|
Advanced Search Options
Income Tax - Case Laws
Showing 21 to 40 of 801 Records
-
2023 (9) TMI 426 - ITAT MUMBAI
Income from house property - notional income u/s 22 - income arising from the stock-in-trade of the Appellant - ALV determination - why the deemed rent on unsold stock of completed units as shown in the balance-sheet should not be taxed under the head “Income from house property”? - HELD THAT:- We hold that the assessing officer has correctly charged notional rent on the unsold flats held as stock in Trade.
We also notice that case of Inorbit Malls Pvt Ltd [2022 (10) TMI 1150 - ITAT MUMBAI] while upholding the decision of the assessing officer to levy notional rent, has given certain riders and directions and one such direction is to hold that the assessing officer is not justified in estimating the income at the rate of 8.5% of investment as ALV and that the AO should ascertain the municipal valuation for computing notional rent. In assessee's case also, we notice that the assessing officer has computed the ALV by applying the rate of 8.5% on the cost of construction i.e. investment.
We direct the AO to recompute the notional rent by ascertaining the Municipal rentable value. Appeal of the assessee is dismissed.
-
2023 (9) TMI 219 - ITAT AHMEDABAD
Disallowance of Prior Period Expenses - HELD THAT:- As in the case of Indian Petrochemicals Corporation Ltd. [2016 (9) TMI 110 - GUJARAT HIGH COURT] held that prior period expenses quantified and paid during current year would be allowed as business expenditure in relevant assessment year even though assessee was following mercantile system of accounting. Respectfully Judgment (cited supra), we hereby delete the addition which has been confirmed by Ld. CIT(A).Decided against revenue.
Over statement of loss - Auditors in the Special Audit Report observed that though during the year the assessee sold five shops of the hotel building for a consideration of Rs. 40,03,000/- but the sale consideration of only Rs. 35,03,000/- was adopted while working out the profits on such sales, accordingly a sum of Rs. 5,00,000/- was proposed to be added by the AO - HELD THAT:- As CIT(A) after considering the material records and held that he do not find any reason why this sum of Rs. 5,00,00/- should again be added in the total income, accordingly the addition made by the AO is deleted.D.R. could not submit any contra evidence on the above findings of the Ld CIT [A]. Thus the ground no. 2 raised by the Revenue is devoid of merits and hereby dismissed.
Addition u/s. 22 - ALV of finished stock - CIT(A) after considering the submissions of the assessee determined the ALV at 5% of the book value of the flats and determined the income - HELD THAT:- Merely because income in respect of said units has not been recognized during the year on account of NON-Execution of Sale Deed, it cannot be held that units are vacant and owned by the assessee for the purpose of taxing notional income u/s. 22 - The assessee is in business of real estate & flats in question are the part of the "stock in trade". Therefore the ALV computed by the lower authorities at 8% and 4% are against the provisions of section 22 and the addition made on this account is illegal
As in order to give relief to Real Estate Developers, section 23 has been amended w.e.f. AY 2018-19 (FY 2017-18). By this amendment, it is provided that if the assessee is holding any house property as his stock-in-trade which is not let out for the whole or part of the year, the annual value of such property will be considered as Nil for a period up to one year from the end of the financial year in which a completion certificate is obtained from the competent authority.
In view of the above amendment to section 23, in the instant case, the assessee is a builder and developer. The issue of taxability is with regard to unsold flats relating to the A.Y. 2013-14. In view of the insertion of sub-section (5) in section 23 by the Finance Act, 2017, w.e.f. 01.04.2018 narrated hereinbefore, we hereby delete the addition made on account of ALV.
Disallowance u/s. 40(a)(ia) - TDS on payments made towards interest, rent, commission etc. - assessee contended that the amounts are charged to WIP of hotel building and reflected in the block of assets and the same has not been claimed as revenue expenditure during the previous year - HELD THAT:- CIT[A] correcly deleted the sum paid to HUDCO is clearly out of the purview of TDS and hence no disallowance can be made of this amount. As regards the balance amount, since the same has not been charged to revenue account the same cannot be disallowed from revenue account. However, as the applicable TDS has not effected by the assessee, thus following the provisions of section 40(a)(ia) of the Act, the WIP has to be reduced. Thus Ld CIT[A] directed the AO to reduce the WIP and partly allowed the appeal correctly.
Deduction u/s. 80IB(10) - income of residential/commercial projects constructed - CIT(A) held assessee has not fulfilled the condition for becoming eligible to deduction u/s. 80IB(10) - Project has not been completed within the time limit of 5 years prescribed in section 80(IB) - HELD THAT:- Regarding Takshshila Coloneal project was not completed within the time limit of 5 years prescribed in section 80(IB) as decided in Bench of this Tribunal in [2023 (8) TMI 1185 - ITAT AHMEDABAD] separate planning permission obtained by the assessee for each Block separately and after construction obtained separate Building Usage permission from the Local Authority within 5 years period, therefore the assessee cannot be denied the claim of exemption u/s. 80IB(10) of the Act. Thus the order passed by the Lower Authorities on this issue is hereby set aside - thus assessee is eligible for deduction u/s. 80IB [10] of the Act on the Takshshila Coloneal project.
Commercial construction is more that the prescribed limit of 3% of the aggregate built-up area of the housing project - As relying on cases Suyog Shivalaya [2018 (7) TMI 1458 - SC ORDER] and Arun Excello Foundations (P.) Ltd. [2012 (10) TMI 1216 - MADRAS HIGH COURT] the assessee is eligible for deduction u/s. 80IB [10] of the Act on the commercial construction which was approved by the Local Authority within the frame work of Development Control Rules and Regulations. Thus this ground raised by the assessee is hereby allowed and the disallowance made by the AO is hereby deleted.
Assessee sold units to more than one person of a family which is not allowed as per section 80(IB) - As relying on Om Swami Smaran Developers (P.) Ltd. [2018 (1) TMI 1646 - ITAT MUMBAI] the assessee cannot be denied the deduction u/s. 80IB [10] of the Act on the entirety and the assessee is eligible for balance units which has been constructed as per conditions laid down in section 80IB[10][c] of the Act. Thereby this issue is set aside to the file of the AO with a direction to grant the deduction after giving opportunity to the assessee.
Difference in cost of construction - In the Special Audit Report the Auditors compared the cost of construction of the shops/flats adopted by the assessee in the current year to the earlier years and pointed out that the cost adopted in the current year is much higher in comparison to the cost taken in earlier years after adjusting the addition to cost of construction during the year - HELD THAT:- CIT[A] considering the reply of the assessee held that the Auditors have arrived at the cost of construction on the basis of what was debited in earlier years and have not found any false expense or any part of the cost debited in the books of accounts of the current year despite the extensive special audit carried out.
When the accounts of the assessee are subjected to special audit disallowance or addition cannot be made without impeaching the entries in the books of accounts or without any income/expense found not entered in the books of accounts, which has not been done in this case.
Further in the SAR the Auditors pointed out that the assessee company has incurred various expenses pertaining to the projects eligible for deduction u/s. 80IB but they were charged to the projects which were not so eligible. Also certain common expenses were not proportioned between the projects eligible for deduction u/s. 80IB and other projects. Hence, the CIT[A] do not find any merit in the action of AO and the addition was deleted correctly. No contra evidence on the above detailed findings of the Ld CIT [A].
-
2023 (9) TMI 152 - ITAT RAJKOT
Disallowance u/s 14A r.w.r. 8D - interest paid by the assessee on LIC loan - Investment in partnership firm by the partner out of loan taken from LIC - HELD THAT:- CIT(A) relied upon the judgment passed in the case of Vishnu Anant Mahajan [2012 (6) TMI 297 - ITAT, AHMEDABAD] and upheld the disallowance made by the Ld. AO as held that it is case of the partner and therefore what is to be examined is whether the share income is excluded from his total income. The answer is obviously in the affirmative and provision contained in section 14A will come into operation and any expenditure incurred in earning the share income will have to be disallowed
In the absence of any assistance rendered by the assessee, we do not find any reason to interfere with the order passed by the Ld. CIT(A). Decided against assessee
Addition u/s 23(4) - assessee has shown more than one residential properties - assessee is staying at Mumbai being a self-occupied house property, but no rental/deemed rental income has been shown in computation of total income and show cause why the addition on account of deemed rental income should not be made - HELD THAT:- The value has been shown by the Ld. AO on the basis of decision passed in the case of Smt. Radha Devi Dalmia [1980 (3) TMI 62 - ALLAHABAD HIGH COURT] and already allowed standard deduction of 30% under Section 24(a) - Hence, in the absence of any assistance rendered by the assessee, we do not find any reason to interfere with the order passed by the Ld. AO and upheld by the Ld. CIT(A) impugned before us. Decided against assessee
-
2023 (8) TMI 1333 - ITAT MUMBAI
Assessment u/s 153A - additions relating to notional income from the unsold flats and made additions relating to unsecured loans - HELD THAT:- On careful consideration of the facts on record, we observe that in the case of CIT v. Continental Warehouse Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] it is held that for assessment u/s. 153A in case of unabated assessment, if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any other issue can be made to the assessment u/s. 153A and 153C.
Estimation of notional rent - assessee had unsold closing stock which was kept vacant during the current Assessment Year - AO has estimated the notional income adopting the rent based on property tax - HELD THAT:- As relying on M/s. Inorbit Malls Pvt. Ltd [2022 (10) TMI 1150 - ITAT MUMBAI] we direct the Assessing Officer to estimate the rent on the basis of municipal ratable value for computing the notional rent. Accordingly, ground raised by the assessee is partly allowed.
-
2023 (8) TMI 758 - ITAT RAIPUR
Disallowance u/s 40(a)(ia) - claim for deduction of interest paid to NBFC - HELD THAT:- On the basis of settled position of law as had been laid down by the Hon’ble Apex Court in the case of Shree Choudhary Transport Co. [2020 (8) TMI 23 - SUPREME COURT] we are of the considered view that the issue in hand is no more res-integra and the amendment made vide the Finance (No.2) Act, 2014 restricting the disallowance to 30% of the sum payable could not be given a retrospective effect. We, thus, in terms of our aforesaid observations reject the claim of the Ld. AR that the disallowance u/s. 40(a)(ia) of the Act was liable to be restricted only to the extent of 30% of the sum payable by the assessee. Ground of appeal No.2 raised by the assessee is partly allowed in terms of our aforesaid observations.
Unexplained cash credits u/s 68 - Loans raised by the assessee from the companies - HELD THAT:- Non-compliance of the notices issued by the A.O u/s 131 and u/s 133(6) to both the aforementioned companies, coupled with the fact that the said lender companies had duly confirmed the loan transactions; and also that the loans that were advanced by both the said companies to the assessee concern in the immediately succeeding year i.e A.Y 2011-12 had been accepted by the A.O while framing the assessment u/s 143(3), we find no justification in treating the loans raised by the assessee from the said companies as unexplained cash credits u/s 68 - Apart from that the part-repayment of loan by the assessee to one of the lender, i.e, M/s MRA Global Pvt. Ltd further fortifies the authenticity of the loan transaction under consideration. Now when the assessee had duly substantiated the authenticity of the loan transactions under consideration and the same had not been dislodged by the department, therefore, the treating of the same as unexplained cash credits u/s 68 cannot be sustained.
Loans raised by the assessee from certain individuals - As the lower authorities had neither considered the aforesaid supporting documentary evidences that were filed by the assessee in order to fortify his claim of having raised genuine loans from the aforementioned parties, nor had the occasion to taken cognizance of the respective “affidavits” of the lenders that have been filed for the very first time before us, therefore, the matter in all fairness requires to be restored to the file of the A.O. We, thus restore the matter to the file of the A.O for re-adjudication after considering the aforesaid supporting documents that have been filed by the assessee in order to drive home his claim of having raised genuine loans from the aforementioned three parties.
Disallowance of expenditure made u/s 14A r.w.r. 8D - HELD THAT:- We find that the CIT(Appeals) too had failed to record his satisfaction that having regards to the accounts of the assessee it was not possible to accept the correctness of the assessee‘s claim that no disallowance of any expenditure was called for u/s 14A of the Act. In case the A.O or the CIT(A) in exercise of his powers which are coterminous with that of an A.O, sought to have disallowed the assessee’s claim that no expenses could be attributed to earning of the exempt dividend income by him, then, there was an innate obligation cast upon them to have recorded the requisite satisfaction that having regard to the accounts of the assessee as were placed before them, it was not possible to generate the requisite satisfaction with regards to the correctness of the said claim. We may herein observe that in the case of CIT Vs. Sociedade De Fomento Industrial (P). Ltd. [2020 (11) TMI 277 - BOMBAY HIGH COURT] had observed that the A.O before rejecting the disallowance offered by the assessee remains under a statutory obligation to give a clear finding with reference to the accounts of the assessee that the other expenditure which were being claimed qua the non-exempt income were in fact related to its exempt income.
Alternatively, we may herein observe that even otherwise as the assessee was having sufficient self-owned interest free funds available with him, therefore, on the said count itself no disallowance of any part of interest expenditure was liable to be made in the his hands. Be that as it may, we are of the considered view that as the A.O had failed to record his satisfaction as to why the assessee’s claim that no part of the expenditure was attributable towards earning of exempt dividend income, was not to be accepted having regard to his books of account as were placed before him, therefore, disallowance so made by him u/s. 14A could not be sustained and was liable to be quashed - Ground of appeal No.4 raised by the assessee is allowed accordingly.
Unexplained credit of bank interest - HELD THAT:- In case the interest income on FDR is included in the interest income on FDR’s credited by the assessee in the profit & loss account of his proprietary concern, viz. M/s. Shrikishan & Co., then no separate addition would be called for in his hands. In our considered view the aforesaid aspect can be verified by the A.O by calling for the requisite details from the bank as regards the total amount of interest on FDRs received/accrued in the account of the assessee during the year under consideration.
As observed by us hereinabove, in case the aggregate amount of FDRs interest as reported by the bank had been credited by the assessee in his profit and loss account of the proprietary concern, viz. M/s. Shrikishan & Co., then the addition made by the A.O would stand vacated. We, thus, in terms of our aforesaid observations for the said limited purpose restore the matter to the file of the A.O. Thus, the Ground of appeal No.5 is allowed for statistical purpose in terms of our aforesaid observations.
Addition on account of LIC maturity proceeds - HELD THAT:- As it was for the assessee to substantiate his aforesaid claim that the amount in question was non-taxable which he had failed to do, therefore, no infirmity could be attributed to the A.O who had held the same as the unexplained income of the assessee. In so far the claim of the assessee that the A.O ought to have carried out necessary verifications, from LIC before rejecting his aforesaid claim, we are of the considered view that as no such request was made by the assessee in the course of the assessment proceedings, therefore, on the said count also the order passed by the A.O does not suffer from any infirmity
In all fairness and interest of justice in order to avoid any exempt income being subjected to tax the matter requires to be restored to the file of the A.O with an opportunity to the assessee to substantiate his aforesaid claim on the basis of supporting documentary evidence. In case the assessee in the course of the set-aside proceedings is able to substantiate that the amounts were the LIC maturity proceeds that were exempt within the meaning of section 10(10D) of the Act, then, the addition so made by the A.O by dubbing the same as the unexplained income of the assessee shall stand vacated.
Addition on account of notional lettable value of the residential houses owned by the assessee - HELD THAT:- As the assessee had failed to place on record any material which would prove to the hilt that his residential property i.e. HIG-101. M.P Nagar, Korba was being used for the purpose of business, therefore, his said unsubstantiated claim that was raised in the thin air cannot be accepted. Also the claim of the assessee that his another residential house at Jal vihar Colony, Raipur was under construction during the year under consideration cannot be summarily accepted and would require to be verified. At the same time, we find substance in the claim of the Ld. AR that the determination of the ALV of the aforesaid residential properties could not have been arrived at by the A.O on an estimation basis. As the methodology for determining the ALV of a property is provided in section 23(1) of the Act, therefore, we herein direct the A.O to determine the same strictly as per the mandate of law. Accordingly, the matter is restored to the file of the A.O for giving effect to our aforesaid observations.
Low house hold withdrawals - HELD THAT:- As no substance at all in the claim of the Ld. AR that the quantification of the household expenses in the case of the assessee who has a family comprising og five members (including two school going children) was taken by the A.O at an exorbitant figure of Rs. 3 lac. In our considered view the A.O had in all fairness quantified the household expenses of the assessee at Rs. 3 lac. At the same time, we are of the considered view that the claim of the assessee that S/Smt. Sarita Devi Agrawal (wife) and Murti Devi Agarwal (mother) had during the year under consideration contributed towards the household expenses had been lost sight of by the A.O despite the fact that the same in the course of the assessment proceedings was brought to his notice by the assessee vide his letter.
In case the aforesaid letter/reply of the assessee is found available on the assessment record, then, the A.O shall verify the respective contributions made towards household expenses by S/Smt. Sarita Devi Agrawal (wife) and Murti Devi Agarwal (mother) during the year under consideration and shall scale down the addition to the said extent in the hands of the assessee. We, thus, restore the matter to the file of the A.O to give effect to our aforesaid observations.
Disallowance of interest expenditure corresponding to interest free loans/advances given by the assessee - HELD THAT:- The interest free advances so made by him were sourced out of such interest free funds and no disallowance of any part of interest expenditure was called for in his hands. Our aforesaid view is fortified by case of CIT Vs. Reliance Industries Ltd [2019 (1) TMI 757 - SUPREME COURT] while approving the view taken by the Hon’ble High Court, had observed, that in case the interest free funds available with the assessee were sufficient to meet its investment, then, it could be presumed that the investments were made by the assessee from the interest free funds available with it. We, are of the considered view that no disallowance of any part of the assessee’s claim for deduction of interest expenditure u/s.36(1)(iii) was called for in his hands.
Charging of interest u/s. 234B - HELD THAT:- As we find no substance in the same. We, say so, for the reason that as held in the case of Anjum M.H Ghaswala & Ors [2001 (10) TMI 4 - SUPREME COURT] as the levy of interest u/s. 243B is mandatory, therefore, no infirmity can be attributed to the direction of the A.O for charging of the same in the body of the assessment order.
Adhoc disallowance of expenses - HELD THAT:- We are of the considered view that a disallowance of an expenditure claimed by the assessee as a deduction as per the mandate of section 37 of the Act can only be disallowed in case of satisfaction of either of the conditions set out in the said section, viz. (i) the expenditure is in the nature of a capital expenditure or personal expenditure of the assessee; or (ii) that the expenditure had been incurred for any purpose which is an offence or which is prohibited by law. As the A.O had failed to place on record any material which would prove to the hilt that the assessee had either raised a bogus claim of expenditure; or that the said expenditure was not incurred wholly and exclusively for the purpose of business; or that the expenditure so claimed as a deduction did not fall within the four parameters of Section 37 of the Act, therefore, we are unable to persuade ourselves to subscribe to the disallowance to the said effect so made by the A.O. We, thus, in terms of our aforesaid observations vacate the disallowance made by the A.O.
Enhancing the gross profit of the assessee by CIT(A) - HELD THAT:- In our considered view there is substance in the claim of the Ld. AR that the CIT(Appeals) had carried out the impugned enhancement without validly putting the assessee to show cause as to why the same may not be made in his hands. At the same time, we are unable to concur with the Ld. AR that merely for the said failure on the part of the CIT(Appeals) the enhancement so made is liable to be quashed. We are of the considered view that as the CIT(Appeals) while carrying out the enhancement had failed to comply with the mandate of sub-section (2) of Section 251 of the Act, therefore, the matter in all fairness requires to be restored to his file for re-adjudication after affording a reasonable opportunity to the assessee to show cause as to why enhancement to the said effect may not be carried out in his hands. We, thus, in terms of our aforesaid observations restore the matter to the file of the CIT(Appeals).
TDS u/s 194A - interest charges - Disallowance u/s. 40(a)(ia) - HELD THAT:- Although the CA certificates refers to the fact that the respective payees, respectively, in their taxable income and had paid the taxes on the same, however, as the said certificates are either incomplete or not in the prescribed form i.e. not in “Form 26A” as provided in the “1st proviso” to Sec. 201(1) r.w. Section 40(a)(ia) of the Act, therefore, the same cannot be acted upon for concluding that the assessee is not to be treated as being in default as regards deduction of tax at source u/s 194A of the Act on the interest charges paid to M/s. Religare Finvest Limited and M/s Magma Fincorp Limited, respectively.
Considering the aforesaid technical lapse on the part of the assessee in not furnishing the accountant certificates in the prescribed form i.e “Form 26A”, we, thus, in all fairness restore the issue to the file of the A.O with a liberty to the assessee to furnish the same in the prescribed form in the course of the set-aside proceedings. In case the assessee furnishes the certificates in the prescribed form i.e “Form 26A” with the A.O in the course of the set-aside proceedings, then, the disallowance u/s 40(a)(ia) to the said extent shall be vacated by him. The Ground of appeal No.4 is allowed for statistical purposes in terms of our aforesaid observations.
Short receipts shown by the assessee - Assessee failed to reconcile the difference in receipts, thus, he sustained the aforesaid addition - HELD THAT:- As the genesis of the controversy can be traced in the books of account of the assessee which were duly produced in the course of the assessment proceedings, therefore, the matter in all fairness requires to be restored to the file of the A.O for fresh adjudication. Accordingly, we set aside the order of the CIT(Appeals) and restore the matter to the file of the A.O for fresh adjudication, wherein he is directed to re-adjudicate the matter after considering the reconciliation statement of the assessee explaining the impugned discrepancies in the gross receipts shown in his books of accounts as against those reflected in the TDS certificates.
-
2023 (7) TMI 1305 - ITAT MUMBAI
Nature of interest expenditure - CIT(A) capitalizing interest expenditure Partly and balance be capitalized as work-in-progress (WIP) - HELD THAT:- CIT(A) has not given any reason for making such an adjustment without pointing out any mistake in working as shown by assessee in this regard. Since the assessee has been following the AS-16 and since there is no doubt about genuineness of the interest expenditure as well as the fact that the assessee has debited the financial cost which are not directly attributed to the project as revenue expenditure, the same ought to be allowed unless the Ld. CIT(A) is able to show that the amount was interest cost which was directly attributable to the project and therefore, should have been capitalized to the cost of WIP.
Since we note that the interest expenditure fulfil the criteria mentioned in AS-16, the apportionment made by assessee ought not to have been interfered with unless it is shown to be incorrectly claimed by assessee. And we further note that by debiting such expenses to the profit and loss account, there is no loss to the revenue, as even by capitalization of such expenses, the same will be debited to the revenue in future years. Accordingly, the treatment of debiting interest expenses to the tune to the profit and loss account ought to have been allowed. And therefore, we dismiss the appeal of the revenue and allow the CO of the assessee and direct the AO to allow the claim of the assessee.
Commission and brokerage of expenses - AO did not accept the assessee’s reliance on para -19 of AS-7 issued by ICAI for “Construction Contracts” stating that the General & Administration Cost and Selling Cost are to be excluded from the Construction Cost, since these costs/expenses cannot be attributed to contract activity or cannot be allocated to a contract - HELD THAT:- As noted that brokerage and commission is a financial cost/selling expenses which the assessee has incurred wholly and exclusively for the purpose of business. And the selling cost has been incurred by the assessee for the services rendered by brokers who canvas booking of flats of projects in advance which is not project specific and irrespective of whether a project is implemented or not, the brokerage cost/commission paid to broker’s need to be allowed being revenue in nature. And since, the commission paid are in terms of agreement rendered between the assessee and the broker, and the genuineness of the expenditure has not been questioned, we are of the opinion that the expenses incurred on brokerage and commission on booking of properties need not be considered as part of business of Construction of units/flats, and are revenue in nature, which needs to be allowed.
Estimation of ALV - Deemed rent calculated @ 2% of the closing stock of unsold flats and shops where occupancy certificates were received - HELD THAT:- As per decision of this Tribunal in M/s. Inorbit Malls [2022 (10) TMI 1150 - ITAT MUMBAI] we set aside the impugned order of the Ld. CIT(A) and restore the matter back to the file of the AO and direct as given in M/s. Inorbit Malls (supra) wherein the Tribunal has held that the AO was correct in computing ALV on deemed rent on unsold stock.
Tribunal directed the AO to do so by considering the following facts. Firstly, the flats or units on which assessee has received any advance in this year or in the earlier years but has not delivered or given final possession of the said flat/unit to the buyer, then no notional/deemed rent can be charged as it tantamount to sale. Secondly, if unit of flat is shown as work-in- progress in the books then also no notional rent be computed. And Lastly, the AO to estimate the ALV after ascertaining Municipal Letable Value for computing the notional rent as held in the case of CIT Vs. Tip Top Typography[2014 (8) TMI 356 - BOMBAY HIGH COURT] or @ 2% which was estimated by AO whichever is less. Therefore, the ground no. 3 of the revenue is partly allowed for statistical purposes.
-
2023 (7) TMI 1253 - ITAT AHMEDABAD
Income from House property - deemed rental income - treating the property of the assessee held as fixed assets, as being eligible for being subjected to tax under section 22 of the Act, on the deemed rental income earned thereon as per the provisions of said section - HELD THAT:- On going through order of the AO, we find that he has rightly interpreted the provision of section 22 and applied it to the facts of the present case. The AO has rightly referred to provision of section 22 as specifying that property consisting of any building or land appurtenant thereto of which the assessee is the owner, other than the property which he occupies for the purpose of any business or profession, to be chargeable to tax under the head income from house property.
AO has noted that all the properties, held as fixed assets by the assessee, who is in the business of real estate, are eligible for taxing their ALV as per section 22since the assessee is not carrying out any business from these properties. Assessee has been unable to controvert this finding of the authorities below. Therefore, the arguments of assessee that the properties held by it as fixed assets were for the purpose of business of the assessee, and their ALV was to be excluded for taxation under section 22 of the Act, is rejected as untenable in law.
Since the properties were vacant throughout the year, the assessee is entitled to vacancy allowance, and accordingly, the ALV of the property would therefore be NIL - AO, we find, has rejected this contention of the assessee noting that the sub-clause(c) of sub-section (1) of section 23 which deals with providing vacancy allowance allows the same only when the property is ‘actually let out’ and not based on the intention of letting out. The ld. counsel for the assessee was unable to controvert this finding of the AO.
No reason to interfere in the order of the ld.CIT(A) holding that the property held as fixed assets qualified for the ALV thereon being subjected to tax as income from house property as per the provisions of section 22 of the Act.
Whether interest paid by the assessee qualified for deduction against the ALV of the properties in terms of section 24 of the Act while computing the income from house property? - As assessee was unable to point out how it had been demonstrated to the CIT(A) that all interest expenses qualified for deduction under section 24 of the Act. In view of the above, we see no merit in the ground no.4 raised by the assessee in its CO seeking allowance of claim of interest expenses u/s 24 of the Act.
CIT(A), we have noted, has been fair enough, in allowing the assessee another opportunity to bring out the facts of its case, and claim allowance of interest expenditure after verifying of the facts by the AO and determining amount allowable as per law. In this view of the matter, ground no.4 of the CO is also dismissed.
Deemed rent on stock in trade - CIT(A) deleted the addition - HELD THAT:- CIT(A) deleted the addition following decision of the Hon’ble jurisdictional High Court in the case of Neha Builders [2006 (8) TMI 105 - GUJARAT HIGH COURT] holding that property held as stock-in-trade did not qualify for ALV thereto being subject to tax in terms of section 22 - DR was unable to distinguish the said case before us. Inview of the same, we see no reason to interfere in the order of the ld.CIT(A) deleting the addition made on account of deemed rental income amounting to Rs. 28,85,598/- on property held as stock-in-trade by the assessee.
Disallowance of interest u/s. 36(i)(iii) - CIT(A) noted that the assessee was in the business of real estate and had made investment in property only, which were classified as fixed assets or as stock-in-trade, thus directed allowance of the claim of interest against such properties, as per section 24 - HELD THAT:- Since the disallowance made by the AO was in relation to property held as fixed assets, and since these very same properties have been subjected to tax on account of deemed rental income under the head “income from house property”, CIT(A) has we hold rightly held that the assessee is entitled to claim interest expenses against the same, as per section 24 of the Act. DR was unable to point out any infirmity in the finding of the ld.CIT(A) in this regard, therefore, we see no reason to interfere in the order of the ld.CIT(A) deleting the disallowance made under section 36(1)(iii) of the Act.
Addition u/s 14A - Addition to book profit u/s. 115JB on account of disallowance u/s. 14A - CIT(A) deleted the addition - HELD THAT:- No infirmity in the order of the ld.CIT(A) vis-à-vis legal proposition followed by it while restricting the disallowance to the extent of exempt income earned. In view thereof, we see no reason to interfere in the order of the ld. CIT(A) restricting the disallowance of expenditure under section 14A
MAT addition - As we see no reason to interfere in the order of ld.CIT(A) deleting the adjustment made to the book profits of the assessee on account of expenses disallowed under section 14A of the Act as relying on TORRENT CABLE LTD. case [2017 (1) TMI 564 - ITAT AHMEDABAD].
-
2023 (5) TMI 919 - SC ORDER
Reopening of assessment - Deemed dividend - addition u/s 2(22)(e) - change of opinion - information received from the Deputy Commissioner of Income Tax, Company Circle V(1) constituted new information - HC [2018 (10) TMI 373 - MADRAS HIGH COURT] decided substantial question of law in favour of revenue - HELD THAT:- Appeal admitted - List immediately after summer vacations.
Deemed dividend addition u/s 2(22)(e) - Addition on account of income from house property as per the provisions of Section 22 read with Section 23 and Addition u/s 40A - HC [2019 (1) TMI 1017 - MADHYA PRADESH HIGH COURT] held assessee being not a member/shareholder of the concerned company the loan/advance received from such company is not deemed dividend u/s 2(22)(e) - payments made to specified persons on rates more that fair market rates - As per HC no substantial question of law arises for consideration - Revenue appeal dismissed - HELD THAT:- In terms of Circular No. 17/2019 dated 08.08.2019 issued by Government of India, Ministry of Finance, Department of Revenue, Central Board Direct Taxes, Judicial Section, since the amount of tax involved is low, we are not inclined to interfere with the impugned order. SLP dismissed.
-
2023 (4) TMI 1286 - ITAT MUMBAI
Deemed income from house property - Rental Income for the properties held as Stock in Trade - as per AO Assessee has received possession of certain property/bungalow plot and had neither used nor offered to earn any income under the head “income from other sources”- AO said that property was treated as deemed to be let out and he determined the actual value of the property for the purpose of section 23(1) and determined the rent at 10% of the value in respect of the property and accordingly additions made - HELD THAT:- As relying on M/S. PEGASUS PROPERTIES PVT. LTD. [2021 (12) TMI 1210 - ITAT MUMBAI] assessee had kept various flats as stock in trade and they were not sold. No addition on account of deemed rental income can be made in respect of unsold stock of flats held as stock in trade up to A.Y.2017-18. In the present case the assessment involved in A.Y.2014-15, therefore the addition proposed by the Assessing Officer is directed to be deleted. Assessee appeal allowed.
-
2023 (4) TMI 804 - ITAT SURAT
Income from house property - Vacancy allowance - deemed income / fictitious income - Computing notional rent u/s 23(l)(a) as against the income declared by the Appellant in the return of income - HELD THAT:- As per the terms and conditions of the agreement, by which the lessee may terminate the said agreement anytime during the currency of the said agreement by giving a prior written notice of three months (3 months).
Accordingly, the lessee bank has given 3 months’ notice on 18.01.2016 to the assessee, to terminate the agreement with effect from 18.04.2016. Therefore, during the financial year 2016-17, the assessee has received 18 days rent from 01.04.2016 to 18.04.2016, which the assessee has offered for tax in the relevant AY.2017-18. After 18.04.2016 the property was vacant, as the assessee could not get any customer to let out the property.
We note that on rental income TDS has been deducted by the ICICI Bank during the current year. ICICI Bank has issued a letter to the assessee, which shows that the lease agreement has been terminated by the ICICI Bank on 18.04.2016.
Based on this factual position, the assessee has received the rental as rent income only for eighteen days in the AY.2017-18 which has already been offered for tax on which TDS has also been deducted. Therefore, since the assessee has not received rental income from 19.04.2016 to 31.03.2017, hence, hypothetical rent should not be taxed in the hands of the assessee.
Therefore, we note that assessee has disclosed the actual rent received by him, therefore fictitious rental income should not be taxable in the hands of the assessee. Neither the AO nor before the Ld. CIT(A) has demonstrated with cogent evidences that assessee has let out the property for the remaining period from 19.04.2016 to 31.03.2017. Therefore the notional rental income assessed by the AO should be deleted - Appeal filed by the assessee is allowed.
-
2023 (4) TMI 312 - ITAT PUNE
Deemed rent u/s. 23(4) - rent on unsold flats - deemed rent in respect of unsold units be brought to tax under the head “Income from house property” - assessee is a company engaged in the business of property development - As explained that the 15 unsold flats cumulatively admeasuring 17341 sq. ft. were not sold during the year under consideration and they were treated as closing stock - HELD THAT:- We note that the assessee treated the same as 15 unsold flats as stock-in-trade which means that the profits on its sale would be offered as business income and no rental income received by the assessee from such 15 unsold flats. Therefore, facts in the case of Gundecha Builders [2019 (1) TMI 112 - BOMBAY HIGH COURT] are different from the facts of the present case in hand. Thus, we reject the arguments of ld. DR of applicability of observation in the case of Gundecha Builders (supra).
This Tribunal in the case of Sai Spacecon India Pvt. Ltd. [2022 (1) TMI 1361 - ITAT PUNE] held no addition on account of deemed rent on unsold flats could be made in the hands of the assessee.
We hold that the order of CIT(A) is not justified in confirming the view of AO in levying deemed rent u/s. 23(4) of the Act on account of income from house property. Grounds raised by the assessee are allowed.
-
2023 (3) TMI 1188 - ITAT MUMBAI
Revision u/s 263 - Income from house property - deemed rent on un-sold flats - as per CIT assessment order as erroneous as well as prejudicial to the revenue and directing the AO to make fresh assessment by taxing the annual value of the property forming part of the closing stock, under the head “Income from House Property” - annual value shall be computed as per the provision of section 23(1)(a) of the Act and deduction if any admissible u/s 24 of the Act shall be allowed while computing the income from house property - HELD THAT:- AO had carried out investigation into the flats including that of unsold flats which was held as stock in trade by the assessee. Moreover it is noted that the assessee was not into the business of letting out the property for rent and its business was Real Estate Development as well as re-development. And we also note that the AO had framed the assessment order on 24.04.2019, and so it can be seen that the AO’s decision on this issue, not to tax the deemed rent on un-sold flats was after the Parliament has inserted sub-section (5) in Section 23 of the Act vide Finance Act 2017, w.e.f 01.04.2018, ie., from AY. 2018-19.
Since CBDT Circular/Instruction are binding on AO and Income Tax Authorities, the AO can be presumed to have taken note of CBDT classification dated 15.02.2018, while framing assessment order on 24.04.2019. Therefore, AO has rightly followed the CBDT Circular (supra) and did not determine the notional income from unsold flats held by assessee as stock-in-trade.
AO has discharged his dual role as an investigator as well as adjudicator. As noted he has examined the relevant facts of unsold flats as well as decision not to determine ALV is in line with the CBDT Circular dated 15.02.2018 and therefore his decision cannot be held to be erroneous as well as prejudicial to the revenue. Therefore, we find the Ld. PCIT has erred in invoking revisional jurisdiction u/s 263 of the Act, only for imposing his view, which is not permissible; and so we are inclined to quash the impugned order of Ld. PCIT. Decided in favour of assessee.
-
2023 (1) TMI 1345 - ITAT MUMBAI
Revision u/s 263 - ALV determination of property under the head income from house property - CIT has discussed on the Provisions of Sec. 22 r.w.s 23(1)(a) of the Act and is of the opinion that the assessee was owner of flats which constitute property within the meaning of Sec. 22 of the Act and therefore the annual value of the flats owned by the assessee is form part of the closing stock and is taxable under the head income from house property in the A.Y 2017-18 and the AO has not considered these facts and excluded
Contentions of the Ld. AR that when the charging of income under income from house property applying the deemed provisions is applicable from A.Y.2018-19 is a debatable and therefore revision proceedings shall not sustained
HELD THAT:- AO in the assessment proceedings having satisfied with the claim has not made any comment on the issue. Further the contentions of the Ld. AR that the ALV of the house property held as stock in trade has to be considered on deeming provisions as per finance Act 2017 from the A.Y 2018-19 and whereas the current A. 2017-18. Further if any query is raised in the assessement proceedings and it was responded by the assessee, mere fact that it is not dealt with by the A.O. in the order cannot implied that there is no application of mind.
Therefore observations of the Pr.CIT cannot be acceptable as the order passed by the A.O. does not satisfy the twin conditions of erroneous and prejudicial to the interest of the revenue. Appeal of assessee allowed.
-
2023 (1) TMI 1228 - ITAT MUMBAI
Revision u/s 263 - no notional rent is offered to tax in respect of unsold flats lying vacant held as closing stock - As submitted Assessing Officer has taken one of the possible view - HELD THAT:- We find that in the case of Osho Developers vs. ACIT [2020 (11) TMI 218 - ITAT MUMBAI] after considering judgment rendered in the case of CIT vs. Ansal Housing Finance & Leasing Company Ltd. [2012 (11) TMI 323 - DELHI HIGH COURT] and various other decisions, which inter-alia, includes decision in the case of CIT vs. Gundecha Builders [2019 (1) TMI 112 - BOMBAY HIGH COURT], CIT vs. Sane & Doshi Enterprises [2015 (4) TMI 882 - BOMBAY HIGH COURT], CIT vs. Neha Builders [2006 (8) TMI 105 - GUJARAT HIGH COURT] and K. Subramanian, ITO & Another vs. Siemens India Ltd. [1983 (4) TMI 3 - BOMBAY HIGH COURT] concluded that the annual letting value of flats held as stock-in-trade cannot be brought to tax under the head “house property”. While taking such view the Tribunal distinguished the decision rendered in the case of CIT vs. Ansal Housing Finance & Leasing Company Ltd. (supra). Thus, as per the decision rendered in the case of Osho Developers vs. ACIT (supra) no addition could have been made u/s. 23 of the Act in respect of vacant flats held as stock-in-trade and carried forward as closing stock.
It is a well settled law that where two views are possible and the Assessing Officer has taken one of the possible view, the PCIT cannot substitute his view in exercise of revisional jurisdiction u/s. 263 of the Act. In the instant case the PCIT has tried to super impose his view in exercise of powers u/s. 263 of the Act over one of the possible view taken by Assessing Officer. This is not in accordance with the settled law. Thus, the PCIT has exceeded his jurisdiction in exercise of revisionary powers. Appeal of the assessee is allowed.
-
2023 (1) TMI 1209 - ITAT MUMBAI
Income from house property - Addition of notional income on property [flat which was vacant, calculated @8.5% of the cost price of the flat - determination of annual letting value of the property - As the assessee owned a flat at Bandra Breeze in addition to its self-occupied property in Capri Tower AO computed the deemed rent from the 2nd property by considering 8.5% of the value of the flat as appearing in the balance sheet - HELD THAT:- In the present case, it is evident that the lower authorities have determined the annual letting value by considering 8.5% of the value of the flat as appearing in the balance sheet. CIT(A) also upheld the findings of the AO on the basis that standard rent under the Bombay Rent Control Act is to be fixed @8.5% of the total investment.
As noted above, in Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT] held that the AO either must undertake the exercise to fix the standard rent himself and in terms of rent control legislation, if the same is applicable or leave the parties to have it determined by the court or tribunal under the said legislation - Also held until then the AO may not be justified in applying any other formula or method and determine the ‘fair rent’.
In the present case, it is evident that the AO did not follow the applicable rent control legislation while determining the deemed rent of the property @8.5% of the value of the flat. Further, nothing has been brought on record to support that the findings of the learned CIT(A) were reached after undertaking the exercise to fix the standard rent in terms of applicable rent control legislation. Thus, we deem it appropriate to remand this issue to the file of the AO for determination of annual letting value in terms of the applicable rent control legislation in light of aforesaid decisions of the Hon’ble Jurisdictional High Court. Accordingly, grounds raised in assessee’s appeal are allowed for statistical purposes.
-
2023 (1) TMI 1155 - ITAT DELHI
Income from House Property - Addition on account of notional rent - AO observed that in view of the provisions of section 23 of the Act, the deemed rental income of the property in question which remained vacant during the year was required to be taxed under the head ‘Income from House Property’ - AO, confronted the assessee who stated that the property could not be let out due to poor access and for want of regularisation - HELD THAT:- As decided in SH. KAMAL KUMAR [2022 (6) TMI 574 - ITAT DELHI] has considered the property located in similar locality and, after elaborate discussion, has found that there was reasonable cause for not putting the property on rent.
Since on similar facts in similarly located property, ITAT has found the reasonable cause for not putting the property on rent, it was sufficient to permit the assessee to get away from the rigors of notional rent.
We note that the submissions of the assessee’s counsel is that there was a sealing drive in the locality, so, it was difficult to find tenant and this was the reason the property could not be let out. It is the plea that identical facts were appreciated by the ITAT in the aforesaid order. Decide the issue in favour of the assessee.
Addition of jewellery found in premises of the assesse - CIT-A held that sources of the jewellery have remained to be explained and accordingly, the ld. AO has rightly taxed it in the Assessment Year 2014-15 - HELD THAT:- We find that on a query as to whether there is any evidence of the source of investment and the mode of payment, the ld. Counsel fairly accepted that these cannot be substantiated. In this view of the matter, in our considered opinion, the assessee has been granted reasonable relief by the AO. The addition sustained is appropriate, hence, we do not find any infirmity in the order of the Revenue authorities in this regard. - Decided against assessee.
-
2023 (1) TMI 660 - ITAT DELHI
Assessment of income from house property - Co-ownership of property - Addition on account of Notional Rent of self-occupied house property fully assessed in the hands of her husband, in which the contribution of the appellant was only 5.4% of the total purchase consideration - ownership of the property would be considered 50-50 and taxed as per section 23(1)(a) - As assessee did not provide any expected reasonable rent of the property, he assessed the annual letting value at 8% of the cost of property as shown in the sale deed and computed income from house property - HELD THAT:- There is sale deed and the co-ownership is evidenced therein but there is no specification of shares of the husband and wife in the sale deed. Therefore, following the decision of Saiyad Abdulla’s case [1922 (6) TMI 3 - ALLAHABAD HIGH COURT] it must be held that husband and wife purchased equal shares and therefore, the Revenue is justified in bringing to tax 50% of the income from house property in the hands of the assessee.
The decision of Ajit Kumar Rao’s case [2001 (6) TMI 41 - CALCUTTA HIGH COURT] relied upon by the Ld. AR also does not help the assessee. In that case, the assessee’s wife had purchased a flat in her name but she being the housewife did not have independent source of income and the entire investment was made by the assessee (husband). It was in such a scenario that the Hon’ble Calcutta High Court held that the income from property should be taxed in the hands of the assessee (husband) and not in the hands of his wife.
In the case before us, the property has been purchased by husband and wife in co-ownership jointly. The assessee is not a housewife. Computation of income for AY 2015-16 appearing at page 2 of Paper Book shows that she is salary earner and earned salary of Rs. 24 lacs from Adam Smith Associates Pvt. Ltd. in AY 2015-16. Therefore, on facts the case of the assessee before us differs from the Ajit Kumar Rao’s case (supra). - Decided against assessee.
-
2023 (1) TMI 273 - ITAT MUMBAI
Income from house property - Denial of complete deduction of interest paid on the loan under section 24(b) - not allowing carry forward of loss under the head ‘income from house property’ - HELD THAT:- Under section 24(b) of the Act interest paid on capital borrowed for the purpose of acquisition, construction, repair, renewal, or reconstruction of property is allowable as a deduction. The 2nd proviso to section 24(b) of the Act restricts such deduction to Rs.2 lakh, in case of the property referred to in the 1st proviso. Further, the 1st proviso to section 24(b) of the Act deals with the property as referred to in section 23(2) of the Act.
From the reading of section 23(2) of the Act, it is evident that the property as referred to therein is only the residential property and the same cannot be the commercial property.
In the present case, as per the agreement for the purchase of the property being Unit 3C, Cynergy, Prabhadevi, Mumbai – 400028, we find from clause no. (mm) that the said property can only be used for the purpose of setting up the IT office as per the IT Park Policy of the Government of Maharashtra. Thus, it is evident that the property in respect of which the assessee claimed interest under section 24(b) of the Act is only a commercial property, and therefore the restriction on deduction as provided in 2nd proviso to section 24(b) of the Act shall not be applicable. Therefore, we are of the considered view that the AO has erred in restricting the deduction of interest paid on the loan to Rs.2 lakh vide intimation issued under section 143(1) of the Act.
AO while computing the annual letting value of the aforesaid property had granted deduction of interest paid on loan under section 24(b) of the Act. Accordingly, we direct that the interest of Rs.1,31,39,560, paid on the loan for acquiring the above property be allowed as a deduction under section 24(b) of the Act. Since the assessee is entitled to claim the entire interest paid during the year on loan for acquiring the above property, therefore, the amount of loss under the head ‘income from house property’, which is not set off against the income under the other head of income be allowed to be carried forward as per provisions of section 71B - Assessee appeal allowed.
-
2022 (12) TMI 645 - ITAT PUNE
Revision u/s 263 - Interest disallowance u/s.36(1)(iii) - HELD THAT:- As assessee’s arguments fail to evoke our acceptance since we do not find even a single question or enquiry from the AO’s side alleging diversion of interest bearing funds for non-business purposes, attracting section 36(1)(iii) interest disallowance. We conclude that the PCIT herein has rightly termed the AO’s assessment completed without making the adequate enquiries in light of section 263 Explanation (2) inserted in the Act by Finance Act, 2015 w.e.f. 01.06.2011 as well as Malabar Industrial Company Ltd., [2000 (2) TMI 10 - SUPREME COURT].
Applicability of section 14A r.w.r. 8D - From perusal of the PCIT's revision directions that he has already directed the AO to examine the issue of applicability of section 14A r.w. Rule 8D in his findings of the revision order. Revenue could hardly dispute that the AO had duly disallowed an amount in his assessment and, therefore, the same could not be termed an instance of lack of enquiry as it is alleged at the PCIT’s behest. PCIT’s revision directions to the limited extent of applicability of section 14A r.w.r. 8D disallowance therefore.
Deemed rent computation issue raised in the learned PCIT’s revision directions - We note from a perusal of the relevant discussion in page-9 para-3 that neither the assessee could clarify before us about the number of house properties owned in the relevant previous year nor could he rebut his computation in the subsequent assessment year 2015-16 qua the same. Faced with the situation, we upheld the PCIT’s revision directions that the AO had neither enquired nor examined the issue of assessee’s rental income from house property u/s. 23 of the Act. The assessee’s arguments to this effect are rejected accordingly.
Section 56(2)(vii) made applicable in assessee’s case on account of alleged difference between stamp valuation and actual purchase consideration qua the sale deed executed in the relevant previous year - A perusal of the said sale deed dated 31.12.2013, and more particularly, the schedule of payment therein at page-16 indicates that the assessee had already paid an amount of Rs.50,000/- on 20.09.2016 by way of bank cheque which followed the agreement itself dated 05.10.2006. Faced with the situation, we quote 1st and 2nd proviso to sec.56(2)(viib) that the consideration amount in such a transfer of immovable property at the time of agreement could also be accepted in case whole or part thereof had been paid in any mode other than cash on or before the date of the agreement, for the transfer of such immovable property.
CIT-DR could hardly dispute that the legislature had introduced similar provision(s) in sec.50C(1) vide Finance Act 2016 w.e.f. 01.04.2017 which have already been held as carrying retrospective effect being curative in nature in Dharmashibhai Sonani [2016 (9) TMI 1259 - ITAT AHMEDABAD] We, therefore, are of the opinion that the only difference in sec.50C vis-à-vis sec.56(2)(vii) is that the former applies in case of transfer of a capital asset in the hands of the vendor whereas the latter one gets attracted in the purchaser/vendee’s case, respectively. We thus conclude that the PCIT has erred in law and on facts in directing the Assessing Officer to frame his assessment afresh in light of section 56(2)(vii) in very terms. His directions to this limited extent are reversed accordingly. The assessee’s instant former substantive ground succeeds in part therefore.
-
2022 (12) TMI 172 - ITAT AHMEDABAD
Income from house property - deduction (Vacancy allowance) - property remain vacant - Annual value how determined - Addition on account of annual lettable value (ALV) as income from house property - AO observed that the assessee had shown “income from house property” from various properties in different years, however, in some of the years, income from some of the properties were not shown/ shown at “Nil” - HELD THAT:- As assessee has submitted that the properties under question were let out in earlier years, but due to reasons beyond the control of the assessee, the same could not be let out during the year under consideration. The counsel for the assessee placed on record various documents in support of the contention that the assessee had made substantial efforts by way of newspaper advertisements etc. to lease out the properties, however, despite best efforts, the properties could not be let out during the year under consideration.
Thus the provisions of section 23(1)(a) of the Act cannot be invoked in case the properties have been let out in some earlier year, however, the same were lying vacant for the entire year under consideration, despite efforts being made by the assessee. The provisions of section 23(1)(a) of the Act can be invoked in the event the properties are lying vacant all throughout and have not been let out either in the prior or succeeding assessment years and also the assessee has made no effort to let out the same.
Notably the words used in section 23(1)(c) of the Act are “the property is let and was vacant during the whole…of the year”, which necessarily implies that the same property cannot be “let out” and yet remain “vacant” during the same assessment year. Therefore, as noted above, the reasonable construction/interpretation of section 23(1)(c) would be that if the property has been let out in any of the previous years, but the same could not be let out despite the best efforts by the assessee, the assessee would be entitled to avail the benefits of section 23(1)(c) of the Act. Accordingly, in our considered view, the Ld. CIT(Appeals) has not erred in facts and in law in allowing the assessee’s appeal on this issue.
Disallowance of Interest Expenditure - AO observed that in respect of amounts taken from individuals/HUF/companies, the assessee has not furnished any documentary evidence to show that the same interest bearing borrowed amount had been given as loan to third party to earn interest - CIY-A deleted the addition - HELD THAT:- CIT(Appeals) has granted relief to the assessee on the basis firstly that income under section 56 is more than the expenses claimed under section 57 and secondly, on identical facts Ld. CIT(Appeals) has granted relief to the previous assessment years AY 2010-11 and AY 2012-13. However, there is no discussion in the order regarding the interest expenditure claimed by the assessee and how and where such interest-bearing funds were utilised for earning interest income. CIT(Appeals) has not discussed how the facts in earlier years were identical/applicable to the facts of the present year i.e. no enquiry/ discussion is done with respect to parties from whom the interest bearing loan was taken and to which parties, the loan was given on interest to earn interest income. Further, Ld. CIT(Appeals) has not controverted the specific findings made by AO in the assessment order under consideration. In view of the above facts, in the interest of justice, we are restoring the file to Ld. CIT(Appeals) so as to conduct an acceptable enquiry into the nexus between the interest-bearing loans and how the same were utilised to earn interest income, so as to examine the eligibility of claim made by the assessee - Department’s appeal is allowed for statistical purposes.
........
|
