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TMI Blog2014 (7) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... Co-operative Housing Society and further confirming the disallowance of Rs. 12,00,000/- paid to the society as compensation. 2.1 Briefly stated, the assessee is a partnership firm carrying construction business following mercantile system of accounting. On one portion of flat no. 355, the assessee constructed and sold flats in a residential building latter known as 'Kailash Tower Co-operative Housing Society' and on the other portion of the land the assessee constructed various offices in a commercial complex 'Kailash Plaza' which were sold in various years. During the assessment year 2006-07, the assessee undertook further construction work of 'Kailash Plaza' as well as 'Kailash Tower Cooperative Society'. The assessee incurred an expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already allowed in the earlier assessment year and further verify the quantum of expenditure incurred during the year under consideration. Accordingly, the AO is directed to decide, in accordance with law, the allowability of the expenditure incurred during the year under consideration after providing reasonable opportunity of being heard to the assessee. We direct and order accordingly. Ground No 1 is partly allowed. 2.2.1 As regards the disallowance of Rs. 12,00,000/-, it is relevant to state that over and above the repairs carried out by the assessee, Rs. 12 lakhs was paid as settlement amounts which the society claimed on account of repairs carried out by them. The assessee claimed the deduction of Rs. 12 lakhs as direct cost during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 3. In Ground No. 3, the assessee has agitated the decision of the Ld.CIT(A) confirming the AO's order treating license fees of Rs. 17,31,240/- received from Reliance Life Insurance Ltd. as business income. 3.1 Briefly stated, the assessee entered into a lease and license agreement with Reliance Life Insurance Ltd. on 03.01.2006 for five years i.e. up to 30.05.2011. According to the lease and license agreement, the lease was to commence from 1st June, 2006 falling within the assessment year under consideration. The amount of lease rent of Rs. 17,31,240/- was offered as income from house property by the assessee and thereby claimed a statutory deduction u/s 24A of the Income-tax Act. However, the AO treated the said lease rent as busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance Life Insurance Ltd is not a business service centre. Even if house property is held as stock in trade, the rental income has to be assessed as income from house property as the assessee is owner of the house property and the house property is not used by the assessee for his own purpose. In view of the aforementioned discussion, the AO is directed to verify whether the premises rented out to Reliance Life Insurance Ltd is different from the premises involved in the assessment year 2005-06 and the same is not forming part of the business centre and accordingly tax the rent as income from house property. On such treatment, the AO is directed to allow the consequential deduction permissible u/s 24A of the Income-tax Act. Ground No. 3 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Ld.CIT(A) in upholding the disallowance of (i) Rs. 5000/- out of office expenses of Rs. 21,608/-, (ii) Rs. 5000/- out of staff welfare expenses of Rs. 21,956/- and (iii) Rs. 40,000/- out of maintenance expenses on Rs. 3,78,888/- aggregate to Rs. 50,000/- on the ground that these expenses were mainly incurred by cash and supported with self made vouchers. Since the quantum cannot be ascertained with 100% authenticity due to the fact that that the expenditure incurred is paid by cash supported by self made vouchers, we do not any justifiable reason to interfere with the decision of the Ld.CIT(A) and therefore, the disallowance confirmed by the Ld.CIT(A) is upheld. Ground No. 5 is dismissed. 6. In Ground No. 6, the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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