AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 1699
X X X X Extracts X X X X
X X X X Extracts X X X X
....house property income rather treating the same as business income despite the facts that the receipts were received from letting out the industrial park, a commercial asset developed by the assessee along with rental from the activities of computer hardware, computer software and allied industrial activities? 2. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in treating the income offered by the assessee as house property income instead of business income without appreciating the decision of Hon'ble Supreme Court in the case of Shambhu Investments (P) Ltd. V. CIT [2003] 263 ITR 143 (SC), wherein it was held that where the prime object of the assessee under the agreement was to let out a portion of the property to various occupants by giving them additional right of using furniture and fixtures and other common facilities for which rent was being paid month by month in addition to the security free advance covering the entire cost of the said immovable property, the income derived from the said property was in income from property and not income from business, as the property was not exploited as business asset? 3. Whether i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ddition made on account of disallowance of expenses amounting to Rs. 6,99,171/- u/s. 37(1) of the Act despite the fact that the interest on service tax is penal nature." 9. "The appellant craves the leave to add, amend, alter and /or delete any of the grounds of appeal as above." 3. We heard the rival submissions and considered the documents available on the record. The revenue has filed the appeal against the order of the Ld.CIT(A). The issue involved related to treating the income as House Property Income as business income by the assessee while filing the return of income. But during the assessment proceedings, the Ld.AO treated this business income as "Income from House Property" amount to Rs. 4,28,93,712/- and accordingly the assessee's claim for set off unabsorbed depreciation of Rs. 83,56,774/- was denied. Finally, the scrutiny assessment was completed under section 143(3) of the act and the Ld.AO treated the said income as "Income from house property" and allowed deductions under section 24 (a) and 24(b) amount to Rs. 1,28,68,114/- and Rs. 1,82,48,117/- respectively. Further, the addition was made on account of 'Other income' and 'Interest income' amount to Rs. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, there are no reasons for us to interfere into or device from the findings recorded by the Ld. CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld.CIT(A) are judicious and are well reasoned. Resultantly, these grounds raised by the revenue stands dismissed." 5. Ground-3 of revenue During the previous year relevant to AY 2012-13 the assessee had outstanding borrowings of Rs. 15,50,38,938/-. Out of these funds, an interest-free advance of Rs. 2,58,75,000/- was given to its sister concern and remained outstanding throughout the year. Total interest paid to HDFC Bank on the borrowings was Rs. 2,13,53,117/-. As the above advance was not utilised for the assessee's own house-property, proportionate interest at 12 percent works out to Rs. 31,05,000/- is disallowed. Accordingly, the deduction permissible under section 24(b) is restricted to Rs. 1,82,48,117/- (Rs.2,13,53,117/- - Rs. 31,05,000/-). But the said disallowance is challenged assessee before the Ld. CIT(A) related interest on interest free advance to sister concern amount to R....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessed by the AO under the head 'Income from House Property', the Other Income & Interest Income of Rs. 44,05,252/- was assessed under the head "Income from Other Sources". As regards the balance interest expenses of Rs. 21,52,380/- debited to the P/L account, the AO held that the assessee had not substantiated that these interest expenses were expended wholly and exclusively for the purpose of earning other income and interest income of Rs. 44,05,252/- as laid down under the provisions of section 57(iii) of the Act. Therefore, the same was not allowed by the AO as a deduction against the other income and interest income. Interest on service tax of Rs. 6,99,121/- was also disallowed for similar reasons by the AO. 7.2 During the appellate proceedings, vide submission dated 25.11.2022 the appellant has stated that "during the previous year ended 31st March, 2012, your appellant was in receipt of interest income of Rs. 5,42,752/- & Rs. 24,61,647/- from M/s. Khandelwal Estates Pvt. Ltd & M/s. M.S. Luvish Properties Pvt. Ltd, respectively. The appellant is also in the receipt of interest income from other amounting to Rs. 5,97,098/- & Miscellaneous Income of Rs. 8,03....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in assessee's own case, we find that the identical issue has already been decided by the Hon'ble ITAT in assessee's own case in ITA No. 2745 & 2748/M/2013 for Ay 2007-08 & 2009-10. Therefore, taking the same stand, this issue is remitted back to the file of AO with similar directions as are contained in ITA No. 2745 & 2748/M/13 for AY 2007-08 & 2009-10. Resultantly, this ground raised by the revenue stands allowed for statistical purposes." 7. Ground-5 of revenue During the assessment proceedings, the Ld. AO noted that the appellant had claimed set-off of unabsorbed depreciation of Rs. 83,56,774/- relating to AYs 2006-07 and 2008-09 against the current year's income. However, the claim was disallowed, as the department had consistently treated the rental income- declared under 'business income'-as assessable under the head 'Income from House Property', where depreciation is not allowable. Accordingly, the set-off was denied. Aggrieved assessee filed the appeal before the Ld. CIT(A). 7.1. The observation of the Ld. CIT(A) in page-10 to 11, paragraph no. 8 of the impugned appeal order is reproduced as below: - "8.1 During the assessment proceedings,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on'ble ITAT for AY 2011-12 cited above. Respectfully following the decision of the Hon'ble ITAT, the AO is directed to compute the income as per the direction above and allow the set off business loss if any as per law. Accordingly ground No. 05 raised by the appellant is hereby allowed for statistical purpose." 7.2. The observation of the coordinate bench in page 18 related ITA No. 4833/Mum/2015 (supra) is reproduced as below:- "After having gone through the facts of the present case as well as considering the orders passed by revenue authorities, we find that Ld. CIT(A) has rightly directed the AO to compute the income and allow the set off of business loss if any as per law. Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this ground raised by the revenue stands dismissed." 8. Ground-6 & 7 of revenue The issue....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appellant has relied on the following case laws: Pr. Commissioner of Income Tax - 14 Versus Wockhardt Hospitals Limited [2020 (3) TMI 972 - BOM HC] M/s. Redington (India) Ltd. vs ACIT [(2017) 392 ITR 633 (Mds HC)] Cheminvest Ltd. Vs CIT [(2015) 378 ITR 234 (Del HC)] 9.3 The submission of the appellant has been carefully considered. The issue under consideration is that the appellant had made suo-moto disallowance of Rs. 69,536/- us/ 14A of the Act. However, the AO invoked Rule 8D and disallowed an amount of Rs. 11,87,946/-. The appellant submitted that the addition made by the AO is not acceptable as the appellant had not earned any exempt income during the year under consideration. The appellant submitted that the addition so made u/s 14A is to be deleted. 9.4 In this regard, reliance is placed on the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, (Central) 1 vs. Chettinad Logistics (P.) Ltd. [2018] 95 taxmann.com 250 (SC)[02-07-2018] wherein it was held that section14A cannot be invoked where no exempt income was earned by assessee in relevant assessment year. In the said decision the SLP filed by th....