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2016 (3) TMI 1109 - AT - Income TaxTreatment to income from letting - income from house property or business income - Held that:- In the present case, we find that one of the main object of the assessee was to run classes and to do educational activities and the property which has been let out by the assessee was a commercial property and was also used by the person to whom it was leased, for the purpose of educational activities. We further find that Hon’ble Gujarat High Court in the case of New India Industries (1992 (8) TMI 41 - GUJARAT High Court ) and after relying on various decisions has laid down various tests to determine the head of income under which the rental income is to be assessed. The tests inter alia lays down the principle that when an assessee derives income from a commercial asset which is capable of being used as a commercial asset and the asset would not cease to be commercial asset simply because temporarily it was not put to use or was let out to other person for his use, the income derived would be business income irrespective of the manner in which it is exploited by the owner of business. In the present case the finding of ld. CIT(A) that asset is a commercial asset has not been controverted by Revenue. In such a situation, we do not find any infirmity in the order of ld. CIT(A) and for which we also find support by the recent decision of Hon’ble Calcutta High Court in the case of Shyam Burlap Co. Ltd. vs. CIT reported in (2015 (9) TMI 852 - CALCUTTA HIGH COURT ), wherein the Hon’ble High Court after taking into consideration that when the object in the memorandum permitted the assessee to carry on business in letting out properties and when 85% of the income was by way of deriving rent and lease, the income from letting was considered as business income of the assessee. In view of the aforesaid facts and relying on the aforesaid decisions of High Courts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed. Addition on account of unaccounted investment u/s.69 - Held that:- . In the present case, we find that A.O. had proceeded to disallow the expenses of labour on the basis of estimation and has not brought any material on record to demonstrate that the investment were not recorded in the books of account. On the other hand, before us, ld. A.R. has submitted that the expenses having been incurred in subsequent years and has also placed on record the copy of ledger account. The aforesaid statements of the assessee has not been controverted by the Revenue. In view of the aforesaid facts and more so, when the addition has been made on estimated basis and without bringing any material on record by Revenue to prove the incurring of expenses to towards labour by assessee, we are of the view that in the present case, no addition is called for. We thus direct the deletion of addition including that which is confirmed by the ld. CIT(A). In the result, this ground of Revenue is dismissed and ground of assessee in C.O. is allowed. Addition on account of labour expenses - Held that:- In the present case, we find that A.O. has proceeded to disallow the expenses of labour on estimation basis. He has not brought any material on record to demonstrate that the expenses were incurred by the assessee. Before us, ld. A.R. has submitted that the expenses having been incurred in subsequent years. The aforesaid statement of the assessee has not been controverted by the Revenue.In view of the aforesaid facts and more so, when the addition has been made on estimated basis and without bringing any material on record by Revenue to prove the incurring of expenses towards labour by assessee, we are of the view that in the present case, no addition is called for.
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