9911796707
Advanced Search 
TMI Blog2013 (12) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.01.2007 passed by the Income Tax Appellate Tribunal, Lucknow in ITA Nos.447/Luc/2001; 138/Luc/2002; 139/Luc/2002; 242/Luc/2002; 339/Luc/2005; and 735/Luc/2003, for the assessment years mentioned above. On 24.07.2007, a Coordinate Bench of this Court has admitted the appeals on the following substantial questions of law: A) "Whether the ITAT was legally correct in holding that income from letting out of shops which formed part of the over all business activities of the assessee, was assessable as income under the head "Income from House Property" and on that ground in not allowing the its claim for deduction of interest amounting to Rs.10,29,788 under section 36(1) (iii) of the Act? B) Whether on a true and correct interpretation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and a few residential flats were constructed at the first floor. All the units including the shop and flats were put on sale as and when there was a demand for the same. A few units were not sold out due to steep decline in market demand. However, these units were kept as Stock-in-Trade being business asset. As a prudent businessmen, a few units were let out for short period. The assessee has received the rent and the rental income was shown by the assessee under the head "Income from House Property". However, during the assessment year under consideration, the assessee has claimed the rental income under the head of the "Income from the business". The claim was disallowed by the lower authorities including the Tribunal. Still not being sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not justified either on the facts or in law to restrict the assessee's claim for deduction of interest to Rs.1,49,120/- on the assumption that part of the initiate borrowings "must have been repaid" and interest on arrears was not allowable as deduction. The arrears of interest formed the part of the borrowings, which were utilized for the construction of the Complex and whole of the claim is allowable as deduction. For the purpose, he has relied on the ratio laid down in the following cases: 1. Abdul Qayume vs. CIT; (1990) 184 ITR 404; 2. Jute Corporation of India Limited vs. Commissioner of Income Tax ; (1991) 187 ITR 688; 3. National Thermal Power Co. Ltd. vs. CIT; (2006) 229 ITR 383 SC; 4. Goetze (India) Ltd. vs. CIT; (2006) 284 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rental income is an income from business activities. It is submitted that earlier omission has been caused solely because of the lack of knowledge about the provision of law. For this purpose, he relied on the ratio laid down by the Apex Court in the case of Moti Lal Padampat Sugar Mills Co. vs. State of U.P.; (1979) 118 ITR 326. During the course of argument, learned counsel for the assessee has informed that a few of the units were further sold. Lastly, he made a request that the claim may kindly be allowed. On the other hand, learned counsel for the department, at the strength of the written statement, justified the impugned order. He submits that in the earlier assessment years, the assessee herself has shown the income from the House ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the Taxation. The building in question was constructed with the help of borrowed funds and the same will have to be returned. To return the interest and principle amount, the rental income was utilized to reduce the burden. The asset was constructed and used for the purpose of the business remained a commercial assets and the same is properly shown in the books of accounts as stock-in-trade as per the ratio laid down in the case of Lakshmi Silk Mills (supra). If the asset is temporarily put out to use or let out to another person for use, the same remains the commercial assets. It is only due to decline in demand, and in order to put the unsold stock to a gainful utilization i.e. letting out and earned income to reduce the burden of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.; (1979) 118 ITR 326 (SC); and 2. Commissioner Of Income Tax vs K.P.V. Shaik Mohammed Rowther; (1998) 232 ITR 176 Madras The assessee raised the legal ground first time before the CIT, which was adjudicated by the authorities as per the ratio laid down in the case of Jute Corporation (supra). In view of above discussion, it is crystal clear that the assessee is entitled to raise the legal ground at any stage. Rental income was obtained due to lull in the market. Business may the temporarily closed / stopped or discontinued, even then the assessee is entitled for carry forward or set off the legal claims as per the ratio laid down in the cases of CIT vs. John V. P.; 229 ITR 475 Kerala; and L.Vc. Vairan Van vs. CIT; 1969 (72) ITR 115 Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
