Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 521 - AT - Income TaxService charges received by the assessee from tenants - whether are not an integral part of the rental income and the same are assassable under the head “business income” instead of “income from house property” - Held that:- The assessee in the present case, on the other hand, has charged rent and service charges separately and it is not a case of receipt of rent for furniture and fixture provided in the property simplicitor but the case of receipt of service charges from the activity of rendering various services that was carried on in the continuous and organized manner. As rightly held by the Ld. CIT(A), the decision of Hon’ble Apex Court in the case of Karnani Pvt. Ltd. (1971 (8) TMI 18 - SUPREME Court) and Attukal Shopping Complex (P) Ltd. (2002 (10) TMI 80 - KERALA High Court) thus is clearly applicable to the facts of the present case and we find no infirmity in the impugned order of the Ld. CIT(A) holding that the service charges received by the company from the tenants is assessable under the head business income by relying on the said decision. The same is therefore upheld dismissing ground no 1 of revenue’s appeal. Interest on fixed deposit is to be assessed in the hands of the assessee under the head “business income” instead of “income from other sources” - Held that:- The assessee company had collected the refundable security deposit from the tenants in order to cater to this requirement and the amount of such deposits partly was deposited in bank to earn interest. Such interest earned by the assessee company was a source, in addition to the service charges levied, to meet the expenses involved in rendering of services and amenities to tenants. The interest income earned by the assessee company thus was inextricably linked with the business of the assessee company of providing services and amenities to the tenants and as rightly noted by the Ld. CIT(A) in his impugned order, the activity of rendering services had resulted into profit only because of interest income earned by the assessee company. Having regard to all these facts of the case, we are of the view that the interest income earned by the assessee company is chargeable to tax as business income as rightly held by the Ld. CIT(A). and not as “income from other sources”. Rental income received by the assessee company from its subsidiary company - whether be assessed on actual basis instead of considering the fair rent as provided under section 23 - Held that:- As regards the allegation made by the A.O. that no rent was being charged by the assessee company to its sister concern M/s. KCT to avoid tax, the Ld. CIT(A) has found the same to be baseless and incorrect after having noted that the said sister concern had declared income running into crores and was assessed to tax at maximum marginal rate. Keeping in view all these observations and findings recorded by the Ld. CIT(A), which have remained uncontroverted by the learned DR, we find no infirmity in the impugned order of the Ld. CIT(A) deleting the addition of ₹ 1,61,52,877/- made by the A.O. on account of the deemed rent allegedly receivable by the assessee company from its tenant namely KCT and upholding the same, we dismiss ground of revenue Addition on account of notional interest earned by the assessee on refundable security deposit taken from the tenants - Held that:- Addition made by the A.O. to the total income of the assessee under the head income from house property on account of notional interest on security deposits received from tenants was not sustainable and the Ld. CIT(A) is fully justified in deleting the same. See CIT vs Satya Co. Ltd. [1993 (8) TMI 293 - CALCUTTA HIGH COURT] Computation of disallowance under section 14A of the Act r.w.r. 8D by taking into consideration only the dividend yielding investment - Held that:- This issue is squarely covered in favour of the assessee by the decision of Hon’ble Kolkata High Court in the case of REI Agro Ltd. [2014 (4) TMI 713 - CALCUTTA HIGH COURT] wherein it was held that only the investment which yield dividend during the relevant previous year that has to be considered while adopting the average value of investment for the purpose of computing disallowance to be made under section 14A as per the Rule 8D(2)(ii) & (iii) of the rules.
|