TMI Blog2014 (3) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal filed by the Revenue. Rental receipts - assessable under the head “business” OR “ income from house property” - Held that:- We hold that the property let out by the assessee in order to exploit commercial asset of the assessee which meant for its business is assessable under the head “income from business” and not under the head "income from house property”. This position was also accepted by the Department itself over a period of decade and therefore there is no valid reason not to consider the income from exploitation of assets by the assessee as income from business. Thus, we sustain the order of the Commissioner of Income Tax (Appeals) in accepting the claim of the assessee on this issue. The grounds of appeal raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the impugned assessment years did not show any income on finance charges relating to NPAs. Provision for NPAs was not charged by the assessee to its profit loss account nor was finance charges on such NPAs credited as accrued income. A.O. was of the opinion that since assessee itself had not considered provision for NPAs as a liability, it was bound to show the accrued financial charges as part of its income. In its appeal before the Commissioner of Income Tax (Appeals), assessee relying on the decision of the jurisdictional High Court in the case of CIT Vs.Elgi Finance Ltd. (2007) 293 ITR 357 argued that assessee being an NBFC governed by the norms prescribed by RBI had to follow its regulations even though it was managing its books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -performing assets was to be considered only after recognizing the income from such assets. In addition to that we also find that Hon ble Delhi High Court in the case of CIT Vs. M/s.Vasisth Chay Vyapar Ltd. by order dated 29.11.2010 after referring to the decision of Hon ble Apex Court in the case of Southern Technologies (supra) as well as that of Hon ble jurisdictional High Court in the case of Elgi Finance Ltd. (supra) held that interest on non-performing assets could not be considered as income on accrual basis. We, therefore find no merits in the appeal filed by the Revenue. 3. Respectfully following the said decision, we dismiss the grounds of appeal raised by the Revenue on this issue. 4. The next issue in the grounds of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) is correct in allowing the claim of the assessee that rental receipts should be assessed as business income instead of income from house property. The counsel also relied on the following decisions in support of his above contentions: 1. Universal Plast Ltd. Vs. CIT 237 ITR 454 (SC) 2. CIT Vs. VST Motors Ltd. 226 ITR 155(Mad) 3. Scientific Instrument Company Ltd. Vs. CIT (202 Taxman 536 (All) 7. Heard both sides. Perused orders of lower authorities and the case laws relied on. It is not in dispute that the assessee all along offering rental income from the property let out under the head income from business and such position subsisted well over a decade. In all the scrutiny assessments completed in the case of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment completed under section 143(3) on similar set of facts. 8. More or less an identical issue came up before the jurisdictional High Court in the case of VST Motors Ltd. (supra). In this case, the assessee was a company carrying on business as authorized dealers in Tata diesel vehicles in a building on Mount Road building consisted of three floors including ground floor. The ground floor first floor were used for assessee s business and second floor was let out to a Government department. The assessee claimed rental receipts as business income as property has been constructed with a view to use the same for the purpose of its business and that surplus accommodation due to shifting of its branches outside Chennai was let out. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactures, imports, purchases and dealing in scientific apparatus, chemicals, chemical products, articles of glass, metal, wood, paper etc., more or less connected with science, as given in the memorandum of association. Out of the three properties at Mumbai, the property in dispute was being used for its regional office. In the interest of the company, it decided to let out one of its properties, to the City Bank, by way of exploitation of business assets, for making profit. The assets were let out, while carrying out other business activities. There was nothing on record, to show that the appellant had sold away the properties or abandoned its business activities. In the circumstances, in order to exploit business assets, as a prudent bus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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