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2018 (6) TMI 1178 - AT - Income TaxRental income - income offered under the head "business and profession " or as " income from house property" - Held that:- The assessee has invested almost all its resources like Share capital Reserves and Surplus and Unsecured loans to invest in -a single residential flat amounting to ₹ 3.53 crores(approx.) and no other resources were left with the company to do a business or invest in any other avenues. Only a miniscule amount of ₹ 10 (lacs approx..) was given by company as loans and advances, ₹ 10 lacs(approx.) invested in shares and an amount of ₹ 13 lacs(approx..) was left as bank balances. The company is not doing any sort of business from many years. The investment in flat is shown as Asset of the company and not as stock in trade. The said flat purchased by the assessee after investing all its funds has' been given to its director on a fixed rent of ₹ 25,000/- p.m from the year 1998 to till date without citing any reason for not increasing the rent. Even though assessee has offered the income under the head "business and profession‟, however, no depreciation has been claimed as per I.T. provisions in respect of alleged business assets in the profit and loss account over these years. As mentioned in the lease agreement that the property was purchased for the purpose of trading and it is being temporarily leased because market conditions are not good, even though market conditions improved, the assessee neither sold the property nor even increased the rent. Thus, the conduct of the assessee over the years shows that the main purpose of acquisition was to provide the same to the Director at a very nominal rent. We do not find any infirmity in the order of lower authorities for not treating rental income as income from business and profession. Computation of ALV - we are in agreement with the AR that AO has not properly computed the ALV. Accordingly, ALV is directed to be computed on the basis of principle laid down in the decision of Jurisdictional High Court in the case of Tip Top Typography [2006 (5) TMI 55 - MADHYA PRADESH HIGH COURT]. We direct accordingly. Reopening of assessment - Allowance of minimum business expenditure to run the company is concerned, we are of the view that minimum expenditure to maintain status of company is required to be allowed. These expenditure are to be allowed to be set off against the income from house property as per the provision of Section 71 of the IT Act. So far as reopening is concerned, as per the reasons recorded, we are in agreement with the lower authorities that there was sufficient reason to reopen the assessment.
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