Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (5) TMI 47 - AT - Income TaxHead of income - income from leasing of rice mill comprising of building and machinery - assessment of income under the head “income from other sources” against the admission of income by the assessee under the head “business income” - Held that:- In the instant case, the assessee owns a rice mill and let out the rice mill to another rice mill and receiving the rental income without carrying on any business activity or rendering any services incidental to carrying on the rice mill. Therefore, referring to in the case of M/s. Sultan Brothers Pvt. Ltd. (1963 (12) TMI 4 - SUPREME Court) relied upon by the lower authorities are squarely applicable and the lower authorities have rightly assessed the income under the head ‘income from other sources’. - Decided against assessee. Denial of depreciation and set off of unabsorbed depreciation - Held that:- Since the unabsorbed depreciation partakes the character of current year depreciation, we hold that the A.O. cannot deny the set off of unabsorbed depreciation against the income from other sources. Accordingly, we direct the A.O. to allow the unabsorbed depreciation from the rental income of the rice mill. The assessee’s appeal on this ground with regard to depreciation is allowed. Deduction in respect of interest paid to bank, interest paid to others, interest paid to partners, establishment charges, electricity development charges and remuneration to partners disallowed - Held that:- Section 57(iii) of the Act allows the expenditure incurred for earning the income. This issue is also considered in the case of Pujya Sujatha Agro Farms Pvt. Ltd. [2010 (11) TMI 694 - ITAT VISAKHAPATNAM] and directed the A.O. to allow the expenses incurred for earning the income. Therefore, we hold that the assessee is entitled for the allowance of expenditure, accordingly we direct the A.O. to allow the expenses incurred for earning the income as well as the interest incurred in establishing, repairing and renovating the rice mill. This ground of appeal of the assessee is allowed. However, the interest and remuneration paid to partners is not covered u/s 57(iii) and the AO has rightly disallowed the same. Thus we confirm the disallowance to the extent of interest and remuneration paid to the partners and direct the AO allow the remaining expenditure including the interest paid to others.
|