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2021 (5) TMI 304 - AT - Income TaxCapital receipt chargeable to tax u/s.45 - claim of exemption u/s.10(2A) - amount received by the assessee partner from the partnership firm - amount received by partner on retirement from a firm - HELD THAT:- Similar ground of appeal was raised in the case of co-partner of the said firm PLA, M/s Rahas Investments Private Limited (now merged with the assessee i.e Lupin Investments Private Limited) [2020 (2) TMI 564 - ITAT MUMBAI] there cannot be any levy of capital gains or any levy in the nature of income within the meaning of Section 2(24) of the Income Tax Act in the hands of the assessee. There was no transfer of relinquishment of rights in favour of the continuing partners. We find that in the instant case the firm i.e. Pranik Landmark Associates had only paid the amounts lying to the credit of the partner i.e. the assessee and had not paid even a penny more than the amount lying in the credit of the partner’s current account - Decided against revenue. Undisclosed / unaccounted /out of books income / investment - HELD THAT:- It cannot be said that the purpose behind restructuring of the partnership firm (i.e admission and retirement) was done primarily for tax avoidance as contended by the ld AO. In fact the firm PLA held the property as its owner which was also reflected in its audited accounts. When the said property was sold as a result of the said restructuring to the new firm PLA-2 , the due tax was paid by the firm and this cannot be re-taxed in the hands of the assessee as tax avoidance. The said amount is the amount of devaluation of the investment which is forming part of the books of accounts. Hence, it is completely misconceiving to treat the same amount as undisclosed income / investments. We find that the ld CIT-A had duly appreciated the contentions of the assessee and had rightly deleted the addition made in this regard, on which, we do not find any infirmity. Accordingly, the Ground No. 4 raised by the revenue is dismissed. Correct head of income - rent received as business income or income from house property - HELD THAT:- CIT-A rightly observed that the assessee had leased the factory premises along with plant & machinery to Lupin Ltd for which it was paid rental income of ₹ 500 per month. Further , the assessee was offering ₹ 12 lakhs per annum as tax under the head income from business. However, the ld AO computed this income as income from house property. The ld CITA by placing reliance on following decisions held that rental income in letting factory building and plant and machinery would be business income for exploitation of commercial assets and this was also accepted in the past assessment years. We find that the ld CIT-A also applied the rule of consistency by stating that assessee offering business income in this regard has been accepted by the revenue since Asst Year 2006-07 and there was absolutely no change in facts and circumstances of the instant case for the year under consideration. Hence, we do not find any infirmity in the order of the ld CIT-A in this regard - Decided against revenue. Addition made on account of notional interest to interest free deposit received by the assessee on Ankleshwar factory premises and Santacruz property - HELD THAT:- We find that the assessee placed reliance on the decision of J K Investors (Bombay ) Ltd [2000 (6) TMI 9 - BOMBAY HIGH COURT] wherein it was pointed out that computation of property income was concerned with annual value or actual rent and not notional interest on interest free deposits. The assessee also placed reliance on CIT vs Moni Kumar Subba [2011 (3) TMI 497 - DELHI HIGH COURT] wherein it was categorically held that notional interest on interest free deposit cannot be taken as determinative factor to arrive at the ‘fair rent’. It is duty of the ld AO to find out or bring on record the reasonable or fair rent or standard rent and then compare the same with the actual rent received or receivable to find out the Annual Value.This should be done after due inquiries being conducted by the ld AO. None of these facts have been brought on record by the ld AO in the instant case. Hence we find that the ld CITA had rightly deleted the notional interest on interest free deposit. - Decided against revenue.
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