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2017 (10) TMI 314 - ITAT DELHIRental income received by the appellant from letting out of retail space in mall - “business income” or “income from house property” - legal owner - Held that:- Qua the retail space, the assessee was not carrying on any systematic or organized activity of providing service to the occupiers of the shops, albeit other service charges pertaining to the common maintenance, event and advertising, parking fees, etc., has been offered separately for tax under the head profits and gains of business of profession. So far as retail space is concerned, it is lease rent simplicitor, which is evident from the copy of sample lease deed which has been placed by the assessee and also the copies of MoU. Thus, on the facts of the present case and also relying upon the principle laid down in the case of Raj Dadarkar & Associates vs. ACIT (2017 (5) TMI 586 - SUPREME COURT OF INDIA), we hold that the receipts from the lease rent/license fee from lease of retail space in the shopping mall is to be taxed under the head “income from house property” under section 22; and consequently, the assessee is liable for deduction under section 24(a) and other deductions of interest of pre-construction period and interest on loan which are to be allowed while computing the income from house property. Accordingly, disallowance made by the Assessing Officer for the sums aggregating to ₹ 18,19,71,202/- is directed to be deleted. Disallowance under section 14A read with rule 8D - Held that:- Since the assessee’s only grievance before us is that, the disallowance under section 14A should be restricted to the extent of exempt income of ₹ 7,63,867/-, therefore, following the ratio and principle laid down by the Hon'ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT), we restrict the disallowance at ₹ 7,63,867/- as disallowance of expenses cannot exceed the income earned. Thus, ground No.2 of the assessee is partly allowed. Deemed dividend under section 2(22)(e) - interest payment on OFCD held by Select Holiday Resorts Pvt. Ltd. which is one of the holding company of the assessee-company - Held that:- We are unable to appreciate such a hypothesis of the Revenue to approach the payment of interest to holding company/ sister concern; firstly, payment of interest on OFCD can never be reckoned as loan or advance given as stipulated in section 2(22)(e), as OFCD is one of the mode of securing an unsecured loan and there is no payment of loan or advance from accumulated profits; and secondly, there is no diversion of any interest bearing fund, because assessee has offered OFCD to a separate entity which has been subscribed by them, on which assessee is paying interest. Hence, there could be no case of diversion of any interest bearing loan or advance of fund to sister concern for non-business purposes. Thus, the ground raised by the Revenue has no merits and the addition has rightly been deleted by Ld. CIT (A). Accordingly, ground raised by the revenue is dismissed. Disallowance of depreciation on plant and machinery - assessee had not produced relevant purchase bills and evidences and assessee did not put to use the aforesaid assets during the relevant previous yea - Held that:- Journal entry for capitalization of plant and machinery from capital work-inprogress passed on 31/3/2008 does not in any manner can lead to an inference that assets were installed and put to use on that date only and were not installed or put to use on 29/9/2007, because the assessee had shown the revenue in the form of rent and maintenance charges in relation to the said complex and also filled various contemporaneous evidences which have been highlighted at page 31 of the impugned appellate order. Based on these facts and evidences, the ld. CIT (A) has given a finding of fact that, since the assessee has shown income from business during the year and there is no way income would have been earned without utilizing the assets like lift, parking equipments, etc. and such income has been accepted by the Assessing Officer, then depreciation on such assets cannot be disallowed. Such a finding of the ld. CIT (A) is based on correct appreciation of facts and law and we do not find any reason to deviate from such a finding or set aside the issue to the file of the AO as contended by the Ld. CIT-DR, because all the relevant material to corroborate the claim are already on record and confronted to the AO. Accordingly, ground No.2 is dismissed.
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