1990 (10) TMI 133

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..... not used for any business purposes during the year and that no business of leasing out the building was carried on in the accounting year and the depreciation was not admissible on the building. He also held that since the income from the said property was directed to be computed under the head 'house property', the question of allowing depreciation did not arise. It is against this order that the present appeal is filed before the Tribunal. 2. Likewise for the assessment year 1983-84, the claim for depreciation was disallowed by the Department in a sum of Rs. 25,363 which was also contested in the appeal before us. The ITO also holding this property to be property whose income is to be assessed under the head 'income from house property' .....

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..... ed, we are unable to agree with the view taken by the Revenue for the reason that this very building was said to have been used in the earlier year as a guest house like a Hotel. Though the figures are not available with us that was the contention of the assessee before the CIT(Appeals) and secondly the CIT(Appeals) found as a fact that for the assessment years 1984-85, 1985-86 and 1986-87, the income from this building by way of business income was computed at Rs. 9,600, Rs. 8,250 and Rs. 18,200 respectively. In these circumstances, it cannot be said that this particular building though was not used for the purpose of the business of letting out on rent as a Hotel in these two years, was in fact used as such in the subsequent years and als .....

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..... orrect and the income from the property has to be estimated on notional basis even if the property is in a state of disrepair. Thus the law is that Section 22 of the Income-tax Act will apply only to a building as mentioned earlier which was used to be let out as building and not to a building which is to be used as a business asset, i.e., for the purpose of commercial exploitation. On the facts of this case and for the reasons given by the CIT(Appeals) in his order, we are satisfied that this is a building meant to be commercially exploited. It is this reason that prevailed with us in coming to the conclusion that no notional income from this property should be taken merely on the ground that during these two years, there was a lull in the .....

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