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TMI Blog2011 (4) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act against the income received from house property. 2.1 The facts relating to the issue are that one M/s Shivam Enterprises entered into an agreement with Sharda Sangeet Vidyalaya Trust whereby the ground floor of the property situated at Madhusudan Kalelkar Marg, Gandhi Nagar, Near Kalanagar, Bandra (E) was taken on lease for 90 years. As per the said agreement the lessee M/s. Shivom Enterprises had to construct the first and second floor at its own cost and provide the same to the trust at free of cost. The said firm M/s. Shivom Enterprises was subsequently on 5-5-1992 converted into a private limited Shivom Build Con. (P.) Ltd. The assessee before us presently known as Shivom Build Con. (P.) Ltd. The first and second floor o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with the sanctioned plans, compound wall etc. and hand it over to the trust for its activities and also had to reimburse the expenditure incurred by the trust for the construction up to ground floor i.e. amounting Rs. 14,40,414.25. He submitted that in lieu, the assessee was granted 135.60 sq. mtrs. on the ground floor, on lease of Rs. 1,08,000 pa to be used by them for commercial purpose i.e. for rental purposes. The assessee also reimbursed the amount of Rs. 14,50,414.25 which was spent by Sharda Sangeet Vidyalaya on the part of the construction (ground floor) as per the terms of the agreement with the trust. The learned AR submitted that during the financial year 1995-96, M/s Shivom Builders (P.) Ltd. who has took over the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hivom Build Con. (P.) Ltd.) entered into an agreement with Sharda Sangeet Vidyalaya, a trust. As per the terms of the agreement, the assessee agreed to avail benefit of 90 years lease in respect of the premises admeasuring 135.60 metres on a monthly rent of Rs. 3,000. Further as per the terms of the agreement for obtaining lease for the premises, the assessee was to construct first and second floor at its own cost and provide the same to the trust free of cost. In addition to this, the assessee agreed to pay an amount of Rs. 14,50,414 being the amount spent by the trust for construction of ground floor structure. Due to the paucity of fund at the assessee's disposal, the assessee entered into a sub-lease with Bharat Co-operative Bank Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilized for construction for first and second floor which is not let out property in question and also not the part of the property which has been taken by the assessee on lease. It has to be taken into consideration that the assessee was under obligation as per the lease agreement to construct the first and second floor and also to pay the sum of Rs. 14,50,414 in lieu of lease for ground floor for a period of 90 years. Therefore, substance of the fact is that the cost of construction for first and second floor as well as the amount of Rs. 14,50,044 are the total consideration paid by the assessee to the trust for acquiring the lease for 90 years of ground floor which is the premises in question. The assessee has offered the income under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in which capital was borrowed, the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees. Explanation.-Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years: Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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