TMI Blog2014 (7) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The expenditure is a reimbursement of cost incurred by the society and there is no income element which requires deduction of tax at source - the payment has not been paid as damages for breach of any agreement/infraction of law which is clear from the reading MOU - the authorities are not justified in making/confirming the disallowance – Decided in favour of Assessee. License fees treated as business income – Held that:- The rent has been received for the office premises which are owned by the assessee - even if house property is held as stock in trade, the rental income has to be assessed as income from house property as the assessee is owner of the house property and the house property is not used by the assessee for his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 2.1 Briefly stated, the assessee is a partnership firm carrying construction business following mercantile system of accounting. On one portion of flat no. 355, the assessee constructed and sold flats in a residential building latter known as Kailash Tower Co-operative Housing Society and on the other portion of the land the assessee constructed various offices in a commercial complex Kailash Plaza which were sold in various years. During the assessment year 2006-07, the assessee undertook further construction work of Kailash Plaza as well as Kailash Tower Cooperative Society . The assessee incurred an expenditure on account of repair work in respect of Kailash Power Co-operative Society carried during the assessment years 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred during the year under consideration. Accordingly, the AO is directed to decide, in accordance with law, the allowability of the expenditure incurred during the year under consideration after providing reasonable opportunity of being heard to the assessee. We direct and order accordingly. Ground No 1 is partly allowed. 2.2.1 As regards the disallowance of ₹ 12,00,000/-, it is relevant to state that over and above the repairs carried out by the assessee, ₹ 12 lakhs was paid as settlement amounts which the society claimed on account of repairs carried out by them. The assessee claimed the deduction of ₹ 12 lakhs as direct cost during the assessment year under consideration. The said claim of deduction was disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld.CIT(A) confirming the AO s order treating license fees of ₹ 17,31,240/- received from Reliance Life Insurance Ltd. as business income. 3.1 Briefly stated, the assessee entered into a lease and license agreement with Reliance Life Insurance Ltd. on 03.01.2006 for five years i.e. up to 30.05.2011. According to the lease and license agreement, the lease was to commence from 1st June, 2006 falling within the assessment year under consideration. The amount of lease rent of ₹ 17,31,240/- was offered as income from house property by the assessee and thereby claimed a statutory deduction u/s 24A of the Income-tax Act. However, the AO treated the said lease rent as business income on the ground that the property was held as stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Even if house property is held as stock in trade, the rental income has to be assessed as income from house property as the assessee is owner of the house property and the house property is not used by the assessee for his own purpose. In view of the aforementioned discussion, the AO is directed to verify whether the premises rented out to Reliance Life Insurance Ltd is different from the premises involved in the assessment year 2005-06 and the same is not forming part of the business centre and accordingly tax the rent as income from house property. On such treatment, the AO is directed to allow the consequential deduction permissible u/s 24A of the Income-tax Act. Ground No. 3 is allowed for statistical purpose. 4. In Ground No. 4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of (i) ₹ 5000/- out of office expenses of ₹ 21,608/-, (ii) ₹ 5000/- out of staff welfare expenses of ₹ 21,956/- and (iii) ₹ 40,000/- out of maintenance expenses on ₹ 3,78,888/- aggregate to ₹ 50,000/- on the ground that these expenses were mainly incurred by cash and supported with self made vouchers. Since the quantum cannot be ascertained with 100% authenticity due to the fact that that the expenditure incurred is paid by cash supported by self made vouchers, we do not any justifiable reason to interfere with the decision of the Ld.CIT(A) and therefore, the disallowance confirmed by the Ld.CIT(A) is upheld. Ground No. 5 is dismissed. 6. In Ground No. 6, the assessee has agitate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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