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2020 (11) TMI 303 - AT - Income TaxDisallowance of Depreciation on the building known as “Business @ Mantri “at Pune - Asset used for business purposes OR house property - HELD THAT:- This is not in dispute that the assessee is in the business of leasing out building and once the building is completed, it is being used for the purposes of the business Even if the building is not actually let out and the assessee is not occupying the same for the purpose of business, Annual Value of the building is to be estimated at the sum for which the property might reasonably be expected to let from year to year and it is brought to tax. Hence, actual use is not a precondition to bring the property to tax under the head Income from House Property. Section 22 is not applicable in a case where the property is occupied by the assessee for business purpose and we find that in the present case, the property is ready on 24.09.2013 but still, the AO has not brought its Annual Value to tax in the present year under the head Income from House Property and this also indicates in our opinion that the AO also accepts silently that the building in question is occupied by the assessee for business purpose and he states this objection only that it was not put to use in the present year because actual let out has happened subsequently AO should allow the claim of depreciation on this basis that the building was put to use for the purposes of the business on 24.09.2013 i.e. the date of completion and keeping this in mind that the assessee was already in the hunt for lessee and keeping this also in the mind that this is not the case of the AO or CIT (A) that income from this house property is taxable under the head income from house property and not under the head income from business because had it been the case of the AO or CIT (A), Annual Value would have been brought to tax and deduction would have been allowed of interest u/s 24 and only depreciation would have been disallowed. Disallowance of interest u/s 36 (1) (iii) in respect of funds borrowed for construction of the same building known as “Business @ Mantri” at Pune - disallowances alleging that the said building was not put to use by the assessee in the present year - HELD THAT:- Requirement of section 32 and proviso to section 36 (1) (iii) is similar and once, we hold that the building was put to use and depreciation is allowable, the conditions specified in this proviso to section 36 (1) (iii) also gets satisfied and interest is also allowable from the date of completion of the building i.e. 24.09.2013 in the present case. Accordingly, we delete the disallowance of interest also and Ground Nos. 2 and 3 are allowed. Deemed Dividend u/s 2 (22) - HELD THAT:- We find force in the submissions of assessee that the learned CIT (A) should have decided this issue on merit instead of upholding the assessment order by following the Judgment of Hon’ble apex court rendered in the case of Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT]. Accordingly, we set aside the order of CIT (A) on this issue and restore this matter back to CIT (A) for a decision on merit.
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