agreement with M/s. Avenio Developers Pvt. Ltd. is dated 14.10.2013 and agreement with M/s. Famous Dwellers Pvt. Ltd. is dated 20.11.2013. Each of the aforesaid agreements were for purchase of land situated at Sectors 88A, 888B and 93, Gurgaon, Near Dwarka. Expressway had been entered much prior to the issue of debentures by the appellant company on 17.12.2014. It is further noted that under the aforesaid arrangement with M/s. Winston Developers Pvt. Ltd., the appellant company had advanced a sum of Rs. 11,40,00,000/- in financial year 2013-14 itself and another sum of Rs. 20 crores in financial year 2014-15 prior to t....
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....of letter to M/s Winston Developers (P) Ltd. from appellant company enclosing fund transfer letter dated 11.12.2014 492 xi) 18.3.2015 Copy of letter to M/s Winston Developers (P) Ltd. from appellant company requesting cancellation of agreement dated 15.8.2013 due to peculiar economical, commercial and political scenario 493 xii) 30.3.2015 Copy of letter from M/s Winston Developers (P) Ltd. to appellant company for refund of advance 494 M/s Avenio Developers (P) Ltd. xiii) 10.9.2013 Copy of letter from M/s Avenio Developers (P) Ltd. for offering service for purchase of agricultural land in Sectors 88A, 88B, 89A, 89B and 93, Gurgaon 591 xiv) 3.10.2013 Copy of letter to M/s Avenio Developers (P) Ltd. regarding terms and conditions for acquiring land 592 xv) 12.11.2013 Copy of letter to appellant company from M/s Avenio Developers (P) Ltd. enclosing original agreement dated 14.10.2013 signed by them 593-597 xvi) 11.12.2013 Copy of letter to M/s Avenio Developers (P) Ltd. by the appellant company for receiving of agreement and further request for identifying the land parcels a....
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.... Copy of letter from Famous Dwellers (P) Ltd. to appellant company for request of advance payment 786 xxiv) 11.12.2014 Copy of letter to Famous Dwellers (P) Ltd. from appellant company enclosing copy of cheque no. 2346509 dated 11.12.2014 of Rs. 190 crores 787 xxv) 14.3.2015 Copy of letter to Famous Dwellers (P) Ltd. from appellant company requesting cancellation of agreement dated 20.11.2013 due to peculiar economical, commercial and political scenario 788 xxvi) 30.3.2015 Copy of letter from Famous Dwellers (P) Ltd. to appellant company for refund of advance 789 12.1 The aforesaid evidences were also forwarded to the learned Assessing officer by the Ld. CIT (A) for his remand report, who initially objected to admission of additional evidence under Rule 46A of the Income Tax Rules. However, in subsequent report dated 27.11.2018, it is seen that, Assessing Officer without making any enquiries has reiterated his earlier conclusion that the loss / expenditure claimed is a contrived/artificial loss to evade the tax. It is thus matter of record now that so far as evidences furnished by the appellant company before the authorities below, have r....
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....ital gain by the Assessing Officer after observing and holding as under: "The return of income in this case was e-filed on 28.09.2015 vide acknowledgement no. 824984641280915 declaring income of Rs. 49,58,050/-. The case was selected for Limited Scrutiny under Company Assisted Scrutiny Selection (CASS) with following reasons: A. High ratio of refund to TDS B. Large increase in investment in unlisted equities during the year Accordingly, notice u/s 143(2) of the Income Tax Act, 1961 was issued on 19.09.2016 by the ITO, Ward-7(4), New Delhi, which was duly served on the assessee. Further, the case was transferred to Circle-7(2), New Delhi and subsequently, a notice u/s 142(1) of the Income Tax Act, 1961 was issued on 14.07.2017 and duly served upon the assessee. In response to the notices issued to the assessee, AR of the assessee, Shri. Sandeep Bhasin, CA attended the proceedings and the case was discussed with him. The details asked for have been submitted by the AR and duly placed on records. 2. During the year under consideration, the assessee company is engaged in the business of real estate. 3. During the course of assessmen....
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....ncome in the hands of M/s. India Bulls Housing Finance Ltd. or M/s. Youthstar Trade-link (P) Ltd. or M/s Dreamcart Reality Services Pvt. Ltd., then it would be too farfetched and unjustified for the revenue to contend that the expenditure incurred of Rs. 104.50 crores on borrowing made by issue of redemption of debentures to M/s. India Bulls Housing Finance Ltd. is either a contrived loss or an artificial loss. For that would be contrary to well known adage that an egg cannot be used partly for eating and partly for hatching. In other words, what is true for the income cannot be said to be an artificial for the expenditure. In our opinion, once income is accepted on the basis of borrowings and redemption of debentures then both logically and legally and consequently, expenditure in the shape of interest is a natural outcome and could not be regarded as artificial claim as a contrived claim by the appellant company more particularly when M/s. India Bulls Housing Finance Ltd. is an independent company and big reputed company. 14. There could be another angle to analyse the so called colourable transaction solely to contrived loss by the assessee company to reduce its taxable incom....
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....suggest that no money were raised by the appellant company so as to suggest that the expenditure incurred on the borrowing is an artificial borrowing more particularly when income originated out of the borrowings has been taxed as income in the hands of M/s. India Bulls Housing Finance Ltd. Infact, it would be pertinent to state and add here that there are two independent transactions, one where M/s. India Bulls Housing Finance Ltd. provided funds to the appellant company on 17.12.2014 on issue of debentures by the appellant company in respect of which appellant incurred expenditure of Rs. 104.50 crores on redemption of debentures on 30.3.2015. There is another set of transaction in respect of borrowing by M/s. Vatika Ltd. by issuing debentures of Rs. 500 crores to M/s. India Bulls Housing Finance Ltd. which were redeemed by M/s. Vatika Ltd. on 17.12.2014. It is not in dispute that M/s. Vatika Ltd. incurred an expenditure of Rs. 88 crores on the aforesaid debentures issued by M/s. Vatika Ltd. to M/s. India Bulls Housing Finance Ltd. This expenditure in the hands of M/s. Vatika Ltd. has been allowed as business expenditure and has been accepted by the revenue. Thus, once the revenue....
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....ite remand report having been specifically sent by the learned Officer in the remand proceedings; and thus once the documentary evidence as furnished by the appellant remain un-rebutted the revenue cannot simply rely upon extraneous considerations to hold that legitimate claim made by the assessee is an artificial claim or a fabricated one and that too without leading any material. The burden was on the revenue to have rebutted the documentary evidence by leading further documentary evidence or by making enquires so as to suggest that the claim made by the appellant is not a genuine claim. Section 142(2) of the Act provides for powers with the learned Assessing Officer to conduct enquiries in respect of evidences furnished or claims made by the appellant company and if the learned Assessing Officer has not invoked those powers then it would be unfair, improper and also unjustified approach to permit the revenue to contend to the contrary to the claim made by the appellant company. It is well settled law that suspicion however strong may be cannot partake the character of evidence of proof. Here, the appellant company has discharged its onus by placing on record material to prove ut....
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....ed by the assessee that this independent transaction was offered as short term capital gain in the course of assessment proceedings, and ought to have assessed as such. The revenue however, has said that aforesaid investment and disinvestment in debentures of M/s. Vatika Ltd. was also part of the contrived loss claimed on issue of debentures by the appellant company. It is a matter of record that the appellant had purchased debentures of M/s. Vatika Ltd. from independent entity M/s. Dewu Developers Pvt. Ltd. on a payment of consideration of Rs. 588 crores after deduction of TDS of Rs. 8.89 crores. This purchase has neither been disputed either in the order of assessment or in the order of CIT (A). It is also not in dispute that the debentures purchased by the appellant had been redeemed by M/s. Vatika Ltd. It is also a matter of record that on the redemption of debentures, bank account of the appellant had been credited by the sums received of Rs. 589 crores. Furthermore, no enquiries have been made or referred in the order of assessment to suggest that the income earned on issue of investment and disinvestment in the above debentures was also a contrived income. The issue of deben....
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....whether the amount was advanced for earning profits." 20.1 It has thus been held by their Lordships that the commerciality of the transaction is only in the domain of an assessee and it is not for the revenue to sit in the arm chair of a businessman while examining the claim of deduction u/s 36(1)(iii) of the Act. Once it had been established that appellant raised funds for purpose of its business then interest paid is an allowable deduction. In the instant case sequence of events show that the entire purpose of issue of debentures by the appellant was to borrow the funds for the purpose of its business. The appellant in the business of real estate it intended to acquire Gurgaon and for financing such project needed sufficient funds and had approached the vender companies after identifying such vender certain companies, who were involved in such activity and had thus entered into agreements, when it sought the assistance of such companies. 21. Another contention raised by the revenue is that the borrowing raised by the appellant did not materialise into any tangible business venture in as much as advances paid to three companies for purchase of land were repaid prior to redem....
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....rities have not reached at a logical conclusion which disproves the evidence placed on record. Under these set of facts, we are of the view that the Ld CIT DR is not justified in placing reliance on the decision of Hon'ble Supreme Court rendered in the case of Durga Prasad More (supra) to simply brush aside the evidences furnished by the appellant. 22.1. The Ld. CIT DR further taken support of the decision rendered by Coordinate bench of Delhi Tribunal in the case of Assessing Officer vs. Shiva Gases (Supra). In the said case as noted by Assessing Officer was that sale of shares on which loss has been claimed was non-genuine transaction and had been manipulated with the sister concern with a view to reduce the liability. However, the facts prevailing in the instant case would show that the debentures were issued to independent entities and that independent entities are duly assessed to tax. Under these set of facts, we are of the view that the Ld CIT was not justified in placing reliance on the decision of Hon'ble Delhi bench of Tribunal rendered in the case of Assessing Officer vs. Shiva Gases (Supra). 22.2 The learned CIT DR during the course of proceedings has reli....
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.... quantum of short term capital gains disclosed by the assessee was a staggering amount of excess of Rs. 100 crores. The loss was generated by disinvestment of assessees share owned in subsidiary Non Banking Finance Company. The fact that three persons/ex-employees who had rewarding association with the assessee group for a long period of time, cast a shadow on the genuineness of the transaction as the shares were sold at a throw away price, when earlier to the sale, the assessee had purchased the shares of Wipro Finance Limited at a premium. Despite disinvesting the shares on such a throw away price under the guise of complying with the legal requirements as directed by RBI, the assessee chose to infuse fresh capital to the extent of Rs. 95 crores at par on the same day and took back the amount on the same day under different head. In the end, they did not comply with the procedures of the law. On the contrary, application filed to the RBI was withdrawn. These undisputed facts borne out from the record clearly establishes the real intention underlying this scheme which they have propounded." 23. It will be apparent that the facts of the said case and the facts in the case of app....
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.... decision relied upon by the Ld. DR is in the case of DCIT vs. Pawan Kumar Malhotra reported in 2 ITR (Trib) 250 (Delhi). Here too, the facts are totally distinguishable in as much as this was a case of purchase of shares from employees and thereafter, sale the same. In the said case, purchase of shares was done from two persons who did not file any particulars about the purchase and sale of shares in their returns. Also, share price of the company was neither known nor reported and there was no basis to suggest that how the share price of a company could increase more than 70 times when these shares were neither quoted nor listed. Thus, the facts as apparently are completely distinguished from the case of appellant company and therefore, could not be made a basis to reject the claim made by the appellant company. 25. In view of the foregoing, we conclude that the appellant is entitled to deduction of Rs. 104.50 crores incurred on redemption of debentures under section 36(1)(iii) of the Act. Furthermore, we also hold that Rs. 1 crores earned by the appellant on redemption of debentures by M/s. Vatika Ltd. in respect of investment made by the appellant company was taxable as busi....
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....2 crores has not been routed through profit & loss account of the appellant and appellant company has also not furnished the details required to examine the veracity of the claim of the appellant. It has been held that appellant has only relied upon the CA certificate regarding the claim of expense and expects the revenue to accept the same without examining its allowability which is not a justified basis to allow the same. 27. The CIT (A) also upheld the addition by observing that since the claim of the appellant is not supported by adequate evidences therefore, expenditure incurred by DLF was not an eligible expenditure and therefore, confirmed the addition. 28. Before us, the learned Senior Advocate contended that Assessing Officer had made addition on the premise that the appellant has yet to receive Rs. 103.42 crores which was based on an erroneous assumption as under the agreement with the DLF, appellant was entitled to only Rs. 89.50 crores and not Rs. 103.42 crores. It was submitted that the reply dated 24.1.2019 from M/s. DLF under section 133(6) of the Act clarified that DLF had paid only Rs. 89.50 crores to the appellant and therefore, this amount of Rs. 13.92 cror....
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.... The landowner has been reimbursed from time to time for the proportionate revenue proceeds as mutually decided, details of payments made to SBPL amounting to Rs. 153.05 Cr. (Rs. 89.50 Cr. plus Rs. 63.55 Cr) is given in Annexure 3. On perusal of said details, your goodself can observe that the pending full & final payment of Rs. 11.04.Cr was made by the company after the decree of compromise agreement. Copy of the Compromise which is duly decreed by the Court is has already been enclosed. So far as, treatment in assessee's books is concerned, it is submitted that all the transactions are duly recorded in the audited financials of the DHDL and the amount of Rs. 13.92 Cr has duly been offered to tax as part of overall revenue of the project bases Percentage of completion method (POCM) on year to year basis as per the applicable laws. It is worthwhile to mention here that the assessee company was duly been assessed u/s 143(3) for AY 2015-16. Even, Scrutiny assessment for AY 2016-17 has also been concluded by DCIT, Circle 7(2), New Delhi. All the assessment orders are part of departmental record." 30. Thus, having regard to the aforesaid agreements sup....
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....ned u/s 23(1) of the Act. In identical case coordinate bench of Delhi Tribunal in case of Ashok Kumar Gupta vs. ITO reported in 167 ITD 165 has held that FMV of properties used by appellant for business purpose could not be determined u/s 23(1) of the Act. In the said case, properties under consideration were the properties which which are lying vacant or were under construction or were let out or were self occupied for the purpose of business purpose and in respect of properties which were used by the assessee for his own office/ business purpose it was held that FMV of the properties used by the assessee for business purpose admittedly cannot be determined u/s 23(1) of the Act. It has been held as under: "6. However, nowhere the Assessing Officer has given any basis for determination of fair market rent, that is, from which source or information he has arrived at the market rent. He has also not excluded the properties which were; firstly, under construction as mentioned in the earlier table; and secondly, one shop which was used by the assessee for his own office/business purpose. The FMV of the properties under construction and property/shop used by assessee for busine....
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....der the head "Income from house property" is not the ownership of property but the nature of operations in relation to them. Considering the objects of the company, the Hon'ble Supreme Court held that such income was chargeable to tax under the head "Profits and gains from business or profession". More recently, the Hon'ble Supreme Court in Rayala Corporation Pvt. Ltd. Vs. ACIT (2016) 386 ITR 500 (SC) considered a situation in which the assessee was engaged in the business of renting its properties. The assessee claimed such rental income as falling under the head "Profits and gains of business or profession". The AO denied such a treatment. When the matter finally came up before the Hon'ble Supreme Court, it considered both the judgments, namely, S.G. Mercantile Corporation (supra) and Chennai Properties and Investments Ltd (supra) and thereafter held that : `the law laid down by this Court in the case of Chennai Properties (supra) shows the correct position of law'. That is how, their Lordships held that the income was to be charged to tax under the head "Profits and gains of business or profession". 5 In view of the foregoing discussion, it is apparent that the view poi....