TMI Blog2014 (3) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... 11, ITA No. 22/Mum/2011 - - - Dated:- 12-3-2014 - Sh. B. R. Mittal And Rajendra,JJ. For the Petitioner : Shri Sanjeev M. Shah For the Respondent : Shri Hashim K. Modi ORDER Per Rajendra, AM. Challenging the order of the CIT(A)-13, Mumbai, assessee-company has filed appeals for three AYs.i.e.2002-03, 2003-04 and 2004-05. ITA/23/Mum/2011-AY.2002-03: Assessee has raised following Grounds of Appeal for the AY.2002-03 (1)The learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming the assessment of the receipts Rs.796701.60/-from Mandvi Bank as income from house property as against business income offered by the Appellant. (2) The learned CIT(A) further erred in this connection in impliedly disallowing expenses Rs.796701.60/-claimed by the Appellant as deductible for earning the aforesaid receipts. (3).The learned CIT(A) erred in affirming the disallowance of interest of Rs.419453/ and secured loan Rs.321894.14 respectively and hence in concluding that it is neither allowable under Section 36(1)(ii)or 22. (4)The learned CIT(A) further erred in this connection in holding that the loan Rs. 321894.14 has not been utilised by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4)The learned CIT(A) further erred in this connection in holding that the loan Rs.35, 64, 000/ has not been utilized by the Appellant for its construction activities. (5)The learned AO erred in levying interest under Section 234B and 234C. (6)The Appellant craves leave to add to and/or amend and/or delete and/or modify and/or alter the aforesaid grounds of appeal as and when the occasion demands. (7).All the aforesaid grounds of appeal are independent in the alternative without prejudice to one another. Assessee is a builder and developer of commercial premises.Details of dates of filing of returns, incomes returned, dates of assessment, assessed incomes, dates of orders of the CIT(A)can be summarised as under :- Dt.of filing of Return Returned Income (Rs.) Date of assessment Assessed Income Dt. of orders of CIT(A) 2002-03 30.10.2002 87,672/- 14.12.2007 6,12,720/- 10.08.2010 2003-04 01.12.2003 68,760/- 14.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chugandas Co.(55 ITR 17-SC), Premchand Jute Mills Ltd(164 ITR 288.Cal), M/s.Shambhu Investments Pvt Ltd.(263ITR143-SC), he held that income of the income offered under the head business income was to be assessed as income from House property.He further held that the assessee was also receiving incomes in the form of Security charges Service charges, that the aforesaid incomes were part and parcel of the month -ly payments to the assessee, that in view of the decision of the Hon'ble Supreme Court in the case of M/s.Shambhu Investments Pvt Ltd. (supra) Security charges Service charges received by the assessee were to be treated as Income from House Property u/s. 22 of the Act. 2.2.After perusing the Profit Loss Account and the Balance sheet filed by the assessee, AO held that the assessee had not debited any expense to its construction account except the amount of interest paid that the assessee had not carried out any work during the year under appeal, that the construction activity carried out by it was over. 2.3.Next ground of appeal is about disallowance of interest amount.AO found that the assessee company had given the Godown on rent to M/s. Mandvi Co-operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied out, that business expenses were not allowable, that there were no indication of any business revival, that no material had been brought on record to show that assessee wanted to revive the business except stating that litigations were pending. Relying upon the cases of Narayan Das [149ITR339] and S.P.V. Bank Ltd[126 ITR 773], he held that in order to sustain a claim for deduction, by way of business expenditure, the expenditure must have been incurred for the purpose of a business which was in existence in the year of account, that there was no business during the year under appeal, that question of allowability of expenses would not arise., that none of the expenses were allowable u/s. 37(1) as the business had ceased to exist. 3.4.As regards the to the allowability of interest expenses, FAA held that AO had discussed the issue in details, that interest could not be allowed u/s.36(1)(iii)or 24(b)of the Act, that AO was justified in disallowing the claim made, that loan taken by the assessee was not utilised by the assessee for its business, that loan was also not used for acquisition of property given on rent. Finally, he dismissed the appeal filed by the assessee. ITA/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the material before us.The issues involved in all the appeals are common and interconnected.For the AY.s2002-03 and 2003-04 the assessment orders were passed u/s.144 of the Act.After perusing the orders of the AOs/FAA for all the three AY.s under consideration, we are of the opinion that the issue as to whether the rental income is to be considered under the head 'Income from House Property' or not has to be considered in the light of the facts for the first AY i.e. AY 2002-03.As the said decision for AY 2002-03 will have consequential effect in the subsequent AY.s, therefore, in the interest of justice, we consider it prudent that the issue may be considered afresh by the AO for all the three AY.s , after giving due opportunity of hearing to the assessee and after considering such evidences as may be placed before him.We may add, that if the assessee fails to co-operate the AO and/or do not furnish the requisite documents as may be required by him, the AO will be at liberty to decide and pass the fresh Assessment Order as per law on the basis of the papers available before him by a reasoned order.Hence, the orders of the FAA for all the three AY.s under considerat ..... 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