TMI Blog2015 (4) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the case because the rental income which was earned from the property in case of Neha Builders was held as “stock in trade” whereas in the case of Assessee, A.O has noted that the property was shown as “capital work in progress” and not as “stock in trade” - Taxable as income from House property - Decided against the assessee. In the case of Sane and Doshi Enterprises [2015 (4) TMI 707 - ITAT MUMBAI], we find that expenditure for claim of deduction u/s. 24(b) was allowed by following the decision of the Tribunal in assessee’s own case for earlier years. Considering the aforesaid facts, we are of the view that the decisions cited and relied upon by the ld. A.R. are not applicable to the present case. Further deduction u/s. 24(b) is allowable when the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital. In the present case no material has been brought on record to demonstrate that the borrowed capital has been used for the acquisition of property. Considering the totality of the aforesaid facts, we find that no reason to interfere with the order of ld. CIT(A) and thus the grounds are dismissed. - Deduction of interest not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) (ii) of the Act. Hon'ble CIT (A) has erred in rejecting this ground of the appellant's appeal and in sustaining the validity of the Assessment Order passed without valid service of notice u/s 143(2) of the Act within the stipulated time limit. 2. That Hon'ble CIT (A) has erred in sustaining the treatment of rental income earned by the appellant by giving counters/spaces/shops in 'Retail Mall' as Income from House Property instead of Profits Gains of Business . 3. That Hon'ble CIT (A) has erred in upholding the disallowance of deduction of various expenses such as electricity charges, depreciation, general expenses, legal professional fees, repairs maintenance, salary, bank charges and partners' interest debited in trading profit loss account totaling to ₹ 20,15,236/- after treating rental income as Income from House Property . 4. Without prejudice to above grounds of appeals, that even if rent income is treated as Income from House Property , then also the appellant is entitled for deduction of interest paid to partners u/s 24(b) of the Act r. w. s. 36(l)(iii) of the Act. That Hon'ble CIT (A) has erred in upholding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not taken before ld. CIT(A). Considering the submissions made by the Assessee, we are of the view that it deals with the legal right of the Assessee and therefore the same is admitted. Before us, Ld AR submitted that he did not want to press ground no. 1 and therefore the ground is dismissed. Ground No. 2, 3 4 are interconnected and therefore considered together. 7. During the course of assessment proceedings, A.O on perusing the Balance sheet and the Profit and Loss account noticed that Assessee had not done any business during the year and the only income was from the rent receipt from the property given on rent. On further perusing the Profit and Loss account he noticed that Assessee had shown opening stock, closing stock, sales receipts, expenses on various heads. He also noticed that the closing stock of ₹ 1,25,36,346/- as appearing on 31st March, 2007 was not appearing in the trading account but was reflected under the head of fixed assets as capital work in progress and therefore Assessee had converted the stock into fixed assets. A.O was of the view that since Assessee has not done any business and received rental income from various parties against the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o exploit the said business asset of 'Picnic Retail Mall' and earning of rental income. I find that the above arguments were also taken up before the Assessing Officer who has duly considered the same in paras 5 to 9 of the order. I also find that the appellant himself, in the statement of facts filed along with Form No. 35, has submitted that the project was not successful and could not be sold, and since he could not receive any booking for the same, he started giving the counters/spaces and shops to various persons on rental basis. This self admitted fact itself indicates that the activity of giving counters/spaces and shops was never taken up as a business venture , but to earn rent, as there was no booking for sale of shops/counters/spaces. I, therefore, do not find any reason to deviate from the finding given in the order on this issue and confirm the action of the Assessing Officer in treating the income received during the year as rent from the tenants of counter/spaces and shops in the above project under the head 'property income'. This ground of appeal is, therefore, dismissed. 4.3. The third ground of appeal is that the Assessing Officer has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was right in claiming the income as business income. Ld. DR on the other hand pointed to the findings of AO and CIT(A) and supported their orders. 10.We have heard the rival submissions and perused the material on record. The issue in the present case is as to whether the income earned from letting out of counters, spaces is to be considered as business income or Income from house property . We find that ld. CIT(A) after considering the detailed submissions of the Assessee has reached to a conclusion that the activity of giving counters/spaces/shops was never taken up as a business venture but was to earn rent. With respect to the allowability of interest paid to partners as interest allowable u/s. 24(b), we find that ld. CIT(A) has noted that interest allowable u/s. 24(b) cannot be equated with interest allowable u/s. 36(1)(iii) of the Act. Before us, ld. A.R. has relied on the decision in the case of CIT vs. Neha Builders Pvt. Ltd. (supra) however, we find that the ratio of the aforesaid decision is not applicable to the facts of the case because the rental income which was earned from the property in case of Neha Builders was held as stock in trade whereas in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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