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M/s Hamilton Technologies India Pvt. Ltd Versus Assistant Commissioner of Income Tax, Central Circle-17, New Delhi.

2016 (1) TMI 534 - ITAT DELHI

Computation of rental income - Assessing Officer treated the amount of rent as ‘income from other sources’ - Held that:- The assessee has in fact credited rental income of ₹ 1.62 crores to its profit & loss account. A copy of the Addendum dated 25.08.2006 to the Lease agreement has been placed at page 28 of the paper book, as per which, “the Lessor agrees to give an additional rent free period of one month from the rent commencement date towards delays in handover of the premises. Lessee h .....

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d order for deletion of this addition. - Decided in favour of assessee

Disallowance on account of interest on O.D. account - Held that:- The assessee claimed deduction of interest on over draft account stated to have been utilized for purchase of the furniture and fixtures and repairs and maintenance of the building which was let out on rent. The Learned AR submitted that the AO did not allow a reasonable opportunity to adduce necessary evidence and requested that one more opportunity .....

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adduce in support of the claim of deduction of interest.- Decided in favour of assessee for statistical purposes.

Disallowance on account of interest on bank loan - Held that:- Here again, the assessee could not file evidence of spending the loan amount for acquiring building etc. with the help of loan on which interest was paid and the learned AR seeks one more opportunity for adducing such evidence. Following the view taken hereinabove, we set aside the impugned order and send the m .....

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of such Professional charges. Setting aside the impugned order on this score, we remit the issue to the Assessing Officer with a direction to allow adequate opportunity to the assessee for producing necessary evidence in support of this payment and then decide as per law.- Decided in favour of assessee for statistical purposes.

Disallowance on account of Processing of loan fees by treating it as capital expenditure - Held that:- No substance in the view canvassed by the authorities b .....

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er on this issue also and send the matter to the file of the AO to consider the deductibility of such amount on the same line as that of the interest.- Decided in favour of assessee for statistical purposes.

Income from house property - Rental income inclusive of service tax - whether should be deducted from the gross rental receipts? - Held that:- The assessee categorically claimed before the authorities that gross rent of ₹ 2.66 crore includes service tax of ₹ 0.14 crore .....

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circumstances, we hold that the gross rental income is chargeable at ₹ 2.66 crore but the assessee is also eligible for deduction of ₹ 0.14 crore towards payment of service tax.- Decided in favour of assessee

Disallowance on account of brokerage charges - Held that:- As AR argued that such brokerage charges were paid to commission agents for procuring tenants of the building and this brokerage was paid at the rate of 40 days’ rental value. He submitted that the assessee co .....

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ICIAL MEMBER For The Appellant by : Shri Adhir Samal, CA. For The Respondent by : Shri Ashok Saroha, CIT-DR. ORDER PER R.S. SYAL, AM:- These two appeals by the assessee relate to assessment year 2007-08 and 2008-09. Since some of the issues raised in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. AY 2007-08:- 2. Ground No.1 is general which does not require any adjudication. 3. Ground No.2 about the treatment of .....

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f ₹ 1.84 crores. The Assessing Officer treated this amount of rent as income from other sources . The assessee argued before the learned CIT(A) that rent for one month was not received as the premises was given on rent to this party with a condition of free user for one month. The Learned CIT(A) did not accept this contention and approved the Assessing Officer s action. 5. After considering the rival submissions and perusing relevant material on record, it is noticed that the assessee has .....

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assessee allowed rent free period of one month to the lessee because there was some delay in handing over of the premises. Once no rent is received as the same stood waived because of late handing over of the possession, there cannot be any question of charging such amount as Income from other sources . We, therefore, overturn the impugned order on this score and order for deletion of this addition. 6. Ground No.4 is against the confirmation of disallowance of ₹ 86,828/- on account of inte .....

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which was let out on rent. The Learned AR submitted that the AO did not allow a reasonable opportunity to adduce necessary evidence and requested that one more opportunity be given to the assessee for filing necessary evidence in this regard. It is noticed that it is a case of payment of interest to bank and hence the genuineness of payment of such interest cannot be denied. The only thing which remains is to link such interest with the purpose of loan. Agreeing with the contention, we set asid .....

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loan amount for acquiring building etc. with the help of loan on which interest was paid and the learned AR seeks one more opportunity for adducing such evidence. Following the view taken hereinabove, we set aside the impugned order and send the matter to the Assessing Officer for deciding this issue afresh in the light of the evidence to be filed by the assessee. 9. Ground No.6 is about the sustenance of disallowance of a sum of ₹ 54,827/- on account of Professional charges. The assessee .....

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tting aside the impugned order on this score, we remit the issue to the Assessing Officer with a direction to allow adequate opportunity to the assessee for producing necessary evidence in support of this payment and then decide as per law. 10. The last ground is against confirmation of disallowance of a sum of ₹ 4,19,083/- on account of Processing of loan fees by treating it as capital expenditure. 11. The Assessing Officer treated processing of loan fees as a capital expenditure and disa .....

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rest and processing fee on loan. In our considered opinion, such processing fee cannot be capitalized and is deductible in the same manner in which the interest is deductible. We, therefore, set aside the impugned order on this issue also and send the matter to the file of the AO to consider the deductibility of such amount on the same line as that of the interest. 13. In the result, the appeal is partly allowed. AY 2008-09:- 14. Ground No.1 is general which does not require any adjudication. 15 .....

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.52 crore. The Assessing Officer noticed that the actual rent paid by the company was of ₹ 2.66 crore. He, therefore, included the amount of ₹ 2.66 crore as assessee s rental income. The assessee argued before the authorities below that this rental income is inclusive of service tax amounting to ₹ 0.14 crore which should be deducted from the gross rental receipts. This contention met with the fate of dismissal. Now, the assessee is before us. 17. After hearing the rival submiss .....

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eceipt aspect of the rent at ₹ 2.66 crore inclusive of service tax but have not allowed any deduction for service tax claimed to have been paid by the assessee before the due date. Under such circumstances, we hold that the gross rental income is chargeable at ₹ 2.66 crore but the assessee is also eligible for deduction of ₹ 0.14 crore towards payment of service tax. This ground is, therefore, allowed. 18. Ground No.4 against disallowance of ₹ 86,828/- on account of inter .....

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