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2014 (5) TMI 1176 - AT - Income TaxDisallowance of business expenditure - assessee company had not commenced during the year under consideration - Held that:- While deciding the appeal for, AY 2005-06 on 11.09.2013,Tribunal had held that assessee commenced its business activity in March 2004 i.e. in AY 2004-05. It was finally held that assessee had set up his business activities in earlier years. As the facts and circumstances for the year under appeal are identical to the earlier AY.s,so,respectfully following the same we decide ground no.1 & 2 against the AO. He is directed to allow the deductions to the assessee as per the provisions of law. Allowance of interest expenditure under the head ‘Income from House Property’ - Held that:- Referring to orders for the earlier years as held that income of the assessee for the year under consideration has to be assessed under the head ‘Business Income’,therefore, in our opinion ground taken by the AO has to be dismissed. Tax the Miscellaneous Income,Foreign Exchange Gain and Other Income under the head ‘Business Income’ - Held that:- We find that AO was of the opinion that assessee had not commenced its business activity and therefore, income received under the heads miscellaneous income etc. could not be assessed as business income. But, in the earlier years it has been held by the Tribunal that income from sub-leasing of premises of the I.T.Parks was the business of the assessee and same was set up/commenced in earlier years and we have followed the order of earlier years. In these circumstances, in our opinion, FAA had rightly held that incomes from foreign exchange gain, car parking, penalty etc. were incidental to the business, carried out by the assessee. Addition on account of income from sub-lease of land and income under the head maintenance - Held that:- Following our order for the earlier year, we hold that income from the sub lease of land and income under the head maintenance has to be assessed under the head Business income and not under the head Income from Other Sources. As a result, we decide first ground of appeal against the AO. Addition on account of interest paid on borrowings utilised for construction of house property under section 24 - Held that:- It is not in dispute that the assessee had taken loan for construction of buildings and it had also paid interest. FAA had held that out of the interest of ₹ 2.93 Crores ₹ 2.48 Crores should be allowed as interest expenditure under the head income from house property. From the balance sheet it is clear that the assessee has interest amounting to ₹ 2.48 Crores was capitalised. Therefore, FAA was justified in holding that it represented work in progress. For the balance interest payment of ₹ 45 lakhs he held that same was allowable under either of the heads. In our opinion,if interest has been paid by an assessee; for acquiring or constructing assets that are used for earning taxable income; then his claim for interest expenditure has to be allowed. Therefore, confirming the order of the FAA - decided against revenue Treatment of maintenance income - assessed as income from other sources or business income - Held that:- To be held that the income received by the assessee as maintenance income has to be assessed as business income. - decided against revenue
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