TMI Blog2012 (12) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... come from letting out of these moulds and dies is to be assessed as income from other sources – Held that:- Whether the rental income received by the assessee of Rs.12 lacs pertains to the rental of moulds and dies. To whom these assets were let out - All these facts are necessary to ascertain the correct nature of the income and only then the claim of depreciation on these assets could be entertained. Whether the depreciation is to be allowed for passive use or it has to be allowed under section 57(ii) of the Income-tax Act. Under which head of income the rental income received on account of letting out moulds and dies is to be assessed – matter remanded to the file of Assessing Officer Addition of expenses incurred on exempted income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest received 414,218.00 Income Tax Refund - Profit on sale of Assets 2,877,316.00 12,259,911.41 3. The revised grounds of appeal read as under :- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs.22,80,241/- made by the Assessing Officer even through the conditions of section 22 of the LT. Act, 1961 were met, therefore, the claim for depreciation was not maintainable. 2. On the facts and in the circumstances of the case, Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs.13,00,683/- made by the Assessing Officer on account of depreciation on mould and dies even though the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer also show caused the assessee, why the income from the rent should not be assessed as income from house property. Assessing Officer also asked to furnish the rent agreement in respect of various premises let out. The assessee submitted the agreements in respect of properties, i.e., 130/24, Faridabad and 143/24, Faridabad only. No evidence or agreements were submitted in respect of remaining properties. Learned DR also pleaded that the CIT (A) had confirmed the assessment of rental income as income from house property, however, he limited the depreciation to the extent of 33.60% and he allowed self occupied portions. Learned DR submitted that the assessee has not submitted full particulars including all the lease deeds wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Rubber Udyog Pvt. Ltd. for AY. 1999-00 and 2000-01 where it was decided to be allowed on W.D.V. basis on the rented portion of the building. Therefore, a similar decision is imperative in the case under consideration and therefore, the action of the AO in shifting the income from business income to income from house property is upheld, but he is directed to allow the depreciation on the W.D.V. of the rented portion of the building as per the Income Tax Rules, 1962." Therefore, on the identical fact and circumstances, disallowance of depreciation on the whole of the properties is not appropriate. The same ought to have been limited to rented-out portion only, which was only 33.60% as already explained by the appellant before the A.O. durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the passive use. Learned DR pleaded to set aside the order of CIT (A). 10. On the other hand, the learned AR submitted that the claim of depreciation of Rs.13,00,683/- was made on the moulds and dies. These assets were leased out. The income from letting out of these moulds and dies is to be assessed as income from other sources. Assessing Officer has assessed the income under the head income from property. It should have been assessed income from other sources, on such income, depreciation is allowed u/s 57(ii) of Act. The assessee deserves for depreciation on these assets as per section 57(ii) of Income-tax Act. He also pleaded that even the depreciation is allowable for passive use. For this, he relied on the decision of ACIT vs. Chen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Learned DR relied on the order of the Assessing Officer. Learned AR relied on the order of the CIT (A). 14. We have heard both the sides. We find that the total disallowance of Rs.23,90,601/- includes five items (i) out of building repair Rs.1,54,690/-; (ii) out of rate and tax Rs.3,72,933/-; (iii) out of insurance Rs.2,238,963/-; (iv) 10% out of remaining Rs.40,880/- (Rs.4,088/-); and (v) expenses disallowed in computation of income of Rs.15,83,135/-. We also find that the issue regarding expenditure under the head building repairs, rates and taxes and insurance had not been thrashed out properly. Some of the buildings or parts thereof were let out and the income from the same is being assessed as income from house property, on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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