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2019 (3) TMI 331 - AT - Income TaxIncome from House property - lease rental income - assessee company was not legal owner of the property which lease rental income were shown in its accounts - Addition on protective basis - standard deduction on lease rent - HELD THAT:- Said rental income is taxable in the hands of M/s. Ambience Hotels and Resorts Pvt.Ltd., as there is no transfer of capital asset to assessee. Thus protective assessment made in hands of assessee to the extent of income received from lease of shops/spaces as per agreement dated 31.03.2008 deserves to be deleted. Assessee cannot be allowed to claim standard deduction under such circumstances in returned income in respect of rental income earned from such premises. - Decided against revenue Income from house property - Appeal of Ambience Hotels and Resorts Pvt.Ltd - applicability of section 60 - Taxability of lease rentals arising out of retail shops and retail spaces owned by assessee - actual transfer of assets - rental income from retail spaces and retail shops owned by assessee, which was collected by M/s.Ambience Developers and Infrastructure Pvt.Ltd. by virtue of agreement dated 31/03/2008 - HELD THAT:- Section 60 contemplates income arising to transferee which should be taxed in the hands of transferor in the event there is no actual transfer of assets from which such income accrued. This fiction under section 60 operates irrespective of whether the concerned transfer is irrevocable or not. Thus essential condition is that there should be no transfer of asset from which such income arises. There are various decisions of Hon’ble Supreme Court and Hon’ble High Court’s, wherein, relation of property from which income arises has been considered to be an essential condition for applicability of section 60. Unable to concur with argument advanced by Ld.AR for taxing rental income received from leased premises in the hands of M/s.Ambience Developers and Infrastructure Pvt.Ltd., when such assets are owned and held by assessee. The exception argued by Ld.AR is no longer available to assessee, by virtue of strict interpretation of section 60-63 of the Act. Uphold view of CIT (A) that income from leasing of shops/retail spaces has to be assessed in the hands of assessee under the head, ‘Income from House Property’, after allowing statutory deductions under section 24 of the Act. Addition u/s 14A - HELD THAT:- Admittedly, assessee during the year has earned dividend. Further, there is substantial investment made by assessee in its subsidiaries during the year. We agree with the submissions advanced by Ld. CIT DR that the ratio laid down by Hon’ble Supreme Court in case of Maxop Investment vs. CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA] would be applicable under such circumstances. In our opinion disallowance cannot exceed dividend earned during the year. Therefore we restrict disallowance to the extent of dividend earned.
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