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2020 (9) TMI 342 - ITAT DELHIReopening of assessment u/s 147 - incorrect treatment of the income received from the house property - HELD THAT:- It is not in dispute that the AO made the addition only on the basis of the grounds which formed the part of the reasons recorded. It is only on merits the CIT(A) held that the income of the assessee is chargeable to tax under the head business income. It is, therefore, clear that at threshold the AO is justified in reopening the assessment and subsequently on merits the CIT(A) reached a different conclusion that the income falls under the head “income from business”. Now it falls for our consideration as to whether the CIT(A) is justified in refusing to take cognizance of the bifurcations of the lease and services by way of a supplementary agreement. We therefore, hold that the reopening of the assessment under section 147 is beyond challenge. Rent received on property - Whether the assessee is free to arrange their business and to enter into an agreement separately one for letting out the demised premises and another for the services and hiring of the equipment. Equipment may be inseparable from the building, but the Revenue cannot force the assessee to provide any services or to hire the equipment along with letting out the property. It is always open for the assessee not to provide the services or not to hire the equipment, while letting out the demised premises. Whether or not such services could be provided or the equipment could be hired independently, is the prerogative of the assessee and the lessee. When it is possible for the assessee to provide or not the services and to hire or not the equipment, then it is equally the prerogative of the assessee to provide them at a separate cost. Revenue cannot force the assessee to enter into any agreement in any particular form, but at the best, the Revenue can probe into the genuineness of the transaction or the correctness of the quantum of expenditure. Revenue cannot prevent the assessee from entering into separate agreements. At best Revenue can verify the quantum of expenditure claimed by the assessee in respect of the services provided or the expenditure related to the hired equipment. When the assessee had chosen to bifurcate the transaction and to charge separately towards the rent of the demised premises and for the services provided and hire charges, in our considered opinion the Revenue cannot prevent the same on the ground that such process would result in loss to the Revenue. Action of the authorities below not to permit the assessee to arrange their business in the way which is beneficial to them, within the permissible limits of law, is impermissible. Then it goes without saying that the assessee is entitled to claim the business expenses in respect of the income from the services provided and hiring of equipment, and statutory deductions under section 24 (a) of the Act insofar as the income from the house property is concerned. We direct the learned Assessing Officer to allow the statutory deduction u/s 24 (a) of the Act also and the interest incurred in respect of the house property. - Decided in favour of assessee.
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