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2015 (6) TMI 699 - AT - Income TaxDisallowance u/s 14A read with Rule 8D - assessee is a non-resident individual - Held that:- AO has applied Rule 8D for making disallowance on income not chargeable to tax. The Hon'ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT) has held that the provisions of Rule 8D are applicable from assessment year 2008-09. Thus, to the impugned assessment year, i.e. assessment year 2007-08, the provisions of Rule 8D will not be applicable. However, we are of the opinion that a reasonable disallowance has to be made on income not chargeable to tax. Accordingly, we direct the Assessing Officer to make a disallowance of 2% of interest free income earned by the assessee during the relevant period.- Decided partly in favour of assessee. Rejection of set off of short term capital loss against short term capital gains - Held that:- The assessee had debited the short term capital loss in Profit & Loss account instead of treating it under the head “capital gains”. After the assessee realized her mistake, she filed a revised computation before the Assessing Officer at the time of scrutiny assessment. The Assessing Officer refused to accept the claim of the assessee. The Hon'ble Supreme Court of India in the case of Goetze (India) Ltd. (2006 (3) TMI 75 - SUPREME Court ) has held that powers of the Tribunal are not impinged for accepting such claim of the assessee. Accordingly, we remit this issue back to the file of the Assessing Officer with a direction to consider the revised computation furnished by the assessee. - Decided in favour of assessee for statistical purposes. Rental income from property treated as business income instead of income from house property - Held that:- For the assessment year under appeal the assessee changed the head from the business income to “income from house property”. The rental income whether to be treated as business income or under the head “income from house property” is a mixed question of fact and law. The authorities below have not examined the rent agreement entered into by the assessee with tenants and other facts surrounding the agreement. If the main intention of the assessee is to let out the property or any part of it, the rental income therefrom should be assessed under the head “income from house property”. If the object is to exploit the commercial property by letting out temporarily, then the income derived from such letting out of property can be termed as “business income”. We are of the considered opinion that this issue needs a revisit to Assessing Officer to examine the rent agreement and analysis of other material. The A.O. shall also take into consideration the general principles laid down by the Hon'ble Supreme Court of India in the case of Universal Plast Ltd. v. CIT (1999 (3) TMI 15 - SUPREME Court ) to determine whether the rental income is assessable as “business income” or “income from house property”. - Decided in favour of assessee for statistical purposes.
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