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2016 (5) TMI 967 - AT - Income TaxIncome received from letting out of Malls - assessable under the head “Income from business or profession” or under the head “ Income from house property” - Held that:- There should be no consideration of primary and secondary lettings in construing the section 12(4) of 1922, which has analogy to 56(iii) of IT Act of 1961. In this case, the letting of building is along with letting machinery, plant or furniture required for ancillaries services and therefore, we hold that the alternative plea of the appellant that in case the income is not to be assessed under the head “income from house property” then it is required to be assessed under the head income from other sources” this is without prejudice to our basic finding that in the instant case, the income from Mall is assessable under the head “income from business”. Income received from letting out of fit-outs is assessable under the head “Income from other sources” Disallowance of compounding fees - Held that:- We have considered the submissions of the assessee and orders of the authorities below. At the time of hearing, the ld. DR submitted that the very same issue has been decided against the assessee in assessee’s own case for the assessment year 2009-10. Thus we upheld the disallowance of compounding fees. Deduction u/s 80-IB(10) - Held that:- Any disallowance of expenditure would certainly enhance the profits of eligible business. If assessee is carrying on eligible business, then, the total profits of the business shall be eligible for deduction under the provisions of Act. In the present case, there is dispute about the activity of the assessee which is eligible for deduction under sec.80-IB(10) of the IT the Act, 1961. However, the assessee has raised the issue before the Tribunal for the first time. The lower authorities have not had an occasion to consider the plea of the assessee in the light of the provisions of sec.80-IB(10) of the Act. Therefore, we deem it appropriate to remit the issue to the file of the AO and direct the AO to examine the claim of assesee in the light of the provisions of sec.80-IB(10) of the IT Act, 1961. Accordingly, we set aside the issue to the file of the AO and direct the AO to re-compute the deduction available u/s 80-IB(10) of the Act, in accordance with the provisions of the Act. Disallowance u/s 14A - whether the interest and other indirect expenditure relatable to earning exempt income is disallowable u/s 14A - Held that:- AO was not correct in disallowing the proportionate interest by invoking provisions of Rule 8D of IT Rules, 1962. As regards the disallowance of administrative expenditure, the AO has disallowed proportionate administrative expenditure by invoking the provisions of Rule 8D (2)(iii). Although, the assessee contended that it has not invested borrowed funds for the purpose of investments in earning exempt income, the assessee cannot get away with the plea it did not incur any administrative expenditure for day today management and monitoring such investment portfolios. Therefore, we are of the view that once there is exempt income relatable administrative expenditure should be disallowed in proportion to the exempt income. The AO after considering the relevant facts, disallowed the administrative expenditure by invoking provisions of Rule 8D(2)(iii) of IT Rules, 1962. Therefore, we upheld the disallowance made by the AO in respect of administrative expenditure
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