TMI Blog2013 (12) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... rom property - In case the main intention is to exploit the immovable property by way of complex commercial activities, it must be held as business income – The assessee has not exploited its business asset for commercial purposes - The shed was never used for its business purpose and immediately after construction, the shed was given to its holding company - Accordingly, for claiming depreciation, the assessee has shown the rental income as business income as there is no other expenses claimed by the assessee in its profit and loss account - The factory shed was constructed by the funds of the holding company and was used by the holding company - The business asset created by the assessee was only for the purpose of holding company and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax matter of the assessee, advised the assessee that no appeal is to be filed against the order of CIT(A), therefore, the assessee did not file appeal. However, when the assessee changed his counsel, who advised that appeals should have been filed and accordingly, the appeals were filed immediately. It was explained that assessee was not aware of the legal provision properly and he was under bonafide belief that no useful purpose will be served if the appeals are filed as advised by the then Chartered Accountant. It was explained that similar facts were involved in the case of Phoenix Mills Ltd. (supra), and the Tribunal has condoned the delay in filing the appeal before the Tribunal. 4. On the other hand, learned DR stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances be taken into account in condoning the delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground. Accordingly, the Hon'ble Apex Court has held that there is a mistake of the counsel and, therefore, the delay in filing the appeal has been condoned. I further noted that similar finding has been expressed by the Hon'ble Supreme Court in the case of N. Balakrishnan v. M. Krishnamurthy AIR 1998 SC 3222. The Tribunal has also considered the decision in the case of Mela Ram sons v. CIT [1956] 29 ITR 607 (SC) and accordingly, the delay in filing appeal was condoned. The facts in the present case are also similar as in this case also due to mistake of Chartered Accountant the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d machinery and air conditions have been shown as ₹ 44,20,544/-, 41,769/-, 6,84,311/- and ₹ 10,859/-, respectively totaling to ₹ 51,57,484/- and the assessee has claimed depreciation on all the above assets. The assessee was required to explain as to why the lease rent shown by the assessee should not be assessed under the head house property against the claim of business income shown by the assessee. The assessee filed explanation, however, the AO was not satisfied, accordingly, he treated the lease rent of ₹ 6,00,000/- as income from house property for all the aforesaid assessment years i.e. assessment year 2003-04 to 2006-07. 8. Before the CIT(A), written submissions were filed and it was submitted that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, I noted that the assessee itself has never used the business asset for its business purpose. It was admitted during the appellate proceeding that in immediately preceding year i.e. assessment year 2002-03, the shed was constructed with the funds borrowed from the holding company. No interest has been paid to the holding company on that amount. It is further seen that small amount was spent on plant and machinery i.e. ₹ 6 lakhs or odd. ₹ 41,769/- and ₹ 10,859/- or odd was spent for electricity fitting and air conditioner, respectively. As stated above, the assessee never used this shed for its own business purpose. When the shed was constructed, immediately thereafter the shed was rented out to the holding company on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, I am of the view that though the asset is a business asset but the rental income earned by the assessee has to be assessed as income from house property, as the assessee has never used this business asset for its commercial purposes. It is also seen that the factory shed was constructed by the funds of the holding company and was used by the holding company, which shows that the business asset created by the assessee was only for the purpose of holding company and not use of assessee. Hence, it is inferred from the fact that the holding company was the owner of the shed as the assessee is a hundred percent subsidiary of the holding company. Therefore, it cannot be said that the business asset was given on rent for exploitation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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